sales compensation for tough times
DESCRIPTION
You'll learn what you can and should do now to ensure success in 2009. You'll see how to avoid overpayment and how to manage your incentive costs so that they stay in line with sales results in these tough times.TRANSCRIPT
Sales Compensation for Tough Times
Today’s Speaker
Liz Cobb, Founder & CEO Makana Solutions
• Makana is the third compensation management company Liz founded
• Over 20 years in sales compensation design and process automation
• Liz is a recognized industry expert, has consulted for hundreds of companies and speaks frequently on effective sales compensation
Today’s Speaker
Teanna Spence, Compensation Director, Makana Solutions Inc.Teanna has 28 years' experience in financial systems including 14 years in incentive design, management, automation, and best-practices development for many companies in a wide range of industries including DEC, Cabletron, Kinkos, Aspect Computers, and Staples.
About Makana Solutions
“the most innovative product I’ve seen lately…they really understand how people design plans and work.”
James Hollincheck Research VP“Plan design is a key element of effective sales compensation, which drives sales behavior. Salesforce users can take advantage of a dedicated sales comp planning solution via the AppExchange with Makana Motivator.”
George Hu, CMO
“We believe CEO Cobb's significant knowledge of and insight into the sales compensation industry….will help land Makana Solutions a solid position in the expanding market.”
Judy Hodges, Research Analyst
Software for your 2009 Planning
• See the big picture• Access built-in best
practice• Anticipate incentive
costs• Generate graphical plan
documents
Planning to Payment Coming Soon
• Instantly start calculating payments on your plans in Motivator
• Get a sneak peek: [email protected]
Sales Compensation Best Practices• www.makanasolutions.com/bestpractice• Sample sales compensation plans• Sales compensation surveys• Recorded Webinars
– Sales planning and territory management– Saas and subscription based sales comp– Sales Compensation best practices– Build a SaaS Sales Comp Plan in 15 minutes– Common Pitfalls in Sales Comp design– Sales Compensation Planning Process
Sales Compensation for Tough Times
Makana Value Proposition
Make great sales compensation easy
Sales Compensation in Tough Times
• Tough times – what you can do
• How Motivator can help• Q&A
Tough times – what can you do?
• Identify growth strategies– Customer segmentation– Industry focus– Product profitability groups– Sell more to existing customers
• Optimize sales productivity– Balance quotas and territories– Clear goals & plans
• Reduce costs– Lower base salary, introduce thresholds– Eliminate cost exposure– Eliminate ‘gaming the plan’
Survey Results for Components of Growth
Sirius Decisions
Sales Comp Follows Business Strategy
Refine Market Focus
• Analyze your compensation data– Top 10 accounts– Top 3 industries– Top selling products– Look at incentive costs
• Clarify your job roles– Can you improve direct sales through better
leads?– Do you need specialists to go after a new
segment? Or Account Managers?
The Plan Communicates
• Starts with clear, concise documents– Easy to see rewards– Keep top priorities in
mind– Define exceptions
precisely
• Be aware of history• Explain transitional
issues and major plan changes directly with individuals
Total Sales
Modeling is more important now than ever
Optimize Sales Productivity
• Balance quotas and territories• Scrutinize under performers• Provide extra motivation for
your top performers• Reward the right behavior
Performance Distribution Curve
Unbalanced
Balanced
Opportunity by Territory
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Territories
Op
po
rtu
nit
y
Average OpportunityRep CapacityLost Opportunity
Territory Opportunity vs. Rep Capacity
Reduce Quotas in 2009?
• Be careful• Analyze sales potential
realistically• Compare to historical
performance• Review in 6 months
Reduce Compensation Costs
• Lower base salary – another ‘be careful’
• Introduce thresholds• Clearly understand cost exposures• Eliminate ‘gaming the plan’
Provide Extra Motivation
• Same TTC• Shift in
mix• Greater
upside
Mix and Upside
Other Levers…
• Levers: threshold and upside • Consider thresholds commensurate
with base salary carefully• Increase upside
Understand Cost Exposures
• Model costs at 150%• Look at historical attainment
Analyze Pay for Performance
Annual Attainment
Are you paying the same for equal performance?
Eliminate ‘Gaming the Plan’
Top 5 ways a rep can ‘game’
• Hold sales until the next quota period
• Coast on annuities• Sell to existing customers• Sell easy products• Fail to report errors in
overpayments
Close the Loopholes
• Monthly quotas that reset are easy to ‘game’
• Use YTD goals• Eliminate ‘tails’ • Don’t delay release of payments to a
far away event• Pay on a single event – the one
closest to the point of influence• Automate payments to increase
accuracy
Now, We’ll Show You How
Planning to Payment: Coming Soon
% Attain
Formulas Rate
Payout
< 100 Rate x Credit
5% $5,000
= 100 Rate x Credit
10% $10,000
> 100 Rate x Credit
15% $15,000
Payment
Start With What-ifs•Historical attainment•Projected attainment•Quotas•Staffing levels•Payout rates
% Attain
Formulas Rate
Payout
< 100 Rate x Credit
5% $5,000
= 100 Rate x Credit
10% $10,000
> 100 Rate x Credit
15% $15,000
Modeled Calculated
Planning
Questions & Answers
Makana Motivator• Planning
– $19/month– Cancel anytime
• Planning to Payment– Request an online
demonstration– [email protected]– (877) 881-0001
Additional Information• Best Practice Content
– Sample plans– Recorded webinars– Surveys– www.makanasolutions.co
m/bestpractice
• Expert consulting– www.makanasolutions.co
m/consulting