Boosting Sales Productivity Through Re-Engineering the Sales Commission Process


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Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

  1. 1. Boosting Sales Productivity Through Re-Engineering the Sales Commission Process Lisa Ard Master Black Belt
  2. 2. Agenda <ul><li>Ceridian Overview </li></ul><ul><li>Project Background </li></ul><ul><ul><li>Commissions Processing </li></ul></ul><ul><ul><li>Terminology </li></ul></ul><ul><ul><li>Input from the Sales Commissions Reporting DMAIC project </li></ul></ul><ul><li>IDDOV: Sales Plan Reengineering </li></ul><ul><li>Validation of Results </li></ul><ul><li>Lessons Learned </li></ul><ul><li>Conclusions </li></ul>
  3. 3. Ceridian Overview
  4. 4. Ceridian: An Introduction <ul><li>A global provider of human resource solutions. </li></ul><ul><li>Fortune 1000 company </li></ul><ul><li>Over 70 years experience in the service industry </li></ul><ul><li>Over 7,800 employees in 80 locations </li></ul><ul><li>HQ in U.S., UK and Canada </li></ul><ul><li>Provide payroll in more than 40 countries </li></ul><ul><li>Provide EAP services in over 100 countries </li></ul><ul><li>$1 billion in revenue </li></ul><ul><li>Publicly traded on NYSE as CEN </li></ul>
  5. 5. Our Customers <ul><li>110,000 customers with over 20 million employees worldwide </li></ul><ul><li>80 Fortune 100 customers </li></ul><ul><li>338 Fortune 500 customers </li></ul><ul><li>562 Fortune 1000 customers </li></ul>
  6. 6. Ceridian Solutions
  7. 7. Multinational Payroll Solutions Ceridian Owned (4) High Volume (11) Low Volume (23) Germany France Switzerland Belgium Netherlands Poland Ireland Czech Rep. Portugal Spain Countries as at January 2006 Finland Sweden Norway Dubai, UAE Estonia Denmark Hungary Australia Hong Kong Greece South Africa Argentina Cyprus India Japan Luxembourg Philippines Singapore Turkey UK USA Morocco Italy Austria Sri Lanka Bangladesh Canada *Mexico *Bureau & Managed Services available
  8. 8. Project Background
  9. 9. Commissions Processing <ul><li>Sales Commissions Processing </li></ul><ul><ul><li>Within Ceridian: </li></ul></ul><ul><ul><ul><li>Sales Plan Creation </li></ul></ul></ul><ul><ul><ul><li>Order Entry </li></ul></ul></ul><ul><ul><ul><li>Sales Plan and Commission Support </li></ul></ul></ul><ul><ul><li>Outsourced: </li></ul></ul><ul><ul><ul><li>Commission calculations, processing & reporting </li></ul></ul></ul>
  10. 10. Terminology <ul><li>Sales Order Value = an estimated annual value of the order </li></ul><ul><ul><li>Commission rate x SOV = Commission payout </li></ul></ul><ul><ul><li>SOV comparison to actual revenue results in a commission adjustment </li></ul></ul>
  11. 11. Input from the Sales Commission Reporting DMAIC Project
  12. 12. Business Case There is high dissatisfaction with the sales commissions reporting and auditing process. Difficulty reading reports, complexity in researching issues, a lack of resources for assistance and untimely report delivery are examples of the issues. Team Objective & Deliverables Project Benefits <ul><li>Outline commission report requirements based on customer needs. Deliver to FIS as requirements for Oracle 11i upgrade. </li></ul><ul><li>Improve employee satisfaction with reporting from 2 to 3 </li></ul><ul><li>Reduce employee inquiries to the Commissions Team by 25% </li></ul>Sales Ops Commissions Financial Information Systems Sales Account Executive <ul><li>Increased sales productivity </li></ul><ul><li>Improved employee satisfaction </li></ul><ul><li>Facilitate requirements gathering for in-house commission reporting process </li></ul>DMAIC: Define
  13. 14. DMAIC: Define <ul><li>Critical Measures : </li></ul><ul><li>Employee Satisfaction </li></ul><ul><li># of Inquiries </li></ul><ul><li>Cycle Time </li></ul>Finance
  14. 15. Process Flow Chart DMAIC: Define
  15. 16. Voice of the Customer <ul><li>Settle on the questions to ask our customers </li></ul><ul><ul><li>Initial Survey (1) </li></ul></ul><ul><ul><li>Initial Focus Group </li></ul></ul><ul><li>Refine the questions and measure the broader voice of our customer </li></ul><ul><ul><li>Web Survey (2) </li></ul></ul><ul><li>Test root cause theory and gather input on opportunities </li></ul><ul><ul><li>Final Focus Group (3) </li></ul></ul>DMAIC: Measure
  16. 17. Sales Commission Survey Results <ul><li>73% are not satisfied with delivery timeliness </li></ul><ul><ul><li>88% would find it acceptable or better to receive reports by the 15 th business day in the month </li></ul></ul><ul><li>97% satisfied with e-mail delivery </li></ul><ul><ul><li>30% would prefer web delivery </li></ul></ul><ul><li>57% have never received training </li></ul>(2) DMAIC: Measure
  17. 18. Sales Commission Survey Results (1) DMAIC: Measure
  18. 19. Sales Commission Survey Results Lack of clear inquiry process (2) DMAIC: Measure Commissions Team
  19. 20. Sales Commission Survey Results All Respondents (2) Importance Scoring : Must Have, Above Average , Average, Below Avg, Not Important, Do Not Use Satisfaction Scoring : Best Imaginable, Very Good/Happy, Good/Acceptable , Not Very Good/Poor, Poor/Angry DMAIC: Measure
  20. 21. (2) Importance Scoring : Must Have, Above Average , Average, Below Avg, Not Important, Do Not Use Satisfaction Scoring : Best Imaginable, Very Good/Happy, Good/Acceptable , Not Very Good/Poor, Poor/Angry DMAIC: Measure Sales Commission Survey Results Sales Manager Responses
  21. 22. Focus Group Results Reports are simple and easy to use Understand the calculations within reports I have the Information I need Reports (in order): IC Commission, Sales Detail, Sales Summary, Open Items, District Detail, FOP & Adjustments, District View Nation, VISTA (3) DMAIC: Measure
  22. 23. Sales Commission Survey Results Overall Satisfaction (2) DMAIC: Measure Satisfaction Scores: 5 = Best imaginable with known technology 4 = Very good / happy 3 = Good / acceptable 2 = Not very good / poor 1 = Poor / angry
  23. 24. Voice of the Customer DMAIC: Measure
  24. 25. Initial Root Cause Analysis DMAIC: Analyze Many root causes were outside of the project scope and upstream from the sales commission reporting process Snapshot of 5Whys?
  25. 26. IDDOV: Sales Plan Reengineering
  26. 27. Business Case Complexity in the sales plan is driving costs to bring commissions processing in house. Rep movement, payment timing, the number of plans are examples of the complexity in the current plan. This team will design a new sales plan and delivery method aimed at reducing complexity and the cost to deliver, while maintaining incentives to sell and retain/attract personnel and improving employee satisfaction. Team Objectives Project Benefits <ul><li>A simple plan , easily understood by those receiving payment and those administering payments </li></ul><ul><li>A market-competitive plan , one that ensures payment accuracy and timeliness </li></ul><ul><li>A plan that minimizes risk to the company </li></ul><ul><li>One that provide incentives to sell those products determined by management </li></ul><ul><li>Flexibility within the plan to accommodate year-on-year changes </li></ul><ul><li>A plan that is cost effective to administer and provides for sales force efficiencies </li></ul>Finance Sales Operations Commissions Team Financial Information Systems Human Resources Compensation <ul><li>Improve productivity </li></ul><ul><li>Reduce cost to administer </li></ul><ul><li>Improve employee satisfaction </li></ul>Identify
  27. 28. Project is in the Verify Phase and at Project Closure
  28. 29. Project Steps <ul><li>Validate Process Characterization (TV) Screens </li></ul><ul><li>Develop Customer Requirements thru Voice of the Customer (VOC) Grid </li></ul><ul><li>Validate and prioritize VOC thru discussions with customers using the Analytic Hierarchy Process matrix </li></ul><ul><li>Determine internal (design) requirements using the House of Quality </li></ul><ul><li>Develop concepts that meet design requirement targets </li></ul><ul><li>Optimize the concepts with a Failure Modes & Effects Analysis </li></ul><ul><li>Verify plan thru modeling using historical order information </li></ul>
  29. 30. Define Address complexity to meet project objectives Sales Operations
  30. 31. <ul><li>Brainstormed customer requirements and benefits using the Voice of the Customer Grid </li></ul><ul><li>Approached three customer groups to validate the customer requirements and understand the relative importance of those requirements </li></ul><ul><li>Tools </li></ul><ul><ul><li>VOC grid </li></ul></ul><ul><ul><li>Analytic Hierarchy Process </li></ul></ul><ul><ul><ul><li>customer interviews </li></ul></ul></ul>Establish the VOC Define
  31. 32. Voice of the Customer 3 Main Customer Segments: Sales, Finance & Executives
  32. 33. Voice of the Customer Comparison Define Some shared customer needs, some competing needs
  33. 34. Analytic Hierarchy Process <ul><li>To prioritize customer requirements within the project </li></ul><ul><ul><li>Which customer segments are most important? </li></ul></ul><ul><ul><li>Which of the customer requirements are relatively more important? </li></ul></ul><ul><li>AKA Full Pairwise Comparison </li></ul><ul><ul><li>Generates a prioritized list of characteristics after answering the question “How important is A vs. B?” for all possible pairs of characteristics </li></ul></ul><ul><ul><ul><li>Advantageous because the human brain finds pairs of items the easiest to rank. </li></ul></ul></ul><ul><ul><ul><li>This method works best for 7 ± 2 characteristics </li></ul></ul></ul>
  34. 35. AHP: Steps to Completion <ul><li>Load the customer requirements in the rows and column headings to build a matrix </li></ul><ul><li>For each cell in the matrix ask: </li></ul><ul><ul><li>Is this Row Characteristic (RC) more important than the Column Characteristic (CC)? </li></ul></ul><ul><ul><ul><li>If NO place a (/) in the cell. </li></ul></ul></ul><ul><ul><ul><li>If YES use the following 9-point scale: </li></ul></ul></ul><ul><ul><ul><ul><li>1: Characteristics are of equal importance. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>3: RC is somewhat more important than the CC. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>5: RC is moderately more important than the CC. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>7: RC is much more important than the CC. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>9: RC is extremely more important than the CC. </li></ul></ul></ul></ul><ul><ul><ul><li>For each (/), enter the inverse (i.e. 1/3 if corresponding value is 3) </li></ul></ul></ul><ul><ul><ul><li>Normalize each column to 1 </li></ul></ul></ul><ul><ul><ul><li>Total and Average each row </li></ul></ul></ul>
  35. 36. Relative importance of customer requirements for Sales Define
  36. 37. <ul><li>Take prioritized customer needs and translate into design requirements </li></ul><ul><li>Develop targets to ensure design requirements meet customer needs. </li></ul><ul><li>Tools </li></ul><ul><ul><li>House of Quality Matrix </li></ul></ul>Design Requirements Define
  37. 38. HOUSE OF QUALITY – Sales Steps: 1. prioritized customer requirements 2. brainstorm internal/design requirements 3. assess correlation 4. develop targets Define
  38. 39. <ul><ul><li>One payment trigger </li></ul></ul><ul><ul><li>Adjustment method based on actual revenue </li></ul></ul><ul><ul><li>Simplified definition of an order and unit </li></ul></ul><ul><ul><li>Simplified draws against commissions </li></ul></ul><ul><ul><li>Reduced the number of rates </li></ul></ul><ul><ul><li>Simplified some payment calculations </li></ul></ul><ul><ul><li>Tightened rules around order booking </li></ul></ul>Sales Plan Concept Driving out Complexity Develop
  39. 40. Optimize the Design <ul><li>Failure Modes & Effects Analysis (FMEA) using the project objectives </li></ul><ul><li>Mitigating Actions: </li></ul><ul><ul><li>Data analysis </li></ul></ul><ul><ul><li>Reporting / analysis to monitor behavioral changes </li></ul></ul><ul><ul><li>Control point in process flow to avoid complexity build up with future sales plan changes </li></ul></ul>Optimize
  40. 41. Verify the Design <ul><li>Validate the plan through data analysis </li></ul><ul><ul><li>Source Data: </li></ul></ul><ul><ul><ul><li>Using sales history and an assumed commission rate </li></ul></ul></ul><ul><ul><li>Impact of changing commission payment trigger </li></ul></ul><ul><ul><ul><li>Financial impact / accounting treatment </li></ul></ul></ul><ul><ul><ul><ul><li>No change </li></ul></ul></ul></ul><ul><ul><ul><li>Impact of cancelled orders and rep terminations </li></ul></ul></ul><ul><ul><ul><ul><li>1% of SOV at risk </li></ul></ul></ul></ul><ul><ul><ul><li>Accelerating Commission Timing </li></ul></ul></ul><ul><ul><ul><ul><li>Minimal expense impact in Year 1 </li></ul></ul></ul></ul><ul><ul><li>Impact of change in Adjustment method </li></ul></ul><ul><ul><ul><li>Applied proposed method to historical sales </li></ul></ul></ul><ul><ul><ul><ul><li>Distribution of order adjustments showed minimal dollar impact </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Few outliers investigated and ruled out as issues </li></ul></ul></ul></ul>Verify
  41. 42. Initial Validation of Results <ul><li>Project Objective: to improve overall satisfaction from a 2 to a 3 </li></ul><ul><ul><li>10/2004 Mean satisfaction score: 1.9 </li></ul></ul><ul><ul><li>10/2005 Mean satisfaction score: 4 </li></ul></ul><ul><li>Productivity gains projected </li></ul><ul><ul><li>10/2004 Managers spent 6.3 hrs monthly reviewing reports and managing inquiries </li></ul></ul><ul><ul><li>10/2005 Managers projected their current monthly hours (avg 8.2) and the savings they anticipate (avg 3.1). Average savings: 38% </li></ul></ul><ul><li>Qualifier: </li></ul><ul><ul><li>Small sample size </li></ul></ul><ul><ul><li>Based on training (mocked up) reports </li></ul></ul><ul><ul><li>Control plan includes follow-up survey </li></ul></ul>DMAIC: Control Satisfaction Scores: 5 = Best imaginable with known technology 4 = Very good / happy 3 = Good / acceptable 2 = Not very good / poor 1 = Poor / angry
  42. 43. Validation of Results Overall Satisfaction <ul><li>Mean satisfaction moves from 1.98 to 2.74 </li></ul>Source: 2006 Sales Commission Survey Satisfaction Scores: 5 = Best imaginable with known technology 4 = Very good / happy 3 = Good / acceptable 2 = Not very good / poor 1 = Poor / angry
  43. 44. Validation of Results Individual Report Satisfaction <ul><li>Assessment of the importance of reports remains stable </li></ul><ul><li>Satisfaction with reports has increased </li></ul>Source: 2006 Sales Commission Survey
  44. 45. Validation of Results 2005 vs. 2006 Survey Comparison Source: 2006 Sales Commission Survey 2.2 3.2 6.3 4.1 <ul><li>Hours spent in audit / follow up each month: </li></ul><ul><li>Sales Managers </li></ul><ul><li>Sales Reps </li></ul>32% 43% % having received training 73% 27% % satisfied with report timeliness 2006 2005 Survey topics:
  45. 46. Lessons Learned <ul><li>Focus groups allow for in-depth, qualitative discussions </li></ul><ul><li>Surveys offer statistically-significant data </li></ul><ul><li>Distinguish VOC by customer segment </li></ul><ul><li>Understand the relative priority of requirements using the Analytic Hierarchy Process tool </li></ul><ul><li>Use the HOQ – to a point -- to develop internal requirements and targets </li></ul><ul><li>Alternatives available to piloting a process </li></ul>
  46. 47. Conclusions <ul><li>Reaching the Voice of the Customer through surveys and focus groups was instrumental in: </li></ul><ul><ul><li>Providing our baseline project metric </li></ul></ul><ul><ul><li>Ruling out theories </li></ul></ul><ul><ul><li>Prioritizing our list of customer requirements </li></ul></ul><ul><ul><li>Establishing our sales plan design targets </li></ul></ul><ul><ul><li>Providing verbatim that fed our root cause analysis </li></ul></ul><ul><ul><li>Substantiating the financial benefits of the project </li></ul></ul><ul><ul><li>Providing the data to manage competing needs amongst customer segments </li></ul></ul><ul><ul><li>Providing ongoing process performance monitoring </li></ul></ul>
  47. 48. Questions?