sales compensation analysis - how does benchmarking help me
DESCRIPTION
Use benchmarking and sales analysis to assess your sales compensation plans. A comprehensive view often times yields issues beyond the sales incentive component. Learn how to apply 16 tests and develop new sales incentive ideas. A presentation by Sales Benchmark Index.TRANSCRIPT
Sales Compensation Analysis
How Does Benchmarking Help Me?
Website Email Phone
www.salesbenchmarkindex.com [email protected] 1-888-556-7338
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The Situation• $520M Technology company faces:– Exodus of top sales talent– Difficulty in recruiting top sales people
• Sales Leader wants to:– Confirm if compensation is in line with
industry – Modify compensation plan to attract/reward
top performers
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What Did Not Work• Contracted with consulting team of an
incentive compensation software provider– Top recommendation was to buy their
software– Analysis restricted to field sales
people– No root cause analysis for exodus of
talent
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What Did Work• Compensation plan & incentive pay
assessed across 16 best practice areas• Analysis concludes:
– Defined base and incentive pay in-line with peers (this is not the issue)
– Separate comp plans required for higher tenured sales people and role type
– Sales management comp plans require accelerators and stock component
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Compensation Scorecard
19 out of 32 Points
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Test Results (Excerpts)
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TurnoverDoes the Compensation Plan attract and retain the best salespeople?
The plan supports high retention of strong performers and adequate turnover of non-performers
Acme
Acme
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Pay Level – Test 1 of 5External and internal benchmarking: Is the current Plan competitive?
The plan is competitive and attractive compared to the benchmark, but below world class levels
AcmeAcme
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Pay level – Test 2 of 5
Total Income at plan is slightly less than Benchmark
Actual Paid Income per Rep for FY10:$212,751 vs$185,249 plan
Acme
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Pay level – Test 3 of 5
Actual Total Comp for DSM and SET is in line with Benchmark amounts
Acme Acme
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Pay level – Test 4 of 5
Acme
Sales Management Total Comp is 13% below the Benchmark amount
Channel Mgr Total Comp is closest to World Class levels of all roles analyzed
Acme
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Pay level – Test 5 of 5
DSM Quota Attainment is 24% below the benchmark
Overall Sales Quota Attainment is 4% below the benchmark
Acme Acme
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Traction & EngagementAre enough salespeople motivated by and participating in the current Plan?
All Reps participated in the plan and several achieved the highest level pay rates.
Plan Traction Measurements
Role Engagement Rate Excitement Index
DSM 100% 36%
SET 100% 20%
Engagement Rate: Measures % of Sales Force participating in variable compensation.
Excitement Index: Measures rate difference between standard commission and the highest level payout rate.
Excitement Index Range
<10% Low 20 – 50% Med >70% High
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DistributionIs the payout variation between top producers and non-producers appropriate? SE
Distribution weighted toward low end
SET Distribution weighted toward high end
Multiples inline with Best Practice
DSM Distribution weighted toward high end
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Recommendations
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Recommendation #1• Increase Accelerators for Sales Management• Determine an appropriate accelerator rate that
is greater than 1% for each 1% of attainment over goal
• Pay overachievement accelerator in stock
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Recommendation #2• Modify Comp plans to distinguish between
Account Development and Account Acquisition• Segment Rep assignments between existing
and target accounts• Establish desired mix of revenue from each
type of account• Determine commission pay rates for each type
of account
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Recommendation #3• Assign Quotas based on Territory Potential
and link to the variable commission rate• Perform analysis of territory potential• Set attainable Quotas that are based on
territory potential, workload, pipeline, market penetration, etc.
• Refine the variable commission rates and accelerators to account for territory potential and quotas
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Recommendation #4• Stratify Incentive Compensation based on
Rep experience level• Define the criteria to distinguish tenured reps
from new reps – years of experience, years in territory, etc
• Modify comp plan, quotas and incentive variable pay to challenge and motivate tenured reps
• Modify the comp plan, quotas and incentive variable pay to reward new reps who achieve superior performance
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Learn More
Contact us to hear the rest of the story...
Email - [email protected]
Phone - 1-888-556-7338
Web: http://www.salesbenchmarkindex.com