How to Develop an Expert Sales Compensation Plan

Transcription

1 SMA Experts Exchange Changing the Sales Compensation Plan October 22, 2010 An Expert Panel discussion featuring: Ted Briggs Principal Better Sales Comp Consultants Fernando Herranz Senior Manager Worldwide Sales Compensation BMC Software Brad Stevens Global Compensation Manager, Sales and Marketing Intel Corporation 2010 The Sales Management Association. All rights reserved

2 About The Sales Management Association 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. Fostering a community of thought-leaders, service providers, academics, and practitioners. Join us December 15 DePaul University in Chicago Advanced Sales Management: Execution Excellence in The Sales Management Association. All rights reserved Slide 2

3 Today s Session Panel format Each panelist will present for 10 minutes I will moderate discussion following these brief presentations We will take your questions Today s Panelists Ted Briggs Principal Better Sales Comp Consultants Fernando Herranz Senior Manager Worldwide Sales Compensation BMC Software Brad Stevens Global Compensation Manager, Sales and Marketing Intel Corporation 2010 The Sales Management Association. All rights reserved Slide 3

4 Changing the Sales Compensation Plan Change Management at Intel Brad Stevens Global Compensation Manager, Sales and Marketing Intel Corporation

5 Quick Intel Sales Basics Intel has a global sales force in over 60 countries Global consistency in sales design across six major regions Over 2,000 commissioned employees Sales plans are governed by a cross functional and global management team Commissions are calc d using a new, home grown system Copyright 2010 Intel Corporation. Used with permission by The Sales Management Association. All rights reserved. Slide 5

6 Design Cycle At Intel Design change process cycle is nearly a year long process at Intel There are many steps in the basic design process including Analytics and assessment, benchmarking Financial modeling Proposal development Significant cross functional stakeholder management Employee training and communications Role clarification and management in the process is critical to our success! Our goal is to have employee acknowledge the plan documents by Jan 1 st of each year before any commissions are paid Copyright 2010 Intel Corporation. Used with permission by The Sales Management Association. All rights reserved. Slide 6

7 Design Cycle At Intel Identifying and establishing relationships with stakeholders in advance makes our process much smoother! Who is responsible for driving the process? HR, Sales Operations, the business? Is the timeline/work communicated and understood? Who is the ultimate decision maker? EVP Sales & Marketing Who are the important reviewers or approvers? Finance, Legal, Work Councils, internal audit, etc. Who needs to be involved and/or give feedback? Local mgmt, IT, Payroll, translation services, etc. What is the plan for employee training and acknowledgment? How much time is needed and what is the method? Copyright 2010 Intel Corporation. Used with permission by The Sales Management Association. All rights reserved. Slide 7

8 Design Cycle At Intel Start early and communicate and re-communicate along the way Take time to talk with those new to the process Process is interactive Expect modifications changes to original proposals Closed loop feedback process is important to stay up-to-date Not everyone will agree, but need to commit to the change Plan extra time to work through conflicts Keep the process moving and keep your sense of humor! Copyright 2010 Intel Corporation. Used with permission by The Sales Management Association. All rights reserved. Slide 8

9 Thank You Thank You The Sales Management Association. All rights reserved

10 Changing the Sales Compensation Plan Lessons For Success Fernando Herranz Senior Manager Worldwide Sales Compensation BMC Software

11 Lessons for Success Corporations tend to change Sales Compensation Plans in small annual increments, instead of a total re-write. This carries some hidden risks: 1. Underestimate the potential financial exposure of that small adjustment. (Model and stress test the plan) 2. Last year s assumptions may not be relevant next year (Review with stakeholders) 3. That minor change in design or metric may not be supported by your system or data sources (Validate with IT and Ops) 4. Those few sentences changed in Ts & Cs may have a significant Operational and Field impact or may need extensive re-write. (Communicate all changes from last year s plan; add What s new this year ) Copyright 2010 BMC Software. Used with permission by The Sales Management Association. All rights reserved. Slide 11

12 Lessons for Success Good Communication will give your Plan a good start and necessary credibility. How?: 1. Publish key dates for the new year plan roll-out and make them happen (What, When) 2. Sales Leadership presents the Plan to the Field, Live (f2f or phone) is more impactful (After all they own it) 3. Empower People Managers to educate their teams on the Plan. (Yes, they can do it!) 4. Reinforce Plan communication via and make available online. (More people than you think look at it) 5. Asses the Field perception after 2-3 months of Plan roll-out. (May need additional communication) Copyright 2010 BMC Software. Used with permission by The Sales Management Association. All rights reserved. Slide 12

13 Lessons for Success A sound and effective Plan design does not assure success. Other important factors can kill a great plan: 1. Quota Setting, half Science, half Art. No prescriptions here, but do the best effort to set the right individual Quotas. 2. Source Data, data quality and availability has significant impact in the ability of a Plan to Perform 3. Systems support your plan design, payment frequency and provide adequate visibility of the process. 4. Execution of plan is timely and transparent. Payments are delivered as close as possible to the event that triggers them. 5. Perception of the Plan in the field is important, it impacts their confidence achieve their objectives, morale and retention. Copyright 2010 BMC Software. Used with permission by The Sales Management Association. All rights reserved. Slide 13

14 Thank You Thank You The Sales Management Association. All rights reserved

15 Changing the Sales Compensation Plan Successful Sales Compensation Change Ted Briggs Principal Better Sales Comp Consultants 2010 The Sales Management Association. All rights reserved

16 Sales Compensation Serves as a Complement to Other Sales Management Decisions Copyright 2010 Better Sales Comp Consultants. Used with permission by The Sales Management Association. All rights reserved. Slide 16

17 The Five Areas of Sales Compensation Assessment Copyright 2010 Better Sales Comp Consultants. Used with permission by The Sales Management Association. All rights reserved. Slide 17 17

18 Sales Compensation Plan Change Prevention Among the top reasons why sales compensation plan change fails: Required change is more complex than expected Timing Job modifications/assignments Disruption Lack of Consensus Need for change Actual recommendations Executive declarations Copyright 2010 Better Sales Comp Consultants. Used with permission by The Sales Management Association. All rights reserved. Slide 18

19 Increasing the Odds of Achieving Change Four Critical Factors 1. Agreement from Sales Leadership 2. Consensus on Drivers of Change and Degree of Changes 3. Consider a Range of Options 4. Impact of Change well tested and effectively communicated Copyright 2010 Better Sales Comp Consultants. Used with permission by The Sales Management Association. All rights reserved. Slide 19

20 Example Incremental Change Three phase approach to incenting strategic products : Incremental earnings opportunity for any un-represented product in accounts (Yellow spaces) Shift from any new un-represented products now products that create more relationship and revenue longevity (sticky products), tied to ability to earn attractive upside Building categories of products into both target incentives and upside opportunity Copyright 2010 Better Sales Comp Consultants. Used with permission by The Sales Management Association. All rights reserved. Slide 20

21 Option 1: Core Quota w/ New Product Commission Copyright 2010 Better Sales Comp Consultants. Used with permission by The Sales Management Association. All rights reserved. Slide 21

22 Option 2: New Product Sales Influence Acceleration on Total Quota Copyright 2010 Better Sales Comp Consultants. Used with permission by The Sales Management Association. All rights reserved. Slide 22

23 Option 3: Separate Target Incentives and Payments for Core and New Product Copyright 2010 Better Sales Comp Consultants. Used with permission by The Sales Management Association. All rights reserved. Slide 23

24 Thank You Thank You The Sales Management Association. All rights reserved

25 Questions and Discussion Ted Briggs Principal Better Sales Comp Consultants Fernando Herranz Senior Manager Worldwide Sales Compensation BMC Corporation Brad Stevens Global Compensation Manager, Sales and Marketing Intel Corporation Slide 25