Multi-product Software and the Single Quota Simplify Your Plans AND Focus Effort Where It s Needed Most

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Multi-product Software

and the Single Quota

Simplify Your Plans AND Focus Effort Where It’s Needed Most

Tom Notar

Vice President, Corporate Sales and Financial Operations, Deltek Inc.

Donya Rose

Director, Sales Effectiveness & Rewards, Towers Watson

Jessica Waddell

Sr. Manager Compensation Administration and Pricing, Deltek Inc.

Perpetual License Bookings

+ Subscription Bookings

+ Focus on Strategic Products

+ Solution Selling (what customer really needs)

+ “Enough” Services

Sales Success

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Measuring sales contribution for software

Market Share Measures Booked ACV Annual Contract Value Booked MRR Monthly Recurring Revenue New Logos Booked SLF Software License Fees In-year Revenue Measures Booked ACV/MRR (proxy) RR Recognized Revenue OTC One-time charges (install fees, training) Booked SLF Lifetime Value Measures TCV Total Contract Value Term Length Booked SLF Annuity Measures Booked ACV / MRR Annual Mainten-ance Balance Sheet Measures Payment timing Subscription Software Measure Both On-Premise Licensed Software Measure

Business and Plan Overview

Business Summary Project-focused enterprise software solutions for government contractors & professional services firms

Private International Employees on plans 300+ Compensation plans 2 structures: (1) License/Services (2) Membership/Renewal Old Plan Thumbnail Plan Measures

•Bookings by product category •Services bookings

•New clients + Strategic products

Measurement Period

•Total year quotas

Pay Frequency

•Monthly year-to-date

Quota credit

•Perpetual & Term: TCV

Payout calculation •Perpetual: TCV • 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% 0% 20% 40% 60% 80% 100% 120% 140% 160% P a y out % T a rge t

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Illustrative example of the old plans

Payout Table

Product/Services Commissions Focus Sales Bounty

Actual Bookings % Annual Quota

Commission Rates (within ranges) Actual Sales % Annual Goal Payout P1 SaaS/Term Booked TCV P1 On-Prem Booked SLF P1 On-Prem Booked SLF P4 On-Prem Booked SLF Services Booked Services 0% - 79.9% 4.03% 4.43% 4.97% 5.76% 0.79% Less than 100% $0 80% - 109.9% 6.27% 6.89% 7.73% 8.97% 1.23% 100% or more $26,250 110% or more 8.96% 9.85% 11.49% 12.81% 1.75% Quota: $39k $2,025k $300k $260k $1,598k $1,280k Target Incentive: $1,749 $99,751 $16,625 $16,625 $14,000 $26,250 % Total Incentive: 1% 57% 9.5% 9.5% 8% 15%

The business goals for the new plans

Simplify

Fewer separate quotas, leading to improved quota accuracy

Fewer/no cross-gates  improved emphasis on how TO earn

Term (/SaaS) Comp

Sales people who meet their goals

earn their target incentive

Add comp for longer term, without over-valuing it

Protect in-year revenue (Perpetual focus, multi-year protection)

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The more finely a goal is divided, the less accurate it is

New plans – overview

Total Incentive =

Software Commission

+ Services Commission

Perpetual License + Term ACV

Overview One commission rate for

all Perpetual License Bookings

Commission rates increase with term length (but not with quota attainment)

One commission rate for all Services Bookings Added commission on allsoftware sales once…

• 85% of Strategic Product quota is attained • Total software quota tiers are attained

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New plans

What the sales person needs to know

Booked Services Booked Annual Contract Value Booked Software License Fees

What the plan really looks like to the sales person

Due to historical practices in the way the plans have been tracked and shown in the administrative system, this is the format used for the presentation of the plans. The rates aren’t precisely the same as those shown on the prior page due to a slight difference in the method for applying the Term Uplift.

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“Tuning” the plans

While there’s only one “hard” quota, there must be productivity expectations for each category with its own rate

 Perpetual Licenses

 Term Licenses

 Mix of ACV by term length

 Services Sales

The relative comp value of each category must also be established

 Perpetual vs. Term

 Increasing value with increasing term length

 Services

Once these decisions are made, it’s just algebra

New plan - example scenarios

This example shows all productivity expectations coming in as planned, and proves out the alignment of the rates, the goals, and the stated target incentive

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Here total earnings are under target even though the total quota is exactly achieved. This is because the quota was attained with all Perpetual and none of the higher-value Term software sales.

New plan - example scenarios

“behaves” as intended.

 Deltektested their plan using each sales person’s prior year actual performance and compared old plan/new plan payouts to confirm that the differences aligned with the company’s interests and could be “sold” to the sales person as reasonable.

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Deltek experience from the first year

Wins

 Clear message about the relative value of different categories of sale  Simplicity of all Perpetual Products

at the same rate

 Term/SaaS sales relieves quota in alignment with in-year revenue, but longer terms are worth more to the rep

 Increased focus on getting higher ACV instead of higher TCV to align with company focus

 Realized no abnormal rep attrition

Lessons learned

 Communication at the sales

management level can’t be over-done  SaaS bookings on an annual quota

mean that reps can meet their number late in the year, and the business misses revenue

 Even though there’s only one quota, getting the mix right in the

assumptions is very important  Ended up increasing rates on

Term/SaaS sales ensure focus on the mix from a sales perspective

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Another Example Plan

Recurring revenue mature, with multiple focus areas

Plan features New Sales Rep

Total Comp at Target $200,000 = $100k base + $100k target incentive

Measurement period Year

Base Commission Measure = Booked

Quota = $3.2M ACV per year

Add-on Commissions

Term (years) Commission Rate

1 1.60% ACV 2 3.04% ACV 3 4.48% ACV 4 5.92% ACV Category Commission Adder Product 1 + 1.6% ACV Product 2 + 4.0% ACV

New Logo + 3.2% ACV

Actual ACV % Quota Commission Adder 0% - 100% No adder 100.1% - 150% + 6.25% ACV 150% or more + 3.13% ACV

+

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