Not a member? Sample unlocked content here.
Kevin Grossman: In this CPSA recruitment and talent podcast we'll talk about rewarding performance and the steps recommended to recognize success in sales. Many experts agree that longtime, one-size-fits-all sales compensation practices probably hurt business sales, including caps on commissions that many large companies use, and the timing of when bonuses are received.
These practices decrease the motivations and efforts of high-performing salespeople. More customized and complex reward systems are the way to go. Even though making a compensation system more complex has its downsides, many companies have done so to attract the different types of salespeople they need to succeed while improving retention. That's why there are many key steps when creating the right sales compensation plan, including the right balance of salary and incentives, overall design, deciding on what to pay out on and when, and also including non-monetary incentives, and of course measuring what produces the best results for the business while retaining the top salespeople.
Our guest today is Rob Catalano. Rob is a marketing professional, entrepreneur, speaker, blogger, and social media influencer. He is passionate about helping companies succeed by leveraging technology to make employees successful. As a founding employee, Rob spent the past 10 years at Achievers leading marketing in the company's global expansion in three different countries until its acquisition last year. With his unique experience in HR technology, Rob co-founded Toronto-based WorkTango, a platform that helps managers build authentic relationships and trust with their employees and teams.
Kevin Grossman: Rob, thank-you so much for being on the CPSA Recruitment and Talent Podcast. Before we dive into the rest of the show, why don't you tell us a little bit about who your are and what you do today?
Rob Catalano: Sure. Currently, I've actually just recently co-founded a new company called WorkTango. It's helping companies get insights and feedback from their employees on a regular basis. Really more in the HR tech space. That was kind of a spawn of where I was 10 years previously at a Canadian start-up called Achievers, from start to the end. In that world I was really more in the sales and marketing space, obviously focused on marketing from a finance standpoint, but joined at the hip from the sales organizations. A lot of insight in terms of that world, and even having some of the teams lead up to marketing.
Before that, I was really just more on the marketing agency side of things. I've kind of done a lot in the last 15 or 20 years, my gosh. But a lot surrounded around the sales and marketing space.
Kevin Grossman: Let's talk now about, what does the right incentive plan mean for salespeople? Because it's not always easy to get right, and depending on where you're at with the business, whether it's start-up, high growth, established organization, there's different phases attributes of each of those stages, and what makes a difference in attracting and retaining the right sales people.
Where do you start? How do you get this incentive plan right?
Rob Catalano: The real starting point is not with the sales team, but it's with the company. What I mean by that is, sales leaders really need to start asking themselves, "What's the most important goal that the company needs to achieve?", then aligning the incentive plan with it. For example, are you trying to add new logos, and really improve your customer counts? Is profitability really important to you? Is it more on gaining market share, or the success of your current customer? You may just be doing new product distribution. Whatever it is, once you've identified the goal, then ask yourself, "How can the sales compensation plan be aligned with that objective?".
You mention it, because it really depends on the stage of your company. Start-ups, for example, may be very focused on acquisition and incentive based on that. But if you have a large company, your incentive plan starts looking at things like, more nurturing those customers, and renewals, and those types of items.
Based on that, you must also thing about what roles should have sales incentive plans. Too often people think just about acquisition and those hunters. What about the SDRs in your organization? The account management teams? Or people that create retention? It's really not just the hunters you need to be thinking about, it's the farmers from in sales incentive plan as well.
Those are the things I really start, but after you get through understanding how sales is going to impact the goals in the business, I think it's starting to look at what other levers really matter for your business. From a timing standpoint. How does compensation and timing in terms of compensating your sales people, how does that relate to how long it takes to get customer payback, right? You may want to incent based on payment terms or length of contracts. I think that's one of the levers you need to look at, and also margins. You need to understand where you start hitting positive margins when it comes to compensation, and don't let your sales team sell anything if the margins there. Don't comp them right away. Other things to think about, other than just what that compensation percentage looks like and feels like.
I think the last thing that comes to mind is, everyone thinks of sales compensation just as commission. But is it just salary plus commission? Is it commission only? Are there accelerators? Are the bonuses? Are there non-monetary rewards? There's this whole list of things that people really need to think about and plan, especially as the organization evolves, and really reconsidering it every six to 12 months in terms of where you're at.
I know there's a lot there, but I guess that's really meant to show there's a lot to think about before just diving into a simple incentive plan.
Kevin Grossman: In particular a couple of things that I wanted to just underscore. Looking at, what is it that you're selling, and the margins of that. Whatever that product and service is. I think that's especially critical at any part of a business's life cycle, but particularly in the start-up phase when you're really trying to figure out, "What the heck is it that we're trying to sell, and what is that price point supposed to be? How are we going to compensate the sales people?".
Not only that. The other thing that you mentioned that I know is extremely critical, at least in the space that you and I are quite familiar with in the enterprise software space is, rewarding those account managers, those account executives. Those people that are handling the customers on an ongoing basis, ensuring that they renew their business, first and foremost, and that they're happy and staying happy. You need to reward those individuals as well. I think that's something that we don't talk a lot about when we talk about sales compensation. I think that's important to underscore.
Rob Catalano: Yeah. Actually, in my time at Achievers, I spent a couple years leading what we called our customer success team. We went to a point where we saw these missed opportunities to incentivize, and also highlight the importance of not just making these customers happy and renewing, but up-selling certain new tools or length or contract, etc. Then once we actually put concentrated effort on doing that, it changed the game in terms of what we were doing with our current customers, the growth levels, and something we actually didn't even consider early on. But in our growth phase, we had customers there, and it was an opportunity we wanted to dive into.
Actually, one thing you also mentioned that I think is interesting is on the margin side of things. Everyone talks about margins and numbers, and pen to paper from a contract standpoint. But also, how do you incent people to sell the right deals? Because we know when our sales organization sells us deals that aren't in the box, or those customers leave in three months, at the end of the day that's more painful for the company.
Consider things like, are there clawbacks if a customer leaves in three months? If you align them to sell in the box, and sell the right deals, the sales person will be better for it. The organization will be better for it. Just another consideration about selling the right thing versus just selling.
Kevin Grossman: Exactly, and it's not a one size fits all. I know that's kind of a cliched phrase, but it's really true when it comes to sales in particular. I was having another conversation in another podcast with an individual, talking about onboarding new salespeople, and getting them to ramp quickly so they can start selling from day one. That also is going to be highly dependent on what it is you are selling, what type of organization it is. Whether it's a B to C company, or a B to B company. If you're going to go be selling retail products, that probably more than likely will have a shorter ramp time, and the odds are you'll be able to quote unquote sell from day one.
But if you work for a highly complex B to B company, and whether it's in the software, whatever the products and services are, integration services for multinational global organizations, that's a much more complex sale at the end of the day.
Do you have any thoughts in that regard? Because that's also going to impact the type of incentive and compensation plants that you should be providing, right?
Rob Catalano: Yeah. When I mentioned earlier one of those levers being timing, think about it from putting yourself in the shoes of that individual salesperson. If the sales cycle of your, to your point, complex B to B sale is 12, 18, 24 months, how are you going to be able to be certain that that individual is going to be paid commissions in a reasonable time frame? You may hire sales people, onboard them, and they're not earning their first commission check for the first year, year and a half. Thinking about that, especially if you have longer sales cycles, has to be put in the context of how you set up these plans.
To your point, you may not know right away after implementation takes another six months, if this was the right deal. Whether you have to have other variables there or clawback methods. But timing does play into it. Not just for how long the sales cycle is, but how long to actually pay these individuals. What the pricing structure is; If you're getting everything up front versus a monthly subscription.
Again, a lot plays into the timing end of it, as opposed to just signing and handing over a percentage.
Kevin Grossman: Let's talk more about the metrics and measures when it comes to setting up salary levels, comp plans, and bonuses. What should be considered when you're actually looking at the numbers? Because this is also very much a financial game. Do you base it on the total revenue that should be generated for their company? Again, we've talked a little bit about margin, getting the deal right. What other metrics should be involved in setting up comp plans?
Rob Catalano: I think you mentioned the basics right there. The growth of revenue, there's margins, there's items like that that need to be considered. I also think that there's a look of, what is the split in terms of the overall impact on new sales? I mean that by, are you just generating new sales? Are you generating renewals? Are they up-sells? All those other elements of where you're going to start generating revenue, or bookings, or whatever you want to call it, will be important in identifying that complete plan.
The other thing too is retention of customers. Do you have issues with retention, and need to identify different comp structures to sell the right deals, vs. unprofitable deals? The other thing that comes to mind, I think I already brought about, was the sales cycle length. We need to think about that. So I think there's a lot of other things that revolve around revenue, and getting there. But all those other elements around where revenue comes from, and the margins behind it, I think are just, I think we mentioned a lot of them already. But those are the main four things I think about when it comes to talking comp plans.
Kevin Grossman: Based on everything else, that included, and everything else we've talked about, Rob, what are your final two or three recommendations to ensure sales success, and that top performers are retained? Let me add a little asterisk there. One thing we didn't touch on are the non-monetary incentives that all should be a part of this. That's a big two-parter question, but what are your final recommendations, and how should we consider non-monetary incentives?
Rob Catalano: First one that I think, and this comes sometimes with a lot of debate, is don't put caps on them. If you want to hire the best, and make them successful, and your company successful, don't cap them. They're not going to see huge opportunity to grow there if you start putting sales caps on it. I think another one is just keep them simple. You shouldn't have to be a level 10 Excel wizard to figure out your comp plan. It should be pretty simple for the organization and the individual to know where they stand. Then some level of immediacy. They should know the impact of doing something great or not.
I think that's actually a good segue into the second part about non-monetary. Where commission checks might take awhile to get through, especially in longer sales cycles. But what else are you doing to also keep them retained? Is there a recognition component? Is there a small percentage that is non-monetary that they can get immediately from a rewards standpoint? I think, again, if there's no caps, you keep them simple, and there's immediacy, and you can leverage non-monetary rewards to do that, those are my recommendations to make your top people perform, but also keeping them in the long term.
Kevin Grossman: Excellent. Thank-you Rob, again, for being on the CPSA Podcast. Where can we find more information about Work Tango, and what you're doing today?
Rob Catalano: You can simply go to worktango, or reach out to me on Twitter at @robcatalano, or my LinkedIn profile. I'd be happy to hear from anyone.
Kevin Grossman: All right Rob, thanks again. I look forward to seeing you again in person soon.
Rob Catalano: Yeah, thanks for having me. Take care.
About the Canadian Professional Sales Association
Since 1874, we’ve been developing and serving sales professionals by providing programs, benefits, and resources that help you sell more, and sell smarter.
Contact us today at MemberServices@cpsa.com or 1-888-267-2772 to see how we can help you and your team reach new heights in sales success.
Copyright ©2016 by The Canadian Professional Sales Association
For permissions, contact firstname.lastname@example.org.
Already a member? Login to see full the article.
Not a member? Sample unlocked content here.
Toll free number 1 888 267 2772 (CPSA) Email: email@example.com
Sign in or join us to unlock over 3,000 tools, resources and more