3 Parts to a Sales Compensation Program

Sales Compensation is not easy.  Throughout my career, I have seen plans which break the sales budget to plans which do are insulting to the rep as they pay too little for a lot of work.  I refer to sales compensation programs as a form of art which requires a bit of science.

3 Parts of Sales Compensation Program

Science is pretty easy as it is understanding how your team should be selling your product and how it translates to the pipeline and corporate goals.  This understanding translates to key performance indicators (KPIs) which one can use to monitor rep performance and team performance.

The art plays in as you develop the actual plan and which KPIs enter that plan.  Average Deal Size, Number of Meetings, or Conference Attendees may not necessarily be the best indicators of sales.  With a mix straight sales revenue compensation (say 2%) and additional kickers and bonuses, the art of using plan structure for influencing rep behavior can take trial and error to get right.

Finally, the best compensation programs leverage transparency, reporting, and recognition. This is plan implementation where making sure the rep understands their KPI progress and how it translates to their paycheck.  Regular reporting and team leaderboard distribution are essential, motivating and drive revenue. A proactive analytics program can ease the calculation and payout of compensation at the end of the quarter.

As a specialist in the field, I encourage you to follow Spiral Analytics, my consulting firm dedicated to sales team optimization and small business promotion.  Follow us on Facebook

 

 

 

Top 5 Best Practices for Rolling Out Sales Rep Scorecards

Sales rep scorecards are that golden unicorn of any sales organization.  The scorecard is a compilation of Key Performance Indicators (KPIs) which are measured against thresholds.  In a rep scorecard, we see a visual interpretation of how a rep is doing for each of the KPIs. An example of which is below:

A Simple Sales Rep Scorecard with three KPIs

Sample Sales Rep Scorecard

Before I dive into best practices, a word on why not a lot of sales organizations have scorecards.  The primary reason is due to organizations struggling with data which best represents the business which makes it difficult for them to setup a KPI, let alone establish effective targets.   An understanding of the analytics continuum is also helpful for understanding the evolution of data practices which need to met prior to rolling out KPIs and Scorecards:

The Analytics Continuum: a blueprint for adoption

Top 5 Best Practices for Sales Rep Scorecards

  • Sales reps, Mangers, VPs, and CROs must all have agreement on the KPI definition, targets, and thresholds.  If one level of the KPI hierarchy is not on the same page as the others, there is very value in using the Scorecard to represent an ideal.
  • Targets and thresholds must be reasonable.  When rolling out KPIs, we often realize that actual performance is far from the corporate ideal. For instance, a Sales Cycle of 45 days is thought to be ideal, but the rep actual is north of 60 days.  Don’t hold this against them, consider rolling out a target of 55 and stepping the target down to 45 days within three quarters of launch.  Be kind to the reps and allow them to catch up.
  • Scorecards must be part of a larger sales communication strategy.  Rolling out a scorecard alone will have an impact on the organization, but the most impressive will happen if scorecards are a part of the larger communication strategy.  For instance, a weekly email can call out wins by reps, it should call out performance, and it needs to call out what needs to be done to hit the goal.  Scorecards are just one piece of the story in sales.
  • Scorecards need to be updated as the business evolves.  Scorecards can never be truly static, recurring reports.  Part of the role of your analytical team is maintain reports as the business changes and evolves.  Scorecards are no different.  From a subtle change of keeping thresholds and targets up to date, to swapping out KPIs for new ones, scorecards are a living animal and requires food to stay alive.
  •  Scorecards are a coaching opportunity, not a punishment tool.  While HR and managers will look at a scorecard and see a rep with all red for their KPIs, this doesn’t mean the rep needs to immediately be put on a performance improvement plan or, worse yet, fired.  Scorecards are coaching tool and enable the manager to work with the sales rep and ask questions like “why do you think your sales cycle is double the average?”  Work with the rep, train the rep, and allow the rep the chance to go for green.

As your team rolls out scorecards across the sales organization, keep these best practices in mind.  Be kind to your reps, get agreement on definition, use scorecards as part of a larger strategy, keep them updated, and use them as a coaching tool.

Need a Sales Team Dashboard?

Monitoring your sales team is a major part of success.  Sales managers and executives need a simplified media to review key performance indicators KPIs to understand how their sales team is performing.

Such a simplified media is a dashboard style report which includes both charts and data tables which report KPIs pertinent to the business.   In a for profit business, typically revenue generation is at the top of the KPI list, followed by product performance, rep performance, and then rep productivity metrics.

Example Sales Team Management Dashboard

Spiral Analytics’ Example Sales Team Management Dashboard – Available for $5 through Fiverr

Since simple is good, Spiral Analytics, the name of my analytics solution company, is offering a gig through Fiverr.  The $5 Gig provides a basic template and setup for a sales team dashboard which follow the metrics above.  Additional charts and the ability to maintain the dashboard for you are available at additional charge.  For more information, send us an email below.

Send us an email inquiry

Anti-Cloud Based Tools for Personal Intelligence

Creating a personal intelligence platform for self tracking has never been easier.  While technology continues to push us toward the “cloud” and SaaS as a strategy of revenue generation, we cannot overlook the tried and true platforms available to keep data on your computer and away from prying eyes of Analysts.

As a data visualization and KPI development guru, I love finding those interesting trends in my own life that drive smarter, better habits.  If you are like me, you don’t feel comfortable sharing your dirty underwear with Mark Zuckerberg and you really wonder what Google is doing with all of that data they keep acquiring.   By maintaining a self database on my desktop computer which I can add to and tweak at a whim, I am able to give myself peace of mind and control over MY data.  Curious, about what KPI’s I track?  Stay tuned, that is a topic of another post.

Without further ado, here are some tools that you can use to create your own personal intelligence platform on your local computer:

  • Microsoft Excel
    • A stunningly powerful tool to use for even the novice user.  Create your own tables, link them how you want and design your own graphs and dashboards at your own pace and complexity.  Available for both Windows and Mac.
  • Numbers
    • A Mac only platform designed to compete directly Microsoft Excel which offers much the same functionality, but lacks some advanced capability compared with Excel.  The simplicity and robust visual que are 2nd to none, but as the data set grows, you may be wishing you chose Excel in the beginning.
  • Qlikview Free
    • I have been a fan of Qlikview for years.  I love the ability to create charts and dashboards from Excel spreadsheets and the gnarly level of interactivity that it provides.  The learning curve isn’t as steep as one might think and well worth a few minutes reading their documentation.   The limitation here is the limited number of shared files you can open.  Windows only.
  • MySQL / Apache / PHP / HTML5 / HighCharts
    • Ok, if you are going with this option, you are a true geek with coding ability.  This isn’t for the lighthearted as configuring MySQL, Apache, etc etc will take time.  But the advantage is you are left with an enterprise class database and a truly blank slate in regards to dashboards.  You can even create your own forms in HTML to add data.  Mac/Linux/Windows
  • Microsoft Access
    • If you need something in between Excel and MySQL to store data, Access is a great option and can interface with Excel graphs and dashboards.  With a mild learning curve, the ability to store any kind of data, and the convenience of a query builder UI, Access makes for a very robust solution. But, it lacks more advanced visualization, so be prepared to connect Excel to Access. Windows only and available with Office Professional.

As you can see, creating a Personal Intelligence platform off the cloud is possible.  You can take full control of your data and keep it private at the same time.  As data becomes more and more of a commodity and SaaS business models continue to nickel and dime everything, home based data management will be more and more appealing.  Excel is the perfect anti-cloud.

Developing KPI’s: Accountability for Remote Workers

While Marissa Mayer’s decision to remove the privilege of remote work from Yahoo!’s culture was met with shock and bewilderment initially, the truth was that Yahoo!’s remote workforce have been slacking.  Since the company is only as good as its best slacker, putting an end to an easy pay check outside the office was the right move.

Since remote work is here to stay, companies need an objective way to monitor their employees.  Just like an employee sitting in office, a remote employee needs to guarantee a certain level of access to their co-workers.  So, how do you know your remote employees are actually working?

As an employee with a few years experience working remote and working with remote bosses, I’d like to discuss some of the data points I think are pertinent to measuring remote employee connectedness and availability.  As a former Citrix Online employee, I am all too familiar with using GoToMyPC and GoToMeeting as tools to enable a positive, productive remote work experience.

Lets take a look at some data points that could give any boss reason to reign in a slacking remote worker:

  • VPN Access – Timed Logged In
    • Most remote employees access company resources through a VPN for security.  Just like Mayer discovered a lack of VPN use at Yahoo!, tracking the amount of time an employee spends on the VPN is essential to understanding their connectedness.  One could also monitor GoToMyPC usage as an alternative to VPN access.
      • While the goal would be agreed upon between employer and employee as some employees may not need to be connected 8 hours a day, the employee should be accountable for at least 90% of the VPN requirement.
  • Phone/Skype Availability – Calls Answered or Callback Time
    • This is simple, if you call the employee, whether via phone or Skype, do they answer?  If they don’t answer, how long does it take for them to call you back?
      • The goal here is to have the employee answer the phone approximately 33% of random calls, with a response time of four hours for messages left.
  • Email Use – Messages Received/Response Time
    • This may or may not be for all employees but since email is taking over for phone calls, remote employees should expect to be in contact with their manager on a routine basis.  The KPI should focus on proactive emails during the period (i.e. did I receive an email from employee) and the response time for emails sent to the employee.
      • Goal is defined as receiving X number of emails from employee with a 24-hour response time for emails sent to the employee.
  • Meeting Attendance – Meetings Attended/Attendance Time
    • Is the employee actually attending team or company meetings?  This KPI tracks their attendance and how long they are connected.  After all, an employee who sits out of team meetings is not likely to be a productive member. Services like GoToMeeting make it easy to know who is connected to a meeting.
      • Goal is to have the employee attend 90% of a meeting’s length and attend 100% of meetings.  Making sure the employee knows to attend a meeting is, of course, the manager’s responsibility.

As you can see, any contact point the employee has with the company can be used to monitor their engagement.  You might be asking yourself how to track these KPI’s and who owns it.  Well, it depends on whether the company has a KPI program or whether a manager is interested in tracking their own team.   In my opinion, whether or not an employee is productive falls squarely on the shoulders of the direct report manager and it would be up to them to create the KPI’s suitable for the situation, leveraging IT and BI departments to access data.

Once a manager begins monitoring remote worker KPI’s, they enable an objective analysis and discussion of expectations between both parties.  Putting the KPI’s onto a shared dashboard is a great way to start off a one on one meeting.

What does an actual dashboard for remote employees look like?  Stay tuned, a mockup is in the works.  In the meantime, what are your thoughts on remote employee KPIs?  leave me a comment or hit me up on Twitter (@mooney1).

What Makes a KPI Special

A key performance indicator (KPI) is a vital tool for an organization seeking grow smart profits, expand customer loyalty, and build a scalable workforce.  While many companies stick a chronological set of numbers on a chart to project it on a wall in front of stakeholders, the reality is what they are seeing may not be a true KPI.   Its just a number unless its special.

To be special, the number needs to have most of the following characteristics in common:

  1. Represents a hierarchy either by time, or by dimension
    1.  Example: Sales broken by Year, Quarter, Month, Week or even day, then sliced by Sales Region
  2. Directly actionable with each stakeholder holding a piece of the action.
    1. Example: Sales are down 15% from goal, Sales Managers, Marketing Coordinators, etc can all speak to how their actions influenced the number
  3. Has  common definition across departments throughout the company
    1. Example: A sale is an action by a user from a variety of channels and promotions that resulted in payment and excludes affiliates for instance.  This definition is signed off by Marketing, Customer Service, Sales, and Product.
  4. Does not include hidden meaning and/or does not hide a trend
    1. Example: A number compared year over year, month over month completely ignores a trend that can be alarming.  While sales could be up year over year, this metric could hide a sudden drop in sales from the beginning of the year.
  5. When displayed with other metrics on a dashboard, the number represents a part of the story and does not represent a conflict to other metrics.
    1. Example: A number is where a chart shows Sales sky-rocketing, but another chart shows New Revenue way down, and yet another charts show Average Deal Size (ADS) flat.  The three charts give conflicting information, so one or more can’t be a true KPI for this business.  In fact, in this case, Sales is the corrupted KPI as it does not conform to a standardized definition.
  6. Supporting data is transparent
    1. Example: Analysts should be able to review aggregate data that rolls up to the KPI for audit reasons.  It provides transparency and allows for drill down capabilities. Often the Analysts receive direct support from a data team are sourced from data sources throughout the business.
  7. The number evolves with the business
    1. Example: A number is just a number unless it can change readily with the business. A team supports the KPI, new data is added when created, and definitions evolve as the understanding of the business evolves.
  8. A goal can easily be set and tracked from the number
    1. Example: If the number is fully understood, a goal can be set and tracked against.  If you can’t answer, “Where do we need to be by the end of the Year?”, then its a number, not a KPI.

Throughout my career, I’ve seen numbers and I’ve seen KPI’s.  The most successful companies I worked with not only have a data team to support their KPIs, but they engage in regular discussions of the KPIs at all levels of the business.  Successful, scalable, and profitable businesses are the ones using special numbers at their core.

When was the last time you saw a number masquerading as a KPI?

Why Marketing Analytics Is More Than Just A Coversion Rate

When I first ventured into the Marketing Analytics realm so many years ago, analytics were simple.  All we needed to know was how many visitors made it our site and from where, and then how many of those converted to trials and sales.  You can easily satisfy marketing stakeholders by slicing these conversion rates into their area of focus, be it Affliliate, Online, Email, or Offline to name a few.

But, over the years since I have to say that Marketing Analytics have evolved into quite a profound and somewhat complicated science that is even more fascinating.  As time passed and companies struggled to control Customer Acquisition Costs (CAC) and Marketing budgets got slashed at the same time, Marketing execs found themselves having to dig deeper for a few reasons.

First they had to justify their current CAC by tapping into the Finance metric of Customer Lifetime Value (CLTV).  They then had to dive into cancellations to understand Drop Rate to see how many of their new customers were “sticky” versus “loose” (we called these net zero customers, who purchase and leave in the first month).   It used to be that Revenue was key, but many Marketers have learned that Revenue metrics are slow to respond to changes in the acquisition funnel.  Hence the need for Drop Rate and CLTV by acquisition to compliment conversion rates.  But then a fundamental shift in marketing came just a couple years ago.

Social media is the latest marketing fad.  The most difficult thing about this fad is the lack of measurement.  Facebook “likes”, Twitter followers, mentions and wall updates are extremely difficult to translate into a monetary return on investment (ROI).   Successful companies have invested a lot of into creating and maintaining their brand, which pulls money away from more traditional and easily measured channels.  While cancellations and CLTV are not directly impacted here, the health of a social media campaign can only be judged by how much it enhances the brand.  Along side our conversion rates, we see “interaction metrics, such as responses to tweet and wall updates.  You see, if your social media guru is posting stuff that your customers do not comment on, your guru is not a guru.

Not only do marketers  have to know if your customers interact on Twitter, but they also need to know how their customers use their products.  So, marketing should have readily available metrics from the CRM/product/content teams such as % usage rates, % support calls, as well as product personas.   If your company uses the Net Promoter Score, heck, marketing should have access as well.

What does Marketing Analytics look like today?  Well, those conversion rates are enhanced by post acquisition metrics.  However, it isn’t as easy as it seems.  In order to provide marketing with the enhanced data sets they need to compete in today’s corporate world, they need the support of Business Intelligence & Web Development teams to tie everything together.  There is nothing worse than having a great product and not knowing anything about your customers because no one ever thought to implement unique customer tracking on the website.

While Marketing Analytics today are a bit more complicated compared to a few years ago, it is a fascinating place to be.  Marketing is one of the few departments that really need a global view of the company, the product, and the customer to succeed.  As an Analyst, this viewpoint is a goldmine for data geekery.

When wast the last time your Marketing team looked beyond conversion rates?