Selling the Connected Widget–Performance ManagementBy: 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 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 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
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.
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
- 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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