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SMA Webcast June 07, 2011 Presented by © Copyright 2011 The Sales Management Association Compensating Sales Channels

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Page 1: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

SMA Webcast

June 07, 2011

Presented by

© Copyright 2011 The Sales Management Association

Compensating Sales Channels

Page 2: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

About the Sales Management Association

A global, cross-industry professional association for sales

operations and sales management.

Focused in providing research, case studies, training, peer

networking, and professional development to our membership.

Fostering a community of thought-leaders, service providers,

academics, and practitioners.

1

© 2011 The Sales Management Association . All rights reserved

Learn More: www.salesmanagement.org

JUN

23

Workshop: “Mastering Sales Management”

This one-day workshop offers an advanced survey of competencies

shared by high performing sales leaders, practical insights into

enhancing sales management impact, and proven models for

structuring essential sales management activities.

Held at DePaul University’s Center for Sales Leadership in Chicago.

Join Us for this upcoming SMA event

Slide 2

Page 3: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Today’s Presenters

© 2011 The Sales Management Association . All rights reserved

Anne Coughlan John L. and Helen Kellogg Professor of Marketing, Kellogg School of Management

Northwestern University

Slide 3

Fred Sass Director, Product Marketing

Varicent Software Inc.

Scott Sands National Practice Leader Sales Force Effectiveness

AON Hewitt

Page 4: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Presenters’ Background

4 Slide 4

© 2011 The Sales Management Association . All rights reserved

Anne Coughlan

• John L. & Helen Kellogg Professor at the Kellogg School of

Management with 30 years of teaching experience

• Anne‟s main research interests are in the areas of distribution

channels, sales force management and compensation, and pricing.

• Lead author of Marketing Channels (now in its seventh edition from

Prentice Hall). Area Editor and member of the Editorial Board of

Marketing Science, Co-Editor of the SSRN Quantitative Marketing

Research Network, and as a member of the Editorial Board for the

Review of Marketing Science.

• Ph.D. in Economics at Stanford University.

Scott Sands

• Principal and Sales Force Effectiveness Practice Leader at AON

Hewitt. Scott has 18 years of experience with leading professional

service firms, including Briggs & Sands Consulting, Sibson

Consulting, The Alexander Group, and Watson Wyatt.

• An expert in Sales Effectiveness, Compensation, Marketing

Program Implementation, Process Re-engineering and Change

Management.

• A frequent author and speaker at national conferences. He co-

authored the WorldatWork’s bestselling book Sales Compensation

Essentials.

Page 5: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Presenters’ Background

5 Slide 5

© 2011 The Sales Management Association . All rights reserved

Fred Sass

• Over 20 years of experience in technology companies – AT&T,

ConceptWave Software, Tira Wireless, Casero, Varicent Software

• Responsible for product marketing strategy and execution for the

Varicent Sales Performance Management (SPM) software solution

• MBA from McMaster University

Page 6: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Compensating Sales Channels

June 07, 2011

Presented by

© Copyright 2011 Anne T. Coughlan. All rights reserved.

Incentives to Coordinate Channel Sales

Efforts

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Pricing Through a Channel: Challenges and Solutions

Slide 7

© 2011 Anne T. Coughlan. Used with permission by The Sales Management Association . All rights reserved

Problem Selected Solutions

Lack of pricing

control

MAP (minimum advertised price) policies

SPIFFS

Asymmetric

partners Functional discounts

Motivating

multiple

behaviors

SPIFFs

Functional discounts

Sales contests

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MAP (Minimum Advertised Pricing) Policies

Slide 8

© 2011 Anne T. Coughlan. Used with permission by The Sales Management Association . All rights reserved

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SPIFFS

Slide 9

© 2011 Anne T. Coughlan. Used with permission by The Sales Management Association . All rights reserved

Page 10: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Functional Discounts

Slide 10

© 2011 Anne T. Coughlan. Used with permission by The Sales Management Association . All rights reserved

Page 11: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Sales Contests

Slide 11

© 2011 Anne T. Coughlan. Used with permission by The Sales Management Association . All rights reserved

Page 12: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

These Are Only the Tip of the Iceberg…

Slide 12

© 2011 Anne T. Coughlan. Used with permission by The Sales Management Association . All rights reserved

Page 13: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Compensating Sales Channels

June 07, 2011

Presented by

© Copyright 2011 The Sales Management Association

Paying for Value

Page 14: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

How do channel partners deliver value?

Channel Coverage Intimacy Loyalty Bundling Service Maint. Staff Inventory Logistics

Field Direct

Low High High Medium Medium Medium High Medium Medium

Inside Direct

Medium Medium High Low Low Low Medium Low Low

OEM Low High Low High High High High High High

VAR Medium High Low High High Medium High High Medium

SI Medium High Low High High Low High Low Low

Distrib. High Low Low High Low Medium Medium High High

Agents Medium Medium Medium Medium Medium Medium Medium Low Medium

Retail Medium Medium Medium Medium High Medium Medium Medium High

Internet High Low Low Low Low Low Low Low Low

Slide 14

© 2011 AON Hewitt. Used with permission by The Sales Management Association . All rights reserved

Page 15: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

How do internal channel managers add value?

Channel Mgr Direct Rep $150K $150K

= 5 customers at $100K per

or $4 million direct at 50% margins

vs $32 million indirect at 30% margins

($150K / $2.0 million = 7.5% of profit)

($150K / $9.6 million = 1.6% of profit)

Slide 15

© 2011 AON Hewitt. Used with permission by The Sales Management Association . All rights reserved

Page 16: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Channel Trends

• Globalization

• Managed Conflict

• Process Division

• Disintermediation

• Technology

• Customer Data

• Margin Pressure

• Comparable Pay Levels

• Less Variable Incentive

• Improving Performance Data – Sales In

– Sales Out

• Separate Pay Programs for Channel Recruitment vs Management

• More Shared Goals

• MBOs for Training

Macro Trends Compensation Trends

Slide 16

© 2011 AON Hewitt. Used with permission by The Sales Management Association . All rights reserved

Page 17: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

© Copyright 2011 The Sales Management Association

June 7, 2011

Presented by

Compensating Sales Channels

Enabling Channels with SPM Software

Fred Sass Director, Product Marketing

Varicent Software Inc.

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Discussion Topics

Slide 18

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

• About Varicent Software

• Channel Management as Part of SPM

• Five Key Requirements for Compensating

Channels

• Questions & Answers

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About Varicent Software

Slide 19

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Addressing the problem that existing Incentive Compensation Systems are slow, rigid and error prone

Typical Problems

Too much time and effort to administer and maintain

incentive compensation processes

Sales create their own „shadow accounting systems‟

Challenged to meet audit and compliance requirements

Difficult to manage third party channel relationships

Some customers…

Page 20: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Example of a Complex Distribution Channel

Slide 20

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Insurance

Carrier

Agencies

Customers

Direct

Indep. Agents Brokers / Dealers

Wholesalers

Captive Agents

Page 21: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Channel Management as Part of SPM

Slide 21

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Incentive Compensation

Calculations, adjustments …

Territory Management

Assign, manage splits ...

Quota Planning

Assign quotas, adjust ...

Channel Management

Direct & indirect, eligibility ...

Report / Analyze / Model / Plan

Page 22: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

5 Key Requirements for Compensating Channels

Slide 22

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Accurately pay commissions for 3rd party organizations

In-depth insight into sales performance for each channel

Ensure compensation plan eligibility

1

2

3

Single view of internal and external sales resources 4

Model and analyze sales & distribution strategies 5

Page 23: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Commission Statement

ETR Miami

Souljoy

of America

1) Accurately Pay Your Channels

Page 24: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

2) Insights Into Channel Performance

Slide 24

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Distribution Channel Report

Top Products

Top Channels

P1095

P1132

P576d

P5136

P1076

35g WAN router $141,560

Satellite receiver $111,080

Transponder backup $75,976

HRS switches $64,484

Testing console $18,079

Sales

A&G Technologies $123,188 $7,042

Doomsfield Inc. $77,969 $3,721

HighSpeed Solutions $73,249 $3,135

Smith & Johnson Ltd $66,979 $2,168

Jensen Sales & Service $66,794 $2,964

Sales Commissions

Page 25: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Slide 25

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

2) Insights Into Channel Performance

Page 26: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

3) Ensure Compensation Plan Eligibility

Slide 26

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Page 27: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

4) Single View of All Sales Resources

Slide 27

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Page 28: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

4) Single View of All Sales Resources

Slide 28

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Page 29: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

5) Model & Analyze Distribution Strategies

Slide 29

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Page 30: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

Summing up the ROI

Slide 30

© 2011 Varicent Software Inc. Used with permission by The Sales Management Association . All rights reserved

Administrative Process Efficiencies

Reduce errors by more than 90%

Reduce processes times by more than 40%

Reduce IT and administrative staffing by more than 50%

Sales Effectiveness

Through 2012, enterprises will miss the equivalent of 5% to 10%

of annual sales as “lost opportunities” that could have been

captures through improved management of sales territories,

quotas and compensation plans.

Page 31: Presented by -   · PDF file• and Sales Force Effectiveness Practice Leader at AON Hewitt ... • MBOs for Training ... Compensating Sales Channels

© Copyright 2010 The Sales Management Association

Thank You.