Hidden Gains from Losing Business Friction
Many companies reach a tipping point in their growth curve, but how they handle that moment holds major implications for their future. For CBEYOND, this tipping point came when the telecommunications provider realized its industry and products were becoming commoditized, and expanded its business into the cloud service model. Slowing down topline revenue growth was a big risk for the public, and the leadership needed to deliver results, fast.
A Champion Raises His Hand
One member of the executive team — David James, Senior Director of Sales Operations & Incentives— knew he needed to act fast. “We were growing,” he recalls. “And I knew our distribution model and sales teams were the secret component to CBEYOND’s success. We needed to hire new sales talent and build new back office competencies. Personally, I needed to build incentive plans that motivated selling our new products and services without abandoning the legacy products. So I asked the team, ‘Why are we skimping on the most important motivational tool that we would use to drive our success in the most important channels?’”
To propel its aggressive sales targets, CBEYOND selected Xactly Incent, and used six strategic steps to motivate its payees:
1. Understand the cost of conflict in your organization.Many professionals should view friction as an obstacle of profit instead of an everyday annoyance CBEYOND revealed the true cost of friction when it reduced its sales commission disputes by 88% increasing their sales team productivity by 30%. As a result, the company increased its strategic cloud services revenue by 21% and cloud subscriptions by 40% in the first 12 months!
2. Clarify your purchase criteria. David knew CBEYOND needed a technology partner that offered a robust set of tools, not an outsourced calculator. As he puts it, “we kept stubbing our toes on spreadsheets.” To fuel CBEYOND’s growth expectations and increase complexity, David needed a solution that could quickly adjust as leadership refined its strategy, sales model, and activity model. For this reason, integration with other platforms like Siebel and Salesforce was also key. Because CBEYOND had its criteria in mind pre-purchase, employees were able to design, model, test, approve, and release new plans in less than 60 days.
3. Wield compensation as a recruiting and retention tool. In a sales-centric organization, how accurately you pay your salespeople, and how quickly you resolve disputes, makes all the difference in keeping salespeople satisfied, motivated, and focused. David raised the bar for CBEYOND to think about compensation as a strategic differentiator when hiring and keeping employees. He says: “How we compensate, the cool dashboards our salespeople get, how accurate and timely payments are — many companies in and beyond our sector aren’t doing these things.” Likewise, he says, “How CBEYOND designs and executes compensation is a benefit,” and has increased sales representative retention by 50%.
4. Ask accounting to give you the toughest report it can think of. You really can kiss angst between Sales and Finance goodbye. Recalls David, “I said [to accounting}, ‘Give me the toughest report you need.’ They did, and we gave it to them. Now, they can run every pivot and see data from almost every angle for traceability, from how a payment got booked, how it got accrued, whether it went to pre-pay, and if it showed up as an expense. We’ve decreased disputes to less than 0.5%, improved forecast accuracy to 99.6%, and finish all the accruals on time, at the same time, every month — with 99.8% accuracy.”
5. Shoot to give your team a feeling of Zen — while reducing headcount. Before automating commission payments, David’s lead administrator, who was exceptionally skilled in Excel, still encountered frustrating issues due to using a manual system. In fact, CBEYOND was going to hire two more employees just to manage commission disputes. Today, post-incentive compensation automation, each member of the team thoroughly understands the platform, which gives their leader “an entirely different level of Zen.”
6. Tweak often. While many companies design or refresh new plans once a year, CBEYOND was growing fast enough to require revisions on a quarterly and sometimes monthly basis. If your company has hinged your entire success on the sales organization, and you have multiple sales organizations, make sure have the option to adjust your compensation plans as quickly and easily as your competitive strategy.
That’s David’s story. What’s yours? If you’re still managing compensation in spreadsheets, or struggling with a poorly implemented incentive compensation system, take these steps and become the change in your organization, too.