Selling the Connected Widget–Performance Management

By: Priya Ghatnekar Digital Transformation, Manufacturing, Sales Compensation, Sales Talent, Technology Sales

In previous installments of this article series, we discussed the evolving buyer and processes necessary when selling connected services in manufacturing. We also covered job role details and competencies. In part 4, we will discuss the sales compensation components used to enable these job roles.

Review of Common Enterprise Sales Roles

The two roles we have discussed throughout are:

  • Enterprise Hunters–responsible for landing new logos
  • Customer Success Managers (CSMs)–responsible for ensuring adoption and expansion

Sales Compensation Concepts

Sales compensation is an alignment tool. As such, it is important to ensure that the associated sales compensation roles support the behaviors the roles are required to execute in the field. For enterprise hunters and CSMs, consider these three main components:

Pay Levels–The Total Target Compensation for the job. This is the sum of base salary and the incentive pay at target.

Pay Mix–The split of base salary and incentive as a percentage of Total Target Compensation. If a job’s total target compensation is $100,000 and it has a 60/40 pay mix. The base salary is $60,000 and the target incentive is $40,000.

Measures–Metrics against which incentive pay is awarded (e.g., revenue, profitability, key sales objectives)

Enterprise Hunter Compensation Components

Pay Levels:
Pay levels for the enterprise hunter tend to be higher than typically seen in manufacturing organizations. These pay levels usually mirror pay levels for high technology sellers.

Pay Mix:
Pay mix for these enterprise hunter roles tend to have more pay at risk than traditional sellers in the manufacturing space. These roles will have a pay mix of 50/50—60/40 as compared to the traditional manufacturing seller which has a pay mix closer to 70/30-80/20.

Common measures for the enterprise hunters include bookings. However, organizations may also be interested in landing new logos. While the overall bookings value is important, they might opt to pay the enterprise hunter for landing the initial booking regardless of deal value. Additionally, to ensure that the enterprise hunter has the ability to capitalize on an initial expansion, some organizations have structured crediting rules so that the Enterprise Hunter will earn incentive on all bookings in the account for a certain period of time during the expansion.

Customer Success Manager Compensation Components

Pay Levels:
Customer success managers have been gaining traction in organizations with recurring revenue models. These roles are critical to ensuring that the customer adopts the technology. They also continue to drive usage throughout the life of the contract. If the customer success manager does their job well, then the organization should be able to capitalize on renewals and upsell and cross-sell opportunities.

Since the CSM role is just gaining traction in the industry, AGI suggests that organizations conduct pay level benchmarking to ensure that the pay level for the CSM role aligns with industry standards.

Pay Mix:
There are multiple ways to deploy the CSM. Some carry a low amount of pay-at-risk to provide a linkage to sales results without risking service focus. Pay at risk can range from 80/20-90/10. If the role is deployed to drive usage of the solution, the role can be 100% base salary and have no pay at risk.

Customer success managers’ sales compensation measures can potentially include:

  • Upsell in assigned accounts
  • Cross-sell in assigned accounts
  • Renewals
  • Number of customers that maintain usage
  • Customer satisfaction

Depending on which measures are included in the compensation plan, the organization should ensure that they are able to accurately measure these data points.

Recapping this article series:

Part 1: New buyers and buying processes associated with Industry 4.0
Part 2: New job roles required to support sales execution
Part 3: Different skills and competencies, metrics to measure performance and considerations for the quota-setting process

The capstone of the series provides sales compensation structures to attract, retain and reward best in class talent for the enterprise hunter and customer success manager roles.

Embracing the challenges of a digitalized world requires continual reevaluation across the firm not only to optimize the customer experience but also to capitalize on the abundant opportunities available.

Are you ready to reevaluate your sales compensation plan’s roles and components? Connect with an Alexander Group practice leader today.

Co-author: John Stamos is a manager in Alexander Group’s Chicago office.

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Priya Ghatnekar

Priya Ghatnekar is a director in the Chicago office. Priya has experience working with clients across multiple industries, including manufacturing, high tech and financial services. Priya has worked on a variety of project types including revenue motions; sales coverage; job design; and multiple large, global sales compensation engagements. One recent engagement had her overseeing the execution of a sales transformation roadmap across three European and North American divisions.

Prior to joining the Alexander Group, Priya was an analyst at Towers Watson’s Investment Services group. She focused on defined contribution and defined benefit plans. She was responsible for developing and monitoring investment programs. Priya has also worked at both The Marco Consulting Group and EnnisKnupp & Associates. Priya holds a B.A. from The George Washington University and an MBA from Kellogg School of Management, Northwestern University.

John Stamos

John Stamos is a manager in the Chicago office. John has experience working with companies in a variety of industries including manufacturing, high-tech, insurance and consumer packaged goods. His most recent engagements include a complete go-to-market strategy assessment, full-scale enterprise program design, job roles and competency model design, and detailed territory alignment.

Prior to joining the Alexander Group, John was a product marketing manager for Cognex Corporation where he conducted market analysis for international serialization initiatives in the pharmaceutical industry and oversaw the development of its configuration software. Prior to this role, John had territory account responsibility at Cognex, selling automation solutions to assist in the quality control and traceability in various industries including pharmaceutical, food and beverage packaging, automotive manufacturing, electronic component assembly and retail logistics. John has nine years of direct sales and distribution management experience.

John holds an MBA from the University of Chicago, Booth School of Business, and a B.S. in Mechanical Engineering & French from the University of Wisconsin-Madison.