New Michael Dunne White Paper and Webinar now available

Many organizations are working hard to improve their sales effectiveness.  Increasingly many of these organizations are turning to information technology to help improve the efficiency and effectiveness of their incentive compensation and sales performance management processes.  Many of these organizations are now in varying stages of rolling out Sales Performance Management (SPM) solutions.

During these deployments, organizations go through a number of distinct phases as they mature.  The first phase is to ensure that the processes they have in place are efficient and produce accurate results.  As organizations look 'beyond the numbers' they go through increasingly complex phases ending with business agility and overall SPM optimization. 

I asked Michael Dunne, X-Gartner analyst, and long-time veteran  of sales effectiveness and sales performance management to write a report, outlining these stages of evolution, and to provide some guidance for organizations who find themselves in different levels of  SPM maturity.


The result is a new report which provides great insight as to the evolution of SPM systems within an organization.  This is a must-read for anyone trying to educate themselves on the Sales Performance Management landscape.   I have also asked Michael to discuss this paper and answer any of your questions in a webcast. This is now scheduled for December 6th.

Click to download Michael Dunne whitepaper or to register for webinar Dec. 6th 

2011 Sales Management Association Sales Productivity and Performance Management Conference

Bob Kelly and the team at the Sales Management Association put together a great event in Atlanta recently.  The agenda was filled with many experts including academics, practitioners and vendors.   Most of the attendees were from sales operations and the people I talked to were happy that there were many sessions targeted specifically for them.  Some of the topics covered included Inside the Sales2.0 Organization, Predictive Analytics for Sales leaders and Technology’s impact on Sales Management Practice.

Andris Zoltners,  the ‘Z’ in ZS associates opened Day 1 with a presentation on the importance and impact of Sales Management on sales productivity.   Day two saw Barry Trailer from CSO Insights and Mark Selcow President of Merced, present a keynote comparing improving sales force productivity to the new Brad Pitt movie Moneyball.  Joe Galvin, former Gartner and Sirius Decisions analyst seemed to be moderating, participating and generally adding value to most of the sessions that I attended.  With his history and rich background in sales effectiveness I always find that Joe provides some great insights.

I was fortunate to have the opportunity to present on the ROI of Sales Performance Management solutions with Justin Lane of OpenSymmetry and Rebecca Sandberg of Elavon.  Justin has such a broad base of experience implementing SPM solutions that he had a lot to contribute.  Rebecca shared her experiences at Elavon, a global credit card processing organization and gave advice on implementing an incentive compensation management solution in a global financial services organizations. 

While this was the inaugural Sales Productivity and Performance Management conference,   I certainly hope it was just the first in a long line of successful conferences hosted by the Sales Management Association.

Six Trends in Sales Performance Management

Sales Performance Management (SPM) solutions are proving to be incredibly valuable for organizations that adopt them.  According to research firm Gartner, organizations that implement compensation management solutions can expect to reduce errors by more than 90%, reduce processing times by more than 40% and reduce IT/Admin staffing by more than 50%.^[1] 

SPM solutions are becoming attractive not only because early adopters are achieving success but also because there is increasing pressure on compensation teams to deliver more.  Organizations are demanding more than just accurate commission statements that are delivered on time.   They need visibility, analysis and oversight into the entire variable compensation process as they want to understand better what is working and what isn’t.   

While the majority of organizations still manage incentive compensation with home-grown solutions, or lots of Excel spreadsheets, more organizations are retiring these solutions in favor of a more complete packaged incentive compensation and sales performance management system. With this rapid SPM adoption new trends are starting to emerge.  This paper discusses the top six trends that are influencing organizations who are considering implementing new software solutions to help them improve sales performance and incentive compensation practices.

Over the next few weeks I will discuss each of the 6 trends.     

The first...

Trend 1:  Increasing Business Complexity 

In a recent study conducted by the Economist^[2] an overwhelming majority of survey respondents (86%) think that business has become more complex in the past three years, many describing their businesses as chaotic.  This increasing complexity is often driven by the reality that organizations produce more products, sell in more markets, through more channels with more complex workflow processes.  These organizations also have an increased need for speed when it comes to getting results.  Adding to this challenge is that many organizations are struggling just to keep up with an ever-increasing volume of data.  Over the past couple of years organizations increased the amount of data stored by a staggering 62%[3].  With this hectic pace of change it is easy to see why existing technologies, plans and processes in sales compensation cannot keep up with new requirements.

Most organizations do not expect the rate of change nor the ability to capture data to decrease in the coming years.   Most home-grown and spreadsheet based systems were implemented years ago and were never designed to handle the volume of data, rate of change, expanding product lines and desire for increased analytics, modeling and reporting.  It is not uncommon to see that today’s compensation systems need to be able to efficiently handle millions of transactions a day in order to manage sales reporting and incentive compensation calculations.  

When considering SPM technology, evaluation teams must consider their requirements to quickly load data, calculate commissions and produce the necessary outputs.  They should also estimate, to the best of their ability, data volumes and complexity for the next few years to ensure that the application is capable of handling those volumes.  Organizations looking to implement new systems are well advised to try and determine their performance requirements and conduct a scalability and performance test when looking at acquiring new software.

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[1] Gartner Marketscope for Sales Incentive Compensation Management Software, Michael Dunne, March 2010

[2] The Complexity Challenge, How businesses are bearing Up,  Economist Intelligence Unit, 2011

[3] EMC annual shareholders meeting presentation.

What is Sales Performance Management?

Sales Performance Management has many different and broad definitions.   From a software perspective, Sales Performance Management (SPM) is defined as a comprehensive solution that helps organizations drive sales alignment from strategy through to execution, while improving efficiency, accuracy and timeliness of the associated administrative processes.  Implementing a Sales Performance Management solution ultimately leads to better management and utilization of sales resources. 

Sales Performance management is about putting timely and accurate data in the hands of decision makers in order to aid them in making more informed decisions.  Who sold what products at what price last month?  What are our top selling products by region?  Are commissions payouts in-line with expectations? Are my territories all covered effectively?  How many reps are over 70% of quota and now on accelerators?   These are just some of the questions that sales management ask every day.  In most organizations there is no simple, consistent and accurate way to get the answers to those questions.  The ERP has some of the information.  The CRM has some of the information.  The HR system has some of the information.  Much of the rest of data is in emails, spreadsheets and legacy systems.  Analysts who are charged with finding out the answers to these questions generally resort to a combination of extract files, Microsoft Access and Excel to pull the data together to provide the answers.  Often the resulting report or analysis is incomplete, late, and suspect in terms of accuracy.  The burden of pulling it all together makes even the simplest of requests a daunting task.  When it comes to managing, processing and reporting on territory assignments, plan eligibility, quota attainment and commissions calculations the process looks much the same.

Sales Performance Management (SPM) help organizations understand and improve the performance of their sales organization by offering a complete solution to manage incentive compensation, roster management, territories and quotas.  Most common sales performance systems provide capabilities to:

·         Integrate data from a variety of disparate source systems (commonly ERP, HR, CRM, spreadsheets and legacy systems.)  This eliminates a lot of data duplication, expensive and error-prone custom ETL routines, multiple and inconsistent versions of the data.

·         Calculate results – the ability to take all the input data, and then match source data with eligibility rules, territory assignments and the plan components to derive accurate commission calculations.

·         Create custom reports – with an embedded reportwriter. These include the ability to capability to generate personalized and branded commission statements, operational and management reports and analysis.

·         Automate workflow processes – to ensure that all operational aspects of the commission management process are documented and effectively executed.

·         Provide complete audit trails -  The ability to track all of the actions, data changes and resolutions involved in Sales Performance Management processes.  This includes plan acceptance, dispute, inquiry and resolutions, calculation expectations etc.

Organizations looking to implement a Sales Performance Management System should look for the following benefits: 

•  Aligning sales resources to organizational goals and strategies 
•  Providing timely, accurate and actionable sales information in order to improve decision making
• Streamlining the administration of incentive compensation management processes in order to reduce errors, costs and time 
• Provide increased visibility into the compensation process for audit, compliance and management oversight

The definition of Sales Performance Management differs slightly depending upon the perspective and background of the individual or organization.  I have included Sales Performance Management (SPM) definitions from a few of the more popular sources and experts below.

 

Ventana Research

Ventana Research defines Sales Performance Management[1] as a coordinated and integrated set of sales-related activities, processes and systems that help organizations meet customer revenue goals and objectives.  Only those sales organizations that integrate people and processes tightly with information and technology are able to maximize their effectiveness, from top management, through finance and operations to the sales representative on the front line.

Ventana believes that Sales performance management today remains more art than science. They also believe this must change. Advancing the maturity of sales and thus its effectiveness and contribution to company success requires not just improved processes but ensuring that the people associated with those processes are evolving to become the sales talent that represents the best of your company. One of the essential underpinnings of this evolution is complete access to information about sales activities and to the metrics that most significantly track the performance of the sales organization.

 

Gartner

According to Michael Dunne, VP Research of Gartner, in his note - Introducing the Concept of Sales performance Management[2], SPM represents the next generation of best practices for sales. It establishes a strong foundation for improving sales execution. Use this concept to better organize sales territories, quotas and compensation plans to increase sales.

Wikipedia[3]

SPM solutions provide executives and sales management with a clear view of critical sales data, such as what products were sold where, by whom and to whom, that enable quick and informed course correction to ensure the alignment of sales strategies to desired business outcomes. These solutions are unique in their ability to solve the “one-two punch” of insight and action (i.e., knowing what business strategies need to be changed and having the tools to make the required changes). Together, these products and services offer medium-to-large enterprises in a multitude of industries the ability to transform their incentive payment systems into strategic business weapons to drive profit growth.

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[1] Ventana Research,  website - http://www.ventanaresearch.com/spm/spm.aspx?id=2384

[2] Introducing the concept of Sales Performance Management,  Gartner Research Note (G00141067), Michael Dunne, Research Vice President Gartner, 2006

[3] www.wikipedia.com – Sales Performance Management Definition

Look for more than improved efficiency when implementing a Sales Performance Management System

I am often asked about the drivers of Sales Performance Management projects.  What specifically are organizations looking to accomplish?    How do they determine the Return on Investment (ROI) on their Sales Performance Management initiative?  What are the first priorities?

While every organization is unique and they each have their own challenges, perspectives and priorities there are three categories of benefits that are common across Sales Performance Management projects. 

They are:

·      Efficiency gains

·      Business enablement

·      Reduced risk

One of these goals normally takes precedence over the others and tends to get most of the focus from project teams.  Organizations are well-advised to look at the opportunity for business gains across all three drivers.  

Efficiency Gains

Organizations often start projects with the goal of looking for efficiency gains.  The pains associated with high commission error rates, delays in processing times, and significant effort and administrative burden are tangible and it is relatively easy to quantify the benefit of gaining improvements in this area.

Improved efficiency is about doing more with less.  The expected gains are in area of reducing the time and effort it takes to process and manage commissions, quotas, roster and territories.  Reducing effort to maintain the current systems, reducing the number of days to process month ends, reducing errors rates in commissions are all common themes.  This makes a lot of sense as industry analysts cite that organizations implementing a Sales Performance Management System (SPM) can reduce the administrative and IT staffing effort by more than fifty percent.  They can also expect to reduce incentive compensation calculation errors by over ninety percent.   Organizations looking for a hard ROI can generally find find ample evidence of organizations than have had major successes in processing efficiency.

Business Enablement

The second area of benefit that most organizations find is in enabling the business to do something that was previously too impractical if not impossible to do.  Many organizations are unable to implement certain types of components in their plans as their current systems, processes and technology preclude them from doing what they want.  Common examples include implementing margin-based versus revenue-based plans, introducing quarterly SPIFs, and incentives to drive certain packages or bundled offerings.   Being able to adjust to market shifts and implement changes quickly can help organizations take advantage of new market opportunities and react to other market shfts quickly.  The overall result is that incentive compensation plans drive the desired sales behavior and help with organizational alignment.   The inability to do this has long been the frustration of many sales leaders.   Modern SPM systems provide sales leaders with the speed and flexibility to drive the sales organization the way they want, ultimately driving increased revenue, increased margins, and increased organizational alignment.

 

Risk Reduction

The third driver of interest in Sales Performance Management software is risk reduction.  According to the respected analyst firm Gartner, approximately ninety percent of organizations with over one hundred sales reps are using home-grown or spreadsheet based solutions to manage incentive compensation.   While these 'systems' lead to many of the inefficiencies and create roadblocks to improved effectiveness that I referred to earlier, it is often the case that there is a compliance or audit driver that is behind putting in a new Sales Performance Management software solution. 

From a compliance viewpoint the challenge is to provide a holistic view of commissions from an overall view down to individual performance.  Increased checks and balances, multiple approval levels, tracking down exceptions and other compliance requirements tend to put a burden on home-grown and spreadsheet based systems that slow them down and create more rigidity - exactly the opposite of what is required.     Modern Sales Performance Management solutions provide built-in complete audit trails, plan approvals, dispute resolution and compressive reporting on exactly how and when territories, quotas, plans and commissions were changed.   For many organizations this increased visibility replaces error prone and time consuming email chains and voice mails.  Payees appreciate the clear and consistent view of their commissions, administrators save significant time and effort tracking down reasons for adjustments, and sales compensation administrators are much better prepared for both external and internal audit and compliance requirements.

Sales Compensation: Trends, Tools, Analytics, and Solutions for the Emerging Environment.

Sales Compensation: Trends, Tools, Analytics, and Solutions for the Emerging Environment.

View more presentations from The SMA Sales Management Association.

Michael Dunne to Keynote INSIGHT11

I am very happy that we managed to get  Michael Dunne, Research Vice President for Gartner to join us at INSIGHT11 (Varicent’s Users Conference) this year.  He specializes in researching leading issues concerning sales performance management, sales operations, sales enablement, sales incentive compensation, sales analytics, price optimization and management, as well as sales and marketing alignment for Gartner.  As a 16 year veteran of Gartner he brings a lot of experience gained not only from his research but a significant amount of client interaction.

I was talking to Michael last week and he was mentioning that he is has a lot of new thoughts on what is happening in the Sales Performance Management space.  He shared a couple of his ideas and I can tell you that we are in for a treat.  It got me thinking and certainly put some things in perspective.  Michael will open up the second day of our conference.