Dan Walter: Why Your Sales Incentive Plan Is Probably Built for the Wrong Role

Business.

Business. Business. Business.

Welcome to Go-To-Market, a podcast for RevOps, sales, and marketing leaders to dive deep into industry insights and best practices. Go-To-Market is sponsored by Fullcast and Silicon Slopes. I am so excited to welcome Dan Walters. He's an expert in variable compensation. And when I asked him to define who he was, he said mercenary. I love it. So we're going to learn a little bit more about Dan and his hot takes on incentive plans. How are you, Dan?

I couldn't be better.

Good. I'm so glad. Tell me a little bit about you. How did you get started in incentive compensation?

Well, my, my story started many, many, many, many, many years ago. I had somebody that I knew that worked in equity compensation and they said, we're looking to hire somebody that can think outside the box, but work within it. And you don't know anything about compensation, but I'll give you a quick overview and maybe you can con your way in through this interview process.

Really? I love that.

It's how I got involved and I realized that pay for performance and variable compensation was the kind of complexity and kind of interesting that I really found motivated me. And I've just spent the last 30-ish years focused on it.

That is awesome. I love that. What is it that excites you? You the most about this type of like compensation in this industry?

Well, I like seeing organizations succeed and grow, and I always tell people, you know, it's in compensation, you're not saving lives, but it would be wrong to say you're not impacting lives. If you actually do your job right, people can afford to buy more things and take care of their families and live better lives. I think that's actually a pretty good purpose.

Absolutely. And not only does it impact the lives of the salespeople, but when salespeople are motivated properly, it makes businesses grow and it makes all the people who depend on the salespeople be able to feed their families. So really, you could say that incentive compensation is the tip of the spear for the growth of an entire organization.

And sales is the tip of the tip of the spear.

That's right.

Absolutely.

Yeah. So, tell me more like, okay, so you're thinking outside of the box, you're working within the box. What are a couple of hot takes that you have on incentive comp?

Let's start with the evolution of sales compensation and the roles. People always talk about, well, we have hunters and we have farmers. And years ago, I spent time on a cattle ranch in Nebraska. And I realized my father-in-law, God rest his soul, was neither a hunter nor a farmer. And he was both. He was a rancher.

Okay.

Ranchers have to grow their own food. They grow their own feed. They're out planting alfalfa. They're growing calves. They figure out how to cull the herd. They're doing both jobs. They're both building, they're managing, they're planning for the future. I make wild big investments on prize bulls. And I realized that's really the role of a consultative salesperson that we are missing. It's not just about closing the sale this year, and it's not just about maintaining the sale that you closed last year. I think there's a lot of people in that more consultative role, that rancher role, than we design sales incentives for, or we even design sales roles for.

I really love what you're saying because when I was running my own business, I did it for 15 years and I was responsible for the sales of the organization, right? And I found myself calling myself the chief problem fixer. Because I was more of a rancher. I've never heard that described before, but I really love that. And what I loved about it was if you can give people the consultative advice, they wanted to buy from you without you even asking. And so I think that if that's kind of what you're talking about, I'm super into this. So in with that third type of sales role, what's the best way to motivate someone like that?

Well, for those kinds of sales roles, partly it depends on your sales cycle and your business strategy. And I think that's why a lot of people avoid it is it's not as easy as saying, go close this much and I will pay you this much. And it's not as easy as keep these clients around and maintain them and I'll pay you this much. It's a combination role, which means for every organization, that rancher role Really needs to be defined based on business strategy, people strategy, and reward strategy, which means there are components of it that are longer term than a traditional sales plan. So you're not looking at a 1-year cycle or a 1-quarter cycle. You might be looking at 2 and 3 years, especially big ticket sales. It might take 3 years to close. That big logo that you're, yeah, questing for. If you're not getting paid for that, there's no reason for you to go out and close it.

That's right.

And if you're just being paid on revenue this year, you're going to focus on the short-term pieces. And people always wonder, well, how do the big ones grow? Some salespeople are ranchers even though they're not being paid for it. It's just a natural state. But we can motivate more of them by taking long-term incentive strategies and short-term incentive strategies and building them into a more holistic sales incentive.

Very interesting. One of the things that it brings to mind, two things come to mind. One is that a guy named Guy Rubin on my team, who's the former CEO of Upstart, is the epitome of this person. I think he is consultative, he's intelligent, people trust him, he's willing to be patient while people come to the table. Um, he just signed the biggest deal at Fulcast of all time and took him 2 years to do it. And it was, he just very carefully built trust and it was very impressive to watch him do that. So I really love that. And then the other experience that I had that I think is kind of what you're talking about is when I was at Infosys. There were people who were, they called account managers, but they really were like the ranchers. They would grow the business inside the business. There were salespeople in 35 different product lines that would sell to this account owner rancher that had the trust of the large enterprise. And so it was very interesting to watch them act partially on behalf of Infosys, but mostly on behalf of the client and the client's needs came first, not Infosys. And I thought that was a really fascinating way. And I think it's a really great way that Infosys built the trust and the long-term stability that it has. So is this kind of what you're talking about?

Yeah, I think, and I think it's interesting because, you know, when you, when you're talking about how do you define the role for different organizations, even as ranchers. So some ranchers, their goal is to raise a lot of animals, and those animals then become part of our food chain. Some ranchers, their biggest goal is to raise a lot of very, very good bloodline animals that are then used by other ranchers to raise animals that become part of our food line. And knowing your role, sometimes the rancher in your organization is somebody you don't even realize is a salesperson, an account manager, an account executive, somebody that's connected. And what they're doing is providing the opportunity for every other person to sell. Sometimes that rancher is closing a little bit of business, maintaining a little bit of business, trying to sort of land and expand while they're also saying, look, if I build this thing out, or if I help our product team build this new product out, 2 years from now, I can sell this thing that doesn't exist, or sell this thing that this company doesn't even know they want. But I know what they're gonna need when they grow from 1,000 to 10,000 employees, and I'm going to be there when they get there.

Interesting.

And I think that's, that's the role. It's— and when I explain this to salespeople, there are a lot of salespeople that go, That's me. I'm that person.

I just barely did that. I just did that.

Yeah, that's me. I do that. That's how come that doesn't, nobody ever talks about what I do for a living.

Yeah.

You talk to leaders, when you ask them to define the absolute best salespeople on your team, half of them are ranchers. They're not doctors.

That's very interesting. So how, what's the best ratio for, You know, if you, if you're an organization with 50 salespeople and you can determine who's hunters, who's farmers, and who's ranchers, what ratio would you give them?

I would say, depending on, it depends on the business, but generally I would say 10% of those people should be pure hunters and 15 to 20% of them should be ranchers.

Interesting. Interesting. Then the remaining, you know, 20 to 25% would be the farmers.

Yeah. Everybody, the rest is how do you make sure that the ranchers are supported? Who are the ranch hands? Who are the farm hands? You know, who's making sure that for the hunters, the gun is loaded? And a lot of times that's, you know, we also miss that correct connection between marketing and sales. Marketing is marketing something that salespeople aren't selling. Selling is often not linked to whatever the marketing campaign is. And it's like, well, all of that comes into play. The rancher's sort of like, hey, no, no, no, no, no, no, no. Right now we need to be focusing on this piece and marketing. Let's do that. Then you need to go over here and sell this product. And I'm gonna make that, it's an interesting role in the sense that often they are sort of a conductor or a coach on the field as much as they are a closer or an opener. Really what they are is a coordinator that can close the sale.

I love this. So if you want to motivate a rancher, what do you do? How do you, how do you set us, set up a structure that motivates that person?

First of all, ranchers. Need autonomy. They need to know they can do what they need to do when they need to do it. I, I, uh, joke around about the fact that my father-in-law claimed he was in the leave me alone political party. Just let me do my job. Just leave me alone. I don't want to be on any side. I'm not. I just, if I do what I do, all the rest of you eat.

Yeah.

So first of all, you need to give them enough autonomy. That they can hang themselves or succeed on their own. Then you need to give them the right tools. You can't ask a rancher to go out and do their job if you can't give them the tools that allow them to do their job. So again, using my father, like, he had a cat— Black Angus cattle ranch, 13,000 acres, 1,000 head of cattle. 2 people.

Wow.

Because he had really good tractors and he had horses when the tractors wouldn't work and he had good pickup trucks and he had arranged everything properly. We don't often give our salespeople the tools they need to succeed. We give them the tools we need to make us successful as non-salespeople.

That's profound and so true and a lesson for RevOps everywhere.

It's often, you know, well, I need this to work so I can report to the CFO. I need this to work so I can create this thing so I can prove that I'm valuable. And it's like, no, what you need is your salespeople to sell the things that make your organization more successful.

That's right.

Get those tools out in their hands. Your reports. You know what? If your report was written on a chalkboard, but it showed that your growth was twice as high as you thought it was going to be, you're fine. The chalkboard will work.

Hmm.

But the flip side is if you define— I had a company last year who said, look, we're going to do is we're going to double our revenue. We're going to cut our sales force by 25%. All right, how? Well, we're moving from an account-based system to a regional-based quota system. All right, and Harry Potter's wand looks like— because what you just said is going to require a magic trick.

I love it. Uh, absolutely. How interesting. Well, so clearly top of the game. Thank you so much for giving us this like fascinating insight. I'm just thinking about my life, the people that I work with, who's a rancher, who's a hunter, who's a farmer. I feel like I've really learned something new today and I thank you so much for it. So how do you, how do you stay at the top of your game and how do people contact you?

So I spend at least 5 hours a week looking at other people's posts, materials, market data, studying what other people are doing. Right now I'm spending a lot of time in the CompTech space and AI space, just making sure I understand what Fullcast is, where everything sort of fits together, because there isn't going to be a system that does everything you need it to do from end to end. Anytime soon. It's just too complicated. It's too bespoke. So I, I spend a lot of time studying, a lot of time studying, and a lot of time talking to people like you and other people in the industry. And then I spend a lot of time writing because I find that when I write things, it forces me to critically examine what I'm actually thinking.

Mm, I love it.

And then as far as how people contact me, I have the easiest LinkedIn profile in the world because you just go to linkedin.com in Dan Walter, because I was like, I think person number 8,000 or something like that on LinkedIn. Um, you can reach me at dwalter@evphub.com. You can call me on my mobile phone, which is easily accessible. Um, I'm really very easy to find if you want to find me. I'm just not the right-wing gun manufacturer in Georgia, and I am not the Dan Walter who writes for a newspaper in Sacramento. Okay, long as it's not those two, I'm pretty easy to find. But if you just type in Dan Walter compensation, Dan Walter incentive, Well, thank you, Dick.

Thank you so much for being one of our most entertaining guests and also one of the most enlightening. So really appreciate your time and thanks for joining the podcast.

Thank you very much.

It was great.