What Your CEO Needs to Know About Sales Compensation · Quotient Principles The Creative Quotient SM Leveraging a creative process and principles, designed for sales, can increase

What Your CEO Needs to Know About Sales Compensation Connecting the Corner Office to the Front Line

www.SalesGlobe.com 770 337 9897

April 2013

Page 2 © 2013 SalesGlobe

A Bit of Background

Advisory and Consulting Services -Sales Process Innovation -Sales Strategy -Sales Training and Coaching -Incentive Compensation www.SalesGlobe.com

Mark Donnolo

•Managing Partner- SalesGlobe

•20+ Years Sales and Marketing Effectiveness

•Closet “Art School MBA”

•Author: “What Your CEO Needs to Know About Sales Compensation” and “Sales Innovation”


Sales Performance... Our Sole Focus

SalesGlobe’s sole focus is working with our clients to get real improvements in business results through revenue growth and productivity improvement. We develop practical solutions around strategy, offer and value proposition, organization effectiveness, sales process, sales team development, and incentives.

New book, published year-end 2013 by Amacom.


Why the Book?

What do a beer truck driver, a sales rep, a pack of

dogs, and 50 C-Levels have in common?

They understand the power of incentives.


Getting Strategic

• Not a Text Book

• A Need for C-Level Insight

• Connecting C-Level to Front Line Incentives Makes Sales More Effective

• C-Level Views and Advice

• Stories from the Front

• Essential Models and Tools for a C-Level

• The Right Questions to Ask


• Accenture

• Agilent

• Anheuser-Busch

• AT&T

• Bellcore

• BellSouth

• BellSouth Advertising and Publishing

• Blue Cross Blue Shield of Texas

• Broadcom

• Browning-Ferris Industries

• Cablevision

• Caja España

• Central Garden & Pet

• Choicepoint

• CIGNA

• CoalTek

• Compass Group

• ConEdison Solutions

• Con-way

• Corestaff

• Crawford & Company

• Danka

• Enrev

• Equifax

• FleetCor

• Fujitsu Network Communications

• GBC

• GE Capital

• G&K Services

• Health Management Systems

• Honeywell

• IBM

• ICF International

• Idearc

• Ingersoll-Rand

• Intermedia

• International Paper

• Iron Mountain

• Johnson & Johnson

• KPMG

• Kronos

• LexisNexis

• Lotus

• M.A. Hanna

• Marriott

• Merial

• Mohawk

• Motorola

• National Westminster

• NationsBank/Bank of America

• Nationwide Insurance

• Nortel

• Novartis

• Novell

• Office Depot

• Orange

• Premiere Global Services

• Printpack

• PwC

• Qwest

• Rainbow Media

• Robert Half

• Sage Software

• SBC

• Sea-Land

• Signature Consultants

• Sodexo

• Southern Company

• Southern LINC

• Spherion

• Springs Industries

• Sprint

• Snelling

• Staffing Industry Analysts

• Staples

• Symbol Technologies

• Technisource

• The Weather Channel

• Times Mirror

• UPS

• UPS Capital

• Verisign

• Verizon

C-Level Insights From Leading Companies

http://intuit.com/


Topics

• Some Top Challenges

• A Common Dilemma

• Critical Factors to Consider

• How You Can Take Action


Some Top Challenges


Plan

Co

mp

lexity

“I’m not clear on exactly how I’m paid. I just hope the check is right.”

45%

Some Top Issues

Setting Effective Quotas

“You hit your quota and get rewarded with a bigger quota next year. It’s not related to opportunity.”

52%

Driving Solution Selling

“The plan doesn’t support solution selling. It drives an aggressive sales process and we need to be more consultative.”

36%

Keeping the Organization Engaged

“Our reps aren’t hitting their objectives in this economic environment. We need to keep them focused.”

29%

Supporting the Sales Strategy and Sales Roles

“Our plan promotes behaviors that are different than our strategy.” 39%

Differentiating Top Performers

“Our highest earners aren’t necessarily our highest performers. We can’t attract and retain the right talent.”

42%


The Common Dilemma of Edward

• A new strategy: partnering for software and services to complement their hardware

• Two SVPs in a covert coffee shop “off-site” in Dallas 10 months after the fact

• How should the incentive plan work? A task force, surveys, analysis, and alternative designs

• Edward, the CEO, heard updates throughout the process, deferred to the executive steering committee


• A simple plan

The Common Dilemma of Edward

What was missing in the direction, the process, the engagement?

• A bridge plan… Introduction delayed until Q2, loss of credibility and focus

• Final CEO presentation…

o New questions about product mix, how the plan pays…

o “Have I seen this before?”

o Wants to revisit the plan with a list of new questions

• A high level of engagement, too late, from a high-IQ CEO

• Got steering committee approvals


How Can We Make the Corner Office to Front Line Connection?

• Communicating the priorities to which incentives connect.

• Challenging the common incentive assumptions like “Do incentives really motivate?”

• Connecting in the field and riding with the reps. Seeing from the rep and customer perspective.

Let’s Get Specific…

We really try to understand who the customer is and what our value proposition is to that customer. If your compensation plan doesn’t align with the strategy and the segments you want to target, then you’re going to be working at cross purposes.” –CEO, F500 “People, confuse incentives with alignment, and they jump to incentives as the answer, as opposed to the hard work of alignment.” –CRO, F500


Connect to the Sales Strategy


Strategic Context: The Revenue Roadmap

The Revenue Roadmap

Insight

Voice of the Customer

Macro Market

Environment

Competitor Performance

Business Performance

Enablement

Sales Strategy

Products & Services

Segmentation & Targeting

Value Proposition

Approach to Market

Customer Coverage

Sales Channels

Sales Roles & Structure Sales Process Sales

Deployment

Incentive Compensation

& Quotas

Recruiting & Retention

Training & Development

Tools & Technology

Charts an actionable growth plan.

Matches roles, resources, and process to customer needs.

Aligns execution with the growth strategy.

Provides information for planning and strategy.


Financial

C-Level Goals

“We want to align our best sales resources with the right buyers further up in the organization.”

“We want to execute our strategy of offering our full portfolio of solutions based on customer needs.”

“We need to build the sales organization of our future with one face to the customer.”

“We need to break the complacency in our sales culture.”

“We want to drive twice as much sales productivity three years from now.”

C-Level Goals


Get Insight on Your Environment


Insight


Knowing How You Grow

The organization grows from year-to-year, not in a straight line but by losing and gaining in certain sales strategy components.

29% New Customer Selling

10%

Customer Penetration

14%

Revenue Retention

82%

Revenue Churn 18%

Revenue Year 1

100%

Revenue Year 2

106%

6%

Benchmark Example


Foundation for: -Understanding growth -Planning the strategy -Aligning coverage -Supporting with compensation

And Aligning it to the Strategy

2. Buyer Penetration

Total Growth

This Year’s Revenue

1. Retention

Customer Growth

Last Year’s Retained Revenue

4. New Competitive

Wins

5. New Markets

Market Growth

Components of Revenue Growth

3. Product Penetration P

rod

uct

Gro

wth


Use a Proven Process to Align the Team


C-Level Goals & Sales Roles

Target Pay

Pay Mix

1

2 Upside

Potential

3

Performance Threshold

4

5 Levels & Timing

6

Measures & Priorities

Evaluation

12

Operations

11

Governance

10

The Sales Compensation Diamond

Objectives & Quotas

9 Team

Alignment

8

Mechanics

7


Motivate the Breed that You Need


Customer Growth

Total Growth


Market Growth



Pro

du

ct G

row

th

Account Acquisition

Motivating the Breed That You Need

Account Management

Service Delivery


Customer Growth

Total Growth


Market Growth



Pro

du

ct G

row

th

Specialization- Product or Market

New Opportunity Pointing



Customer Growth

Total Growth


Market Growth



Pro

du

ct G

row

th

Multi-Role Hybrid



90%

TTC (Target Total Compensation)

Pay Mix and Upside Potential

10%

10%+

30%

30%+

50%

50%+ Upside Potential: 200% - 300%+ of Target Incentive

Target Incentive

Base Salary

Account Acquisition

Account Management

Service Delivery

70%

50%


Be a Reverse Robin Hood


The Reverse Robin Hood


The Bus Protocol

Moderate Threshold

What Portion of Quota Would Recur Without the Rep?

Pay from First Dollar

High Threshold

Slow Ramp from First

Dollar

None Full Quota Event

Annuity

What is the Typical Type of Sale?


Get Creative in a Functional Way…


Artistic creativity which is focused on expression, is usually mis-targeted and produces little more than initial excitement. Functional creativity, however, is oriented toward solving an issue or meeting an objective.

Functional Creativity and Artistic Creativity

•Targeted toward expression

•Minimal or no constraints

•Targeted toward an issue or objective

•Numerous constraints

Artistic Creativity

Functional Creativity


Adding the Creative Quotient

L R


Known Approaches

Conditions

Discovery

Application

Creative Quotient Principles

The Creative QuotientSM

Leveraging a creative process and principles, designed for sales, can increase the effectiveness and impact of the team.

The Creative Quotient- Innovating Your Solutions


Have the Right Level of C-Level Involvement


Getting C-Level Involvement Right

“My role, at the end of the day, is for sales to function as a center of excellence. I sit down with the people and make sure that we’re thoughtful about the strategy, the insights we’re building off of.” Chief Revenue Officer, F200



“As a CEO I want to understand the targets that align with our priorities. How can we align the financial, key performance indicators, and motivators with those levels of value?

“The way I’ve always thought about it is: where is a dollar a dollar, and where is a dollar not a dollar? I think about sales compensation from a perspective of what’s strategically important to the business, and how we can motivate people to that end.”

CEO, F1000



“If the CEO is getting involved in the details at the wrong level, it can lessen our effectiveness.

The effect of making tweaks on the plan and adjusting the payout curves can be intellectually intoxicating. Millions of dollars can shift from one end of the plan to the other. It can draw an executive in too much at the wrong level of detail, rather than staying strategic.”

VP Sales Operations, F50



“Our CEO got involved this year at the end of the process. We were pretty much done with the plans, and then all of a sudden he wanted to take a look at them. We had to change the plans, and it took us another month and a half to get them approved, which made it interesting.”

Director of Compensation, F500



“Does the sales compensation plan support our strategic initiatives for the year?

How would that have affected our top 20 percent of performers?

What is the behavior you want to drive next year?

What are the risks of this strategy, and what are the potential long term benefits?”

President, F500



“We lived on the road for 7 straight weeks, and we would go to a city and have a big meeting but then we’d hit three more locations that were within a jet ride to that office and it was pretty much the same message. And it was global – Asia Pacific and Europe. We touched 67% of the employees.” President, F50


Ask Insightful Questions


Top Questions C-Levels Ask

Are we driving the right behaviors? 65%

What are the financial returns and risks? 53%

Does it align with the strategy? 40%

How will it affect recruiting, retention of top people? 34%

Is it easily understood? 20%


C-Level Question Dimensions

oHow is each of the five C-Level Goal areas represented by the plan or by how we manage?

Question

Representation

Dimension

oWhat behaviors will this motivate that support or conflict with our C-Level Goals?

Motivation

oWhat are the numerical, measurable results we expect in each of the C-Level Goal areas?

Results

oWhat other factors, beyond the compensation plan, are we counting on for these results?

Dependency

oWhat are the risks of the program not working or the dependencies not happening as planned?

Risk

oHow can we simplify the approach and make the message clearer?

Simplicity

oHow will we successfully implement this change and what is the C-level role in that change?

Change


How You Can Take Action


2. Get Your Sales Comp Report Card WhatYourCEONeedsToKnow.com

3. Get Help… Consulting & Sales Comp Toolkit SalesGlobe.com

1. Get the Book to Align Your Team Here, Amazon.com, BarnesandNoble.com

Take Action

Questions and Counsel: Mark Donnolo- [email protected] 770 335 9225


Thank You

www.SalesGlobe.com

Questions and Counsel: Mark Donnolo- [email protected]

mailto:[email protected]

47

• How to attract and retain top performers through compensation, and how to prevent overpaying the underperformers.

• Measuring performance at the correct levels for each role.

• Motivating strategic account sales. • Setting equitable and profitable sales goals. • Understanding and motivating sales management. • Communicating and implementing the sales compensation plan,

and directing change management.

It’s the single biggest expense for most organizations with the motivational power to move financial mountains, but many executives squander the opportunity sales compensation presents. What Your CEO Needs to Know about Sales Compensation is the first book to address sales compensation challenges from a C-suite perspective. It focuses on the top challenges in companies today, offers logical leadership approaches, tools, and models for dealing with each of these issues, and shares stories from top sales executives in leading companies. The C-level perspective of this book will generate interest for readers up and down the corporate ladder, from the sales organization to human resources who want to know what the CEO should know, to the C-suite themselves. The book will help business leaders at all levels to develop sales compensation programs that are aligned with the business objectives for the entire company.

Key challenges addressed in the book:

• The right (and wrong) ways for C-level executives to become involved in the sales compensation process.

• Essential questions for C-level executives to ask the sales compensation design team.

• An understanding of how sales compensation supports the overall business strategy.

• Ways to determine if problems are really sales compensation challenges or larger sales strategy issues.

• How to clearly define and differentiate sales roles to capture revenue growth, and how to compensate each role.

What Your CEO Needs to Know About Sales Compensation- Connecting the Corner Office to the Front Line

Pre-order the book now on Amazon.com and BarnesandNoble.com. Get a 25% discount and send your order confirmation to [email protected] for your first two chapters and report card now.

The book includes:

•Perspective from Mark Donnolo, who has spent 25 years designing sales effectiveness and sales compensation plans for Fortune 1,000 companies. •Logical, proven approaches for solving top sales compensation challenges. •Tools and models for connecting the strategy of the business to the front line sales compensation plan. •Stories, examples, and ideas from C-level executives in Fortune 1,000 companies on how they’ve made sales compensation work effectively for their businesses.


SalesGlobe is a leading provider of sales strategy consulting, sales operations services, and leadership coaching to help business to business sales organizations increase their performance. SalesGlobe works with organizations dealing with challenging growth issues to develop actionable solutions and real revenue results. Services include:

• Enterprise and Sales Strategy Alignment. Working with CSOs to connect to the corporate strategy, implement best practices, and gain significant revenue growth.

• Sales Transformation and Productivity Improvement. Making major changes and implementing proven levers to increase growth and profitability.

• Competitive Intelligence and Benchmarking. Capturing hard-to-find competitor and market information on practices and issues that provide intelligence that goes beyond just the numbers.

• Sales Compensation and Incentive Design. Developing methods to motivate and drive performance with your sellers.

• Sales Organization and Sales Process Design. Creating the most effective roles and sales process for your strategy.

• Sales Coverage Strategy and Channel Management. Aligning the right channel mix and programs for your partners.

• Sales Team Development and Coaching. Building sales and solution capabilities from your front line through sales management.

• Sales Operations Improvement and Management. Optimizing and operating the critical support roles for your organization.

• Sales Process Innovation. Building creative solution selling capabilities in your sales teams to close those hard-to-win deals that are critical to your forecast and results.

SalesGlobe sponsors the SalesGlobe Forum, a leadership community, research, and advisory organization of senior sales executives. Our Board of Advisors includes executives from top companies and business schools.

To get more information on solutions for your organization and to understand how you can make your strategy and organization more effective, visit SalesGlobe.com.

Background

Consulting Coaching Content Creativity


Mark is a founder and managing partner of SalesGlobe, a sales effectiveness consulting firm that works with major sales organizations on sales strategies to grow revenue. SalesGlobe focuses on helping companies grow profitably by developing and implementing strategies that improve the effectiveness of sales, marketing, and service organizations. Areas of focus include sales strategy, customer segmentation, channel strategy, sales organization design and deployment, performance management, and incentive compensation. Mark’s work spans several industries including technology, telecommunications, business services, manufacturing, staffing, and financial services.

Mark Donnolo is also a founder and managing partner with the SalesGlobe Forum, a community of senior sales executives that provides a environment for addressing critical growth issues, sharing best practices among members in a confidential environment, hearing outside speakers, and building business relationships with peers in non-competitive businesses. The Forum operates with the guidance from its member Board of Advisors as well as professorial support from Georgia Tech’s College of Management and SMU’s Cox School of Business.

Mark formerly launched CoalTek, and emerging clean energy technology company with operations internationally, including China. He was a Senior Vice President with MarketBridge, leading the firm’s Sales Effectiveness Practice. He was also a Partner and Senior Vice President with Sibson Consulting, where he was on the firm’s management team and led its Sales & Marketing Effectiveness Practice. Previously, he was a Vice President with The Alexander Group and a consultant with Siegel & Gale/Saatchi & Saatchi, an international marketing and advertising firm. Mark also co-founded and was CEO of Biltmore Communications, and was President of InfraStream, a venture-funded VoIP service provider.

Mark holds an MBA from the University of North Carolina at Chapel Hill and a BFA from The University of the Arts in Philadelphia.

Mark speaks on sales and marketing topics and has been published in publications that include Fortune, Sales & Marketing Management, Selling Power, Telephony, Investment Property, Telecommunications, Velocity, Workspan, American Way, and Marketing News.

Mark serves on the Board of Trustees of The University of the Arts, founded in 1876 as the Philadelphia Museum and School of Industrial Art, now the country’s first visual and performing arts university.

Selected Publications and Speeches Include:

Author of “Sales Innovation”, AMACOM, 2013

Author of “What Your CEO Needs to Know About Sales Compensation”, AMACOM, 2012

“Developing an Effective Value Proposition”, Independent Thinking, 2011

“The Creative Quotient- Innovating Your Sales Process”, SI Review, 2011

“The Art & Science of Quota Setting”, Texas Total Rewards Conference 2011

“Coaching Your Team”, SMU and Georgia Tech TSLF, 2010-2011

“Strategic Sales Compensation”, 2011

“The Deal You Can’t Afford to Lose”, SMU and Georgia Tech TSLF, 2011

“Leveraging Your Sales Productivity Drivers”, The Performance Conference, 2010

“Your Top Sales Compensation Challenges”, 2010

“Design Leadership Planning and Operations”, Ohio State University- Guest Lecturer, 2009-2010

“The Right Structure for Sales Operations- Building Your Organization for Sales Effectiveness”, 2010

“Sales Transformation- Changing the Sales Organization for a Changing Marketplace”, 2009

“Ten Simple Rules for Improving Your Sales Compensation Plan”, Key Notes, 2009

“Found in Translation”, Sales Performance Management, 2008

“What’s Your Growth Capacity?”, Key Notes, 2008

“Risky Business- New Products and New Customers Fueling Growth”, Sales & Marketing Management, 2008

“The Trouble with Quotas”, Key Notes, 2008

Featured in “Sales Management Demystified”, by Robert Calvin, University of Chicago, McGraw Hill, 2007

“What Sales Organizations Will be Doing to Improve Performance”, The Performance Conference, 2007

“Marketing and Sales Under Stress”, Telephony Magazine, 2007

“Sales-Enabled Marketing- Accelerating Your Strategic Account Pipeline”, Velocity, 2006

“Channel Checking: New Approaches for Optimizing Your Strategic Account Sales Channels”, SAMA National Conference, 2006

“Market-Driven Quota Setting”, The Performance Conference, 2006

“Aligning the Organization with Incentive Compensation”, The Performance Conference, 2006

“Salespeople in the Catbird Seat”, Fortune, 2005

“Building for Revenue Growth: What Leading Companies Will Be Doing in the Next Year”, The Sales Effectiveness Conference and Expo, 2005

“Four Keys to OEM Sales Effectiveness”, Velocity, 2005

“Check Your Sales Compensation Report Card”, Workspan, 2005

“Transforming Your Strategic Account Management Program”, SAMA University, 2004

“A Tidal Wave of Turnover”, American Way Magazine, 2004

“Building a High-Performance OEM Sales Strategy”, SAMA National Conference, 2004

“Driving Growth in Competitive Markets- A Growth Management System”, SAMA National Conference, 2003

“Customer Service Falls with High Turnover”, Sales & Marketing Management, 2003

“Dear Workforce”, Workforce, 2003

“Empowering Corporate Change”, WorldatWork National Conference, 2003

“Build Your Battle Plan for Growth”, Perspectives, 2002

“Grow With What You’ve Got”, Perspectives, 2002

“Developing the Right Sales Model”, Money & Markets, 2002

Featured in “Stop Whining and Start Winning”, by Frank Pacetta, Harper Collins, 2001

“At Your Service”, Selecting Network Services for Business, Investment Property, December 2000

Regular feature column, “Market Mechanics”, Tele.com Magazine, 1999-2000

“Managing Distribution Channels to Improve Performance”, Distribution Channels for Telecommunications, 1999

Conference Chairman, Distribution Channels for Telecommunications, 1999

Contributor for Compensating New Sales Roles, by Jerome A. Colletti and Mary S. Fiss, AMACOM, 1999

Monthly feature column, “Ask Alex”, Wireless Business & Technology, 1998

“Marketing in the One-Stop Telecom World: Five Pitfalls to Avoid”, Telecommunications, 1998

“Maximizing Profits with Segmented Sales Strategies”, Segmented Marketing for Telecoms, 1997

“Winning in Local Markets Through Sales Effectiveness”, ALTS ’97 Convention, 1997

“Winning Through Sales Channel Optimization”, Customer ’97 Conference, 1997

“Alternative Distribution Strategies”, Competing in the New Wireless Marketplace, 1997

“Marking Their Time”, Sales & Marketing Management, 1997

“Expand Your Sales Force Without Adding Headcount”, Marketing News, 1997

“Execute to Win”, Wireless Business & Technology, 1997

“Battling for Distribution”, Wireless Business & Technology, 1997

Summary Biography: Mark Donnolo


• Accenture

• Agilent

• Anheuser-Busch

• AT&T

• Bellcore

• BellSouth

• BellSouth Advertising and Publishing

• Blue Cross Blue Shield of Texas

• Blue Cross Blue Shield of New Jersey

• Broadcom

• Browning-Ferris Industries

• Cablevision

• Caja España

• Central Garden & Pet

• Choicepoint

• CIGNA

• CoalTek

• Compass Group

• ConEdison Solutions

• Con-way

• Corestaff

• Crawford & Company

• Danka

• Enrev

• Equifax

• FleetCor

• Fujitsu Network Communications

• GBC

• GE Capital

• G&K Services

• Health Management Systems

• Honeywell

• IBM

• ICF International

• Idearc

• Ingersoll-Rand

• Intermedia

• International Paper

• Iron Mountain

• Johnson & Johnson

• Kimberly Clark Healthcare

• KPMG

• Kronos

• LexisNexis

• Lotus

• M.A. Hanna

• Marriott

• Merial

• Mohawk

• Motorola

• National Westminster

• NationsBank/Bank of America

• Nationwide Insurance

• Nortel

• Novartis

• Novell

• Office Depot

• Orange

• Premiere Global Services

• Printpack

• PwC

• Qwest

• Rainbow Media

• Robert Half

• Sage Software

• SBC

• Sea-Land

• Sodexo

• Southern Company

• Southern LINC

• Spherion

• Springs Industries

• Sprint

• Snelling

• Staffing Industry Analysts

• Staples

• Symbol Technologies

• Technisource

• The Weather Channel

• Times Mirror

• UPS

• UPS Capital

• Verisign

• Verizon

• Westvaco

Representative Clients


Get Your Report Card


How Does Your Organization Rate? Your Strategic Sales Compensation Report Card

Get Your Sales Comp Report Card www.WhatYourCEONeedsToKnow.com

Documents

What Your CEO Needs to Know About Sales Compensation · Quotient Principles The Creative Quotient SM Leveraging a creative process and principles, designed for sales, can increase