Sales Comp Planning Process Recording

Driving the Sales Compensation Plan Design Process

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• Goal: Build a winning Game plan for sales comp in 2009

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• Help companies design & run effective sales compensation programs through an automated self-service model

• And expert consulting with Motivator

Planning to Payment: Coming Soon

% 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

Start With What-ifs•Historical attainment•Projected attainment•Quotas•Staffing levels•Payout rates

% 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

Modeled Calculated

Planning

Driving the Sales Compensation Plan Design Process

Driving the Planning Process

• Benefits of advanced planning

• Overview of the process• Analysis you should do NOW• How Motivator can help

Benefits of Advanced Planning

• Overnight sessions before the kickoff meeting

• Tension because the plan is late

• Dense documents that no one can understand

• Confusion about what to do

• Conflicts between plans• Plan documents that look like they come from

another company

• And the list goes on . . .

None of these things happen:

Overview of the Process

• Involve each function•Sales operations

•Finance•HR•Executive•Administration•IT

• Establish timeline

• Identify new sales objectives

• Analyze performance

• Review job content

• Determine job roles required

• Benchmark pay

• Establish measures

• Assign territories

• Set quotas & goals

• Create plans

• Model costs using attainment history

• Gain program approval

• Create plan documents

• Communicate to individuals

• Implement new calculations and reports

Multiple Perspectives Needed

SMB may not have a full time person in each role, but the cross-functional perspective is still needed

Division of Responsibilities

Responsible for leading these efforts during process

Sales Leader

Role definition, design, definitions and communication

Sales Ops Performance analysis, quota allocation, territory assignment and document creation

CEO Strategy and alignment

Finance Analysis, modeling, budget and administration

Marketing Market analysis, product strategy and pricing

HR Role assessment, benchmarking, general policies

Legal Contract language for arbitration and signoff

Establish Timeline

1. Analysis2. Design 3. Documentation4. Implementatio

n

Traditional timeline for a $10M SW company with 10 reps

W1

W2

W3

W4

W5

W6

W7

W8

“ ”We probably reduced the process from a 2 person, 2 month process to a one person, two week process. 

Steve Balk, VP SalesSteve Balk, VP Sales

Use Motivator Planning to reduce the timeline

ROI Calculator - Makana Motivator Planning

Your company's complexityNumber of plans (job roles) 3Number of participants 50carry quota/direct sales

Hours Total Hours Total1. Analysis of History

- Gather participant data 0.25 12.5 0- Incentive payout by customer

-Analyze territory/quota coverage 0.5 6.25 0.5 6.25- Pay versus performance 8

2. Plan Creation & ModelingSet up spreadsheet model 24 0

- For all plans 6 18 1 3- Create multiple scenarios 8 4

- Review payouts for each person 0.2 10 0.1 5-Run model again after reviews 1 3 1

3. Document creationDraft document 4 12 0

- Revise after review 2 0.5- Avg. # of reviews per doc 5 30 5 7.5

Draft terms and conditions 8 8-Revise T&Cs for each plan 3 9 0.5 1.5

Approval/signoff-Individualize, print and distribute 0.25 12.5 1

-Follow-up for signatures 0.2 8 0.2 84. Implement and Communicate the Plan

Setup and extract your measurement data 8 8Implement new plan rules in adminstrative system

Sales participants - lost time while reviewing 2 100 0.5 25

Total Hours 278 38Total Weeks 7.0 1.0

Savings - Hours 240Savings - Weeks 6

MotivatorManual

Identify New Macro-level Sales Objectives

• Get Started! – Will you be addressing new markets or is your

customer mix changing?– Do you have new products to announce?– Are new sales channels/partnerships being

considered?

• Actual goal setting can wait until later in the process

Assess Current Plan

• Alignment to strategy• Team motivation• Comparison to competitors• ROI• Feedback loop

Assess Alignment to Strategy

• Look at plan elements side by side – Are you getting the results you wanted? – Are you rewarding for the right metrics? – Are the job roles incented to work together

as intended?

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?

Assess Competitiveness

• Are you able to attract the talent you want?

• How does TTC, mix and quota compare to competition?

Assess the Return on Investment

• What is your overall cost of sales?

• What are you paying for performance?

• What is the total cost per order?

Assess Your Feedback Loop

• Are your systems in order?

• Are your payments timely and accurate?

• Is it easy for your reps to see how they are performing?

• Survey group 2-3 times per year

The more frequent the feedback the better the results

Listen for Symptoms

* “Check Your Sales Compensation”, Workspan, 01/05 By Mark Donnolo, Sibson Consulting

Top Job Design Errors*

• The Corrupted Sales – Adding collections, marketing and customer

service to selling

• The Blended Sales Job– Sell new business, sell to existing, work with

channels

• Bandwidth Exceeded– Too many products and dissimilar

customers

• Undetected Job Transformation– Company stage shifts, misalignment follows

* Compensating the Sales Force, David Cichelli

Example: How to Analyze Pay for Performance

Annual Attainment

Are you paying the same for equal performance?

How Motivator Can Help

Performance Distribution Curves

Aim for a bell curve with 60% at or over quota

Rollout – Communicating the Plan

• Starts with clear, concise documents– Easy to see rewards– Keep top priorities in mind– Define exceptions precisely

• Be aware of history• Explain any transitional issues• Train first line managers on

how to communicate the plan

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

Planning to Payment: Coming Soon

% 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

Start With What-ifs•Historical attainment•Projected attainment•Quotas•Staffing levels•Payout rates

% 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

Modeled Calculated

Planning

Resources

• Compensating the Sales Force, David Cichelli

• Compensating New Sales Roles, second edition, Jerome A. Colletti and Mary S. Fiss

• The Sales Compensation Handbook, Stockton B. Colt

• Rewards that Drive High Performance, Thomas B. Wilson

• World at Work, an association of compensation professionals– www.worldatwork.org

Next Steps

GamePlan Program• One Year Motivator Free

– Take one hour free training– Get one year free – $490 to $1,490 value– First come first serve

• www.makanasolutions.com/game-plan

Additional Information• Best Practice Content

– Sample plans, recorded webinars

– www.makanasolutions.com/bestpractice

• Makana Payment sneak peek

• (877) 881-0001