drilling down into big data to manage variable incentive risks
DESCRIPTION
As a CFO, you are accustomed to checking ratios in regards to expenses, COGS, net income and more. Comparing ratios from publicly available information is a key part of the monthly, quarterly and annual review of firm performance. Some information, however, is not as easily visible when peer comparisons are being made. Take the over $800 billion spent annually on sales compensation. Visibility to variable compensation ROI is hard for companies to measure, let alone drawing comparisons against the marketplace. For example: - Do you know what percentile you are paying your sales reps compared others in your industry? - How does your quota setting practices match up to your industry peers? - What is the optimal compensation plan for your industry? This session will share new insights into how companies are leveraging empirical big data from Xactly to check their plans, spending levels, and performance to analyze benchmark internal performance against the peers. Speaker: Marisa Massie, Controller, Bazaarvoice Presentation delivered at ProformaTECH 2014 - http://www.proformatech.com Track: Change Anticipation & Readiness | Session: 3TRANSCRIPT
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Drilling Down Into Big Data to Manage Variable Incentive RisksMarisa Massie
Controller, Bazaarvoice
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© 2014 Proformative
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Common Ground Across Industries
Success in Subscription Economy: Role of the Controller
Big DataSaaS and
Sales Comp Leader
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© 2014 Proformative
1.Source: Forrester Research
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By 2016 an estimated
52% of total online and offline retail sales will be influenced by Internet content(1)
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Confidential and Proprietary. © 2012 Bazaarvoice, Inc.
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MillennialsTrust & influence.
2012 study by Bazaarvoice and The Center for Generational Kinetics
51%
84%59%
Trust strangers’ opinions over friends and family.
are influenced by UGC.
List internet as their main news source.
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Bazaarvoice powers a network that connects brands and retailers to the authentic voices of people where they shop.
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Brand content can be displayed across multiple retail sites
Content syndication across the Bazaarvoice network
Brand X
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473BImpressions served since inception
145BImpressions served in FY2013
400MAverage impressions
served per day in FY2013
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Global blue chip client base Travel and LeisureConsumer Products Financial ServicesRetail Technology
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© 2014 Proformative
Evolution of Sales Performance Management
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Big Data Plan Performance
Integrated SaaS Tools CRM & Sales Comp
3 MeasuresHunter vs. Farmer
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Invest in the Top Line
Top 3 Investments
Cap Ex IT Sales Comp
Sales Comp 15-25% of Revenue
Get the comp plan right deliver the top line
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Invest in Sales Comp – dramatically higher ROI
• Measure Plan Success • Deliver on key metrics
• Pay for real performance
• Lead data-driven decisions• Benchmarking
• Predictive Analytics
Invest in Excellent Data
What is the right Data to invest in?
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What is Plan Success ….vs Saleperson Success?
Salesperson Success
• Made Quota – Going to Club
• Made OTE
• Paid on big deals
Plan Success
• Company hit sales targets• Right markets, right markets
• Achieved on all 3 elements• Not through SPIFFs, exceptions, etc.
• Paid without caps for the right deals
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Managing Variable Incentive Risks
“Commissions paid, sales targets
missed”
“Risk from Blue Bird deals”
“Pay for Performance”
“Invest with Confidence”
“Game the Plan”
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It All Seems so Simple When We Start
CFO SalesRevenue
GoalsMarketsProducts
Profitability
BehaviorsNew Business
ProductsRenewals
Cost Envelope Target OTE
Commission Plan
Quota Rates
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When Does it Get so Difficult?
Experience Sword
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What are the Battlegrounds?
Quotas
Payout Curves
Bluebird
How many measures?
“Outside Plan”
60% hit quotaOverassign wisely
Keep selling
Manage the rate per credit
Only ThreeLeverage Policy
2-3% OTE [across the business]
Midyear quota resetSplits w/o quota
Capped curves drive sales to next year
Capped payments
Build two measures into one
SPIFs, quarterly bonus, new logo, product
TRUSTCOMPLEXITYPLAN ELEMENT
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Measure What You Manage
CFO EVP Sales
Revenue goalsMarketsProducts
Profitability
Behaviors ProductsRenewalsMulti-year
Quarterly consistencyProfessional Services
Outclauses
Cost EnvelopeTarget OTE
Club?
Commission PlanQuota Rates
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Fast Feedback Reinforces Behaviors
Selling New Products
Everyone Wins
Contract Length
Longer, but not too long
Renewals
Collaboration
50% 30% 20%
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Measure the Effectiveness of Your Plan
• Cost per revenue $$ or product?• Include everyone paid on the products
• Desired deal structure?• Product mix
• Contract term
• Cross-account customer profitability?
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Insights & Benchmark Examples
• Executive• Quota Setting• Quota Modeling• Quota Distribution• Productivity by Product,
Region, Rep
• Finance• Sales Comp Profitability
(Spend/Revenue)• Spend by Plan• Spend by Role
• Sales Ops• Model Comp Plan• Payout Curve Benchmarking• Payment Triggers• Model Crediting• Effective Commission Rates
• IT• Data Quality• System Usage Distribution• Processing Distributions
v
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How do you Invest in Excellent Data?
1. Tie all commission credits and payments to specific transactions
2.Architect your data across CRM, Sales Order and Comp ecosystem
3. Measure ALL payouts
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© 2014 Proformative
Evolution of Sales Performance Management
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Big Data Plan Performance
Integrated SaaS Tools CRM & Sales Comp
3 MeasuresHunter vs. Farmer
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Connecting the Dots to Big Data
Opportunity
Sales CompQuota/Commissions
Product Pricing Payment
Quote
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1. Tie all Payments to Transactions
Order line details drive credit calculationOrder info, order start date, order end date, term, product ID, account or order ID
Leverage your comp system to calculate the credit and retain ‘references’ to opportunity, contract and account
Data transformation = data loss
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2. Robust Data Architecture
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Lead
Account &
Territory
Opp’ty OrderCompCredit
Source
Inside sales
Partner
Parent
Territory
Region
Sales Team
Support roles (e.g. SE)
Product
Terms
New or Renew
Tie to Order / Oppty / Accoun
t
Value-add data resides everywhere
Comp Tool
CRM
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2. Automate and Enrich Data
LeadAccount
& Territory
Opp’ty OrderComp Credit
Comp Product Family
SPIF Object
Commission Event Object
Account Team for Splits
Role-based share
Credit Type
Deal Object
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3. Measure All Payments
Trade-off ‘discretionary’ items to fund more impactful design elements
• Outside of Plan elements: Professional Services
• Expensive add-ons: SPIFs, Quarterly bonus,
• Unplanned expense: Exceptions, adjustments
Create Unique tracking IDs for these in Comp System
All Payments through Comp Team
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Payback is Data-driven Decisions
• Maximized investment in highest value plan elements
• Robust risk modeling and forecasting
• Effective sales performance management
• Motivated sales team
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© 2014 Proformative
Evolution of Sales Performance Management
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Big Data Plan Performance
Integrated SaaS Tools CRM & Sales Comp
3 MeasuresHunter vs. Farmer
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Benchmarking Opportunities
Compare through ‘independent’ sources
• Benchmark vs. self• Prior year Plan Design Success• Monthly progress of current Plan
• Benchmark vs. others• Organize data to enable benchmarking
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Quota Attainment vs Industry Benchmark
Attainment 0-80%
Attainment 80%-120%
Attainment Over 120%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
50%
15%
35%
20.00%
65.00%
15.00%
Attainment
Benchmark
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Payout Curve Benchmark
PAYO
UT
%
0% 50% 100% 150% 200% 250% 300%0%
50%
100%
150%
200%
250%
ATTAINMENT %
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You’re Not Alone…
Sibson Software Sales Comp Forum
• Renewals comp in ‘Hunter’ Plan
• Crediting new products
• Goal for 100% attainment / club
• Blue Bird Clauses
• SaaS vs. Software Sales comp
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Benchmarking – Data Driven Decisions
• Start by analyzing your own performance
• Identify highest value areas
• Reach out to data sources
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What’s next? Where do you go from here?
Assess commission data quality
Evaluate plan effectiveness at same level you designed
Look for benchmarks in preparation for next year’s plan
Invest in the infrastructure
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© 2014 Proformative
Evolution of Sales Performance Management
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Big Data Plan Performance
Integrated SaaS Tools CRM & Sales Comp
3 MeasuresHunter vs. Farmer
Specific Transactions Architect Data Measure ALL
Measure Plan Success Start Benchmarking
Define Plan Success Design with trust
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Xactly Solutions
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Questions
Marisa Massie
415-728-2932
Subscription Economy: Role of the Controller
Zuora – Subscription Economy - eBook
@marisamassie
http://www.linkedin.com/in/mmassie
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Drilling Down Into Big Data to Manage Variable Incentive RisksMarisa Massie
Controller, Bazaarvoice