Sales Management Association Webcast Five Key Trends Shaping Sales Compensation … · 2019-07-03 · impact through high-performance sales and marketing solutions ... 1.Globalization

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© Copyright 2017 The Sales Management Association. All rights reserved.

Sales Management Association Webcast

24 February 2015

Five Key Trends Shaping Sales Compensation Today

Chad AlbrechtPrincipalZS [email protected]

Steve MarleyPrincipalZS [email protected]

mailto:[email protected]



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Today’s Speaker

3

Chris Bucholtz

Content Marketing Manager

CallidusCloud

[email protected]

Chris Bucholtz

Content Marketing Manager

CallidusCloud

[email protected]

mailto:asdf

mailto:asdf

Presented by


Sales Management Association Webcast

24 February 2015

Five Key Trends Shaping Sales Compensation Today

Chad AlbrechtPrincipalZS [email protected]

Steve MarleyPrincipalZS [email protected]



− 5 −© 2015 ZS Associates | CONFIDENTIAL 5 Trends Shaping Sales Comp Webinar FINAL2

ZS is the world’s largest firm focused exclusively on delivering

impact through high-performance sales and marketing solutions


Adapting to inside sales

5 trends shaping sales compensation today

Intrinsic motivation impact on sales incentives

Motivating Millennials

Globalization / centralization of sales compensation

Shifting from revenue to margin / price

− 7 −© 2015 ZS Associates | CONFIDENTIAL 5 Trends Shaping Sales Comp Webinar FINAL

POLL QUESTION

Which of these trends are you seeing within your organization (select all that apply)?

1.Globalization of sales compensation and the centralization of administration

2.Incorporating intrinsic motivation with extrinsic incentive plans

3.Motivating Millennials

4.Shifting to inside sales

5.Moving metrics from revenue toward margin and price


Adapting to Inside Sales


2009 – 2011 Job Growth2011 Change in Inside Sales Force Size

Inside sales is an investment area for many organizations, even

during the downturn

4%Decrease

25%No Change

27%Increase

1% to 10%

19%Increase

11% to 20%

25%Increase

> 20%

59%

124%

0%

20%

40%

60%

80%

100%

120%

140%

Lead Generation Jobs Inside Sales Jobs

InsideSales.com reports that inside sales is still growing

at 3X the rate of outside sales today.Source: 2011 Change in Sales Force Size — CSO Insights

http://www.csoinsights.com/Publications/Shop/telemarketing-inside-sales

Source: 2009 – 2011 Job Growth — Simply Hired

http://www.simplyhired.com/a/jobtrends/home


Sales headcount in different roles vs. plan to shift resources

over the next two years

Company Type (Based on Revenue)

Mean % of Total Sales Headcount Plan to Shift Resources (% of Respondents)

22%

44%

76%

78%

56%

24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Large Companies(n=10)

Medium Companies(n=14)

Small Companies(n=19)

Inside Sales Outside Field Sales

40%

7% 11%

10%

7%11%

50%

86%79%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Large Companies(n=10)

Medium Companies(n=14)

Small Companies(n=19)

From the Field to Inside Sales From Inside Sales to the Field No Change


What incentive compensation structure components are included

in the sales incentive plans?

IC Structure Components Included in Sales Incentive Plan

(% of Revenue)

0%

20%

40%

90%

60%

0%

7%

29%

71%

79%

5%

5%

0%

79%

95%

0% 20% 40% 60% 80% 100%

IaaS

SaaS

Category 3

Category 4

5

Small Companies (n=19) Medium Companies (n=14) Large Companies (n=10)

Overall

Commission

Quota-based

MBOs

Relative-based

Other

81%

79%

19%

9%

2%


15%

36%

43%

49%

51%

53%

57%

0% 10% 20% 30% 40% 50% 60%

IaaS

SaaS

Category 3

Category 4

5

6

7

What are the metrics used to evaluate performance of the

sales development group?

Metrics Used to Evaluate the Performance of Sales Development Group

(% of Respondents)

Quality of leads /

conversion rate

Number of leads

Number of appointments set

Pipeline contributions

Revenue from lead activity

Number of activities (calls,

connections etc.)

Other

Other includes: “# of opportunities generated, Alignment to sales leader revenue, accounts closed, combined revenue of AE team”.

*Respondents were allowed to select multiple options.


Intrinsic vs. Extrinsic Rewards


Three key elements

Daniel Pink suggests that if our work provides these three elements,

extrinsic compensation rewards are not required.

Autonomy

Freedom to choose

what you do

Mastery

Becoming an expert

at something

Purpose

Having a reason to do

what you do


Four drive theory of motivation

The Four Drives Behind Human Motivations*

* Based on the research and “Driven” book by Paul R. Lawrence and Nitin Nohria

Acquire Acquire and attain material rewards or

recognition

Bond Affiliation with something greater than self;

sense of belonging

Defend Fight or flight drive

Learn Desire to be challenged and grow personally

(aka Challenge and Comprehend)


Non-Cash

Intrinsic ExtrinsicIntrinsic Extrinsic

Incentive vehicles

Cash

Autonomy, Mastery, and

Purpose provided by job

Define & Defend:

recognition and status

of your company

Acquire

Status

Acquire

Cash

Acquire & AttainBond &

Belong

Challenge &

Comprehend


Motivating Millennials

What needs to be different?


Over the next 20 years, Millennials will be replacing Boomers in

the job market

85.4

61.0

81.5

31.9

49.4

59.9

0

10

20

30

40

50

60

70

80

90

100

Millennials Generation X Baby Boomers

Population Labor Force

Population by Generation (Millions)

Source: US Census Bureau, 2010, Bureau of Labor Statistics

Millennials are expected

to make up 44% of the labor

force by 2020


Characteristics of Millennials

9 Immediate and regular feedback

8Want meaningful work / meaningful contribution

7Desire for non-monetary perks (flexible hours, e.g.)

6 Personal development

5 Immediate gratification

4 Want challenge

3 Grew up with technology

2 Collaborative / Team Players

1 Goal-Oriented

Millennial Characteristics


Potential impact on sales incentive plans in the future

9 Immediate and regular feedback

8Want meaningful work / meaningful contribution

7Desire for non-monetary perks (flexible hours, e.g.)

6 Personal development

5 Immediate gratification

4 Want challenge

3 Grew up with technology

2 Collaborative / Team Players

1 Goal-Oriented

Millennial Characteristics

Gamification

Time off / charitable contribution as a reward

Individualization of incentives

More short-term incentives

Importance of SPM technology

Potential Impact


Globalization of Sales Comp and

Centralization of Administration


What does this really mean?


Benefits of globalization

Consistency in plan designs or guiding principles

1

Equity across sales people regardless of location

2

Instill and reinforce common culture3


Globalization continuum

Increased Level of Globalization

Level 1 Level 2 Level 3 Level 4

Geo Design

ResponsibilityLocal Local Global Global

Global Framework

Global Incentive Plan

Enforcement /

Governance

Exceptions Not

AllowedN/A


Best practices followed in operations (COE)1

Reduction in fractional FTEs supporting process in different geos

2

Consistent visibility into performance and plan effectiveness

3

Benefits of centralization of administration


Level 1 Level 2 Level 3 Level 4

System / Tool Selection Local Centralized Centralized Centralized

Administration Local Local Centralized Centralized

Reporting Local Local Centralized Centralized

Field Queries /

Dispute ResolutionLocal Local Local Centralized

Centralization continuum

Increased Level of Centralization


Metric Shift From Revenue

Toward Margin and Price


Why pay on price or margin?

Salespeople drive margin…

..but often don’t maximize

it…

..and companies may not be

able to measure it (or may

not want to report on it)


5% Swing

17% Swing

50% Swing

Impact of price changes on the bottom line

Example assuming 30% margin

Paying on margin provides magnified impact on incentives,

but some companies want more.

$100 ASP

Price $100

COGS $70

Margin $30

SGA $20

Net Profit $10

5% Discount

Price $95

COGS $70

Margin $25

SGA $20

Net Profit $5

5% Premium

Price $105

COGS $70

Margin $35

SGA $20

Net Profit $15


20% Higher

50% Higher

150% Higher

Impact of product mix changes on the bottom line

Example with 2 product categories

Paying by product “bucket” conveys the strategic importance

of specific products while driving margin up.

Core Products(30% Margin)

Price $100

COGS $70

Margin $30

SGA $20

Net Profit $10

Strategic Products(38% Margin, 20% Price Premium)

Price $120

COGS $75

Margin $45

SGA $20

Net Profit $25


Metric to pay on depends on the margin

and price control

Price

Control?

Product Mix

with Varying

Margins?

High Margin

Business?

Resulting Metric Used to Drive Price/Margin

Gross MarginProduct

BucketsASP

No No Yes/No No benefit to pay on margin - pay on revenue

No Yes No

No Yes Yes

Yes No No

Yes No Yes(or revenue)

Yes Yes No

Yes Yes Yes


How Does Training Become More Nimble?

32

If we want to implement profitability as a metric next year, what are the “watch outs”?



33

What about overtime/FLSA? How does that share how companies pay inside sales?



34

Are there any tools that help with measuring expenses tied to cost controls?



35

What are the top 1-2 issues companies face when globalizing?



36

For engineered to order business with long complex sales cycle is there a rule of thumb of base salary to commission pay out? I often hear from operations-that is what the base is for non-related sales support- which can be up to 70% of their time.


Thank You

Thank You

Documents

Sales Management Association Webcast Five Key Trends Shaping Sales Compensation … · 2019-07-03 · impact through high-performance sales and marketing solutions ... 1.Globalization