Finalize Your Sales Comp Plans

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Build your 2009 compensation plans with this automated tool.

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Finalize Your Sales Comp Plans

  1. 1. Finalize Your 2009 Sales Compensation Plans
  2. 2. Today’s Speaker Liz Cobb, Founder & CEO Makana Solutions • Makana is the third compensation management company Liz founded • Over 20 years in sales compensation design and process automation • Liz is a recognized industry expert, has consulted for hundreds of companies and speaks frequently on effective sales compensation
  3. 3. Today’s Speaker Teanna Spence, Compensation Director, Makana Solutions Inc. Teanna has 28 years' experience in • financial systems including 14 years in incentive design, management, automation, and best-practices development for many companies in a wide range of industries including DEC, Cabletron, Kinkos, Aspect Computers, and Staples.
  4. 4. About Makana Solutions “the most innovative product I’ve seen lately…they really understand how people design plans and work.” James Hollincheck Research VP “Plan design is a key element of effective sales compensation, which drives sales behavior. Salesforce users “We believe CEO Cobb's significant knowledge can take advantage of a dedicated sales of and insight into the sales compensation comp planning solution via the industry….will help land Makana Solutions a AppExchange with Makana Motivator.” solid position in the expanding market.” George Hu, CMO Judy Hodges, Research Analyst
  5. 5. Create Great Sales Comp for 2009 Create Great Plans Planning to Payment • See the big picture • Create Great Plans • Access built-in best practice • Calculate payments • Anticipate incentive costs • Share commission statements and management reports • Generate graphical plan documents
  6. 6. Makana Solutions, Inc. Brilliant plans energize the team to achieve the strategy. Makana Motivator helps companies build brilliant plans quickly.
  7. 7. Motivator Express - $19/mo Clear, motivating plans built on top of a strong foundation of strategy Make a Brilliant Plan
  8. 8. When does your plan need to be done? 35% 30% 25% 20% 15% 10% 5% 0% Overdue Middle of January End of January End of February End of March
  9. 9. Today you will learn… • How to create brilliant plans and finish in TIME! – Review the process – Collaborate with your planning team – Produce clear and motivating incentive compensation plans – Get you ready for rollout
  10. 10. Why is Sales Planning Important? • Effective sales incentives: – Improve sales motivation – Tell your team what to sell and to whom – Reduce turnover • What do your comp plans communicate? – Sales reps always ‘find the money’ – Corporate strategy must be clear – It will drive their behavior – ideally in the way you intended ***Mismanagement Can be Costly
  11. 11. General Thoughts • Sales people will follow the money • Reward at the point of persuasion – The point at which the sales person can help the customer make choices – The sales person must be in control of achieving his or her goal
  12. 12. Planning Now… • You are busy and have: • No visibility • No training • No tools • No help
  13. 13. Establish Timeline – When is that Kickoff? Approve Analysis Design, model & document & rollout W1 W2 W3 W4 W5 W6 W7 W8 1. Analysis 2. Design 3. Documentation 4. Implementation Traditional timeline for a $10M SW company with 10 reps “ ” We probably reduced the process from a 2 person, 2 month process to a one person, two week process. Steve Balk, VP Sales
  14. 14. www.makanasolutions.com/save
  15. 15. Where are you in the process outlined above? 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Analysis Cost Modeling Design Documentation Roll out
  16. 16. Analysis -- Look at Last Year’s Plans Approve Analysis Design, model & document & rollout • Did you get the results you wanted? • Did you reward for the right metrics? • Did the team work together as intended? • Did you pay for performance? – Too much? – Too little?
  17. 17. 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?
  18. 18. Confirm the Strategy • Understand the overall company goals – Key economic drivers – Areas of growth – New markets – New channels
  19. 19. Design and Align – 4 Key Steps Design, model & Approve Analysis document & rollout 4 3 Produce Comp Plans Model 2 Costs Define Plan 1 Elements Identify Job Roles Market Strategy
  20. 20. 4 3 Eligible Job Roles 1 2 Lead Outside Account Customer Generation Sales Management Service • All customer facing roles • Measurable influence over the actions of the customer • Willing to consider at least 15% of TTC as incentive
  21. 21. 4 2 Define Plan Key Elements 3 1 • Summary level info for alignment and benchmarking • Performance measures and goals • Payout Components & Rates
  22. 22. 4 2 Plan Summary 3 1 • Target Total Comp – Market – Budget – Equity across plans – Scope of job – Type of sale – Level of experience • Leverage – Mix of salary vs. incentive – The higher the risk, the greater the rewards
  23. 23. 4 2 Base to Incentive Ratio 3 1 Makana How much comp should be variable at target? Mix Max Incentive Mix Matrix 0%/100% Individual Current New products, products, customers markets 60/40 40/60 Control New Current products, products, markets customers Team 60/40 85/15 Min Incentive Mix Existing New 85%/15% Products/Markets
  24. 24. 4 2 A Good Plan Must be Measurable 3 1 • No more than 3 measures! • Do measure: – Sales volume, margin, units sold – Product mix, new accounts • Don’t measure: – Management activities • Input to CRM system • Sales calls/week – The past • What are the goals per measure?
  25. 25. 4 2 Crediting Terms Must Be Clear 3 1 Be specific about: • What is measured – What’s the value? Net? Margin? Gross? • Who gets credit – Multiple roles can erode margins • When they are eligible – Booking, invoice, cash receipt • How exceptions are managed – Person starts late, leaves early, goes on LOA – Be careful of precedence – What happens if there is a customer problem
  26. 26. 4 2 Identify Key Payout Components 3 1 • 3-5 at most • Make sure focus is clear • No component should be less than 20% of TIC
  27. 27. 4 2 3 Review Across Roles for Alignment 1 • Examine: – Mix and leverage according to level of personal influence – Common measurements for team alignment – Strategic alignment of measures to company goals – Equity within company – Competitiveness of pay
  28. 28. 3 4 Model Costs 2 1 • Know overall budget for commissions • Start with top down using historical attainment • Check for full allocation of quotas • Know incentive cost of sales • Review direct versus overlay • Compare to last year – don’t surprise your top performers
  29. 29. 4 3 Produce Plan Documents 2 1 • Be clear and motivating – Easy to see rewards – Keep top priorities in mind – Define exceptions precisely
  30. 30. 4 3 Produce Plan Documents 2 1 • Include T&Cs that matter: – Eligibility, effective period, crediting rules for measures – Transition policies • late start, LOA, termination, etc. – Customer changes • Dissatisfaction • Returns – Ramp up of new hires • Draws/guarantees • Be careful of committee review – don’t lose consistency but do include legal
  31. 31. Rollout & Implementation Approve Analysis Design, model & document & rollout • Rollout – Be aware of history – Explain transitional issues • 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
  32. 32. Questions & Answers Makana Motivator Additional Information • Time savings • Planning – www.makanasolutions.com/save – Motivator Express • Cash Receipt Blog Post – $19/month – www.makanasolutions.com/Blog • Planning to Payment • December 9th Posting • More Best Practices – Motivator Pro – Sample plans – $29/month per payee – Sample reports – Request an online – Webinars demonstration – Surveys – info@makanasolutions.com – www.makanasolutions.com/resources – (877) 881-0001

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