The vice president of sales is a key player in any organization — although in some industries you’ll find more than one per company. Charged with meeting the revenue goals, hiring, organizing and overseeing the sales force, the required skill set is both extensive and unusual. Sales VPs typically come up through the ranks of sales, but most talented salespeople will not make effective VPs.
Great salespeople are hunters. Great VPs are hunters who’ve learned how to organize and lead hunting parties.
How much a VP/Sales gets paid is influenced by factors that include:
- Track record
- Years of experience
- Size of employer
- Years of tenure at an employer
- Employer’s industry
- Industry knowledge and connections
- Method of compensation
This plays out in how VP/Sales are paid. There’s typically a substantial base salary garnished with varying amounts of bonus money depending on the company and the industry. For example, an “average” VP/Sales in the financial industry is not unique in their organization; there may be dozens of VP/Sales in a large firm.
For software companies or manufacturers, there may be just a few — or only one. As a result, total VP/Sales compensation (OTE, On-Target-Earnings) in some industries is lower than you might expect.
There are also many types of additional compensation. Startups or tech companies may offer a mix of bonus cash and stock for reaching or exceeding goals. Others may stick with straight commission sharing.
In addition to its industry, where a company is located and its geographic footprint are major determinants of total income for their VP/Sales. A regional business in the Midwest is not going to pay what a global business pays. Large national/multinational companies tend to pay in the same ranges as others in their industry because they are competing for the same talent.
According to research from Glassdoor, the average base pay for a VP/Sales is $100,000 across all industries and all experience levels. When you factor in the size of the company and years of experience as a VP/Sales, large differences in compensation emerge. For our analysis, we looked at average pay in four scenarios:
- Low — less than one year experience at a small company with fewer than 50 employees total
- High — average salary for VP/Sales with 15 years experience at large companies (1,000 or more employees)
- Highest — Highest average salaries for AEs with 15 years experience at large companies
- High total comp — Total compensation for highest earners when OTE was included
Averages can be deceiving of course: There are VP/Sales making less than $100,000 and some making ten times that amount when total compensation is included.
- Average: $100,000
- Low: $66,000
- High: $268,000
- Total Comp: $288,000
There’s significant variation between industries, too. In some, additional compensation is modest, keeping total comp down, while other industries have almost unlimited potential.
BioTech & Pharma
The biotech and pharmaceutical world was rocked by the arrival of COVID-19 and the reverberations continue. While the direct impact was felt most acutely by the firms engaged in combating covid, the increased demand for healthcare supplies of all kinds affected many others. Rapid change will be a major factor going forward, as mass therapies (blockbuster drugs) give way to highly tailored individualized treatments. This will allow pharma sales executives to stay on top of a fast-moving marketplace:
Bio-sensors, big data and IOT will accelerate the changes.
- Average: $190,000
- Low: $82,000
- High: $221,000
- Total comp: $365,000
The covid pandemic poured fuel on an already hot marketplace as digitalization of business processes and new digital services were transforming the business landscape. With an annual growth rate north of 10%, the demand for more business services — especially digital tools — shows no sign of slowing. The spread between the lowest and highest earners reflects the growth and importance of digital services.
- Average: $142,000
- Low: $64,000
- High: $296,000
- Total comp: $547,000
Some of the major drivers of consumer services were walloped by restrictions and anxieties around coronavirus: travel, hospitality and recreation all took huge hits. As the pandemic eases, money will likely surge back into these sectors, producing some good years until the pent-up demand is satisfied. The amount of services spending in the overall economy is reflected in relatively higher pay for VP/Sales positions in the industry.
- Average: $172,000
- Low: $113,000
- High: $249,000
- Total comp: $391,000
An ageing population plus more available treatments and increasing diversity of delivery points should continue to foster a steady rise in health spending in the years ahead. Consolidation among traditional healthcare companies such as hospitals and medical practices is somewhat offset by the proliferation of “health adjacent” settings offering services such as administration of cosmetic treatments and dietary/lifestyle coaching.
- Average: $168,000
- Low: $97,000
- High: $182,000
- Total comp: $327,000
Tech: Hardware & Software
It’s not surprising that there’s a lot of compensation available in computer hardware and software sales. From established “blue chip” leaders like HP, Dell and Apple to startups making the IoT happen, digitalization is well established and shows no sign of slowing. The application of AI across the entire spectrum of our business and personal lives is already underway and will only accelerate in the years ahead, creating even more opportunities for sales leaders who can crush goals.
- Average: $188,000
- Low: $102,000
- High: $222,000
- Total comp: $548,000
Cloud-based software has conditioned the market to renting rather than buying, which promises to further boost spending on tech services, which has been clipping along at a growth rate of about 11%. New modalities — SaaS, blockchain, AI — have appeared and are setting off another major wave of digitization. As with their compatriots in the hardware/software sector, sales execs on the services side are paid very well. The numbers skew a bit lower, possibly because many companies in this sector are startups, which tend to pay a bit less but also offer big upsides through stock options.
- Average: $194,000
- Low: $88,000
- High: $359,000
- Total comp: $516,000
Looking at the profits of big financial institutions and the pay scales for VP/Sales might raise the question of who’s getting all that money. Part of the answer is that some players, especially banks, have multiple VP/Sales, literally spreading the wealth among a larger number of executives. Financial services have been doing very well, but there are some questions about the future: Blockchain technology will be implemented throughout the industry, possibly reducing regulatory burdens and making more services more widely available. However, the counter trend is that cryptocurrencies may lead to significant assets moving out of traditional financial services companies.
- Average: $135,000
- Low: $57,000
- High: $230,000
- Total comp: $391,000
Companies with “digital maturity,” ones that have already adopted and implemented digital processes throughout their organizations, have done better over the past few years than their peers who are less mature. Labor shortages and supply chain issues continue to roil the industry, and over-reliance on low-inventory models has damaged companies who rely on a steady stream of shipments from their factories.
Manufacturers who can bring production closer to home markets while maintaining margins stand the best chance of prospering. For VP/Sales, a company’s capacity to deliver will continue to be a key determinant of marketplace success.
- Average: $185,000
- Low: $88,000
- High: $220,000
- Total comp: $353,000
Change is a constant in the telecom world and the coming decade will be no exception as 5G rolls out across the world. Intense competition is the norm and that won’t lessen anytime soon as wire-based telecom solutions compete with fiber optic, cellular and even satellite providers. The global appetite for moving data is enormous and growing. The Iot alone promises to add trillions of bits to the packets moved by telecom providers, so the future is bright. For VP/Sales in this arena, the fights will be long and hard, but the rewards could be massive.
- Average: $185,000
- Low: $126,000
- High: $208,000
- Total comp: $351,000