Blog for Sales Performance and Commissions Professionals

Corporate greed: is it driven by shareholder value, e.g. earnings per share, stock price, dividends in a public company, equity valuation in preparation for an IPO or selloff in a private company? Perhaps all of the above. Do senior executives, including sales leaders unknowingly contribute to this greed or is there a willful disregard of laws and regulations in pursuit of higher personal earnings & reward, i.e. incentives?

A case in point is Wells Fargo Bank and its Community Banking Division. Last week, the Consumer Financial Protection Bureau, working with the Office of the Comptroller of the Currency and the city of Los Angeles imposed a $185 million fine on Wells Fargo for defrauding customers in order to generate more revenue.

Much of that fraud took place in the retail banking and credit card units of the community banking division. According to Wells Fargo, over 5,300 employees were fired in the past 5 years for the unauthorized opening of accounts. These accounts were fraudulently opened in customer names in order to hit unrealistic sales goals. Astonishingly, it would appear that Wells Fargo was aware of this practice for five years, but did nothing to willfully stop it.

So what will be the fallout of this debacle? Loss of confidence in the consumer banking industry and likely, a new wave of regulations from DC. Whether or not future regulatory stipulations are enacted, SPM vendors should take note.

Would a Sales Performance Management tool have further enabled this activity or could SPM have prevented it? Regardless of the technology used or not used, it comes down to the people in charge who allowed this gaming of the system to occur.

Many questions still remain:

  • Where were the checks and balances in terms of variable pay to assignment allocations for the sellers and their managers?
  • How were the performance bonuses for sales management measured and who oversaw this?
  • Why weren’t alarm bells going off and red flags raised over the fact that 5,300 people were terminated over a 5-year period? No one thought to ask why?
  • How was the leadership team able to game the system?

Can SPM tools, with all their analytic capabilities, advanced workflow and communication features, be a solution to help prevent this from happening again? Or, is it just a sad reality that no matter what technology exists, simple human greed and despicable executive behavior will always triumph over the best of code and firewalls.

The Economic Truth About SPM

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Recently, I posted a blog looking back at the evolution of SPM, from the automation of sales commission calculations through today’s sophisticated sales performance management solutions. The evolution began with a tactical efficiency improvement tool and advanced to a strategic planning and sales force efficacy platform with applications that can enable, manage, analyze and plan in support of forecasting to corporate objectives.

So what does all this amount to? For one, spending 6 figures or more to implement a SPM solution is not a trivial matter. There is relative parity among the software vendors when it comes to software licensing fees in competitive evaluations, assuming of course that it’s an “oranges to oranges” comparison. Which is another reason why it’s critical to understand your requirements and align them to must-have functional attributes. On the other hand, the cost of implementing the software, along with associated support services is another story, and can vary greatly.

Over the last 15 years I have seen implementation estimates for the same project vary by 6 figures between vendors and sometimes between the vendor and its partners. One example is a project where the services estimate exceeded $450,000 across 2-3 vendor solutions for less than 500 payees. With a cost and variance like this, if I were responsible for the budget, I would kill it, and that is precisely what happened. Uncertainty amplifies risk and risk without mitigating factors, become nullified decisions.

Assuming the software will be delivered as a service via the Cloud in a subscription model, most organizations will itemize the software as an operational expense or OPEX, as most in this business are aware. Implementation services are typically capitalized, meaning a capital expense or Capex. Capex budgets are a battle for line item allocation and this is where a lot of SPM projects can be delayed or canceled. Renting software is one thing; implementing SPM software with 6 figure price tags, or more, plus paying for ongoing support, can require political stewardship and EMOTIONAL buy-in, high up.

Where’s The Beef?

When the evaluation of SPM software fails to deliver a predetermined value quotient, e.g., emotional buy-in, the project is prone to losing funding or getting bumped in favor of another project. One of the larger detractors with SPM is the lack of perceived value, which is overshadowed by the risk assumed by senior leadership. Financial models, hurdle rates, total economic impact, ROI and so on, become less of a factor if the software cannot provide ample evidence that it can help executive leadership capitalize and execute on corporate strategy. SPM is not viewed as a critical path at the ‘C’ suite level because the trajectory of the strategic outcome can be perceived as falling short of the goal line.

SPM software demonstrations, proof of concepts or workshops are not delivered with this these things in mind. Most vendors focus on either the tactical gains or just the performance improvements for sales operations and compensation teams. They fall short on demonstrating the overall impact to sustainability, growth and the financial benefits to the company as a whole. RFP’s can also do an organization more harm than good because many times they fail to synthesize the collective business benefits and outcomes of implementing a SPM solution. Rather, RFP’s can focus too heavily on the technical and functional attributes that are aligned with efficiency gains and short range performance improvements.

At a recent SPM conference, it was mentioned by a top tier analyst firm, that out of an estimated 250 SPM related vendor evaluations in 2015, 75% ended in a no-decision. That equates to a mere 63 projects out of 250 that made it to the vendor selection stage. The point being, a no-decision is usually linked directly to risk and the lack of value perceived by senior decision makers, the economic buyer being a key member of that team, among others. In addition, of these 250 evaluations, over 100 were RFP driven.

One Possible Financial Option to Help Mitigate Risk

A unique concept being offered by at least one SPM vendor is bundling the software licensing fees in a standard subscription model (SaaS) and the implementation services as a single monthly payment. For the first 12 months, customers can pay off or pay down implementation costs together with their software subscription fees. After 12 months, the customer will have either paid off the services or would carry a balance to be paid under extended terms.

An approach like this does a couple of things. First, it commits the vendor to perform against all SLA’s and manage the implementation to as close to perfection as possible since their implementation fees are at risk over an extended period of time. Second, it mitigates risk for the customer, allowing a predetermined expense to be amortized, thus having predictable costs associated with each phase of the project against a capital budget.

I think this is a model that has the potential of catching on. Perhaps the reseller channel should take note, provided they are financially sound, since most are private companies and not pressured by Wall Street and the SEC. It would also allow the partner to deepen their relationship with customers, leveraging experience working with customer data, opening future opportunities to provide ongoing support, managed services and more.

The cost of implementations is not going down. While some vendors tout rapid implementation times and a faster time to value, the reality is, more time will be required to achieve a full, go-live production environment.  This includes administrative and end-user training, parallel testing and fixing initial bugs uncovered as a result of early software testing, both in the software itself and in workflow and design. In fact, like many other software implementations at the enterprise level and even some smaller, SPM implementations never really end, it’s just the beginning.

About the Author: For more than 15 years, Tom Troiano has been a successful senior sales executive with the leading Sales Performance Management vendors including IBM / Varicent, Synygy (Now Optymyze), Callidus Cloud and Oracle. Throughout these years he has helped 100’s of companies across many industries evolve from spreadsheets and homegrown tools to today’s data driven SPM solutions supported by a strong business case. Tom has been in sales and sales management his entire career. Starting in 1980, where he led a sales team at a small startup that grew into a big sales team while designing his first sales compensation tools.

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    Sales Performance Management, A Look Back

    Back when I started my professional selling career over 35 years ago, the term sales performance management meant sitting though weekly sales meetings and performance reviews every 3 months. Sales performance management in those days had little to do with analyzing productivity, team performance, sales enablement or incentive compensation, except, if you weren’t performing, i.e. hitting your numbers, sales management took the keys to the company car in return for your last check.

    24 Carat Gold Calculators

    From the early to mid-90’s, sales compensation management software started to hit the market. There wasn’t much science or empirical data to drive business outcomes based on historical or regression analysis, just a more streamlined and efficient calculator of sales commissions. This software was sometimes referred to as a ‘24 carat calculator’ because of its overall cost relative to its utility. A lot of IT organizations began building rudimentary commission calculators and reporting tools more cheaply. In fact, my team worked with our IT folks at Textron Systems to build such a proprietary system in 1990 using Lotus Symphony (before IBM) on Unix / Sun Solaris.

    From SCM to EIM to ICM and Now SPM…

    Over the next decade or so, sales compensation management (SCM) as it became known, morphed into EIM or enterprise incentive management as finance looked to increase its focus, and control, over incentive spend relative to performance. Then, by the early to mid-2000’s, incentive compensation management (ICM) became a more common definition as incentive compensation management moved across lines of business to now include other forms of incentives, both cash and non-cash for sales and non-sales staff with varying degrees of reporting and workflow.

    As the new millennium was nearing the end of its first decade, sales performance management (SPM) became the defining terminology. With advanced reporting and analytics, territory and quota planning, improved workflow and flexible user interfaces, SPM software was now the quintessential tool designed to align sales performance with company goals. Sales operations suddenly had a new face, with new responsibilities and for some, a seat at the table.

    From a technology perspective, the adoption of the Cloud (SaaS) and advanced integration technologies made the economics more attractive. The newer generations of SPM software became technically superior over just a couple of years prior. For better or worse, functionality also became quite similar across vendor offerings making vendor selection even more challenging, at least visually.

    SPM Software, The Devil’s in The Details and The Requirements

    Today, there are nearly 30 software vendors, including the leading ERP vendors, that perform many of the common SPM functional attributes. Out of these 30 software vendors, fewer than 10 are considered to be best of breed SPM software vendors. Of these best of breed vendors, most can satisfy at least 70% to 80% of the typical functional requirements found in technically challenging RFP’s. However, any one vendor can fall short on reporting, analytics, workflow, territory & quota planning, data volumes, managing overly complex compensation plans – the list goes on.

    This is why it is imperative for stakeholders to take ownership of defining, gathering and documenting requirements for their particular line of business. The most successful implementations of a SPM solution occur when line of business owners are directly involved from the onset, executive sponsorship is established and realistic project goals are set. SPM projects are like ERP projects in some ways; there are a lot of fingerprints touching various segments effecting a lot of people, the way they work and the financial impact to the company. SPM is not a compartmentalized nor a departmentalized tool.

    Human Capital Management Software

    Human Capital Management (HCM), Human Resource Information Systems (HRIS) and Human Resource Management Systems (HRMS) also have variable compensation management capabilities. A few have rudimentary sales incentive compensation management functionality but none can manage the volumes of transactional sales data, perform complex sales crediting, perform simulated scenario modeling of plans, territories and quotas then analyze this data for outcomes against a prescribed forecast. That is a fundamental difference between HR tools and SPM, currently.

    Many SPM tools can also calculate bonuses, assign and measure MBO’s while enabling scorecard functionality, a core function for HR tools. But, they cannot perform many of the core workforce management functions such as salary administration, equity or stock distribution, deferred compensation and merit pay, together known as total compensation or total rewards. In addition, HCM tools provide a unified view across all employees that can analyze role-based performance, measure skill levels and prescribe best-fit candidates for a particular job and provide a holistic view of the total workforce.

    If a top tier HCM or HRMS vendor were to acquire a top tier SPM vendor, or, the other way, around, then integrating the two successfully, while offering either as a stand-alone solution or together as one, that would be a market moving game changer. I’m surprised that hasn’t happened up to this point given the speculation and rumors that have circulated throughout the industry for years. I think further consolidation of the SPM market is inevitable, which can be a good thing.

    About the Author: For more than 15 years, Tom Troiano has been a successful senior sales executive with the leading Sales Performance Management vendors including IBM / Varicent, Synygy (Now Optymyze), Callidus Cloud and Oracle. Throughout these years he has helped 100’s of companies across many industries evolve from spreadsheets and homegrown tools to today’s data driven SPM solutions supported by a strong business case. Tom has been in sales and sales management his entire career. Starting in 1980, where he led a sales team at a small startup that grew into a big sales team while designing his first sales compensation tools.

    Data Quality for SPM Operations

    SPM operation, especially the Incentive Compensation part of it, is all about handling data. Poor data quality can significantly
    drive up the operational costs and cause the sales team to lose faith in the calculations. Good data is essential to producing correct pay calculations and reports, allowing sales team to focus on delivering sales, rather than dealing with discrepancies.

    But, having good clean data is not enough. SPM operations are time sensitive, and the data across various underlying systems is every changing. Hence proper data synchronization (across business and IT systems) is important as well.  Different Reporting Cycles, Payroll Cutoffs, and Period specific Adjustments can’t be handled accurately, until data is clean, and well synchronized.

    The following check list will help guide the decisions to deliver consistent and accurate data to the SPM system:

    1. Choose the data source carefully

    Companies that have a single source for revenue and customer sales data are more likely to have good data quality, thus generating the most accurate reports. Data quality suffers when companies have multiple production systems and data repositories that are managed by multiple teams.  If these systems and repositories are not in sync because of different adjustment and reconciliation processes, the data quality will be poor.  To insure integrity of the SMP reports, these companies must design requirements that sync up the various data sources and utilize the same data that is used for all other company reports.

    2. Consider full data loads vs. incremental transactions

    Based on the cost and time it takes to process sales transactions, the most common transaction loads are incremental. Because companies make periodic payments to Sales, the SPM data must be date-stamped and stored. This insures that future transactions do not alter or compromise the historical values previously used for pay calculations. Many core business systems provide the infrastructure to load incremental data without compromising the historical data.  Companies with known data issues however, may resort to full YTD data loads prior to the close of each pay period.  Still others still, design compensation calculations that factor the YTD data changes into the current pay period.

    Companies should decide on the type of data load best suited for them, based on factors impacting their sales crediting policies such as, type of business, number of transactions, and volume of revenue adjustments.

    3.Determine the impact of adjustment transaction

    Adjusting sales results involves different types of transactions, including contract revisions, cancellations, discounts, claims, and pricing revisions.  Three important principles should be followed to ensure good SPM data quality:

    • SPM data should be loaded in sync with adjustments posted in the core systems and those posted to management reporting systems
    • Do not attempt duplicate postings of core data adjustments directly into the SPM data loads. This could be a costly move.
    • Create a separate category for “SPM Only” Pay For Performance adjustments (small volume critical pay adjustments) that can be posted within a specific pay period for correcting payouts. By year end all final adjustments will be posted to the core systems and these SPM adjustments will show a net of zero.


    4. Reconcile with core systems before running compensation calculations

    Even the best designed data acquisition and validation processes need to be reconciled with the core system before pay calculations are executed. This is easily done by reconciling the SPM data loads with core system results during the period-ending data load process.  Make sure that the revenue and other key metric values are reconciled to the same reporting periods, so that SPM calculations are in sync with other business systems.

    5. Provide an easy way to create reports and data files for sales and support teams

    Add customized reports and data extracting options, specifically designed as inquiry tools, to the SPM system.  This will enable Sales Support and others to easily create reports whenever needed.

    6. Retain “locked” multiyear data available for SPM analytics

    The ‘locking’ functionality in many SPM systems allows access to detailed, multiyear performance data and provides a major advantage when producing sales team compensation analytics, internal pay plan performance trends, and business performance metrics.

    In summary, the first priority in the development of a SPM Pay and Performance reporting process is to design requirements that will produce superior data quality. This includes dictating that the SPM data is in sync with your company’s sales results reporting and business metrics.  Poor data quality will lead to a lack of confidence in the SPM system and Operations team, creating unease and discontent among your Sales team.

    Managing sales compensation programs takes planning; focus and a daily drive towards the organizations sales performance management objectives.  To discuss this further feel free to email us at

    About the Author:  George O’Connell has on premise and SaaS expertise in the area of Sales Performance Management (SPM) and Incentive Compensation Management (ICM). His experience includes design, development, operations, governance, and analytics for a company with $2.5 billion in sales to over 500,000 customers.   He’s managed SPM operations for a wide range of sales channels including telephone sales, sales executive channels, union contracts, new business start-ups, call centers, third party vendors, sales management plans, and director / sales VP compensation.

    Author:  George O’Connell

    I have observed a wide range of organizational structures for Sales Performance Management (SPM) operations. Compared to any other organizational operation, SPM operations are somewhat an oddball because there is no single department in the organization that is a natural fit to take full ownership. Roles and responsibilities are often undefined and spread across multiple functional groups.  There isn’t a standard best demonstrated structure that fits all businesses. The SPM operational responsibilities are by and large split evenly between the HR, Finance, and Sales Operations teams.

    To ensure the most effective practices, the organizational responsibilities should be assigned to the most qualified, and experienced resources available in the organization.  Anticipated business changes, in addition to the existing workload, should be a factor in deciding how to build SPM organization.

    If, at any given time, a particular department needs to focus their attention on other critical business issues, they should be excused from SPM’s operational responsibilities. For example, HR may be dealing with high turnover, core HR system installations, or a lack of experienced resources needed to manage programming staff.  Likewise, Finance and Sales Management, and Sales Operations will have their own specific challenges.  In fact, Sales Operations may be viewed as too closely controlled by Sales Management to be appropriate gate keepers for commissions and bonus payments.  Nevertheless, each one of the organizational options can be designed with all the appropriate management controls.

    The right resources in any one of the three departments can produce excellent SPM operations results. For most companies, an evaluation of current talent and performance is needed to select the team with the highest probability for success.  Once the dedicated SPM operations group has been selected, it can function successfully under the guidance of any one of the three departments.

    The following three steps will help guide a company through the organizational set up:

    SPM Advisory Board

    The company should setup an SPM advisory board to oversee and approve changes to compensation plans and processes. The approval process will involve many aspects, such as legal issues, HR compensation policy, cost analytics, strategic financial decisions, sales management objectives, systems capacity, security, performance issues, etc.  The senior advisory board should be the governing body that makes the final decisions for all SPM related projects and investments.  A well functioning board will give the SPM operations team clear and timely direction so they can deliver effectively on companywide pay for performance objectives.

    The senior leadership group should be comprised of representatives from HR, Finance, Legal, Sales Management, and Technology.  Once the most qualified department is selected for direct SPM responsibilities, the board should monitor the performance of the dedicated team responsible for all SPM operations.  The most senior SPM manager should have a seat at the advisory board meetings.

    RACI Chart

    Once the SPM organization is formed, the detailed responsibilities and scheduled interaction with the advisory board should be documented.  Every company should put together a RACI chart to outline various functions involved in SPM and clearly define responsibilities and ownerships around these. Sample RACI Chart can be downloaded here. The best SPM organizations have “end to end” process responsibilities–from data capture, vendor management, SPM system design, plan development, pay calculations, testing, and reporting, to on-going support.   Effective management of these end to end processes insures that the SPM team delivers accurate and timely results critical to maintaining excellence in sales performance.

    Another important role of the SPM team is to keep the advisory board apprised of systems development, data or calculation issues, company sales payout trends, resource requirements, and all other operational factors impacting pay plans, projects, and cost.

    Flexible Staffing Model

    SPM operations usually require close interaction with the company’s IT organization, HR payroll staff, Financial Planning, Sales Management, New Product Marketing, and Legal departments.   Due to the quick turnaround requirements, and the impact of revised or new annual compensation plans, SPM is best managed with a flexible resource pool.

    Incremental resources from other departments, vendors, or outside consulting firms are frequently required to meet project deadlines.   It is unlikely that a cost effective Sales Operations team can deliver a new compensation plan within 60 to 90 days using only in-house staff and management.  SPM organizational resource needs are fluid, project based, and sometimes seasonal.  The quality and timeliness of the incremental resources are often critical to the success of delivering pay for performance responsibilities.

    In summary, org structure for SPM operations is unique for every company. An SPM advisory board can provide guidance and decisiveness. A RACI chart helps clarifying who does what, and creating a flexible staffing model will ensure an effective SPM operation.

    About the Author:  George O’Connell has on premise and SaaS expertise in the area of Sales Performance Management (SPM) and Incentive Compensation Management (ICM). His experience includes design, development, operations, governance, and analytics for a company with $2.5 billion in sales to over 500,000 customers.   He has managed SPM operations for a wide range of sales channels including telephone sales, sales executive channels, union contracts, new business start-ups, call centers, third party vendors, sales management plans, and director / sales VP compensation.

    “Broken” SPM / ICM Systems

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    “Our incentive compensation management software is broken. We need something new.”

    Over the past few months I’ve heard that statement and similar sentiments from at least four companies. All were using Gartner defined Sales Performance Management (SPM) “Leaders” ) yet all believed their SPM system was failing them. The companies complained about the lack of flexibility to adapt to their changes and some were moving to manual processes to get commission calculated.

    Speaking further with these companies highlighted the same core issue at each firm and it had very little to do with their SPM technology and everything to do with their staffing decisions. For instance, one of these companies had been successfully operating their sales compensation system for over three years. Three years of success and then the only trained person to maintain and operate the system left the company.  Then, much to the company’s surprise, everything came to a screeching halt. The company blamed the software for not being flexible enough and set off to find a new system.

    While it’s easier to blame a vendor than to accept responsibility, this company was operating with a naïve assumption that anyone could step in at any time and keep the system running.  IC systems are complex and require the proper staffing, training, and maintenance to keep them operating smoothly. Single points of failure are never safe (would you fly with only one pilot?). Maybe it was the original sales pitch that told them how easy things would be that led them to this point? Maybe it was a short term situation that turned into a long term situation? Regardless, if you want to minimize your risk of a service disruption and make proper use of your SPM solutions, take the following steps.

    1. Document
    You must maintain some minimum level of documentation. In the case cited above, there was nothing in writing – it was all in the head of the one user. Start with a simple ‘run book’ that documents the major steps in your commission cycle (i.e., data loading, calculations, QC steps, outputs) as well as a Data Flow Diagram. Each cycle, make note of special cases and exceptions and use the history of multiple cycles to guide you to process improvements.

    2. Staff Appropriately and Cross-train
    It’s important to have skilled people (more than one) supporting your IC system. Companies all too often fail to appreciate what it takes to manage an SPM system well – trusting too much in the tool’s much advertised flexibility. Companies that do this well, acknowledge that this is a specialized skill set and requires people who are adept at managing multiple constituencies and who are able to translate requirements to produce deliverables. Be sure to anticipate and address peak staffing needs as well by cross-training beyond your core support team (for example, you can have the person who is responsible for quota maintenance also learn your ICM system).

    3. Stay Current
    SPM/ICM vendors are constantly rolling out new features. Pay attention to those and proactively work to incorporate those into your configuration. That means staying on (or near) the latest version of the software as well as investing in training – both base-level training to new staff and advanced training to more tenured staff. Join and participate in local user group meetings and attend the vendor’s national conference (i.e., Callidus’s C3 and IBM’s Vision) each year.

    4. Archive Old Components
    Be sure to allow for time to archive and remove unused components (rules, data, reports, etc.) from your system to keep as clean as possible. Doing so extends the overall life of your incentive compensation system, keeps the processing speeds faster, and allows for faster configuration changes.

    In summary, managing sales compensation programs takes considerable focus and proper staffing. Recognizing and addressing this is critical to its successful operation. To discuss this further feel free to email us at or call us at (408) 813-1443.

    About the Author: Dan Ganse has 20 years of deep expertise in the area of Sales Performance Management (SPM) and Incentive Compensation Management (ICM). His experience includes assisting customers in all aspects of enterprise-wide incentive management and brings a unique combination of business and technology expertise to address customers’ incentive management issues.

    How To Communicate Compensation Plans Effectively

    2015 is nearly upon us and many of you are preparing to roll out new sales compensation plans and supporting documentation. How do you ensure that your plan document has all the right ingredients and is communicated to the sales reps in the best way? Here are a few tips you may find useful.

    Distribute the Plan Document Early
    It is critical distribute the plan documentation as close as possible to the start of the plan year, preferably within the first week of the new plan year. At least two states – California (AB 1396) and New York (Section 191 of the Labor Law) – require that employees who are paid on commission must be provided a written contract which sets forth the method by which the commission shall be computed and paid. These laws further require that the employer provide a signed copy of the commission agreement to the employee and obtain a signed receipt for it. Delaying indefinitely (or skipping) formal documentation is no longer simply a bad business practice but put you on the wrong side of the law. Do whatever you can to get your plans out on time.

    Setup Webinars
    Often, major changes are incorporated in the new sales plan and simply pushing the document to the sales reps is not enough. If there are significant changes to the design, setup webinars with the reps and walk them through the plan components. Give them a platform to ask questions and clarify; their questions may even give you important inputs to make suitable changes to the document.

    Provide Clear Guidance on How to Sign the Document
    Many systems allow you to capture an electronic signature. However, sales reps often plead ignorance about this when clear instructions are not provided. Focus on a couple of things here: First, provide a clear guidance on the signature process. Second, clearly indicate the due date and send reminder emails couple of days before the due date. Send follow up emails to those who miss the deadline and copy their direct manager. And consider what some companies do – withhold commission payments until you have a signature on file.

    Make Your Plan Document Lean and Precise
    We often see plan documents that are too bulky which make them tedious to read and hard to follow. Most of the bulk comes from the Terms & Conditions of the compensation policy. Focus the document on the plan components and corresponding business objectives and make the Terms & Conditions as a common appendix.

    Consider Adding a Clause About Windfall Payments
    You may periodically experience a windfall sale – a large sale that the selling rep didn’t have much influence over. This often translates to a large, singular payment of two to five times the annual target commission target. Instead of simply paying this out, consider the safeguard action of having a windfall clause in your plan like “Under extraordinary circumstances, the company has the right to adjust the total commission payment based on a common sense business approach.”

    Use Charts and Graphs for Visual Appeal
    The compensation plan document can be a great motivational tool. If you include graphs and charts which creates an imagery of how compensation figures grows when attainment levels rise, it attracts your sales reps attention immediately. A picture paints a thousand words!

    Communicate Linked Components Clearly and Concisely
    Some plans will link the payment of one component with the performance of another component. For example, a sales rep could carry both a product and a service quota. Companies that link components don’t want a rep to be satisfied with payment on a single component at the expense of the other. Typically these plans work in such a way that the rep does not get a product accelerator unless he also meets the service quota (or vice versa). Numeric examples should be used to help the rep understand their compensation under various scenarios. Each scenario can depict a service-product quota break up and projected earnings.

    Cover a Single Position or a Role
    There can be situations where an individual has carried out the responsibilities of two roles for a limited period of time. For example, take the case of a manager who has filled in for a sales rep who has quit the company. For such cases, do not create a new plan. The individual should be assigned two separate plans for each position or handled as an exception and with senior management approval.

    Now that you are ready to go out with your plan, one last thing!

    Make sure the plan document is reviewed and blessed by all stakeholders (i.e., HR, Legal, Sales, Finance) before you communicate to your sales reps. The last thing you want is to make yet more changes to the plan document after the rollout.

    Make it a good year!

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  • Mayflower

    The Mayflower’s voyage was a test of will and survival. The pilgrims had sold nearly all their possessions and worked hard to pay for their passage. The voyage was a stormy and unpleasant one with many of the passengers so seasick they could scarcely get up. After more than two miserable months on the Atlantic Ocean, the band of 102 people finally managed to reach the New World.

    The colonists spent the first winter, which only 53 passengers and half the crew survived, living onboard the Mayflower. Once they moved ashore, the colonists faced even more challenges. During their first winter in America, more than half of the Plymouth colonists died from malnutrition, disease and exposure to the harsh New England weather. Without the help of the area’s native people, it is likely that none of the colonists would have survived. An English-speaking Pawtuxet named Samoset helped the colonists form an alliance with the local Wampanoags, who taught them how to hunt, forge, and grow local crops. At the end of the next summer, the Plymouth colonists celebrated their first successful harvest with a three-day festival of thanksgiving. We still commemorate this feast today.

    Sales Performance Management professionals can learn a few lessons from the way the pilgrims battled the odds and demonstrated their survival instincts. We listed some of them below:

    1. Have faith in your purpose
    The pilgrims were known for their unwavering conviction of reaching their destination. They had a strong purpose to settle and had full faith in their belief in God and confidence in themselves to survive the testing ordeals.

    From an SPM professional’s standpoint, having a clear goal or purpose is crucial for sustaining your performance. You should clearly understand how your role in sales operations enriches the effectiveness of the salesforce and how the belief in your own contribution supports and drives the strategic goals of the entire organization.

    2. Practice Discipline
    The Pilgrims demonstrated an example of disciplined living, not only by completing the long and difficult voyage but also the way they had survived in a new and completely unknown geography by being adaptable and flexible. Their ethic of self-mastery and discipline is a learning deck for SPM professionals.

    An SPM professional’s job has multiple facets. You cannot afford to lose sight of one at the expense of another. You must constantly work towards making the salesforce more productive. You work on providing better analysis to help them make better and faster decisions, shortening the sales cycles, increasing the sales frequency, and increasing sales deal size.

    It’s about understanding your role, committing to the process and delivery schedule, understand how you fit into your role, communicating with the key stakeholders, letting them understand and appreciate your role, and taking proactive steps rather than just let wait for people to come and ask for things.

    The practice of discipline to drive salesforce efficiency with flexibility and adjust processes to meet business demands is the hallmark of your success.

    3. Care About Others
    The Pilgrims had social concern. They lived with locals who looked different than then did and had a different religion and culture. They knew that they were citizens of another world, but they sought to improve the world they were passing through. The Pilgrims made their new world better, not by tearing down the old, but by constructive work and fair dealings with their new neighbors.

    In an SPM professional’s world, there are multiple stakeholders like Sales, Finance, Human Resources, Legal and IT involved in a sales incentive plan. You cannot adapt a reckless approach to deal with all these stakeholders. You need to be politically savvy to interface with them while maintaining the focus on supporting the sales organization.

    In addition to the internal stakeholders, pay attention to your external ‘customers’ – the salesforce itself. Understand how business conditions and natural disasters can affect them. For instance, when Hurricane Katrina struck in 2005, many of the leading sales organizations adapted to the situation to give quota relief to their salesforces. Remember, your salesforce is your customer. Be compassionate and flexible. Make exceptions to the rules at the right times and for the right reasons to make your sales team function better.

    4. Dream Great Dreams
    The Pilgrims dreamed great dreams. They dreamed of a haven for themselves and for their children. The Pilgrims’ strength of spirit was forged by a strong faith in God, tough discipline, a foresight, and by regular habits of winning against odds.

    As an SPM professional, do not lose yourself in your regular daily activities. Take a holistic approach and look at your function as the binding key between the corporate business goals and sales execution. Put on your system thinking cap to build structured processes around quota setting, territory alignments, sales compensation management et al, not for the sole purpose of moving up the value chain as an individual contributor. You are here to help the entire corporation in achieving its mission. Think big!

    5. Triumph of survival instinct
    The pilgrims exhibited tremendous fighting instincts during the voyage. After battling the storms and sea sickness for more than two months, when they finally reached the Plymouth Rock, they had no home or food. It was winter, and most of them were too weak, cold and hungry, to survive. However, they had the indomitable spirit and mental toughness to survive the trying conditions.

    SPM systems have their own storms and trying conditions – they face frequent data disruptions and continuous changes in strategies and internal IT systems. There are numerous dependencies and external factors that can very quickly bring in significant changes to business processes, incentive plans, and resource availability. This is the reality of your job.

    In spite of these difficulties you have to be able to adapt and guide the processes and procedures to support an organizational goal – to make your salesforce succeed in the field. It may be cliché but “change is the only constant factor.” You cannot do much to stop or avoid the changes, but you can accept the changes and adapt your systems and processes to adjust to those changes.

    Be tough and let your survival instinct come to the forefront. You will always triumph at the end!

    Have a safe and happy Thanksgiving!

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  • Filed under: Sales Performance Management
  • Key Questions to Ask SPM Vendors Before You Buy

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    You have done the hard work with internal assessments of your sales performance management needs distributing RFIs and RFPs. Now you are getting vendors to come in for sales talks, and you better be prepared to ask them the tough questions.

    Spectrum and its consultants have worked with well over 100 firms deploying SPM systems and based on our experiences, we have assimilated some key questions that will help you in the final selection process.

    The questions fall under three categories – product features, pricing, and support.

    1) Product Features

    Basic feature evaluation is covered by most teams. Here are some of the important but often ignored areas to question the vendors:

    SaaS versus On-Premise – If vendors offer both on-premise and SaaS deployments, understand if the vendor has a clear preference. In case of many vendors, only the SaaS product is being actively managed and upgraded.

    Data Integration – Does the SPM product have a built-in ETL tool or does it rely upon other external ETL tools? Some SPM products include this while others do not. Typically if they’re included your end users can do more ‘heavier lifting’ within the product.

    Reporting – You should understand what it takes to build new reports. This task is easier in some tools than others. Are there any out-of-the-box reports available? Are they useful for your organization?

    Workflow – Another important question to ask your vendors is about the workflow possibilities. Ask the vendor if the software handles disputes, territory alignments, quotas (setting, communication, approval, and/or relief). Can the system generate email and other types of alerts?

    Mobile Use – Look at how the end user experience is on mobile devices, especially for sales reps. How easily is that experience supported (heavy and specific mobile configuration efforts or part of general definition that then translate well to mobile)? Understand if the vendor has an app that they use or if this is done via web browser.

    2) Pricing

    Your vendors may provide you a range of pricing models. You have to spend some time to understand the pricing parameters of the contract and understand what may increase the prices. If it is SaaS model bid, you have to size up the hardware and build out databases. If the actual data used is much more than planned, you will end up paying more (sometimes a lot more) money to the vendor. Ask questions to understand the storage variables and how sensitive this is.

    Most companies also base pricing on payee or overall user counts. Get your vendors to provide the incremental cost if your users increase as well as saving if your user counts fall.

    Be sure to ask about the pricing after the initial term and seek a rate hike cap on the future pricing. Check if there is an early termination fee, and if so, seek to eliminate or negotiate this fee lower.

    Don’t forget to ask about not-so-obvious costs related to implementation, training, upgrades, test environments, data retention, data archival, data backup, etc.

    For implementation fees, you may have fixed bid contracts on the table which come with a set of fixed assumptions. Often these assumptions are broad enough that they leave your implementation vendor plenty of leeway to seek additional fees. Pay attention to these assumptions and seek to clarify them so you really understand the implementation parameters of your project.

    3) Support

    Be sure to clarify the ongoing support model with your vendor – what’s available for purchase and what you are in fact purchasing.

    You want to first make sure your vendor provides a helpdesk and/or web support and then look for a service level agreement (SLA) on response times for fixing bugs and addressing product defects. Understand what self-help tools are available (i.e., online help, knowledge bases, user community, etc) and work to gauge their level of helpfulness (some are not actively managed and are more to simply say a YES on RFP responses).

    Most vendors provide product support but not configuration support. You need to understand whether the support is a skill you want to build and maintain in-house or if you prefer to use outside assistance. If you want outside help, some of the software vendors provide this as an optional service as do specialized 3rd party SPM/ICM service providers, including Spectrum Technologies.

    Last but not the least don’t limit your reference checks to customers provided by the vendor. Use your network to find out more customer references independently to gather as much information as possible to guide your decision.

    Good luck with your upcoming vendor evaluation!  To discuss this further feel free to email us at or call us at (408)-813-1443.

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  • Filed under: SaaS, Sales Performance Management, SPM Selection
  • 5 Reasons Why SPM Projects Fail


    Sales Performance Management (SPM) projects are complex and most don’t complete on time or within budget.  As a specialized SPM services firm, Spectrum has worked on numerous SPM implementations with a variety of technologies.  The following our five of the top reasons why SPM implementations run into issues and our take on what can be done to mitigate those risks.

    # 1 – Lack of Executive Sponsorship

    SPM projects involve participation from multiple business functions like Sales, Finance, HR, Legal et al.  There is always a possibility of participants losing momentum on project tasks, as they also need to focus on other regular job.  The presence of a senior leader as an Executive Sponsor of the SPM project, who everyone looks up to for directions and guidance, helps in keeping the focus of the team on the project priorities.

    Decision making in a multi-dimensional team comprised of mid-level managers is a challenge.  The project runs into time pressure frequently.  The executive sponsor understands the success factors and constraints too well.  With the authority to take quick decisions, he helps aligning the team to his directives and ensures that timelines are met.

    # 2 – Poor Project Governance Model

    Since multiple functional departments have participants in the project, involving all the stakeholders throughout the life cycle of the project is an absolute necessity.  A consistent, proactive and methodical communication platform ensures that the all the stakeholders are well informed of all the elements of the system that are being impacted during the project.  It is important to form the steering committee very early in the project that lays down a simple and transparent project governance model, identified the dependencies and risks in the project, establish a versatile project plan involving all stakeholder participation and a sound  communication platform that keeps the directives clear.

    # 3 – External Dependencies

    SPM projects impact multiple functions such as Sales, Finance, Legal, HR, IT etc, and at the same time get impacted by multiple functions.  This puts SPM projects at high risk, especially the projects with long project timelines.

    Several external factors like – a new executive, launch of a new product line, an M&A announcement, economic downturn or legal lawsuits, can very quickly bring in significant changes to business processes, incentive plans and resource availability.  The new VP of Sales walks in with new visionary ideas that put the in-flight project back to design phase!  An enhancement applied to ERP system breaks the data interface and so on.

    It is important to realize that SPM projects are not happening in silo.  There are lots of dependencies!  While it is impossible to predict the unforeseen, one has to put in a conscious effort to look beyond the horizon and anticipate the factors that may impact the project.  If there are too many changes expected in the near term, you should consider pushing out the project kick off.

    # 4 – Poor Resource Planning

    Operational and project responsibilities are different, and it makes sense to keep them separate.

    Can the driver of the car also be made responsible for engine tune up?  Yeah, maybe, but generally you wouldn’t expect one person to take on the dual role.  However, in SPM projects, we often see the commission operations team carrying on the added responsibilities for supporting the new project, especially testing.  This leads to severe operational conflict with project tasks.

    Like any other complex projects, different specialists are needed to be assigned to specific roles.  Bigger the project, greater will be the resource needs.  If it is so deemed that operational team has to be the one doing testing as well, then one has to plan for the month/quarter ends, when operational team would have no bandwidth for the project.  Don’t assume 100% availability.

    Planning of vendor resources is also important.  I have seen projects where multiple vendor resources are on-boarded on the project kick off, even though the ground work of the project is not yet completed!  It’s like getting construction workers on the ground when the floor plan is not even approved.  This burns a lot of money over idle vendor resources causing budget crunch for later phases of the project.

    # 5 – Testing Approach

    Most popular testing approaches are – Parallel Run and Test Case based testing.  Most often there is not much thought given to which approach is best suited for the project.

    Parallel Run approach requires running the legacy (or current) system in parallel with the new (or enhanced) system, and comparing the results for a quarter or two.  This approach does not work, if there are significant changes in the plan design and expected results.  I have seen testing resources working arduously to identify and explain the gaps between the two systems.  If the new plan design is very different, or the old system has lots of known issues, then why waste time in doing reconciliation!  In such a situation, test case based approach is more suitable. However, building numerous test cases, test data, and expected results, is a time and effort intensive approach.

    One needs to evaluate the two options, and take a conscious decision on which testing approach is most suited. Very often a hybrid approach works much better.  Compare the results with the old system where there are no changes, and build exhaustive test cases for some selected modules.

    About this Blog’s Author
    Maneesh Gupta is the founder and Managing Partner at Spectrum Technologies.  Spectrum is a Silicon Valley firm providing specialized services in the area of Sales Performance Management Systems since 2006.  Maneesh can be reached at


    Spectrum Technologies

    Spectrum’s ICM team consists of technology and business professionals with solid expertise in implementing and supporting various ICM packages and Commission systems. Spectrum has been involved in ICM implementations since 2004 and our team has an outstanding track record of successful deployments at several Fortune 500 companies. For more information, please visit

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