Best Practices for Sales Compensation Management

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Best Practices for Sales Compensation Management
Track Sales Operations

• Christopher W. Cabrera, Xactly Corporation
• Jeff Williams, IronPort Systems

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Xactly Corporation
Christopher W. Cabrera
Founder, President and CEO
ccabrera_at_xactlycorp.com
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Xactly Corporation

• The leader in automated on-demand sales
  compensation management
• 100 pure-play on-demand
• Multi-tenant application/multi-tenant database
• Services Oriented Architecture (SOA)
• Flexible, rules-based compensation engine
• Hosting facility MCIs MAE West, SAS 70, Type
  II
• Headquartered in San Jose, CA
• Executive staff 30 years of combined sales
  compensation domain experience

A new paradigm in automating sales compensation
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Xactly Corporation

• Benefits to Sales and Finance

Align payments to performance
Automate manual tasks - SOX
Improve sales rep behavior
Create competitive advantage
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Xactly Corporation

• Benefits to Sales
• Drive better performance
• Increase revenue
• On-line commission statements
• Contests, SPIFs
• Model future commissions
• On-line comp plans with electronic signature

Enhance Performance Legally
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Xactly Corporation

• Benefits to Finance
• SOX compliance - According to recent study 91
  of spreadsheets have errors
• Companies typically spend between 8-10 of gross
  revenues in compensation (ex. 150 sales people x
  80,00012M)
• Reduce error rates
• Model plans, organizations, SPIFs, scenarios
• Revenue analysis
• Maximize profitability

Being a non-conformist is fun except when it
comes to SOX!
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Xactly Corporation

• Who is Being Paid Variably?
• Direct sales reps/managers
• Indirect sales reps/managers
• Telesales reps/managers
• Channel reps/managers
• OEM reps/managers
• Marketing reps/managers
• Systems engineers/managers

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Xactly Corporation

• Who is Managing the Headache?
• Compensation administrator
• Financial analyst
• Sales operations
• Finance operations

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Xactly Corporation

• How Is It Managed Today?
• Predominantly calculated using Excel
• Most companies pay 30 days in arrears
• Usually provide an Excel spreadsheet statement
  with payment
• Rarely provide web-based reporting during the
  month
• Companies tend to dumb down their compensation
  plans
• Some companies over complicate their plans

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Leapfrog the On-Premise Paradigm
Manual
On-Premise
On-demand

• Inexpensive
• Error Prone
• Poor Reporting
• Limited web-based visibility

• Rich functionality
• Web-based reporting
• SOX Compliance
• No software license
• No hardware
• Rapid Installations
• No Upgrades

• Rich functionality
• Web-based reporting
• SOX Compliance
• Expensive
• License
• HW
• 9-12 mos install
• Upgrades

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Dont just pave the cow paths

• Incent on discount percent

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I pay commissions on the NET revenue- So I am
discouraging discounting

• You decide to sell your 1M home
• Sign a real estate agent to represent you 3
• Your real estate sales person is excited
• Because when they sell your house they get
• 30,000.
• First day on market you get an offer for 900k
• What is your agent incented to do?
• There is a better way?

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Dont just pave the cow paths

• Incent on discount percent
• Vary commission rates by product
• Pay on margin

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I pay commissions on ALL products so I am
incenting my reps to sell ALL the products ALL
the time

• Not all products are created equal
• Reps WILL take the path of least resistance
• Reps WILL gravitate to the higher value products

Low margin high revenue
High margin low revenue
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Dont just pave the cow paths

• Incent on discount percent
• Vary commission rates by product
• Pay on margin
• Create SPIFs or contests

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I pay commissions on ALL products ALL the time,
so I dont need to use SPIFs

• SPIFs can move obsolete products
• SPIFs can encourage learning about new products
• SPIFs can allow for quick competitive responses
• SPIFs can be FUN!
• SPIFs work.

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IronPort Systems
Jeff Williams
Vice President of North American Sales
jw_at_ironport.com
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IronPort Systems

• Leading gateway security provider for
  organizations ranging from small businesses to
  the Global 2000
• 100 sales reps in 35 countries

INDUSTRY Email/web security
EMPLOYEES 400
GEOGRAPHY Global
USERS 100
PRODUCT(S) USED SFA, Service Support
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IronPort Systems Key Challenges

• Business Challenges
• Excel-based system for managing sales
  compensation was no longer meeting the companys
  needs adequately
• Changing/working with large amounts of data (100
  sales professionals) in a spreadsheet was a
  nightmare
• Sales reps flying blind no real time
  visibility
• Technology Challenges
• Separate CRM and sales compensation systems
• Desire to leverage and extend Salesforce
  investment

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IronPort Systems The Solution

• Solution Criteria
• Leveraged existing Salesforce investment
• Reduce TCO of compensation management
• Capex
• Opex
• Data security and SOX compliance
• Seamless integration

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IronPort Systems Results

• What were the results?
• Improved margins
• Rapid deployment
• Improved compliance and reporting operations
• Increased trust and efficiencies from a sales
  perspective
• Ultimately increased sales productivity

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QUESTION ANSWER SESSION
Christopher W. Cabrera
Founder, President and CEO
Jeff Williams
Vice President, North American Sales