November 24, 2009

Ted BriggsPrincipalBetter Sales Comp Consultants

Brian HartlenVice President MarketingVaricent

Sales CompensationTrends, Tools, Analytics, and Solutions for the Emerging Environment

© 2009 The Sales Management Association

The Sales Management Association

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A global, cross-industry professional association for sales operations and sales management.

Focused in providing research, case studies, training, peer networking, and professional development to our membership.

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Copyright © 2008 - 2010 The Sales Management Association. All rights reserved.

This abridged presentation is provided as a preview.

Sales Management Association members may access the presentation in its entirety, and download copies in PowerPoint format, at the Sales Management Association website: www.salesmanagement.org.

Consider joining The Sales Management Association, the premier professional association for sales management and sales operations professionals.

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• Governance• Plan Development• Plan Management

• Sales Compensation Analytics• Basic• Advanced

• Leveraging Information Technology• Today’s Environment• Role of Technology• Sales Performance Management

AgendaToday’s Webcast

© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 4

• It’s a common sense look at how sales compensation plan decisions are made and how they are managed…

• Who performs which tasks?• Under what timelines?• Under what philosophy or direction?• With which degrees of authority?

• Good sales compensation governance gives stakeholders peace of mind that plan decisions are made…

• Wisely• Strategically• With everyone’s understanding and buy-in

Sales Compensation GovernanceWhat Does it Mean?

© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 5

Sales Compensation GovernancePlan Development and Plan Management

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Strategy and Plan

Goals

Sales Jobs

Plan Design

Plan Cost

Plan Approval

Plan Imp/

SupportPlan

Administration

Plan Monitoring & Assessment

Interim Modifications

Dispute Resolution

Plan Development

Plan Management

HQ Executives

• Define overall corporate strategy

BU Head

• Apply corporate strategy at BU level

BU Sales Head

• Determine sales strategy to support BU strategy

Steering Committee

• Ensure alignment with sales, BU, and corporate strategies

HQ HR/ Operations

• Determine pay ranges/job levels within corporate structure

BU Sales Head/ Mgrs.

• Select appropriate jobs/coverage required from approved list

Steering Committee

• Review BU job selections to ensure adherence to corporate structure

BU Sales Managers

• Assign salespeople to appropriate job roles

Sales Strategy Formulation

Job Role Definition and Application

© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 7

Where Responsible ResidesB. Define Clear Ownership

The Basics and Beyond

• You are most likely aware of the “usual suspects” in terms of compensation plan analytics

• Can provide great value• Serve as the foundation to any analytical program

• But companies now more than ever are focusing on next level analytics for better sales compensation and better sales effectiveness

• Headcount planning• Quota setting• CCOS-based segment analysis

Plan Analytics

© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 8

Market-Based Information Driving Account Level Goals

• Incorporating more inputs, more stakeholders, and greater effort

Leveraging Market-Based Information

• Understand the particular growth rates by industry segments, geographies, and account types

• Better aligning sales and marketing groups

Categorizing Accounts

• Categorizing accounts

• Ability to identify growth rates by account type

Applying Growth Rates

• Applying the appropriate market-informed rates to each account

Reconciling Bottom Up and Top Down

• Comparing account driven growth rates versus top down estimates

• Further analysis to close gaps

© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 9

Next Generation II – Quota Setting

Recovering from the Economic Crisis

• The last twelve months involved companies making many fast-paced (hasty?) and challenging (short-sighted?) decisions

• Sales cuts and pay reductions may have compromised the role and perceptions of the sales team’s value

• Unraveling the changes made will take time, particularly as the economy still limps forward but is poised for recovery

• We need to transition from “what the heck happened” to “what now”?

© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 10

Sales Compensation Trends

Compensation Design ElementsWhat ‘s Under Consideration?

• Eligibility • Ranges and Structure• Incentive Mix *• Upside *• Performance Measures *• Performance Targets• Crediting• Plan Mechanics *

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Poll Question 1 Incentive Mix

A. Increasing at-risk pay as a percentage of target compensation

B. Decreasing at-risk pay as a percentage of target compensation

C. Not made or considering any changes to base/incentive mix levels

As it relates to base-salary/at-risk ratios (incentive mix) our company has acted or is considering:

Increasing At-Risk Pay

No Change

Decreasing At-Risk Pay

30%

14%

56%

As it relates to base-salary/at-risk ratios (incentive mix) our

company has acted or is considering:

A. Substantially changing our plan mechanics

B. Moderately changing our plan mechanics

C. Only tweaking our plan mechanics

D. Not making any changes to our plan mechanics

As it relates to plan mechanics our company has acted or is considering:

© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 13

Poll Question 4Plan Mechanics

A. Increasing at-risk pay as a percentage of target compensation

B. Decreasing at-risk pay as a percentage of target compensation

C. Not made or considering any changes to base/incentive mix levels

As it relates to base-salary/at-risk ratios (incentive mix) our company has acted or is considering:

Substantially Changing

Just Tweaking

Moderately Changing

10%

30%

44%

As it relates to plan mechanics, our company

has acted or is considering:

No Change 17%

• Inability to look at the impact of recent, or planned changes• Inability to implement new plans quickly• Managing overpayments and errors• Sales creates its own ‘shadow accounting systems’ • Challenged to meet audit and compliance requirements • Inability to model/analyze effectiveness of incentive spend • Too much time and effort to administer and maintain incentive compensation

processes• Payment disputes consume significant time & effort • Limited ad-hoc reporting & analysis capabilities• No ‘tight’ links between incentive pay, sales territories, quotas and business

metrics

• Inability to look at the impact of recent, or planned changes• Inability to implement new plans quickly• Managing overpayments and errors• Sales creates its own ‘shadow accounting systems’ • Challenged to meet audit and compliance requirements • Inability to model/analyze effectiveness of incentive spend • Too much time and effort to administer and maintain incentive compensation

processes• Payment disputes consume significant time & effort • Limited ad-hoc reporting & analysis capabilities• No ‘tight’ links between incentive pay, sales territories, quotas and business

metrics

Slow Rigid Error Prone

© 2009 The Sales Management Association, Better Sales Comp Consultants, and Varicent 14

Today’s Challenges

Revenue

Cost of Sales0

200

400

600

800

1000

1200

1400

Revenue vs Sales Spend

Revenue Sales Spend

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Focusing on Good Business

Sales Performance Management

Sales Performance Management Dashboard

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Sales Performance Management

This abridged presentation is provided as a preview.

Sales Management Association members may access the presentation in its entirety, and download copies in PowerPoint format, at the Sales Management Association website: www.salesmanagement.org.

Consider joining The Sales Management Association, the premier professional association for sales management and sales operations professionals.

Learn MoreThe Sales Management Association

Copyright © 2008 - 2010 The Sales Management Association. All rights reserved.

© 2009 The Sales Management Association

The Sales Management Association is a global professional association for sales management and sales operations. The SMA fosters a community of interest among sales force effectiveness thought leaders, consultants, academics, and sales management practitioners across many industries.

Through training workshops, online resources, and research materials, The SMA addresses the management issues of greatest concern to members. The SMA’s focus areas include management leadership, sales force performance coaching, sales planning, sales process management, enabling technologies, incentive compensation, and sales force support.

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