what you need to know about sales compensation · •raise sales organization quota performance...
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Page 1 © 2019 SalesGlobe
What You Need to Know About Sales CompensationFive Imperatives for Designing a Strategic Sales Compensation Program
November 2019
www.SalesGlobe.com(770) 337-9897+44 (0)20 7250 4754
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We are rethinking sales.SalesGlobe is a sales innovation firm that solves challenging sales problems. We work with our clients to implement solutions that give them a significant ROI.
rethink
why?Our Story- Sales Innovation
Mark Donnolo
Why do companies repeat the same old solutions?
Why do they use benchmarks and current practices as the answer?
Why do they leave themselves vulnerable to competition?
• Sales Strategy and Go-to-Market
• Account Segmentation and Targeting
• Voice of the Customer Insight
• Sales Process Optimization
• Sales Organization Design
• Channel Programs
• Sales Capacity and Goal Design
• Talent Assessment and Planning
• Strategic Account Programs
• Sales Compensation
• Quota Setting
• Technology Readiness
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Solve Your Real Problem1
5 Imperatives
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why?Why do we repeat the same solutions?
Why do we lack new ideas?
Why do we leave ourselves vulnerable to the competition?
SalesDesign ThinkingPrinciple
Walk Away from the Problem. Leverage the assimilation powers of the mind. Pose a question and let it percolate in the background.
Where were you when you thought of your last great idea?
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mythReality: Solutions are usually the result of a problem solving progression.
Ideas Come in Eureka Moments?
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issuesTop Sales Compensation Challenges
Q
Setting Effective Quotas 66%
Keeping the Organization Engaged
33%
Differentiating Top Performers 35%
38%Plan Complexity
Paying Competitively 50%
Integrating Plans From M&A 35%
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?What…are the pain points?
How and When…did it happen and develop?
Who…was involved?
Where…was it happening?
Why…was it done this way?
Understanding the Story
What…• Frozen engine.• No oil
How and When…• Car just stopped• Had prior accident and repairs• Changed the oil recently but no oil?
Who…• Auto association- incorrect diagnosis• Repair shop after the prior accident
Where…• Engine froze in NC but repairs in GA• Subsequent oil changes in GA
Why…• Prior shop was in a hurry• Missed the rag in the engine
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right
RL
Sales Design Thinking
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right
1. Articulate Problem
Statement
2. Redefine Challenge Question
3. Think
Horizontally
Understand the Story
Combine Options
Look for Parallels
Create Solution Vision
4. Develop Vertically
5. Manage Change
Refine the Few
Test Readiness
Implement & Communicate
Get the Initial View
Investigate Why
E n g a g e t h e O u t s i d e r
. ? ….. ...
Sales Design ThinkingSM
Sales Design Thinking
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We need to fix the quota process
because the organization is
underperforming.
1. Articulate Problem
Statement
.problemWhat They Thought
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2. Redefine Challenge Question
?
?What…are the pain points?
How and When…did it happen and develop (the story)?
Who…was involved (executives, roles)?
Where…was it happening (globally, regions)?
Why…was it done this way?
Understanding the Story
But What’s the Real Challenge?
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?Understanding the Story
What…• Too many reps were below quota (only 20% attaining) dragging company performance.
How and When…• Company started with core electronics. Grew through acquisition (antennae, GPS).• Varied sales organization integration. Numerous independent teams. Inconsistent design.• Increased competition and higher sales expectations. Porpoising YoY sales performance.
Who…• Senior leadership did opportunistic M&A. Fine as long as the market was healthy.• As competition increased, Finance became the pit bull for the C-level.
Where…• Sporadic performance especially in global accounts.• Turnover highest in 75th p performers and reps with <2 years tenure with no ramp plan.
Left the mid-performers with no new talent flow.
Why…• Aggressive M&A growth and declining market created pressure from investors and debt
holders creating pressure on sales leaders via finance and turnover with lagging results.
2. Redefine Challenge Question
?
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?What…are the pain points?
How and When…did it happen and develop (the story)?
Who…was involved (executives, roles)?
Where…was it happening (globally, regions)?
Why…was it done this way?
Understanding the Story !Creating a Solution Vision
What…is a successful outcome?
How and When…could it happen (at once, over time)?
Who…should be involved (executives, roles)?
Where…should this happen (globally, regions)?
Why…would it be beneficial or be resisted?
2. Redefine Challenge Question
?
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!Creating a Solution Vision
What…• Raise sales organization quota performance (50% to 70%)• Company revenue goal attainment.• Market opportunity-based goals.
How and When…• Staged introduction across the global organization.
Who…• Lowering turnover for high performers and new hires • Consistent, improved organization design for the sales team.• Engaging theater leaders to align them with corporate and theater objectives.• Engaging finance and sales as a unified team on solution development and implementation.
Where…• Across all markets, especially in global accounts without a program.
Why…• A benefit to shareholders with increased, predictable growth. To sales with stronger
growth and lower turnover. To finance with manageable growth and cost of sales.
2. Redefine Challenge Question
?
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Redefined Challenge Question
2. Redefine Challenge Question
?
How can we develop a solution that:
• Uses market opportunity-based quotas,
• Drives company revenue goal attainment,
• Raises sales organization quota performance,
• Across all markets, especially in global accounts,
• Engages theater leaders,
• With year-to-year consistency,
• Contributes to lower turnover for top performers and new hires,
• And responds to an improved sales organization design,
• While aligning finance and sales as a unified team?
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Solve Your Real Problem1
Align with the Strategy2
5 Imperatives
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The Revenue RoadmapInsight
Voice of the Customer
Macro Market
Environment
Competitor Performance
Business Performance
Enablement
Sales Strategy
Products & Services
Segmentation & Targeting
Value Proposition
Approach to Market
Customer Coverage
Sales Channels
Sales Roles & Structure Sales Process Sales
Deployment
Incentive Compensation
& Quotas
Recruiting & Retention
Training & Development
Tools & Technology
Charts an actionable growth plan.
Matches roles, resources, and process to customer needs.
Aligns execution with the growth strategy.
Provides information for planning and strategy.
strategyStrategic Context- The Revenue Roadmap
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c-level
Financial
C-Level Goals
What customer priorities do we have and how do we want to position ourselves?
What do we offer today and what are our future offers?
What are our priorities around roles, process, and engagement model?
Where do we need to invest in talent?
How and where do we want to grow?
C-Level Goals
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c-level
Financial
C-Level Goals
“We need to sell to higher potential segments and further up the organization.”
“Our strategy is about offering our full portfolio of solutions based on customer needs.”
“We need one face to the customers and managers need to leverage the team rather than sell.”
“Our sales culture needs to evolve, and we need to break the complacency.”
“We want to drive 2x more sales productivity three years from now.”
C-Level Goals
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Solve Your Real Problem1
Align with the Strategy2
Sharpen Your Roles35 Imperatives
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diamond
C-Level Goals & Sales Roles
TargetPay
Pay Mix
1
2Upside
Potential
3Performance
Threshold
4
5Levels & Timing
6
Measures & Priorities
Evaluation
12Operations
11Governance
10Objectives &
Quotas
9Team
Alignment
8Mechanics
7
Sales Compensation Diamond
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roles
Foundation for:-Understanding growth-Planning the strategy-Aligning coverage-Supporting with compensation
2. Buyer Penetration
1. Retention
Customer Growth
4. New Competitive
Wins
5. New Markets
Market Growth
Components of Revenue Growth
3. ProductPenetration P
rod
uct
Gro
wth
TotalGrowth
This Year’s Revenue
Last Year’s RetainedRevenue
Aligning Roles to the Sales Strategy
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rolesCustomer Growth
TotalGrowth
This Year’s Revenue
Market Growth
Last Year’s RetainedRevenue
Components of Revenue Growth
Pro
du
ct G
row
th
Account Acquisition
Account Management
Service Delivery
Motivating the Breed That You Need
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rolesCustomer Growth
TotalGrowth
This Year’s Revenue
Market Growth
Last Year’s RetainedRevenue
Components of Revenue Growth
Pro
du
ct G
row
th
Specialization- Product or Market
New Opportunity Pointing
Motivating the Breed That You Need
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rolesCustomer Growth
TotalGrowth
This Year’s Revenue
Market Growth
Last Year’s RetainedRevenue
Components of Revenue Growth
Pro
du
ct G
row
th
Multi-Role Hybrid
Motivating the Breed That You Need
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90%
TTC (Target Total Compensation)
70%
50%
Account Acquisition
Account Management
Service Delivery
Target Incentive
Base Salary
30%
50%
10%
mixPay Mix
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upsidePay Differentiation
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Solve Your Real Problem1
Align with the Strategy2
Sharpen Your Roles3
Nail Your Quotas4
5 Imperatives
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Sale
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challenges
His
tory
Pro
cess
Be
lief
Many Challenges are People and Process Related.
His
tory
Alig
nm
en
t
Cap
acit
y
Org
aniz
atio
nal
Pri
ori
tie
s
Info
rmat
ion
Be
lief
Pro
cess
His
tory
Alig
nm
en
t
Cap
acit
y
Org
aniz
atio
nal
Pri
ori
tie
s
Info
rmat
ion
Be
lief
Pro
cess
55%52%
42%39%
27%22%
20%
0%
10%
20%
30%
40%
50%
60%
Quota settingis based onhistory and
notopportunity
Reconcilingbottom-upinput withtop-down
goals
Salescapacity
relative toquota
requirements
Quotas aretoo heavilydriven byFinance
Data gapsadd
challenge tosetting
effectivequotas
Marketopportunitynot factoredinto quota
setting
Reps don’t believe in the quota setting
process
Be
lief
His
tory
Bo
tto
m-U
p
Cap
acit
y
Fin
ance
-Dri
ven
Dat
a
Mar
ket
Top Quota Challenges- The Symptoms
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quotasQuota Allocation
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quotasThe Quota Success Model
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methods
Perspective
All Equal
History Predicts the Future
Market Differences
Predictors of Opportunity
Buyer- Specific
Anticipated Opportunities
Historical Potential
Account Orientation
General
Specific
Flat
Historical
Market Factors
Account Potential
Opportunity Forecast
Account Planning
The Quota Methods Continuum
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Solve Your Real Problem1
Align with the Strategy2
Sharpen Your Roles3
Nail Your Quotas4
Communicate the Plan 5
5 Imperatives
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commsYour Communications Campaign
Who must understand each message?
• Formal roles• Management, front line• Sub groups that have
particular issues
2. Identify Audiences
1. Determine Message Areas and Themes
4. Design Modes and Vehicles
3. Create Content and Proof Sources
What important messages do we need to communicate?
• Pay levels• Quota process• High performer rewards• Performance penalties
How will people best understand the message?
• Written• Verbal• Visual• Kinesthetic• Mathematical
How should we prove the message?
• Message themes• Positioning• Proof sources• Communication points
5. Structure and Schedule Campaign
What cadence should we use?
• Combinations of audience, messages, vehicles, and timing
• Repetition to reinforce
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commsCommunications Campaign Examples
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thanks1.Practice one Sales Design Thinking step-
Redefining your Challenge Question to Build Your Muscle Memory
2.Order Quotas! and What Your CEO at Amazon.com or BN.com
3.Book Your Workshop:-Sales Design Thinking-Strategic Sales Compensation
More information at
Twitter: @markdonnolo
LinkedIn: /in/markdonnolo
Taking Action