Sales comp pricing quoting survey results

© 2013 Vendavo, Inc. PROPRIETARY & CONFIDENTIAL© 2013 Vendavo, Inc. PROPRIETARY & CONFIDENTIAL

Survey Results:Sales Compensation, Pricing

and Quoting

March 18, 2013

© 2013 Vendavo, Inc. PROPRIETARY & CONFIDENTIAL

Objective

Gather input about current pricing approaches from sales leaders and pricing professionals


Methodology

Started the project in February 2013 using one-on-one telephone interviews to gather quantitative and qualitative data

– 5 interviews

Implemented a web-based survey in late February 2013 to increase the number of participants

– 95 surveys


Executive Summary

The biggest challenges that organizations have are:– Change management– Setting prices/pricing policies

The top goals for the next year include:– Expanding use of technical tools

• New tools• Broader use/integration from existing tools

– Improve profit margins– Implement/improve pricing management processes

“Gaining support from Sales for sales system”

“Get Vendavo iPad ready”

“Implement a deal publishing solution that meets business

requirements”

“Streamline price information and definitions”


Executive Summary (cont’d)

Pricing is currently being established primarily by sales reps either based on sales manager input or on their own, using policies and tools they are given.

– Only 43% of the time does price come from a published price list.

– 73% of the time, quoting tools are used.• Among those who use quoting tools, home grown tools (65%) and

CRM tools (57%) are the most commonly used quoting tools; only 22% are using 3rd party tools.

– SAP is, by far, the most common CRM tool.



Participants don’t feel as if they have control over deal profitability and don’t think that teams are very effective at maximizing profit on deals.

Target prices aren’t being consistently set.– When established, usually it’s usually done by product managers

or pricing managers.

Discounts are most likely to:– Require a manager’s approval– Be based on volume



Variable compensation is most likely to be based on revenue; 62% say that there are changes being discussed (moving toward profit and contribution).

– Sales executives are more likely to be compensated based on profit and margin than sales managers or sales reps are.


Who Participated

48 companies represented– 47% of respondents from Pricing/Functionality function

• Only 15% have quota carrying sales teams reporting to them• Difficult to get sales managers to participate

Pricing

/Pro

fitab

ility

Proce

sses

/Sys

tem

s IT

Mar

ketin

g

Busine

ss A

nalys

tsSale

s

Busine

ss D

evelo

pmen

t

Other

0%

20%

40%

60%

Functional Area

Yes No0%

20%

40%

60%

80%

100%

Do you have a quota carrying sales team that re-ports to you or to one or more of your managers?


Primarily mid-sized industrial manufacturing companies

Who Participated (cont’d)

0%

10%

20%

30%

40%

50%

Industry

10 - 100 reps

100 - 500 reps

500 - 1000 reps

1000 - 5000 reps

5000+ reps0%

10%

20%

30%

40%

50%

What is the total size of the sales force at your organization?


Top Challenges

The top challenges faced by respondents (listed in order of frequency):

– Change management– Setting prices/pricing policies– Data quality/management– Increasing/managing profitability– Competitive data


Top Goals

The top goals targeted for the next year (listed in order of frequency):

– Expand technology tools– Profit/margin growth– Implement/improve pricing management processes– Revenue/market share growth– Improve analytics


About the Pricing/Quoting Process

Sales reps are most likely to prepare quotes themselves at most of the organizations surveyed.

Sales Reps prepare quotes

themselves

Sales Operations Deal Desk N/A - We do not provide quotes

Other0%

20%

40%

60%

80%

Who Prepares & Provides Quotes(check all that apply)


69% of participants said that sales managers determine price. Other people who determine price:

– Sales rep (56%)– Product manager (53%)– Pricing manager (43%) or pricing specialist (33%)

About the Pricing/Quoting Process (cont’d)

Sales Manager

Sales Rep Product Manager

Pricing Manager

Pricing Specialist

Sales Op-erations

Deal Desk Other0%

20%

40%

60%

80%

When working on a deal or a quote, who determines the price? (check all that apply)


There is no consistency around establishment of target prices for products.


1 None

(no prod-ucts have

target prices)

2 3 4 5 6 7 All

(every product has

a target price)

0%

10%

20%

30%

To what degree are target prices known for your products?


Product managers are most likely to establish target prices (50%).

– Pricing manager: 39%


Product Manager

Pricing Manager

Sales Manager

Pricing Specialist

Sales Rep Sales Ops Deal Desk N/A - Target

prices are not

known for our prod-

ucts

Other0%

20%

40%

60%

Who sets target prices?


Sales is most likely to receive target prices from pricing managers (39%)

– From product manager: 28% – From sales manager: 23%


Pricing Manager

Product Manager

Sales Manager

Pricing Specialist

Sales Ops Deal Desk Other N/A - Target

prices are not

known for our prod-

ucts

0%

10%

20%

30%

40%Who communicates target prices to Sales?


There are a variety of ways by which product pricing is established:

– Sales rep requests a price below floor: 54% – Sales manager ensures that price meets margin goals: 46%– Price comes from a published price list: 43%


Sales reps can request a price below floor

Sales mgr responsible to ensure the quoted price meets company pocket margin goals

Price comes from a published price list and appears on the

quote

Sales rep responsible to ensure the quoted price meets company pocket margin goals

Other0%

20%

40%

60%

Which of the following is true about how product pricing is established? (check all that apply)


Profit margin is considered most of the time when quoting below floor.


0%20%40%60%80%

When quoting below floor, is profit margin considered?



The most common ways in which sales reps prepare for customer visits that involve negotiation:

– Review CRM for historic customer data (pricing, order volume, etc.)

– Prepare an account-specific approach after conferring with others (Sales manager, product management, etc.)


73% of participants are using quoting tools at their organizations.


Yes No0%

20%

40%

60%

80%

Are quoting tools used by your organization?


The most common quoting tools are:– Homegrown tools (63%)– CRM (52%)

• Most likely to be SAP


Homegrown Quoting Tool

CRM Third Party Quot-ing Tool

SFA0%

20%

40%

60%

80%

What quoting tools are used by your organization? (name any and all that apply)


Sales reps appear to be mostly compliant at using quoting tools.


1 Not com-pliant at

all

2 3 4 5 6 7 Extremely compliant

0%

5%

10%

15%

20%

25%

30%

How compliant are your reps at using quoting tool?


Discounts usually:– Require manager’s authority– Are based on volume of products sold


Manager's au-thority is re-

quired

Based on vol-ume of products

sold

Sales rep has authority to give

the discount

There is a pre-set discount el-igibility chart

Revenue/units sold must not be

less than a set floor price

Other0%

20%

40%

60%

80%

Which of the following is true when giving discounts? (check all that apply)


Very few participants feel as if they have complete control over deal profitability

Profitability

1 I have no

control over deal prof-itability

2 3 4 5 6 7 I have

complete control over

deal prof-itability

0%

10%

20%

30%

To what degree do you feel like you have the ability to impact deal profitability in the field?


Profitability (cont’d)

There is a low level of confidence in how effective teams are at maximizing profit on a deal-by-deal basis.

1 Not confi-dent at all

2 3 4 5 6 7 Extremely confident

0%

10%

20%

30%

40%

How confident are you that your team maximizes profit on a deal-by-deal basis?


Variable compensation is most likely to be based on revenue for all Sales personnel.

– Profit is the next most likely driver of variable compensation, although it is more likely to drive sales executive compensation than sales managers or sales reps

• Sales reps are equally likely to be compensated based on volume and profit.

Compensation

Revenue Profit Contribution Margin

Volume Value-added Quote to Target

0%

20%

40%

60%

80%

Variable Compensation is Based on:

Sales Reps

Sales Mgrs

Sales Execs


62% of participants said that changes to their variable compensation have been discussed in their company.

– Profit and contribution margin are the most likely areas of change.

Compensation (cont’d)

Profit Contribution Margin

Value-add Quote to Target

Volume N/A - No dis-cussions have taken place

Other0%

20%

40%

60%

What, if any, changes to variable compensation have been discussed in your company?

(check all that apply)


64% of participants said that their company motivates the sales force using other tools/programs.

– Leaderboards are the most common form of non-compensation incentive (25%)

Compensation (cont’d)

Leaderboards Carrot and Stick

Missions Social Connec-

tions

Employee of the Month

Games Other N/A - No other motiva-

tion is used

0%

10%

20%

30%

40%

In addition to compensation, how else is your sales force motivated? (check all that apply)


The most commonly used online resources are (in order of usage):

– Professional Pricing Society (PricingSociety.com)– Vendavo.com/Vendavo blog– Gartner.com– Google search– Harvard Business Review (HBR.com)

Online Resources Used


https://twitter.com/%23!/Vendavo

https://www.facebook.com/Vendavo

http://www.linkedin.com/company/14613?trk=srch_hero_comp_name

http://www.vendavo.com/blog

Documents

Sales comp pricing quoting survey results