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Improve Financial Results By Optimizing Sales Territories

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jointly presented by TerrAlign and Callidus Software at the TrueConnection: Sales Performance Management Conference 2007

jointly presented by TerrAlign and Callidus Software at the TrueConnection: Sales Performance Management Conference 2007

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Improve Financial Results By Optimizing Sales Territories Presentation Transcript

  • 1. Improve Financial Results by Optimizing Sales Territories Ken Kramer Director, Product Marketing TerrAlign
  • 2. The Financial Impact of Territory Optimization • In this session, you'll learn how your organization can increase financial performance through more intelligent sales resource alignment • Increase revenues and market share thru full utilization of your sales resources Decrease cost of incentives • Ability to identify the real stars (and the bottom 10%) • Decreased hiring, training, lost revenue during ramp up • Reduction of travel costs • The creation of a sense of fairness with equitable • territories Right number of reps, with right quota, in the right place • © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 3. “One key aspect of improving the performance of a sales organization is to align sales territories with the abilities of the sales force and the revenue potential of customers… Organizations that need a simple but sophisticated approach for optimizing sales potential through territory alignment should examine how TerrAlign could help their efforts.” - Mark Smith, VP Research © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 4. About The TerrAlign Group • Founded in 1987, TerrAlign has a wealth of experience providing Sales Resource Optimization (SRO) solutions, with a core focus on Field Territory Alignment & Management • Leverage domain expertise to deliver market leading software and invaluable strategic consulting services with a focus of making every customer successful • Partner with other leading best in class vendors to deliver best possible solution © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 5. Objectives of Optimizing Territories Creation of territories…. • that are balanced with regards to a strategic metric • where workload/opportunity requirements are equivalent to rep capacity • that are geographically configured to enable reps to work efficiently • that help reps maintain relationships with accounts • that are equitable and critical to setting equitable quotas © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 6. Why Territory Coverage Models Should Change • To follow the same strategy used in designing comp plans • To balance territories based on a combination of opportunity, workload, account/prospect information and geography • When your situations change • Expansion or reduction of sales force caused by new competition, new products, mergers/acquisitions • Modifications due to new customer acquisition, personnel changes © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 7. © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 8. © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 9. © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 10. Integrating Territory Optimization into the Compensation Process “Through 2010, on average, enterprises will miss the equivalent of at least 10 percent of total annual sales in quot;lost opportunityquot; revenue that could have been captured with improved processes for defining, assigning and managing territories, quotas, and incentives and compensation plans (0.8 probability).” Gartner, Inc. Analyze/ Optimize Set and Calculate Design Set Sales Incentive Allocate Comp Plan Corporate Territories Quotas Comp Strategy © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 11. Realignment Evolution 300.00% 250.00% 200.00% Relative Value Current Optimized 150.00% Final High Low 100.00% 50.00% 0.00% Territories © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 12. Territory Opportunity vs. Rep Capacity Opportunity by Territory Average Opportunity Rep capacity 4,000 3,500 3,000 2,500 Opportunity 2,000 1,500 1,000 500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Territories © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 13. Territory Opportunity vs. Rep Capacity Average Opportunity Opportunity by Territory Rep capacity Lost Opportunity 4,000 3,500 3,000 2,500 Opportunity 2,000 1,500 1,000 500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Territories © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 14. Based on Sample 1000 Rep Field Force Equivalent to 100 160 empty territories 140 % of Average Equivalent to 100 120 unassigned reps 100 80 60 40 Under-utilized resources Opportunity Available Productive Work Lost Opportunity © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 15. Imbalanced Territories Create Over and Underperformers, Regardless of Talent Distribution of Attainment 25 % of Sales Force 20 15 10 5 0 50 60 70 80 90 100 110 120 130 140 % of Quota © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 16. Improved Balance and Workload Opportunity by territory 2000 1800 1600 1400 Opportunity 1200 1000 800 600 400 200 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Territories © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 17. Balanced Territories Lead to Expected Incentive Compensation Costs, Aligned with Revenue Distribution of Attainment 25 % of Sales Force 20 15 10 5 0 50 60 70 80 90 100 110 120 130 140 150 % of Quota © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 18. Let’s Do the Math 500 reps x $75k var = $37.5M 1000 reps x $2M quota = $2B in expected revenue 500 reps x $150k - $75M 1000 reps @ $200k OTE = Or $112.5M IC Spent $200M Same Revenue - $12.5 Over-spent 50/50 Base vs. Variable = $100M IC planned Distribution of Attainment % of Sales Force 25 20 15 10 5 0 50 60 70 80 90 100 110 120 130 140 % of Quota © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 19. More Numbers Total Revenue Re-Allocate work amongst top expectation of $2B and bottom 100 reps Increase revenue by Increase revenue by up to 10% up to 10% with no with no increase in resources increase in resources Equivalent to Equivalent 100 empty $200M incremental to 100 territories Revenue unassigned Average reps % of © 2007 Callidus Software Inc. – Proprietary & Confidential
  • 20. In Summary • Balanced territories improve sales and profits by 4% to 12% • Territories that are more efficient travel-wise reduce costs on average by 10%- 15% • Equitable territories reduce turn-over • Territories built on objective business metrics provide better management of quotas and more predictable incentives © 2007 Callidus Software Inc. – Proprietary & Confidential