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ZS Associates | 617.557.5800 | www.zsassociates.com

Sales Performance Management

This presentation is solely for the use of III meeting attendees. No part of it may be circulated or reproduced for distribution without prior written approval of ZS Associates.

Prepared for Institutional Investor Institute

Jason Brown

Principal, ZS Associates

617.557.5814 | jason.brown@zsassociates.com

(2)

Marketing Sales Ops & Technology

2,500+ professionals

30 years of consulting

20 global offices

1,000+ clients

 Marketing strategy  Customer insight & VOC  Perception & loyalty tracking  Experience design  Segmentation  Spend optimization  Predictive analytics  Channel strategy  Resource deployment  Incentives & goals  Sales effectiveness  Competencies & training  Performance management  Sales enablement

 Outsourcing & offshoring  APO (Analytic Process Outsourcing)  Reporting solutions

 Master data management  Data warehousing

 Technology deployment  Software development

ZS Associates is a global leader in marketing and sales strategy,

operations, and supporting technology

(3)

ZS' Sales Compensation Offering

Sales incentive design

Quota setting

Incentive plan health checks

Change management

Field communication

Client training

Software configuration

ZS data integration services

Technology managed services

Custom tool development

Incentive managed services

Staff augmentation

Business process management

Operations process design

Consulting Services Operations Services Technology Services

Global Operating Model (Onshore-Offshore Teams)

Exp

er

ien

ce

 Incentive Compensation is the largest practice in ZS by annual revenues

 Largest provider of compensation design expertise with 100+ design projects per year

 Implement the leading 3rd party Sales Performance Management software solutions  Outsourced business process support for 100,000+ reps across 50+ countries and

100+ companies across industries

250+ FTEs supporting outsourced incentive compensation services

(4)

Sales performance management observations

Introduction

Sales performance management is difficult—especially for institutional and key accounts teams

1

The best programs take a balanced view of the salesperson, the process, and the results

2

Failure to account for sales opportunity is the leading source of unfairness

3

Discretionary compensation is often too… discretionary

4

Commissions are often overused (as a % of total pay)

(5)

What is sales performance? (Audience poll)

A. Sales results (wins, losses, revenue)

B. Customer results (satisfaction, experience, perceptions) C. Sales approach or process (how the results were achieved)

D. Sales activities (specific tactics or events delivered during the process) E. All of the above

F. None of the above

(6)

Sales performance analogy: Pitcher Wins

Haddix’s competition was tough (Lew Burdette threw 13 shutout innings)

The team around him let him down (failed to score; error in 13

th

inning)

Some bad luck, too (Pirates got 12 hits, but didn’t score)

Some consider this the best pitching performance in history… and the

result was a ‘loss’

Date IP H ER BB SO

July 5, 1959 8 9 4 0 7

Date IP H ER BB SO

May 26, 1959 12.2 1 0 1 8

Component Analysis (the process)

Outcome

L

W

(7)

The bad news

: We can’t wait a career to evaluate

performance!

Pitcher wins and underlying performance are closely

correlated when looking across a player’s full career career

1

The good news: All these approaches converge over time

R² = 0.758 0 100 200 300 400 500 600 0 20 40 60 80 100 120 140 160 180 P it cher W ins

Component Analysis (Wins-Above-Replacement)

Component analysis versus actual wins

1. These data show wins-above-replacement (WAR) and wins for the top 500 pitchers (by WAR) in MLB history.

(8)

Sales performance evaluation criteria for Asset Managers

Measurement

Sales “wins” • Few in number; volatility in win % over time • Individual contribution vs. team and brand AUM (total or growth) • Wide variance and volatility • Overstates salesperson’s contribution? Sales activities

(finals presentations, etc.)

• Activities don’t pay the bills • Measure activities, get activities Customer feedback

• Often qualitative, low sample size • Salesperson attribution issues

Observed competencies

• Competency without activity = no results • Risk of rater biases

Criteria

Draw

backs

(9)

Process Driven People Driven Results Driven

Process Skills Rewards Process Skills Rewards Process Skills Rewards

Focus on:

• Account planning • Coaching

• Sales activity reporting • ‘Solid’ performers

• Low compensation variance

Focus on:

• Hiring

• Mentoring & apprenticeship • Training and development • Long horizons

• High average compensation

Focus on:

• Incentives and goals • Hiring/firing

• Sales tools

• Individual autonomy

• High compensation variance

Distinctive

Adequate

Companies typically adopt one of three positions with respect to

sales performance management

(10)
(11)

Process Driven People Driven Incentives Driven

Process Skills Rewards Process Skills Rewards Process Skills Rewards

Distinctive

Adequate

Most asset managers use “People” or “Incentives”-driven

approaches

Measurement

Focus on:

• Account planning • Coaching

• Sales activity reporting • ‘Solid’ performers

• Low compensation variance

Focus on:

• Hiring

• Mentoring & apprenticeship • Training and development • Long horizons

• High average compensation

Focus on:

• Incentives and goals • Hiring/firing

• Sales tools

• Individual autonomy

(12)

An example of process-driven performance measurement

Each step in the process yields viable performance metrics

Comparison across salespeople yields insight

Useful as a diagnostic and coaching tool

Understanding opportunity (# plans on the market) is important

RFPs Finals Wins AUM

100

75

25

10

$50B

Sales Rep A 75% 33% 40% 50% share

Average Rep 60% 25% 25% 40% share

# of plans on the market

(13)

An example of people-driven performance measurement

Surveys and interviews can be used to capture these details

Push for detail, examples, and direct comparisons wherever possible

Be wary if results don’t match evaluations over a large sample

Customer

feedback

Deal team

feedback

Sales leader

feedback

Standardized

tests

Work with again?

Recommend to others?

Ratings vs. peer group

(14)

An example of incentives-driven performance measurement

Illustration

A clear, direct approach for communicating expectations

Controls cost of sales

Sales opportunity across salespeople affects pay ‘fairness’

Undermines ability to ‘control’ or direct salesperson activities

Measurement

Pay mix Incentives 70%, base salary 30%

Metric 1

Commissions on 1st year AUM (or AUM growth, or net flows, etc.)

Metric 2 Bonus for achieving 100% of AUM sales goal (or AUM market share, etc.)

(15)

Please select all that apply

Which of the following are part of your salesperson incentives?

(Audience poll)

A. Commissions

B. Bonus for individual goal achievement

C. Bonus for company performance (e.g., sales or profits)

D. Objectives-based or discretionary bonus

(16)

Commissions can be powerful, and dangerous, incentives

Commissions are useful, but they shouldn’t be the only component within an Asset Manager’s

Advantages Disadvantages

Often functions as “hidden salary” Can discourage territory expansion Less adaptive to company strategy Simple

Timely

Controls cost of sales

Design

Best uses of commissions:

When launching a new product/offering

When outsourcing sales to a third party

When the salesperson contributes highly to the sale (low carry-over)

(17)

Objective-based measures are ideally suited to institutional sales,

but they often fail in execution

Ob

jec

tiv

ity

is ke

y

Bad

Good

Conduct 20 in-person sales meetings Achieve finals presentations with X% of opportunities

Achieve high customer satisfaction Rate in the top X% of industry peers in customer satisfaction

Develop 10 key account plans Achieve X% of approved tactical objectives in account plans Design

Push

to

di

ffer

entiate

0 2 4 6 8 10 12 14 16 Bottom 10%

Next 20% Mid 40% Next 20% Top 10%

Sales MBO

If your MBO ratings look like this…

Consider:

Relative ranking among

salespeople

Discrete levels (or goals)

(18)

Some closing advice

Conclusions

Gather multiple perspectives to validate

sales performance

1

Control for sales opportunity wherever

possible

2

Take the long view… for as long as

the business will allow!

4

Be wary of commission-dominated

incentive plans

(19)

References

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