Upload
others
View
7
Download
0
Embed Size (px)
Citation preview
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
SALES FORCEEFFECTIVENESS MANAGEMENTAccelerate Sales Force Productivity and Improve Your Sales Results by Aligning Sales Activities with Company Objectives
Origin Source by David CichelliSenior Vice President The Alexander Group, Inc.Author of ‘Compensating the Sales Force’
2
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Comprehensive Framework for Sales GrowthComprehensive Framework for Sales Growth
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
3
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Predictable Pattern of Business GrowthPredictable Pattern of Business Growth
Base
Low
High
Phase IStart-Up
Phase IIVolumeGrowth
Phase IIIRe-
Evaluation
Phase IVOptimization
Grow
GrowReally Fast
Grow; KeepCustomers
Launch NewProducts
ControlPricing Reduce
Cost
Re-ThinkProduct & Market
Strategy
Reposition
GrowSelect
Markets
Top Line Growth
• Territory Sizing• Quotas
Revenue Mgt
• Get New Customers
• Keep Customers• New Products
Price Mgt
• Protect Base• Price Mgt• Reduce Costs
Segment Gowth
• New Value Proposition
• New Markets• Specialization
Objectives
IssuesSales
Growth
4
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Success Can Lead to ObsolescenceSuccess Can Lead to Obsolescence
Business Strategy
Start-Up
Any Business
Marketing Strategy One Product
SalesStrategy Survive
Obsolescence
Obsolescence
Volume Growth
More Business
Big Market
Lower Costs
Obsolescence
Obsolescence
Re-Evaluation
What Business?
Many Products/Markets
Hold Share
Obsolescence
Obsolescence
Optimization
CertainBusiness
SegmentManagement
Optimize forReturns
Obsolescence
Obsolescence
SBUs
InsufficientCustomerCoverage
InsufficientCustomerCoverage
Failure toSupport Multi-
Product Strategy
Failure toSupport Multi-
Product Strategy
Price ErosionPrice ErosionToo ManyDissimilar
Products andCustomers
Too ManyDissimilar
Products andCustomers
Phase IStart-Up
Phase IIVolumeGrowth
Phase IIIRe-
Evaluation
Phase IVOptimization
5
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Dimensions of Excellence by PhaseDimensions of Excellence by Phase
Business Strategy
Start-Up
Any Business
Marketing Strategy One Product
SalesStrategy Survive
Transformation
Transformation
Volume Growth
More Business
Big Market
Lower CostsTransform
ationTransform
ation
Re-Evaluation
What Business?
Many Products/Markets
Hold Share
Transformation
Transformation
Optimization
CertainBusiness
SegmentManagement
Optimize forReturns
RecruitingOn-boardingMessagingExecutingTesting
RecruitingOn-boardingMessagingExecutingTesting
Acct StratificationMultiple Messages
Acct Mgt SkillsHunters
New ProductsMarket Share
Acct StratificationMultiple Messages
Acct Mgt SkillsHunters
New ProductsMarket Share
Customer SegmentsMultiple Channels
Sales SpecializationRules of EngagementMargin Maintenance
Customer De-selectionProductivity
Customer SegmentsMultiple Channels
Sales SpecializationRules of EngagementMargin Maintenance
Customer De-selectionProductivity
Fewer SegmentsSimpler Channels
Intense Customer FocusHigh Productivity
Low ChurnGood Margin/ Cash Flow
Fewer SegmentsSimpler Channels
Intense Customer FocusHigh Productivity
Low ChurnGood Margin/ Cash Flow
Phase I Phase II Phase III Phase IV
6
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Destination: Sales Excellence - ThemesDestination: Sales Excellence - Themes
Start-Up Volume Growth Re-Evaluation OptimizationPhase I Phase II Phase III Phase IV
New MarketAccess SellingNew MarketNew Market
Access SellingAccess Selling
Successful GrowthScaling
Successful GrowthSuccessful GrowthScalingScaling
Core-Market SellingProficiency
CoreCore--Market SellingMarket SellingProficiencyProficiency
Multi Segment/ Solution SellingMulti Segment/ Multi Segment/ Solution SellingSolution Selling
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Sales Segment & Objectives
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
8
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Sales SegmentsSales Segments
Sales must do marketing…
Sales Segments
Product
Customer Channel
… to organize selling resources.
9
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Principles of Effective Segmentation and TargetingPrinciples of Effective Segmentation and Targeting
• Actionable: determines sales strategy, coverage and account targeting
• Simple: easy to communicate and understand• Customer focused: based on buying process and
buyer needs• Sales potential focused: customers and prospects
grouped on potential and current revenue• Ranked by attractiveness: segments are evaluated
and ranked in term of buying processes revenue potential, profitability and past success
10
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Segmentation and Targeting ComponentsSegmentation and Targeting Components
How should the market be divided into meaningful, actionable groups and which should be targeted?
Buyer ProfileBuyer Profile Identification of significant differences in how buyers make their purchase decisions
Buyer GroupAttractivenessBuyer Group
AttractivenessDetermination of attractiveness of buyer groups based on current and potential revenue, profitability, strategic fit, operational fit, loyalty, etc.
Targeted andActionable Segments
Targeted andActionable Segments
• Matching segment buying criteria (based on how buyers want to buy) with the attractiveness of segment to the company
• Segments must be identifiable and actionable
Value propositionValue proposition• Alignment of value proposition with buying preferences• Delivery of a unique value proposition
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Coverage Model
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
12
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Channel Strategy EvolvesChannel Strategy EvolvesBusiness Growth Phase
Start-Up Volume Growth Re-Evaluation OptimizationI II III IV
SBUsV
Deployment Model
Geographic-based coverage
Customer Size/ Value
Specialization
Vertical Market and Product
Specialization
•Channel•Specialization•Channel Bus Unit
•Field Bus Unit•Market Bus Unit
•Channel•Specialization•Channel Bus Unit
•Field Bus Unit•Market Bus Unit
Strategic Business Unit
Action Plan Account Stratification
• Size• Value
Account Segmentation
• Product• Industry• Channel
Buyer Segmentation
• New Access• New Buyer
Access
Market Segmentation
• New Market Access
13
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Illustrative Sales Coverage ModelIllustrative Sales Coverage Model
Coverage Resource Coverage Comments
Worldwide AccountsTop 500 Accounts: Over S10M in Potential Annual Revenue
Team Selling Model
Corporate Accounts Local Sales Through Central AM
Major Accounts Channel Management
Field Sales Accounts Geographic Sales Coverage Channel Support
Inside Sales Accounts Assigned AccountsField TeamingOutbound/ Inbound
Inbound only Customer Service
E Commerce E-Channel
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Sales Process
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
15
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Types of SellingTypes of Selling
• Select accounts• Narrowly defined• Large account list• Geographic• GeographicDeployment
• Engages in joint planning with customer; lead their thinking
• Establishes exclusive partnership with customer
• Value added through application expertise
• Justifies higher prices through superior product and/or ability to meet “needs”
• Price/ performance comparison
Selling Technique
• Articulates vision regarding where industry and customer are going and can go in the future
• Guides customer toward solutions with long term implications
• Focuses on economics of customer’s operation
• Proactively identifies ways to improve business results
• Sell solutions that improve market share, profitability, customer retention, etc.
• Focuses on use of product in customer’s environment
• Engineers product to fit customer’s requirements
• Typically repetitive solutions to standard, recurring issues
• Differentiates on basis of product characteristics
• Mathes products to customer’s “needs”
• Overcomes objections
• Adds value through product knowledge
• Responds to RFPs• Submits bids• Differentiates
products based on delivery, price
Salesperson’s Activities
• Leads customer toward solutions that result in attainment of volume and profit goals
• Establishes and grows long-term relationships
• Meets growth goals in volume and profitability
• Maximizes gross margins
• Obtains/ retains target accounts
• Maximizes volume and price
• Achieves desired product mix
• Obtains “approved supplier” status
• Maximizes volume
Primary Objectives
“Visionary Selling”“Consultative selling”“Design-in selling”“Need satisfaction selling”
“Vending”Also Known As
Product FocusSelling
Feature/ BenefitSelling
ApplicationsSelling
SolutionSelling
ThoughtLeadership
Selling
16
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Close/Fulfill
Identify Sales ProcessIdentify Sales Process
GenerateLead
QualifyLead
ConductNeeds
Analysis
DesignSolution
Propose/Negotiate
Steps of the Sales Process
Attrition (hit rates) 10 8 6 4 3 1
Effort (hours) 1.5 4 3 6 6 8
Total Effort (hours) 15 32 18 24 18 8 = 115
Duration 3,5 months
Avg. Sales Value $ 90K
Return on sales effort = $90,000/115 = $780/hour
How can we minimize attrition late in the sales process?How can we increase speed to close?How can we improve the close rate and pipeline yield?How can we increase transaction size?
17
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Cross Industry BenchmarkCross Industry Benchmark
TotalTotalTimeTime
SellingSellingTimeTime
5050--60%60%
NonNon--SellingSellingTimeTime
4040--50%50%
OnOn--SiteSiteContact Contact
33%33%
OtherOtherSelling Selling
22%22%
ServiceService1010--20%20%
AdministrationAdministration1010--20%20%
TravelTravel1515--20%20%
World ClassWorld Class
18
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Sales Personnel Survey - BenchmarkSales Personnel Survey - Benchmark
8%
12%18%
15%
9%
9%
10%
9%
7%
3%
Market Development/ Prospecting
Account/ Opprtunity Planning
Account Development
Opportunity Pursuit/ Close
Order Entry and Delivery
Implementation Problems
Customer Service
Admin. / Reporting
People Development
Travel and Other downtime
Sale
s Ti
me
Sale
s Ti
me
NonNon
-- Sal
es T
ime
Sale
s Ti
me
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Job Design & Organization Structure
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
20
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Existing ADC North America Sales Force StructureExisting ADC North America Sales Force Structure
LargeAccounts
NationalAccounts
Conn
ectiv
ity
IP C
able
Wire
less
OtherAccounts
• Verizon• AT & T• Qwest• SBC• Bellsouth
• Sprint• Level 3• Cisco• Nortel• Others
VPVPVP
WirelineDedicated Resource
WirelineDedicated Resource Connectivity
Dedicated Resource
ConnectivityDedicated Resource Services
Dedicated Resource
ServicesDedicated Resource
Field SalesDirector
Field SalesDirector
Sr. AMSr. AM
AMAM
AMAMFor Each Large Account
VPVPVP
HQHQ OEMOEM EntertainmentEntertainment GOVGOV
Sr. AMSr. AM
AMAM
AMAM
Sr. AMSr. AM
AMAM
AMAM
Sr. AMSr. AM
AMAM
AMAM
Sr. AMSr. AM
AMAM
AMAM
VP ConnectivityVP Connectivity VP IP CableVP IP Cable VP WirelessVP Wireless
Sr. AMSr. AM
AMAM
AMAM
Sr. AMSr. AM
AMAM
AMAM
Sr. AMSr. AM
AMAM
AMAM
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Resource Deployment
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
22
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Resource Development – 7 StepsResource Development – 7 Steps
Assign accounts to account managers:Industry/ account knowledge, skills experience
Step VII
Build territories/ segment of equitable size:Run the sales capacity model for all territories/ segments
Step VI
Refine sales capacity model:Based on market test
Step V
Develop resource deployment recommendations:Review for “reality check” with test market.
Step IV
Develop sales capacity model:Build model based on productivity benchmarks
Step III
Determine territory/ segment definition criteria:Consistent relationships, geographical deployment, match skills with opprtunity, coverage of accounts in multiple location, segment issues.
Step II
Determine the optimal territory/ segment size:Define the average anticipated capacity for each sales role
Step I
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Sales Talent & Supervision
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
24
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Sales Talent & SupervisionSales Talent & Supervision
Competency ModelCompetency Model
Assessment ToolsAssessment Tools
Skill AssessmentsSkill Assessments(Implementation)(Implementation)
Training CurriculumTraining Curriculum
Ongoing DevelopmentOngoing DevelopmentPlanPlan
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Performance Metric
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
26
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Return on Sales EffortReturn on Sales Effort
Close/Fulfill
GenerateLead
QualifyLead
ConductNeeds
Analysis
DesignSolution
Propose/Negotiate
Steps of the Sales Process
Attrition (hit rates) 10 8 6 4 3 1
Effort (hours) 1.5 4 3 6 6 8
Total Effort (hours) 15 32 18 24 18 8 = 115
Duration 3,5 months
Avg. Sales Value $ 90K
Return on sales effort = $90,000/115 = $780/hour
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Sales Compensation
Sales Management System
1Sales Segments
& Objectives 2Coverage
Model 3SalesProcess 4Job Design
&Organization
Structure 5ResourceDeployment 6Sales Talent
&Supervision 7Performance
Metrics 8Quotas&
SalesCompensation
Strategy Structure Management
S A L E S O P E R T I O N S A N D T E C H N O L O G I E S
28
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Why Sales Compensation is Different…Why Sales Compensation is Different…
• Powerful and effective but noisy and difficult to manage• Derivative design process – matches unique job content• Multi-parties must be involved – sales, marketing, finance, HR
and IT• Best solution is a consensus• It produces positive results and sometimes unexpected negative
outcomes• Most litigated compensation program• Requires constant attention – communication, administration,
interpretation• Not an HR compensation program
29
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Management: What Drives Sales?Management: What Drives Sales?
• Base Pay• Benefits Stock• Incentive Compensation
• Cash• Security Programs• Incentives
IV. Remuneration
• Career Progression• Recognition Programs• Training
• Individual Goals and Needs
• Personal Achievement Programs
• Affiliation/ Team
III. Self-Accomplishment
• Appraisal Process• Program Execution• Reporting
• Measurement• Engagement Management
II. Accountability
• Speeches• Learning• Orientation• Leadership Conferences
• Corporate Vision• Communication
I. Leadership
MethodsDescriptionFactor
30
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Types of Variable Compensation PlansTypes of Variable Compensation Plans
TargetTargetTotalTotal
CompensationCompensation
Types of Variable Compensation PlansTypes of Variable Compensation Plans
GainsharingGainsharing AddAdd--OnOn 2x Capped2x Capped 3x Uncapped3x UncappedStraightStraight
CommissionCommission
31
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Two Categories of Sales JobsTwo Categories of Sales Jobs
IncomeProducers
SalesRepresentatives
Value Created by
Account Owner
Basis of Pay
Examples
Seller(Relationship)
Sales Person
Percent of Revenue(Unlimited)
Real EstateTraders
Independent AgentsMulti Tier Marketing
Company(Product/Services)
Company
Manage to Target Pay
Territory RepAccount ManagerChanel Manager
Product Specialist
32
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Market Pay – Volume Versus EarningsMarket Pay – Volume Versus Earnings
HighHigh
LowLow
WW--2 Earnings2 Earnings
LowLow HighHigh
Sales RepresentativesSales Representatives
Income ProducersIncome Producers
Sales Territory VolumeSales Territory Volume
33
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Managing Pay – Sales RepresentativesManaging Pay – Sales Representatives
HighHigh
LowLow
WW--2 Earnings2 Earnings
LowLow HighHigh
Sales RepresentativesSales Representatives
Sales Territory VolumeSales Territory Volume
Territory RepresentativeTerritory Representative
Senior Sales RepresentativeSenior Sales Representative
AccountAccount ExecutivesExecutivesSenior Account ManagerSenior Account Manager
Global Account ManagerGlobal Account Manager
34
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Job Categories – and Pay PlansJob Categories – and Pay Plans
Income ProducersIncome Producers • Own the accounts – Portable• Relationship Selling
• Straight Commission• Target Rate - Unlimited
Sales RepresentativesSales Representatives • Company Accounts• Promote Solution/ Value
• Bonus Plus Incentive• Target Pay – Managed• Significant Risk
Sales SupportSales Support • Support Company’s Sellers• Extend Solution/ Value
• Base Plus Incentive• Target Pay – Managed• Moderate Risk
35
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Target Pay – Target Cash CompensationTarget Pay – Target Cash Compensation
Consistent with your company’s:• Labor Market Rates• Job Scope• Budget Dollars• Internal Equity
Target Total Cash Compensation is the preferred annual pay for achieving goal: lower pay for less than goal; higher pay for exceeding goal.
Target Total Cash Compensation is the preferred annual pay for achieving goal: lower pay for less than goal; higher pay for exceeding goal.
36
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Manage All CompensationManage All Compensation
SalesExpenses
Benefits
Salary
TargetIncentive
Pay
OvertargetIncentive
Pay
Contests
Recognition
Reimbursement
Security Needs
Retention/ Non-Sales Pay
At Risk Pay
Outstanding Pay
Focused Efforts
Intrinsic RewardsSpecial Compensation
Sales Compensation
Fixed Compensation
Performance- BasedCompensation
37
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Upside EarningsUpside Earnings
9070
50
1030
50
Extent of Upside PotentialExtent of Upside PotentialLowLow HighHigh
120
0%0%
100%100%
TargetTarget
Targ
et C
ompe
nsat
ion
Targ
et C
ompe
nsat
ion
Influence of Influence of SalespersonSalesperson
160200
38
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Performance MeasuresPerformance Measures
AccountableAssigned to a Salesperson
ObservableMeasurableAccurateReportable
AccountableAccountableAssigned to a Salesperson
ObservableObservableMeasurableAccurateReportable
Bad MeasuresCorporate Galactic MeasuresCompliance MeasuresInput MeasuresCant Measure Measures
Bad MeasuresBad MeasuresCorporate Galactic MeasuresCompliance MeasuresInput MeasuresCant Measure Measures
RequiredRequired
AvoidAvoid
39
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Types of Performance MeasuresTypes of Performance Measures
Sales Revenue: purchase, continuing, estimatedProfit: gross margin, contribution marginItems: units, contracts, design wins
Sales Revenue: Sales Revenue: purchase, continuing, estimatedProfit: Profit: gross margin, contribution marginItems:Items: units, contracts, design wins
Volume ProductionVolume Production
Products: balance, mix, launch, cross-sell, packagesAccounts: new, retention, penetration, growthOrders: close rate, size, length, receivablePrice Management: discount, rebates, realization, percent
Products: Products: balance, mix, launch, cross-sell, packagesAccounts: Accounts: new, retention, penetration, growthOrders:Orders: close rate, size, length, receivablePrice Management: Price Management: discount, rebates, realization, percent
Sales EffectivenessSales Effectiveness
Sales Satisfaction: surveys, complaintsLoyalty: persistency, share
Sales Satisfaction: Sales Satisfaction: surveys, complaintsLoyalty: Loyalty: persistency, shareCustomer ImpactCustomer Impact
Productivity: cost per order dollar, sales loadingChannels: partner success, outlet performancePersonnel: balance performance, turnover, ramp rate
Productivity: Productivity: cost per order dollar, sales loadingChannels: Channels: partner success, outlet performancePersonnelPersonnel: balance performance, turnover, ramp rate
Resource UseResource Use
40
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Quota DifficultyQuota Difficulty
30% to 40%of Sellers
60% to 70%of Sellers
Bottom 10%of Sellers
Top 10%of Sellers
Minimum Target100%
Excellence
Quota Performance
# of
Sal
espe
rson
41
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Formula Types for Sales RepsFormula Types for Sales Reps
Target Incentive Target Incentive ––Commission FormulaCommission Formula
Target Incentive Target Incentive ––Bonus FormulaBonus Formula
TI - CFTI - CF
TI - BFTI - BF
Target Earning are Pre-EstablishedExpected Volume is Known – Same for All TerritoriesCommission Formula Rate – Pay Percent of Production
to Achieve and Exceed Target Earnings
Target Earning are Pre-EstablishedExpected Volume is Known – Same for All TerritoriesCommission Formula Rate – Pay Percent of Production
to Achieve and Exceed Target Earnings
Target Earning are Pre-EstablishedExpected Volume is Known – Differs by TerritoriesBonus Formula Rate – Pay Percent of Target Pay for
Percent of Goal Achievement to Achieve and Exceed Target Earnings
Target Earning are Pre-EstablishedExpected Volume is Known – Differs by TerritoriesBonus Formula Rate – Pay Percent of Target Pay for
Percent of Goal Achievement to Achieve and Exceed Target Earnings
42
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Flat CommissionFlat Commission
Features
Illustration
Comments
Pay Mix: 0/100Payment for each sale: sales dollars, gross margin, units
Flat CommissionRate on Revenue
3%
Commission Graph
Commission Dollars
Sales Volume
Simple, easy to understandSeller owns customersEarnings will vary substantially
3%
43
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Ramped CommissionRamped Commission
Features
Illustration
Comments
Pay Mix: 0/100Payment for each sale: sales dollars, gross margin, units
CommissionVolume RateTo $3M 2%$3M & Over 4%
Commission Graph
Commission Dollars
Sales Volume
Simple, easy to understandSeller owns customersPremium paid for high sellers
2%
4%
44
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Bonus - StepsBonus - Steps
Features
Illustration
Comments
Pay Mix: 80/20Territories: dissimilar sizeEarnings: equalized
I. Base Salary
II. Bonus Schedule
% to % ofQuota Base<85% 0%85% 5%90% 15%100% 25%105% 40%110% 55%
>115% 75%
(% of Base Salary)Bonus Schedule
Basis Choices: base salary, midpoint, target incentiveWeakness: steps
45
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Bonus – Dollar ScheduleBonus – Dollar Schedule
Features
Illustration
Comments
Pay Mix: 75/25Territories: dissimilar sizeEarnings: equalized
I. Base Salary
II. Dollar Schedule
% to DollarQuota Amt<96% $1,50098% $3,000
100% $5,000102% $7,500104% $10,000106% $12,500
>108% $15,000
Dollar Payouts
Basis Choices: base salary, midpoint, target incentiveWeakness: steps
46
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””
http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Bonus – Supervisor MatrixBonus – Supervisor Matrix
Features
Illustration
Comments
Pay Mix: 75/25; base plus bonus matrixMeasures: volume and number of reps achieving goalLinked: both measures must be excellent payout
I. Base Salary
II. Bonus Matrix
Effective: strong visual impact of results and pay-outApplication: channel manager, product overlay specialistWeakness: double threshold and cap
Excellence 75 100 125 150 200 250 30058 83 108 133 172 211 25042 67 92 117 144 172 200
Volume Target 25 50 75 100 117 133 15017 36 56 75 92 108 1258 22 36 50 67 83 100
Treshold 0 8 17 25 42 58 75Treshold Target Excellence
Bonus Matrix (% of Target Incentive)
# of Reps Reaching Goal
VisiVisi PramudiaPramudia““FUNFUNtastictastic Enthusiasms to you!Enthusiasms to you!””http://http://visipramudia.wordpress.comvisipramudia.wordpress.com
Thank You