The document outlines strategies for effectively managing and compensating sales teams to boost business revenue. It emphasizes the importance of aligning sales DNA with business goals and the selling ecosystem, as well as creating comprehensive sales compensation plans. It also highlights key lessons learned from real-world experiences in hiring and managing sales professionals.

2. Entrepreneur’s Toolkit : www.marsdd.com/entrepreneurs-toolkit.html HR Workbook 1: Building an A-Team HR Workbook 2: Compensation HR Workbook 3: HR at Work Creating an HR plan: Butteriss on human resources Building HR processes, policies and procedures Compensating employees Hiring your friends: Is it such a good idea? Video: Human Capital: Building high performance teams Video: Human Resources Management

3. Best Practices HR Series Finding, Managing and Compensating Your Sales Team Effectively

4. Agenda Why must companies pay attention to the sales function? Focus on the impact to the business. Tips on hiring and managing sales. Sales DNA; knowing what you need and then finding it. Tips on managing sales teams for effective results. Sales Compensation Strategy Design Implementation Evaluation War stories and lessons learned. Sharing real stories from the field - what worked, what didn’t.

5. Why companies need to pay attention to the sales function…. One assumption: Your business needs to make money! If so, then this topic is of critical importance.

6. Revenue Stream Cost to create revenue Margin

7. Revenue Stream Cost to create revenue Margin Deal structure will drive the amount of margin. Margin Margin Sales Rep. will use ALL of these levers to close the deal.

8. Costs associated with each new sales hire: Salary Travel Additional staff (SE’s) Revenue Stream Cost to create revenue Margin Selling costs will further impact margin. Margin Sales Compensation Plan Design: Poorly set quotas Multi-layered sales teams Commission payment triggers

9. Sales DNA Hunter Will sell what product you have now Will sell what is easiest Will drive to close deals Will use and overuse every lever available Will continually hunt out new business So will not focus on post-sales activities Will place lots of demands on your team to respond to customers wants/needs Compensation Features Higher ‘at risk’ pay Incentive based on quotas Revenue targets, or margin targets

10. Farmer Will milk additional sales from existing accounts Will not seek new accounts Will use levers to drive repeated sales Will operate more autonomously Will have more focus on post-sales support Values ongoing customer relationship Compensation Features Lower ‘at risk’ pay Incentive based on quotas Revenue targets, or margin targets More support/service revenues targets Sales DNA

11. Business Development Focus on early engagement & evangelizing Usually has a more technical background, or extensive sector experience Focused on building relationships; influencing strategic decisions Selling product and ideas at multiple levels Not driven to close a deal Relationship focused Usually after a target list of customers or partners May focus more on the ‘big fish’ Not uncovering every stone for new accounts Compensation Features May have no incentive, or low ‘at risk’ pay Incentive based on pre-sales milestones MOU’s Trials Partnering agreements Sales DNA

12. Channel Management Focus on developing sales through 3 rd party channels Not focused on direct sales Compensation Features May have no incentive, or low ‘at risk’ pay Incentives based on revenue quotas achieved through channel partners Layered commission - $$ to channel manager & to channel partner Sales DNA

13. Very difficult to find one individual with multiple Sales DNA styles HOWEVER – as company’s needs change – you may need different sales DNA Very expensive to have the wrong sales person in place Not just $$$, but highly distracting to the business and the team Must be prepared to make changes as necessary Sales DNA Challenges

14. How to hire the RIGHT sales person…. STEP 1 Know what you need to (or can) accomplish – the GOAL Amount and timing of revenues required in your business plan (has it changed!)? Do you have something to sell…is the product ready? Is there a loss leader product? To drive adoption; create footprint; establish relationships Do you need partnerships or sales or both? STEP 2 Understand the SELLING ECOSYSTEM Is it a complicated sale? Are there multiple influencers involved? Can have organizations that create demand but will not buy your product Can have organizations that will influence demand through technical standards, regulatory environment, etc. Can have organizations that will buy your product, BUT will not buy directly from you and will only buy through partners or resellers

15. How to hire the RIGHT sales person…. STEP 3 Match the SALES DNA to the GOAL and the SELLING ECOSYSTEM This will also help in designing an effective sales compensation plan STEP 4 Consider where the sales function should be located? Close to the customer Close to a regional hub Close to HQ STEP 5 Create a description that reflects all of the above Review session on Recruiting your A-team for tips on sourcing candidates

16. Tips on successfully interviewing for Sales What to find out about the candidate: Building a pipeline Success in closing deals Post-sales focus (or not) Sales team support needed Quota results Types of deals (size of deals, number of customers, types of customers) Hitting quotas Remember that these are sales professionals – very adept at convincing you they can achieve anything Must validate their claims Understand their personal drivers Key to determining a good match Will also help in designing an appropriate compensation plan Doing a 2 nd interview is key; the candidate shifts from selling mode to asking mode Validate everything through references

17. Managing Sales Teams Effectively Requires a lot of maintenance!! Set and monitor clear targets Quotas – revenues; margins; etc. Milestones – must have meaningful value to the company Continually monitor results & pipeline – test credibility and assign appropriate probabilities Size of funnel 3:1 (depends on sector) When results don’t happen – understand why Wrong DNA for type of selling needed Market adoption of the product Availability of GA product Support to sales Changes in technology, regulatory environment, standards, competitive landscape, etc. Remember it is difficult to get different sales DNA in one person

18. Sales Compensation Linking the sales compensation plan to your business strategy Establishing the design team Assessing the existing plan (if required) Designing the new plan Implementing the new plan Evaluating results

19. Linking the Sales Compensation Plan to your Business Strategy Drive Desired Results: Sales objectives which support business plan Building customer faith Supporting revenue generation and profitability Incenting achievement of short term and long term goals

20. Understanding the Strategy Who?- Customers/Dealers What? - Specific Products & Services When?- Sales Cycle Where? - Competitive Environment Why? - Profitability, market share How? - By Customer? By Territory? by Product?

21. Balancing Business Objectives In-year objectives Sales volume goals Sales channel development profit targets % revenue growth specific customers specific products or services penetration of new markets keep salespeople focused Long term objectives Increasing shareholder value sustained profitability strategic customer or dealer base, customer loyalty improved market share product evolution retention of salespeople

22. Balance Revenue and Profit Margins - requirements and flexibility Meeting commitments to shareholders Affordability of incentive plan

23. 2. Establishing the Design Team Sales & Marketing Finance HR Legal Possibly IT

24. 3. Assessing the Existing Plan Business goals and strategies – review and assess Costs and productivity products Customers Employees Metrics Sales Productivity Customer Service Return on Compensation Investment (ROI)

25. Design Elements Eligibility Mix/Leverage Total Target Compensation Performance Measures Incentive Formulas Formula features

26. Eligibility Sales vs Non-sales focus Technical, Administrative staff etc. Team vs Individual Bonus Senior management Executive or Sales Compensation?

27. Compensation Mix/Leverage Factors influencing leverage: Leverage degree of sales focus level of influence management responsibility administrative responsibility customer service focus product sales cycle + -

28. Total Target Compensation Determine Organization’s compensation strategy Define job design and org structure Slot employees into jobs Collect relevant market data Focus on Total target compensation Create individual plans

29. Performance Measures Performance Measures – Sales staff Volume Profitability Strategic Objectives – MBO

30. Incentive Formulas and Features Tie market data to the target incentive Determine incentive payout Performance measures by job level Weightings by job level Accelerators by job level

31. Affordability - Cost Modeling Use financial ratios (profit margins by product, cost of sales etc) to determine affordability of plan design Finalize Accelerators, Performance measures and weightings

32. Terms and Conditions Eligibility Transfers Terminations Split credits House accounts Territory or accounts changes Foreign currencies Pricing Adjustments to payments “ Out Clause”

33. Implementation Communication Plan Explain any new or revised changes to plans Updates on forecasting models, product, customer, employee changes Individual meetings Makes changes as required Administration Finance reports and payouts Quarterly updates

34. Evaluation Back to step # 3 “Assessing the existing plan” Performance Measures – Sales Plan Business goals and strategies – review and assess Costs and productivity products Customers Employees Metrics Sales Productivity Customer Service Return on Compensation Investment (ROI)

35. Driving Behaviour – Keys to Effective Sales Compensation Setting pre-revenue sales targets – must be milestones that create significant value in the eyes of board/investors Paying out incentives at end of year for more strategic roles: gives more opportunity to build revenue stream and ‘afford’ the incentive payout allows time for success to be measured For BD roles – make payment of incentive conditional upon closing a financing round aligns to the goals of the whole team/company Higher ‘at risk’ pay plan design

36. Trends Cont’d Move to growth focus, Move to more value-add solutions sales - not box products Sales staff want access to plan details and performance/incentive - not 3 months for statement. 3 or less performance measures - less is more HR and Finance working more closely - critical for evaluation of plan Improved modeling and testing

37. War Stories and Lessons Learned Lesson 1 Hiring pedigree over substance. Lesson 2 The Asian footprint – tread carefully. Lesson 3 Multi-layered sales teams – who really makes the deal happen?

38. War Stories and Lessons Learned Lesson 4 Think global – act local… Lesson 5 Quota nightmares – adjustments, windfalls, turnover… Lesson 6 Late Sales Contracts – meet your deadlines or…

39. Thank You! Questions?