Just as information technology supports manufacturing, distribution, accounting and field force automation, it's fast becoming a pillar in the sales office. While SFA programs, product configuration engines and presentation tools have proliferated, there's still a demand for higher level solutions to help managers deal with the complexities of setting budgets, aligning territories and objectives, deploying salespeople, defining quotas and designing compensation plans. It's a need felt particularly by "Fortune 1000" companies and their larger, more complex sales organizations.
While the major CRM vendors do offer modules to address some higher functional needs, sales offices are finding solutions in a number
of places to fill holes in sales manager's toolboxes. They range from specialized "best-of-breed" solutions from venerable consulting firms to new Internet-based virtual solutions.
What's clear is a demand for actual software applications. "What we wanted to do was take ownership once we had finished with our initial consulting and be able to manage the system on our own," says Linda White, manager of strategic operations at NEC Technologies, with headquarters in Itasca, Ill. Her product group was looking to replace its outdated incentive management spreadsheets and chose Incentive Systems' solution. "What we saw in their system was that they truly had a product and not just a service."
Other leading sales management firms witness this trend toward hands-on tools also.
"What we saw more and more was our clients coming to us and asking, ‘When you are gone, what do you have to help me make these changes take root in the organization?'" notes Mike Meisenheimer, co-founder and vice president for product strategy of Ockham Technologies in Atlanta.
His solution begins a look at four such products aimed at rounding out the sales manager's toolbox.
"Part of what we try to do is put a sales management lens on what can be a whole lot of data," says Meisenheimer. "We consolidate that data and then our applications are built around different processes to help use that data and help managers make better decisions." Today data washes in from every direction--ERP programs, CRM systems, field reports, point-of-sale systems, third parties and a growing number of other places.
Greater data sources typically enable a finer grain of analysis. So while they add complexity, they add value. They allow a sales manager to drill down on sales by a specific product number or zoom out to look at sales in a single geography or a whole group of products across several industries or channels.
"Those views are then applied to, say, a pipeline metric that pulls data primarily from the front office, or I might have a cost-of-sale metric where I track revenue per headcount," says Meisenheimer. "We ship the product with a set of best practice metrics and those views are applied to each one."
The software provides managers a flexible quota setting process by allowing them to define the characteristics of their own sales environment--the size of accounts, the length of the sales cycle, the type of customers and how salespeople are measured and paid. "Based on the answers to those questions," explains Meisenheimer, "the application recommends and walks them through a process. Those span a continuum from numeric, regression model based kind of territory-based quota setting to more large account opportunity-based quota settings." Users can then explore what-if scenarios, analyze them and easily modify quotas with included tools.
Internal benchmarking tools are another asset. Managers can see how they are doing against peers and the rest of their organization. But external benchmarks may have an even greater value. "If I'm in the software industry, I can know how I'm doing against my peers in terms of the quotas that I am setting," explains Meisenheimer. These benchmarks are good indicators of opportunities that exist in various markets.
Ockham has partnered with companies that specialize in survey and benchmark data to provide detailed external comparative benchmarks. "What we are really targeting is the telecommunications, high tech and pharmaceuticals industries," explains Meisenheimer.
Managing Incentive Compensation
A traditionally time-consuming task, managing incentive compensation is gaining in importance as management learns the overall importance of strategic behavior management. In short, companies have to pay for the behavior that leads to their success. Managing complex, perhaps personalized incentives on top of shifting market demands and priorities requires a flexible software solution for keeping track of goals and behavior alignment.
"If you want to align your people around a new set of targets, the incentive compensation plan is the most effective way to rapidly align that team," says Nina McIntyre, vice president of marketing at Incentive Systems in Bedford, Mass. Incentive management software makes it easier to pay not just on revenue, but perhaps on sales over a certain target margin or other criteria. "We can pay and measure any sort of activity," says McIntyre. "It could be customer satisfaction, a click on a Web site, or the duration of a call in the call center. For example, if you have a short call and you always have a satisfied customer, you get a bigger bonus."
With incentive management software, sales managers can model their organization and do what-if analysis on the structure of sales team, the roles and what pay plans are put in place.
NEC Technologies, which sells monitors, LCD panels and other technology, went live with Incentive Systems in October 1999. One of the product groups was making some changes to its sales structure and the legacy incentive system wasn't going to be able to handle an increase in hierarchy levels from five to seven. Plus, as Linda White, manager of strategic operations explains, "Some of the key ways that we were paying were causing some internal processing issues, and we had to identify what they were and change the way that we processed our data."
There were more obvious reasons. "Our previous system did not motivate the sales organization very well," she says. The company's old FoxPro-based system was too cumbersome to use effectively. "If you don't have a flexible method of changing those plans, and if it is not easy to do, then people don't do it," warns McIntyre. "So companies don't pay their people for what they need done."
Incentive Systems offers an enterprise wide incentive tool for designing, creating, maintaining and administering incentive-compensation plans. It allows sales managers to more easily and more flexibly manage product line objectives, corporate and regional goals, territory considerations and dozens of other factors while creating individualized compensation plans. It also automates much of the reporting tasks, freeing the manager's time.
At NEC Technologies, it saves a lot of time. "On a monthly basis to process the commissions was a good seven to ten days in the old system," says White. "Now they have gotten it down to a two-day process." They also narrowed down the three people working on incentives (one from sales, one from strategic systems and one from finance) to a single user.
"Ultimately, these people are in the sales operations capacity," says White, "so they have many other functional responsibilities." It frees their time.
Running Sales Contests
"Generally, we like to think that we are motivating our salespeople with our compensation structure such that we don't need to run contests all of the time," says Scott Adams, area sales manager in the pharmaceutical sales department of the Healthcare Division of Bayer, part of Bayer Canada.
When Bayer did run contests, however, they were only at the national level and generally the appeal was limited. "They were too labor-intensive and the reps had to do a lot of extra paperwork to qualify to win prizes," says Adams. "Secondly, the prizes that were handed out were great for some people, but some people didn't care for them."
"The reason I wanted to set up a sales contest for my area was we sometimes get into a rut of not asking for the business," explains Adams. "Because we make a good presentation, we assume the physician is going to prescribe more of our product. I wanted to motivate people to make these product presentations and then follow up by asking and getting a confirmation from the physician that they would indeed use more of our product."
SalesDriver.com sold Adams on its solution because it addressed the two problems the company had with sales contests. SalesDriver.com was largely hands-free and the prizes were good.
"What we were trying to fix was the fact that most sales incentive programs are very expensive and very time consuming for sales managers to build and run," says Mark Sullivan, vice president of sales at SalesDriver.com in Maynard, Mass. SalesDriver.com allows sales managers to design contests easily from a variety of drop-down menus. Once the contest is launched, it requires minimal input from the manager to enter individual performance statistics, and then SalesDriver.com automates the communication with participants and awards them a certain number of "$DriverDollars," which they can redeem online for awards.
It took Adams all of about 10 or 12 minutes to complete the rough design of his first contest. "It was a pretty easy setup, I must admit," he says. "I set up how the contest is going to run in terms of the specific things that I needed. Like I needed 10 physicians, and I needed within the action plan for [the reps] to quantify how much business they were going to ask for and state how they were going to accomplish getting that business."
Progress was tracked on a simple spreadsheet that Adams e-mailed to his salespeople and had returned. "People would set something up, and they would provide me updates. Then I would check to see if the updates fit in the action plan, and I would go into salesdriver.com and update their $DriverDollars," says Adams. "The great thing about that was, when there was an update to the scoreboard, SalesDriver.com, not me, would e-mail that person and tell them that they have more $DriverDollars."
It's been virtually hands-off for Adams, and the field has welcomed the program enthusiastically. "There wasn't a person in my area who didn't find some thing or things that they wanted," says Adams. This resolved the problem of disappointing award selections. "We want to give the impression of being high-end no matter what we do, and that is no different if we run a contest for our own employees," says Adams.
"It's one of the most powerful tools I have in my arsenal," claims Damon Race, manager of sales force operations at DJ Pharma, a San Diego-based subsidiary of Dura Pharmaceuticals. With the proliferation of complex sales organizations, new sales channels and mirrored sales structures, tools for territory alignment provide welcome visual analysis, ease of use and reporting capabilities to people like him.
His strategic weapon is MAPS software from ZS Associates in Evanston, Ill. "I use this tool to deploy our sales force and build the structure and foundation for success, making sure that we are optimizing geographically our distribution into the target audience."
DJ Pharma, since it's a start-up, has a cost-saving mix of 65 full-time employees and about 220 flex-time representatives. But as Race says, "That creates a lot of challenges when you are aligning a sales force."
"There is so much data that is available to our customers," says Elissa Goldsmith, MAPS product manager at ZS Associates, "and they want to be able to react quickly and realign the sales force and give their territory managers information about their customers so that they can meet their
DJ Pharma uses MAPS since one of the pharmaceutical company's data sources is tapping into some 3.8 million prescription records for 600,000 physicians. It needs sensible geographical depictions of the market and analysis of the information. Prescription data and other sources can be rolled up to the ZIP code level and made into maps for identifying opportunities and guiding the company's sales force deployment.
"While there's no limit to the information that can be included," says Goldsmith, "typically, what our clients use is customer-level information. That would be profile information, any sales information, market sales, market potential, information about call history, specific information about whether a certain account is a target or anything that is going to help them determine the value of the different customers.
"You can have multiple sales teams managed within the same system and you can bring up multiple map windows so you can visually compare one team's alignment to another and see how they might need to coordinate," notes Goldsmith. A sample of the many reports includes sales force overlap, scenario disruption overlap, comparison, scenario graph and layout. These can identify potentially redundant coverage but also potential productivity gains.
There is also an index. "The index is a way of measuring different types of things with different magnitudes. Those could be physicians, prescriptions, managed care information, hospitals and accounts, and making them all relative to one another as components," explains Race. "Then you decide which ones you want to put weight on. It depends on your aligning objectives."
For DJ Pharma, a good tool is critically important. Says Race, "It determines the entire structure for the
company and how we are deployed. It's our success or failure right there."