sales compensation: trends, tools, analytics, and solutions for the emerging environment
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November 24, 2009
Ted BriggsPrincipalBetter Sales Comp Consultants
Brian HartlenVice President MarketingVaricent
Sales CompensationTrends, Tools, Analytics, and Solutions for the Emerging Environment
© 2009 The Sales Management Association
The Sales Management Association
2
A global, cross-industry professional association for sales operations and sales management.
Focused in providing research, case studies, training, peer networking, and professional development to our membership.
Visit Us Online at www.salesmanagement.org
Copyright © 2008 - 2010 The Sales Management Association. All rights reserved.
This abridged presentation is provided as a preview.
Sales Management Association members may access the presentation in its entirety, and download copies in PowerPoint format, at the Sales Management Association website: www.salesmanagement.org.
Consider joining The Sales Management Association, the premier professional association for sales management and sales operations professionals.
Learn MoreThe Sales Management Association
Copyright © 2008 - 2010 The Sales Management Association. All rights reserved.3
• Governance• Plan Development• Plan Management
• Sales Compensation Analytics• Basic• Advanced
• Leveraging Information Technology• Today’s Environment• Role of Technology• Sales Performance Management
AgendaToday’s Webcast
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 4
• It’s a common sense look at how sales compensation plan decisions are made and how they are managed…
• Who performs which tasks?• Under what timelines?• Under what philosophy or direction?• With which degrees of authority?
• Good sales compensation governance gives stakeholders peace of mind that plan decisions are made…
• Wisely• Strategically• With everyone’s understanding and buy-in
Sales Compensation GovernanceWhat Does it Mean?
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 5
Sales Compensation GovernancePlan Development and Plan Management
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 6
Strategy and Plan
Goals
Sales Jobs
Plan Design
Plan Cost
Plan Approval
Plan Imp/
SupportPlan
Administration
Plan Monitoring & Assessment
Interim Modifications
Dispute Resolution
Plan Development
Plan Management
HQ Executives
• Define overall corporate strategy
BU Head
• Apply corporate strategy at BU level
BU Sales Head
• Determine sales strategy to support BU strategy
Steering Committee
• Ensure alignment with sales, BU, and corporate strategies
HQ HR/ Operations
• Determine pay ranges/job levels within corporate structure
BU Sales Head/ Mgrs.
• Select appropriate jobs/coverage required from approved list
Steering Committee
• Review BU job selections to ensure adherence to corporate structure
BU Sales Managers
• Assign salespeople to appropriate job roles
Sales Strategy Formulation
Job Role Definition and Application
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 7
Where Responsible ResidesB. Define Clear Ownership
The Basics and Beyond
• You are most likely aware of the “usual suspects” in terms of compensation plan analytics
• Can provide great value• Serve as the foundation to any analytical program
• But companies now more than ever are focusing on next level analytics for better sales compensation and better sales effectiveness
• Headcount planning• Quota setting• CCOS-based segment analysis
Plan Analytics
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 8
Market-Based Information Driving Account Level Goals
• Incorporating more inputs, more stakeholders, and greater effort
Leveraging Market-Based Information
• Understand the particular growth rates by industry segments, geographies, and account types
• Better aligning sales and marketing groups
Categorizing Accounts
• Categorizing accounts
• Ability to identify growth rates by account type
Applying Growth Rates
• Applying the appropriate market-informed rates to each account
Reconciling Bottom Up and Top Down
• Comparing account driven growth rates versus top down estimates
• Further analysis to close gaps
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 9
Next Generation II – Quota Setting
Recovering from the Economic Crisis
• The last twelve months involved companies making many fast-paced (hasty?) and challenging (short-sighted?) decisions
• Sales cuts and pay reductions may have compromised the role and perceptions of the sales team’s value
• Unraveling the changes made will take time, particularly as the economy still limps forward but is poised for recovery
• We need to transition from “what the heck happened” to “what now”?
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 10
Sales Compensation Trends
Compensation Design ElementsWhat ‘s Under Consideration?
• Eligibility • Ranges and Structure• Incentive Mix *• Upside *• Performance Measures *• Performance Targets• Crediting• Plan Mechanics *
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 11
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 12
Poll Question 1 Incentive Mix
A. Increasing at-risk pay as a percentage of target compensation
B. Decreasing at-risk pay as a percentage of target compensation
C. Not made or considering any changes to base/incentive mix levels
As it relates to base-salary/at-risk ratios (incentive mix) our company has acted or is considering:
Increasing At-Risk Pay
No Change
Decreasing At-Risk Pay
30%
14%
56%
As it relates to base-salary/at-risk ratios (incentive mix) our
company has acted or is considering:
A. Substantially changing our plan mechanics
B. Moderately changing our plan mechanics
C. Only tweaking our plan mechanics
D. Not making any changes to our plan mechanics
As it relates to plan mechanics our company has acted or is considering:
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 13
Poll Question 4Plan Mechanics
A. Increasing at-risk pay as a percentage of target compensation
B. Decreasing at-risk pay as a percentage of target compensation
C. Not made or considering any changes to base/incentive mix levels
As it relates to base-salary/at-risk ratios (incentive mix) our company has acted or is considering:
Substantially Changing
Just Tweaking
Moderately Changing
10%
30%
44%
As it relates to plan mechanics, our company
has acted or is considering:
No Change 17%
• Inability to look at the impact of recent, or planned changes• Inability to implement new plans quickly• Managing overpayments and errors• Sales creates its own ‘shadow accounting systems’ • Challenged to meet audit and compliance requirements • Inability to model/analyze effectiveness of incentive spend • Too much time and effort to administer and maintain incentive compensation
processes• Payment disputes consume significant time & effort • Limited ad-hoc reporting & analysis capabilities• No ‘tight’ links between incentive pay, sales territories, quotas and business
metrics
• Inability to look at the impact of recent, or planned changes• Inability to implement new plans quickly• Managing overpayments and errors• Sales creates its own ‘shadow accounting systems’ • Challenged to meet audit and compliance requirements • Inability to model/analyze effectiveness of incentive spend • Too much time and effort to administer and maintain incentive compensation
processes• Payment disputes consume significant time & effort • Limited ad-hoc reporting & analysis capabilities• No ‘tight’ links between incentive pay, sales territories, quotas and business
metrics
Slow Rigid Error Prone
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 14
Today’s Challenges
Revenue
Cost of Sales0
200
400
600
800
1000
1200
1400
Revenue vs Sales Spend
Revenue Sales Spend
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 15
Focusing on Good Business
Sales Performance Management
Sales Performance Management Dashboard
© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 18
Sales Performance Management
This abridged presentation is provided as a preview.
Sales Management Association members may access the presentation in its entirety, and download copies in PowerPoint format, at the Sales Management Association website: www.salesmanagement.org.
Consider joining The Sales Management Association, the premier professional association for sales management and sales operations professionals.
Learn MoreThe Sales Management Association
Copyright © 2008 - 2010 The Sales Management Association. All rights reserved.
© 2009 The Sales Management Association
The Sales Management Association is a global professional association for sales management and sales operations. The SMA fosters a community of interest among sales force effectiveness thought leaders, consultants, academics, and sales management practitioners across many industries.
Through training workshops, online resources, and research materials, The SMA addresses the management issues of greatest concern to members. The SMA’s focus areas include management leadership, sales force performance coaching, sales planning, sales process management, enabling technologies, incentive compensation, and sales force support.
About The Sales Management Associationwww.salesmanagement.org
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