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Sales Compensation Creativity with Standard Functionality or Customization

Sales Compensation Creativity with Standard Functionality or Customization Presented by Creative Consulting Solutions, Inc. Presenters Lisa Barthel-Daluge, CEO/Managing Director Jill Lorenz, Consulting Manager Agenda OSC Highlights OSC Comp Plan Structure OSC Release Calculation Features

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Sales Compensation Creativity with Standard Functionality or Customization

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  1. Sales CompensationCreativity with Standard Functionality or Customization Presented by Creative Consulting Solutions, Inc.

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

  3. 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

  4. OSC Highlights • Commission Calculation --> Plan Element • Revenue • Unit • Manual • Discount • Margin • Draw

  5. 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)

  6. OSC Comp Plan Structure

  7. 3i Revenue Unit Draw Manual Discount Margin Formulas Intelligent Calculation Integrate with Oracle Field Sales OSC Release Calculation Features 10.7 NCA • Revenue • Unit • Draw • Manual 11.03 • Revenue • Unit • Draw • Manual • Discount • Margin • Formulas

  8. 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 Key Suggestions for Design

  9. 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.

  10. Commission Situation/Suggestion • Situation #1 Example: • Setup the Sales Rep and Region Manager in the Sales Rep Hierarchy

  11. 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.

  12. Commission Situation/Suggestion • Situation #2 Example

  13. 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 <=0.

  14. 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.

  15. Commission Situation/Suggestion • Situation #4 Example

  16. 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.

  17. 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.

  18. 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.

  19. 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

  20. 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.

  21. 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.

  22. 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)

  23. 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.

  24. 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

  25. Commission Situation/Suggestion • Open to Audience Situations • Suggestions

  26. 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

  27. Closing Remarks and Questions & Answers

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