effective sales force mgt

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Visi Visi  Pramudia Pramudia  FUN  FUN  tastic  tastic Enthusiasms to you! Enthusiasms to you! http:// http:// visipramudia.wordpress.com visipramudia.wordpress.com SALES FORCE EFFECTIVENESS MANAGEMENT  ccelerate Sales Force Productivity and Improve Your Sales Results by ligning Sales ctivities with Company Objectives Origin Source by David Cichelli Senior Vice President The Alexander Group, Inc. Author of ‘Compensating the Sales Force’

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SALES FORCEEFFECTIVENESS MANAGEMENT  ccelerate Sales Force Productivity and Improve Your Sales Results by

ligning Sales ctivities with Company Objectives

Origin Source by David CichelliSenior Vice President The Alexander Group, Inc.Author of ‘Compensating the Sales Force’

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Comprehensive Framework for Sales GrowthComprehensive Framework for Sales Growth

Sales Management System

1Sales

Segments&

Objectives 2Coverage

Model 3Sales

Process 4Job Design

&Organization

Structure 5Resource

Deployment 6Sales Talent

&Supervision 7

PerformanceMetrics 8

Quotas&

SalesCompensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Predictable Pattern of Business GrowthPredictable Pattern of Business Growth

Base

Low

High

Phase IStart-Up

Phase IIVolumeGrowth

Phase IIIRe-

Evaluation

Phase IVOptimization

Grow

GrowReally Fast

Grow; Keep

Customers

Launch NewProducts

ControlPricing

ReduceCost

Re-ThinkProduct & Market

Strategy

Reposition

GrowSelect

Markets

Top Line Growth

• Territory Sizing• Quotas

Revenue Mgt

• Get NewCustomers

• Keep Customers• New Products

Price Mgt

• Protect Base• Price Mgt• Reduce Costs

Segment Gowth

• New ValueProposition

• New Markets• Specialization

Objectives

Issues

Sales

Growth

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Success Can Lead to ObsolescenceSuccess Can Lead to Obsolescence

BusinessStrategy

Start-Up

 Any Business

MarketingStrategy

  One Product

SalesStrategy

  Survive

 O b   s  ol     e s  c  en c  e

 O b   s  ol     e s  c  en c  e

Volume Growth

More Business

Big Market

Lower Costs

 O b   s  ol     e s  c  en c  e

 O b   s  ol     e s  c  en c  e

Re-Evaluation

WhatBusiness?

Many Products/Markets

Hold Share

 O b   s  ol     e s  c  en c  e

 O b   s  ol     e s  c  en c  e

Optimization

CertainBusiness

SegmentManagement

Optimize for Returns

 O

 b   s  ol     e s  c  en c  e

 O

 b   s  ol     e s  c  en c  e

SBUs

Insufficient

Customer Coverage

Insufficient

Customer Coverage

Failure to

Support Multi-ProductStrategy

Failure toSupport Multi-

ProductStrategy

Price ErosionPrice Erosion

Too Many

Dissimilar Products andCustomers

Too ManyDissimilar 

Products andCustomers

Phase IStart-Up

Phase IIVolumeGrowth

Phase IIIRe-

Evaluation

Phase IVOptimization

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Dimensions of Excellence by PhaseDimensions of Excellence by Phase

BusinessStrategy

Start-Up

 Any Business

MarketingStrategy

  One Product

SalesStrategy

  Survive

T r   an s f    o

r  m a t   i     on

T r   an s f    o

r  m a t   i     on

Volume Growth

More Business

Big Market

Lower Costs

T r   an s f    o

r  m a t   i     on

T r   an s f    o

r  m a t   i     on

Re-Evaluation

WhatBusiness?

Many Products/Markets

Hold Share

T r   an s f    o

r  m a t   i     on

T r   an s f    o

r  m a t   i     on

Optimization

CertainBusiness

SegmentManagement

Optimize for Returns

RecruitingOn-boardingMessagingExecutingTesting

RecruitingOn-boardingMessagingExecuting

Testing

 Acct StratificationMultiple Messages

 Acct Mgt SkillsHunters

New ProductsMarket Share

 Acct StratificationMultiple Messages

 Acct Mgt SkillsHunters

New ProductsMarket Share

Customer SegmentsMultiple Channels

Sales SpecializationRules of EngagementMargin Maintenance

Customer De-selectionProductivity

Customer SegmentsMultiple Channels

Sales SpecializationRules of EngagementMargin Maintenance

Customer De-selectionProductivity

Fewer SegmentsSimpler Channels

Intense Customer FocusHigh Productivity

Low ChurnGood Margin/ Cash Flow

Fewer SegmentsSimpler Channels

Intense Customer FocusHigh Productivity

Low ChurnGood Margin/ Cash Flow

Phase I Phase II Phase III Phase IV

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Destination: Sales Excellence - ThemesDestination: Sales Excellence - Themes

Start-Up Volume Growth Re-Evaluation Optimization

Phase I Phase II Phase III Phase IV

New Market

 Access Selling

New MarketNew Market

 Access Selling Access Selling

Successful GrowthScaling

Successful GrowthSuccessful GrowthScalingScaling

Core-Market Sell ing

Proficiency

CoreCore--Market SellingMarket Selling

ProficiencyProficiency

Multi Segment/

Solut ion Selling

Multi Segment/Multi Segment/

Solution SellingSolut ion Selling

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Sales Segment & Objectives

Sales Management System

1

Sales

Segments

&

Objectives

2

Coverage

Model

3

Sales

Process

4

Job Design

&

Organization

Structure

5

Resource

Deployment

6

Sales Talent

&

Supervision

7

Performance

Metrics

8

Quotas

&

Sales

Compensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Sales SegmentsSales Segments

Sales must do marketing…

Sales Segments

Product

Customer Channel

… to organize selling resources.

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Principles of Effective Segmentation and

Targeting

Principles of Effective Segmentation and

Targeting

•  Actionable: determines sales strategy, coverage and

account targeting• Simple: easy to communicate and understand

• Customer focused: based on buying process and

buyer needs• Sales potential focused: customers and prospects

grouped on potential and current revenue

• Ranked by attractiveness: segments are evaluatedand ranked in term of buying processes revenuepotential, profitability and past success

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Segmentation and Targeting ComponentsSegmentation and Targeting Components

How should the market be divided into meaningful, actionable groups and which should be targeted?

Buyer ProfileBuyer Profi le Identification of significant differences in how buyers make theirpurchase decisions

Buyer Group

 Attractiveness

Buyer Group

 AttractivenessDetermination of attractiveness of buyer groups based on current andpotential revenue, profitability, strategic fit, operational fit, loyalty, etc.

Targeted and

 Actionable Segments

Targeted and

 Actionable Segments

• Matching segment buying criteria (based on how buyers want to buy)with the attractiveness of segment to the company

• Segments must be identifiable and actionable

Value proposi tionValue proposi tion• Alignment of value proposition with buying preferences

• Delivery of a unique value proposition

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Coverage Model

Sales Management System

1

Sales

Segments

&

Objectives

2

Coverage

Model

3

Sales

Process

4

Job Design

&

Organization

Structure

5

Resource

Deployment

6

Sales Talent

&

Supervision

7

Performance

Metrics

8

Quotas

&

Sales

Compensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Channel Strategy EvolvesChannel Strategy Evolves

BusinessGrowthPhase

  Start-Up Volume Growth Re-Evaluat ion Optimizat ion

I II III IV

SBUs

V

DeploymentModel

Geographic-based coverage

Customer Size/Value

Specialization

Vertical Marketand Product

Specialization

•Channel•Specialization•Channel BusUnit

•Field Bus Unit•Market Bus Unit

•Channel•Specialization•Channel BusUnit

•Field Bus Unit•Market Bus Unit

StrategicBusiness Unit

 Action Plan   AccountStratification

• Size• Value

 AccountSegmentation

• Product• Industry

• Channel

BuyerSegmentation

• New Access• New Buyer

 Access

MarketSegmentation

• New Market Access

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Illustrative Sales Coverage ModelIllustrative Sales Coverage Model

Coverage Resource Coverage Comments

Worldwide AccountsTop 500 Accounts: Over S10M in Potential

 Annual Revenue

Team Selling Model

Corporate Accounts Local Sales Through Central AM

Major Accounts Channel Management

Field Sales Accounts Geographic Sales Coverage

Channel SupportInside Sales Accounts  Assigned Accounts

Field TeamingOutbound/ Inbound

Inbound only Customer Service

E Commerce E-Channel

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Sales Process

Sales Management System

1

Sales

Segments

&

Objectives

2

Coverage

Model

3

Sales

Process

4

Job Design

&

Organization

Structure

5

Resource

Deployment

6

Sales Talent

&

Supervision

7

Performance

Metrics

8

Quotas

&

Sales

Compensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Types of SellingTypes of Selling

• Select accounts• Narrowly defined• Large account list• Geographic• GeographicDeployment

• Engages in jointplanning withcustomer; lead theirthinking

• Establishesexclusivepartnership withcustomer 

• Value addedthrough applicationexpertise

• Justifies higherprices throughsuperior productand/or ability tomeet “needs”

• Price/ performancecomparison

Selling Technique

• Articulates visionregarding whereindustry andcustomer are goingand can go in thefuture

• Guides customertoward solutionswith long term

implications

• Focuses oneconomics ofcustomer’soperation

• Proactively identifiesways to improvebusiness results

• Sell solutions thatimprove market

share, profitability,customer retention,etc.

• Focuses on use ofproduct incustomer’senvironment

• Engineers product tofit customer’srequirements

• Typically repetitivesolutions to

standard, recurringissues

• Differentiates onbasis of productcharacteristics

• Mathes products tocustomer’s “needs”

• Overcomesobjections

• Adds value throughproduct knowledge

• Responds to RFPs

• Submits bids

• Differentiatesproducts based ondelivery, price

Salesperson’s

 Activities

• Leads customertoward solutions thatresult in attainmentof volume and profitgoals

• Establishes andgrows long-termrelationships

• Meets growth goalsin volume andprofitability

• Maximizes grossmargins

• Obtains/ retainstarget accounts

• Maximizes volumeand price

• Achieves desiredproduct mix

• Obtains “approvedsupplier” status

• Maximizes volume

Primary Objectives

“Visionary Selling”“Consultative selling”“Design-in selling”“Need satisfactionselling”

“Vending” Also Known As

Product FocusSelling

Feature/ BenefitSelling

 Appl icationsSelling

SolutionSelling

ThoughtLeadership

Selling

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Close/Fulfill

Identify Sales ProcessIdentify Sales Process

GenerateLead

QualifyLead

Conduct

Needs

 Analysis

DesignSolution

Propose/Negotiate

Steps of the Sales Process

 Attrition (hit rates) 10 8 6 4 3 1

Effort (hours) 1.5 4 3 6 6 8

Total Effort (hours) 15 32 18 24 18 8 = 115

Duration 3,5 months

 Avg. Sales Value $ 90K

Return on sales effort = $90,000/115 = $780/hour 

How can we minimize attrition late in the sales process?How can we increase speed to close?How can we improve the close rate and pipeline yield?

How can we increase transaction size?

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Cross Industry Benchmark Cross Industry Benchmark 

TotalTotalTimeTime

SellingSellingTimeTime

5050--60%60%

NonNon--

SellingSelling

TimeTime4040--50%50%

OnOn--SiteSite

ContactContact

33%33%

Other Other 

SellingSelling

22%22%

ServiceService

1010--20%20%

 Administ ration Administ ration

1010--20%20%

TravelTravel

1515--20%20%

World ClassWorld Class

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Sales Personnel Survey - Benchmark Sales Personnel Survey - Benchmark 

8%

12%18%

15%

9%

9%

10%

9%

7%

3%

Market Development/ Prospecting

 Account/ Opprtunity Planning

 Account Development

Opportunity Pursuit/ Close

Order Entry and Delivery

Implementation Problems

Customer Service

 Admin. / Reporting

People Development

Travel and Other downtime

   S

  a   l  e  s   T   i  m  e

   S

  a   l  e  s   T   i  m  e

   N  o  n

   N  o  n  -  -   S  a   l  e  s

   T   i  m  e

   S  a   l  e  s

   T   i  m  e

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Job Design & Organization Structure

Sales Management System

1

Sales

Segments

&

Objectives

2

Coverage

Model

3

Sales

Process

4

Job Design

&

Organization

Structure

5

Resource

Deployment

6

Sales Talent

&

Supervision

7

Performance

Metrics

8

Quotas

&

Sales

Compensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Existing ADC North America Sales Force StructureExisting ADC North America Sales Force Structure

Large Accounts

National Accounts

    C   o   n   n   e   c    t    i   v    i    t   y

    I    P    C   a    b    l   e

    W    i   r   e    l   e   s

   s

Other  Accounts

• Verizon• AT & T• Qwest

• SBC• Bellsouth

• Sprint• Level 3

• Cisco• Nortel• Others

VPVPVP

WirelineDedicated Resource

WirelineDedicated Resource

ConnectivityDedicated Resource

ConnectivityDedicated Resource

ServicesDedicated Resource

ServicesDedicated Resource

Field Sales

Director 

Field Sales

Director 

Sr. AMSr. AM

 AM AM

 AM AM

For Each Large Account

VPVPVP

HQHQ OEMOEM EntertainmentEntertainment GOVGOV

Sr. AMSr. AM

 AM AM

 AM AM

Sr. AMSr. AM

 AM AM

 AM AM

Sr. AMSr. AM

 AM AM

 AM AM

Sr. AMSr. AM

 AM AM

 AM AM

VP ConnectivityVP Connectivity

VP IP CableVP IP Cable

VP WirelessVP Wireless

Sr. AMSr. AM

 AM AM

 AM AM

Sr. AMSr. AM

 AM AM

 AM AM

Sr. AMSr. AM

 AM AM

 AM AM

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Resource Deployment

Sales Management System

1

Sales

Segments

&

Objectives

2

Coverage

Model

3

Sales

Process

4

Job Design

&

Organization

Structure

5

Resource

Deployment

6

Sales Talent

&

Supervision

7

Performance

Metrics

8

Quotas

&

Sales

Compensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Resource Development – 7 StepsResource Development – 7 Steps

 Assign accounts to account managers:

Industry/ account knowledge, skills experienceStep VII

Build territories/ segment of equitable size:

Run the sales capacity model for all territories/ segmentsStep VI

Refine sales capacity model:

Based on market testStep V

Develop resource deployment recommendations:

Review for “reality check” with test market.Step IV

Develop sales capacity model:

Build model based on productivity benchmarksStep III

Determine territory/ segment definition criteria:

Consistent relationships, geographical deployment, match skills with opprtunity,coverage of accounts in multiple location, segment issues.

Step II

Determine the optimal territory/ segment size:

Define the average anticipated capacity for each sales roleStep I

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Sales Talent & Supervision

Sales Management System

1

Sales

Segments

&

Objectives

2

Coverage

Model

3

Sales

Process

4

Job Design

&

Organization

Structure

5

Resource

Deployment

6

Sales Talent

&

Supervision

7

Performance

Metrics

8

Quotas

&

Sales

Compensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Sales Talent & SupervisionSales Talent & Supervision

Competency ModelCompetency Model

 Assessment Tools Assessment Tools

Skil l AssessmentsSkil l Assessments(Implementation)(Implementation)

Training CurriculumTraining Curriculum

Ongoing DevelopmentOngoing Development

PlanPlan

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Performance Metric

Sales Management System

1

Sales

Segments

&

Objectives

2

Coverage

Model

3

Sales

Process

4

Job Design

&

Organization

Structure

5

Resource

Deployment

6

Sales Talent

&

Supervision

7

Performance

Metrics

8

Quotas

&

Sales

Compensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Return on Sales EffortReturn on Sales Effort

Close/FulfillGenerateLead QualifyLead

Conduct

Needs Analysis

DesignSolution Propose/Negotiate

Steps of the Sales Process

 Attrition (hit rates) 10 8 6 4 3 1

Effort (hours) 1.5 4 3 6 6 8Total Effort (hours) 15 32 18 24 18 8 = 115

Duration 3,5 months

 Avg. Sales Value $ 90K

Return on sales effort = $90,000/115 = $780/hour 

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Sales Compensation

Sales Management System

1

Sales

Segments

&

Objectives

2

Coverage

Model

3

Sales

Process

4

Job Design

&

Organization

Structure

5

Resource

Deployment

6

Sales Talent

&

Supervision

7

Performance

Metrics

8

Quotas

&

Sales

Compensation

Strategy Structure Management

S A L E S O P E R T I O N S A N D T E C H N O L O G I E S

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Why Sales Compensation is Different…Why Sales Compensation is Different…

• Powerful and effective but noisy and difficult to manage• Derivative design process – matches unique job content

• Multi-parties must be involved – sales, marketing, finance, HRand IT

• Best solution is a consensus• It produces positive results and sometimes unexpected negative

outcomes• Most litigated compensation program• Requires constant attention – communication, administration,

interpretation• Not an HR compensation program

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Management: What Drives Sales?Management: What Drives Sales?

• Base Pay• Benefits Stock• Incentive Compensation

• Cash• Security Programs• Incentives

IV. Remuneration

• Career Progression• Recognition Programs• Training

• Individual Goals andNeeds

• Personal Achievement

Programs• Affiliation/ Team

III. Self-Accomplishment

• Appraisal Process

• Program Execution• Reporting

• Measurement

• Engagement Management

II. Accountability

• Speeches

• Learning• Orientation• Leadership Conferences

• Corporate Vision

• Communication

I. Leadership

MethodsDescriptionFactor 

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Types of Variable Compensation PlansTypes of Variable Compensation Plans

TargetTarget

TotalTotal

CompensationCompensation

Types of Variable Compensation PlansTypes of Variable Compensation Plans

GainsharingGainsharing  Add Add--OnOn 2x Capped2x Capped 3x Uncapped3x UncappedStraightStraight

CommissionCommission

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Two Categories of Sales JobsTwo Categories of Sales Jobs

Income

Producers

Sales

Representatives

Value Created by

 Account Owner 

Basis of Pay

Examples

Seller 

(Relationship)

Sales

Person

Percent of Revenue

(Unlimited)

Real Estate

Traders

Independent Agents

Multi Tier Marketing

Company

(Product/Services)

Company

Manage to Target Pay

Terri tory Rep

 Account Manager 

Chanel Manager 

Product Specialist

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Market Pay – Volume Versus EarningsMarket Pay – Volume Versus Earnings

HighHigh

LowLow

WW--2 Earnings2 Earnings

LowLow HighHigh

Sales RepresentativesSales Representatives

Income ProducersIncome Producers

Sales Terri tory VolumeSales Terri tory Volume

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Managing Pay – Sales RepresentativesManaging Pay – Sales Representatives

HighHigh

LowLow

WW--2 Earnings2 Earnings

LowLow HighHigh

Sales RepresentativesSales Representatives

Sales Terri tory VolumeSales Terri tory Volume

Terri tory RepresentativeTerri tory Representative

Senior Sales RepresentativeSenior Sales Representative

 Account Account ExecutivesExecutives

Senior Account Manager Senior Account Manager 

Global Account Manager Global Account Manager 

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Job Categories – and Pay PlansJob Categories – and Pay Plans

Income ProducersIncome Producers

• Own the accounts – Portable

• Relationship Selling

• Straight Commission

• Target Rate - Unlimited

Sales RepresentativesSales Representatives• Company Accounts• Promote Solution/ Value

• Bonus Plus Incentive• Target Pay – Managed

• Significant Risk

Sales SupportSales Support• Support Company’s Sellers• Extend Solution/ Value

• Base Plus Incentive• Target Pay – Managed• Moderate Risk

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Target Pay – Target Cash CompensationTarget Pay – Target Cash Compensation

Consistent with your company’s:

• Labor Market Rates

• Job Scope

• Budget Dollars

• Internal Equity

Target Total Cash Compensation is the preferred annual pay for achieving

goal: lower pay for less than goal; higher pay for exceeding goal.

Target Total Cash Compensation is the preferred annual pay for achieving

goal: lower pay for less than goal; higher pay for exceeding goal.

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Manage All CompensationManage All Compensation

SalesExpenses

Benefits

Salary

TargetIncentive

Pay

OvertargetIncentive

Pay

Contests

Recognition

Reimbursement

Secur ity Needs

Retention/Non-Sales Pay

 At Risk Pay

Outstanding Pay

Focused Efforts

Intrinsic RewardsSpecial Compensation

Sales Compensation

Fixed Compensation

Performance- BasedCompensation

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Upside EarningsUpside Earnings

9070

50

10

30 50

Extent of Upside PotentialExtent of Upside Potential

LowLow HighHigh

120

0%0%

100%100%

TargetTarget

   T  a  r  g  e   t   C

  o  m  p  e  n  s  a   t   i  o  n

   T  a  r  g  e   t   C

  o  m  p  e  n  s  a   t   i  o  n

Influence ofInfluence of

SalespersonSalesperson

160

200

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Performance MeasuresPerformance Measures

 Accountable

 Assigned to a SalespersonObservable

Measurable AccurateReportable

 Accountable Accountable

 Assigned to a SalespersonObservableObservable

Measurable AccurateReportable

Bad Measures

Corporate Galactic MeasuresCompliance Measures

Input MeasuresCant Measure Measures

Bad MeasuresBad Measures

Corporate Galactic MeasuresCompliance MeasuresInput MeasuresCant Measure Measures

RequiredRequired

 Avoid Avoid

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Types of Performance MeasuresTypes of Performance Measures

Sales Revenue: purchase, continuing, estimated

Profit: gross margin, contribution margin

Items: units, contracts, design wins

Sales Revenue:Sales Revenue: purchase, continuing, estimated

Profit:Profit: gross margin, contribution margin

Items:Items: units, contracts, design wins

Volume ProductionVolume Production

Products: balance, mix, launch, cross-sell, packages

 Accounts: new, retention, penetration, growth

Orders: close rate, size, length, receivable

Price Management: discount, rebates, realization, percent

Products:Products: balance, mix, launch, cross-sell, packages

 Accounts: Accounts: new, retention, penetration, growth

Orders:Orders: close rate, size, length, receivable

Price Management:Price Management: discount, rebates, realization, percent

Sales EffectivenessSales Effectiveness

Sales Satisfaction: surveys, complaints

Loyalty: persistency, share

Sales Satisfaction:Sales Satisfaction: surveys, complaints

Loyalty:Loyalty: persistency, shareCustomer ImpactCustomer Impact

Productivity: cost per order dollar, sales loading

Channels: partner success, outlet performance

Personnel: balance performance, turnover, ramp rate

Productivity:Productivity: cost per order dollar, sales loadingChannels:Channels: partner success, outlet performance

PersonnelPersonnel: balance performance, turnover, ramp rate

Resource UseResource Use

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Quota DifficultyQuota Difficulty

30% to 40%of Sellers

60% to 70%of Sellers

Bottom 10%of Sellers

Top 10%of Sellers

Minimum Target

100%

Excellence

Quota Performance

   #  o   f   S  a   l  e

  s  p  e  r  s  o  n

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Formula Types for Sales RepsFormula Types for Sales Reps

Target IncentiveTarget Incentive – –

Commission FormulaCommission Formula

Target IncentiveTarget Incentive – –

Bonus FormulaBonus Formula

TI - CFTI - CF

TI - BFTI - BF

Target Earning are Pre-Established

Expected Volume is Known – Same for Al l Terri tor iesCommission Formula Rate – Pay Percent of Productionto Achieve and Exceed Target Earnings

Target Earning are Pre-EstablishedExpected Volume is Known – Same for All Terri tor ies

Commission Formula Rate – Pay Percent of Productionto Achieve and Exceed Target Earnings

Target Earning are Pre-EstablishedExpected Volume is Known – Differs by Territor ies

Bonus Formula Rate – Pay Percent of Target Pay forPercent of Goal Achievement to Achieve andExceed Target Earnings

Target Earning are Pre-EstablishedExpected Volume is Known – Differs by Territor ies

Bonus Formula Rate – Pay Percent of Target Pay forPercent of Goal Achievement to Achieve andExceed Target Earnings

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Flat CommissionFlat Commission

Features

Illustration

Comments

Pay Mix: 0/100Payment for each sale: sales dollars, gross margin, units

Flat Commission

Rate on Revenue3%

Commission Graph

Commission

Dollars

Sales Volume

Simple, easy to understandSeller owns customersEarnings will vary substantially

3%

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Ramped CommissionRamped Commission

Features

Illustration

Comments

Pay Mix: 0/100Payment for each sale: sales dollars, gross margin, units

Commission

Volume RateTo $3M 2%$3M & Over 4%

Commission Graph

Commission

Dollars

Sales Volume

Simple, easy to understandSeller owns customersPremium paid for high sellers

2%

4%

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Bonus - StepsBonus - Steps

Features

Illustration

Comments

Pay Mix: 80/20Territories: dissimilar size

Earnings: equalized

I. Base Salary

II. Bonus Schedule

% to % of  Quota Base<85% 0%85% 5%

90% 15%100% 25%105% 40%110% 55%

>115% 75%

(% of Base Salary)Bonus Schedule

Basis Choices: base salary, midpoint, target incentiveWeakness: steps

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Bonus – Dollar ScheduleBonus – Dollar Schedule

Features

Illustration

Comments

Pay Mix: 75/25Territories: dissimilar size

Earnings: equalized

I. Base Salary

II. Dollar Schedule

% to Dollar  

Quota Amt

<96% $1,500

98% $3,000

100% $5,000102% $7,500

104% $10,000

106% $12,500

>108% $15,000

Dollar Payouts

Basis Choices: base salary, midpoint, target incentiveWeakness: steps

S i i

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Bonus – Supervisor MatrixBonus – Supervisor Matrix

Features

Illustration

Comments

Pay Mix: 75/25; base plus bonus matrix

Measures: volume and number of reps achieving goal

Linked: both measures must be excellent payout

I. Base Salary

II. Bonus Matrix

Effective: strong visual impact of results and pay-out

 Application: channel manager, product overlay specialist

Weakness: double threshold and cap

Excellence   75 100 125 150 200 250 300

58 83 108 133 172 211 250

42 67 92 117 144 172 200

Volume Target   25 50 75 100 117 133 150

17 36 56 75 92 108 125

8 22 36 50 67 83 100Treshold   0 8 17 25 42 58 75

Treshold Target Excellence

Bonus Matrix (% of Target Incentive)

# of Reps Reaching Goal

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