Guest blog by Seth Ellertson, Director of Sales East for Sage CRM
As Sage is rapidly approaching the advent of our new and exciting cloud offering for SalesLogix CRM, we’re tasked with advising our partners on how to appropriately motivate and compensating their sales people in this new world. While there is no question our partner and customers are anxiously awaiting our new offer, I can’t help but think that this changes the game for sales compensation. The old days were easy – you gave a sales representative a quota for license sales and paid them against achievement. It was really that easy. The only real question was how much to make their quota and how much to pay them, but of course that could be solved pretty easily by some revenue and cost modeling done by accounting people much smarter in the ways of finance than myself. Sales people had a license revenue target that they achieved by securing upfront software license purchases.
The SASS and Cloud offerings require a bit more thought, although according to Joel York in his March 2010 article SaaS Sales Compensation Made Easy, “The ONLY difference between SaaS sales compensation and sales compensation for software or other products is that you should pay based on the “LIFETIME VALUE of THE DEAL” instead of the unit price of the product. Unfortunately, It didn’t appear that simple from the rest of his article. Joel actually goes on to talk about present values of annuity’s and other financial calculations that I just simply couldn’t focus enough of my attention deficit mind around in my most boring college classes. (Trust me there is a reason I’m in sales) Joel then goes to provide the following formula – SaaS Subscription LTV=RR = RR (1-a)/(1=i) + RR ……… ok, I can’t find the symbols on the key board for the rest of it. Needless to say that’s where Joel lost me.
So I started to think about all of the reasons that a re-occurring model was different from a traditional sales model and the questions surrounding the differences - Should a sales representatative be paid upfront despite the company receiving payments in monthly or quarterly increments? Do you pay on total contract value or reoccurring revenue? If you pay on reoccurring revenue how to you motivate someone to secure a multi-year contract. What if a customer cancels their contract? As I’m researching options, one thing continues to come to my mind –COMPENSATION DRIVES MOTIVATION.
As we’ve rolled out dozens of different sales models over the years the only real question that sales people have is – what exactly do I need to do to make exactly how much money. So what does that mean for a small business owner or a VP of sales looking to change a compensation model… well its simple I think (although I’m clearly not as financially educated as Joel) - First make sure the plan is easy to understand and calculate, remember us sales people like thinks simple. Second make sure that you align compensation with corporate goals. If your corporate goal is to acquire 100 new customers this year, then base a sales representative on customer acquisition. If your goal is to secure 5 million or 500 million in annual re-occurring revenue, then base them on those targets. The only real thing to be careful about according to Joel (yes, I really did read his whole article, it was quite insightful) is to make sure that you choose a time frame for the reoccurring target like monthly, quarterly and yearly and stick with that timeframe, as changing it periodically has serious impact.
So at the end of the day figure out a reoccurring revenue target by doing some projections and modeling and pay your people for achieving those targets. Couldn’t be easier… after all sales people aren’t compensated for managing cash flow they are compensated for closing deals.
I found a great quote in a pdf presentation I found on sales compensation -
“Most of the time was spent discussing our business plans and objectives and worrying less about paying too much or too little” Steve Balk, VP Sales, Dataflux
Steve, I don’t know who you are, but I like your style. I couldn’t agree with you more, although I selfishly favor paying salespeople too much. Lets figure out how to achieve our business objectives and if we overpay our salespeople a bit in the first year because we achieved those objectives – who cares, let’s just go sell!
As I look around I’ve noticed competitors selling their businesses, closing their doors or simply getting small. It’s not just my competition, it’s the business world around us. Whether you’re starting a business or want to build your business in this economy, here’s 7 simple ideas to consider.
1. Acquire: Growth through aqcuisition could be your key to future growth. Find businesses within your industry that are distressed or tired. Or stretch a bit and add a business that has synergy with your core business. But don’t wander too far from your core business. Look for a business that adds to your cross-sell initiative since new customers are hard to find in a tough economy.
2. Inbound Marketing: Invest wisely in marketing. Although traditional marketing still has it’s place, use your spare time or consider getting your marketing folks onboard with Inbound Marketing initiatives. Become a thought leader within your industry. Use the web to get found by your buyers. Today, people want to buy rather than being sold too. Using Inbound Marketing (blogs, Search Engine Optimization (SEO), Social Media like Facebook, Twitter, LinkedIn and more) help your potential buyers find your company when they are ready to purchase. Inbound marketing creates credibility with your buying audience and it’s cost effective! It’s also timely since people who find you are already in the buying /sales cycle. Read the book Inbound Marketing. It’s full of ah-hah moments that will get you rolling with new marketing strategies. Check your web site grade against your competition with this free tool; website grader. Here’s a shout out to our friends at Hubspot for a great product too!
There’s been a lot of talk lately about the Social CRM process. Actually, the phrase was recently dubbed by blogger Jacob Morgan. As social media outlets continue to take off, we need to understand how the wealth of data can be categorized and monetized within CRM. It’s difficult to visualize how these outlets can turn into sales.
How can we successfuly integrate social media into our CRM systems? It seems like a messy undertaking, but Morgan does a great job of clearing it up.
Here is his original idea. It’s simple, maybe too simple.
Morgan's Original SCRM Depiction
Through the beauty of social media, his ideas grew in a few week’s time and he’s added on to it. A Google group, Social CRM Pioneers, led a discussion on Morgan’s initial thoughts. The discussion took on even more interest on the Cloud Ave. blog and ReTweets followed. Social media seems abstract, but with the help of others, Morgan drilled down a little more.
Morgan's Revised SCRM Process Depiction
How do you follow through with social media traffic? Have you created new fields in account records for Twitter activity?
Two hot fixes have just been released for Sage MAS 90 & 200, versions 4.3 and 4.4. Both versions had trouble printing to paperless office on Windows 7.
Both of the fixes are below. As always, BrainSell is here to help if you have any issues with your ERP or CRM system.
Expense reports are a pain. After a long trip, the last thing you want to do is sit in front of a spreadsheet and unfold stashed receipts from pockets, wallets and briefcases. Acumatica, a cloud-based ERP system we adore, has a snazzy iPhone interface.
Now you can start expense reports before they get out of control. Enter the expenses from your phone as they happen and lose the spreadsheet for good!
I’ve recently discovered the beauty of bit.ly, a simple URL shortener. URL shorteners are good for many things, but especially for Twitter. When you’re limited to 140 characters, you can’t waste them on a long URL. When you shorten with bit.ly, it keeps track of your moves. Create a free user login and you can track how many hits your shortened URL gets and from which source.
Bit.ly makes you rethink Twitter. Why does one tweet get your URL 25 clicks and another gets ignored completely?
Tips for tweet clicks…
Keep it short
Get sexy! I know you just read that, use some catchy words.
Get creative too! Say things in that appeal to a wide audience.
Don’t get too specific, that’s the beauty of having a bit.ly URL for people to follow, they can get the details there
I’m supplimenting my google analytics obsesion with Bit.ly now. Use your tweets to see what grabs peoples attention. It works!!!
BrainSell is so into social media that we’ve partnered with the very cool social media company, InsideView.
InsideView, located in San Francisco, has a great little product, SalesView. SalesView can integrate into SugarCRM and find social media connections and news.
Let’s face it, one can waste hours scouring social media sites, blogs and general news sites for mentions of their competitors, leads, customers and THEMSELVES. SalesView monitors thousands of sources relentlessly for that information. You can sit back and see the buzz happen right from SugarCRM.
Social media has never been so easy, and profitable!
Check out our new SalesView page! You can even try it for free.
Ross Jones, VP of Sales Engineering at BrainSell, lectured at Harvard University’s Extension School of Management last month. Jones has been feature as a guest lecturer for three years at Harvard.
Jones’ lecture, The Need for CRM, is part of the graduate course, MGMT 6060 Customer Relationship Management. The course, led by Paul Olean, teaches how to develop a successful customer relationship management (CRM) program.
Jones’ two hour presentation addressed why CRM is needed in business, the benefits and implementation tactics. Jones also discussed why social media is now an invaluable facet of CRM.
“Social media can no longer be ignored,” said Jones. “Using social media as a means of inbound marketing is a very cost-effective way of increasing sales. CRM can handle all the extra data that is a product of social media. It’s a win-win.”
Jones has been a VP with BrainSell for eight years and is an expert on CRM implementation and service.
For more information on Harvard University’s graduate management program, visit the extension Website.
Hubspot founder Dharmesh Shah related outbound marketing to killing kittens at our Accelerator event last month. We don’t like doing it, but it’s necessary sometimes. Depending on your business, you may be able to use inbound marketing so much that you’re running an animal shelter. Others aren’t so lucky.
BrainSell still finds outbound marketing valuable. It’s a way to engage customers who aren’t buzzing on social media sites all day. With the right pitch and implementation, outbound marketing can work.
A method we favor is still email marketing. However, you have to be careful! Getting blacklisted is easier than you think. Using an automated email program can build consistency, leads and follow-through. You can also integrate these programs into CRM systems so the correspondence doesn’t get lost.
BrainSell CEO Jim Ward will go to great lengths for service excellence. A pesky air conditioning unit has left the office in temperature control distress; this hot box is 76 degrees and climbing! New Englanders like us don’t do well in that sort of climate, and neither do our servers.
Jim takes matters into his own hands…
Just another example of BrainSell’s commitment to excellence in all fields.
However, you have to be careful! Getting blacklisted is easier than you think. Using an automated email program can build consistency, leads and follow-through. You can also integrate these programs into CRM systems so the correspondence doesn’t get lost.
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