As the technology industry continues to push aggressively into an everything-as-a-service (XaaS) world, leading organizations wrestle with what constitutes best or even center-practice around market coverage and sales compensation.
This was the backdrop for the recent 4th Annual Compensation and Coverage Symposium. Over 40 tech sales compensation and strategy leaders from more than 30 top companies gathered with the Alexander Group from across the tech landscape at the beautiful Autodesk Gallery in San Francisco’s Embarcadero District to explore the latest industry trends affecting coverage and sales compensation; gain some consensus on issues; and create a powerful new network of knowledgeable, experienced professionals.
Theme: Operating in an ILAER buying paradigm and the challenges this presents for both legacy tech companies and emerging born-in-the-cloud companies. ILAER (Identify—Land—Adopt—Expand—Renew) is simply an acronym describing the modern technology customer buyer journey; implementing an effective ILAER coverage and compensation strategy is anything but simple.
Ted Grossman, Principal and Technology Practice Leader, Alexander Group
David Cichelli, Senior Vice President, Alexander Group
─Ted Grossman left little doubt that the industry is demonstrably shifting from perpetual license, on-premise solutions to subscription-based services usually provisioned in public and private clouds.
─David Cichelli, a leading authority on sales compensation for customer-facing roles, reminded compensation leaders of their opportunity and responsibility to lead their organizations into the XaaS world. While sales compensation plans are not the only lever for driving the right functions and behaviors within a company, successful plans will invariably reflect a cogent strategy and a thoughtful coverage structure. When such linkage is not evident, it is incumbent upon compensation leaders to highlight challenges and proactively lead the organization to tackle them systematically.
AUTODESK GALLERY, San Francisco
Facilitator: Chris Semain, Principal and Technology Practice Leader, Alexander Group
Julie Sokley, VP Global Sales Operations – Autodesk
David Sakamoto, Head of Customer Success Americas – Cisco
Ellen Miller, Senior Director Global Sales Compensation – LinkedIn
Adam Carroll, Director Customer Success Strategy & Operations – New Relic
Panelists discussed designing an effective ILAER coverage model, facets of the ILAER model their companies focus on, recent changes to coverage and jobs, and downstream impact to the sales compensation model.
─The diversity of responses indicated how specialized coverage and sales compensation solutions have become in the XaaS model. There are a myriad of factors, including complexity, technicality, “stickiness” of solution, sales cycle time, market and competitive landscape, legacy coverage and sales compensation model, and presence of channel partners, that drive the coverage and compensation decisions of contemporary tech companies.
─Panelists agreed that the key to success is to innovate rapidly, balancing the need between giving solutions the time to blossom while possessing the courage to expeditiously correct missteps.
Smaller workshop sessions focused around the following topics:
─Incenting Recurring Revenue
Nearly all participants shared the goal of creatively incenting sellers to close deals in Q1 to positively impact MRR (monthly recurring revenue) throughout the year.
─Calculating CCOS in the XaaS Era
Companies must realize the tradeoffs between in-year revenue and customer lifetime value to effectively set acceptable CCOS benchmarks in different parts of the ILAER model. The old methods of calculation and benchmarking no longer apply.
─Rewarding Customer Success Resources
CSMs (Customer Success Managers) hired by companies based on previous customer success background at different companies/industries were almost universally ineffective. Participants cited much greater success in hiring from customer’s businesses because such reps were better at identifying and empathizing with customer’s needs.
─Hybrid Compensation Evolution
Hybrid companies struggle to establish parity between subscription and perpetual license compensation emphasis for many reasons but most notably because of inability to set effective subscription goals and lack of management tolerance for the higher cost and lower yield of subscription signings.
─Designing a Sales Compensation COE
The biggest challenges cited by our group of professionals in establishing a compensation center of excellence are gaining executive buy-in, ensuring that calendar timelines are enforced, and accommodating the need for regional variation.
The Symposium provided participants both a wide array of topics and a forum in which to engage their peers in a series of candid and relevant discussions. Alexander Group reinforced the importance of community in addressing the daunting sales compensation and coverage issues that make navigating the XaaS so complex–an offer we extend to you now.
If you would like a full, in-house briefing on the topics discussed at this Symposium or other topics that are challenging your customer-facing organization, please reach out to the Alexander Group for more information.