Sales Compensation & Quotas in COVID & Beyond

Well, hey, Mark. And hey, everybody. Welcome to another week of the salesglobe Rethink Sales roundtable.

That's right. And glad to have everybody here. How you doing today, Michelle?

I'm doing great. How are you doing, Mark?

Pretty good. Pretty good.

Good.

I'm excited. We're gonna be talking about all the top questions today, and these are a lot of the questions that we haven't been able to get time to get to over the different sessions that we had, plus others that just came in. So we're going to be doing a kind of a fun card draw.

What kind of questions, Mark? What are we talking about?

We're talking about sales comp. We took all the personal questions and insults out. So it's just sales comp.

Now it's just sales compensation.

Mostly sales comp. Mostly sales compensation.

Yeah. Actually, this is going to be a fun session, we believe today. So Mark and I have been preparing all week as you, the people that make the roundtable so successful, have been sending in your questions to us. And we've also gathered some from clients that we have, and we really appreciate you all being here and being part of that. So it's going to be kind of a good session. And we are doing a little bit different this week, Mark. I mean, I know we had a lot of questions to go through and we were looking at stuff, but really, the prep work this week, it wasn't as bad. Maybe we should be pushing this off to our listeners more frequently. I don't know.

I mean, it felt like we were taking tons of time to select and make sure we had, you know, all. All the. All the great questions and. And in the most frequently asked questions.

So I was worried about having the right answers, but, you know, we're going.

To do them randomly, so we don't know what's coming up. So we'll see. We'll see how it goes.

Yep, yep. That'll be fun. So I am kind of excited that I think we'll wait another minute.

Yeah.

Yeah. Okay. So I'm kind of excited that this weekend I'm gonna go to Red Top Mountain. So we're going to go to the lake, take the dogs. I believe that that's what's going to happen. My daughter's coming home from college, which will be fun, and spending the weekend there. So I'll take my girls and that'll be fun. And our two little dogs, which are also girls. So I guess I'll be taking like five girls. But anyway, we ready to get started today, Mark?

I Think we are. Well, welcome everybody to this week's Sales Globe Rethink Sales Roundtable. Michelle, let's tell them a little bit about who we are.

Yeah. So at Sales Globe, we are what we call a problem solving firm for sales. And that means that what we do each every day is solve the biggest challenges that companies have with the sales in their organization. And we do things like insights, market insights, and the impact that that's having on your business. Sales strategy, coverage model. We build sales structures for organizations and do things like territory planning, segmentation, and then the whole enablement piece. Right. So incentive compensation, what we're talking about today, tools and technology to enable your team and training.

Yep, yep. And. And that's what we. What you talked about, Michelle, is what we really get excited about is solving problems that haven't been solved before. Things that you've done year after year where you just haven't gotten the right answer or you haven't gotten the results that you're looking for. Those are the tough things we love to crack into. So getting beyond the benchmarks and getting into how do we really get to the root cause of what we're trying to solve for?

That's exactly right. And today, Mark, can you hand me that book over there? We're actually going to be covering some insights from what your CEO needs to know. Look at. Oh, my God. I could say from what your CEO, Let me pull that out. Needs to know about sales compensation. So it should be fun. And for those of you that do have this book, please send us your comments because we always want to know what you think. And for those of you that don't, it is available on Amazon.com and Mark, I just heard something.

What's that?

I heard your book kind of made the big time. It's actually available on target.com target.com I.

Know, I don't know that people shop a lot for sales comp books on Target, but it is.

Yeah, but it just shows that it's getting to be more mainstream. So guys, really and truly though, do check it out.

Maybe people are getting tired of all the books at Target. They want to read something a little divergent here on sales comp, but you never know.

I don't know. So, Mark, I thought one of the things we would do before we actually get into everyone's big sales comp challenges and the questions they've given us, a couple things that we keep being asked about is just kind of our big picture. So I would love for you to kind of take it through Take us through a little bit of sales group thinking around that and let you and I discuss the things that we believe that are going to be happening to companies in 2021. And then after we do all the questions, we'll kind of wrap up with what we think the future of comp looks like, but what we think 2021 is going to look like from our work perspective.

We get a lot of signals from the market, so we talk to and work with a lot of different companies, so we get many, many data points that we can go off of. And so as we're doing our mind mapping about what we see as the factors driving the future of sales, the future of sales compensation, those kind of things are helping us to maybe get a little bit of vision with what might be ahead. And so we wanted to share a few of those ideas with you right here. And so the big picture. So we're going to do the big picture from a sales effectiveness business standpoint, and then we'll do our questions and then after that, we'll go into the big picture from a sales comp standpoint. Okay, so what you might have noticed on that whiteboard and previous whiteboards we've shared with you is there are a couple of big factors that are driving change here. One of them is fear and the other is financials. So fear, is this going to continue? How long is it going to continue? Our behavior is going to stay the same. Are they going to change? You know, so it's fear of the unknown. And the financials are about the tough times that some companies and a lot of people are having, of course, but the financials are also about the opportunities. So we know that there are a lot of different things going on in terms of variations by market. You know, the stock market's doing really well. There's a lot of opportunistic stuff happening out there. What companies are seeing in general is as we have the work at home movement, we're not using all this commercial real estate. So companies are saving money on commercial real estate, which hits the financials big time. Right. So they're not spending that kind of money and they're going, wow, okay, this is really interesting. Maybe we can still be productive without having to have all this real estate and have people in the office. So those two big factors are driving us and also cost cutting. So a lot of companies are in second or third round of layoffs at this point.

They sure are. We're still hearing about layoffs. Right. From our clients.

So. So if you, if you Think about it. The, the financials can drive behavior and it can also drive to some of the decisions that may not be optimal decisions. So they're going to be tempting. The real estate savings, the cost savings will be tempting for now because it's, it's, you know, it's helping with margins a little bit longer term. We see that field sales is going to morph and that's probably going to be turned, turning into some kind of hybrid role. It's giving us some increased efficiencies because our contact frequency is up and we're probably not going to go. We don't think we're going to go to complete inside roles. I think, you know, they're going to see some changes to the employee value proposition. We'll talk as we'll talk about, but we're going to see some near term morphing of what the roles look like.

Yeah, and I think it's really important to say that because a lot of people ask us this, you know, is sales forever home? All right, so a couple things. One, just don't think that because you're working remote that that's inside sales, because it's not. And we also do believe that there still will be a role for a field sales rep and an inside sales role. We just do believe also that the field sales role is going to morph a bit. Right. So it's not the elimination of inside sales and it's not the field sales is going away. Yeah, we do believe that. A couple of other big points is that, you know, you guys are seeing it and we've seen it in early days, the whole efficiency of contact with buyers and that continues to increase. Right. So everybody think about back to March. And we've discussed this before. You turn on if you had web conferencing services at your company and you set up a call, everybody used voice and nobody used video. Now it's like, why aren't they on video? Right. So that efficiency of contact is still going to continue. Planes and trains will probably come back, we expect. But also we believe that geographic boundaries are going to matter less than they did before because of the comfort level of buyers and sellers communicating on formats just like this one. And finally, though, as a result of that, and we get questions like this every single day, how do I build relationships like this? And how do I build them with prospects in particular? And so what we have been spending a lot of time on our roundtables and writing white papers about is how you actually build that relationship. So, yeah, it's going to be a little bit different. Moving ahead with how you build those relationships, you're going to have to communicate differently. When we talk about employee value prop thinking about, you know, your brand and then getting personal. Right.

So you see relationships going to be a challenge. Collaboration is going to be a challenge, too. So how do we get teams to work together that really depend on that? Because you just can't collaborate on video as well as you can when you're working together in person. So there are a lot of jobs that, yeah, they can work independently, but many, especially in sales careers, really need to work with people to be effective, to do effective problem solving. We talked about the idea of call centers before, and it's kind of a natural. You go, well, you know, you could move call centers all remote because people can work out of their homes. But call centers really are centers of excellence. They're all learning together. Right. So when we take that apart and we put people in different places, you get a loss of collaboration and a loss of connection. Productivity is probably going to wane again. This is a prediction. It's probably going to wane near term due to things like homeschooling. So we have kids at home. You've got two parents at home. Both are distracted. Nobody knows how to do homeschooling. Well, we did homeschooling with my daughter for four years. And I'll tell you, it is a challenge to figure out how to do that. It is like a real art to do that. And just having an entire country do that at once with two parents at home, there's a lot of distractions. So we're going to see productivity going away a little bit there and what I call bunny slipper fatigue. So I'm getting kind of tired of sitting in my living room with my bunny slippers on. I'm not highly motivated to do that and that. And I really need to get out with people. And that's why people, a lot of people are in sales is they want to be with people. So being in the living room with the bunny slippers on is going to start to wear on people mentally over time.

Yeah, we're definitely seeing that. So what we believe is that, you know, there's all this talk about saving money and the footprint of your building. Right. The actual establishments where people are working. And we do believe that commercial real estate, it's not really going to go away. It's. The footprints may shrink a little bit, but we don't believe that it's. Everyone's going to be working Remotely in the future. We, I think I talked about this last week, so I apologize if I repeat, but Amazon is one of the companies that came out against what Google and Facebook are doing and they're opening up hundreds of new physical office locations for people to work out of for that very reason the lack of the collaboration and the productivity decline. So don't be thinking that we don't believe that this short term productivity that or the initial conversations that were having where we're hearing productivity is not declining. We, we're starting to hear something different. And then, you know, we already talked about employee value proposition for a moment. But how you're going to connect and how you connect differently. Go out to our YouTube channel, we've got a lot of videos out there with partners where we talk about that. How your personal brand and how you make human connections remotely are becoming more and more important. So you know, what do we know in summary of this? We do believe that the future of sales, it continues to be uncertain. And we believe the future salesperson has got to be, and we've said this before, a data driven creative problem solver. So they're going to be solving problems instead of just selling widgets, if you will. And you know, everybody was talking before about trusted advisor and the solution seller. This is one sure way to make that happen.

That's right. And in the near term think about your sales capacity and what that's going to look like because you're going to have to recalibrate based on all those factors that we just talked about. So changes in productivity, changes in access frequency is going to affect sales capacity.

That's right, Yep. So now, yeah, we're going to get to our questions and Brittany on our marketing team, she's going to hand those over to us. You see our right arm is extending her right arm over in the sealed.

Envelope audited by the accounting firm of Dewey Cheatham and how. And we have all of our questions.

Here and a lot of questions in Mark.

They have been pre shuffled and what we're gonna do is we're gonna fan them out and randomly.

Yeah. So what are I did was I, I decided what I wanted Mark to do is I'm gonna hold them out and then he gets to like pick.

Right.

Here we go, first one. Yep.

Okay, first question. Okay, this was, and these are, these are from prior sessions as well. We were talking about sales capacity which we just mentioned a minute ago. If the average REP is spending 50% of their time on non sales activities, what's a reasonable percentage to reduce that too. Does decontamination always require an organization to hire more sales support? Good question. So that's a good question. And as we're thinking about these questions, if you want to send us any questions, go ahead and put them in the Q and A window as well and we can pick those up as we go.

Yes, please send us questions on Q and A. We'll take them live. Okay.

All right, so this is a good one. Let me, let me kick off a couple of thoughts on that one. So we have talked about the idea, Michelle, that the average sales organization spends about 50% of its time on selling, which means it's spending about 50% of its time on non sales activities. And that is a big lever for improving sales capacity, sales productivity is the increasing the amount of time that we have to sell. What is a good number to get that up to? You know, I worked with a company a couple years ago and they had a mantra. They were at 50% and they had a mantra, 55 to stay alive.

Right, that's right. I remember that.

So what we see most companies do is they calculate something that's going to be significant but not unachievable, at least in the near term so that they can learn how to do job decontamination and increase that capacity. So it might be, you know, if you're at 50%, it might be a 5% increase, which, you know, 5 percentage points, which is a really a 10% increase in sales time. But what I would do is I would look back to your sales capacity model and you know, you've got a number of levers in sales capacity which include, as we said, sales time, but also workload, the amount of time it takes to close a sale or manage an account which we can improve through better pipeline management. It includes the level of talent that we have. It includes, of course, the head count. So as you look at these different levers, look at the time allocation lever and play with that and say, okay, if we calibrate our sales capacity model to where we are right now, given all of the metrics that we have, we know how much time we're spending on selling and non selling, etc. Then start to tweak those levers. So change your sales time allocation, increase that a percentage to percentage and see what kind of impact that has on revenue.

Right? So the second part of that question was, do I have to hire more people to take on those extra roles and responsibilities? And the answer is not necessarily so. We've seen it both ways. Many Times what you have to do. And there's a process that, that we take companies through because we do help them with job decontamination. And so here's what we ask you to do. What you want to do is understand where people are spending their time. And then there's a way to calibrate that, to categorize all of those different things. And then the ideal state is you get together some management and even Frontline, and you go through those activities. And there's a process that we go through, and it's called the stop, start, continue process. And it says, okay, there are some things, because there are some legacy things that you may be doing in your organization that when you question it, there's no reason to be doing them anymore. How many times have we found that? And they're like, why are we doing that? Oh, gosh, yeah, we don't even need to be doing that anymore. And then other things, you just say, yep, it belongs with sales and others. You may go ahead and move over into another function. So it could be customer success, customer service. Maybe it's activity that belongs with the project management team. But don't think that you have to hire roles to take on activities that you're decontaminating. Go through the stop start, continue starting, mean another team is starting those activities. And then ask yourself, understand what the capacity is of the other roles to take it on. And then decide if you need to hire, if you've got any gaps there. Any other advice on that, Mark?

I can think of an example of where this applies, where you don't have to hire. This is a company that we worked with where they had, I think it was about 16 hours a week, something like that, spent on customer contact. It was pretty low on average. And what we learned was they have a collaborative culture. Right. And they were very proud of their collaborative culture. And what collaborative culture meant to them was they had lots of meetings.

Internal.

Internal meetings.

Internal meetings, yes.

Probably more internal meetings than customer meetings. So by recognizing that and understanding that's where they were spending their time, what their president did is she said, okay, no more internal meetings. Monday to Thursday, they all get moved to Fridays. And I don't care if you, you know, you need that time. We're going to spend that Monday to Thursday in contact with customers. And that completely changed the sales time allocation very, very quickly, but it didn't require any more resources. I'm sure people missed some of their meetings, but they were all of a sudden spending a lot more time in front of customers. And I think they felt. And again, this is a cultural question. I think they felt obligated, like they really needed to spend that time working with their team. And once they were released from that obligation, you know, the way we've always done it kind of thing, then it changed the entire, entire equation for them. So you don't have to just add resources to do this.

Yep, I completely agree with you. And you just reminded me of another example of a company, international company, out of the Northeast. And what they were doing is they were going. They were spending one day a week visiting customers. One day. Now, how come the sales leader wasn't even really aware of this was kind of a mystery. But they spent a lot of time in the office, and I was trying to figure out what they were doing in the office, and we were finding out what they were doing. And basically, you know, because they weren't making these appointments, they were getting involved in project management, getting involved in shipping, because they wanted to have value added activity to do. So we just changed it. Right. We changed what it was that their objectives were, and they didn't need to hire anyone. So that was a good decontamination. All right, ready for the next question? Okay, ready.

As you can see, I don't see the question. Okay, let's pull it up here. Let's say a company is not laying off people. Now, if they adjust their quotas or reduce, where are companies going to find money to pay sellers? Say paying the same amount for less revenue generated.

That's a good question.

You want to take that, really?

Sure. So what we're saying is they're not laying anybody off. They've adjusted their quotas, they're reducing them. They are. Where are they going to find the money to pay the sellers? Well, here's the. Here's what we have done is what we're saying is that the new opportunities are just not there, or your sales cycle may be really elongated. These are the problems that we're finding that our clients have. So they're saying, gosh, we're not getting there because the sales cycle is elongated. Budgets are less than they were, and, you know, they want to do business with us, but maybe it's not even going to be as much. So what we have been working with our clients on, and what our clients have been telling us is that they've been working creatively with their clients on really listening, using their listening skills to really understand what it is the client is saying and what it is that they really need. So what you want is for them to become good problem solvers. And what you have to be willing to do as an organization is look at activities and other things that you may not be paying a salesperson to do today, but motivating them to do those things. And I'll give you a couple examples. We have some clients that their particular services weren't even being used by clients. And the clients are coming back and saying because our establishments are closed and they would be retailers, as everybody knows that retail has been closed for a while. We're not using the services and we can't even pay for them. So what the salespeople were doing is they were actually saying, okay, we're going to give you this six month break. Would you extend your contract terms with us for 10 months? So six month, give four additional months, total of 10 more months on the back end. And normally you wouldn't even ask a sales rep to do something like that. Right. But we're asking them to do things like that that would bring in a little bit longer term revenue. So not immediate, but longer term. Now we talk about short term. Mark, what are some advice that you have there? So we talked about activities and pipeline and paying beyond the curve.

Right. So like a lot of questions, I think the danger in this question is trying to address the exact question as the real problem. Right. And what we found is, you know, most companies first off are not reducing or adjusting quotas quite yet. So we're still moving through the year. There has been some pushing out of quotas, re seasonalizing quotas. We've, we've moved to more discrete payment or measurement periods. We've seen that. But most companies have not made the major quota adjustments. What they do realize is that they're very likely going to have a higher compensation cost of sales, but they're not necessarily going to pay out the same amounts for less. There is a conscious investment, like you said, Michelle, an investment decision being made here where if they're running into roadblocks and they're not going to see that revenue short term, they're paying for leading indicators of things that are going to bring them to that revenue, that whole helping customers rather than selling kind of thing. But the bigger answer, I think, at least for a lot of the clients we're working with, lies in what they're trying to accomplish during this period. And when we get the questions about should we adjust quotas or should we be making some kind of increase to compensation or putting a floor on compensation, the question we ask is what do you want the outcome to be after this period. So when we get to the end of COVID say we're, you know, in the beginning of 2021 or middle of 2021 or wherever that might be, what do you want the outcome to be with your sales organization and with your customers? Well, you know, we want our customers to be feeling good about how we work with them. We want our sales organization to feel good about how we worked with them. And they feel like they have some loyalty to us, which may increase our retention of those salespeople. So then they're looking at these bigger questions and making a, an investment decision to say, okay, well, we actually may do something in terms of compensation or quotas, knowing that it's probably going to cost us more in the short term. But when the market gets competitive again, we're going to keep our people because that goodwill will be there.

Right. And what we have found is that, you know, companies are really doing one of three things and they're saying we want to keep our people whole and they're willing to make the investment in that. And gosh, we've got a technology company, another one in the northeast that we do business with. And Mark, they came back and made a pretty strong statement and said sales is in it with us. They get the success in the, in the big years and it's a lean year. They're going lean, you know, so it, you got to think about what your compensation philosophy is. So that's kind of a, it's not a straightforward answer. The question that this particular person gave to us.

Yeah. It lies in what's the bigger thing you're trying to accomplish? What is your culture? What's your philosophy? The company that you mentioned, Michelle? Yeah. That's more of a rough and tumble sales organization. So you're going to have good years, you're going to have bad years. And guess what, this may not be one of the good years. And so we're all going to get through it, but there's plenty of opportunities. You can go out and find them. So their mentality was a little bit different than others that we've worked with.

It was. Okay, next question.

All right, ready?

It's kind of fun. We should have a wheel and do like a wheel of fortune or something like that.

What are you seeing companies do in relation to year end bonuses? I realize not incentive comp question, but everyone shares in that pie at our company, including sales. So year end bonuses. And so we're sitting in September, so I guess we're looking ahead at that.

So here's what we're finding. We're finding that companies have started having conversations and actually the sooner you have the conversation, the better if you're looking at changing what the bonus is going to be or eliminating it altogether. And here's what we can tell you. What we can tell you is that in the clients that we've been doing business with and our friends out there who we're talking to, they are doing some eliminations of year end bonus. They are substantially cutting or they might be doing like a 50% cut on bonuses. I, I'm not hearing that they're leaving them intact. I don't know of anyone who's leaving the year end bonus intact. But the key to make that successful. I actually, I wrote a blog about this not that long ago. This is a good question because I wrote a blog about it. Okay. So in my blog what I said was what you want to do is communicate early on though, especially if you're eliminating the bonus and you have to look at how you're treating everyone in the organization. And that starts at the C level. So here's the deal everybody. I had someone from a global technology manufacturing firm, a very high up position, call me very frustrated and this was a couple weeks ago, this person isn't in the sales organization but said, I cannot believe this. We are cutting the, we're cutting bonuses out across the company and there has been no impact to any of the salaries or bonuses at the executive level and they're actually having a good year. It's kind of crazy. So here's the deal. What we find is that the companies where the C level is saying, okay, I'm in it as well, so my bonus is cut or we're finding that a lot of them are doing temporary salary decreases, Mark. And it's okay. You should be loud and proud about communicating that as part of your communication and saying we know it really stinks that we're cutting year end bonus, but let me tell you what the C level is doing and the management level is doing as well so that everybody's all in it together. And guys, second part of the message, we are about saving jobs. And as we get out of this together, we will take care of you. Trust us.

Yeah. And at the senior levels too. Michelle, to your point, we are seeing pay cuts somewhere in the range of, at the VP levels and above, sometimes 10 to 20%.

That's right.

@ the C level. Some of the C level people we know have stopped taking compensation altogether.

They have.

So they're demonstrating Something there. I do think that we're going to wait and see what's going to happen with the year end bonuses because we still have a few more months to go here and that's going to determine what companies are going to be willing to do. But I think the best advice is be really consistent with how you're treating the organization overall. So, you know, and some companies are booming right now and some are not. So it's kind of the story of the haves and the have nots. It's quite interesting.

It sure is.

So we hear questions about, wow, people are blowing the plan out. And we hear questions about people are selling nothing.

Yes, we do.

Okay.

Oh, you're switching it up. All right, let's see. Be a good question. Where do we think the largest impact of COVID will be on sales go to market, strategy and approach in 2020? Ooh, this is a big question.

That's a big question. I like that. That's a big, juicy question.

Okay, so this is about sales, go to market, strategy and approach. So not direct comp.

But you know, okay, so big juicy one. Let me take a stab at a couple of thoughts on this. I think it's going to start with customers. And so we're going to have to understand what customers are looking for that's maybe different than what they needed in 2019. We've already started to do that. Right. So 2020. 2021. We're going to be adjusting value propositions. We're going to be adjusting offers. Companies are already doing that right now. We talked a bit about this previously, that when you have times that are tough and you have a lot of barriers and challenges, that promotes creative thinking, which we love. Right. So we're seeing a lot of new creative ideas in terms of offers. So offers and meeting customer needs will be one important area. Another important area, if you kind of look at customers on the other end in terms of opportunities, is we're going to have to reassess how we're looking at opportunities in the market. So we can't just look at what we've done before, but we're going to have to start looking at more market potential, more tactically to get down to customer level. And I'll make one more comment. I think that the sales roles are going to be adjusting. So I think what we're going to see is probably more hybrid field and inside roles. We're going to have to understand what does inside sales mean, because it's going to mean something different. Now somebody was talking the other week. And they said, well, you know, we're having problems because our field people are effectively have they become inside salespeople and that doesn't match up with our pay brackets. And we're like, well, yeah, but this is a different world. You're gonna have to start to think about this differently. So we're gonna see migrations in those roles and we're probably gonna see more data driven problem solving in terms of what salespeople are doing, which means we're gonna have more support in the back office to be providing salespeople with the information and the data they need to have compelling conversations with customers. Not just. And if you think about, you know, the PowerPoints not just going through PowerPoints online and saying, you know, here's my slides and my little heads up here and you can see my little talking head. Well, we got to get beyond that to okay, let's, let's have meaningful data driven conversations with customers. A lot of salespeople, a lot of sales organizations are not prepared to do that right now. And they're going to need back office support and capabilities to enable them to do that.

Yeah. So a couple of other things. We are getting a lot of questions from sales leaders that are calling us and C level even and saying, how should I change my structure for next year? Like I think that we need to make a change here. And we're saying, okay, wait, slow down for just a minute. Slow down and think about the big picture. Right. So couple things before you look at changing your sales structure. We want you to think about two things. One, the customer experience. And I'm going to explain what that means in a minute that you want to offer. And that doesn't mean 24, 7 support customer experience. And then the sales impact factors you need to be thinking about. So customer experience, we're asking you to ask question that you might think is funny. But it's this. Who am I as a company? What's your purpose and why do you exist? And finally, that should help inform why customers want to do business with you. I promise you that if you step back and answer those three questions as a company, that will inform what your coverage model needs to look like. That's the first thing. And then sales impact, which is the other piece of that. It looks at things like your cost of sales tolerance. So like, you know, if it's really slim, right. You don't have much margins there and cost of sales is highly sensitive. Maybe you can't go to some of these teaming models that are out there. Now between inside and field. But you need to be thinking about something else. You know, you need to be thinking about geographic reach. So how important or how sensitive is that or not? And there's. There's actually five different sales impact factors that you want to be thinking about that are important to your business and understand your tolerance for those as well as the customer experience you want to offer. And gosh, if you guys want, we'll send you the details behind these to help you go through the process. We've got a model, but that should inform your structure. So before you change it. Right. Just. Just think about those things. So we are being asked that a lot. And just like what Mark said, we do believe that the salesperson of the future, they're going to have to change. Right. So it's more about humanity. It's more about, you know, empathy and really listening to what people have to say and understanding the story behind a person and the problem they're solving for at their company. Right. So become the answer for them.

I think if there's, you know, one of the things that's positive that's come out of this, Michelle, is what you just said is the humanity and the understanding of people and of the customer. Where, you know, we were just blowing and going before for a lot of organizations, and now they have to really stop and connect with people. And I think that's just. That's a much better thing to do and it leads to much better answers.

Yeah. And it's a whole lot different now. Right. Because it's not just going to be a round of golf and maybe a beer or a glass of chardonnay or whatever you drink. I don't know.

Round of golf and two beers. All right, here we go.

Another one. What's the next one? It's a big one. Our business has seen a huge windfall across different segments because the pandemic, this is the opposite, as one of our sales leaders put it. In one of our European countries, the salesperson walks outside and catches a wait. European countries, the salesperson walks outside and catches orders in his hand like raindrops on a stormy day. How do we approach this? We haven't reduced quotas in lean years before. And I'm concerned about the message we will send. At the same time, the current plan payout isn't exactly sustainable with the expectations we have for 20, 21 ideas.

Okay.

I hope I don't get dinged for that bad.

Anyway, that was your natural accent.

Well, it is. I've taught myself how to speak American.

So. I'm a fan of not messing with the comp plan, not messing with the goals unless you have to. So we talked before about good years and bad years. While some companies are having really good years right now. So I would let it ride. We can get more into Bluebirds and things if those kind of questions come up. But this is really a question about the market is hot and the market's doing well, everybody's doing well. The question on sustainability though, I would say when you were designing your compensation program, you really needed to make sure that it could handle all performance levels so that your compensation cost of sales, if people are at 200% of quota, was actually becoming better than it was when they were at 100% of quota. A lot of that depends on your margins and of course your payout curves. But that's something, that's a fundamental design principle, guys, that you got to make sure that those curves are going to work for you under all sorts of different scenarios. So my answer is I would let it ride and I let them enjoy the good year. You may need to find ways to keep people engaged if they're blowing out their quotas and it's super easy. So you may have to look at other types of measures and other things outside of the comp plan to keep them engaged as well. Because we don't want people writing things off. But in most cases they won't. If it's a really hot market, they're going to stay with it.

So then in that vein, so what I'm thinking about is making sure and building that long term relationship. Right. So I don't know what the particular situation is with this company. I don't know if they happen to have something that others don't. And during the pandemic it's, you know, they really, you know, are selling a lot more of it. I don't really know. I know that we have one client that is seeing a huge windfall because what was a negative for them before, which was they only manufactured in the United States, became a positive just because of the whole, you know, infrastructure being able to get that put. So in this particular case, how then let's say, Mark, that that sounds like there's frustration there around, oh, they're going to be making all this money and they're not doing anything. But isn't that a great time to be sitting down with those clients though and maybe building long term, five year strategic plans and looking at maybe some other activities?

It is, it is. We have a client in the, in the. In the food business. And it's that. That way for them. Packaged foods are booming right now. Right. For obvious reasons. And their salespeople are making a lot of money, but they are getting. They're just spending more time with customers, more time on strategic account planning because they can see, you know, future opportunities for growth. But, but they're really being intentional about it versus, you know, just letting people. Letting people go and, you know, have. Have an easy time of it this year. So use the time, you know, to your advantage.

Okay, that sounds good. Clean up Salesforce, everybody. I'm just kidding.

Okay.

All right, let's see what do we got? In addition to income protection, will companies be thinking of giving quota relief as well?

Yeah, we talked about this a little bit already. So most companies have not adjusted quotas for the year. The moves that they're making are that they have either re seasonalized quotas, so they pushed them further out into the year to make the going a little bit easier earlier in the year, or what we're seeing is breaking quotas into more discrete periods. So we're taking the annual quota and we're breaking it into quarterly or semiannual quotas just because it's giving us more time for visibility to make any adjustments. So the answer to that ultimate quota relief question, I think is probably still a couple of months out before we actually see what companies are going to do, because I think everybody's still waiting to get more visibility. That's been the game in 2020 here is get more visibility, buy time, assure the sales organization that things are going to be okay. Which is the point we made before about understanding your true intention here and what you want to do from a cultural and employee connection standpoint. So a lot of it's been around the messaging that just do the job. We're going to help you do this as well as you can, and we'll figure it out as we get there. So a lot of it's just kind of getting through the fog right now.

Okay, so speaking of getting through the fog, do we want to do one more question before we talk about what's ahead? All right, I think we got time for just one more.

I get to pick this one.

All right, you get to pick it. I like doing that.

See.

Another big one.

You talked about discrete quotas and cumulative year to date as options. We've had a cumulative year to date measurement in place, but we're unsure of what our particular environment is going to look like. Forecasting is proving difficult for 2021 meaning for, I guess for a full year quota. I've always thought of discrete quotas create that they can create mistrust with the sales team because they really can be jiggered to the detriment of the team. How do these work in practice? Okay. You know, I usually see that question go in the other direction, which is we're used to having quarterly quotas and gosh, what is cumulative year to date all about? Or we're used to having a full year quota and when somebody gets to that full year quota or the threshold of that full year quota, then they start getting paid. So you know, they might hit that in the middle of the year or something like that. So usually companies are more accustomed to the discrete, you know, Q1, Q2, Q3, Q4. And if you hit it in Q1, you know, it's, it's kind of a single game within the quarter. What we like for more strategic types of environments is the cumulative year to date approach, which means that I'm taking, if I had a quota of $4 million for the rep for the year, I'm taking that $4 million. And if I didn't have any seasonality, I'd just be dividing it into four. So a million dollars for Q1, $2 million for Q2, $3 million for Q3, and $4 million for Q4. And that, that the reason we like it in a strategic environment is that it allows you to catch up. So if we did a good job on setting that $4 million quota and somebody needs more time beyond Q1 to make those major deals, they're not going to push them artificially. Right. And so they're going to have time to catch up over time. What you have to be careful of on the cumulative year to date are the accelerators. So if somebody can hit accelerators too early in the year and then they bottom out later in the year, you can end up in a red balance type of situation. So that's usually the way we'll lean. If you go with quarterly quotas, anytime you have endpoints, artificial endpoints, and what I mean by artificial is that it's a month, it's a quarter, then you have gaming around those endpoints. So if I close out Q1, then go to Q2 and I close out Q2, you're going to have a lot of gaming which is going to be pushing deals or pulling deals to try to move them in and out. And that causes unnatural behavior. Right. So either somebody's not going to hit it for Q1 and then they kind of push what they have into Q2 so that they stand a better chance of hitting Q2's compensation. Or they're doing unnatural things to the customer. Not like truly unnatural, but unnatural things in terms of trying to make them buy stuff. And so we don't like that kind of behavior.

Okay, that's my answer on that note. On that note, I am going to have us move on to looking ahead.

Yeah, let's take a look ahead. What we see for compensation coming up in 2021 and all right, so what.

We got Mark, since we already started talking about quotas, we are going to have you talk about what's ahead in 2021 for quotas. It's okay. I think our slide is just stuck. It's fine. Let's go ahead and you move on and talk about quotas. There we are, there we go.

We are not slide dependent by the way.

So no, that's why I'm like, okay, let's move on.

These are for you guys to refer to. So quotas, these are extensions of what we talked about in the beginning in terms of the big impact around sales effectiveness. So quotas, the geographic boundaries are going to matter less. Right? So we're going to be able to, especially for non strategic accounts. So we're going to be able to push and pull territories differently than we used to, which is going to mean quotas can be treated differently. Perhaps we can balance territories a little more easily if we don't need to be there in person. For all those cases, the quotas are going to become more account opportunity driven. History, as we said before, is history. So 40% of companies use some form of history in their quota setting. And the problem with that is that we're looking in the rear view mirror to try to predict future performance. So what we want to do is we want to get more account level information so that we can understand what the opportunities are in the market. And so we'll be using data sources to be able to do that and give us more granular account information. We've talked about that in some prior sessions. If you have questions on that or you'd like an account based look, go ahead and ask us for that. We can give you some data on that. The sales potential data sources are going to have to improve. Industry targeting is going to surpass general deployment. What does that mean? Well, if I have a range of industries in my market as a head of sales or a sales manager, I'm going to be looking at which industries are stronger right now. So there's going to be quite a bit of variation and we've shown you some trend lines on that in prior sessions. That's going to become more important. And it's possible, Michelle, that we'll start to see some shorter term quota setting in 2021. And what I mean by that is it's going to be hard when we come into 2021 to be able to set an entire 2021 goal because the future is going to be so unpredictable. So we might go to shorter quarterly or semi annually or we may make some provision to adjust those quotas along the way.

Yep. Okay, so when we talk about sales comp, and I think we discussed some of these, we said we're going to have to recalibrate productivity with the compensation value, right?

Yeah. So the, when we look at sales capacity and we get different productivity assumptions out of our sales capacity, we're going to have to look at what we're paying for those. So what's the, how much compensation are we paying and are we getting, getting the productivity value out of that? So the, you know, standard account manager produces X and we pay them. Y is going to change when we start looking at our sales capacity model.

Yep. The other thing is, and we've actually worked with some clients on this this year already, for next year, pay mix will become more aggressive. And what that means is when you look at your base to variable, let's say you've got a, I don't know, 60, 40 plan today, 60% base, 40% incentive. We're seeing companies go more aggressive. 50, 50. Now again, that's not really a negative as long as. Right. You've got to communicate this. Right. You've got to make sure that the incentive portion is actually attainable. So what you're doing is you're changing the pay mix because you want to make sure that you're paying on results, but you also do need to make sure that that's attainable, especially if you're going to mess around with base pay. Right. Yeah. We also believe that revenue, it's going to continue to be the main metric with an increase in use of bookings. So why is that? You heard us talk about the elongated sales cycle right now. So if my sales cycle was six weeks and we're hearing this and now it's like three months, four months. If you pay them something on bookings, just a portion of that, it still motivates the rep, gives them something a little in the money, if you will, and will allow them to continue to follow that sale all the way through to close, you know, same thing related to that, but not exact. But the thresholds, we're looking at lowering thresholds and what that means, again, it's getting people in the money a little bit sooner. We've got clients that have 80 and 90% threshold, meaning that you've got to get to that level of attainment before the plan begins to pay. And so what we're working with companies on and we encourage you to look at is lower that number. Maybe it needs to be 70 or 80, but then manage how much pay you would have. So it may not pay at the same rate. You may say that at 75% it only pays out. Oh, I'm going to make up this number 15% of your incentive opportunity. But you need to work with your cost models there and look at what, where people were the previous year and kind of understand what your tolerance is around that. We also do believe that upside opportunity is going to continue to increase and that means based on the results right. In plans. And that's because you're still going to want to attract top talent. Right. So we're hearing about a lot of layoffs, but also it means that there's a lot of good people out there that may have a lot of opportunities to cherry pick the best companies to work for. So, you know, and then finally I would say that, well, stepped rates, we do know that those are increasing a little bit to drive incremental performance. Right. And then finally we do see regardless of the cost savings that companies are looking at, they are looking at putting investments in technology to provide visibility to the team, information to the team, help people understand where they stand, particularly in this remote environment. It's important from the C level managers all the way down to the front line to understand where the performance is.

Yep.

So with that, anything else, Mark, you want to, want to leave us with before we talk about our next session next week?

I think the big point is we don't know yet. So we're going to have to be learning these things. We're going to have to be sensing and when, you know, we talk about the whiteboards and the mind maps, the reason we do that is we're looking for those indicators. So these are, these are based on indicators that we're seeing and what we're seeing companies doing right now.

Yes. Yep. So thank you for being with us. Now, just real quick on next week, anybody you know that's interested in inside sales, building the model, changing the team driving results, we're going to Talk about inside sales. And I'm really excited because we've got some insights that are going to be featured in my book that will be there. And then, you know what, Marc, I thought I would ask you to come on over at the at end of that session and do some Q and A with me, if you don't mind.

Fun. Okay.

Yeah, I see. Thought he was going to be off the hook. So don't forget to register for our next roundtable. Please talk to us about your toughest sales comp challenge. And then, you know, we are your resource for you. So we've got Sales Globe on Demand, which is ongoing consulting, advisory services for you when you need it. And we've got some sales comp assessments that we're doing for companies to help you get through this sales comp season. We can help you target your biggest areas of improvement. Thank you for spending time with us this week. It is a privilege that you do that for us each and every week. It's a privilege for us to serve you. So thank you for being with us and have a great weekend.

Thanks, everybody. Thanks for joining us.

Bye. Bye.

And I think we can hang on just for a minute, Brittany, if any people are still on. There was a question that came in. I just wanted.

There was. There were a few, but you want to take that other question? Sure.

Yeah, several of those. But I think there was one that just came in that we want to make sure we cover.

Okay. So if you had a question that you submitted.

Okay, all right. So the question. And we couldn't get all these in, but accelerators over goal. How would you structure accelerators over goal for folks that have varying sizes of goal Today, the structure is based on their base rate bc divided by goal times 3.5 for every percentage of attainment over goal. Okay, well, what we'll usually do on something like that is we'll look at the dispersion of goal attainment. So if you're talking about varying sizes of gold, what that would indicate is that those may be varying sizes of, like, different sizes of accounts certainly could be different sizes of territories. So we're talking about different sizes of accounts. If we're saying, you know, we've got middle market accounts and the goal is different than if we've got strategic accounts, should the accelerator be different? The answer is maybe because if we look at the performance or the distribution curve around a goal, we may see that for the major accounts that you may not have as big of an increase in performance over a goal. You know, your 90th percentile performer for major accounts or strategic accounts may not be as high as, say, for middle market accounts. So it might be a 90th percentile performer for strategic accounts is 115%, where maybe a 90th percentile performer for middle market accounts is 130%. So because there's more volatility in those smaller accounts. So in that case, you probably would have a different accelerator based on that dispersion.

That was a really smart answer, Mark.

Okay, thresholds. How do you manage putting in a threshold when plan paid from $1 on a curve? Yeah. Okay, so you're going in a different direction than what we're seeing. A lot of companies you're saying we're paying for from $1 right now and we're going to put a threshold in place. And there. Okay, so let's talk about, Michelle, the reasons you would put a threshold in place. It's usually we like to use the bus protocol, which is if the rep got hit by a bus, what amount or what portion of quota would come in if they just never came back. And if you see you have a.

Great graphic on that, by the way, anyway.

And it is a graphic graphic. Yes. And so if they were hit by a bus, they never came back. You might say, well, you know, that rep, gosh, you know, probably, you know, 50% of their goal is going to come in because we have a lot of existing business, we've got other people on the team, etc. In that case, you might have a threshold that maybe, maybe it's around 50% plus or minus. Right. Because what we want to do is we want to pay put threshold at the minimum acceptable level of achievement. If you said, well, none of that goal would come in because that person is a Doberman or a Hunter, you might have no threshold. So you might say, well, it's going to be $1. The other metric we use, of course, is 10th percentile. So where's the 10th percentile performer? And that will indicate usually where the threshold level should be. And then the third metric, if we triangulate, is called fired. So at what level of continued performance would that rep be fired? And that's usually. So when you've played those three off each other, they actually come in pretty well. So if you decided you want to put a threshold in, what you're going to have to probably do is do that gradually or do it with a very positive message. And usually the positive message we see around putting a threshold in place is the reverse Robin Hood principle.

That's Right.

Which says, okay, we're not going to pay for underperformance. What we're going to do is we're going to take all the money we're paying under performers under the new threshold level, and we're going to move that to the upside. And so we're going to take from the underperformers, we're going to pay the over performers. So a lot of that has to do with your messaging, and that can be very powerful in terms of being able to attract the right talent and retain the right talent to have more upside in the plan.

And if you're thinking, well, that didn't really save me any money, just run the cost model, run the numbers and look at the performance and look at the revenue compared to what you pay out. And what you'll find is that it really does work. And Mark truly is talking about once you hit quota, that upside in the plan make it more attractive. So again, the messaging is going to be really important around it and you're sending a clear message on we're paying for performance. And believe me, you're high performers. And even those that perform at quota, they're going to be really motivated to blow it out and they're going to be really excited about the upside opportunity.

Super. I think that's all we have time for. Thanks, everybody, for joining us.

We'll see you next week.

Feel free to reach out if you have any questions or need any input or insight.

Great. Thanks a lot, everybody.

Bye.

Bye.