better tools, better process, better performance best-in-class spm deployments mirrored by xactly customer

Between September and November 2012, Aberdeen surveyed 312 end-user organizations about their sales effectiveness practices and accomplishments, specifically to understand how sales perf

May 2013

Better Tools, Better Process, Better

Performance: Best-in-Class SPM Deployments

Mirrored by Xactly Customers

One of the most crucial challenges facing today’s business-to-business (B2B)

companies is the care and feeding of their professional sales staff, considering

that competitive threats, savvy buyers, and ongoing budgetary constraints put

pressure on sales leadership and operational managers to do more with less

Fortunately, a select group of top-performing enterprises reveals, in recent

Aberdeen research, an actionable combination of best practices and technology

adoption that successfully meets this challenge This Research Brief will outline a

series of these protocols that can be adopted by under-performing sales

organizations seeking to improve their business results, as well as how a subset

group of Xactly customer survey respondents relate to these practices and

performance levels

Between September and November 2012, Aberdeen surveyed 312 end-user

organizations about their sales effectiveness practices and accomplishments,

specifically to understand how sales performance management (SPM) is most

effectively deployed by Best-in-Class firms (sidebar) and detailed in Motivate,

Incent, Compensate, Enable: Sales Performance Management Best Practices (January

2013) Ten percent (10%) of these survey respondents indicated Xactly as their

technology provider around SPM, and we see in Figure 1 that sales reps for

Figure 1: Xactly Customers Field More Successful Sellers

Source: Aberdeen Group, November 2012

59%

54%

56%

43%

40%

45%

50%

55%

60%

Reps achieving quota

First-year reps on quota

n = 312

Research Brief

Aberdeen’s Research Briefs provide a detailed exploration of key findings from a primary research study, including key performance indicators, Best-in-Class insight, and vendor insight

The Sales Performance Management Best-in-Class

In November and December, 2012, Aberdeen surveyed 312 end-user sales organizations to understand their sales effectiveness best practices The performance metrics used to define the Best-in-Class (top 20%), Industry Average (middle 50%), and Laggard (bottom 30%) among these sales teams are:

88% customer retention rate, vs 78% among Industry Average and 14% for Laggard firms

12.3% average year-over-year increase in overall team attainment

of sales quota, vs a 1.0% increase for the Industry Average and a 5.8% decline among Laggard respondents

10.1% average year-over-year increase in the percentage of sales reps achieving quota, vs a 1.2% decline for Industry Average and a 7.7% decline (increase in) the cycle time among Laggard respondents 8.0% average year-over-year increase in average deal size or contract value, vs a 0.8% increase for the Industry Average and a 1.5% decline among Laggard respondents

these particular organizations, particularly first-year sellers, are more likely to

achieve their individual quota levels If we may safely assume that more sales

reps hitting their number is a desirable trait — and Aberdeen’s Sales

Effectiveness research consistently yields support for this metric as a crucial key

performance indicator (KPI) in overall ROI on Sales Operations spending —

then it is well worth exploring how these firms, as well as top-performing

enterprises, support their front line with core competencies and technologies

Best Practices, Best Performance

In Figure 2, we learn about a series of process capabilities (see Aberdeen’s

PACE research model, sidebar, page 3) that are consistently deployed more

frequently by Best-in-Class sales organizations than under-performing

companies, all of which can be effectively utilized in support of an SPM

technology deployment Let’s take a detailed look at some of these practices:

Figure 2: Best-in-Class Capabilities Yield Superior Sales Results and Enablement Efficiencies

Source: Aberdeen Group, November 2012 Among all companies, and especially well-adopted by the Best-in-Class, is the

organizational capability defining SPM support from the C-Suite It is

somewhat surprising that so many Laggard companies — nearly half — actually

report that senior executives are not invested in enabling their sales

organization; their business results paint an unfortunate picture of the

associated poor performance results On the other hand, it should be noted,

the involvement of top corporate management in the specific compensation

design for the sales team is not as advisable, with only 35% of the Best-in-Class

(45% of All Others) reporting such a connection While senior-level

involvement in fixing sales quota is the leading compensation determining factor

among all companies, Best-in-Class firms do not allow this top-down

involvement to override other forms of input nearly as dramatically as Industry

Average and Laggard companies, such as previous rep compensation, needs of

81%

78%

65%

45%

78%

40%

51%

37%

30%

45%

60%

75%

90%

SPM process has buy-in from corporate senior leadership

Defined metrics for analyzing impact of sales performance

on company health

We provide sales managers with training/tools to help them provide better feedback to, and guidance for, their reps

Sales reps use automated solutions to forecast their performance against goal / their likely compensation

n = 312 Best-in-Class Industry Average Laggard

Sector Definition

For the purposes of this survey, the term “sales performance management” referred to any process, strategy, or initiative focused

on managing, compensating, rewarding, motivating, or promoting sales staff, in order

to achieve optimal performance in revenue attainment and overall sales productivity

the business or territory, or overall expectations for a team’s performance This

is due to the distance, especially in large corporations, between top executives

and staff in the trenches, to whom they might not easily relate Rather, they

balance the input more evenly with past and future corporate needs as well as

the realities of sales incomes and goals

Next, Best-in-Class firms are 37% more likely than All Others (78% vs 57%) to

link the sales team’s overall performance to the company’s overall

health, using defined metrics such as profit margin, forecasting accuracy,

customer retention, net client value, etc Rather than isolating the perception of

the sales team’s performance around the simple number of dollars in closed

deals, these companies value a more holistic contribution by the business

development team, and track measurable statistics to back up their

commitment

A final Best-in-Class core competency shows fewer than half of all companies

provide their sales reps with automated solutions to forecast their

current sales performance against their goals and/or their expected

compensation based on pending achievements It is worth noting, however, that

top-performing firms are more likely than others to take advantage of the best

practices and tools described in Better Sales Forecasting Through Process and

Technology: No Crystal Ball Required (July 2012), which provide sellers with

real-time data on their performance results vis-à-vis quota The most advanced SPM

deployments allow sales reps to perform quick what-if scenarios that delineate

their exact income potential should any particular sales opportunity or set of

deals close during the current selling cycle, as well as how incentive programs

such as President’s Club or gamified internal competitions will play out This

kind of visibility can serve as a strong motivator, considering the fact that 98% of

Best-in-Class companies confirm the value of financial compensation as a prime

motivator for the sales persona This knowledge management capability is also

the one in which Xactly customers most often report their adoption, with a

63% rate, compared with 38% among all other organizations

Supporting Best Practices with Enabling Technologies

Now let’s turn to how Best-in-Class companies invest in specific SPM platforms

and applications to turn these best practices into measurable business value In

Figure 3 we look at four specific technology enablers that are deployed more

often by Best-in-Class organizations than by Industry Average or Laggard firms:

CRM compensation integration: Since the customer relationship

management (CRM) platform is the legitimate standard sales home port

for most enterprises, and money is the clear leading motivator of sales

behavior, it makes sense to marry these two functions Aberdeen’s

research shows that Best-in-Class companies are 32% more likely than

All Others (66% vs 50%) to integrate real-time compensation and quota

data or a commission estimator into the CRM system of record By

doing so, the strongest-performing enterprises enable their reps to play

out how their compensation will be affected by closing (or failing to

close) various deals in their pipeline

Aberdeen’s PACE Methodology

Aberdeen applies a methodology

to benchmark research that evaluates the business Pressures, Actions, Capabilities, and Enablers (PACE) that indicate corporate behavior in specific business processes:

Pressures — external forces that impact an organization’s market position,

competitiveness, or business operations

Actions — the strategic approaches that an organization takes in response

to industry pressures

Capabilities — the business process competencies (process, organization, performance, and knowledge management) required to execute corporate strategy Enablers — the key

functionality of technology solutions required to support the organization’s enabling business practices

Figure 3: Enabling SPM Technologies Support Peak Sales

Effectiveness Results

Source: Aberdeen Group, November 2012

Performance dashboards or scorecards, also preferably

integrated into the CRM, provide a quick visual status update to savvy

end-users who want to rapidly digest the information they need to

run their personal or group book of business It works out best for all

stakeholders if such dashboards are configurable all the way down to

the individual user level, so that individual reps can select which data

points — commission estimates, quota attainment, gamification status

updates — are in front of them, and preferably with no distinction

between the device or location of the end-user This technology

enabler also represents the highest adoption rate among Xactly

customers of the four presented here, with 55% of them doing so,

compared with 53% among the other 90% of survey respondents

Best-in-Class firms are 23% more likely than Average companies (53%

vs 43%) to use quota planning or management technologies to

develop aggressive-but-attainable quotas and territories for their reps,

as well as to address the need to give all reps a reasonable chance at a

fairly-sized book of business Considering that the average reported

cost to replace a B2B sales rep is $35,360, ensuring that as many of

the front line team members have an achievable result and stay

engaged and profitably employed by the enterprise, is well worth

careful planning Xactly customers are less likely than both the

Best-in-Class and other companies (41% vs 42%) to deploy quota planning;

they are encouraged to enjoy the benefits of adoption, particularly if

their existing SPM platform can be integrated with this type of tool for

seamless management- and rep-level access

53%

43%

56%

65%

43%

38%

39%

29%

20%

30%

40%

50%

60%

70%

CRM or SFA includes

compensation

module or

commission

estimator

Performance dashboards / scorecards for both managers and reps

Quota planning/

management solution Compensation management

solution

n = 312 Best-in-Class Industry Average Laggard

Sales Mobility: No Longer a Nice-to-Have

As reported in Aberdeen’s Sales Mobility: How Best-in-Class Remote Sellers Are

Replacing “See” with “Do” (April 2012), today’s most successful enterprise field

sales staff and account managers are fully enabled with processes, platforms,

devices, and technical support to ensure that peak sales performance, especially

among that data set’s Best-in-Class cohort (sidebar), is ensured regardless of the

physical location or time of day when sales reps perform their jobs In the

context of the current SPM research, a majority of companies either currently

or plan within the year to support their team with mobile access to sales

compensation data, with Best-in-Class firms leading All Others by 17% (48% vs

41%) Why is mobile access to earnings data so important? Because we want

our sales reps to see the “if–then” potential of closing that last-minute deal

regardless of where they are working For example, a successful but tired rep

who is traveling at month-end may log into the CRM from the road, discover

that one more small customer up-sell will vault them into a higher commission

payment plan for the remainder of the quarter, and use their final hours of sales

cycle time to squeeze enough revenue out of their territory to hit that elevated

number — rather than close up shop, ignorant of the missed opportunity And

this incremental revenue certainly helps their company, as well as internal and

external stakeholders, count on additional revenue overall In this area, Xactly

customers out-pace the Best-in-Class, with 63% currently deploying the

approach, compared with just 15% among other firms In Table 1, we look at

the performance advantages associated with this protocol, comparing a number

of sales effectiveness KPI results among users and non-adopters

Table 1: “Show Me the Money” — an Anywhere, Any Time, Any

Device Must-Have

Sales Effectiveness Metric

Mobile Access to Sales Compensation Data

All Others

Average deal size or contract

Annual improvement in sales

Source: Aberdeen Group, November 2012

Sales Motivation: Is it Just the Money?

Salespeople are only in it for the money, right? While fully 98% of

Best-in-Class firms predictably indicate individual financial compensation as a

top-three sales motivator, we see in Figure 4 that when we move beyond the

cash, even this classically hard-edged job role is highly susceptible to the value

of being told, “Job well done,” as well as to the challenge of internal

competition Best-in-Class companies indicate that internal recognition for

Sales Mobility: Best-in-Class Defined

Aberdeen research published

Best-in-Class Remote Sellers Are Replacing “See” with “Do”

(April 2012) features a Best-in-Class group of survey respondents, defined as the top 20% of performers: 109% of overall sales quota achieved by the sales organization during the last completed calendar or fiscal year, compared with 73% among Industry Average firms and 41% within Laggards

8.1% year-over-year increase in lead conversion rate (sales-accepted lead

to close); vs a 2.1% increase for Industry Average firms and 6.1% decrease among Laggards 4.6% average year-over-year improvement in customer renewal rate, vs

a 0.3.% improvement for the Industry Average and a 2.5% decline among Laggard respondents Best-in-Class: Top 20% of aggregate performance scorers

Industry Average: Middle 50%

of aggregate performance scorers

Laggard: Lower 30% of aggregate performance

strong performance matters greatly to the sales function, followed by tangible

cash and non-cash rewards, as key motivators of the most highly desired sales

behaviors

Figure 4: Top Non-Financial Sales Motivators — Cash Is King, But

Tell Me You Love Me

Source: Aberdeen Group, November 2012 Does this mean that salespeople actually have … feelings?! Indeed, yes Consider

this common scenario in a typical sales organization: a number of

high-performing reps are consistently beating quota, making President’s Club, earning

good money … so what is the next step in their professional development? The

current research teaches us that “great players don’t often make great

managers” — only 18% of all respondents prioritize a promotional track to sales

management, perhaps knowing that many sales leaders earn less than their top

reps — so how can we keep our strongest sellers engaged? By instituting formal

recognition programs and competitive campaigns that reward leadership and

winning within a team environment

This brings up the subject of the relatively new Sales Performance Management

focus on gamification, which is defined as the use of game mechanics to motivate

or reward distinct behaviors While only 12% of survey respondents currently

report an active gamification initiative, 23% of them (31% among the

Best-in-Class) indicate a plan to implement one within the next 12 months Gamification

is a natural fit for the sales function — it represents another dimension in which

these naturally competitive team members can one-up each other — and is

adopted by the same 12% of Xactly customers as among all companies Fifty-six

percent (56%) of these companies, however, consider public recognition a top

motivator around reps’ ability to achieve quarterly sales goals, compared with

36% among non-Xactly users Hence, gamification adoption is likely to rise

The other motivator under discussion here is competition While the Human

Resources team inside a typical company may not always get excited about

creating employee competitions in which there are identified winners and

losers, the sales function is a natural fit for tapping into the competitive spirit

that has long been associated with the job role In Figure 5, we note that

companies indicating the use of competition as an actively deployed motivator

57%

35%

21%

18%

10%

20%

30%

40%

50%

60%

Internal

recognition

for positive

performance

Competition with other team members

Learning and developing new skills

Promotional opportunities within the company

Team-based financial compensation

Employee engagement program aligned to company values

n = 312

Best-in-Class

Best-in-Class companies average 105% total team attainment of quota, compared with 86% for Industry Average and 54% among Laggards

Best-in-Class firms close an average of 29% of sales-accepted leads; the number drops to 24% and 19% among Industry Average and Laggards respectively The percentage of sales reps achieving quota grew by 8.8% among the Best-in-Class and 1.0% for Industry Average companies; Laggards report an average 2.1% decrease

for sales results see more first-year reps and all reps overall achieving their

individual sales quota numbers In the case of Xactly’s customers, they are 16%

more likely (58% vs 50%) to identify themselves as active adopters of this

practice

Figure 5: Competition — an Effective Motivator of Sales

Over-Achievement

Source: Aberdeen Group, November 2012

Does Teamwork Matter?

Finally, let’s consider the references above to cash-oriented and non-cash

rewards in the context of teamwork Figure 6 teaches us that the classic

assumption that salespeople are only motivated by their own personal

compensation, and achievement, is not supported by the data The majority of

all survey respondents, and particularly the Best-in-Class, provide

organization-wide financial rewards for overall accomplishment of corporate

goals; these targets can vary from hitting revenue numbers to achieving

defined levels of customer satisfaction Forty-eight percent (48%) of

respondents also provide non-cash incentives on a company-wide basis, with a

slightly higher percentage of Best-in-Class firms doing so These incentives can

be tied into the gamification process described above, and serve to further the

point that while money remains the prime motivator and delivery model of an

individual’s sales remuneration, it is wise to consider rewarding teamwork

both via payroll and non-cash models Looking at the Xactly users within the

research, they report an average score of 2.81 on a 1 to 5 scale of focusing on

teamwork as an essential sales effectiveness ingredient — “1” equaling an

“every man for himself” environment and “5” representing a total “one for all,

all for one” scenario “ which ranks lower than the 2.95 average among all

survey respondents As more aggressive users of SPM tools, however, this

sub-set of companies sees more reps achieving quota (Figure 1 above) and

60%

49%

56%

43%

40%

45%

50%

55%

60%

Reps achieving quota

First-year reps on quota

n = 312

Competitive Motivators All Others

Fast Facts

The Best-in-Class report a 16% higher average sales quota than all other firms:

$1.208M vs $1.043M Best-in-Class companies raised average sales quota 13.7% since last year, vs 8.1% among all others Best-in-Class firms are 15% more likely than Laggards (69% vs 60%) to onboard / train sales staff specific to individual job roles

their average overall team attainment of quota — 78% vs 77% among

non-Xactly users — doesn’t suffer as a result

Figure 6: Business ROI of Rewarding Teamwork on the Sales Team

Source: Aberdeen Group, November 2012

Conclusion: Sales Effectiveness is Worth the Care and

Feeding

Readers have no doubt experienced the classic view of B2B sales people: they are

cutthroat, selfish, and motivated only by their own W-2, with no loyalty to their

co-workers or their employer beyond WIIFM — what’s in it for me

Figure 7: Sales Employee Satisfaction

Source: Aberdeen Group, November 2012

A different story, however, is revealed by the research, and exemplified by the

Best-in-Class companies within the data Consider the value, proven here, of

92%

51%

69%

52%

70%

46%

40%

55%

70%

85%

100%

Organization-wide financial rewards non-financial rewards Organization-wide

n = 312 Best-in-Class Industry Average Laggard

3.16

2.88 3.03

2.64 2.59

2.35

2.00

2.50

3.00

3.50

Overall sales employee satisfaction

Overall sales team satisfaction with compensation

n = 312 Best-in-Class Industry Average Laggard

Fast Facts

What is the “ideal” amount

of sales turnover? Best-in-Class firms report 9.7%; Industry Average 10.1%; Laggards 12.3%

What is the average fully-loaded cost of sales rep?

$152k among Best-in-Class organizations; $148k for Industry Average; $138k among Laggards

Are Best-in-Class companies larger than others, and therefore more able to invest in SPM technologies? Actually, they are 18% smaller than Industry Average and Laggard firms, measured by revenue

emphasizing teamwork, career growth, non-financial rewards, and many other

softer sides of managing salespeople most effectively In reality, the most

successful sales and sales operations leaders put energy and resources into

developing long-term, happy front-line employees We see in Figure 7 the

clear link between sales staff satisfaction and peak performance Sales leaders

with the strongest results around quota attainment, revenue growth, and

shortening the sales cycle are selecting, on-boarding, training, motivating,

incentivizing, and of course compensating their sales team members — and

managers — with a holistic view toward creating employees who are both

productive and satisfied When it comes to compensation, Best-in-Class and

even Industry Average companies report better-than-neutral average

satisfaction with how much their teams are paid: in these uncertain economic

times, this is an enviable and ultimately profitable position to attain

In the context of Xactly customers’ performance, the percentage of these

firms indicating strong overall and compensation satisfaction rates among their

sales teams is strong, with 73% and 61%, respectively, ranking at four or five

on the Figure 7 scales, equal to the 74% and 61% levels among all other firms

If “a happy sales force is a successful one,” the performance of this customer

base remains strong, as evidenced by the opening data in Figure 1 above, as

well as by the additional metric provided in the sidebar

Xactly Customers’ Performance

vs All Others

In addition to the performance metrics showcased in Figure 1, Xactly’s customers achieved stronger performance around these sales effectiveness KPIs, in comparison with the other 90%

of responding companies: 30% lower sales employee turnover (15.0% vs 21.4%) 26% shorter sales time-to-hire (2.1 vs 2.8 months)

22% shorter sales time-to-productivity (3.6 vs 4.6 months)

19% shorter average sales cycle (4.02 vs 4.98 months) 2.8% annualized growth in average deal size, vs 0.8%

For more information on this or other research topics, please visit

www.aberdeen.com

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March 2012 Author: Peter Ostrow, Vice President and Research Group Director; Customer

Management, Sales Effectiveness

( peter.ostrow@aberdeen.com ) LinkedIn Twitter

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