Part 1: What You Need to Know about Sales Compensation [Webinar]

Hi, everybody. Thanks for joining us. I'm Mark Danolo, managing partner of Sales Globe.

And I'm Michelle Seeger.

So tis the season, Michelle, we're getting into sales compensation season. Everybody's thinking about what they're going to do with their plans for 2019. And today we're going to talk about what you need to know about sales compensation. We're going to cover five imperatives and then we're going to get into a video series where we talk to executives about their biggest sales compensation challenges, how they solve them. And it's going to be totally off the cuff. So we have no idea what they're going to say. So it's going to be fun.

Yeah, I'm very excited. Expecting to learn something new myself from that, Mark.

And then we've got some workshops coming up.

Yeah, very excited about the workshops. So we've got two coming up this fall that we hope you will be here to join us for one will be here out of our design studio in Roswell, Georgia. That's where we happen to be. Our webcast series is out of today and then one in October in London. So it'll be the first of its kind in London as well.

All right, mate. It's going to be a great time.

Yes, it will be, I'm sure.

All right, so let's get right into it. A little bit about us. Salesglobe is a sales innovation firm. So we do work around sales effectiveness, from go to market strategy to account planning to talent management to sales organization design to, of course, sales compensation. We've got a few books that are out, what your CEO needs to know about sales compensation, which you're going to recognize. Some content from that in our series here and a book called the Innovative Sale, which is about problem solving for sales, coming up with new solutions, and then Essential account Planning, which is about major account strategy.

Yeah. And Mark, I would like to mention though, that you also have a fourth book coming out on quotas. We're very excited about that one, too. So stay tuned.

Quotas with an exclamation point. Because it's your biggest sales compensation problem.

Yeah, it sure is.

So let's jump into it. The big five here. Number one, speaking of problems, solve your real problem. Well, the thing is, when we get into working on sales compensation, very often we start doing the interviews, we start doing the analysis, we kind of get deep into it and we're not really thinking about what the problem is that we're trying to solve. So we step back and we ask the question, why why do we end up recreating the same old solutions, leaving ourselves vulnerable to the competition and. And coming up with the stuff that we've seen other companies do? Why not look at something new? So the idea here is let's understand the true problem before we start getting into doing all the analytics. And what we're going to give you is an idea here, an approach to start to do this, about looking at the diagnosis and the clues and then building a hypothesis.

And so, Mark, this gets into creative problem solving, which is one of the topics of the innovative sale. So I think it's key to bring that up.

So I think a good illustration of this is about how to look at the story of what happened with the sales compensation plan and the sales organization. So if you're only looking at the current state, you can miss things. It can just lead you. So you've got to put together your investigative story and support that with the analytics. And it reminds me of something that happened with my daughter, who goes to school in Chapel Hill, North Carolina, which is just up the road from here. And her car broke down on the side of I40. This is a while back. And she called me and she said I had to have it towed off. And AAA took it away, and we chased it down to aaa and they said, well, the engine froze up. And so we called a number of mechanics to try to figure out what had happened with the engine. And they said, oh, you're gonna have to get a new engine. It's gonna be thousands and thousands of dollars. We don't want to put it into this car because it's not worth putting a new engine.

Yeah.

So I started making calls, and I'm looking for, how do you buy a new engine on the Internet? And I find this guy Jimmy. And Jimmy is a guy in Raleigh, and he's originally from New York. And so the first thing Jimmy asked me when I called him is he said, well, tell me the story. And I said, what do you mean, the story? He said, well, tell me what happened with the car. Take me back a couple of years. So we started going through everything we've done with the car, and he's like, mmm. And so we bring the car over to Jimmy and he tears it apart, and. And then he calls me, and Jimmy's, you know, he's a former New Yorker. So he goes, mark, you sitting down? And I'm like, yeah. He goes, you're not going to believe this. We found a rag in the oil pan. And I'm like, what? And he Goes, yeah, he said, we tore it open and there was a rag in the oil pan. And we traced it back to some repairs that had been done several months back where somebody forgot the rag there. Well, long story short, we ended up getting a free engine, and Jimmy was a pretty happy guy because he saved the day, but he went through and he looked at the whole story. So that's what we're doing describing here. We look at sales compensation. Let's look at the story of what happened.

Yep, that's a good analogy, Mark.

So a couple points here. What are the pain points you're experiencing when you're doing your diagnosis? How did it develop? What was your story? Who was involved? Why was it done that way? Where did it happen? Start to build that out and then you're going to know what you're solving for and then flip that over. And then once you do your diagnosis, start to look at the hypothesis and fill out those same areas. So what would be a successful outcome? When could it happen? Is it something that we roll out all at once or we do over time? Who's involved? Why is it beneficial? And ask those kind of questions as you build out your story and then know where it's going to happen as well. So we're going to do that worldwide and are we going to do that locally? And by thinking about it as the story and building out the parts, you're going to have a more successful diagnosis, you're going to have a more successful plan design. So a little unorthodox for sales comp thinking, but I think you'll find that really helpful.

Yeah, I mean, typically what we find is that when our clients talk to us, they just pick up the plan and they say, we think we need to increase this particular mechanic or make this specific change, but really it ends up being something broader than that. Right, Mark?

Yep. Yep. We all think we know the answer. We all want to cut right to the answer. So, talking about issues, Michelle, let's talk about some of the big ones this year in terms of sales comp issues.

All right, so we just did a refresh of our annual sales compensation challenge survey, and right at the top of the list, we talked about your book earlier. Quotas. It's setting effective quotas. So that number is actually up from last year. And that tends to be one of the primary complaints we have in setting the sales compensation plan. And really it's simply related to they don't think it's achievable. Right. Or they often don't even understand where it came from, from. And then secondly, that would be by paying competitively. We've seen that as a challenge too, haven't we, lately, Mark, in the paying competitively. And really what's happening with some industry consolidation and a lot more transparency and pay across industries, similar roles across industry, we're finding that that becomes more transparent and companies are really taking a hard look at are they paying appropriately to the role. And then some of the other things that we tend to see is the complexity of the plan, differentiating top performers. And that gets into, you know, how do we, those people that are really knocking out of the park, how do we differentiate them from the rest of the pack? And then integrating plans from M and A, that's a really interesting one that really hasn't shown up before. It tends to be new. And we have found that about what half of our business now, half of our consulting work is centered around M and A and bringing together two sales organizations, including the plans effectively and then finally keeping the organization engaged. And that really, that aligns with communications. And we'll be discussing that a bit later as well.

You know, a lot of these too, Michelle, have to do with where we are in the economy. So all you have to do is pick up the Wall Street Journal any morning and take a look down that left hand column and you'll see all the indicators are up. So that does push on things like planned competitiveness, upside, and making sure that we are able to compete in a heating up market. And then with the M and A, that's something that's really an indicator of what's going on with the economy as well. So all these things kind of connect together.

Yep, good point.

So let's talk big picture. Let's step back for a second and talk about how we put all this in context. And there's this idea we use called revenue roadmap. The big idea behind revenue roadmap is that sales compensation doesn't sit by itself. It doesn't reside all alone as an independent discipline. What it does is it responds to a lot of other disciplines, what we call upstream discipline. So when you look at how an organization operates well from a sales standpoint, they do four major things well. They've got great insight on what's happening in their market and with their customers and, and with their competitors. And they use that to inform the sales strategy. And sales strategy, Michelle, is always like this daunting term, it's this fancy term, but all it really is is it's an action plan.

It's a plan Achieve results.

That's all a strategy is, an action plan. So within the sales strategy, things like what are you offering, who are segments that we're going to be focusing on and targeting, what's our value proposition or overall approach to market. And then we put it into action with the coverage model. So that has to do with your roles, your organization design, your sales process, rules of engagement, deployment. And then finally, Michelle, we get to this enablement layer which has the programs like sales comp and talent and technology. So the big point is all these things connect together. So as you look at those sales compensation issues and the ones you mentioned before, Michelle, a lot of those are really symptoms of what's happening in terms of misalignments further upstream.

Yeah. So for example, Mark, we do a lot of consulting with changing products and services and we, for example, as we look at some transactional products and services that now are becoming more complex, software as a service or a changing industry, we're finding that the plans haven't been changed to adapt to that.

Yeah, great point. So on that whole SaaS question, where you previously may have sold a product as a one time sale and even if it had a contract to it, maybe you paid up front with SaaS or software as a service or cloud products. And they're not all just technology. It could be converting other types of major products to services. The way the sales process works is different and the revenue flows are different and the compensation plan has to respond to that. So just calling it a comp plan problem itself is kind of an indicator of the wrong thing. You really have to look at it holistically.

Yeah.

So when you pull back up to a higher level than beyond the revenue roadmap, and you talk about strategically where we're going, we use this idea called C level goals. And all C level goals is a North Star for where the business is going. And we first designed this working with a CEO who was notorious for tearing up sales compensation plans. And the team would bring plans to him and it wouldn't be what he wanted. And we finally sat down with him when we came on the scene and we said, hey, let's talk about what your priorities are. Not with all of the revenue roadmap, but just in a few major areas, actually five major areas. And as he was able to answer these questions, we were able to get clarity on what he thought was important for the business. And we were able to design compensation plans that fit that. And those questions are around the areas of what's important from a customer standpoint. In terms of markets that we're going to be focusing on, products or services or what our offers are and what the focus. Focus areas are there. Our coverage model in terms of the organization and roles, the talent or the people that we need there, and then also the financial priorities. So, Michelle, when you set this framework, it makes it a lot easier to communicate from the CEO or any C level role to the organization and design plans that are going to fit.

Yeah, and so I think what we're saying here, Mark, is, is talking to our practitioners is that their starting point is getting their C level together and understanding what their priorities are in this key area.

Yep, exactly. So a couple of great tools that you can use. And you know, they're really good for organizing the team as well. Michelle. It's not just things that you kind of use as intellectual models, but these are good when you're in meetings and you need to help steer thinking, organize thinking, get everybody on the same page. So number four, sharpen your roles. Michelle, let's talk about revenue sources.

Yeah, this is great. So when we talk about aligning your roles to the strategy, we take a step back and say, where does the revenue come from anyway? And it really comes from three places. So you've got, in the lower left corner here of this model, you've got your retained revenue, and that is just simply the revenue that you start the year with. And then you've got this penetration revenue. And that's my existing customers that I have. We may be providing them new products and services or there may be new buyers for that who we don't have a relationship with today. And then you differentiate that with revenue coming from new markets and new competitive wins. A lot of our clients refer to that as new logo business. And really there is no other place that revenue can come from, is there?

That's it. Those are pretty much those few places, these three areas.

And so what we find is that there is misalignment in those three areas and we'll get a little bit more deeper into that.

So, Michelle, you can look at this from a sales strategy standpoint. So you can ask the question, where has our growth come from over the years? And we can diagnose any issues there. We can also look at it in terms of directionally, where we want to go. We can look at it from organizational standpoint. So what kind of roles or sales channels are going to cover each of these areas? Rules of engagement. So how do they come. And we were working with a client last year where there was a big conflict about who owned the customer. And once we broke this idea out here, we were able to talk about, well, it's not about customer ownership. It's about ownership of various revenue flows within the customer. And all of a sudden, rules of engagement became a lot easier.

It became very clear that the company overall always owns the customer. Right. But you've got individuals in there in different roles that are responsible for various pieces of revenue. So that's the other thing that we often find when we talk about misalignment. What are you paying for by role? So making sure that that's aligned with the behavior that you want out of that role.

Yep. And then, of course, sales compensation feeds right into this as well, because you pay these roles differently. So as we sat back and we thought about these different revenue flows, these different sales strategy areas, we thought about, how do you align sales roles to them? And I know a lot of people use the hunter farmer model, which I think is great. It's kind of black.

Yeah, we see it a lot.

Hunter, you got your farmer, but it's not very granular. I suppose you could have a hunter that gets tired out and retires and becomes a rancher. Right. So you could have a middle one.

You could have a rancher.

We sat back and we said, there's not enough resolution in this model. So we sat back and we thought, what is it that describes salespeople? And we thought dogs. And it just came to us. And you have to admit, as soon as I said that to you, somebody's face popped into your head and you said, yeah, I know that person.

Yeah.

And so when you think about it and play along with this for a second, if you think about these revenue flow areas, there are different breeds that you need in order to sell in different strategies. And this is really one dimension of sales roles is the strategy. So you've got, in terms of retention, you've got your lap dogs or your colleagues, the ones that are really building strong relationships with the customer. In fact, they may get so close to the customer, they forget that they actually work for your company.

That often happens. Yeah. We actually, I had a client, a global chemical company, and we found out that some of the salespeople there, they were actually wearing shirts, company branded shirts of their client. So that does happen.

And you got your retrievers. Those are the ones that are out and watching their own backyard, and they're going after penetrating everything they can find in their own accounts or their own backyard. That takes a certain DNA type. And of course, you've got your Dobermans, which are going to go out and find new things and they're going to take off an arm to get a new sale. So those are very different roles. And then you might have other types of specialists, you might have pointers going after new opportunities or lead generation. You might have specialists around certain products or certain markets. So the specialization usually improves performance. And you compare that to sometimes where we are as we start out as a business and as we evolve, which is kind of a breed that's trying to do too many things here. So we get a little bit schizophrenic and we love this breed, we love this pup here. But this pup was the one that helped us to build the business. It went out and it won customers, new customers initially. And as it did that, it had to then manage those customers and then it had to deal with operational issues. And then all of a sudden it became stretched in too many different directions. So the specialization makes a big difference in sales roles. So this is one dimension. There are probably five or so other dimensions that we look at when we're defining sales roles around what part of the sales process they play, what they offer in terms of services, etc. So there are a lot of different dimensions you need to look at, but this is one, I think that's a really strong dimension you should consider when you're looking at your plans.

It's very easy to remember too, you know, when you think about the Doberman, the retriever, it's very easy to remember and it helps you think about what it is that you're paying for, what behavior you want to drive, and then it'll even get down to your talent at some point. Right, but today we're here to talk about the plan.

Well, that's true talent, and that's for another day, but that is consideration here because what it takes to be a Doberman is different than what it takes.

To be a retriever.

Number four, simply connect your pay. So the first two areas about here, Michelle, are around the problem solving and coming up with new ideas. And it's around the strategy and around the roles. And now we're finally looking at sales compensation specifically. But you have to do that up front work in order to look at it correctly. So let's talk a bit about some of the components.

One of my favorite frameworks here, the sales compensation diamond. And as they say, diamonds are a girl's best friend. And it is the case here. So this is actually the framework and model that we use to diagnose plans ourselves as we're working with our clients, it's one of our great handy tools. This and the revenue roadmap, I think, are probably my two favorites. But if you look what the starting point is, something we've already talked about, everything starts with an understanding of the C level goals and the sales roles. And so making sure that you have a clear understanding of what they are and what the objectives of that particular role is will inform everything else.

Those are the foundations of the plan, really. If you don't do that work, then you're not going to be able to design an effective plan. If you start at any of these components, like a lot of people start at the bottom around plan mechanics, they start tweaking the commission rates of the payout curves. That is the worst wrong place to start.

You're right. Your facets will not be cut properly and you will not get that brilliant shine that you expect. So when we look at the sales compensation diamond, it starts with framing the plan and that's when we look at things like your pay mix and that's going to be your balance of base pay to incentive. And then we look at things like upside potential, which we talked about earlier, and that's paying for high performers. And then we move into linking pay and performance. That's when we get to the meat of the plan. And that's often where people will. Where individuals will get hung up on where they want to start. Right, Mark? When they want to diagnose new plans, you're looking at things like your measures and priorities and then levels and timing, and that's just simply, are you paying at an individual or a team level? And then timing, what is the timing of the payout? Then we move to aligning the team and financials. We are looking at things like your objectives, your quotas and then any team alignment. So everyone in the lifecycle of the sale and the role that they play and finally operating for results, that's when we look at things like the governance in the plan, which a lot of companies really don't do so well, do they? They really need to have that governance in place so it's very clear. And then, of course, administration and pay and how that's going to work.

So if you take a spin around this as you're diagnosing your plan and look at each of these areas and then take another spin around as you're designing your plan, you're going to be pretty comprehensive in terms of making sure that you've covered all the big areas.

Yeah, that's a really key point, Mark. So what we ask you to do is look at your current plans in the context of the sales compensation diamond, and then what are the key areas, pain point areas that you've got now? When you develop your new plans, make sure that you're addressing them appropriately.

So we're going to dive into two areas real quickly here that come off the diamond. One is the area of paymix. And you can see our little canine friends here, like friendly little PEZ dispensers showing us how pay mix works. The idea here is that as the role changes, the pay mix changes. And like the the job definition, there are a number of different factors that go into this, probably seven or eight factors that go into this decision. So we're just pulling out one right now, which is the sales strategy. And the basic idea is if you took three roles and just say hypothetically, they were all paid the same amount of money that target total compensation or ttc. If they're all paid the same amount at target or at quota for hitting their quota, you would see a different pay mix for each one of those. So for the Doberman, you'd probably see a more aggressive payment, something perhaps like a 50. And that's to promote more aggressive selling behaviors versus say a retriever, which might be more mid range, say 70, 30 or 60, 40, and that's going to promote a little bit more of a relationship type of focus. Compare that to your service delivery type of role, which might be more of a 90, 10, and that's going to promote more retention activities, more service activities. And all you have to do is think about the motivation this would create with you. If we all of a Sudden said, Hey, 50% of your pay is at risk, you would act a lot differently than if you say, had 30% of your pay at risk, 50% of your pay at risk, you'd be saying, why am I sitting here watching a webinar? I need to get out in front of customers. So it creates a different level of drive and motivation. What we don't want to do is we don't want to mix up the mixes either, right?

No, we don't. So when we look at that guy that's wearing that branded shirt, for example, if we give him a high pay at risk plan, and often we have seen companies do that in their quest to grow revenue. But what happens, they're not focused on service, are they?

Nope, nope.

And that's what. Yeah. So you want to make sure that you've got those appropriately aligned.

And so imagine if you're crossing the wiring here, Michelle. If you put a Doberman plan on a retriever and you had a high pay at risk, what you're going to have is very aggressive behavior that's not going to be conducive to building relationships.

Correct? Yeah.

And then we also have to watch out for false pay at risk. And what that means is you may have, say, a 50, 50 plan. And you go, yeah, they've got 50% of their pay at risk. But when you look at the pay at risk and the revenue that needs to come in to earn that pay, there may be a good portion of that revenue that's already pretty well assured that's coming from customers. So they don't really have half their pay at risk. So it just looks like it. So that's something we want to watch out for as well. Let's take a look at another piece here, which is the performance measures. Yeah, the old performance measures cubed the idea here. As you're working with your team, you're going to think about a lot of different types of measures, and you've got to put organization around your thinking here. So take the red dimension, which are the measures themselves. Only four categories. Financial measures, which are the measures that you see on the financial statements, like revenue or profit or units. You've got customer or strategic measures, which are measures that are going to talk about how we get that financial goal. So certain customer mix, certain product mix, and then you've got forecast measures, which are leading indicators, and then qualitative measures, kind of the swamp of performance measures. These are the ones that are more like your MBOs and your KSOs. So if you had your preference, you really want the financial measures and the customer measures. So think of the financial measures kind of like a gas pedal. And the customer measures are kind of like the steering wheel. They're saying we want more, but we want to steer it in certain directions.

And it's not to say that these measures are not important. They just can't all be in the plan. Right, Mark?

Right. Yeah. You want three or fewer measures in the plan, typically. And when you think about it, it's about creating focus. The more stuff I put in the plan, the less focus I create, the more it becomes like a buffet table. So I'd rather go for the yellow jello than the. Than the roast beef. Right. So I'm going to kind of pick and choose what I want. We don't want that. We want to be telling salespeople what we want them to do. So let's Talk about the other couple dimensions.

Chocolate cake, by the way, would have been a lot better than yellow jello.

Yellow jello? Yeah. It doesn't have a good sound.

No. Some of the other measures, Mark, what we look at is. So we talked about the four key areas of measures and then we're looking at frequency. Right. The frequency of the pay. And that just means what is our rule of thumb there? Our rule of thumb would be we just want to pay as close to the event as possible as we can.

Right.

And then level. That's just looking at the level of influence that an individual would have on that plan. We really like to see in an incentive plan, individual or potentially team measures, division and company. We really do not recommend as part of the incentive plan. And why would that be marked?

Just too high level. So it's too removed from somebody's job to have influence over what corporate profit is going to be, for example. So you get into this situation where you're kind of like riding on an ocean liner and you don't really have any influence over where it's going to go versus I'm in a little rowboat with an individual measure. And I can highly control that.

Yeah. So to summarize this slide, I guess what we're saying is three or fewer measures, anything less than 20% loses any attention anyway, the pay frequency should align with the sale as much as it can because that stays motivational to the team and also will drive them to close. Right. That business. And then level. We want it to be as close to the level of influence that the individual has over the plan component.

Yep, exactly. So let's take a couple of minutes on quotas since it's such an important area on how to nail your quotas.

Nailing your quotas. Not to be confused with manicures, right?

I hope not.

Okay. I'm just making sure.

So the big challenges around quota setting. We took a look at some of the big sales comp challenges before some of the big ones taking a historic view. So we tend to look in the rearview mirror in order to set quotas. So we look at what people did historically, and it creates what we see as a performance penalty, which is the second one from the right. So if I have historic quotas, I do well on my quota attainment. What do I get? I get a bigger quota for next year, which is a performance penalty.

So both big issues and admittedly so how many sales leaders do we talk to? And they say that they are guilty of doing that because they rely on that person to bring it in.

And you'll start seeing this behavior with salespeople as well. We were working with a beer company recently and they have a quota based program that or a historic quota program that looks at how they do each month and each quarter. And what they do is they just hover around that hundred percent number and then there'll be a new person that comes on and the new person will be blowing the quota out and the older people sit back and they'll kind of chuckle and they'll go, yeah, he'll find out pretty soon. Oh boy.

That's driving the right behavior, creating behaviors by doing that.

Other quota issues, ineffective process or people don't believe in the process. So either we don't have a process or people don't understand it or they don't think it's credible. That's a problem. Bad data. So we don't have good information in order to set the quotas. That's less of a concern now than it used to be because we have better information than we've ever had for quota setting. We've talked about performance penalties with the historic quotas and then no transparency in the process. So people don't know how their quotas were set. And there's a motivational piece in this, Michelle, which is I could get the same quota and you could tell me, here's your quota and good luck because it came from corporate and that's what we have to do. You could give me the same number and say, well, here's how we set it and if I understand that I'm probably going to believe in that quota, I'm going to have better odds of hitting that number.

Yeah.

So, Michelle, quiz question. What do we see for a pattern here in terms of all these quota issues?

Well, they look to be people or process challenges. And I hate to tell you, but this was an easy quiz because the answer's at the bottom of the slide.

Mark, you probably heard this one before too. Talk about that for a second here. In terms of bigger picture on quota setting, the center column you see here, and this is what we call the quota success model. The center column takes it from the corporate goal and it brings the quota all the way down to the point front line. We've got various stages of cascading that number down and increasing that number, building in some padding as we go. And that's typically what happens is we just kind of keep allocating the pain further down.

That's right. Yeah.

But there are two big factors here you need to Consider with quota setting, the one you see on the right, which is opportunity. And this is step number one, if you can figure this one out, Opportunity, which is base the quotas not on history, but based on opportunity. So what do we see in terms of indicators or predictors of potential? What's different about the market? So there are a number of different methods and we'll highlight those in a second here. But you've got to balance the opportunity with the left side, which is the sales capacity. And what we mean by sales capacity is the sales organization has a certain ability to accomplish revenue production or corporate retirement. And it usually comes from areas like headcount. So how many people do we have? That's kind of an obvious one. Workload. What does it take in order to make a sale or manage a customer in terms of number of hours per month or number of hours per year? And things that figure into that are your close rates and the duration and how people manage their pipelines. And then you've got how people spend their time, their time allocation. And we find that most sales organizations spend right about half their time selling and the other half is doing other administrative operational activities. So big opportunities to increase capacity.

So, Mark, I would call out a couple of things. When we go from that corporate goal, that number up in the cloud, that's a bit nebulous. By the time it gets down to the front line, it's really no surprise it becomes nebulous because as you mentioned, when you go down to each level of allocation that the quota, everybody tends to pad it a little. Right. So it may have no resemblance really to what actually happened up at the top. And then often people just don't understand what it meant. And then I'm hearing you shifting from this historical to more of an opportunity view, which is a big change for a lot of companies to do that. Right. And we often counsel them to get there slowly. Look at some, some opportunities, maybe around strategic accounts as a first step to get there. And then sales capacity. I think what gets lost there is that there's always the assumption that if I've hired a salesperson, they can do an unlimited number of sales and that they're just out there selling.

Right, right. Yeah. So balancing those factors. And there's a negotiation that happens too, between opportunity and capacity. And the negotiation is basically from a sales perspective, if you want me to do more in terms of getting more opportunity, more quota, if I'm exceeding the sales capacity we have, I need more sales capacity. So we've got to be able to do things like hiring or decontaminating jobs or what have you. So you've got to look at that balance makes sense. So let's take a look at a couple of methods here very quickly. And these range from historic view to more of a market opportunity based view. And you'll see they start at the top with flat quotas, which kind of think, you know, that's kind of the Neanderthal version of quota setting. But they're actually effective if you have a situation where you've got equal opportunities across reps and reps have relatively similar types of capabilities that could make sense, say in a new market situation. And then you see the friendly historic quotas. That's where most of the population resides. Probably half of companies have some form of historic quota setting method. And then we start to get into other methods like market factors. So taking history and making some modifications to that about looking at what's different in the different markets. And then we can get into looking at growth rates, market opportunity in terms of predictors of potential, what we have in the pipeline. And then we get all the way down to what you mentioned, Michelle, which is account planning. So account planning can be used for account strategy, but it also can be used for identifying opportunities and accounts that we can use for setting effective goals. So the whole account planning separate discussion because there is a finesse about how do you use account plan information to set goals without exposing people and shutting them down in terms of identifying opportunities and accounts? Because if I am doing account planning and I tell you too much about what's in those accounts, I might get a bigger goal. So there's a finesse there that has.

To be worked well and I'm going to just have to pull. Don't we have a whole webinar series on account planning on our website?

Right. If you go to our website, you'll see that. And we've got some great interviews with some executives there on account planning approaches as well. Finally, managing your change. Michelle, let's talk about change management.

Great. One of my favorite topics clearly. So when we talk about the plans and we talk about managing change, what are you thinking about? We're thinking about a couple things. So communicating it, getting it out there and then motivating the team. So when we think about the communications, going back to what you talked about earlier, Mark, when you diagnose your plan, it's the who, what, when, where, why. So we're telling a story. We also want to make sure that in communications that the executive sponsorship is right there, that they Also understand the plan and then when you're communicating it out, you're doing it frequently and using multiple methods of communication that you'll be talking about. And just as important is looking at the motivation factor in the plan. So we got a, I think we've got a slide up right now and it shows this table over there on the right and this just shows motivational strength. And this is pretty interesting because when we talk about the drive and the motivation, when we get down to the rep level, they're going to respond to what's called the burning platform or the near term gain. And what does that mean? That means they clearly understand what's in it for them. They clearly understand that their competitor situation out there. There are some things that need to happen or they may not even have a job right in the next year. Maybe sales have been waning versus when the company, if you look at the far left, that aspirational goal when the company might say we're going to change our product over the next five years and here's what we want to look like, that can be a little bit more demotivational if it's not placed in the plan appropriately. So I think it's bringing people along to that opportunity and helping them understand. But make sure that your plan communicates where you want them to go but also pays them for something that they can realize the benefit from.

So the short term avoidance of pain or even short term benefit usually is much more motivational than the long term aspiration. Someday we'll be able to grow a great company that's good. I gotta pay for college tuition so that doesn't help me or the long term risk. If we don't change, the smaller companies are gonna outdo us. Well, I'm not so concerned about that because I'll be retired by then.

We have to think about shorter term motivations.

So let's talk about communication. So we've got this change, we've got this great new compensation program. And I think the biggest mistake most companies make, Michelle, is that they don't communicate enough. They'll just announce the plan and in six months they'll wonder why nobody understands it.

Right, you're right. Yeah, it happens all the time.

And that's because you got to tell people stuff seven times usually for them to get it.

So what did you say, Mark?

Seven times, that's time number two. So you got to repeat that. But it's not just repeating the same old message because if somebody says something to you seven times, you stop listening. All they do is repeat the message. So you have to do it a certain way. And we call that a campaign. And so at salesglobe, in our creative work, we use parallels from other industries and other places. And we look at the advertising industry as one example here of how do you communicate effectively? So think about your sales compensation program as a product. And so you're going to have different messages or themes that you're going to want to get out. For example, the compensation plan is competitive. It's a great compensation plan. You've got to get it across to certain audiences. And if you're thinking that your audience is the sales organization, you're probably thinking too broadly. It's usually different roles. Could be management to frontline or different types of account management or account executive roles. Could even be different geographies, different levels of tenure. Perhaps the plan gets more competitive with more tenured reps. So you've got audiences and then you've got content and proof sources. So let's take our message. The plan is competitive. Well, prove it to me. You can't just say that we need to back it up with something.

Right. Data. Sometimes we can give examples that are written out in the plan so it'll show you, based on a real deal, how it actually pays out. There are calculators.

Talking about vehicles. Like that brings up the vehicles or modes that we might use for communication. So too often we just announce the plan verbally or maybe we get it out in a webinar or maybe some written message. But we have to use multiple communications modes. So you want to think about modes that leverage written, that leverage verbal, that leverage kinesthetic, which is what you describe with plan calculators. People get to try something and they get to play with that mathematical. So you think about when you introduce the plan, Michelle, and you're standing up in front of the room, the people you're most concerned about are the mathematical learners, because they're the ones that have already calculated how the plan is going to compare to last year before you finish talking. Yeah, you know, those are the. So we have to communicate in that way as well. And then we put all that together in a campaign structure or campaign schedule. So think about how that's going to run over the next year. And it's going to be probably a combination of frequencies modes. You might have everything from web sessions to lunch and learns that people are doing in the field.

Yeah, and then check in. Right. So check in and understand what performance looks like, like throughout the year. And understand if something isn't going right. Why?

Yep. Should have audits built in as well. So a quick visual look here at a campaign. This is for a love this campaign that, yeah, it was a very, very sports oriented company and tied in particularly to football. So the big, big sponsors of a particular NFL team and not everybody is a fan of that team, so we kept it a little bit neutral. The idea is here that we used this campaign through different vehicles, different learning modes, but it was a football theme. And you can see even the structures of the plan on the lower right get into how the plan works in that theme. So everything from how you score points to getting to the red zone to scoring extra points, it becomes very memorable.

Yes, it does. So this analogy is just like what you said, Mark. It's something that resonates with the team and with the organization as a whole. So it's very simple and clear and easy to understand.

Yep. And they even extended it to things like premium so you can win little footballs and little helmets depending on different levels that you hit. They had a wall of fame. So the plan itself became this living process versus just a comp plan. So think about it creatively when you get into this. So here's your big five. Solving your real problem, sharpening your roles, simply connecting your pay, nailing your quotas and managing your change. So think about those top five as you move ahead here. And then, Michelle, let's leave everybody with a to do list.

Yeah, really exciting.

Let's talk about the workshop.

Exciting. So the workshop again in Atlanta, September 20th. We would love to see you here in our design studio in Roswell, Georgia and in the UK and London. It'll be October 18th and 19th. You can find out about both of them by going to salesglobe.com you see we've got the hyperlink in there, but salesglobe.com workshopus or UK. But if you just search our site, you can find that we are, as Mark talked about, going to be getting very strategic about your plans. We're going to get very specific about your plan designs and ask you to send us your toughest or the one that covers your greatest population plan to us in advance. We will get more into creative problem solving and help you understand what you actually can do to change the behaviors and to change your plans that will drive the right behaviors you're looking for. And then what about the 3 and 30, Mark?

Yes, the 3 and 30. What we do is we give you 30 minutes to ask us your three toughest sales comp questions so you can go ahead and book that with us if you'd like. And that's totally complementary.

Oh, we should mention, too, that we've got some really great models and framework and things that we've shared here, and we are happy to send them collateral as well.

That's a great point. Right. If you need some background information or tools, just let us know. We'd be happy to help you with that. And then our next webcast is coming up on August 24th. We're starting our interviews with executives about their toughest sales compensation challenges and how they solve them. So thanks for joining us.

Exciting. Yeah. Thank you very much.

And you've got our contact information on the bottom of the page here year as well. And feel free to reach out to us and look forward to seeing you on the next session.

We do look forward to seeing you soon.