Sales Comp Modeling Tool to Optimize Expenses Plus Improve Sales Results
Sales Comp Planning Process Recording
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Transcript of Sales Comp Planning Process Recording
Driving the Sales Compensation Plan Design Process
“Get a GamePlan” Program
• Goal: Build a winning Game plan for sales comp in 2009
• Use Motivator Planning Free for a Year
• Take a one hour live training class
• www.makanasolutions.com/game-plan
Makana Solutions, Inc.
• Help companies design & run effective sales compensation programs through an automated self-service model
• And expert consulting with Motivator
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
Driving the Sales Compensation Plan Design Process
Driving the Planning Process
• Benefits of advanced planning
• Overview of the process• Analysis you should do NOW• How Motivator can help
Benefits of Advanced Planning
• Overnight sessions before the kickoff meeting
• Tension because the plan is late
• Dense documents that no one can understand
• Confusion about what to do
• Conflicts between plans• Plan documents that look like they come from
another company
• And the list goes on . . .
None of these things happen:
Overview of the Process
• Involve each function•Sales operations
•Finance•HR•Executive•Administration•IT
• Establish timeline
• Identify new sales objectives
• Analyze performance
• Review job content
• Determine job roles required
• Benchmark pay
• Establish measures
• Assign territories
• Set quotas & goals
• Create plans
• Model costs using attainment history
• Gain program approval
• Create plan documents
• Communicate to individuals
• Implement new calculations and reports
Multiple Perspectives Needed
SMB may not have a full time person in each role, but the cross-functional perspective is still needed
Division of Responsibilities
Responsible for leading these efforts during process
Sales Leader
Role definition, design, definitions and communication
Sales Ops Performance analysis, quota allocation, territory assignment and document creation
CEO Strategy and alignment
Finance Analysis, modeling, budget and administration
Marketing Market analysis, product strategy and pricing
HR Role assessment, benchmarking, general policies
Legal Contract language for arbitration and signoff
Establish Timeline
1. Analysis2. Design 3. Documentation4. Implementatio
n
Traditional timeline for a $10M SW company with 10 reps
W1
W2
W3
W4
W5
W6
W7
W8
“ ”We probably reduced the process from a 2 person, 2 month process to a one person, two week process.
Steve Balk, VP SalesSteve Balk, VP Sales
Use Motivator Planning to reduce the timeline
ROI Calculator - Makana Motivator Planning
Your company's complexityNumber of plans (job roles) 3Number of participants 50carry quota/direct sales
Hours Total Hours Total1. Analysis of History
- Gather participant data 0.25 12.5 0- Incentive payout by customer
-Analyze territory/quota coverage 0.5 6.25 0.5 6.25- Pay versus performance 8
2. Plan Creation & ModelingSet up spreadsheet model 24 0
- For all plans 6 18 1 3- Create multiple scenarios 8 4
- Review payouts for each person 0.2 10 0.1 5-Run model again after reviews 1 3 1
3. Document creationDraft document 4 12 0
- Revise after review 2 0.5- Avg. # of reviews per doc 5 30 5 7.5
Draft terms and conditions 8 8-Revise T&Cs for each plan 3 9 0.5 1.5
Approval/signoff-Individualize, print and distribute 0.25 12.5 1
-Follow-up for signatures 0.2 8 0.2 84. Implement and Communicate the Plan
Setup and extract your measurement data 8 8Implement new plan rules in adminstrative system
Sales participants - lost time while reviewing 2 100 0.5 25
Total Hours 278 38Total Weeks 7.0 1.0
Savings - Hours 240Savings - Weeks 6
MotivatorManual
Identify New Macro-level Sales Objectives
• Get Started! – Will you be addressing new markets or is your
customer mix changing?– Do you have new products to announce?– Are new sales channels/partnerships being
considered?
• Actual goal setting can wait until later in the process
Assess Current Plan
• Alignment to strategy• Team motivation• Comparison to competitors• ROI• Feedback loop
Assess Alignment to Strategy
• Look at plan elements side by side – Are you getting the results you wanted? – Are you rewarding for the right metrics? – Are the job roles incented to work together
as intended?
Assess Team Motivation
• Is your sales team pumped?• Are you seeing unintended
consequences?• What is your turnover?• What is your performance
distribution?• How are they spending their time?
Assess Competitiveness
• Are you able to attract the talent you want?
• How does TTC, mix and quota compare to competition?
Assess the Return on Investment
• What is your overall cost of sales?
• What are you paying for performance?
• What is the total cost per order?
Assess Your Feedback Loop
• Are your systems in order?
• Are your payments timely and accurate?
• Is it easy for your reps to see how they are performing?
• Survey group 2-3 times per year
The more frequent the feedback the better the results
Listen for Symptoms
* “Check Your Sales Compensation”, Workspan, 01/05 By Mark Donnolo, Sibson Consulting
Top Job Design Errors*
• The Corrupted Sales – Adding collections, marketing and customer
service to selling
• The Blended Sales Job– Sell new business, sell to existing, work with
channels
• Bandwidth Exceeded– Too many products and dissimilar
customers
• Undetected Job Transformation– Company stage shifts, misalignment follows
* Compensating the Sales Force, David Cichelli
Example: How to Analyze Pay for Performance
Annual Attainment
Are you paying the same for equal performance?
How Motivator Can Help
Performance Distribution Curves
Aim for a bell curve with 60% at or over quota
Rollout – Communicating the Plan
• Starts with clear, concise documents– Easy to see rewards– Keep top priorities in mind– Define exceptions precisely
• Be aware of history• Explain any transitional issues• Train first line managers on
how to communicate the plan
Implementation
• Make sure you have access to the accounting data
• Automate as much as possible• Allow time to test your automation• Explain new plans to your
Administrator
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
Resources
• Compensating the Sales Force, David Cichelli
• Compensating New Sales Roles, second edition, Jerome A. Colletti and Mary S. Fiss
• The Sales Compensation Handbook, Stockton B. Colt
• Rewards that Drive High Performance, Thomas B. Wilson
• World at Work, an association of compensation professionals– www.worldatwork.org
Next Steps
GamePlan Program• One Year Motivator Free
– Take one hour free training– Get one year free – $490 to $1,490 value– First come first serve
• www.makanasolutions.com/game-plan
Additional Information• Best Practice Content
– Sample plans, recorded webinars
– www.makanasolutions.com/bestpractice
• Makana Payment sneak peek
• (877) 881-0001