The B2B Revenue Executive Experience
The B2B Revenue Executive Experience

Episode · 3 years ago

Brian Burns on 5 Things That Make a Great Comp Plan

ABOUT THIS EPISODE

It’s the beginning of the year and companies are beginning to roll out new comp plans. For salespeople, especially ultra high performers, comp plans are one of the primary motivators for structuring out the year and harnessing focus.

We sat down with Brian Burns, host of The Brutal Truth About Sales & Selling to discuss five things to consider when evaluating your comp plan.

Yo're listening to the BTB revenueexecutive experience, a podcast, dedicated ELPA executives, train theirsales and marketing teams to optimize growth, whether you're looking fortechniques and strategies wore tools and resources, you've come to the rightplace. Let's accelerate your growth in three to one: welcome everyone to the Bto b revenue executive experience. I'm your host Chad Sanderson today we'retalking about COMP plans, beginning of the year everybody's, getting new onesrolled out. The question we often ask ourselves is: What really makes a greatcomp plan? complents are the motivators for sales people, or at least one ofthe primary motivators. I don't want to say that we're all just money motivatedwe do get motivated by other things. However, the Complan is kind of how westructure our year, how we work backwards into our activity levels, ourfocus. It structures the underpinnings for how are years going to unfold whatfinancial rewards or gains we might be able to achieve things of that nature.complents is extremely important topic for many people in the world today,especially those that are looking to achieve the ultrahi performer status,so Brian Burns, and I sat down and started to go through the things thatwe believe make a great compplan. They chat. Let's talk about complants isthat time of year, isn't it everybody's getting ready to figure out what nextyearis going to look like yeah, Welli'm sure you've had a lot ofexperience with complans. You know, what's the most important thing for you?Well, so if I'm looking at it for myself, one of the first things that Ilook at and one of the things I always try to do for my teams is make surethat it's stable right. I've worked for a lot of organizations where everyquarter based on performance. They want to tweak the complan. They want tochange something, and all that does is create distraction right. So I thinkit's really important for executive sales executives, especially to makesure that they're actually taking the time to think through the Complan, makesure they understand what their goals are. They have to be able to articulatethat clearly to the sales team and then structure the complan in such a waythat it's going to stay stable. For you know twelve months give people time towork inside of whatever that structure is and quit changing the rules as anindividual contribute. Tha, always irritated the crap out of me, yeah ND. I think it's gotten more andmore complex. You know, certainly once you start doing the division of laborand you know we're now moving to smaller upfront deals with, you knowmonthly recurring, and you know I remember when I got started. It waspretty simple you now you had a base commission right and I'm listening to all kinds ofpeople because et was a report that came out that only fifty three percentof the sale traps, Mana quota, yeah and all there's all kinds ofinterpretations of that. You know because most people are like, oh well,you know that's because they're, not good sales people, that's oneinterpretation, yeah, that's executive's! Favorite interpretation,it seems like, and I've also noticed that there's kindof almost three or four numbers is the board number. You know what the boardis being told that they'll do and that they'll build expenses off of aninvestment off of, and then there's the executive number which the wilthoughthe executives will get cumped off of and then there's the rap number. You know and each time there's a littlebit of a padding addit to there's definitely a badding effect.What's interesting to me a and I've always I don't know that I've necessarily runinto it all. I've seen it a lot is that, as you translate those numbers downfrom the board to the exact o, the rap, it's amazing, the the fuzziness rightthat starts to happen like it seems to...

...me. You know- and I guess this becauseback to that whole point of stable is like if a sales exact knows what he hasto deliver an you then have to divide it up across your team. You know you'vegot to make sure that all the math works and I've seen some complans,where you know because, like any sit, any good sales Goy, I'm going to try tofigure out O game the system right, it's just the way, I'm out to make asmuch money as possible. So I need to know what the rules of engagement are.But then, when you just take a step back- and you add it all back up- yeahyeah, you still can at time see it not achieving if or exceeding exact orboard numbers, and that I think it lends itself to confusion, and it lendsitself to you know, complaints that are not extremely clear. Yeah and you know my number one is thatthe quota is real, mean that somebody actually put some thought into it. Yeahjust didn't pull it out of the Air I've had I had one manatery goes. No, no.Everyone gets the same quota and I'm like. Does everybody have the sameterritory? Does everybody have the same support? Does everybody have the same?You know account base. He goes well, it's too confusing. If it's differentquotas, it's like it's math, it's not that confe and it's not even complexman. I mean we're making it more complexas, like you, said, division ofLabor right so you'll have SDRs or BDR sales development rapsn, whateverthey're calling them thet. Maybe setting appointments and they'reprobably calm to differently. Then you know your key account raps oryour strategic accountrops, whatever you want to hat whatever they're beingcalled and then what ends up happening when you get into that division ofLabor is and the complans are different for each one as they should be. Thenyou start to see a lot of friction between well, what's the handoff, whatI well, I qualified it as an SDR. It's not my fault that the key accountmanager couldn't do anything with it. Well, all right now, you're againyou're creating a situation where, without clear rules of engagement in astable structure or something that is achievable for each of those roles,it's going to create, drag it's going to great, drag on the SalesOrganization and dragon each of the reps, and I probably could have someblowback culturally as well. Yeah, because you know, as smart rap will saylike well G, I need you know another BDR SDR inside person, whatever youcall it and they're, not thinking that, if you do do that, that raises the costof sale whichso it's so that means your quote is going up and I'm shocked how many reps I talk to whodo not understand complants, I got into it on Linkedin this week andhe goes Oh. If it doesn't close in Decambr just closes in Januaryeverything's. Fine, I go yeah except or you don't get paid for it and he goes yeah. I do I go. No, youdon't your managers going to add it to your quota. This is a sutere thingright, so all of a sudden people can't understand simple division and that's why I, at the end of thebeginning of Q, for I do several podcast on the please listen to me onthis. This is how the game is played now, because you, what a reps do theyblow up their forecast and all of a sudden they go into q on and themanager gives thim his huge quota and they go. I can't do that. Why is it in?Why is it in the crm then? Well, and it's amazing at you know theI think the other thing for me when you look at a complant is making sure thatyour systems or your forecasting process supports it right,enables it mirrors. It not works against it, because if there's not aconsistent, the if language it's using the Complan is not the same languagethat yous in forecasting er the way you qualify, there's a mismatch there, andso you end up spending a lot of time debating this account versus thataccount rather than having something really clear right. So I think theCOMPLAN has to not be you know a set aside from what thesales team does. It needs to be a part of that DNAA pillar of the way they acin it needs to provide that...

...foundational support across the entiresales organizition and, quite frankly, even beyond the sales organization YeahI mean Pius today, I, if you can't put your complan and a spreadsheet- and youknow- basically, you know type in your deals for that quarter and figure outhow much you're getting paid, because it used to be super simple and pepe. Itused to be people wouldn't even go the difference between five and ten percent.No one would do six or nine is because they had to do it in their head.You know it's like they didn't want to have to use a spreadsheet, but todayit's turning into a neural network and an AI APP to figure out how to paypeople well- and I've seen you know- and this is at least for me and reps-that I had workd for me. You'd always see him. If the the first thing you doget Giv Hem the cont plan, you go over it, you explain why the Complaninstructure the way it is, and you show them the tools that you know. Maybe itsomehow ties into your crm, and this is how it's going to be calculated, butmyself and a lot of the reps that work. For me, the first thing we did wascrack open, excel and figure out. Okay, here's! My tracking, like I understandthat the company may have you know, ways that they're going to track it,but I'm not a hundred percent sure. I trust it and then, quite frankly, anexcel. I can then determine where I need to put you know my focus it mygetting higher comp on net new business or is it? Is it higher comt because thecompany wants us to expand existing accounts or is it penetration into anew industry or vertical? And so how do I work those numbers backwards? And Isee a lot of reps that don't take the time to understand you know not onlythe complent, but what that means when they work backwards into their activityand focus levels. So a complen that somehow I don't want to say is toosimple because we've, I think, we've made it more complex tand. It needs tobe, but one that easily allows reps to back into an activity in a focus level.I think, is critical as well and that's it in. I think, a lot oftimes Ir's a mismatch, certainly like on the quarterly goals of the manager.You know who's, probably comped, on meeting quarterly goals, but the repsaren't so t you know they're putting thepressure on the rap to close it by the end of the quarter and the repcoes.Well, it doesn't matter to me you the next day yeah. You know love tohelp you out buddy, but yeahi already know weln exact comp is it's alwaysinteresting. There's always not always don't want to use absolutes, but oftenyou see the way ezackcomp is structured, doesn't mirror, connect to the waythey've broken down sales, comp or even marketing Cotif they're, getting VeriWLE COMP for mqls or quality of mql tthere's. This mismatch right so thatconsistency of that compensation plan and how itties into what the business issues and objectives are for the exacts and theboard and the organization as a whole. It doesn't happen as often as I thinkit should, and I think a lot of sales executives or executives in general dothemselves a diservice by not spending the time to do that and then whathappens is the reps will try and just okay, I'm going to focus on my littlearea and it's not my problem if the EXAC screwed up the complan and itdoesn't really achieve what they need it to achieve, and I think that getsdangerous right. It gets dangerous because it's a mismatch and motivation yeah. It is, and you know, because thisis the time of year- that you know. Certainly, you know, I think mostcompanies get them out in January, I've been at companies where you didn't getit to the middle of that February and and Ir's so much anxiety, becauseeveryone's jockeying, you know the managers you know ther. They don't wantto tell you anything because they want to. You know reassign territories rapshave to, like you know, hold their cards close to their vest about thedeals that are happening in Qteon.

How have you positioned yourself to youknow, make sure the that complan is, you know advantageous to you anddoesn't get you know overblown or undoable, but I've always. I learned, Iguess the hard way right to be extremely honest with myself and withwith any of the executives that I was dealing with as an individualcontevutor or with reps that were part of the teams that Iran, like I alwayswanted. I wanted to know whether I was anindividual contributo or not. I wanted to know what was the goal for ourbusiness, so if essentially, reverse engineering the way we sold and usingit on ourselves so eating our own dog food. What is it we're trying toaccomplish? What are the metrics, where the KPIS and then okay? How does thatkind of work its way down into the organization? I can work accounts anyway. You want me to I'm going to focus on how I'm going to make the most money,because that's why I got into sales. I mean no, not not to hurt anybody'sfeelings out there, I'm not in sales to it s create world peace. I want tosolve problems for businesses, and I want to make money. That's what I'mhere to do, but I also want to do it. I am aware: There's a cultural componentto a sales raps performance inside of an organization well, in order to tryand get over that, you know sales as the devil mentality that you see a lotof times. There needs to be an awareness, a bigger awareness of what'sgoing on inside of the company. So for me it was always not just looking at mycomplan or making it sound like. I was just looking at it for myself, but Iwanted to make sure that I was being you know, quote unquote a goodcorporate citizen as well as making sure that it was. It was stable andfair and accessible and going to help us all hit our goals, because there'snothing worse than when the goals that are set up or the Kpis that arestructure, they're, skewed they're, screwed up something happens in themarket, maybe had political changes. Who knows what it is, but when thoseare off and the numbers aren't being hit in the revenues not coming in thenall of a sudden the attention all the way down into the minew show of howmany phone calls did I make how many emails did I send how many face to facemeetings that was the last place in the world? I ever wanted to be so you whatyou want me to go. Do this then help me make sure that I am educated and wereand aligned with everything else that's going on, so it was that kind ofperspective of yeah. It's about me, but I understand I'm not playing alone here and I'm seeing a huge trend. Tell me ifyou're seeing it, you know people moving to six month: com plants, man,I've seen that, and I guess you know I guess I could see where it would makesense if t's it's. The first tip of the spirit deal is transactional shortsalecycle. Now most of my life, I'm used to BTB complex. You know nine twelve,eighteen f hell in some cases. Twenty four month sales cycles for very largedeals. So if you change it every six months and that's going to change myaccount strategy every six months and that I don't, I don't see making a lotof sense. But as we're moving to more of that, you know Sdr Division of Labortype stuff, smaller get in the door types of accounts. I could see itpotentially making sense, but I don't know- maybe I'm just too old. Maybe Ijust don't move as fast as I used to six months to me goes by in the blinkof an eye I mean hell. A year goes by an the blink Veni. Now Yeah it does, Imean IBM when I was there through anacquisition they moved to of it, and you know it just clearly a red flagthat they, it was a commission expense management thing, as opposed to youknow, a strategic thing, because you know what they, if they had visibilityinto a huge deal, they could move things around and you know an a companylike that. You know a blue bird can be a big blue bird right. You know, but,and I've also seen it in smaller companies and typically, when I go in,I ask you know: What's the percentage of the reps making quota and it's justshockingly low today and then did the...

...company make its number they? Oh yeah,I go how's that possible awe Wa wait, so the company hit it but less thanhalf of your sales repsit their target. So we're back to the e twenty ruleright. Twenty percent of your raps for generating eighty percent of yourincome. That's one interpretation I mean yeah. I mean it gets the thingthat I, if somebody came to me and said, Hey, I'm going to move us to a sixmonth complant. My first question would be why what is it we're trying to do do? Is it?Do you really just want to manage commission expense, because the otherthing that I look for in complans that- and I think, is important in complants,depending on the length of the sale cycle- is whether or not like. If youstart working a deal, let's say middle of the year and you're working andyou've chosen to focus on that account because, based on your Complan, that asit stands today, you're going to achieve x and then all of a sudden thehalfway through the game, the rules change and they come back and say: Ohwell, we're going to change a complan or it's a new complan this year andthat Xyou thought you were going to get you really only going to see about athird of that, and that is soul. Crushing when you've put your. You knowyou've put the effort into a complex sale, thinking that if you can get thispulled off, there's going to be the return well hell. If my, if I'd know mycomplaint was Goinna, be that I would have totally done things differently,and so I think, with six month plants there, I think you run the risk ofkeeping your salespeople from being able to focus the way you want them toto drive the result Youre after yeah. I agree with you there. My point aboutthe fifty percent was that they over assigned quota by forty percent, meaning that you know say the companywanted to do ten million they assignd an fourteen million of quota yeah, which is not uncommon. Today, Andand Igo. Why did you do that? All we wanted to make sure we were okay and I' go alevel below that and I go so you feel that people will sell more when they'reunder quota or over quota. Well, I guess over quota, so why wouldyou make quota so hard to get that right right? Well- and you see thatwhen you see that over assignment of quota, sometimes it's deliberate, I wasalways to and I've seen it actually be accidental I caught I won't. I won'tname the company I was working for, but I caught one of the divisions I wasworking for iis going back. I don't know ten eleven years, I just did themath adjusted the math on just the team that I was a part of there were other.You know other elements in the sales rcisition and just working backwards.They had they had almost oversigne twenty four percent more in quota andthen in the same breath would complain that their turnover costs on the salesteam, because you know, if you lose them, then you got to bring people inand ramp up costs. Time and money. They'd complain about that, but theydidn't see the connection there right. So it's that one of the things forcomplex rmovs always again making sure that it's not looked at in Asilo. Butyou got t understand. There are impacts across the organization culturallyyou're going to you could take, hits on cost o sales, or you know, head countoroverhead things like that. An and I think most sales executives have atendency. Most exactives have a tendency to look at it in Asilo rightin this protected little perfect, lab environment and FIF labs, LAVenvironments, not paying my bills right, and I think people have to manage tolike a sports franchise team versus you know an assembly line right because, okay, it might take youknow a month to learn how to put a door on a car. But it's going to takeprobably eighteen months to learn how to sell the product into a largeenterprise. Account. Oh e got it oubt right, so you have o know you get theright picture, the right catch or the right left, fieldman and all of asudden. You start you know not all...

...those players on that team get paid thesame. Well, that's yeah, and that's anotherthing right. So you start have you seen organizations where they'ethey've madethe complant so different, based on division of Labor, that it actuallycreates internal strife in the sales teams themselves? Have you run intothat not so much, but I've frend on most ofthe time is like when there's somebody who knocks it out of the parkconsistently. They keep coming up with new and new handicaps and what they do is they force theperson out the door. Now, if you use that on a sports team, let's say youhave you know Homerun Hitter, okay! Well, you know wecan't pay him more than the right fielder right, all right, no one that that logic justdoesn't apply right, Aand. Sometimes I can't understand whywhy people choose to look at it? That way, I mean. Have you seen impacts as aresult of that Oh yeah yeah? They leave that's the easy oethey dom out yeah Imean I can't tell you the number of times I look at the complan and the Oand they go oh yeah. There's two people in that territory. You have your choiceof either keeping these accounts that youv built with this huge number weretaking this brand new territory with this lower number, but there's norevenue in starting over and you got to give that account to that guy. You hateover there andcould you spend three months teaching them what to do andyou're like no thanks and OPASS. That's aotherthing about complents that that has always made me kind of TELP, my head,like a confused pumpy. So you know the organizations we've all we probably alldo. Business wither more have talked to the SASROUND, where you know everytwelve months, you're going to get a new list of accounts or you're going tohave to give up. You know, they're going to reshuffle it right and, andapple was one of these. When I was working with some of their raps, Inever worked for apple, but W at working with their raps. If you wouldget Ino October November, they BIL yeah. We can't we don't want to talk aboutthose accounts anymore because that's probably not going to be my account atthe first of the year. Okay, so well what in essence Jus happene is you justlost three months of work on these accounts that could have producedrevenue could have produced return because you've created a culture whereyou know the shuffle is going to be so great at the first of the year or atthe end of the you know, financial calendar that people start to then makedeliberate choices about where they're going to spend their time, and that hasa drastic impactale amount of revenue they produce and so that consistentshuffle of whether it be accounts or Oh, I love the realignment of territorieslike Oh last last year I was Texas was part of my territory. Now I'm going toMichigan but like. Why would why would Organi Don'? I havenever understood why organizations would consistently make such drasticchanges occasionally, yes, but consistently. I can see that being a severe drag again on the on the teamsand the efforts- and I think probably goes back to that whole stable point yeah and I think what I've alwaystalked to when when I was a manager, I would tell raps I go. This is your aterritory this I can guarantee you you're going to get next year. I have aany control over it. Now your be territory, I understand, is going to beB and that meaning it's going to be a lower priority. But I want you to workit and tell me if there's something th t, that's just not going to happen thisyear and you can just tell me I'll, manage it and I understand completelybut I'll protect you. But you got to protect me, so you got A, I think,manage like you're managing you know a sporting team and understand that youwant these players. You know you put all this investment in them and thatcame out of your box. You know you're back and you don't want them leavingbecause I heard a manager say well, we don't hire a players, we rent thembecause they don't stay.

I've never heard that before that'sgreat right, ancase often too often true, yeah, because IIT's too hard toyou know convince the CFO that this person's really worth more than theother person and and I think we're going dangerously in this direction ofhiring. You know I like the SDR role and even having you know, young juniorpeople come in, but you know I think, once you get the accountants involvedin this, because I see everybody is equal. Oh yeah, it's a spreadsheep viewof the world and then theye going to go into the division of Labor Gone Mad,which works in a high velocity sal with her's pole. But not many companies havepoul right and and if you're still in the push stage, that's a talent, that'sa skill that does not come. You know they don't teach it in college and ittakes a while to develop and it is a skill and once you built that skill,you don't want it walking out the door well Ma and the main, the maintainingof your team over time will generate better results. Right, I mean it justit's one of the reasons why one of the one of the best tools I've seen incomplans is a team accelerator. So, yes, everybodymay have different complans, because the players like said with the sportsnon with the baseball analogy, they do different things. So there might be.You know different types of complants for them. However, much like a baseballteam or a football team wwhen you win the championship. Everybody gets areally expensive ring and a nice bonus right. So in order to get over that, I in the past ave have used- and Ididn't come up with it- stole it from somebody else, but that team incentivethat team accelerator that if you know for the quarter or the half or the yearwhatever it is, if the entire team achieves the targets, then there's thenthere's another a way to accelerate their individual camp. Now it usuallyis a multiplier on whatever their complan is just to keep it. You knowfair across the board, but that type of laitering that that one layer of likeokay, you hit these stiff, the entire tea mensys targets and everybody makesmore money you get to see. You see people work together more often andhave a tendency to stick around a little bit longer because they don'tfeel ere just hanging out by themselves, and that brings up a great pointbecause most sales managers think of their team as a team right and in some ways they are to him,the manager but to the rap. You know if one, it's almost the opposite right,because if one person is you know a hundred and fifty percent of the quota,all the rest of them have to push that person down. Otherwise they look bad andi. Remember this one start up UF,you know, we'd all meet at the airport, be going back to the airport. We get onthe rental, bus and head back to the airport and wed all look around and say:Okay who's not going to be on this bus trip. Next quarter. AAND. I S Sad, butyou know there's a lot of backbiting and, and I think that a team boduswould kind ofto pull people together, because managers to tend to think Oh there, myteam, but there's no incentive to them helping each other is a d incentiveright Welltua if they like, like share resources. Well, Nay, that's where Iwas just going to go, especially today when you see it, how many people areinvolved in a sale m an we often talk about how many people are involved onthe buyer side, and I forget what the lates seven eight nine ten, whateverthere's a lot of people, typically on the buying side of it, but we're alsoseeing an increase in t number of people on the salesside of it the daysof the lone wolf it still happens. I still know some that can pull it off,but that requires a command of a skill set that you don't see a lot of peopleworking to develop. You know as much anymore. You have to see a lot morespecialization and so now you've got...

...more people involved in the salesprocess. Well, you want everybody working together. The only way to dothat, if you're going to have different complans for the different players isto give them some type of some type of team incentive, all right, everyonethat does it for this episode. I hope you enjoyed the conversation aroundcomplans, obviously sensitive subject for many in sales. Today, hopefully, weprovided some insight, some things to think about and some ways that you canreevaluate your perception of your own complan as you move into making twothousand and eighteen stellar year for your sales performance. When I thankeverybody for listening, as always you like what we're hearing, what we'redoing and what you're hearing drop US review on Itunes, we greatly appreciateit shoot us an email. Let us know what other guests or topics you'd like us tocover, and until next time we avalue prime solutions with you all nothing,but the greatest success you've been listening to the btobrevenue executive experience to ensure that you never miss an episodesubscribe to the show in Itunes for your favorite podcast player. Thank youso much for listening until next time.

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