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.

6 new SPM Trends - Trend 4 - Increasing requirements for Audit, Compliance and Visibility

There is an increased need for oversight in the world of Sales Performance Management.   There is a growing desire to scrutinize the inner workings of the compensation system and the related processes.  There are two main drivers of this change.  First, some organizations are cracking down on the internal audit processes.  They are driven by concern of new industry regulations.  Many are making sure that they can comply with the changes to incentive compensation brought on by the Dodd Frank Act[1].   In particular, they must comply with section 956 of that Act which states that covered organizations must disclose to the regulators (and there may be more than one in some cases) the structures of all incentive-based compensation arrangements.  The intent is that organizations should have plans that appropriately balance risks and rewards, are compatible with effective controls and risk management and are backed up by strong corporate governance and oversight.

The second driver for increased audit and compliance comes from organizations who want to better understand how the sales operations, HR and Finance processes are working with respect to SPM.  They are trying to evaluate the effectiveness and service levels for their key operational processes.  How long does it take to process all commissions?  How many disputes are filed with every commission run?  How long does it take to resolve these disputes?  Are commissions tracking towards the agreed targets?  Which management reports are being viewed?   These are just a few of the questions that organizations are looking for better answers for.

While many organizations have solid incentive compensation plans, documented processes and workflow surrounding compensation they cannot efficiently and effectively respond these new demands for reporting and audit.  Data from emails, conversations and sales-driven exceptions often fail to make their way into the system of record.   Hiring more administrative staff, or taking a long time to respond to audit requests, is not acceptable so many organizations are implementing new incentive compensation management systems to help.  As the majority of organizations also use spreadsheets and homegrown systems to manage incentive compensation the ability to provide the necessary insight also diminishes.  These tools do not provide the robust audit trail, embedded security, role based access and other key features required to pass an audit.   With changing and more stringent requirements for increased visibility on the horizon it is critical to have flexible reporting capabilities in the hands of those who need to provide data to all the oversight groups.

Potential buyers of SPM technology should survey the finance and internal audit groups within their organization to survey their existing needs, and anticipate their needs going forward.  This establishes a foundational baseline of requirements when looking for a new system.

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[1] Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

6 New SPM Trends - Trend 3 - The Increasing Role of Finance

In a recent survey conducted by CFO Research[1],  CFO's were asked whether the finance function would play an increased role in sales incentive management (including plan design and administration).  While many finance departments are already heavily involved, 52% of the respondents said they will get even more involved over the the next two years.  It’s not surprising to see this interest from Finance.  In times of economic uncertainty, compounded by the concern about negligible revenue growth, many CFOs are seeking opportunities to improve margins.  They are no longer focusing just on cost reduction; rather they want to improve margins by driving sales of the most profitable products and services, not simply by selling more of the high volume offerings.

According to the survey, 61% of the Finance team wants to see ‘more sophisticated selling’ by their sales teams. Sophistication, in the minds of Finance, means encouraging team selling, bundled offerings, multi-year deals, cross selling, and increased selling of high margin products.  They also want to see a tighter link between the setting of quotas and the specific revenue goals of the organization.  It’s frustrating to see the organization make a strategic decision to try and drive business growth in one area, only to find that the sales plans drive a very different behaviour.  Reconciling the plans to the strategies can often take over a year, which results in delayed execution of strategy and missed opportunities.

From a Sales Operations/Human Resources perspective, leading ‘experts’ on incentive compensation plan design are encouraging organizations to simplify plans and make sure that incentive plans have as few measures as possible (often stating that best practice plans have no more than three measures). 

Finance’s drive for more sophistication versus Sales Operations and Human Resources drive for focus and simplification of incentive plans appear to be at odds.   The best resolution is to get ahead of the curve.  This is a great opportunity for all business interests to converge and share their perspectives on the challenges and high priority items for moving forward. 

Successful organizations work with finance to not only agree on the sales plans and drivers but to agree on time-lines, decision making processes, constraints and any potentially conflicting viewpoints on plan design, implementation priorities and targets.  The combined group needs to come to consensus and then communicate their shared goals across the organization.  Failure to do this often leads to different priorities and misaligned goals.   In turn this leads to inconsistent and often conflicting communications being delivered to the sales organization.  A coordinated effort leads to common goals, sales alignment and increased performance.

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[1] Managing Sales Incentive Compensation Amid Uncertainty, CFO Publishing, March 2010

6 New SPM Trends - Trend 2 - Sales Adoption of Mobile Devices

Last week I blogged about the 6 new trends I see in Sales Performance Management. The first trend was about the need to handle increased business complexity.  This week's blog is about mobile devices for sales teams.

It’s no surprise that Ipads, smartphones and other mobile devices are being adopted by sales forces everywhere. Smart devices are now outselling laptops[1].   It seems almost every week there is a new entrant into the tablet wars.  The market is expected to grow from 26 million to over 80 million tablet users in the US^[2] alone. 

Many questions are now being considered by sales organizations everywhere. What is the appropriate mobile device for the sales team?  What is the right set of functionality that needs to be delivered to the mobile device?    There is no universal right answer, and the adoption of mobile technology for sales teams is a broader issue than SPM.  There are three key things that organizations have to look at when it comes to mobile adoption - Device Support, Functionality, and Culture.

Device Support – What platform do you need to support?  On the tablet side, Apple has gone out to an early lead with about 68%[3] market share of all tablets sold.  The market however is still young and there is lots of room for technology advances.  Organizations must consider whether they want to take a device specific approach, or an agnostic approach.  Looking for vendors who support standards like HTML5 and browser agnostic support gives an organization the most flexibility in tablet support.  Applications coded specifically for a platform may have tighter integration with that platform, but will be more limiting in terms of device support as the market matures and shifts.

Functionality -   Once the platform is decided, and then you must decide what functionality you want to deliver on the mobile device.  In most SPM scenarios simply replicating a full desktop or web experience on a smartphone doesn’t work.  Have a look at your current commission statement and imagine how much would be viewable on a Blackberry, Android or Iphone window.  Typically commission reports are multi-page statements with lots of columns and in order to comprehend the entire statement you would have to be able to look at more than one or two columns at a time.  Organizations are well advised to design reports and outputs specifically for the mobile device, and not settle for delivering full reporting onto mobile devices – just because you can.

Culture - this is often overlooked when considering mobile device support.  Some Sales Leaders want to ‘get everything on the smartphone and tablet’ to avoid all the wasted time lugging around laptops, trying to figure out VPN or other connecting activities.  The idea of ‘right here right now’ information delivery has a huge value over waiting for the sales reps to connect when they are back home, in a hotel or office.    There is another train-of-thought where sales leaders are concerned about everything that takes away from their sales teams ability to have customer facing time during the day.  The idea of delivering commissions, quota and territory update information constantly throughout the day is a distraction.  Their belief is that this kind of information should be delivered to the laptop/desktop when the reps are not out in the field.

The overriding trend we are seeing in mobile device support is that the adoption of mobile technology for sales is directly proportional to the frequency of data updates.  Organizations that report on sales and commissions daily are much more likely to want to drive this information out to mobile devices than organizations who update their data monthly or quarterly. 

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[1]  IDC Worldwide Quarterly Phone Tracker, January, 2011

[2]  Forrester Research eReader Forecast 2010 – 2015 (US)

[3] IDC Worldwide Quarterly Media Tablet and eReader Tracker, September 2011

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.

My perspective on CSO INSIGHTS 2011 Sales Compensation and Performance Management – Key Trends Survey

 

Jim Dickie and Barry Trailer of CSO INSIGHTS do a great job every year of taking the pulse of sales leaders and sharing their survey results and opinions.  The 2011 Sales Compensation and Performance Management – Key Trends survey is another good read from Jim and Barry, and as we have come to expect, their insights and observations add a lot of value to the raw results.  

A copy of the survey results is available at   http://bit.ly/pbvNHG

As I was preparing for a conference presentation next month, I was re-reading the results and I was struck by one chart in particular.  When the question was asked – What aspects of your comp plan would you change, and in what order?   

The top three results were

• Management’s ability to judge plan effectiveness
• Management's visibility into sales performance
• Ability to model plan revisions

The bottom three, in terms of priorities were

• Managing credits, exceptions and adjustments
• Minimize inquiries and disputes
• Support compliance requirements

The complete list is good, and I am sure that anybody reviewing it could not disagree with it as a whole.  This list however, represents the perspective of sales leaders as it relates to compensation.  I wonder, if we asked CFOs, Compensation Teams, and HR leaders how they feel, would we get the same list and the same priorities.  My hunch is that while other groups wouldn’t disagree with any of the requested changes, they believe that the fast and accurate payment of commissions, and minimizing inquiries and disputes will increase sales job satisfaction and give the sales team more time to sell by reducing their administrative effort and shadow accounting efforts.  This could be argued as one of the biggest benefits of automating the commissions management process and therefore made the top priority for the compensation team.

I have often talked about the need for cross-functional organization alignment, around goals and priorities when implementing a Sales Performance Management System.  If the cross-functional team isn’t aligned as to what the short and long term goals and objectives are, then the projects are in risk of cost and time overruns and missing expectations of some group when it is delivered.   What this chart got me thinking is that it’s not enough to make sure that the list of goals is correct, but also that they are prioritized and agreed upon by the whole team.   Getting alignment from the start will save everyone a lot of time and effort in the long run.

Isn’t Sales Performance Management software just part of CRM, HR or ERP systems?

I am often asked why Sales Performance Management isn’t just a part of some other enterprise application.  Based on the background of the individual asking, ‘some other application’ is generally the organization’s CRM, ERP or HR system.    

The truth is that while SPM touches all of these areas it is not well served by any of them.  The design point of each of these applications is not Sales Incentives. Adding a few columns and a few reports doesn’t solve the problem of accurate, timely and efficient payment of variable compensation.  Nor does it start to solve the challenges around modeling, reporting and analysis of sales performance.

Let’s look at each of them.  Some would say that Salesforce.com, Microsoft Dynamics CRM or other CRM solutions are the obvious choice of where sales commissions should be handled.  For many organizations the CRM is the place to capture customer centric information and related activities.  It stores what the customers purchase, it may capture what they order, but very rarely does it capture who gets credit for the sales of those items, how commissions were handled, hire and termination dates of potential recipients of commissions, and what attainment towards Quota the credited sales rep was at in order to determine accelerators.   This is just a short list of the things that are needed in a modern sales compensation system.  Without that relevant data it is impossible to calculate commissions simply by looking at the CRM.  Loading all of the data and building the calculation logic that is required is also not possible or not in scope for most CRM solutions.

Many say Success Factors, PeopleFluent, Taleo, Workday or some other HR or Talent Management solution is the place for compensation and benefits information and therefore the place to capture information about variable pay.  The challenge is that HR systems do not track detail about what customers purchase what products.  This is critical to a sales compensation system.  HR systems do not capture the components of the plan in order to run complex calculations needed to determine specific payouts.  In fact, most HR systems are generally good at data collection and reporting, but do not have the concept of a calculator or modeling engine as part of their solution set and therefore should not be used for sales compensation.

Let’s have a look at ERP solutions.  ERPs are assumed to be the place that houses all the transaction data needed for calculating commissions.  While the transactions are a key ingredient to a compensation system, ERPs were not designed to manage commission exceptions, overrides, splits and plan adjustments that are the course of business in incentive compensation.  The concept of prior period adjustments, claw backs, holds, spifs and draws are not common to the process efficiency mindset of ERP solutions.

None of these systems were designed for sales commission’s calculations purposes, and while they all have some of the data needed, none have all the data nor  the dispute resolution, plan modeling and other necessary functionality.  These systems are not well suited for your sales performance and commission management needs. 

So how are organizations managing this critical process? According to Gartner, nearly 90% of organizations with over 100 sales people are still managing commissions with home-grown solutions, Access databases, Excel and manual effort.   Outside of North America there is even less automation.   A number of organizations have come to realize than in order to deliver timely, accurate commissions, and in order to design and implement plans that drive the sales behavior they want, they must look to specialized software for this task. Software that can accept data from a myriad  of data sources,  determine the proper crediting for all the incoming transactions,  calculate commissions, and then produce commission statements, reports and analysis.   Modern SPM systems also allow compensation teams to model different scenarios, analyze plan effectiveness, manage the territory and quota processes as well as calculating commissions.    

Organizations that implement SPM systems are more likely to drive down administrative costs significantly reduce errors and put more selling time back into the hands of the sales team

Conference highlights - WorldatWork Spotlight on Sales Compensation

For the second year in a row the WorldatWork’s Spotlight on Sales Compensation event was a sell-out and a great success.  Approximately 300 people congregated at the Westin in Chicago to discuss sales compensation.  Most of the people I talked to came with one of two things on their minds.  How do we improve the compensation plan design?  Or how do I better leverage information technology to improve efficiency in the compensation management processes?

The who’s who of sales compensation showed up and presented their latest thinking on managing the sales compensation and commissions processes.  Attendees got to hear from many speakers including practitioners  from organizations like Salesforce.com, Manpower Group, American Express,  and Office Depot.  We also were able to from hear thought leaders from organizations including Towers Watson, Coletti-Fiss, Sibson Consulting, BetterSalesComp and the Cynal Group.

As readers of this blog will know, I have been out collecting  ‘keys to success’ from project managers of incentive compensation systems.  I have collected a ‘top 10’ list over time and I was asked to share the findings of these interviews.   I was fortunate by be joined by Vivian Adashek of Manpower, and we jointly presented - Keys to Success in implementing a Sales Performance Management Solution on Thursday afternoon.  Manpower has been using an automated solution for a few years now and Vivian gave some great advice for new project managers.  We also had a interactive group which made the session that much more enjoyable.

Some of the Keys I have blogged about before, but a new one has hit the top 10 recently.  It’s all about understanding the policies, processes and procedures that surround the commissions management process - before you start doing things.  Vivian found, and others agree,  that when a project team first assembles on the project,  that they have a general understanding of the compensation processes but this is not enough.  The challenges that arose during software selection, implementation and roll-out were often caused by the fact  that they did not understand the commissions process at a deep enough level, and this lack of knowledge tripped them up several times.  I too have seen this on a few of the projects that we have worked on.   Managing compensation is a complex process that has often been patched, pulled and changed to meet a myriad of changing requirements over the years.  Fully understanding what truly happens along the entire process is key before you start the automation project.  Ignoring this often leads to delays in the project plan, frustration for the team members, and cost overruns that could have been avoided.

I know that there is always the desire to jump right in, and start developing with the new software, but take the time to make sure you document and fully understand how sales compensation in done today and a very detailed level.  This up front effort will save you lots of time and money over the course of the project.

If you want a copy of the presentation, or have suggestions for the top ten list, or other questions and comments about commission management software please let me know.  

New Presentation for Spotlight on Sales Compensation in Chicago

I have been asked to present on Keys to Success when implementing a Sales Performance Management System at the upcoming WorldatWork Spotlight on Sales Compensation in Chicago (August 24-26).  I have been fortunate that over the years I have met a lot of very successful people who have done just that.  I have collected a lot of their advice and rolled it into a top 10 list.   For WorldatWork’s conference this year I will be joined by Vivian Adashek who will be talking about their implementation at Manpower.  She is a joy to work with, and brings some great experiences and practical advice for any new project manager.  Anyone starting on the SPM journey will be well served by listening to what Vivian has to say.

Specifically, we’ll be covering issues such as:

• Ensuring all functional areas are aligned to the same goals
• Key considerations for reporting
• Things to consider for testing, history tracking and data integration
• Role of Information Technology groups

Please comment or share this post. If you have advice for new project managers please share them, and I will continue to add to the list and make it available.  If you have questions feel free to post them as well and we will try to help.

If you’re attending WorldatWork’s Spotlight on Sales Compensation conference, please visit us at exhibit #7 and attend our workshop (Workshop Code: C15TH4) on Thursday, August 25^that 4:15pm.

Contact Paul Peters at 647.260.1556 or ppeters@varicent.com to set up a meeting while we’re there. We value your feedback and insights.

New Quota Management Survey

I wanted to alert you to an interesting new study focused on quota processes and programs being conducted by the team over at BetterSalesComp.   This is timely study as companies have struggled setting quotas with the current uncertainties in the economic climate added to the fact that no one ever feels they do quotas all that well.  The results will provide some much needed insight into Quota Management processes.

This cross industry survey only takes about 15 minutes to fill out, and in return for your contribution BSC will provide all participants a copy of the results. 

The study will focus on:

• how organization go about setting quotas, who owns it, what systems and data sources are employed, and what methodology is being used
• quota changes and whether the economy has impacted this facet of quota programs
• gauging overall effectiveness of quota programs and perceptions from both the field and sales management

The BSC team will also leverage their years of experience to provide some expert opinion and guidance based on the results of the survey.   I encourage you to participate. Just follow this link - http://bettersalescomp.quota-study.sgizmo.com