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Motivating Sales Team in the new SaaS world

The SaaS movement is all about how customers buy and pay for value delivered.  There is a dramatic shift with SaaS in how customers buy, and hence how we sell and thereby, incentivize sales teams. Before we can talk about how to adapt sales compensation plans to the new reality of SaaS, let’s understand how “we need to change our sales approach”.

Here are the key “sales approach” shifts happening with SaaS:

  • Focusing on our sales process → Helping customers make buying decisions
  • One big decision → Trying out things without exit barriers
  • Bulk Purchase → Incremental purchases and “pay-as-you-go” and “pay-as-you-consume”
  • Kill and move on → Land & Expand
  • Will they sign → Will they be a profitable account (strategic qualification)

Earlier sales teams were more like hunters. Now they need to be both hunters and farmers (customer success).  Even if customer success roles are separate in the organization, the way in which salespeople connect and sell sets up the foundation for customer success.  Salespeople need to think beyond meeting their quota or maximizing their commissions; they need to build customer success-driven growth momentum.

The SaaS shift is also having a significant impact on company cash flow.  Although there is a reduction in the “highs” of large deals, on the positive side, there is more steadiness in long-term cash flow in addition to the potential for reduction in overall sales cost. The SaaS movement has a huge impact on how we qualify and engage with customers, and how we incentivize our sales team.

Many software and technology companies that only sold “one-time” or “perpetual licenses” are now transitioning aggressively to selling “subscription licenses”. This is happening across the board for small and large value software licenses.

This shift has huge implications on how companies sell and how they design sales compensation plans for their salespeople. There is a higher risk of dissatisfaction amongst sales teams due to lower upfront commission earnings on new customers since the value realization is pushed out into the future.

On the other hand, the company has to be concerned about “retention” and “realization” from new customers and not pay commissions aggressively up front. This shift has huge implications on the sales force and sales plans.  How companies handle the sales force structure, role and sales plan will decide who the winners and losers are during this huge shift.

SaaS Plan Design considerations
Sales incentive plan design strives to optimize the interplay of three objectives:

  • Incenting the Right Behaviors
  • Protecting Earning Potential and Cashflow
  • Managing Incentive spend ROI

Incenting the Right Behaviors
With SaaS, salespeople are no longer just closers and hunters.  They need to be selective in which customers they acquire based on the long-term retention potential of the customer. Their focus has to be on transparency and value delivery to both the customer and the company.

The sales effort for a subscription fee model versus the upfront license model may not be that much less.  So while the revenues are realized over time, the sales effort is loaded up front. We need to recognize that and reward the salesperson with either a higher commission (on lower ACV of SaaS) or a sign-up bonus for new customer acquisitions.  

At the same time, salespeople need to be tied to the long-term success of the client and hence, need to have renewal, retention and upsell components that are more aligned to how customer value realization works for the organization.

Case-In-Point: A technology company wanted to grow rapidly and increase the number of customers they had.  They decided to give signup commissions to salespeople for any account they signed. At the same time, the company did not create specific qualification requirements in the sales or commission process.  They felt that they could have the same kind of success with more clients that they had with their past clients (who were very selectively picked). The end result – after two years – was poor revenue realization. Many of the customers they sold were not long-term buyers. Moreover, these were not ideal clients and consequently, whatever revenue they generated was not as profitable.

To incentivize long-term perspective in salespeople behavior, a company may combine both a carrot and a stick approach.  The company can give bonuses for retention rates, renewal rates, upsell and profitable product mix. On the stick side, the company can also claw back commissions on customers if the customer discontinues within a certain timeframe (say they cancel in the first 6 months).

Another way to ensure the quality of customers is by rewarding managers and leaders on customer success factors such as CSAT, NPS and renewal rates. In the SaaS era, it is important to tie the salesperson back to the long-term success of the customers.  They may themselves act as Customer Success Managers (CSM) or have a supporting CSM helping them. In either case, their commissions should be tied strongly to long-term revenue and profitability of customers.

Protecting Earning Potential and Cashflow
When the transition to SaaS licensing model is rapid for an organization, there is a reduction in first-year contract value (ACV) of new customers. To make up for this reduction in ACV and hence commissions, we need to reward the salesperson on subsequent year revenue through retention and renewals commissions.

By adding a retention and renewal component, we make the salesperson’s earning potential from a sale fair.  However, there is a delay in realization which means that their current year commission cash flow would be negatively affected at the cost of future commissions.

To make up for that negative impact, companies can do two things:

  • Increase the commission rate on first year ACV
  • Provide a reducing guarantee on commissions that runs anywhere between 6-12 months

The cash flow issue can also be mitigated by putting in an MBO or behavioral component for one or two years to help focus on the behavioral change needed, to how and what kind of customers should be acquired.  For example, they could get a multi-product bonus or a bonus for certain product line ACV above a certain amount.

Managing Incentive spend ROI
The shift towards SaaS models brings about significant “revenue realization”, “cost of sales” and “cost of commission” changes for a company.  Suddenly, the company is paying out more in commissions for “future revenue”.

The interplay between cash flow shifts, salesperson earning potential, customer lifetime value and customer acquisition costs have to be modeled accurately in designing the sales commission plan.

The incentive plan has to shift from direct upfront commissions to a combination of upfront commissions, subsequent commissions and additional metrics of customer success over time.  The worst thing that a company can do is break the incentive bank on “bad sales” in terms of the lifetime value of a customer. Another thing to account for is not giving guarantees for too long such that they become handouts.

The movement to SaaS is a huge shift and it will impact organizations both negatively and positively.  Organizations that adapt and change to the new way of selling will thrive and grow, while the others will languish.

To thrive, organizations will have to rethink and re-articulate their sales process and focus on delighting customers and creating customer success.  Salespeople will need to be motivated to become value creators and to build long-term success (versus meet quarterly numbers).

The sales compensation plans will have to be more nuanced and modeled extremely carefully to ensure that motivation is not only sustained but also strategically aligned.  The compensation plans will have to ensure that salespeople aren’t negatively impacted by the shift and companies can avoid having to compensate for the loss of income.

Moving to a SaaS model, if handled well, is a great opportunity for companies to leapfrog ahead of the competition.

Even with the pains of change, every disruption is a foreteller of a great opportunity!

Contemplating SPM Automation Tools? Is Your Organization Ready For The Road Ahead?

road2Sales Performance Management (SPM) involves multiple business processes, and hence, the procurement and implementation of an SPM Tool (such as Callidus, IBM, Xactly) requires a significant amount of planning and effort.

The planning must start long before you schedule vendors demos. There is no point in conducting vendor demos if your organization is not yet prepared to travel the road towards SPM automation. So how do you go about evaluating your preparedness?

To determine your organization’s readiness for an SPM tool, here are the top 10 questions you should answer:

1. What is the Business Justification?

The answer could be Cost Savings, Enhanced Reporting, Operational Efficiencies, Auditability, Calculating Payments or something related. Whatever it may be, if you can’t come up with a couple of strong business justifications, you will find it difficult to make a business case for the tool. Although it doesn’t all have to be about the financials, you have to be ready with a worksheet that shows the numbers. To learn how to build a business case, here is a link to a webinar that could be very helpful to you:

2. Are the Executives on board?

Have you discussed your plans with your executives? Do they understand the high level budgetary needs for such a project? Do you have their verbal nod for a ballpark budget?

If your executives aren’t okay with the estimated budgets, maybe you have gotten ahead of yourself. Save yourself some time and initiate the vendor demos only after you see your executives warming up to the idea.

3. Are Compensation Plans Stable?

The most common reason for SPM implementation failure is that the compensation plans are in a state of flux, sometimes even changing while the implementation is in progress. Are your organization’s comp plans still going through significant changes because of evolving market landscapes?  If so, you will have a tough time keeping your SPM implementation on track.

Taking this into consideration, you are not ready for an SPM tool. And yes, when you are told that the tool can handle all future changes without any time or effort, take it with a grain of salt.

4. Do you have enough Time?

From vendor demos to go-live, SPM projects will take no less than 4-5 months. If you are too close to the beginning of the new Plan Year and the deadline for Pay file is already in sight, you have probably missed your window of opportunity. If you decide to move forward at this point, you will be scrambling to move fast, thereby compromising the quality of your decisions, and creating a huge risk to the project overall. You are better off planning a mid-year rollout, which will have its own challenges, but at least you have time to plan for it.

 5. Are Business Processes Mature?

When the organization is growing rapidly, HR and Finance are constantly tweaking the organizational framework. For this reason, or maybe due to a recent M&A, if the processes and policies in the organization have not yet been solidified, it is difficult for the implementation team to configure the new tool.  A lot of time and effort would go to waste in changing the tool configuration again and again.

For example, if the new hire draw policy is changing every few months, the SPM tool can’t really be successful.

6. Do you have IT Systems providing Reliable Data?

SPM tools can’t operate in a vacuum. If you don’t have HR systems providing reliable Payee data or ERP systems providing sales data, you will have huge challenges with the SPM tool. Garbage in, garbage out. For instance, if new hire notices are coming to the commission administrator on Post Its, you are not ready for an SPM tool. You must first invest in HR tools and processes.

7. Is IT Leadership ready for one more Tool?

SPM implementation projects require IT budget and resources. If the IT team has resource constraints, or there is another large IT initiative, such as an ERP upgrade planned for the year, then IT will not be very happy about supporting an SPM implementation. A quick synch up with your IT leadership would help ensure that no such major roadblocks exist.

8. Is the Cloud an option?

Almost all major SPM tools are now available only as SaaS solutions, where the software is hosted in the vendor’s Cloud. What that means is, if your organization has a strong preference for On-Premise solutions, your choice of vendors becomes very limited.

It’s better to clarify with your business leaders if Cloud solutions are an acceptable option. If not, knowing the road map for all software vendors, you may want to abort the idea of packaged solutions or wait for your organization’s mindset to change.

9. Do you have Resources to support this Project?

After the tool is implemented, you may be able to cut the headcount in commission operations. But initially, you will have to dedicate a great deal of time and energy in evaluating and implementing the tool. If you are unable to free up any of your current resources and can’t find the budget to hire external consultants, it will be extremely challenging for you to get this to the finish line.

10. Is there an M&A on the Horizon?

Last but not least, if there is an M&A on the horizon, it’s better to wait on an implementation project. The new company may already have an SPM tool, and it is almost guaranteed that your business team will want a single SPM tool catering to the joint salesforce.

If you need further assistance with getting you prepared for an SPM project, please contact us at

The Evolution of Sales Performance Management

TTBlog_pic 2aSales Performance Management, A Look Back

Back when I started my professional selling career over 35 years ago, the term sales performance management meant sitting though weekly sales meetings and performance reviews every 3 months. Sales performance management in those days had little to do with analyzing productivity, team performance, sales enablement or incentive compensation, except, if you weren’t performing, i.e. hitting your numbers, sales management took the keys to the company car in return for your last check.

24 Carat Gold Calculators

From the early to mid-90’s, sales compensation management software started to hit the market. There wasn’t much science or empirical data to drive business outcomes based on historical or regression analysis, just a more streamlined and efficient calculator of sales commissions. This software was sometimes referred to as a ‘24 carat calculator’ because of its overall cost relative to its utility. A lot of IT organizations began building rudimentary commission calculators and reporting tools more cheaply. In fact, my team worked with our IT folks at Textron Systems to build such a proprietary system in 1990 using Lotus Symphony (before IBM) on Unix / Sun Solaris.

From SCM to EIM to ICM and Now SPM…

Over the next decade or so, sales compensation management (SCM) as it became known, morphed into EIM or enterprise incentive management as finance looked to increase its focus, and control, over incentive spend relative to performance. Then, by the early to mid-2000’s, incentive compensation management (ICM) became a more common definition as incentive compensation management moved across lines of business to now include other forms of incentives, both cash and non-cash for sales and non-sales staff with varying degrees of reporting and workflow.

As the new millennium was nearing the end of its first decade, sales performance management (SPM) became the defining terminology. With advanced reporting and analytics, territory and quota planning, improved workflow and flexible user interfaces, SPM software was now the quintessential tool designed to align sales performance with company goals. Sales operations suddenly had a new face, with new responsibilities and for some, a seat at the table.

From a technology perspective, the adoption of the Cloud (SaaS) and advanced integration technologies made the economics more attractive. The newer generations of SPM software became technically superior over just a couple of years prior. For better or worse, functionality also became quite similar across vendor offerings making vendor selection even more challenging, at least visually.

SPM Software, The Devil’s in The Details and The Requirements

Today, there are nearly 30 software vendors, including the leading ERP vendors, that perform many of the common SPM functional attributes. Out of these 30 software vendors, fewer than 10 are considered to be best of breed SPM software vendors. Of these best of breed vendors, most can satisfy at least 70% to 80% of the typical functional requirements found in technically challenging RFP’s. However, any one vendor can fall short on reporting, analytics, workflow, territory & quota planning, data volumes, managing overly complex compensation plans – the list goes on.

This is why it is imperative for stakeholders to take ownership of defining, gathering and documenting requirements for their particular line of business. The most successful implementations of a SPM solution occur when line of business owners are directly involved from the onset, executive sponsorship is established and realistic project goals are set. SPM projects are like ERP projects in some ways; there are a lot of fingerprints touching various segments effecting a lot of people, the way they work and the financial impact to the company. SPM is not a compartmentalized nor a departmentalized tool.

Human Capital Management Software

Human Capital Management (HCM), Human Resource Information Systems (HRIS) and Human Resource Management Systems (HRMS) also have variable compensation management capabilities. A few have rudimentary sales incentive compensation management functionality but none can manage the volumes of transactional sales data, perform complex sales crediting, perform simulated scenario modeling of plans, territories and quotas then analyze this data for outcomes against a prescribed forecast. That is a fundamental difference between HR tools and SPM, currently.

Many SPM tools can also calculate bonuses, assign and measure MBO’s while enabling scorecard functionality, a core function for HR tools. But, they cannot perform many of the core workforce management functions such as salary administration, equity or stock distribution, deferred compensation and merit pay, together known as total compensation or total rewards. In addition, HCM tools provide a unified view across all employees that can analyze role-based performance, measure skill levels and prescribe best-fit candidates for a particular job and provide a holistic view of the total workforce.

If a top tier HCM or HRMS vendor were to acquire a top tier SPM vendor, or, the other way, around, then integrating the two successfully, while offering either as a stand-alone solution or together as one, that would be a market moving game changer. I’m surprised that hasn’t happened up to this point given the speculation and rumors that have circulated throughout the industry for years. I think further consolidation of the SPM market is inevitable, which can be a good thing.

About the Author: For more than 15 years, Tom Troiano has been a successful senior sales executive with the leading Sales Performance Management vendors including IBM / Varicent, Synygy (Now Optymyze), Callidus Cloud and Oracle. Throughout these years he has helped 100’s of companies across many industries evolve from spreadsheets and homegrown tools to today’s data driven SPM solutions supported by a strong business case. Tom has been in sales and sales management his entire career. Starting in 1980, where he led a sales team at a small startup that grew into a big sales team while designing his first sales compensation tools.

Right Organizational Structure For Sales Performance Management (SPM) Operations

Author:  George O’Connell

I have observed a wide range of organizational structures for Sales Performance Management (SPM) operations. Compared to any other organizational operation, SPM operations are somewhat an oddball because there is no single department in the organization that is a natural fit to take full ownership. Roles and responsibilities are often undefined and spread across multiple functional groups.  There isn’t a standard best demonstrated structure that fits all businesses. The SPM operational responsibilities are by and large split evenly between the HR, Finance, and Sales Operations teams.

To ensure the most effective practices, the organizational responsibilities should be assigned to the most qualified, and experienced resources available in the organization.  Anticipated business changes, in addition to the existing workload, should be a factor in deciding how to build SPM organization.

If, at any given time, a particular department needs to focus their attention on other critical business issues, they should be excused from SPM’s operational responsibilities. For example, HR may be dealing with high turnover, core HR system installations, or a lack of experienced resources needed to manage programming staff.  Likewise, Finance and Sales Management, and Sales Operations will have their own specific challenges.  In fact, Sales Operations may be viewed as too closely controlled by Sales Management to be appropriate gate keepers for commissions and bonus payments.  Nevertheless, each one of the organizational options can be designed with all the appropriate management controls.

The right resources in any one of the three departments can produce excellent SPM operations results. For most companies, an evaluation of current talent and performance is needed to select the team with the highest probability for success.  Once the dedicated SPM operations group has been selected, it can function successfully under the guidance of any one of the three departments.

The following three steps will help guide a company through the organizational set up:

SPM Advisory Board

The company should setup an SPM advisory board to oversee and approve changes to compensation plans and processes. The approval process will involve many aspects, such as legal issues, HR compensation policy, cost analytics, strategic financial decisions, sales management objectives, systems capacity, security, performance issues, etc.  The senior advisory board should be the governing body that makes the final decisions for all SPM related projects and investments.  A well functioning board will give the SPM operations team clear and timely direction so they can deliver effectively on companywide pay for performance objectives.

The senior leadership group should be comprised of representatives from HR, Finance, Legal, Sales Management, and Technology.  Once the most qualified department is selected for direct SPM responsibilities, the board should monitor the performance of the dedicated team responsible for all SPM operations.  The most senior SPM manager should have a seat at the advisory board meetings.

RACI Chart

Once the SPM organization is formed, the detailed responsibilities and scheduled interaction with the advisory board should be documented.  Every company should put together a RACI chart to outline various functions involved in SPM and clearly define responsibilities and ownerships around these. Sample RACI Chart can be downloaded here. The best SPM organizations have “end to end” process responsibilities–from data capture, vendor management, SPM system design, plan development, pay calculations, testing, and reporting, to on-going support.   Effective management of these end to end processes insures that the SPM team delivers accurate and timely results critical to maintaining excellence in sales performance.

Another important role of the SPM team is to keep the advisory board apprised of systems development, data or calculation issues, company sales payout trends, resource requirements, and all other operational factors impacting pay plans, projects, and cost.

Flexible Staffing Model

SPM operations usually require close interaction with the company’s IT organization, HR payroll staff, Financial Planning, Sales Management, New Product Marketing, and Legal departments.   Due to the quick turnaround requirements, and the impact of revised or new annual compensation plans, SPM is best managed with a flexible resource pool.

Incremental resources from other departments, vendors, or outside consulting firms are frequently required to meet project deadlines.   It is unlikely that a cost effective Sales Operations team can deliver a new compensation plan within 60 to 90 days using only in-house staff and management.  SPM organizational resource needs are fluid, project based, and sometimes seasonal.  The quality and timeliness of the incremental resources are often critical to the success of delivering pay for performance responsibilities.

In summary, org structure for SPM operations is unique for every company. An SPM advisory board can provide guidance and decisiveness. A RACI chart helps clarifying who does what, and creating a flexible staffing model will ensure an effective SPM operation.

About the Author:  George O’Connell has on premise and SaaS expertise in the area of Sales Performance Management (SPM) and Incentive Compensation Management (ICM). His experience includes design, development, operations, governance, and analytics for a company with $2.5 billion in sales to over 500,000 customers.   He has managed SPM operations for a wide range of sales channels including telephone sales, sales executive channels, union contracts, new business start-ups, call centers, third party vendors, sales management plans, and director / sales VP compensation.

How To Communicate Compensation Plans Effectively

2015 is nearly upon us and many of you are preparing to roll out new sales compensation plans and supporting documentation. How do you ensure that your plan document has all the right ingredients and is communicated to the sales reps in the best way? Here are a few tips you may find useful.

Distribute the Plan Document Early
It is critical distribute the plan documentation as close as possible to the start of the plan year, preferably within the first week of the new plan year. At least two states – California (AB 1396) and New York (Section 191 of the Labor Law) – require that employees who are paid on commission must be provided a written contract which sets forth the method by which the commission shall be computed and paid. These laws further require that the employer provide a signed copy of the commission agreement to the employee and obtain a signed receipt for it. Delaying indefinitely (or skipping) formal documentation is no longer simply a bad business practice but put you on the wrong side of the law. Do whatever you can to get your plans out on time.

Setup Webinars
Often, major changes are incorporated in the new sales plan and simply pushing the document to the sales reps is not enough. If there are significant changes to the design, setup webinars with the reps and walk them through the plan components. Give them a platform to ask questions and clarify; their questions may even give you important inputs to make suitable changes to the document.

Provide Clear Guidance on How to Sign the Document
Many systems allow you to capture an electronic signature. However, sales reps often plead ignorance about this when clear instructions are not provided. Focus on a couple of things here: First, provide a clear guidance on the signature process. Second, clearly indicate the due date and send reminder emails couple of days before the due date. Send follow up emails to those who miss the deadline and copy their direct manager. And consider what some companies do – withhold commission payments until you have a signature on file.

Make Your Plan Document Lean and Precise
We often see plan documents that are too bulky which make them tedious to read and hard to follow. Most of the bulk comes from the Terms & Conditions of the compensation policy. Focus the document on the plan components and corresponding business objectives and make the Terms & Conditions as a common appendix.

Consider Adding a Clause About Windfall Payments
You may periodically experience a windfall sale – a large sale that the selling rep didn’t have much influence over. This often translates to a large, singular payment of two to five times the annual target commission target. Instead of simply paying this out, consider the safeguard action of having a windfall clause in your plan like “Under extraordinary circumstances, the company has the right to adjust the total commission payment based on a common sense business approach.”

Use Charts and Graphs for Visual Appeal
The compensation plan document can be a great motivational tool. If you include graphs and charts which creates an imagery of how compensation figures grows when attainment levels rise, it attracts your sales reps attention immediately. A picture paints a thousand words!

Communicate Linked Components Clearly and Concisely
Some plans will link the payment of one component with the performance of another component. For example, a sales rep could carry both a product and a service quota. Companies that link components don’t want a rep to be satisfied with payment on a single component at the expense of the other. Typically these plans work in such a way that the rep does not get a product accelerator unless he also meets the service quota (or vice versa). Numeric examples should be used to help the rep understand their compensation under various scenarios. Each scenario can depict a service-product quota break up and projected earnings.

Cover a Single Position or a Role
There can be situations where an individual has carried out the responsibilities of two roles for a limited period of time. For example, take the case of a manager who has filled in for a sales rep who has quit the company. For such cases, do not create a new plan. The individual should be assigned two separate plans for each position or handled as an exception and with senior management approval.

Now that you are ready to go out with your plan, one last thing!

Make sure the plan document is reviewed and blessed by all stakeholders (i.e., HR, Legal, Sales, Finance) before you communicate to your sales reps. The last thing you want is to make yet more changes to the plan document after the rollout.

Make it a good year!

5 Tips to Manage Annual Changes to Your Sale Incentive Plan

By: Dan Ganse, Spectrum Technologies

It’s that time of the year again, the leaves are changing, pumpkin lattes are back, and you’re starting to hear about changes to next year’s sales incentive plan.

You could sit back and wait and for these changes to find you, hope that they’re small and will be easy to make…but if you’re wrong, you’re setting yourself up for long days and a late program rollout.  It would be wiser to seek out these changes now and carefully analyze their impact on the current IC system.

Here are 5 tips that will help plan for next year:

1.  Start Early

An IC steering committee – typically formed with HR, sales, sales operations, finance, and other stakeholders – often decides on the annual plan changes.  And it’s not uncommon for major changes (e.g., new data sources driving new metrics) to take 2-3 months to implement.  It’s also not uncommon for this group to finalize these changes in mid/late December.  Failing to anticipate these changes will only put pressure on your timelines and the quality of your initial payroll and other deliverables.  And making mistakes – for any reason – will take you 3-6 months to regain credibility.

2.  Run It Like A Project

The key to managing annual plan changes is to make the stakeholders recognize what the key deliverables are to a new plan year rollout.  Push the steering committee to provide final compensation plans as early as possible.

Communicate timelines to all stakeholders early and publish and track dates to reinforce dependencies and accountability.  Establish a weekly meeting with all key stakeholders to share timelines, assess project risks, and resource plan for all roles (HR, support, IT, etc.).  If you’re planning to engage a vendor to help with your changes, secure the resources early on.  Don’t wait for the final plans to be ready as you’ll need to account for enough time for the vendor to plan their own staff and ramp up on your requirements.

3.  Model the New Plan

Modelling the new plan is crucial to ensure that the plan behaves as expected.  Monte Carlo simulation (running repeated simulations with random sets of data) can be particularly helpful to gauge the financial sensitivity of the plan.  You’ll want to understand how the plan behaves under a variety of conditions in order to (1) adjust the plan if the behavior isn’t desired before you launch and (2) serve as a baseline and reminder later in the year when discussions arise to change the plan.

4.  Archive Old Components

Too often, little or no time is spent archiving or removing unused components (rules, data, reports, etc.)  The reasons for not doing this are many – you assume this is a feature of your IC system, you don’t have enough time to do this and make the required changes, or it simply didn’t occur to you to do – but the consequences of not “pruning” these unused components is a more complicated system that is harder to understand and make changes to.

Be sure to allow for time to archive and remove unused components from your system to keep as clean as possible.  Doing so extends the overall life of your IC system, keeps the processing speeds faster, and allows for faster configuration changes.

5.  Communicate to the Salesforce

Your company is spending a lot of money on sales incentives.  Don’t assume that  just because you implement the changes requested that the salesforce knows what those changes are.  And just because you updated the Terms and Conditions of the plan for the new year, that also doesn’t meant the salesforce understands the plan or changes made to it.

Each and every year, it is essential to remind and educate the salesforce on their sales incentive plan.  This can be accomplished through a variety of ways such as testing and certification, road shows promoting the plan, sessions at a national sales meeting, webinars, on-demand videos, and more.  The key is that a concerted effort is made to remind, educate, and drive home the sales plan’s key metrics and overall corporate strategy of your organization.  Doing so, drives the performance of your sales organization and strong ROI in your sales incentive plan.

This is always a busy time of year, where you can be pulled in multiple directions.  Don’t let next year’s sales compensation needs sit idly by – take the time to prepare for what is to come.  Make it a good 2015!

5 Lessons SPM Professionals Can Learn from the Success of the Ice Bucket Challenge

ALS IBCThe ALS Ice Bucket Challenge has taken over social media and its success has far exceeded all expectations. The objective is clear and simple, and the challenge doesn’t require much effort from participants: donate online and/or pour a bucket of ice water on yourself.

Sales Performance Management professionals can learn a few lessons about human behavior from the success of the Ice Bucket Challenge. We listed five of them below:

1. Challenge to Motivate
When people are challenged (especially, if done publicly), they get motivated to succeed. The ice bucket challenge did this very successfully utilizing social media.

From an SPM standpoint, the challenge is for the sales team to make its sales goal. Sales goals or quotas need to provide motivation for the sales team to push hard towards those numbers. Beware of goals that are too aggressive – you’re just as likely demotivating the very team you need to achieve your goals.

Frequent communication around your sales goals – and overall sales incentive compensation – is critical to maintain mindshare and motivation with the sales team. Multiple channels, from monthly statements, to leader boards, and communications from sales executives are necessary to keep the sales team on target.

2. Build a Sense of Urgency
We procrastinate! By giving a deadline of 24 hours, the ice bucket challenge made it difficult for people to put it off and forget.

Building and maintaining a sense of urgency within the sales plan is certainly more challenging, but consider establishing shorter term goals (semi-annual or quarterly from annual) to keep the sales team always ‘sprinting’. If this is difficult, other ways to maintain urgency are contests, leader boards, and other public recognition of top sales reps throughout the year.

3. Align to Good Karma
Human beings have an innate desire to do good things. Most of us would go extra mile, if it helps a charitable cause.

Attributing a tiny part of corporate’s resources to social charitable activities, would not only provide a team-building exercise, but also build personal pride for the company they work.

4. Create Social Visibility and Peer Pressure
Peer pressure can get us to do things that we left on our own, would not have done. There is an element of social disgrace for those who choose not to participate.

From an SPM standpoint, set highly visible goals and challenge your sales team to accomplish them. Don’t let the goals be buried in a once-a-year produced ‘goal sheet’ – or only listed on a monthly commission statement. Make the leaders public and let lesser performers know how they stack up against those leaders.

5. Money isn’t Everything
Hardly anyone would have poured cold water on their head, if all they were getting in return was some money. People did it for reasons other than money, and in fact, most actually did it, and also gave money. What a deal!

Money alone may not be the only motivational tool for your sales team. Consider other motivational tools that can complement your cash rewards, like yearend recognition trips, merchandise, extra PTO days, and more.


Improving Business Strategies with Management Dashboards

By Larry Jackson, Spectrum Technologies

In my experiences, I’ve rarely come across managerial staff with a crisp picture of what reports and management dashboard should contain.  A management dashboard is simply a canvas you can paint with key information to help businesses break away from simple operational commission summaries and line item information.  With a good dashboard, businesses can have a powerful tool at their fingertips.

Here are some potential elements for creating an effective management dashboard.

# 1 Top and Bottom Performers

A traditional ranking report usually consists of employee names, rank number, and the performance measure (i.e., Goal Attainment). It’s typically multiple pages or screens long and merely a “data dump”.  To improve and make this a relevant part of a dashboard that provides managers with useful information with which they can use, focus on the top AND bottom performers to show the ‘best of the best’ and the ‘worst of the worst.’ In addition to goal attainment percentages, add sales figures and other performance metrics to give management an opportunity to identify areas of improvement, or to even motivate employees with various incentive prospects. The possibilities are endless.

Example – Top and Bottom Performers

Click to enlarge


# 2 Geographic Performance

Assessing geographic performance view will allow businesses to extend their strategies beyond improving the performance of employees. Managers can employ strategies to improve performance in specific areas/regions. The information provided in this report can shed light on the trouble areas of operation.



# 3 Performance by Product Lines

Corporate-level reporting shows management where areas of improvement can be met with effective sales and marketing strategies. At this level, sales and marketing tactics can be created and applied at the top level and deployed business-wide. This approach could be efficient provided it addresses areas of improvement universally. If this approach is only somewhat effective, the combination of Dashboard elements will ultimately prove to be effective in deploying strategies that work to improve business. Case in point, the efficacy of implementing a Corporate Sales report can be astounding.


Analyses of aggregate regional performance and performance by product line can greatly increase strategic effectiveness by providing detailed sales figures, or other information, at a higher level for each location. Combine this with totals for each component and full totals are provided on a company level. This will be effective in giving insight on how the company is performing in each of the key categories. An effective instrument exists to give management an edge in strategy.



# 4 Product Line Sales Performance by Region by Quarter

It is important for leaders to add time dimension to their dashboard, to be able to spot the trends that may be buried in the reams of data. Noticing the declining annual sales of a particular product line in a particular region can be fixed by top management, only if noticed.

 Region Attainment by Quarter


From an SPM perspective, management dashboards can be very helpful in quota and territory setup. A dashboard that stacks aggregated rep attainment for various territories against time dimension would help in setting up Quotas and Territories.

When building a management dashboard, it is always good practice to provide users with the ability to download data to an Excel Spreadsheet, or print the report using a pdf format. In addition, customization that allows users to drill-down (i.e., select a date, then select a region) gives more flexibility to the management dashboard, providing a better user experience.


In conclusion, a good management dashboard creates a world of opportunities for managers. The information presented with a dashboard can provide clarity to not just sales managers, but to departments company-wide.  Good dashboards help answer key business question and drive organizations forward.   With a good management dashboard, the possibilities are endless!!

About the author

Larry Jackson is an SPM Analyst with Spectrum Technologies LLC. He has 6+ years of enterprise system experience with last 3+ years in the field of SPM. He has worked with several large companies in banking and telecom industry on their SPM implementation projects.

Simplifying the Sales Compensation Program

By: Dan Ganse, Spectrum Technologies

Author’s Note: This blog looks at possible ways to help simplify the Sales Compensation Program.  Simplification can lead to better overall plan understanding and subsequent improved sales execution (higher revenue), as well as reduce overall administration support time (lower costs).

Topic # 1 – Simplifying Mid-Cycle Transfers

Recently, I spent time with a customer discussing and analyzing their sales compensation program.  The customer shared with me a recent plan change, a pretty simple change, which greatly reduced the plan administration effort required to support employees in one role.

The role in question was the Regional Marketing Manager (RMM).  For this company, the RMM is a sales overlay position – a position that can influence a sale through local marketing events– but not a person responsible for the direct sale of their product.  Additionally, the position has a relatively low incentive lever of approximately 20% of the role’s Total Target Compensation (TTC) which, when combined with their high volume sales transactions, translated into relatively low payments on a per transaction basis.

The prior commissioning process was to align the RMM to each sales transaction within their assigned region.  However, this company found that the RMMs were people frequently on the move within their organization – and consequently the crediting process (and adjustments to that process) was a source of constant administrative pain.


To ease this pain – the company instituted a quarterly geographic performance metric and managed any necessary proration by adjusting the quarterly target earnings for the RMM.  For example, the first quarter’s regional performance was 103% to goal and the RMM was in the field for the first half of the quarter.  Instead of looking at the actual transactions from the first half and prorating a goal, to compute some sort prorated attainment that then only applied to this person – the company now takes the first quarter’s performance (103%) and adjusts the target bonus by the 50% eligibility of the RMM.

The RMMs found this easy to understand and welcomed the change.  Field management liked the change because it simplified their reporting and underscored the importance of a regional metric.  Lastly, plan administrators saw exceptions and complexity drop – shaving a day off a five day commission cycle for the company.

About the Author: Dan Ganse has 20 years of deep expertise in the area of Sales Performance Management (SPM) and Incentive Compensation Management (ICM). His experience includes assisting customers in all aspects of enterprise-wide incentive management and brings a unique combination of business and technology expertise to address customers’ incentive management issues.