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Drilling Down Into Big Data to Manage Variable Incentive Risks

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Information about Drilling Down Into Big Data to Manage Variable Incentive Risks
Business & Mgmt

Published on February 18, 2014

Author: Proformative

Source: slideshare.net

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: 3
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Drilling Down Into Big Data to Manage Variable Incentive Risks Marisa Massie Controller, Bazaarvoice

Common Ground Across Industries Big Data SaaS and Sales Comp Leader Success in Subscription Economy: Role of the Controller 2 © 2014 Proformative

By 2016 an estimated 52% of total online and offline retail sales will be influenced by Internet content(1) 3 © 2014 Proformative 1.Source: Forrester Research

Millennials Trust & influence. 51% 59% 84% Trust strangers’ opinions over friends and family. List internet as their main news source. are influenced by UGC. Confidential and Proprietary. 4 2012 study by Bazaarvoice and The Center for Generational Kinetics © 2012 Bazaarvoice, Inc.

Bazaarvoice powers a network that connects brands and retailers to the authentic voices of people where they shop. © 2014 Proformative

Content syndication across the Bazaarvoice network Brand content can be displayed across multiple retail sites Brand X

400M Average impressions served per day in FY2013 145B 473B Impressions served in FY2013 Impressions served since inception

Global blue chip client base Retail Technology Consumer Products Travel and Leisure Financial Services

Evolution of Sales Performance Management Big Data Plan Performance Integrated SaaS Tools CRM & Sales Comp 3 Measures Hunter vs. Farmer © 2014 Proformative 10

Invest in the Top Line Top 3 Investments Cap Ex Sales Comp  IT Sales Comp 15-25% of Revenue Get the comp plan right  deliver the top line 11 © 2014 Proformative

Invest in Sales Comp – dramatically higher ROI • Measure Plan Success • Deliver on key metrics • Pay for real performance Invest in Excellent Data What is the right Data to invest in? • Lead data-driven decisions • Benchmarking • Predictive Analytics 12 © 2014 Proformative

What is Plan Success ….vs Saleperson Success? Salesperson Success Plan Success • Made Quota – Going to Club • Company hit sales targets • Right markets, right markets • Made OTE • Paid on big deals 13 © 2014 Proformative • Achieved on all 3 elements • Not through SPIFFs, exceptions, etc. • Paid without caps for the right deals

Managing Variable Incentive Risks “Game the Plan” “Commissions paid, sales targets missed” “Risk from Blue Bird deals” 14 © 2014 Proformative

It All Seems so Simple When We Start CFO Sales Revenue Goals Behaviors Markets Products Profitability Cost Envelope 15 © 2014 Proformative New Business Products Renewals Target OTE Commission Plan Quota Rates

When Does it Get so Difficult? Experience Sword 16 © 2014 Proformative

What are the Battlegrounds? PLAN ELEMENT TRUST How many measures? Build two measures into one Only Three Leverage Policy Payout Curves Capped curves drive sales to next year Keep selling Bluebird Capped payments Manage the rate per credit Quotas Midyear quota reset Splits w/o quota 60% hit quota Overassign wisely “Outside Plan” 17 COMPLEXITY SPIFs, quarterly bonus, new logo, product 2-3% OTE [across the business] © 2014 Proformative

Measure What You Manage CFO EVP Sales Revenue goals Behaviors Markets Products Profitability Cost Envelope 18 © 2014 Proformative Products Renewals Multi-year Quarterly consistency Professional Services Outclauses Target OTE Club? Commission Plan Quota Rates

Fast Feedback Reinforces Behaviors Selling New Products 50% Everyone Wins © 2014 Proformative Renewals Contract Length 30% 20% Collaboration Longer, but not too long

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? 20 © 2014 Proformative

Insights & Benchmark Examples • Executive • • • • Quota Setting Quota Modeling Quota Distribution Productivity by Product, Region, Rep • Finance • • • 21 Sales Comp Profitability v (Spend/Revenue) Spend by Plan Spend by Role © 2014 Proformative • Sales Ops • • • • • Model Comp Plan Payout Curve Benchmarking Payment Triggers Model Crediting Effective Commission Rates • IT • • • Data Quality System Usage Distribution Processing Distributions

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 22 © 2014 Proformative

Evolution of Sales Performance Management Big Data Plan Performance Integrated SaaS Tools CRM & Sales Comp 3 Measures Hunter vs. Farmer © 2014 Proformative 23

Connecting the Dots to Big Data Opportunity Quote Product Pricing Payment Sales Comp Quota/Commissions 24 © 2014 Proformative

1. Tie all Payments to Transactions Order line details drive credit calculation Order 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 25 © 2014 Proformative

2. Robust Data Architecture Value-add data resides everywhere Account & Territory Parent Territory Region 26 © 2014 Proformative Lead Opp‟ty Order Source Sales Team Product Inside sales Partner Support roles (e.g. SE) Terms New or Renew Comp Credit Tie to Order / Oppty / Account CRM Comp Tool

2. Automate and Enrich Data SPIF Object Account & Territory Comp Product Family Lead Deal Object Opp‟ty Account Team for Splits Role-based share 27 © 2014 Proformative Order Credit Type Comp Credit Commission Event Object

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 28 © 2014 Proformative

Payback is Data-driven Decisions • Maximized investment in highest value plan elements • Robust risk modeling and forecasting • Effective sales performance management • Motivated sales team 29 © 2014 Proformative

Evolution of Sales Performance Management Big Data Plan Performance Integrated SaaS Tools CRM & Sales Comp 3 Measures Hunter vs. Farmer © 2014 Proformative 30

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 31 © 2014 Proformative

Quota Attainment vs Industry Benchmark 65.00% 70.00% 60.00% 50% 50.00% Benchmark 35% 40.00% 30.00% 20.00% 20.00% 15% Attainment 15.00% 10.00% 0.00% Attainment 0-80% 32 © 2014 Proformative Attainment 80%120% Attainment Over 120%

Payout Curve Benchmark 250% PAYOUT % 200% 150% 100% 50% 0% 0% © 2014 Proformative 50% 100% 150% ATTAINMENT % 200% 250% 300%

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 34 © 2014 Proformative

Benchmarking – Data Driven Decisions • Start by analyzing your own performance • Identify highest value areas • Reach out to data sources 35 © 2014 Proformative

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 36 © 2014 Proformative

Evolution of Sales Performance Management Big Data Plan Performance Integrated SaaS Tools CRM & Sales Comp 3 Measures Hunter vs. Farmer © 2014 Proformative  Measure Plan Success  Start Benchmarking    Specific Transactions Architect Data Measure ALL   Define Plan Success Design with trust 37

Xactly Solutions 38 © 2014 Proformative

Questions Marisa Massie @marisamassie marisa.massie@bazaarvoice.com http://www.linkedin.com/in/mmassie 415-728-2932 Subscription Economy: Role of the Controller Zuora – Subscription Economy - eBook 39 © 2014 Proformative

Drilling Down Into Big Data to Manage Variable Incentive Risks Marisa Massie Controller, Bazaarvoice

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