sales compensation for tough times

Sales Compensation for Tough Times

Today’s Speaker

Liz Cobb, Founder & CEO Makana Solutions

• Makana is the third compensation management company Liz founded

• Over 20 years in sales compensation design and process automation

• Liz is a recognized industry expert, has consulted for hundreds of companies and speaks frequently on effective sales compensation

Today’s Speaker

Teanna Spence, Compensation Director, Makana Solutions Inc.Teanna has 28 years' experience in financial systems including 14 years in incentive design, management, automation, and best-practices development for many companies in a wide range of industries including DEC, Cabletron, Kinkos, Aspect Computers, and Staples.

About Makana Solutions

“the most innovative product I’ve seen lately…they really understand how people design plans and work.”

James Hollincheck Research VP“Plan design is a key element of effective sales compensation, which drives sales behavior. Salesforce users can take advantage of a dedicated sales comp planning solution via the AppExchange with Makana Motivator.”

George Hu, CMO

“We believe CEO Cobb's significant knowledge of and insight into the sales compensation industry….will help land Makana Solutions a solid position in the expanding market.”

Judy Hodges, Research Analyst

Software for your 2009 Planning

• See the big picture• Access built-in best

practice• Anticipate incentive

costs• Generate graphical plan

documents

Planning to Payment Coming Soon

• Instantly start calculating payments on your plans in Motivator

• Get a sneak peek: info@makanasolutions.com

Sales Compensation Best Practices• www.makanasolutions.com/bestpractice• Sample sales compensation plans• Sales compensation surveys• Recorded Webinars

– Sales planning and territory management– Saas and subscription based sales comp– Sales Compensation best practices– Build a SaaS Sales Comp Plan in 15 minutes– Common Pitfalls in Sales Comp design– Sales Compensation Planning Process

Sales Compensation for Tough Times

Makana Value Proposition

Make great sales compensation easy

Sales Compensation in Tough Times

• Tough times – what you can do

• How Motivator can help• Q&A

Tough times – what can you do?

• Identify growth strategies– Customer segmentation– Industry focus– Product profitability groups– Sell more to existing customers

• Optimize sales productivity– Balance quotas and territories– Clear goals & plans

• Reduce costs– Lower base salary, introduce thresholds– Eliminate cost exposure– Eliminate ‘gaming the plan’

Survey Results for Components of Growth

Sirius Decisions

Sales Comp Follows Business Strategy

Refine Market Focus

• Analyze your compensation data– Top 10 accounts– Top 3 industries– Top selling products– Look at incentive costs

• Clarify your job roles– Can you improve direct sales through better

leads?– Do you need specialists to go after a new

segment? Or Account Managers?

The Plan Communicates

• Starts with clear, concise documents– Easy to see rewards– Keep top priorities in

mind– Define exceptions

precisely

• Be aware of history• Explain transitional

issues and major plan changes directly with individuals

Total Sales

Modeling is more important now than ever

Optimize Sales Productivity

• Balance quotas and territories• Scrutinize under performers• Provide extra motivation for

your top performers• Reward the right behavior

Performance Distribution Curve

Unbalanced

Balanced

Opportunity by Territory

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Territories

Op

po

rtu

nit

y

Average OpportunityRep CapacityLost Opportunity

Territory Opportunity vs. Rep Capacity

Reduce Quotas in 2009?

• Be careful• Analyze sales potential

realistically• Compare to historical

performance• Review in 6 months

Reduce Compensation Costs

• Lower base salary – another ‘be careful’

• Introduce thresholds• Clearly understand cost exposures• Eliminate ‘gaming the plan’

Provide Extra Motivation

• Same TTC• Shift in

mix• Greater

upside

Mix and Upside

Other Levers…

• Levers: threshold and upside • Consider thresholds commensurate

with base salary carefully• Increase upside

Understand Cost Exposures

• Model costs at 150%• Look at historical attainment

Analyze Pay for Performance

Annual Attainment

Are you paying the same for equal performance?

Eliminate ‘Gaming the Plan’

Top 5 ways a rep can ‘game’

• Hold sales until the next quota period

• Coast on annuities• Sell to existing customers• Sell easy products• Fail to report errors in

overpayments

Close the Loopholes

• Monthly quotas that reset are easy to ‘game’

• Use YTD goals• Eliminate ‘tails’ • Don’t delay release of payments to a

far away event• Pay on a single event – the one

closest to the point of influence• Automate payments to increase

accuracy

Now, We’ll Show You How

Planning to Payment: Coming Soon

% Attain

Formulas Rate

Payout

< 100 Rate x Credit

5% $5,000

= 100 Rate x Credit

10% $10,000

> 100 Rate x Credit

15% $15,000

Payment

Start With What-ifs•Historical attainment•Projected attainment•Quotas•Staffing levels•Payout rates

% Attain

Formulas Rate

Payout

< 100 Rate x Credit

5% $5,000

= 100 Rate x Credit

10% $10,000

> 100 Rate x Credit

15% $15,000

Modeled Calculated

Planning

Questions & Answers

Makana Motivator• Planning

– $19/month– Cancel anytime

• Planning to Payment– Request an online

demonstration– info@makanasolutions.com– (877) 881-0001

Additional Information• Best Practice Content

– Sample plans– Recorded webinars– Surveys– www.makanasolutions.co

m/bestpractice

• Expert consulting– www.makanasolutions.co

m/consulting