Leveraging Lessons Learned in 2012to Exceed Financial Goals in 2013Erik Charles | Principal Incentives StrategistXactly Co...
Introductions                Erik Charles                Principal Incentives Strategist                XactlyCorporation ...
Plan Strategies for 2013
MEET XACTLYLEADER IN SAAS INCENTIVECOMPENSATION MANAGEMENTFASTEST GROWING PROVIDER– OVER 500 CUSTOMERSFOCUSED EXCLUSIVELY ...
WHAT IS OUR GOAL?
EVERY COMPANY INCENTS RIGHT
“   Why this matters…
IMPROVING INCENTIVES                       EXPERIENTIAL   ACADEMIC                        EMPIRICAL
>$800Bfederal budget    $3,796,000,000,000
“   How much will we pay?
PAYMENT AND RECOGNITION                                       69%    … of employees would work harder     if they were bet...
INCENTIVE BUCKETS SIMPLIFIED
INDUSTRY BREAKOUTS                                                                                                      10...
INCENTIVE ATTAINMENT                                                                        Distribution of On Target Paym...
SHARING THE WEALTH
PAY AT RISK                              Flat Salary      1% - 15%                                  3%             10%    ...
PAYROLL MODELING ESTIMATES Not everyone will hit their numbers There will be turnover The market will change Someone w...
“   How about the numbers?
WHAT ARE YOU TRYING TO ACHIEVE? ? Top and bottom line growth ? Market share ? Customer satisfaction ? Strategic product re...
INCENT RIGHT = MEASURE WHAT MATTERS
WHAT IS MOST IMPORTANT?Only set goals for things that you canactively measure and report on in atimely matter:• Units sold...
DON’T USE TOO MANY!
ATTAINABLE GOALS          @erikchaz / @xactlycorp
“   What can we expect?
SETTING QUOTA SO YOU DON’T WIPEOUT
CASH FLOW TIMING IMPACT• You will see spikes in revenue for whatever  the measurement period is.• Combine monthly and quar...
QUOTA TIMING IMPACT           Annual Quota Targets          60% over 80% of quota                 Versus           Quarter...
RUNNING THE NUMBERS ON QUOTA                    84%                     Average                    Attainment
QUOTA SEGMENTS FOR MODELING
ANALYSIS OF QUOTA ATTAINMENT                                                               Distribution of Annual Quota At...
# QUOTAS?   1   58%
WHAT ELSE TO WORRY ABOUT?• Quota attainment typically focuses on  revenue  – Some SPIF payments for margin  – Other measur...
QUOTA’S CHECKLIST Set Territories based on zip codes, area  codes, named accounts, vertical  markets, company size) Chec...
REVENUE MODELING ESTIMATES Not everyone will hit their numbers There will be turnover The market will change Someone w...
“   The Team
INCENT RIGHT = INCENT THE ROLE
TEAM BUILDING Do you have all of the roles identified? Do you have a full team assembled? How long will you give them t...
KEEPING THE HUNTER HUNTING Conduct a salary survey to set target  pay. Know your market – it changes. How much of the ta...
THE VALUE OF FARMING Make sure you know what line items in a  transaction reflect the appropriate renewal  and up-sell re...
SPIFFING A SPECIALIST The complexity of the product will   increase a specialist’s percent of   salary consisting of vari...
ADDING PROSPECTORS Do your prospectors develop their own lists or  is marketing providing assistance? Is the plan incent...
COMPING THE CAPTAIN If the entire team hits quota, what is the Captain’s  performance toward goal? If the Captain hits t...
“   Keeping them focused
INCENT RIGHT = SHOW ME THE MONEY
LEADERBOARDS
INCENT RIGHT = INCENTIVES EVERYWHERE
EMPLOYEES AREDISTRACTED ONCE EVERY …10.5 MINUTES_______
WHICH ADDS UP TOA TOTAL OF… 546_______ HRS A YEAR
SPIFFS AND OTHER REWARDS• Build into your budget• Make it immediate• Majority of variable  should be individual• Team bonu...
BUDGETING Money for core incentives Money for SPIFFs Money for club Money for shared credits Money for all roles  Thi...
“   Incent Right
WHY NOT JUST USE EXCEL?                Custom Excel             3-4 weeks                               E-mails           ...
WASTING TIME NOT SELLINGSALES doesn’t understandtheir plansToo much time betweenthe effort and thepaymentCompanies do not ...
INCENT RIGHT = COMPLETE VIEW
THE PAYOFF                                                                FASTER                                          ...
“   New Year’s Resolutions
1. KNOW THE COSTSCompensation Cost of Sales (CCOS) Collecting that data is not always as  easy as it sounds, because it l...
ONGOING BUDGET TRACKING   @erikchaz / @xactlycorp
2. SPEND MORE ON SALES Drill into your top-performing  territories, products, and performers. What opportunities do you ...
3. INVEST IN YOUR SALES REPSSales managers get the best ROI oncoaching dollars by investing in midlevelperformers. Review...
4. CHECK & RE-CHECK THE NUMBERS If the entire team hits quota, what is your  total revenue, total margin, and total cost?...
5. COMPLY WITH THE LAW Stay up-to-date on legislation Create plan documents that specify how  commissions will be tracke...
“   Final thoughts
REMEMBER TO CONNECT THE PIECES
MY BOOKSHELF Predictable Revenue,  Aaron Ross Compensating the Sales Force,  David Cichelli The Complete Guide to Sales...
REMEMBER What are you trying to achieve? Who is going to do it for you? How much leverage and upside? What are you goi...
QUESTIONS            225 W. Santa Clara St., Suite 1200            San Jose, CA 95113            www.xactlycorp.com       ...
Free Resources• www.dealmakerindex.com  Score your sales effectiveness. Get advice. See how you  compare.• www.dealmakerge...
Where You Can Find Us www.thetasgroup.com •   US 866.570.3836 •   UK +44(0)1189 880 149 •   International +353(0) 1 6788 9...
Leveraging Lessons Learned in 2012to Exceed Financial Goals in 2013Erik Charles | Principal Incentives StrategistXactly Co...
Sales Webinar | Leveraging Lessons Learned in 2012 to Exceed Financial Goals in 2013
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  • Having an incentive plan that works is one of the most important things a company can do. That’s why we automate incentive compensation systems.  Founded in the cloud, we are the only multi-tenant SaaS solution, the leading automation provider and the faster growing business in the space.  All told, our systems manage more than $6 billion in compensation annually. Here’s a look at the top reasons customers pick Xactly
  • Need a title ..Visibility??? Another term?
  • Resolution #1: Find out how much sales compensation really costs.Most sales managers and sales-compensation analysts consider Compensation Cost of Sales (CCOS) a key metric for making the right strategic decisions. To correctly determine the percentage of total revenue spent on salaries and incentives, however, you must have the right data.Collecting that data is not always as easy as it sounds, because it lives all over. For example, base pay may be stored in payroll software, while commission information may be stored on spreadsheets. Instead, consider this:Sync all of your business data — finance, ERP, sales, CRM, etc. — in one automated sales-compensation tool.Use complete, real-time data to determine percentage of spend.
  • Resolution #2: Spend more on sales.I know what you’re thinking: “Shouldn’t we reduce costs?” The short answer is yes. But you’ll spend less in the long run (and increase profits and revenue) if you spend more on sales where it counts. For example, drill into your top-performing territories, products, and performers. What opportunities do you see to increase spend for long-term improvements? Maybe data indicates that you should sweeten the pot for certain top performers or increase sales spending in certain territories
  • Resolution #3: Determine exactly where to allocate funds for coaching and training.Many sales managers take a one-size-fits-all approach to coaching and training. But research by Harvard Business Review and CEB has shown that sales managers get the best ROI on coaching dollars by investing in midlevel performers. (Top performers don’t require the same level of coaching, while poor performers often can’t be helped, no matter what you do.) Here are a few action steps I recommend:Review your data to determine the effectiveness of your coaching and training programs.Identify sales reps who could most benefit from coaching and training (typically midlevel performers).Customize training and coaching programs to increase performance where you need it most, based on what’s worked well already.
  • Resolution #5: Comply with sales commission regulations.You know noncompliance can be very costly, but how effective are you at staying up-to-date on legislation?For example, have you heard about California AB 1396? It’s a new law requiring companies with any commission-based employees providing services in California to have written commission plans in place by January 1, 2013. (Read more about the details on Xactly’s blog.)Stay compliant:Create plan documents that specify how commissions will be tracked and paid, then route them to employees for approval.Use an automated tool to guarantee consistency between commission plans and information used to calculate and report on commissions.Partner with a company that will keep you abreast of future legal requirements.
  • Sales Webinar | Leveraging Lessons Learned in 2012 to Exceed Financial Goals in 2013

    1. 1. Leveraging Lessons Learned in 2012to Exceed Financial Goals in 2013Erik Charles | Principal Incentives StrategistXactly Corporation
    2. 2. Introductions Erik Charles Principal Incentives Strategist XactlyCorporation © The TAS Group 2013
    3. 3. Plan Strategies for 2013
    4. 4. MEET XACTLYLEADER IN SAAS INCENTIVECOMPENSATION MANAGEMENTFASTEST GROWING PROVIDER– OVER 500 CUSTOMERSFOCUSED EXCLUSIVELY ONINCENTIVES AND COMPENSATIONMANAGING >$6 BILLION INCOMPENSATION ANUALLY
    5. 5. WHAT IS OUR GOAL?
    6. 6. EVERY COMPANY INCENTS RIGHT
    7. 7. “ Why this matters…
    8. 8. IMPROVING INCENTIVES EXPERIENTIAL ACADEMIC EMPIRICAL
    9. 9. >$800Bfederal budget $3,796,000,000,000
    10. 10. “ How much will we pay?
    11. 11. PAYMENT AND RECOGNITION 69% … of employees would work harder if they were better recognized
    12. 12. INCENTIVE BUCKETS SIMPLIFIED
    13. 13. INDUSTRY BREAKOUTS 100% 26% 36% Percent of Population 48% 41% 39% 39% 28% 45% 25% 33% 35% 30% 36% 36% 29% 22% 26% 26% 0% Business Services Media & Entertainment 39% over 120% of on target earnings 26% over 120% of on target earnings Software & Technology Life Sciences 41% over 120% of on target earnings 36% over 120% of on target earningsCommunications Manufacturing & Distribution48% over 120% of on target earnings 39% over 120% of on target earnings
    14. 14. INCENTIVE ATTAINMENT Distribution of On Target Payments 9% 8% 7%% Frequency of People Sampled 6% 5% 4% 3% 2% 1% 0% 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 % of Incentive Attainment (with Trendline)
    15. 15. SHARING THE WEALTH
    16. 16. PAY AT RISK Flat Salary 1% - 15% 3% 10% >60% 16% 16% - 25% 17% 41% - 60% 31% 26% - 40% 23%2011 Sales Compensation and Performance Management Key Trends Analysis
    17. 17. PAYROLL MODELING ESTIMATES Not everyone will hit their numbers There will be turnover The market will change Someone will knock it out of the park Split your model into 3 buckets of attainment when forecasting costs.
    18. 18. “ How about the numbers?
    19. 19. WHAT ARE YOU TRYING TO ACHIEVE? ? Top and bottom line growth ? Market share ? Customer satisfaction ? Strategic product revenue growth ? New account acquisition ? Account/revenue retention Make the list, rank it and use it
    20. 20. INCENT RIGHT = MEASURE WHAT MATTERS
    21. 21. WHAT IS MOST IMPORTANT?Only set goals for things that you canactively measure and report on in atimely matter:• Units sold• Revenue dollars• New customers• ProfitsIf you track multiple metrics makeone the primary measure.
    22. 22. DON’T USE TOO MANY!
    23. 23. ATTAINABLE GOALS @erikchaz / @xactlycorp
    24. 24. “ What can we expect?
    25. 25. SETTING QUOTA SO YOU DON’T WIPEOUT
    26. 26. CASH FLOW TIMING IMPACT• You will see spikes in revenue for whatever the measurement period is.• Combine monthly and quarterly goals with the annual numbers to help smooth the revenue cycle. 25% 20% 15% 10% 5% 0% 1 2 3 4 5 6 7 8 9 10 11 12
    27. 27. QUOTA TIMING IMPACT Annual Quota Targets 60% over 80% of quota Versus Quarterly Quota Targets 67% over 80% of quota
    28. 28. RUNNING THE NUMBERS ON QUOTA 84% Average Attainment
    29. 29. QUOTA SEGMENTS FOR MODELING
    30. 30. ANALYSIS OF QUOTA ATTAINMENT Distribution of Annual Quota Attainment % 12% 10%% Frequency of People Sampled 8% 6% 4% 2% 0% 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 250 % of Annual Quota Attainment (with Trendline)
    31. 31. # QUOTAS? 1 58%
    32. 32. WHAT ELSE TO WORRY ABOUT?• Quota attainment typically focuses on revenue – Some SPIF payments for margin – Other measures for new clients, upsells, etc.• Reps focus on their primary measure – Secondary measures reward, but might not incent – Too many measures leads to distraction
    33. 33. QUOTA’S CHECKLIST Set Territories based on zip codes, area codes, named accounts, vertical markets, company size) Check industry databases to ensure that there are enough opportunities in each territory. Not everyone makes quota, so don’t make the sum of quota your annual goal! If everyone is at quota, how much will the company payout in total commissions?
    34. 34. REVENUE MODELING ESTIMATES Not everyone will hit their numbers There will be turnover The market will change Someone will knock it out of the park Split your model into 3 buckets of attainment when forecasting costs. (Sound Familiar?)
    35. 35. “ The Team
    36. 36. INCENT RIGHT = INCENT THE ROLE
    37. 37. TEAM BUILDING Do you have all of the roles identified? Do you have a full team assembled? How long will you give them to fill a slot?
    38. 38. KEEPING THE HUNTER HUNTING Conduct a salary survey to set target pay. Know your market – it changes. How much of the target pay should be variable? Pick metrics to base rewards on that meet corporate goals, focusing on the most important one. Check out how much you’ll spend on sales if everyone makes quota
    39. 39. THE VALUE OF FARMING Make sure you know what line items in a transaction reflect the appropriate renewal and up-sell revenue the Farmer owns. Don’t assign quota based on things the Farmer does not control. What periods should you track? If all of your renewals are at year-end, a monthly quota does not make sense. Try annual quotas instead.
    40. 40. SPIFFING A SPECIALIST The complexity of the product will increase a specialist’s percent of salary consisting of variable pay. Quota = combined quotas of supported team members Reward for other specialist’s activity, like fairly supporting sales staff, helping move new products, etc.
    41. 41. ADDING PROSPECTORS Do your prospectors develop their own lists or is marketing providing assistance? Is the plan incenting the prospector to deliver the right types of leads? Check the relationships between prospectors and sales reps, and watch to see how many they can support. How much of the closed revenue do you want to pay to ensure that only good leads are passed? How many qualified leads are needed to become a closed opportunity? How long does it take?
    42. 42. COMPING THE CAPTAIN If the entire team hits quota, what is the Captain’s performance toward goal? If the Captain hits their goal, where is the company against plan? Captains will usually assign higher numbers downstream in case of a rep not performing. Are there open positions in the Captain’s team? How does the Captain’s quota reflect open positions, new reps and experienced reps?
    43. 43. “ Keeping them focused
    44. 44. INCENT RIGHT = SHOW ME THE MONEY
    45. 45. LEADERBOARDS
    46. 46. INCENT RIGHT = INCENTIVES EVERYWHERE
    47. 47. EMPLOYEES AREDISTRACTED ONCE EVERY …10.5 MINUTES_______
    48. 48. WHICH ADDS UP TOA TOTAL OF… 546_______ HRS A YEAR
    49. 49. SPIFFS AND OTHER REWARDS• Build into your budget• Make it immediate• Majority of variable should be individual• Team bonuses can be accelerators or contests• Awards – President’s Club• Weekend escapes• Gift certificates
    50. 50. BUDGETING Money for core incentives Money for SPIFFs Money for club Money for shared credits Money for all roles This is all part of your cost of sales
    51. 51. “ Incent Right
    52. 52. WHY NOT JUST USE EXCEL? Custom Excel 3-4 weeks E-mails Spreadsheets in arrears
    53. 53. WASTING TIME NOT SELLINGSALES doesn’t understandtheir plansToo much time betweenthe effort and thepaymentCompanies do not modifyplans to addresschanges, launches or threats
    54. 54. INCENT RIGHT = COMPLETE VIEW
    55. 55. THE PAYOFF FASTER REVENUE GROWTH >2x SHORTER QUICKER SALES SALES LOWER CYCLES SALES TURNOVER MORE REPS 37% MAKE 36% QUOTA 25% SOURCE:Aberdeen Dec 2011 7%
    56. 56. “ New Year’s Resolutions
    57. 57. 1. KNOW THE COSTSCompensation Cost of Sales (CCOS) Collecting that data is not always as easy as it sounds, because it lives all over. Sync all of your business data — finance, ERP, sales, CRM, etc. — in one automated sales-compensation tool. Use complete, real-time data to determine percentage of spend.
    58. 58. ONGOING BUDGET TRACKING @erikchaz / @xactlycorp
    59. 59. 2. SPEND MORE ON SALES Drill into your top-performing territories, products, and performers. What opportunities do you see to increase spend for long-term improvements? Does the data indicate that you should sweeten the pot for certain top performers? Should you increase sales spending in certain territories?
    60. 60. 3. INVEST IN YOUR SALES REPSSales managers get the best ROI oncoaching dollars by investing in midlevelperformers. Review your data to determine the effectiveness of your coaching and training programs. Identify sales reps who could most benefit from coaching and training Customize training and coaching programs
    61. 61. 4. CHECK & RE-CHECK THE NUMBERS If the entire team hits quota, what is your total revenue, total margin, and total cost? How many people got paid on each deal? Re-run the numbers using performance buckets. Re-run the numbers AGAIN assuming different turnover rates. Include the time lag from position posting to first deal closed. After you build the plan – be prepared to blow it up if the market makes a big change.
    62. 62. 5. COMPLY WITH THE LAW Stay up-to-date on legislation Create plan documents that specify how commissions will be tracked and paid, then route them to employees for approval. Use an automated tool to guarantee consistency between commission plans and information used to calculate and report on commissions.
    63. 63. “ Final thoughts
    64. 64. REMEMBER TO CONNECT THE PIECES
    65. 65. MY BOOKSHELF Predictable Revenue, Aaron Ross Compensating the Sales Force, David Cichelli The Complete Guide to Sales Force Incentive Compensation, AndrisA. Zoltners, PrabhakantSinha and Sally Lorimer Sales Compensation Made Simple, Joseph DiMisa What Your CEO Needs to Know about Sales Compensation, Mark Donnolo
    66. 66. REMEMBER What are you trying to achieve? Who is going to do it for you? How much leverage and upside? What are you going to measure? When will you write the check?
    67. 67. QUESTIONS 225 W. Santa Clara St., Suite 1200 San Jose, CA 95113 www.xactlycorp.com Erik W. Charles Principal Incentives Strategist echarles@xactlycorp.com @erikchaz on Twitter
    68. 68. Free Resources• www.dealmakerindex.com Score your sales effectiveness. Get advice. See how you compare.• www.dealmakergenius.com Create a customized sales process.• www.dealmaker365.com Read our blog featuring insights on sales effectiveness.• @dealmaker365 @thetasgroup Follow us on Twitter.• www.thetasgroup.com Learn more on our website. © The TAS Group 2013
    69. 69. Where You Can Find Us www.thetasgroup.com • US 866.570.3836 • UK +44(0)1189 880 149 • International +353(0) 1 6788 900 • marketing@thetasgroup.com • Twitter: @thetasgroup © The TAS Group 2013
    70. 70. Leveraging Lessons Learned in 2012to Exceed Financial Goals in 2013Erik Charles | Principal Incentives StrategistXactly Corporation

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