Sales Performance Management

Accenture has put out a paper on enterprise sales incentive management. Improving the incentive management process is critical to a company’s ability to meet target sales objectives—whether those objectives are growth, improved profitability, customer retention or some combination thereof. There are two distinct approaches to improvement, each with its attendant benefits.

In addition to encouraging sales behavior that is better aligned with a company’s corporate and sales strategies, an optimized incentive management capability delivers several other important benefits:

1. Improved incentive plan design and implementation. The incentive compensation plan is owned by sales. However, several other company stakeholders play significant roles in its development and use, including marketing, human resources and finance. An optimized incentive management capability delivers agility to the enterprise and positions it for growth and increased market share.

2. Automation of key activities. A well-designed software solution automates previously manual activities—including compensation reconciliation, adjustment processing and incentive credit assignment. Streamlined processes and improved integration allowed one Accenture client in the telecommunications industry to reduce the lag time between the recording of a sale and issuance of commission to the appropriate sales participant from 60 days to one.

3. Better business intelligence for the company. Because the software solution automates administrative activities, compensation administrators have more time to focus on value-adding activities such as analysis and forecasting. Such activities, as well as software-supported analytics and dashboard reporting for senior executives and key functions (such as sales, sales operations, finance and human resources), increase management confidence in incentive compensation results.

4. Improved accuracy in plan operations. With the new software replacing manual or patchwork systems, a company can experience dramatic improvements in the accuracy of compensation calculation and a reduction in the incidents of incentive overpayment.

5. Improved compliance with Sarbanes-Oxley. The tools and process associated with optimized incentive management create and maintain easily accessible audit trails for payments and adjustments. Compensation adjustments are more directly attributable to source data changes and recalculated with full traceability, as opposed to offline calculations and cash-based debits and credits.

6. Standardized compensation plans across sales forces. Implementing a new incentive compensation system allows an organization to standardize these disparate compensation processes, plans and systems to better realize the anticipated benefits of the initial business combination while improving flexibility to act in accordance with differentiated market and geographic needs.

By creating an optimized incentive management capability—one that clearly illustrates the link between strategy, performance and paychecks—companies can more effectively align sales force behavior with the company’s goals. And in doing so, companies take an important step toward boosting the sales function’s ability to advance the growth agenda, as well as enable the sales force to make a significant contribution to the pursuit of high performance.

Video – The Formula for Executive-Level Cold Calling

An integrated sales and marketing health check as you plan for next year

Monitor Consulting recently published on StrategicOxygen.com on the importance of awareness of where your organization currently exists. That progression is dependent on awareness.

Similar to Monitor Consulting, we too provide organizational assessments and have have seen vast misalingment, but also a lack of metrics to even build an understanding of current performance.

This is a picture from the blog entry on managing performance, how can it be applied to your current campaigns?

The article asks the following questions:

• What are the likely pain points for next year?
• Where are the pain points you still need to solve?
• What experiments must we force to happen?
• What skills do we need to enhance?

Steps to reaching the Asian consumer

Todd Guild, a man I highly respect, has just published a McKinsey Quarterly marketing article on reaching the Asian consumer. His paper argues the most successful global enterprises are rapidly refocusing their efforts to target the up and coming Asian high-grwoth markets.

The paper argues for global consumer companies, a regional / local structure will be an enormous challenge but one that cannot be ignored. Asian market invovlement will soon become necessary for survival.

Todd, and McKinsey’s article, recommend a few steps:

1. Go where the growth is
2. Leverage innovation and talent through regional teams
3. Think in terms of cities, not regions or countries
4. Customize market reach locally, don’t just tweak existing product lines
5. Learn to market and sell across a larger variety of channels

Eight Questions to Assess Your Sales Organization

Melissa Raffoni at the Harvard Business Review is in the process of surveying 50 CEOs ranging from 10-1000 employees. Now at the mid-research point, what she’s found keeping CEOs up at ngiht is how to optimize the sales channel.

The 8 key questions she suggests you ask in assessing your sales organization’s effectivness are:

1. “Ok, tell us again, what’s your value proposition? Why should customers choose you over the competitors?”  It’s so basic, isn’t it?  Yet, I continue to be amazed at how difficult it is to answer this question well. With the constantly changing competitive landscapes and customer needs, every company should take a second look at what they are pitching and why it still resonates today.  I’m sure, for most, the value proposition needs a facelift.
2. “What is your sales process and how does your organizational structure map to it?”
3. “Do you think your overall cost of sales is where it should be?  What makes you think that?  Are you comparing to an industry standard or mapping to a projected financial model?”
4. “What key measures are you using to track sales effectiveness? Do you have a sales dashboard?” Is it cost of sales as a percentage of revenue, close ratio, sales person productivity? Something else? You can’t really optimize if you don’t know which lever you want to move.
5. “If you believe there are two ways to drive sales–increase the funnel and/or increase the close ratio–what are you doing to achieve those increases?
6. “Is sales compensation driving the right behaviors?” Is there enough of a variable compensation component to make a difference?
7. “It’s a new world, how are you taking advantage of it?” Partners are willing to talk, new talent is on the street, customers are looking for high ROI offerings, social media is changing how people communicate. Are you experimenting?
8. Do you have the right people?

Why relationships matter to VCs and industry clusters

Olav Sorenson has just joined Yale SOM as a professor of organizational behavior. His background is in examining why firms cluster. This has been a research topic of my own interest in the past and an interesting puzzle.

Sorenson looks at the issue of industry clusters from the perspective of where an entrepreneur should choose to start a firm. By positioning a new firm near existing relationships, capital, resource, and social networks, it explains why this would be a rational place to start. As research has repeatedly shown, clustering of this type leads to a tight concentration of industry that may decrease eventual production rates over time.

In the venture capital industry, investment almost always flows to entrepreneurs that the VC already knows. Existing relationships have the power to determine the potential for funding. As introductions are made to the VC community, cultural differences have the potential to ruin funding, as it is the cultural barriers an entrepreneur must overcome to build those relationships that could lead to funding from the VC community.

In markets where VC investment is required, VC relationships are what becomes influential in industry development.

Over the next 10 years, the growth of relationships in the VC community in relation to emerging clusters will determine what new ventures get backed for an opportunity to change market dynamics.