In Practice January 17, 2008

Two More Hours of Weekly Sales Activity Leads to Millions

Shifting two hours per week from administrative duties to selling can result in millions of dollars in incremental sales for companies.
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Watson Wyatt’s 2008 Report on Sales Effectiveness and Compensation found that just two hours more of sales activity a week can lead to as much as $225 million in additional expected revenue for a company with 1,800 new-business developers. In addition, Watson Wyatt contends, reallocating time and resources between new-business developers and account managers can create as much as $600 million in additional expected sales for a FORTUNE 100 company with $20 billion in sales.

According to the study, each minute a new-business developer with a $2.5 million quota spends on administration instead of with a qualified lead or prospect costs a company $15 to $20 in lost expected sales. For a sales professional, shifting two hours per week from administrative tasks to time with customers can be worth between $90,000 and $120,000 in sales.

The study found the majority (52%) of top-performing salespeople responsible for developing new business prefer in-person communication to other methods of contact with prospects and customers, compared with 39% of lower-performing colleagues. Top performers also typically spend less time on administrative tasks.

Additionally, Watson Wyatt suggests appropriately structuring variable pay programs is a key differentiator between top performers and others. Top-performing salespeople report incomes nearly one-quarter higher than their less productive counterparts, and sales-related variable pay accounts for a vast majority of this difference, the news release said. Top-performing new-business developers and account managers respectively typically receive 46% and 60% more sales-related variable pay than their peers, respectively.

“While financial incentives are an important part of driving sales growth, the key to long-term success is freeing up salespeople to develop and build customer relationships,” said Craig Ulrich, North America East Division practice leader for sales effectiveness and compensation at Watson Wyatt, in the release. “Companies that take steps to implement the right sales structure and design compensation plan incentives to focus on the highest-value activities can expect to increase sales and profitability. Those that don’t manage their sales roles and activities smartly risk leaving hundreds of millions of dollars of potential sales revenue on the table.”

The report is based on responses of more than 800 salespeople from approximately 500 companies. More information is available at www.watsonwyatt.com/saleseffectiveness.

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Data & Research January 17, 2008

Women over 50 Can Lag in Annuity, Pensions

As a result of a difference in their length of time in the workforce, women who were older than 50 in 2006 were much less likely to have an annuity and/or an employment-based pension than men, according to a new study.
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The Employee Benefit Research Institute (EBRI) reported that if female workers over 50 in 2006 received an annuity or employer pension, they were likely to end up with a smaller amount. However, EBRI was quick to add, women currently in the workforce are in better shape than their older counterparts since they are more likely to spend more time in the workforce.

The EBRI study evaluated the impact of gender, age, education, marital status, and other demographics in the likelihood of a worker receiving annuity and/or pension income in retirement.

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According to the EBRI data, in 2006, 44.6% of men age 65 and older received annuity and/or pension income, with a mean amount of $17,200 per year while only 28.4% of women age 65 and older received annuity and/or pension income in 2006, with a mean amount of $11,142 annually.

Although fewer individuals age 50 and older received pension income from a public-sector plan (7.5%) than from a private-sector plan (12.6%) in 2006, the median amount an individual received from a public-sector plan ($17,974) was considerably larger than that received from a private-sector program ($8,146).

In 2006, some 27.5% of men age 50 and older with a graduate-level education received annuity and/or pension income, compared with 21.7% of men without a high school diploma.

A woman age 65 or older in 2006 was only about two-thirds (63.7%) as likely to receive an annuity and/or pension payment as her male counterpart, and her mean benefit was likely to be about 65% of that received by a man of he same age.

In fact, the likelihood of receiving annuity and/or pension income increases with age, until the oldest age group (80 and older), for whom the data shows a lower percentage receiving such income. However, the percentage of those 80 and older receiving annuity and/or pension income increased from 17.7% in 1975 to 39.7% in 2006.

EBRI pointed out that the women who were born in 1956 at the latest are part of a group who, on average, spent fewer years in the labor force than their younger counterparts. However, on average, today’s younger women tend to spend more time in the workforce than did women who were 50 and older in 2006, so the number of younger women who will receive annuity and/or pension income and the amounts they will receive are likely to increase over time.

Men age 50 and older in 2006 who were married or widowed were more likely to receive annuity and/or pension income than men of the same age who were never married. Women age 50 and older in 2006 who were never married were more likely to receive annuity and/or pension income than married women, but widowed women were much more likely to receive annuity/pension income than either married women or women who were never married.

The research is available here.

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