Direction Determines DestinationSales Strategy & Planning Best PracticesMarch 1, 2013

Shawn RossiPrincipal, North American Sales Performance Leader shawn.rossi@mercer.com678-427-8275

MERCER 1

Shawn RossiPrincipal, Sales Performance

Practice Leader

About The Speaker…

• Focused on sales force productivity optimization for 17+ years

• Widely published and frequent speaker – Works published in WorldatWork, SHRM and

other publications– Spoken for WorldatWork, SPM Solution

Provider User Conferences and the Sales Management Association

• Former sales operations strategy executive for a leading consulting company

• Former marketing executive for an eMarketing company specializing in the IT Solution space

• Began sales effectiveness career at Andersen Consulting – focused on CRM and customer care within the telecommunications industry

MERCER

CAPABILITIES & TRAITS OF TOP PERFORMING SALES ORGANIZATIONS

MERCER

Sales performance excellence is centered around the voice of customerSales strategy and planning defines the direction

3

MERCER 4

Ranking the impact of sales performance management levers

4

0%

5%8%

8%8%

11%14%

22%

24%24%

32%38%

41%41%

51%73%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Other

Customer SegmentationSales Coverage/Role/ Channel Modeling

Sales Person Status Changes

Account Definition & MaintenanceField Communication

Recruiting & On-boardingTerritory Definition & Alignment

Sales Compensation AdministrationSales Process & Playbook Definition

Sales Productivity Analysis & ReportingSales Training

Deal/Pipeline Management

Sales Compensation DesignQuota/Goal Setting

Sales Strategy & Planning

% of Companies

Impact of Levers on Sales Productivity(% of surveyed companies who ranked lever within top 4)

MERCER 5

Keeping it in the familyLion’s share of sales strategy & planning owned by sales or sales ops

5

0% 20% 40% 60% 80% 100%

Sales Strategy & Planning

Customer Segmentation

Sales Coverage/Role/Channel Modeling

Sales Process & PlaybookDefinition

Account Definition &Maintenance

Deal/Pipeline Management

Sales Sales Ops Marketing Other (Finance, HR, IT, etc.)

Lever Ownership by Organizational Function

MERCER 66

Top sales performance DNATraits of best in class sales organizations

Maximizing sales time for the right opportunities

Effective Execution

Coverage model and sales process reflects the voice of the customer (VOC)

Attune to the Voice of Customer

Sales role definitionSales role definitionRecruiting & on-boardingSales compensation designQuota/goal setting

Key Sales Organization Characteristics Sales Operations Core Competencies

Customer segmentationSales strategy & planningSales strategy & planningSales training

Hiring the right DNA for the sales role and supporting the right behaviors via aligned

rewards

Right People, Right Behaviors

1

2

3Coverage/deployment modelingCoverage/deployment modelingDeal/pipeline managementSales productivity analysis & reportingSales compensation administration

MERCER

Best practice is to “connect the dots” and align

Sales & Channel Strategy Sales Process Definition & Alignment

1 2 3

4Sales Organization & Role

Design

5Sales Compensation

Design

6

Customer Segmentation & Targeting

Quota Setting

Cust. Seg. Retention Expansion Acquisition

Tier 1 95% $100M $10M

Tier 2 85% $75M $100M

Tier 3 75% $25M $40M

Targets

EVP, Americas

VP, Channel Sales

VP, Direct Sales

Account Manager

Director, Midmarket

Director, Strategic Accounts

Director, Hardware Sales

Account Executive

Sales planning

Targeting strategy

Qualification (go/no-to decision), based on fit & plant capacity

Expansion opportunity

Deal strategy

Pricing / negotiation

Product Planning

Prototyping and Trialing

First order (PO signed)

Win/loss review

4. Commitment

Sales Process

1. Interest 2. Belief 3. Engagement 4. Commitment

Build – Reconcile – RefineBuild – Reconcile – Refine

SeniorManagement

SalesManagement

Salesperson

Senior Management reviews with Sales Manager

and makes adjustments based on trend line data

and corporate expectations

Senior Management reviews with Sales Manager

and makes adjustments based on trend line data

and corporate expectations

Sales Management determines how to

achieve adjusted goals on a Salesperson basis

Sales Management determines how to

achieve adjusted goals on a Salesperson basis

Sales Management strategizes with

Salesperson on how to achieve goal on an

Account basis

Sales Management strategizes with

Salesperson on how to achieve goal on an

Account basis

Salesperson combines data with customer insight to

developAccount-level Planning for

the year

Salesperson combines data with customer insight to

developAccount-level Planning for

the year

Salesperson and Sales Manager review and

agree on the Salesperson’s Account

Plans

Salesperson and Sales Manager review and

agree on the Salesperson’s Account

Plans

Sales Manager rolls up Salespersons’ Account Plans to Sales Manager

Level

Sales Manager rolls up Salespersons’ Account Plans to Sales Manager

Level

MERCER 11

Target pay mix 85/15Target pay mix 85/15

Measures & Weights

Mechanics & Links

NEW ACCOUNTSTOTAL REVENUE

New Accounts = 30% of TI

Individual Contributor: Directional Incentive Comp RecommendationsFor Sales Rep, Account Manager/Executive, National Account Manager

Mix & Upside

Total Target Incentive (TI)

Total Revenue = 70% of TI +

Payout Type Bonus

Thresho ld 85% of Prior Year Re venue

Bonus Payout

Attainment TI Payout 0% - 85% 0

86% - 90% 50%91% - 97% 75%98% - 100% 100%

101%+ +3% for each 1%Cap NoPayment Quarterly

• Total revenue = all revenue generated both for home plant and other plants

• New accounts = number above $40K

• Remove plant EBI/operating budget modifier

Payout Type BonusThreshold None

Bonus Payout

New Accounts TI Payout 1 - 2 $1,5003 - 4 $5,0005 – 8 $7,500

9+ $1,500 per acct.Cap NoPayment Annually

• Payouts and tiers are illustrative and need to be cost modeled

• Consider counting an account >$100K to count as more than 1 account

• Hold upside pay for total revenue until annual goal is achieved

• Goals should be calibrated and set based upon an individual’s market potential

7

DEFINING AN ACTIONABLE SALES STRATEGY

MERCER

Top performing sales organizations answers these key questions during the planning process

1. How will we drive the sales organization to deliver and meet the revenue goals?

2. Where is the revenue going to come from if we are to meet and exceed our goals?

3. Do we have the resources required to cover the market?

4. How can we effectively drive accountability to ensure we make our goals?

Overall Sales Strategy

Go-To-Market Approach

Channel Strategy & Coverage Model

Sales Process & Accountabilities

Account Planning

Strategize

Plan

ExecuteToday’s Focus

9

MERCER

Sound sales strategy answers three key questionsIllustrative outcome

Answering These 3 Simple Questions Provides Foundation for Action

Customer Segment Retention Expansion Acquisition

Tier 1 95% $100M $10M

Tier 2 85% $75M $100M

Tier 3 75% $25M $40M

How

Where

Target Retention: 85% ($850M)Target Expansion: 20% ($200M)Target Acquisition: 15% ($150M)

Prior Year Revenue: $1BGrowth Target: 20% or $1.2B

What

10

MERCER 11

Key Input: Understanding & prioritizing growth componentsStart with knowing your revenue streams

Identifying key business drivers that need to be reinforced through either the sales incentive plan or the sales management process is

critical for strategic alignment.

Identifying key business drivers that need to be reinforced through either the sales incentive plan or the sales management process is

critical for strategic alignment.

Key drivers for success

Customer Scale-BackBeginning

of Year Revenue

End of Year

Revenue

- +

+

=+

-

Starting Year

Revenue

Ending Year

Revenue+

+X%

Metrics to encourage cross-selling LOBs

Align rewards to target specific customer segments

Support a more consultative sales approach to drive

additional client value

Customer Acquisition

Customer Churn

Up-selling &

ExpansionCross -Selling

Price Increases

CustomerScale-Back

Retention New Sales Core Business Net Growth

MERCER

Key Input: Customer segmentation & targetingSegmentation sets the foundation for alignment, targeting drives effectiveness

Universe of Companies

Target List

Targ

etin

g P

roce

ss G

over

nanc

e

Clients

Key Questions To Answer

• What are the sources of data for targeting purposes?

• What is the ideal client profile?

• What are the segmentation criteria?

• What customer segments are most attractive?

• What are the unique needs of the industry and the service lines?

• Who currently covers these accounts and are they effectively selling to them?

• How is the targeting process managed and incorporated into performance management?

• What is the action plan for each of the customer segments?

Ideal Client Profile

Priority Segments

Pursuit Targets

Action Plans

Segmentation

12

MERCER

Profile-based SegmentationProfile-based Segmentation

Leading companies identify the best targets to achieve our growth goalsTargeting approaches

Revenue$

Revenue$$

Revenue$$$

Large Companies

Small Companies

Large Companies

Small Companies

Internal

External

Com

mer

cial

Indu

stria

l

Opportunity-based SegmentationOpportunity-based Segmentation

Illustrative

External Variables• Company size (revenues/# of ee’s)• Industry/Industry sector• Company dynamics (growth rates)• Private vs. public• Degree of organizational change

(M&A activity)

Internal Variables• Revenue• Profitability• Volume• Products purchased• Strength of relationship

Maintain selectively

Maintain minimal

resources/ investment

Withdraw

Evaluate growth

opportunity/ maintain

Maintain minimal

resources/ investment

Maintain selectively

Develop & grow

Develop & grow

Protect & grow

Opportunity HighLow

Low

High

Fit

• Dependency is quality data to segment accounts:• Internal: Finance, Ardexus• External: D&B, Hoovers, US Bureau of Labor

Statistics • Most commonly used approach

• Dependency is Opportunity/Fit Scorecard:• Clearly define what constitutes degree of fit and

scale of opportunity• Progressive companies are increasingly taking this

approach; easier to institute if data quality is an issue13

MERCER

COVERING THE MARKET TO DELIVER RESULTS

MERCER

Top performing, highly efficient sales organizations leverage a holistic channel strategy, especially in hyper competitive, diverse target markets

Target Market

Customer SegmentGeographyProduct/Solution Fit & PreferencesImplementation Requirements

15

MERCER

Consider target market dynamics as well as sales and marketing capabilities when formulating your channel strategy

Channel Selection

External Factors Internal Factors

16

MERCER 17

Customer buying preferences and dynamics provides insight into the optimal channel strategy, coverage model and sales process

LOW HIGHTECHNICAL REQUIREMENTS

PRICE ROIFINANCIAL FOCUS

LOW HIGHKNOWLEDGE OF LOCAL MARKET REQUIRED

ONE MULTIPLENUMBER OF BUYERS/DECISION MAKERS

LOW HIGHPROMINENCE OF PROCUREMENT

Key customer buying factors can vary by product and market…

Examining VOC/ buyer preferences answers the question:How do we best tap the potential of the target customer segment?

MERCER

Direct Sales ChannelSales Objective Service/

Maintain Retain Expand New

Account Executive

Client Managers

Business Development Managers

Inside Sales(Lead Gen)

Inside Sales(Revenue)

Sales Operations

Product / Technical Specialists

Delivery / Implementation

Coverage links channel, roles and sales strategyExample coverage model for complex, B2B solution sale

Ove

rlay

&

Supp

ort

Rol

es

= Cover

Dire

ct S

ales

R

oles

18

MERCER

World class sales organizations define and align sales roles holistically as the role definition is critical in driving effectiveness and accountability

Sales Role

Customer SegmentGeography

Product/Solution Channel

Revenue Stream

Sales Process

19

MERCER

ACHIEVING DESIRED OUTCOMES…GROWTH IS FIRST PRIORITY

MERCER

Sales Process Step Identify Opportunity Qualify Propose Close Implement Care/

Service Renew

Client Managers I I C C A A A

Business Development

ManagersA A A A C I I

Inside Sales(Lead Gen) A A

Inside Sales(Revenue) A A A A I I A

Sales Operations C C C I I I C

Product / Technical Specialists C C R C C

Delivery / Implementation R R C

Clearly aligning sales roles and the VOC driven sales process is a key lever for accountability and positive outcomes

Sale

s R

oles

Supp

ort R

oles

Illustrative Direct Channel RACI (R = Responsible, A = Accountable, C = Consulted, I = Informed) 21

MERCER

Benchmarking studies reveal significant opportunity within the existing customer base…and account planning is an enabler to realize growth

Revenue TrendsRevenue Trends OpportunityOpportunity

Existing Customers

New Customers

Source: Sales Executive Council Benchmarking data¹ A “solution” was defined as an effort that monetizes a service, an integration effort, or a contractual arrangement sole alongside core products

Existing CustomersLeverage account plan as your strategic roadmap to expand customer relationships – what strategies will you take to strengthen and grow the relationship?

New CustomersLeverage account plan as a tool to guide the sales process – what is your position relative to the competition and how will you communicate (or sell) your value proposition?

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MERCER

• A disciplined and systematic framework to manage the relationship lifecycle

• The vast majority of customers interviewed said that they would welcome a formalized, joint account planning process

93% of World-Class Sales Organizations jointly set long-term objectives with key/strategic accounts, in comparison to just 35% of other organizations

Effective execution requires account-level planningAn account plan should capture where you are today, where you want to go and an action plan to help you achieve your goals

• Encourages reps to take a forward-thinking view of the relationship

• Connects company’s goals and customer goals

• Enables the company to be more proactive in aligning ideas to the customers needs

• Serves as a roadmap toward long-term growth

• Elevates ability and improves consistency of strategic thinking

• Increase growth rates• Higher account satisfaction and

retention• Increase cross-product and cross-

plant integration

Account PlanAccount Plan OutcomesOutcomes

IllustrativeAccount Name: Industry Sector:

Name of Buyer Customer Needs Company Strengths: Company Weaknesses:

1. 1.

2. 2.

3. 3.

4. 4.

Connecting our Value to the Customer’s Needs Our StrategyValue Proposition Validated?

Investments We Will Make Target Revenue

Possible Actions Action Plan Who When

Account Name: Industry Sector:

Name of Buyer Customer Needs Company Strengths: Company Weaknesses:

1. 1.

2. 2.

3. 3.

4. 4.

Connecting our Value to the Customer’s Needs Our StrategyValue Proposition Validated?

Investments We Will Make Target Revenue

Possible Actions Action Plan Who When

Und

erst

and

the

Cus

tom

erD

eter

min

e th

e St

rate

gyD

evel

op

Act

ion

Plan

23

MERCER

Warning signs for potential sales strategy gaps

24

MERCER

Putting theory into effective action

Ideal Future State (What should we do?)

Feasibility (What can we do given current resources?)

25

Next Steps

1. Align with VOCTransform long term sales strategy and execution to better align with best practices

Clarify/improve GTM approach, segments, roles, accountabilities, processes, account planning, etc…

MERCER 26

THANK YOU!

26

Shawn Rossi Principal, Sales Performance Practice Leader

MercerShawn.Rossi@mercer.com

678.427.8275