Sales Compensation Creativity with Standard Functionality or Customization

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Sales CompensationCreativity with Standard
Functionality or Customization

• Presented by Creative Consulting Solutions, Inc.

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Presenters

• Lisa Barthel-Daluge, CEO/Managing Director
• Jill Lorenz, Consulting Manager

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Agenda

• OSC Highlights
• OSC Comp Plan Structure
• OSC Release Calculation Features
• Key Suggestions for Design
• Commission Situation and Suggestion
• Customization or Comp Plan/Business Plan
  Simplification
• Questions and Answers

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OSC Highlights

• Commission Calculation --gt Plan Element
• Revenue
• Unit
• Manual
• Discount
• Margin
• Draw

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OSC Highlights

• Commission Groupings
• Revenue Classes
• Rules
• Commission Calculations
• Rate Tables
• Discount Tables
• Paid on Invoice (Line Level)
• Paid on Payment of Invoice (Line Level)

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OSC Comp Plan Structure
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OSC Release Calculation Features

• 3i
• Revenue
• Unit
• Draw
• Manual
• Discount
• Margin
• Formulas
• Intelligent Calculation
• Integrate with Oracle Field Sales

• 11.03
• Revenue
• Unit
• Draw
• Manual
• Discount
• Margin
• Formulas

• 10.7 NCA
• Revenue
• Unit
• Draw
• Manual

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Key Suggestions for Design

• Streamline where possible
• Group into higher level commission buckets
• Minimize give/take back
• Minimize exceptions
• Settle with reps as they move positions
• Be open to adjustments of commission philosophy

• Commission exactly as you do today
  customizations
• Think outside the box
• Consistency in structure/process
• Utilize rates to drive different performance
  rather than different elements

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Commission Situation/Suggestion

• Situation 1 Company reports information at
  multiple levels but only pays commission at a few
  levels.
• Suggestions
• Place the levels for commission purposes in the
  hierarchy.
• Setup a reporting structure using either/or
  areas/regions for reports or a data warehouse
  environment.

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Commission Situation/Suggestion

• Situation 1 Example
• Setup the Sales Rep and Region Manager in the
  Sales Rep Hierarchy

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Commission Situation/Suggestion

• Situation 2 Commission is paid on an extensive
  amount of elements causing a very complex setup
  and operating process.
• Suggestion
• Try to group similar components together.
• Determine if rate variations would cause the same
  desired result.
• Determine if the end commission results warrants
  the various revenue class components.
• Determine if an increase in base or reaches the
  same goal.

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Commission Situation/Suggestion

• Situation 2 Example

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Commission Situation/Suggestion

• Situation 3 Commission is paid when the invoice
  is paid in full.
• Suggestions
• Change the approach to pay the commission when
  the invoice line is paid. OR
• Customize the collection routine to only collect
  payment lines when the invoice amount due is lt0.

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Commission Situation/Suggestion

• Situation 4 Different tiers are used for both
  the rate tables and the discounts associated to
  the rate tables.
• Suggestions
• Modify the tiers to be consistent.
• Modify the rates themselves and make the
  discounts consistent to obtain the desired
  results.

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Commission Situation/Suggestion

• Situation 4 Example

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Commission Situation/Suggestion

• Situation 5 The company has unique processing
  for term reps, rep movement, promotions, etc.
• Suggestions
• Settle the reps at all movement points.
• Assign the rep a new rep number so data flows
  correctly when a heavy hierarchy situation
  exists.
• Make the position comp plans large enough so
  plans do not change frequently.

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Commission Situation/Suggestion

• Situation 5 Example
• Sales rep to make a territory transition
• Current Territory
• Sells Camping Equipment, Golf Equipment and
  Skiing Equipment.
• Commissions Rolls up to District Manager for
  reporting purposes.
• Location Minnesota
• Will be splitting Commissions with new rep for
  next three years.
• Future Territory
• Sells Water Equipment, Biking Equipment and
  Golf Equipment.
• Commissions Rolls up to new manager for
  reporting purposes.
• Location California
• Will be splitting Commissions with old rep for
  next three years.

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Commission Situation/Suggestion

• Situation 6 The company has commission
  components and also allows for exceptions.
• Suggestions
• Remove the majority of exception processing.
• Make consistent business processing rules for
  each unique event.
• Minimize your not/except for processing as this
  usually results in exponential amounts of revenue
  classes.

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Commission Situation/Suggestion

• Situation 6 Example
• 10 commission is paid for selling a tent and any
  camping related equipment, for the exception of
  the third week in May when they will receive 12
  on sleeping bags that were sold in the last week
  of April.
• Solution Manual
• A decision has been made to run a context to
  boost sales. The contest will pay an extra 5 to
  sales reps in California only for selling a golf
  bag along with a full set of Callaway golf clubs.
• Solution Manual

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Commission Situation/Suggestion

• Situation 7 The company has commission
  percentages setup at fraction of percents.
• Suggestions
• Usually not real large issue.
• Try to limit the percent tiers and the variation
  of ranges.

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Commission Situation/Suggestion

• Situation 8 The company pays commission on
  estimated sales and then constantly adjusts as
  actual revenue comes in.
• Suggestions
• Change the approach to pay the commission when
  invoicing occurs or when payment of the invoice
  lines occurs.
• Write an interface from OE when the actual order
  is placed and remove the constant adjustment
  process.

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Commission Situation/Suggestion

• Situation 8 Example
• This typically happens in the service industry,
  for instance having new carpet installed.
• An estimate is given (Includes price of carpet
  and installation)
• Estimate is put into system
• Sales rep receives commissions
• Work is completed
• Invoice is cut for different amount
• An adjustment has to made (manual or custom)

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Commission Situation/Suggestion

• Situation 9 The company has goals for the
  quarter. The reps do not achieve the quarterly
  goal and then achieves a later quarter goal at a
  higher level, they pay the previous
  non-performing quarters.
• Suggestions
• Change the goal to an annual goal.
• Increase the goals for cyclical variations.

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Commission Situation/Suggestion

• Situation 9 Example
• Sales rep has a poor 1st quarter
• Does not reach 1st quarter goals
• Has a good 2nd quarter
• Receives 2nd quarter bonus along with the 1st
  quarter bonus that he did not previously receive

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Commission Situation/Suggestion

• Open to Audience Situations
• Suggestions

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Customization or Comp Plan/Business Plan
Simplification

• Fully review options and end results of standard
  functionality
• Always consider simplification/streamlining over
  customization
• Customize for key performance differentiators
  only
• Customize only for areas resulting in large
  compensation differences

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Closing Remarks and Questions Answers