Sales Compensation for Tough Times


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You'll learn what you can and should do now to ensure success in 2009. You'll see how to avoid overpayment and how to manage your incentive costs so that they stay in line with sales results in these tough times.

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Sales Compensation for Tough Times

  1. 1. Sales Compensation for Tough Times
  2. 2. Today’s Speaker <ul><li>Liz Cobb, Founder & CEO Makana Solutions </li></ul><ul><li>Makana is the third compensation management company Liz founded </li></ul><ul><li>Over 20 years in sales compensation design and process automation </li></ul><ul><li>Liz is a recognized industry expert, has consulted for hundreds of companies and speaks frequently on effective sales compensation </li></ul>
  3. 3. Today’s Speaker <ul><li>Teanna Spence, Compensation Director, Makana Solutions Inc. </li></ul><ul><li>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. </li></ul>
  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 can take advantage of a dedicated sales comp planning solution via the AppExchange with Makana Motivator.” George Hu, CMO “ We believe CEO Cobb's significant knowledge of and insight into the sales compensation industry….will help land Makana Solutions a solid position in the expanding market.” Judy Hodges, Research Analyst
  5. 5. Software for your 2009 Planning <ul><li>See the big picture </li></ul><ul><li>Access built-in best practice </li></ul><ul><li>Anticipate incentive costs </li></ul><ul><li>Generate graphical plan documents </li></ul>
  6. 6. Planning to Payment Coming Soon <ul><li>Instantly start calculating payments on your plans in Motivator </li></ul><ul><li>Get a sneak peek: </li></ul>
  7. 7. Sales Compensation Best Practices <ul><li> </li></ul><ul><li>Sample sales compensation plans </li></ul><ul><li>Sales compensation surveys </li></ul><ul><li>Recorded Webinars </li></ul><ul><ul><li>Sales planning and territory management </li></ul></ul><ul><ul><li>Saas and subscription based sales comp </li></ul></ul><ul><ul><li>Sales Compensation best practices </li></ul></ul><ul><ul><li>Build a SaaS Sales Comp Plan in 15 minutes </li></ul></ul><ul><ul><li>Common Pitfalls in Sales Comp design </li></ul></ul><ul><ul><li>Sales Compensation Planning Process </li></ul></ul>
  8. 8. Sales Compensation for Tough Times
  9. 9. Makana Value Proposition <ul><li>Make great sales compensation easy </li></ul>
  10. 12. Sales Compensation in Tough Times <ul><li>Tough times – what you can do </li></ul><ul><li>How Motivator can help </li></ul><ul><li>Q & A </li></ul>
  11. 13. Tough times – what can you do? <ul><li>Identify growth strategies </li></ul><ul><ul><li>Customer segmentation </li></ul></ul><ul><ul><li>Industry focus </li></ul></ul><ul><ul><li>Product profitability groups </li></ul></ul><ul><ul><li>Sell more to existing customers </li></ul></ul><ul><li>Optimize sales productivity </li></ul><ul><ul><li>Balance quotas and territories </li></ul></ul><ul><ul><li>Clear goals & plans </li></ul></ul><ul><li>Reduce costs </li></ul><ul><ul><li>Lower base salary, introduce thresholds </li></ul></ul><ul><ul><li>Eliminate cost exposure </li></ul></ul><ul><ul><li>Eliminate ‘gaming the plan’ </li></ul></ul>
  12. 14. Survey Results for Components of Growth Sirius Decisions
  13. 15. Sales Comp Follows Business Strategy
  14. 16. Refine Market Focus <ul><li>Analyze your compensation data </li></ul><ul><ul><li>Top 10 accounts </li></ul></ul><ul><ul><li>Top 3 industries </li></ul></ul><ul><ul><li>Top selling products </li></ul></ul><ul><ul><li>Look at incentive costs </li></ul></ul><ul><li>Clarify your job roles </li></ul><ul><ul><li>Can you improve direct sales through better leads? </li></ul></ul><ul><ul><li>Do you need specialists to go after a new segment? Or Account Managers? </li></ul></ul>
  15. 17. The Plan Communicates <ul><li>Starts with clear, concise documents </li></ul><ul><ul><li>Easy to see rewards </li></ul></ul><ul><ul><li>Keep top priorities in mind </li></ul></ul><ul><ul><li>Define exceptions precisely </li></ul></ul><ul><li>Be aware of history </li></ul><ul><li>Explain transitional issues and major plan changes directly with individuals </li></ul>
  16. 18. Modeling is more important now than ever Total Sales
  17. 19. Optimize Sales Productivity <ul><li>Balance quotas and territories </li></ul><ul><li>Scrutinize under performers </li></ul><ul><li>Provide extra motivation for your top performers </li></ul><ul><li>Reward the right behavior </li></ul>
  18. 20. Performance Distribution Curve Unbalanced Balanced
  19. 21. Average Opportunity Rep Capacity Lost Opportunity Territory Opportunity vs. Rep Capacity
  20. 22. Reduce Quotas in 2009? <ul><li>Be careful </li></ul><ul><li>Analyze sales potential realistically </li></ul><ul><li>Compare to historical performance </li></ul><ul><li>Review in 6 months </li></ul>
  21. 23. Reduce Compensation Costs <ul><li>Lower base salary – another ‘be careful’ </li></ul><ul><li>Introduce thresholds </li></ul><ul><li>Clearly understand cost exposures </li></ul><ul><li>Eliminate ‘gaming the plan’ </li></ul>
  22. 24. Provide Extra Motivation <ul><li>Same TTC </li></ul><ul><li>Shift in mix </li></ul><ul><li>Greater upside </li></ul>Mix and Upside
  23. 25. Other Levers… <ul><li>Levers: threshold and upside </li></ul><ul><li>Consider thresholds commensurate with base salary carefully </li></ul><ul><li>Increase upside </li></ul>
  24. 26. Understand Cost Exposures <ul><li>Model costs at 150% </li></ul><ul><li>Look at historical attainment </li></ul>
  25. 27. Analyze Pay for Performance Annual Attainment Are you paying the same for equal performance?
  26. 28. Eliminate ‘Gaming the Plan’ <ul><li>Top 5 ways a rep can ‘game’ </li></ul><ul><li>Hold sales until the next quota period </li></ul><ul><li>Coast on annuities </li></ul><ul><li>Sell to existing customers </li></ul><ul><li>Sell easy products </li></ul><ul><li>Fail to report errors in overpayments </li></ul>
  27. 29. Close the Loopholes <ul><li>Monthly quotas that reset are easy to ‘game’ </li></ul><ul><li>Use YTD goals </li></ul><ul><li>Eliminate ‘tails’ </li></ul><ul><li>Don’t delay release of payments to a far away event </li></ul><ul><li>Pay on a single event – the one closest to the point of influence </li></ul><ul><li>Automate payments to increase accuracy </li></ul>
  28. 30. Now, We’ll Show You How Base Incentive TTC Quota Customers Product Lines Job Roles Territories Organization Measures Formulas Payout
  29. 31. Planning to Payment: Coming Soon <ul><li>Start With What-ifs </li></ul><ul><li>Historical attainment </li></ul><ul><li>Projected attainment </li></ul><ul><li>Quotas </li></ul><ul><li>Staffing levels </li></ul><ul><li>Payout rates </li></ul>Modeled Calculated Planning % Attain Formulas Rate Payout < 100 Rate x Credit 5% $5,000 = 100 Rate x Credit 10% $10,000 > 100 Rate x Credit 15% $15,000 Payment % Attain Formulas Rate Payout < 100 Rate x Credit 5% $5,000 = 100 Rate x Credit 10% $10,000 > 100 Rate x Credit 15% $15,000
  30. 32. Questions & Answers <ul><li>Makana Motivator </li></ul><ul><li>Planning </li></ul><ul><ul><li>$19/month </li></ul></ul><ul><ul><li>Cancel anytime </li></ul></ul><ul><li>Planning to Payment </li></ul><ul><ul><li>Request an online demonstration </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul><ul><ul><li>(877) 881-0001 </li></ul></ul><ul><li>Additional Information </li></ul><ul><li>Best Practice Content </li></ul><ul><ul><li>Sample plans </li></ul></ul><ul><ul><li>Recorded webinars </li></ul></ul><ul><ul><li>Surveys </li></ul></ul><ul><ul><li> </li></ul></ul><ul><li>Expert consulting </li></ul><ul><ul><li> </li></ul></ul>