Does your Company Need an Oil Change or a New Engine?
In the world of business process improvement, one of the most common objectives is that “it isn’t a priority right now”, closely followed by “it seems to working well enough.” This push-back from a company’s representative could be about shifting to digital signature (e.g. with Docusign), improving your marketing automation (e.g. with Marketo), or automating your sales incentive processes with Xactly. The initial objections are all around the perception that the investment to make it better is not worth the return, since nothing seems to be broken.
I get it. When building out priority lists, it is easy to push to the bottom anything that seems to be a lot of work, especially when your desk is covered in sticky notes from different areas – everyone one of them supposedly an emergency. You respond to the squeak in the door, and procrastinate on the bigger issue of the engine oil that needs changing. I get the desire to delay – I used to have to change the oil on a Nissan Z-24 engine where the oil filter was horizontally placed in the middle of the block. It was inconvenient, hard to get a grip to remove, and no matter what dumped some oil on the engine block providing a delightful burning smell the next time you started driving. I never WANTED to make the change, I just knew the price if I didn’t.
In high school I was a passenger in a car driving through the streets of Tulsa, OK. We were simply cruising around when all of a sudden the driver commented that the engine seemed to be heating up. Heating up FAST. Then a loud metallic CLANG, we started dumping smoke like a getaway vehicle from a James Bond movie, and he slowly coasted to a stop on the side of road. He had driven his car without ever once changing the oil, replacing oil, or even checking the dipstick. Result – overheating, carbon deposits and finally a thrown rod. It was new engine time. I learned – never, ever go without checking and maintaining the oil – or you will find yourself buying a new engine instead of 5 quarts and a filter.
Which brings me back to the world of keeping the engines of commerce running smooth. Too many companies lack a proper dashboard to know when they need to make changes. They might look at the revenue model and note if deals aren’t coming in with the same growth that they desire, but instead of checking the entire operation they just focus on yelling at the sales team to close more, and marketing to dump more leads on the table. That is ignoring the underlying need to have a well functioning sales enablement tech stack. But fixing that tech stack is work, while yelling at reps and lead gen activities is much, much easier. The problem is, however, that if you don’t makes some changes – your revenue engine is going to throw a rod.
So how do you check the oil at your company, and how do you know if it needs changing? Let’s start with just looking at company history:
- Has sales turnover increased, decreased or stayed the same?
- What is happening with your cost of revenue? Is the incentive cost of revenue changing?
- How long is it taking you to replace reps, and how long does it take for them to become productive? Is this better or worse then before?
- How are your sales contests performing? Did your last SPIF make any impact on the sales team, or was it just money tossed into the wind?
- Is your commission plan full of rules that have no value? Do you have accelerators that nobody hits, caps that are never reached, or add-ons that are never sold?
These can all be easy indicators of potential problems – purely based on comparing to your own historical data. To get an even better perspective, however, you need to know more about what things COULD look like. One of the challenges is that if you don’t a good set of market data, you don’t know what dirty or low oil even looks like.
- Check sales turnover, and compare it to the market. How many reps are leaving, and what does that cost you?
- Do your top performing reps get top pay? i.e. if a rep is at the 75th percentile of their company peers, do they receive 75th percentile payouts compared to the market?
- Are you keeping too many low performing reps? What does your overall quota attainment curve look like vs. your peers?
Reading these reports is your personal engine check. Think of it like taking your car in every few thousand miles – are you burning oil? Has your mileage changed? Is anything worn out, dirty or running hot? Reviewing these reports will let you know that you might have a problem. Ignoring (or worse, not even looking) means that you have decided, through inaction, that you would rather wait until the engine throws a rod. Instead of cleaning up your sales operations, you might be cleaning up your LinkedIn profile.
You need to make the investment in tools to measure, track, and respond to problems in your revenue engine. Don’t find yourself at the side of the road while the competition passes you by.
[DEMO] Xactly Incent Enterprise™
Take control of your incentive compensation and inspire performance with Xactly Incent Enterprise. Our cross-functional application allows Finance, Compensation, and Sales teams greater visibility into quota attainment and employee performance giving them real-time analytics and flexibility to make changes based on market conditions.