Building a Smart Sales Plan

Transcription

1 Sales Management Association Webcast Building a Smart Sales Plan 9 October 2014 Presented by Copyright 2014 The Sales Management Association.

2 About The Sales Management Association A global, cross-industry professional association for sales operations and sales management. Focused in providing research, case studies, training, peer networking, and professional development to our membership. Fostering a community of thought-leaders, service providers, academics, and practitioners. Learn More: The Sales Management Association. All rights reserved. Slide 2

3 Today s Panelists 2014 The Sales Management Association. All rights reserved. Slide 3

4 Sales Management Association Webcast Building a Smart Sales Plan 9 October 2014 Presented by Copyright 2014 The Sales Management Association.

5 Applying Collaborative Analytics to Improve Your Sales Plan Deloitte Consulting LLP October 2014

6 Quota Basics WHY? What organizations use quotas? Not all organizations use quotas Quota usage typically strongly correlates with the organization s maturity Sales Growth Time Position in Business Cycle: Launch Grow Hold Share Reap Profit Optimize Realign for Growth Typically Use Quotas? NO LIKELY TYPICALLY, YES Rationale for using quotas: Strategic Business Planning Tool Translate Corporate Goals to Actionable Objectives Sales Performance Management Pay for Performance Measurement Motivate the Workforce - 6 -

7 Quota management is extremely important to achieving sales effectiveness and business results Quotas cannot be set and managed in a vacuum. Changes to sales strategy, resource deployment, and the execution of your strategy, can impact quotas Deloitte s Sales Effectiveness Model Sales Process and Execution Drive sales with standardized processes, informed forecasting, and quota setting based on cross-functional inputs Empower the sales force with advanced lead management and predictive modeling tools Leverage wins for long term return with exceptional lead-to-sale and cross-sell and up-sell opportunities Examples of changes that may affect quotas: Changes to go-to-market strategy create new variables that need to be considered when setting quotas Augmented roles, sales responsibilities, and organizational structure require a reevaluation of how quotas are distributed Territory re-alignment, altered metrics, upgraded sales force, and improved productivity all require accurate quota setting to set achievable goals that drive to the corporate goal - 7 -

8 By neglecting to adopt a comprehensive quota management process, many sales organizations overlook a root causes of their sales effectiveness challenges Sample issues that can arise when quota management is executed poorly Quota Calculations: Poor information may lead planners to believe that rep overachievement is a result of under-set quotas and not strong performance Territory Planning: Poorly set quotas often result in performance below realistic expectations and available market potential left on the table Business Analytics: Expected YOY growth projections applied as a means to setting quotas sets unrealistic sales numbers and misalignment with sales strategy Coverage Model: Overlapping and corrupted roles create a broken customer engagement model resulting in sales incentive overpayment and crediting issues One method of incorporating a comprehensive quota management process is by adopting advanced modeling and advanced analytics. This will not only allow you to precisely set quotas, but enable you to better understand your sales organization

9 Customer Focus Company Focus An analytical approach can be incorporated into one of five quota management methodologies used by most organizations The large majority of quota setting and allocation practices can be slotted under one of the following five broad categories; based on focus on the organization vs. the external marketplace. Fixed Allocation Historic Allocation Adjusted Value Account Planning Flat targets set across sales team Simple process Doesn t take account potential into consideration Potentially creates a free-ride for reps with highest potential accounts Pro-rata allocation based on last year s performance Simple process Doesn t take account potential into consideration Creates a performance penalty ; best reps (continue to) carry the burden Pro-rata allocation modified by factors (market opportunity, penetration, competition, rep experience) Creates equitable objectives Easy to administer Individual account evaluation Driven by the rep and sales manager Most effective for small number of large accounts Bottom-Up, Top-Down Market-level potential information used to create estimates of territory potential Top-down corporate objectives reconciled with market-level data Incorporates local market information for more equitable goals No matter which approach you use, it is critical to take a comprehensive and well informed approach to ensure quotas are accurately set and distributed

10 Overview of Quota Allocation Quota allocation links company and participant goals Shareholder and Management Requirements Company Goals Goals Allocated as Quotas Business Units Business Units Business Units Regions Regions Regions Regions Regions Reps Reps Reps Reps Reps Reps Reps Reps Market Opportunity Quota allocation reconciles corporate strategic objectives to actionable quotas (=goals) for the sales organization

11 Analytical approaches creates a model of success designed to more accurately predict potential and performance and allocate quota AQAM takes into account internal and external data sources and provides a score that is indicative of whether quota is likely to be met. Explanatory reason messages are also generated to provide key insights that support decision making. Quotas can then be adjusted with these factors in mind in order to improve performance. Illustrative Inputs to Advanced Quota Allocation Model Internal Data Account level data (Size/ Share of wallet, tenure with Company) Employee HR Data (tenure, level) Prior Performance (# Activations, Churn, Net Revenue) External Data Macro and micro- economic factors (GDP, region growth) Seasonality Competitor activities in region and/or on accounts New product introductions/ phase-outs Optimal weighting of key performance drivers Quantitative, objective, and consistent Independently validated performance Ability to Meet Quota = w 1 (Account-level Info) + w 2 (Tenure with firm) + w 3 (Tenure with client) + w 4 (Net Revenue) + w 5 (Historical performance) + w 6 (Competitor promotions) + Sample Model Equation By combining internal data with external data, enhanced accuracy is achieved. John Smith 1 Circle Ave. Anytown, NY 92 Reason Messages: Prior Performance Competitor activity Region growth

12 Incorporating advanced analytics into the quota management process will improve the accuracy of quota setting Opportunities for quota management improvements using advanced analytics Incorporating advanced data requires deep analysis of sales trends, performance data, macro and micro-economic factors, and seasonality to ensure accurate model inputs Assessment of coverage model and roles forces sales leaders to manage appropriate sales capacity and span of control Detailed analysis of which products/product groups drive sales of other products/product groups helps identify cross-sell opportunities Incorporation of revenue / profit mix analysis identifies optimum tactics to maximize ROI Analysis of market potential, sales forecasts, competitor moves, new product introductions, and product phase outs to inform quota setting Ways your sales organization can benefit from advanced quota management Analytical quotas mean achievable goals and increased rep focus Provide measurable benchmarks to monitor true market penetration Alignment between quotas and comp plans keeps Cost of Sales at bay Effective quota setting results in improved territory allocation and a fairer payout potential Clearly defined and realistic goals = motivated sales force and increased sales

13 Building a Smarter Sales Plan at McAfee

14 McAfee Acquired by Intel Largest dedicated security company Organization sales representatives $2B+ in sales Changes Acquired by Intel in 2011 for $7.68B Background Sales Today

15 New Sources of Margin Pressure Post Acquisition Misaligned Plans Process Inefficiencies Excessive Discounting Reduced margin

16 Fractured Systems Led to Inefficient Processes Oppty Quote Order Book Invoice Large portion of platform based in MS Excel & Access (40+ DBs, 13+ SSs) Comp Plan Sales Hierarchy Assign Credit Adj. Credit (Excel) Specialized manual support required creates process inefficiencies and risk Lack of data integration leads to high risk of incorrect plan and quota data Territory Compensation Calculator Comp Modeler Lack of trust in comp data lead to a increased help-desk requests Sales Rep Assignment Quota Goal Sheets Analytics &Reporting ERP 1 ERP 2 Excel/Access Tools* Process Inefficiency *Each Excel Access tool should be considered to be a separate application

17 Planning Siloes Quota Management Lack of visibility Under allocation Difficult to manage changes Territory Alignment Analyst across geos out of sync Weeks to consolidate and load Assignment errors Commissions Calculation No visibility to plan effectiveness Variance between actual and plan Chronic overpayment Misaligned Plans

18 Challenges with Tools and System Quota Management Lack of visibility leads to under allocation Impossible to manage change and lack of auditability around who was changing numbers Territory Alignment Analyst across geos are out of sync 1 week to process and doesn t consolidate accurately Commissions Calculation Absence of a real time picture High variance between planned commission payout and actual Period end heroics to reach goals Price and Discount Deal Desk Over discounting of deals Incorrectly configured solutions Inadequate transparency and insight into pipeline

19 A Unified Sales Management System Improve Account Coverage Balance Territories Quota Management Target-Quota Reconciliation Run-Time Planning Audit and Change Control Accounts Better Quota Attainment Rep Alignment Discounting Bookings Territory Alignment Account Segmentation Territory Carving What-if analysis Products Territories Pricing Sales Rep Credit Rules Commissions Calculation Traceable crediting rules Timely and accurate payments Proactive rate management Reduce Commission Spend Improve Trust in Data Reduced Discount Rates Faster Quote Approval Deal Desk Discount analytics Quote validation

20 Commission System 2011 to 2012 Q1 Bookings Pre-Process Q1 Commission NA EMEA APAC LTAM NA EMEA APAC LTAM Q2 Bookings Pre-Process Q2 Commission Q1 Report NA EMEA APAC LTAM Q3 Bookings Pre-Process NA EMEA APAC LTAM Q3 Commission Q2 Report Comp Letter 2011 NA EMEA APAC LTAM NA EMEA APAC LTAM Q3 Report Q4 Bookings Pre-Process Q4 Commission NA EMEA APAC LTAM NA EMEA APAC LTAM Q4 Report 2012 Comp Letter

21 Commission System Estimated ROI Key assumptions Remove 2 commission headcount due to efficiency gains ($200k annually).5% gain on over-payment corrections ($500k annually) 21 ROI w/ Sales Synergies Experience is 1-2% range,.5% is conservative ROI w/out Sales Synergies Five-Year ROI and Payback Summary Non-Risk- Adjusted Risk-Adjusted Estimate Return On Investment 2178% 1632% NPV of ROI 1962% 1467% Total NPV of Costs $ 649,271 $ 649,271 Total NPV of Benefits $ 13,390,085 $ 10,177,037 Total NPV $ 12,740,814 $ 9,527,766 Payback Period 2 Months 3 Months Five-Year ROI and Payback Summary Non-Risk- Adjusted Risk-Adjusted Estimate Return On Investment 373% 277% NPV of ROI 326% 240% Total NPV of Costs $ 649,271 $ 649,271 Total NPV of Benefits $ 2,767,753 $ 2,210,287 Total NPV $ 2,118,482 $ 1,561,016 Payback Period 12 Months 14 Months 1.75 hours per sales employee per month re-invested into selling activities (this is only in the ROI w/ Sales Synergies) $250k implementation costs (in budget based on headcount reduction) $50k for Anaplan based on hourly quote with hard cap at $50k $200k internal costs assumed funded by leveraging existing annual GTM spend on OBI enhancements. No need to manage/support OBI rules. October 9, 2014 $100k annual license fee (in budget based on headcount reduction)

22 ROI Resource Reduction and Re-alignment TEAM SIZE COMP PLANS MANAGED 2008: 22 people 2008: 1, : 10 people (-55%) 2012: 1,600 (+33%) 22 October 9, 2014

23 Collaborations with Sales, Sales Finance and Sales Ops SEGMENT Sales Sales Ops BOOKINGS CREDIT & COMMISSION TERRITORY Sales Comp Analyst COMP PLAN QUOTA PLANNING Standardized: Transparent to all users Sales Finance Aligned: All users have complete understanding of why a Territory and Segment are set up in specific way 23 Collaborative: Providing users knowledge across

24 Business Unit Support Bookings Report (Including Channel) Bookings Report By Rep Accrual Reporting Payments Payroll Sales Ops Plan, Quota and Rate Reports for review and approval Finance HR Comp Attainment Dashboard Weekly Update Sales Finance Quota & Plan Maintenance Channel Rule Maintenance Key Metrics Rate Reports Attainment Payments Top 20 / 100 Performance Dashboard Development & Maintenance Anaplan is accessible via web 24/7 Sales Comm Ops

25 Collaboration with IT Territory Rule Deployment Process Sales Ops SGTM TMT Business Benefits 1. Identify and address rule conflicts and coverage gaps early with territory assignment previews 2. Reduction in cycle time for new hire or territory changes during the year 3. Single source of truth: No need to maintain the rules in 2 system IT Benefits 1. No overhead to maintain SQL server database for rule consolidation and formatting 2. Accelerate deployment of clean rules to CRM 3. Efficient and effective CRM assignment process

26 Collaboration with IT Crediting Rules by Plan Order Transaction E T L Configured and Maintained by Business No wait for release cycle No overhead to IT Current State ETL Sales 26 Crediting Rules by Plan X Maintained by IT X Overhead to IT - managing rules and releases X IT release cycle dependent Old State

27 Questions and Discussion How do you know your quota plan is good, and how to we define good? 2014 The Sales Management Association. All rights reserved. Slide 27

28 Questions and Discussion Which do you see is most typical set and hold firm monthly quotas for the entire year, or adjusting month-tomonth based on business dynamics? 2014 The Sales Management Association. All rights reserved. Slide 28

29 Questions and Discussion How does the deal desk integrate with quota management in terms of discounting, and how do you treat inbound opportunities vs. one the rep has been chasing? 2014 The Sales Management Association. All rights reserved. Slide 29

30 Questions and Discussion How many firms are using these advanced analytic modeling to set quotas, and how are they applying it? 2014 The Sales Management Association. All rights reserved. Slide 30

31 Questions and Discussion Complexity vs. Simplicity How do you balance the two and the need to address a business that can be complex? How many quotas are too many? 2014 The Sales Management Association. All rights reserved. Slide 31

32 Questions and Discussion How do we establish consistency in account potential estimation across sales management and sales managers? 2014 The Sales Management Association. All rights reserved. Slide 32

33 Questions and Discussion How do you build a business case to management to invest in these tools? 2014 The Sales Management Association. All rights reserved. Slide 33

34 Questions and Discussion Can you share lessons around getting aligned with the CFO? 2014 The Sales Management Association. All rights reserved. Slide 34

35 Questions and Discussion Is there any guidance you can offer in terms of establishing the ideal coverage model? 2014 The Sales Management Association. All rights reserved. Slide 35

36 Thank You. Copyright 2014 The Sales Management Association