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A strategic sales plan is a portfolio of ideas, processes, and technology that guides a sales organization’s strategy and provides the resources and tactics for reaching sales goals. It defines your company’s go-to-market strategy and expected costs and returns.

Sales planning starts with executive and senior leadership working with sales to set goals and define where your organization wants to end up in the next year. With goals in hand, sales leadership must then assess and determine the needs and means to achieve those goals.

Understand Your Team’s Needs

To put it simply: in order to reach your sales goals, you need the right amount of resources. A successful sales organization needs productivity gains in order to achieve goals. As part of their strategic sales plan, companies usually invest in the following areas to aid productivity gains—people, processes, and technology.

People: Do you have enough headcount? Can your sales force effectively reach goals at its current size? Do you need to hire now to account for ramp time and potential attrition?

Processes: Are your sales territories balanced? What incentives and sales commission structures will you use to motivate sales reps?

Technology: What sales performance management tools can you invest in to reduce administrative burdens, increase performance visibility, create stronger reports, and analyze your team performance?

Download the guide "Optimizing Sales Planning with Data Intelligence,"to discover how you can use sales performance data to strengthen planning and performance.

Understanding your sales capacity needs sets the foundation of your strategic sales plan and further identifies the resources they’ll need to be successful, including:

  • Sales force sizing
  • Productivity expectations per rep
  • Territory design
  • Coverage model
  • Compensation plans
  • Technology investments
The Right Quotas Start with Data

The sales organization as a whole has goals handed down from senior leadership. Quotas are then broken down into expectations for each sales rep who will collectively will help the company achieve its goals. It’s important to note that sales quota planning should begin and end with the mindset that not every rep will hit their number (aim high, plan realistically).

Your Territory Design Matters

Your sales territories map the playing field for your strategic sales plan. Research has also shown that territory design can have a big impact on sales team morale and performance. In all reality, territories should be balanced so that regardless of the territory assigned, each rep has equal opportunity to reach and achieve their quota.  

Incentives Should Drive the Right Behavior

Plain and simple: money motivates. Sales organizations motivate sales reps with compensation plans. The incentives within the plan should align with company goals, and encourage reps to perform accordingly by emphasizing products, bundles, etc. with different incentives. Ultimately, sales compensation plans must drive the behaviors that will reach organizational goals.  

The Importance of Year-Round Strategic Sales Plan Analysis

Your strategic sales plan isn’t a one-and-done deal. To be truly successful, you need to continuously analyze, improve, and repeat. Analysis should be a year-round process occurring on at least a quarterly basis. Find more plan analysis tips and a calendar guide in our recent blog, 5 Steps to a Competitive Sales Incentive Plan.

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When it comes to sales planning, there are a lot of moving parts to consider. Identifying the resources you need and implementing them effectively can quickly turn into a guessing game. Sales leaders often rely on tribal knowledge or gut instinct to make big planning decisions—and their sales teams and quota attainment often suffer for it. In a recent webinar, Xactly VP Strategic Marketing, Erik Charles, sat down with the Big Switch Networks Sales Operations  Manager, Gavin McChesney, to discuss how benchmarking data can turn sales planning from a game of darts into a data-driven, credible, and scientific process.

In the webinar, McChesney discusses three key tips that have improved his company’s sales performance, including:

  • Start sales planning well in advance of your new fiscal year
  • Use benchmarking to stay competitive in your industry
  • Keep a close eye on sales rep behaviors to ensure on-track development

In this abridged transcript, we’ve highlighted several questions that were discussed in the webinar. To listen to the full audio, including extended details and specific Benchmarking data, click the link below.

Watch the webinar, "Put the Darts Away: The Importance of Benchmarking Data in Sales Planning," to discover the importance of current benchmarking data for effective compensation plan design.

Erik: Let’s talk about off the comp plan design here. Your fiscal year started, you’re in the New Year now?

Gavin: Yes, so planning it out started a long time ago.

Erik: How early you start designing the new year’s plans?

Gavin: Probably a year beforehand.

Erik: Okay, so you’re way ahead of most companies, that’s great. What are the biggest challenges and problems for kicking off that comp plan design process?

Gavin: I think it’s keeping the plan simple. There is often a propensity to over-engineer certain things. People come with different goals and we want to make sure everyone’s on the same page and we’re all really focused

Erik: And how long have you been using the Xactly benchmarking product?

Gavin: About three years.

Erik: Okay. And what did you use before that?

Gavin: A lot of word of mouth—and whatever limited industry websites I could find.

Erik: Now how many other industries do you like to look at and compare?

Gavin: Almost all of them, so having a data set that is consistently updated, that we can track and monitor, is really important.

Manage your sales team and optimize performance. Learn how you can proactively monitor and optimize with Xactly Benchmarking.

Erik: Switching gears a bit, there’s a popular concept that encourages moving back from an enterprise to a startup mentality—it’s almost this idea of wanting to be more nimble. So talk to me about your “startup enterprise” mentality.

Gavin: For us, it means we have a very lean operating model. Everyone is extremely ready to welcome new people to the company. We want to keep it that way.

Erik: Are you hiring from a startup or mature company perspective?

Gavin: Both. Yeah, they both have different values. We see from a startup perspective, we see reps that are very closely aligned with what is new and next in the market. They know the new players, they understand the challenges. We also hire from large industries because they have that depth of experience with channel partners beyond the product set.

Erik: Right. So how do you bridge the gap between experience and novice? I mean, you’re hiring some very experienced reps—and also hiring greener reps who need development plans.

Gavin: Yeah we are still walking through that. We start by a nurturing some understanding, and then as reps continue to get into the weeds and mature, then they move into different roles responsibilities.

Erik: Let’s talk a little bit about tenure—the experience a sales rep has at the company and how that’s impacting the team. Where do you see the value of tenure?

Gavin: Yeah, well if you have tenure at our company, you’re there because you perform. We create high alignment—so if you’re there for a long time you’re making more than someone who’s a little bit younger, you’ve earned it. When you look at other companies, tenure isn’t always indicative of good performance and that’s a shame. Again, we’re looking for people who are very tenacious and very resilient—they’re the ones who stick around.

Erik: What’s sort of development program do you have?

Gavin: Because we’re such a small, tightened group, if you want to ask a question and you need guidance, it’s always there for you. So new reps can lean in on that maturity and be able to pick things up by asking the right questions.

Erik: Do you run analytics then to see how long it takes for new reps to be a full quota-bearing rep—and then how many years does that actually take?

Gavin: Absolutely. We take special care because as we are expanding into new markets we need to ask: How is that market going to perform compared to other markets? So, if a rep comes and is 100 percent new in that new market, that’s very different from someone who’s coming into a warm market.

Erik: And that moves us into the idea of growth and an expanding headcount. I mean, how do you actually benchmark company and sales team maturity? Are you comparing yourself to companies with similar years in the marketplace or do you also compare yourself to startups?

Gavin: We really do look at everything and use that in determining where we should be at developmentally and how our team should be performing.

Erik: And how does that data impact who you put into management?

Gavin: That’s kind of an interesting conversation because you need to ask why the reps who are successful are being successful. Is it because they have a channel partner they have a great relationship with? Are they successful because they’re very focused and very aggressive? These things don’t always translate into management success—but they do give us a good indication of effective selling behaviors and how we can improve our performance management.

Erik: Interesting note on promoting reps to managers. From Xactly’s analysis, we found that reps who know how to sell a company’s entire portfolio of products make better managers than those that bring in the exact same amount of revenue off of fewer products.

Gavin: Yeah absolutely.

Erik: Earlier, you mentioned “checkpoints” you use to evaluate your own rep tenure. You’re looking at these when? At the end of the first year?

Gavin: I’d say from day one reps are under a microscope.

Erik: Okay, and do you do a cohort analysis?

Gavin: Yes, and we look at that every single quarter.

Download "The Impact of Tenure on the Retention of Top Performers," to see data pulled straight from the Xactly Insights application and discover how tenure affects performance and rep retention.

Erik: Often times we hear from people who just want to get off of a spreadsheet and fix incentive compensation management. What’s your advice for somebody who’s looking to go from manual to automation? And what else should they be adding to their compensation package and at what point?

Gavin: That’s kind of the psychological advantage that Xactly offers. Xactly will give you a night to sleep that you didn’t you have before. When you run commissions in spreadsheets, you’re asking for anxiety. You buy things because you want a better quality of life—and doing commissions with Xactly is going to give you that—a better quality of life, and a better night’s sleep.

To listen to full the webinar, including specific lessons learned regarding employee retention and competitor benchmarking, click here.

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Sales planning can be complicated, really complicated—and “three easy steps” may sound too good to be true. When it comes to hitting sales targets, sales leaders must balance their overall pipeline opportunities with their team’s actual bandwidth. Effective sales capacity planning determines how you set, pursue, and achieve your sales goals. In order to hit your targets, motivate team performance, and get some sleep at night, you’ll need an accurate sales capacity plan to pave the way.

Download the guide "The Complete Sales Planning Handbook," to discover how you can use sales performance data to strengthen sales capacity planning and performance.

Follow these three steps to set yourself up to achieve your booking goals.

Step 1: Create a Viable Resource and Capacity Plan

Identifying how you will achieve your sales targets is often quite complicated. You might spend months running scenarios; gathering current and historical data on ramp, attrition, and time to hire—or arguing over how many leads the marketing team should deliver to make the plan work.

Let’s press the pause button. The first thing you should do after determining a target is evaluate whether or not you have the sales capacity to hit that goal. Once your sales capacity has been established, it’s time to decide if you need to add or reduce your headcount—and by what date you need to do so (taking into account ramp and time to hire).

Step 2: Combine Your Plan With Your Actuals

Traditionally, companies create a plan and let it sit for 365 days—failing to reassess and adjust it throughout the year. With dynamic markets and increased competition, it’s best practice to frequently monitor your plan against actuals. By regularly checking in with your performance data, you’ll be able to pinpoint any deviations and course correct before being derailed from your target goals.

*Tip! Xactly recommends checking your actuals against your plan at least once a month, but if you’re consistently missing your targets, checking in on a weekly basis may be a better option.

Step 3: Analyze Sales Performance & Take Action

By closely following Steps 1 and 2, you will be able to spend less time on the initial planning process, giving you more time to analyze important data. This data includes your sales performance management strategies and results. By identifying and evaluating the impact that factors—such as attrition, ramp, and untimely hiring—have on your sales capacity, you’ll be able to derive the best approach to ensuring the sales success of your team and business.

These fundamental steps will help you craft a stronger sales foundation—but making them “easy” is our job. Xactly Sales Resource Planning can help you determine the resources you’ll need to hit your sales goals.

Learn more in this short video.

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Sales statistics are a variety of metrics that provide insight into your sales organization’s health.  Industry and planning-specific statistics also help guide sales planning and incentive compensation. When used properly, statistics should tell a story.

Numbers and metrics can show what methods are working for an organization, as well as uncover gaps that need to be filled. We did some research and compiled some valuable sales stats that are important for all salespeople to be aware of. You’ll find, these statistics tell a story about the sales industry: how it’s changing, what kinds of best practices exist, and where the challenges lie.

10 Sales Statistics for Better Planning

1. Companies that set cookie-cutter quotas across similar roles see 14% lower quota attainment than those that assign quotas based on territory-specific opportunities (Complete Sales Planning Handbook.)

2. Organizations that use automated territory planning technology have up to 20% higher sales achievement than the average (Optimizing Sales Territory Design: Sales Management Association 2018 Research Update)

3. Nearly 50% of companies fail to measure and adjust financial forecasts and plans to account for the residual impact caused by sales force attrition (2018 Mid-Market Sales Incentive Study)

4. 95% of companies who use ICM technology have payouts completed in less than 6 weeks, with the majority under 3 weeks (2018 Sales Comp Administration Survey) (2018 Sales Comp Administration Survey)

5. 83% of companies have payment inaccuracies for commissions, at an average rate higher than 5 percent. (2018 Sales Comp Administration Survey)

6. An compensation payment error rate of 1 percent can cost a company $500,000, while a 5 percent error rate can cost $2.5M (2018 Sales Comp Administration Survey)

7. Companies paying competitively at the 75th percentile or higher have 50% less sales turnover (Xactly Insights)

8. Top performing sales reps hit their peak quota attainment between 2-3 years in their role (Xactly Insights: The Impact of Tenure on the Retention of Top Performers)

9. Enterprises will miss the equivalent of up to 10% of annual sales lost opportunity that could have been captured through improved management of sales territories, quota and compensation plans (Gartner). Learn more in our Enterprise Guide to Sales Performance Management.

10. An integrated SPM suite increases sales productivity by 12.5% and accelerate financial close times up to 50% (Simon & Kucher, Optimizing Sales Territories for Strategic Advantage)

Putting Sales Statistics to Work

As the driver of your sales organization, your sales plan must be accurate. The best way to do this? Your sales performance data. Learn more about using data to drive your sales planning in our guide, “Optimizing Sales Planning with Data Intelligence.”

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The start of a new year comes with a new sales plan—and that means you must reassess your sales capacity needs, align and balance sales territories, and create a sales incentive plan that drives sales performance. Enter sales compensation planning.

The Importance of Sales Compensation Planning

Your sales compensation plan drives your company to reach its goals. Therefore, it’s important that your sales compensation planning drives the right sales behaviors and motivates reps to achieve and exceed their quota.

Your sales compensation planning (and resulting sales incentive plan) should consider the different parts of your compensation plan (e.g., pay mix, bonus vs. commission, commission rate, etc.). To help, here are 10 of our top how-to reads to guide your 2019 sales compensation planning—complete with sales compensation best practices, tips, and templates.

Download our "Ultimate Guide to Sales Compensation Planning" for incentive best practices and everything you need for a sales comp plan design project.
Understanding Pay Mix & Commission Structures

Read about the different types of sales rep compensation, different commission structures, and tips for paying different roles on your sales team.

1. What is Pay Mix in Sales Compensation?

To motivate reps, attract new talent, and keep top sales reps from leaving, your compensation must be competitive. Pay mix—the ratio of base salary to target incentives (aka commission) that your sales reps earn—is an important part of this. Discover how benchmarking against industry pay and performance data can help you create a strong pay mix for competitive sales compensation planning.

2. Sales Commission Structures: Which Model is Best for Reps?

Typical sales compensation plans are made up of two parts—a fixed base salary and variable commission. Setting the right sales commission rate structure helps motivate reps to achieve and maintain high performance (and can help encourage middle performers to improve). Learn more about the different types of sales commission structures.

3. How to Use a Tiered Commission Structure to Drive Sales

Tiered commission structures are one of the most common variable pay structures for sales reps. Under this pay structure, sales reps earn higher commission rates once they’ve hit a target amount of sales or percentage of quota (e.g., 6% up to $100,000 in sales, 9% up to $200,000 in sales). See how a tiered commission structure drives performance and motivates reps to meet and exceed quota.

4. What is Draw Against Commission in Sales?

Commissions are a large part of sales rep compensation. A draw against commissions guarantees pay for sales reps to motivate them to perform. These commission advances often work best for onboarding sales reps, who may or may not repay the commissions (depending on your compensation plan). Learn how a draw against commission can motivate reps and increase performance.

5. How to Design a Sales Manager Compensation Plan (With Examples)

Not all sales roles are created equal. Sales reps and managers have different responsibilities, and therefore, their compensation plans should be different. Discover best practices and templates for creating a sales manager sales compensation plan and how pay should differ by role.

Download our "Ultimate Guide to Sales Compensation Planning" for incentive best practices and everything you need for a sales comp plan design project.
Sales Compensation Planning Best Practices and ASC 606 (IFRS 15) Compliance Tips

Discover sales compensation planning best practices and templates, and learn how to transition and comply with the new revenue recognition standard, ASC 606 (IFRS 15).

6. How to Develop a Sales Incentive Compensation Plan (with Templates)

Strong sales incentive compensation plans motivate sales reps and are competitive compared to your industry peers. Learn how to design a sales incentive compensation plan that drives the right sales behaviors, and use templates to tailor your incentives by sales role.

7. 5 Tips for Designing Successful Sales Incentive Compensation Plans

Your sales compensation planning requires more than just incentives to be successful. Ensure your compensation plan is the best it can be with these tips from Xactly CEO, Chris Cabrera. Discover the importance of incentive design, knowing your sales team, and tracking the right metrics to design successful sales incentive compensation plans.

8. Accounting for Sales Commissions

ASC 606 (IFRS 15) is now in effect for all public and private companies, yet many companies are still transitioning to the new regulations. Learn the basics of ASC 606, how to transition to compliance, and best practices for accounting for sales commissions.

Motivating Sales Reps Beyond Incentive Compensation

Sales compensation is the main driver behind sales performance. But your sales compensation planning should include additional incentives and coaching tips that sales managers and leaders can use to motivate reps and keep them engaged.

9. 16 Sales Incentives to Keep Your Team Engaged and Motivated

Sales team morale can make or break performance. To keep on track towards company goals, sales managers and leaders need to keep sales reps engaged and motivated. One of the most popular methods are SPIFs—special performance incentive funds. Learn how additional sales incentives help keep your sale team engaged and motivated to hit their number.

10. Industry MBO Examples to Kickstart Your Sales Team Engagement

Management by Objectives (MBOs) encourage sales reps and provide a way for them to individually strengthen the sales organization as a whole. Discover the benefits of MBOs and use these industry MBO examples to guide your sales compensation planning.

Want to learn more? Download our 2018 Sales Compensation Administration Best Practices Survey for best practices and tips. Get your FREE copy today!

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The sales planning process can become quite complex, especially when it comes to designing sales compensation plans. From building a team to analyze metrics and company goals, the job carries a large amount of responsibility. Ultimately, the new compensation and incentive plans must successfully motivate the right sales behaviors to achieve goals, all while driving growth.

Fortunately, sales compensation planning doesn’t have to be a tiresome, drawn-out process. As part of our Friends of Xactly (FOX) Community, we’ve spoken with sales compensation leaders to create a blog series about their journeys in sales compensation, best practices, and the Xactly advantage. In this post we’re sharing tips from Nuance Communication Commissions System Manager, Robert Walters.

Meet The Expert – Robert Walters, Commissions System Manager

Who: Robert Walters

Position: System Manager, Commissions
Company: Nuance Communications

Time in sales compensation: 4 years

Bio: Robert Walters grew up in the Boston Area and graduated from Umass Lowell with dual degrees in Business Management and Finance. He started his career in Order Management, and gained experience over time in general accounting, revenue accounting, general finance, etc.

Outside of work, Walters enjoys rowing. In the past, Walters has rowed, coached, volunteered at (and directed) regattas in many capacities, and he is now a licensed US Rowing Assistant Referee. Walters is very passionate about the sport and his career with sales compensation, which has helped him excel in both areas.

Nuance Communications is a multinational computer software technology corporation that is “reinventing the relationship between people and technology.” Based in Burlington, MA, Nuance Communications has “pioneered the highest functioning speech software in the world, perfecting the ability for machines to recognize and emulate the human voice.”

Tell us about your career journey in sales compensation. (How did you get your start? How did you end up where you are today?, etc.)

“I started using Xactly back in 2014 when my previous company implemented Express, and they needed someone in Finance to help manage the system. The company was a startup and both the company’s and my career growth were moving fast. I decided to make a shift from what I was doing originally to managing commissions.

After close to a year, we decided that Express was not flexible enough to handle our complex plans and increasing number of reps, so we decided to implement Xactly Incent in 2015. From there, I earned 2 years under my belt as an Xactly Admin doing everything commission related from beginning to end. I flew out to the west coast for multiple training courses and conferences hosted by Xactly which fed my appetite for learning how to improve our system and processes. I was promoted to Commissions Manager in 2016 and eventually my company was acquired and a new opportunity landed me here at Nuance Communications.

Nuance had just implemented Xactly Incent a year or so prior to my joining but was in over their heads after some key Admins left the company. I now work with a team of 9 individuals to manage about 4 times the size of my previous company’s plans and sales reps. I manage the system from a technical standpoint and support my team with whatever they need to be successful at their job.”

What are the biggest challenges you face in your role today?

“The biggest challenges are related to gathering and making sense of the information being used to calculate commissions (whether Transaction Data, HR data, or plan data).

We have 850+ sales reps across four separate, unique company divisions. Every sales/sales ops team treats their commissions plans differently. Trying to keep decisions in check and influence designs to bring consistency to our plans is a constant struggle. However, it helps improve our ability to process the data efficiently and accurately.

We have seen major improvements in the past year and are looking forward to more consolidation as we rethink our processes and start implementing further automation in our system.”

How has technology played a role in your evolution as a sales compensation professional?

“Technology has had a huge impact on my evolution as a compensation professional. From learning a lot of tricks in excel, to implementing multiple systems in Xactly, I have learned a lot more than I would have ever expected to in the time that I have been working with the data.

The ability to create formulas and tie records and rules together to be able to automate what used to take hours of analysis (and a large number of spreadsheets) has freed up my time to learn more about compensation in general and constantly improve and simplify our processes. It also makes me feel a lot more comfortable about the data because there is a lot less risk of manual errors.”

Describe your company’s sales compensation planning process, your role in it, and how Xactly has changed this process (What is your favorite Xactly tip/trick that you’ve learned?).

“My company spends a lot of time planning our compensation plans. We start months in advance to ensure that we are all on the same page with our expectations of the following plan year. We discuss areas that need improvement and try to consolidate and update our processes as best we can.

We don’t typically receive the quota details or HR changes until the last minute, but we try to have templates set up and the majority of other decisions made so that we can quickly setup the plans and send out the plan documents.

My role is to ensure that all of the needed formulas, rules, records, and reports are set up. I work with the plan admins to identify the needed credit types, quotas, earning groups, and custom fields for each team and division. I enable the system so that they can just fill out an upload template and import the data for the new plans. They then validate the data in the Plan Docs and route as needed.

One of my favorite Tips/Tricks is to use Lookup tables to reduce the number of formulas and rules that you need to create and manage. By using lookup tables to identify the correct formulas, rate tables, and pay curves for a given situation, it reduces the variations of formulas and rules that are required to be able to handle many different scenarios.”

Download the "2018 Sales Compensation Administration Best Practices Executive Guide," for incentive compensation trends, best practices, and tips to drive the right sales behaviors to kickoff your sales compensation planning.
What piece(s) of advice/lessons have you learned on your journey that you would share with your peers or younger self?

“The biggest piece of advice I can think of is to keep your mind open. It is very easy to get trapped in your ways of doing things and understanding things without realizing that there are often better solutions and perspectives out there.

The only way you are going to continuously learn and improve is by keeping your mind open to new ideas and being courageous and determined enough to go out there and find them.”

How do you envision the future of sales compensation?

“I envision a much more automated, streamlined, and consistent approach to Sales Compensation.

I anticipate a lot of growth in our own collective processes and knowledge of the system that we use and I look forward to further improvements and updates being released by Xactly that will help us reach that goal.”

Discover the Xactly Advantage for Your Company

At Xactly, we partner with our customers and arm them with the data and tools they need to for an integrated sales planning process. Sales compensation is a vital part of your company’s growth and success, but the process should never be a struggle with error-prone spreadsheets or manual commission calculations. Find the right Xactly solution for your business, industry, or role. Schedule your personalized demo today!

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Definition of MBO Bonus

An MBO bonus is a performance-based reward an employee earns when completing the goals stated in their MBO program. These bonuses pay employees based on individual tasks and thus, are highly motivating incentives. To be successful, these bonuses and objectives should stem directly from higher-level organizational targets.

MBO Bonus Best Practices Take a Simple Approach

One of the most valuable aspects of the MBO bonus lies in its transparency. Employees can easily visualize attainment and collaborate with their team to achieve success. However, it’s important to set goals realistically. Aim to set approximately three major goals per quarter so employees can prioritize appropriately.

The saying “when you try and do everything, you do nothing” definitely rings true in this case. We’ve all been in the position of having too much to do; so much that you just spin your wheels trying to figure out where to start. Or worse, starting, and then jumping to the next task before completion of the first, and then on to the next one, over and again (rabbit holes will get you every time if you let them). Not to mention the overwhelming feeling of having to hit something like seven goals for full payout versus an achievable three.

To cement the point, companies that set goals quarterly in the form of MBOs see 31 percent greater returns from their performance process than those who set goals yearly. So keeping things simple with a few targets per quarter is the way to go.

Download our "Ultimate Guide to Sales Compensation Planning" for incentive best practices and everything you need for a sales comp plan design project.
Align Corporate Goals to Individual Objectives

While it’s important for MBO bonuses to be tied to individual tasks, it’s also crucial that employees are receiving rewards for achievements that are aligned with corporate objectives, too.

Think of it like a system of individual funnels (employee goals) constructed to fill a big bucket at the bottom (your organizational goals). There is no way that main bucket gets filled if the personal employee funnels above it are pooled or misaligned. Sure you might be successful at filling individual funnels, but you’ll eventually have water all over the place, and very little in the bucket.

Improving employee morale is an additional benefit of ensuring goal alignment. CEB HR Leadership Council found that organizations that effectively convey to employees how their individual role impacts the overall business, experience a 21% higher total shareholder return over three years. One can speculate that this is because such communication gives employees purpose and an identity as a team member tasked with shouldering their share of the load. This greatly improves the odds of your people being engaged and happy in the workplace, in return.

Practice Clear and Continuous Communication

When it comes to goal setting, you hear this a lot—it should never be a “set it and forget it” activity. If you are going through the process of setting goals with your people, you need to also take the required steps of checking in on those targets before the deadlines. Reinforcements and reminders keep employee minds fresh and focused on the task at hand, and nudges them back on track of achieving their MBO bonus.

As an example, remember when your parents would ask if your room was clean?  Over time (certainly not immediately), you began to get the sense of when they were going to ask such an important question, so, you made sure your room clean before they could. Then, when they did, you took the pleasure in stating a resounding “Yes!” Eventually, your room was clean more often than not, all because you you were having regular check-ins with your parents about it—and, you were expecting those check-ins, and began to take a little pride in your responsibility.

See where I’m going? If employees know they aren’t going to have to talk about a goal and their progress, they’re going to procrastinate. It’s just human nature. On the flip side, they aren’t going to want to look foolish by having zero progress to report when asked, and the goals they’re reporting on will naturally float to the top of their minds on a more regular basis.

Download our "Ultimate Guide to Sales Compensation Planning" for incentive best practices and everything you need for a sales comp plan design project.
Embrace Technology

To be clear, we aren’t talking about spreadsheets or word processing documents. Yes, they are on a computer, but no they aren’t the best technology for such a situation (or many situations involving compensation, incentives, or rewards).

Employee Performance Management or MBO software like Xactly Objectives allows for flexibility and organization, and the visibility I’ve been talking about. All of this creates the ability to easily adjust goals and bonuses at a moment’s notice should the need come about. On the other hand, multiple spreadsheets just waiting to be infected with human error along with the threads and threads of email communication don’t contribute to the recipe for success.

Other Considerations For the MBO Bonus Maintain Balance

No matter how good your MBO bonus program is, or the amount and quality of communication you have around it all, goals and bonuses will always invoke pressure. So, it’s important you dial back the pressure when it comes to meeting goals, and turn up the balance between achieving those objectives and achieving them in a manner you’d be proud of.

Specifically, goals shouldn’t be presented as “by any means” necessary. While you should push employees to meet their targets, also be mindful of any language that might encourage your people to cut corners or act dishonestly. One way to ease the pressure could be breaking goals down into smaller chunks, to the point where an employee missing one out of three or four smaller targets isn’t as big of a financial deal as missing one large goal making up the majority of the bonus.

Keep Goals Within Reach of the Individual

This isn’t the time for team or departmental goals. Meaning, the achievement of the MBO bonus should be controlled (or at least mostly) by the individual, without having to heavily rely on others.

Now of course, realistically, there are very few tasks that can be completed in a vacuum. Set an individual goal like “increase sales in region X by X%” if the region’s total sales are made up by multiple individuals. If Sales Rep Samuel increases his sales by 20%, but the others fall short, so does the goal, which isn’t fair to Sales Rep Samuel. More on MBO examples.

While the examples above center around sales primarily, MBO bonuses can work for any employee in any industry. How could they improve your organization? Learn more about incentives for each sales role on your team in our “Complete Guide to Sales Team Compensation.”

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With another year coming to a close, New Year’s resolutions and big plans for the future are in the air. We’ll leave the gym goals up to you, but as you start compiling all of the things you want to achieve in 2019, we’d like to recommend adding a few sales-related commitments to your list. Here are six resolutions that will help your sales team hit quota faster—and make your 2019 a more successful and stress-free year.

Download the guide "The Complete Sales Planning Handbook," to discover how you can use sales performance data to strengthen sales capacity planning and performance.
1. Use Data to Drive Sales

The most effective and innovative sales leaders use data to their advantage. If you aren’t embracing data and analytics in your sales organization, you need to start now. A study by CSO Insights found that 94% of world-class sales organizations know why their top sales performers are successful by actively using sales analytics to measure and predict sales performance. Identifying actionable insights, establishing KPIs for your organization, and staying current with your data is key to gaining the competitive advantage in today’s market.

2. Adopt a Continuous Sales Planning Approach

Creating a sales plan that you look at only once a year isn’t cutting it in our dynamic business world. To get the upper hand in 2019, you’ll need real-time information and data readily available at your fingertips. For sales, that means regularly checking your performance against the plan in order to get a read on how well you’re executing. One of the major benefits of continuous planning is that you’re able to catch potential problems and course-correct your plan before those problems become detrimental to your business.

3. Align with Finance

Much of what your sales team does impacts your company’s overall financial plan one way or another—and although you and finance sit in different departments you do have one mutual goal: increasing profitability. How can sales better align with finance in 2019? The answer is simple: share you sales plan and share your data. If you’re able to show finance how hiring next month vs hiring in six months will impact bookings, you’ll be better able to justify headcount spend. You’ll find there’s a positive impact for the whole organization when sales and finance are setting goals together and regularly communicating on their progress.

Hear the full audio from "CXO Fireside Chat: 5 Ways Data Can Elevate Sales Performance Management in 2019" to learn more about how the Xactly finance and sales teams have together transformed sales performance.
4. Set Realistic Quotas

All sales leaders should have high expectations for their teams—but there’s a fine line between an aggressive goal and an unattainable goal. When setting quotas, you should ensure that the majority of your team will be able to hit them; impossible goals are not motivating and reps will be unable to succeed if they’re set up to fail. By making sure your quotas are fair and attainable, you’ll not only be able to keep your employees happy and increase rep retainment, but you’ll also be more likely to deliver accurate sales forecasts

5. Appreciate Sales Ops

If you think sales operations professionals are just number-crunchers, think again. They are an extremely valuable asset to growing organizations. Sales operations know all, see all, and hear all—so if you aren’t already working closely with them—it’s time you start. Make sure they have the data and tools they need in order to help you run a productive and successful sales team, and consult with them often on ways in which you can improve sales practices, strategies, and plans.

P.S. If you don’t have a dedicated sales ops person, make it your top priority to hire one in 2019.

6. Be Proactive in Hiring

Hiring too late can put your sales targets at risk, and we all know hiring good sales reps is no easy task. Data can help you understand the time it takes to hire and ramp reps at your company—but it can also help you analyze how hiring and ramp impact your ability to achieve your sales goals. Can you hit your targets with the sales resources you currently have? How will hiring three months later than you anticipated affect your bookings? Many sales leaders miss the mark in hiring and it negatively impacts their ability to hit their targets. A proactive approach to hiring will always work in your favor.

Go Seize the New Year

By adding these six resolutions to your 2019 sales plan, you’ll be able to impact the behavior of your team and surrounding departments for the better—and you’ll be more equipped to accomplish your company’s sales goals. As you look forward to all the possibilities that this next year may bring, consider hearing more about how Xactly can help set you up for success.

Happy Planning!

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This the fourth blog in a series of sales planning fundamentals being written by Xactly Chief Sales Officer Marc Gemassmer. Read part 1 on sales planning fundamentals, part 2 on ramp time and attrition, and part 3 on quota planning.

Knowing Where to Draw the Lines

So far, in my blog series on sales planning, we’ve looked at:

In today’s post, I’ll talk about territory planning. Territory planning represents the foundation of sales performance management (SPM).

Just consider the trickle down effect. You must have the right territory design in place to accurately allocate quotas. Accurate quota allocation impacts your team’s ability to achieve their anticipated incentive compensation. This, in turn, affects rep satisfaction and—ultimately—the retention of your top performers.

Download our executive guide "Optimizing Sales Territory Design: Sales Management Association 2018 Research Update" to discover the benefits of using data and automation to optimize your sales territory planning.
Is Your Territory Planning Still Stuck in the Dark Ages?

Everything starts with territory planning.

Yet, for something that has such a direct effect on sales success, organizations continue to conduct territory design the same way they did 20 years ago – with spreadsheets and maps.

According to research by the Sales Management Association (SMA) earlier this year:

  • 83% of organizations still use spreadsheets frequently or moderately to design territories
  • 61% of organizations have rarely or never used purpose-built solutions for territory design

To stay competitive, sales organizations need to stay ahead of the curve. With a function so vital to your sales success, why would you still use a spreadsheet?

A Personal Story about Territory Balance

Early in my sales career I had an experience that taught me the value of accurate territory alignment for top line performance.

I was working as a rep. I was a top performer and had 42 accounts—all in California. My manager called me in one day and asked me to identify my top seven accounts—the accounts where I’d focus most of my energy on to make my money the coming year.

I rattled them off, and he said, “Great. Take the remaining 35 accounts and please divvy those up between the other two reps on the team.”

Well, I blew my stack. In fact, I probably should have gotten fired for my response. All I heard was, “I’m taking territory—I’m taking opportunities—away from you.”

The result? That same year, I ended up having my best year as a rep and my best financial year ever.

At the same time, the accounts that I ended up giving up also brought in more revenue for the company. Because the other two reps on the team weren’t spread as thin, they could service those accounts with the right amount of time and attention – adding to the company’s bottom line.

This is a classic example of not leaving money on the table through effective territory design. My boss knew that I didn’t have the ability to focus because my territory was too big. I was stretched too thin, and that was causing problems for the company.

You need to know where to draw the lines. With right-sized territories, you serve existing customers better, uncover new sales opportunities, and balance workload with rep capacity.

Why You Need Data to Draw the Lines

Sales leaders sometimes look to NFL cities as a guideline to create territories. If a city’s big enough to have an NFL team, you should put a rep there, right? So what do you do with cities that have two NFL teams? There goes that idea.

You’re trying all these different things to figure out where to draw the lines. The fact is that NFL team cities don’t show you where to draw the lines. Spreadsheets don’t show you where to draw the lines. Your ‘instinct’ won’t show you where to draw the lines.

In today’s digital world, you need data to draw those lines. Territory alignment must be a data-driven process.

Advanced and automated territory mapping software ensures that data provides the foundation for your territory alignment.

It does this by:

  • Enabling the seamless integration of third party data sources
  • Comparing the balance of territories side-by-side
  • Providing prescriptive recommendations for improvements

Download our executive guide "Optimizing Sales Territory Design: Sales Management Association 2018 Research Update" to discover the benefits of using data and automation to optimize your sales territory planning.
Drive Revenue and Lower the Cost of Sales

This is the goal of every sales leader. As a leader, I’m continuously looking for new ways to reach that goal.

The SMA research uncovers that organizations using automated technology for territory design increase sales performance up to 30 percent more than those that do not.

It’s easy to get bogged down by the daily, weekly and monthly tactics and execution that you absolutely need to manage your organization. However, it’s a longer end game. As leaders, we need to be looking for new approaches to maximize performance and stay ahead of the competition.

If you’re interested in learning how advanced territory planning software can help drive revenue and lower costs for your organization, please contact us. We use this software ourselves and can share how the territory planning process has improved for our own business since adopting it over a year ago.  

Ineffective territory design impacts your entire sales performance. If territories aren’t balanced, you won’t have enough coverage to achieve goals. If your territories aren’t fairly distributed, your quota allocation will be off – hurting your sales team’s motivation and performance.

Don’t overlook this vital piece of sales planning.

Want to learn more about territory planning? Join us Jan 17 for a sales territory mapping webinar with Commvault Director of American Sales Operations, Bob Malandruccolo, to learn how territory planning can improve your sales performance.

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Compensation drives sales behavior, which means your sales incentive plan is a critical factor in sales performance and objective achievement. It takes careful planning and consideration of several different factors. The incentive compensation planning team faces the challenge of balancing executive priorities and designing incentives that motivate reps. The resulting plan is your map to driving sales objective attainment for the year ahead.

Ideally, your organization will begin compensation planning at least 3-6 months before the end of your current fiscal year. However, a strategic sales incentive plan requires ongoing analysis and adjustments throughout the year. To help you kickstart and improve your compensation planning, here are five steps to a competitive sales incentive plan.

Download our "Ultimate Guide to Sales Compensation Planning" for incentive best practices and everything you need for a sales comp plan design project.
1. Set the Foundation

When: 3-6 months before plan rollout

Gather your previous and YTD data

Analyze sales performance data from the year wrapping up, as well as 2-3 years back (you’ll also need this for ASC 606 (IFRS 15) implementation). Understand what incentive structures have worked and which haven’t. Identify areas where your compensation plans have improved over time and where there is still room for improvement.

Assemble your team

Compensation planning requires several key players to ensure all your bases are covered. Your team should have a senior-level representative from six departments: sales, finance, human resources, marketing, compensation administration, and legal. It is also helpful to have a “gut check” with an outside compensation expert or consultant.

Know your planning teammates

It’s important to understand where your planning team stands prior to beginning plan design. Take time to get to know each team member; understand their goals and priorities for the year ahead. The better you understand your compensation “playing field,” the better you can keep planning on track and help prioritize objectives for the incentive plan.

2. Building the Framework

When: 3 months before plan rollout

Align all priorities and objectives

Start your incentive design broadly, then focus on specific key objectives. Take all of the priorities and start narrowing down to the most important. Set all executive priorities so they create an aligned strategy that contributes to the overarching corporate goals.

Determine your capacity needs

With key data in hand, you can build a strong sales plan, which is the basis of your overall sales strategy. This allows you to assess your current sales situation and where you want to be in the coming year. Use the data to understand your needs and consider the size of your salesforce, sales team structure, and your territory coverage and potential to determine what you’ll need to reach company goals.

3. Designing the Details

When: 2 months before rollout

Cultivate the right sales behaviors

Your incentives should be aligned with your main objectives. To do so, each part of your compensation plan should focus on driving the right sales behaviors. Each incentive should motivate reps to perform the behaviors that will help achieve company goals.

Redefine sales roles

It’s important to understand that differing sales roles have different responsibilities, and their compensation plans should reflect this. Your sales managers and their reporting reps should have different compensation plans. Redefine what each sales role is responsible for and align incentives with each roles’ responsibilities.  

Benchmark pay and performance

Data is a valuable asset. Use internal and industry pay and performance data to benchmark your compensation to attract and retain top talent. While your incentive pay should be competitive, avoid underpaying over-performers and over-paying under-performers.

Answer the what-ifs

When planning, we often like to envision the best-case scenario, but you need to know how your plan will perform in every circumstance. Test and forecast for best- and worst-case situations to ensure that your plan can still produce positive revenue even if the results aren’t as good as you hoped and aimed for.

4. Rolling out the Plan

When: 1 month before rollout

Prepare senior leadership to communicate effectively

Your senior leadership team will be the first point of communicating the new plan. Therefore, you need their buy-in if the entire sales force is going to accept the new incentive plan. Start communication with senior leaders and have them pass down the new plan to managers and reps.

Be transparent

Your sales reps need to fully understand the new compensation plan to perform. In this instance over-communication is never a bad thing. Be as transparent as possible in rolling out the new plan details, and allow opportunities for reps to ask questions and give feedback.

Emphasize the benefits

In sales, changes to an incentive plan are often viewed as a bad thing. Your communication team should focus on ensuring that each rep understands the value of the new plan and emphasizing that the changes are for the better. If necessary, take reps aside and have managers demonstrate potential earnings for their teams under the new plan.

Download our "Ultimate Guide to Sales Compensation Planning" for incentive best practices and everything you need for a sales comp plan design project.
5. Analyze Plan Performance

When: Throughout the year, but starting as early as 1 month after implementation

Check in quarterly

Analysis of your new plan should begin almost immediately after implementation depending on your deal flow. At the end of each quarter, dive into plan performance, see if there is a need for a reset or shift in your compensation plan, and implement any changes that are needed. Note any changes to compensation and track metrics closely between quarterly analyses.

Take performance data farther

Your pay and performance data can help improve sales retainment and lower attrition levels. Using predictive analytics, sales leaders can easily identify negative trends and dips in performance to identify reps that are at risk for turnover. Using this data can help shape compensation plans that retain top talent while reaching company goals.

Use your data wisely

As you start to round out your fiscal year, it’s time to begin thinking about the planning process again. Begin compiling the necessary data and analyzing your current plan. Understand the effectiveness of incentives on sales rep retention and motivation as well as progress towards quota attainment. With your strongest asset–data–in hand, you’re ready to start the process all over again.

Making Sales Incentive Plan Analysis a Continuous Process

First and foremost, your sales incentive plan drives sales behaviors. When designed effectively, it drives company objective achievement. Ensuring that your compensation plan is effective should be a year round process. Not only should plan strategically, but you should analyze the plan proactively throughout the year to ensure you stay on track to reach your goals.

Want to learn more about sales incentive plan best practices or have your current plan analyzed? Schedule a consultation with the Xactly Strategic Services team today!

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