What Motivates A Sales Force

What Motivates a Sales Force? Patrick Mosher Global Lead Sales Talent Management Accenture Jason Angelos Global Lead Incentive Compensation Management Accenture

Driving behavior within intended performance guardrails… Avoid Acquiring New Customers Because it Wastes Too Much Time (Order Taker) Balance New Customer Acquisition While Retaining Old Customers (Hunter and Farmer) Focus on New Customer Acquisition at the Expense of Existing Customers (Existing Customer Sat Erodes) (Bounty Hunter) Sell too few Units with Focus on High Profitability (Volume Erodes) Sell Volume at Reasonable Discounts (Balanced Results) Sell Too Many Units (Margins Erodes) Too Much of a Good Thing Too Little of a Good Thing Just Right Participation (n=1) No Participation Rush the Stage Illustrative

Behavior, and their gaps, are driven by only three factors: Ability, Motivation, and Context. BEHAVIOR Effectively target, define, and run loyalty campaigns Context and Tools Motivation Ability Right Skills to Perform Target Behaviors Right Knowledge to Perform Target Behaviors Right Person into the Right Role Right Work Assigned to the Right People Right Performance Specified and Measured Incented to show Target Behaviors Right Information to Support Target Behaviors Right Tools to Easily Access Information Right Place at the Right Time to Exhibit their Target Behaviors Motivated to show Target Behaviors

“ Chalk Talk” Building a Performance Architecture

BEHAVIORS

Generate and qualify leads

Visit qualified leads

Establish rapport with new customers

METRICS

Customer Churn

Market Share

Revenue Mix (new vs. existing customers)

MOTIVATION CAPABILITIES DRIVE BEHAVIOR

Performance Definition and Objective Setting

Effective Incentive Design

Valued Rewards

Performance Feedback Systems

PREDICTABLE BEHAVIORS DRIVEN BY.. KPOs ATTAINED BY PREDICTABLE BEHAVIORS… SUCCESS MEASURED BY… Key Performance Objective Example: Acquire New Profitable Customers (growth) B

Increasing Behaviors “Within the Guardrails” The probability if… I extend the Effort , that I will attain the Performance Objective Motivating a Person to a Performance Objective depends on… The probability if… I achieve the Performance Objective , that I will receive the Reward How much I Value the Reward

Aligned Behaviors Drive Leading Indicators Leading Indicators Lagging Indicators Real Time Indicators

Potential Leading Indicators

Training Taken

Account Plans Completed

Opportunities Weighted

Leads Qualified

Deal Velocity

Close Rate

Goals Set

Rewards Attached to Goals

Lagging Indicators

Sales Results

Incentives Paid

Correlates With Correlates With Integrated Systems Effective ICM Systems You Are Here

Keys to managing incentives in a broad sales performance context

Traditional incentive measures use lagging indicators and don’t consider sales performance in context

Moving leading indicators requires timely insight to upstream behavior measurements in addition to traditional sales results

Staying within the Behavior Guardrails requires you to correlate behavior drivers – with their associated leading indicators -- with lagging measures.

The end goal: A holistic approach to managing sales performance can “move the middle” 10% People Performance 70% of Sales Force 20% 10% Low Core High 10% Curve Shift 10% Curve Shift

Financial Impact of Moving the Middle +$1B Why does shifting the curve matter? Shifting the performance curve creates measurable business value on all fronts, especially for core performers. $300M $750K 30% = $3B 400 High Performers (Top 20% contribute 30% of revenue) $650M $460K 65% = $6.5B 1400 Core Performers (core 70% contribute 65% of revenue) $ 50M $250K 5% = $500M 200 Low Performers (bottom 10% contribute 5% of revenue) Total Increase in Revenue @ 10% Shift Revenue Increase per Rep @ 10% Shift $10B Sales Revenue / Performance per Group 2000 Reps

Extra Slides

Executives recognize that customer facing workforces play a prominent role in the company's overall success.

Sales Force tops the list for the FOURTH consecutive year

Source: High Performance Workforce Study, 2003, 2004, 2005, 2006; Interviews with CEOs, COOs, and senior vice presidents conducted by Accenture 0% 10% 20% 30% 40% 50% 60% 70% Logistics Training & Development Manufacturing R&D IT Human Resources Engineering Marketing Strategic Planning Finance Customer Service Sales Percentage of executives citing each function as one of their company's three most important

Executives in Leading organizations are focusing on REVENUE GROWTH and Sales Force is a primary driving force . Source: CSO Insights, Sales Performance Optimization, 2006 0% 10% 20% 30% 40% 50% 60% 70% Other Decrease Discounting Reduce Administrative Burden Improve Communications Improve Team Selling Increase Channel Sales Effectiveness Improve Margins Reduce Sell Cycle Time Improve Customer Loyalty/Satisfaction Increase Market Share Increase Sales Effectiveness Increase Revenues Percentage of CEOs citing each objective as one of their company’s three most important.

Growth comes with unique People Challenges …

FLASH !!!

Nearly three quarters of CSOs say that their sales force must increase by 10 percent or more over the next twelve months.

Does your headcount growth match your revenue growth plans?

Voluntary Turnover Involuntary Turnover

FLASH !!!!

Sales Force attrition is decreasing, but it continues as a major challenge with about 35% attrition and involuntary turnover of 16.7 % in 2006

Do you know your turnover rate? Is compensation the root cause for voluntary turn?

Source: CSO Insights, Sales Performance Optimization, 2006 Planned Changes in Sales Force Size Increase by 11-20% (20.0%) Decrease in Size (2.4%) Remain the Same (26.6%) Increase by 10% or Less (34.0%) Increase by 21-30% (7.0%) Increase by >30% (11.3%) Salesforce Annual Turnover Rates 2004 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2005 31.6% 17.7% 20.4% 17.8% 18.3% 15.7% 2006 50%

The Goal: Transform Sales Force Behaviors Sales Force Transformation must fundamentally change the interaction between the Field Sales person and the customer. Fundamental Unit of Transformation Aligned and Consistent Customer Interaction Target Behaviors Across whole Sales Force = Imagine if … All 15,000 Sales Reps exhibit target behavior set XYZ for a customer situation XYZ. No guessing. No interpretation.

Sales Force Key Performance Objectives Revenue Enhancing Cost Reducing Forecast Predictability 5 4 3 2 1 2. Sell More to Existing Customers 4. Improve Product / Solution Pricing 5. Maximize Return on New Product Launches 3. Retain Profitable Customers Longer 9. Reduce Customer Acquisition Costs 8. Decrease Direct Selling Costs 1. Acquire New Profitable Customers 12. Improve Sales Forecasts 10. Decrease Sales Operations Costs 6. Sell Most Profitable Services/Products 7. Sell Ongoing Service/Maintenance 11. Win the War for Sales Workforce Talent Grade your Selling Organization 13. Increase Consistent Use of Sales Methods/Tools

Targeting Value in Sales Transformation Shareholder Value Increase Revenue Decrease Cost Improve Predictability Levers Performance Objectives Sell More to Existing Customers Improve Product / Solution Pricing Retain Profitable Customers Longer Reduce Customer Acquisition Costs Decrease Sales Operations Costs Acquire New Profitable Customers Improve Accuracy of Sales Forecasts Maximize Return on New Product Launches Decrease Direct Selling Costs Increase Consistent Use of Sales Methods/Tools Sample Metrics

Customer Churn

Market Share

Average Revenue and Margin Per Customer

Average Number of Products Per Customer

Sales Cycle Time

Average Customer Satisfaction Score

Average Length of Customer Relationship

Average Customer Life-time Value

Customer Attrition Rate

Average Discount Per Order / Deal

Average Margin Per Order / Deal

Brand Affinity

Reach and Frequency

Campaign Response/Closure Rate

Percentage of Revenue from New Products

Expense to Revenue Ratio

Span of Control

Time off Territory

Average Acquisition Cost

Campaign Response Rate

Marketing Return on Investment

Expense to Revenue Ratio

Direct Sales to Sales Support Ratio

Span of Control

Forecast Accuracy by Quarter Quartiles

Number of customer contacts

Customer facing contact time

Administrative burden

Illustrative Win the War For Sales Talent

Attrition Rates

Time to Proficiency

Days Open Positions

Onboarding Costs

Sell Most Profitable Products/Solutions

Product Quota Attainment

Margin Generated by Rep

Sell Ongoing Maintenance / Service

Service Contracts Closed

Number of Cross-Channel Leads Generated

Driving Value through Targeted Sales Force Behaviors Shareholder Value Increase Revenue Decrease Cost Improve Predictability Levers Performance Objectives Sell More to Existing Customers Improve Product / Solution Pricing Retain Profitable Customers Longer Reduce Customer Acquisition Costs Decrease Sales Operations Costs Acquire New Profitable Customers Improve Accuracy of Sales Forecasts Maximize Return on New Product Launches Decrease Direct Selling Costs Increase Consistent Use of Sales Methods/Tools Sample Sales Force Behaviors

Target the right customers to visit

Articulate Value Proposition aligned to customer needs

Effectively Handle concerns of long-term customers

Convert customer’s discussion on price/cost to discussions of value

Clearly articulate value proposition for new products/services

Reduce time spent on administrative activities

Prioritize customer activity to focus on hottest opportunities

Apply Sales Methodologies and Processes consistently

Maintain accurate sales pipeline information

Apply CRM Tools effectively

Illustrative Win the War For Sales Talent

Coach junior sales reps

Sell Most Profitable Products/Solutions

During customer interactions Seamlessly introduce the value of most profitable product service

Sell Ongoing Maintenance / Service

Collaborate effectively with Service organizations on post sales activity

Effective ICM for agents and employees provides the platform to support desired behavior and enable high performance sales. Clear, Timely Plan Setting