Sales Management Association Webcast

21 November 2013

Presented by

Winning the Business Case for Sales

Performance Management (SPM)

#WinningSPM

About The Sales Management Association

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.

Fostering a community of thought-leaders, service providers,

academics, and practitioners.

Learn More: www.salesmanagement.org

#WinningSPM

Today’s Panelists

#WinningSPM

21 November 2013

Introduction

Sales Management Association Webcast

Presented by

#WinningSPM

Key Drivers for Sales Performance Management

Understand the Stakeholders

Financial ROI

Risk Mitigation

Sales Force Motivation

Business Visibility

Q&A

Wrap-Up

OUR TOPICS FOR TODAY

KEY DRIVERS FOR SPM IMPLEMENTATION

SPM

Business

Visibility

Financial

ROI

Risk

Mitigation

Sales Force

Motivation

SPM VALUE – UNDERSTAND THE STAKEHOLDER VIEW

• Identify all stakeholders – Decision Makers

– Influencers

• Figure out what is important to each stakeholder

• Build a case to address specific needs for each individual stakeholder. – A generic business doesn’t work well

MASSAGE THE MESSAGE PER AUDIENCE

Driver CEO CFO CIO VP Sales VP Sales

Ops

Internal

Audit

Financial

ROI

Risk

Mitigation

Sales Force

Motivation

Business

Visibility

FINANCIAL ROI

SPM

Business

Visibility

Financial

ROI

Risk

Mitigation

Sales Force

Motivation

FINANCIAL ROI – OVERVIEW

How to Calculate the ROI?

Step 1 - Calculate the System Costs

Step 2 - Estimate the Total Cost of

Ownership

Step 3 - Determine the ROI

FINANCIAL ROI – SYSTEM COSTS

Overpayments • Gartner estimates that manual systems such as spreadsheets produce an

average 3-8% error rate in overpayments. These errors are rarely reported and the funds are almost never recouped.

Shadow Accounting • Experts estimate that sales personnel spend 8 to 24 hours per months shadow

accounting – ensuring their commission payments are accurate

Excessive Sales Personnel Turnover • HR experts estimate the cost of replacing a sales person is 1.5 times their

salary

Payment Disputes • Manual systems lead to payment disputes which waste sales rep salaries,

unrealized revenue due to loss of selling time

Plan Administration Costs • Aberdeen Group estimates that the average company spends $1,500 per year

to administer their plans

FINANCIAL ROI – ESTIMATE THE TCO

FINANCIAL ROI – CALCULATE THE ROI

ROI Payback is the period that a capital investment would be paid back based on savings and revenue increases:

ROI Payback Time in Months

TCO = 12 X Capital Investment

divided by:

(Estimated Annual Savings)

(Estimated Annual Incremental Value) +

FINANCIAL ROI – CALCULATE THE ROI

• Calculate the savings or recovery percentage for each cost – Shadow accounting costs

– Overpayment costs

– Administrative costs

– Excessive attrition costs

– Dispute costs

– Dispute lost revenue

• A well implemented SPM system that should allow for 50-75% recovery of costs or incremental revenue realization, compared with spreadsheets or legacy systems

FINANCIAL ROI –TIPS

• Weigh the hard costs versus the soft

costs – Some of the cost ranges we have cited are based

on studies rather than on your business processes

– When measuring performance against a study, be

conservative about using the data

• Create an ROI Spreadsheet – Some straightforward calculations are listed in the

Iconixx White Paper

RISK MITIGATION

SPM

Business

Visibility

Financial

ROI

Risk

Mitigation

Sales Force

Motivation

DRIVER # 2 – RISK MITIGATION

Loss of Key Resource(s) in Comp Admin

Identify resources who are singularly responsible for key

functions

Paint a scenario where a key employee abruptly leaves, or

becomes unavailable

Educate management about Single Point of Failures

Highlight the dependencies on Individual Heroics v/s

Systematic Processes

DRIVER # 2 – RISK MITIGATION

Over Payment – With system, comes in processes and discipline

– High risk, if you have lots of shared/split credits

SOX / Audit Compliance – Highlight the risks presented by Audit failures

Lawsuits from Employees and Partners – Provide references to past or current lawsuits

– Risks to the brand as an employer

SALES FORCE MOTIVATION

SPM Sales Force

Motivation

Business

Visibility

Financial

ROI

Risk

Mitigation

DRIVER # 3 – SALES FORCE MOTIVATION

Align Comp Plans w/ Business Strategy

Short Term

-Frequent SPIFFS, a potent tool for business success

-SPIFFS, being temporary, are difficult to manage

-Highlight a SPIFF that is relevant to your business

Long Term - MBOs are great tools to ensure long term alignment

- System tools can facilitate the Workflows and Processes

- Highlight a few MBOs that are important

DRIVER # 3 – SALES FORCE MOTIVATION

Enhanced Reporting For Salesforce

Ability to publish reports more often

Frequent Reports Proactive Alerts Better Sales

Improved Trust in Commission Payments

BUSINESS VISIBILITY

SPM

Business

Visibility

Financial

ROI

Risk

Mitigation

Sales Force

Motivation

DRIVER # 4 –BUSINESS VISIBILITY

Territory Planning and Quota Planning

Highlight the guess work in planning the Quotas and Territories.

Point to a recent situation where Quota/Territory had to be updated

in the middle of the year

Forecasting and Modeling capabilities of SPM tools put some

science in the art of quota planning

DRIVER # 4 –BUSINESS VISIBILITY

Business Dashboard

Mock up a graphical Dashboard that your executives may appreciate

Reporting for external Channel Partners

Comparative Analysis across Managers and Territories

CONCLUSIONS

Calculate your anticipated ROI – A thoughtful calculation makes a more compelling

business case

These calculations are important for: – Reducing Risks

– Improving Employee Performance

– Aligning Business Goals and Plan Effectiveness

– Enhancing Management Insights

CONCLUSIONS

According to Gartner MarketScope Reports, SPM solutions result in…

Compensation spend decrease by 5%

A reduction in overpayments by 8-10%

40% less disputes from sales

A reduction in shadow accounting by up to 90%

And up to a 3% increase in revenue per sales payee

Questions and Discussion

Enter your questions in the

“Questions” box on the right

hand side of the webinar

application window.

Did we run out of time before we got to your

question? Presenters can follow-up with you

via email. Feel free to submit more questions if

you’d like an offline response.

Who’s role is SPM Implementation?

Which function in the

organization should lead and

SPM initiative?

Who should be involved?

Do you see sales operations

teams involved in these

decisions?

SPM vs. MBO?

Can SPM systems incorporate

MBO systems?

Sales Team Response to SPM?

What is the real impact of SPM

on the sales team?

What does SPM cost?

Is the cost per person, how do

you size the cost?

#WinningSPM