Alexander Group’s technology vertical team recently hosted four virtual roundtables on strategies to manage through the pandemic.

More than 120 tech revenue leaders across the world came together to share their experiences and expertise. These four robust discussions utilized the findings of multiple Alexander Group COVID-19 surveys from tech industry leaders and centered around three areas:

  1. Business Planning and Strategy: What moves have tech companies executed? What initiatives are tech companies contemplating and when? How has COVID-19 changed near or long-term strategy?
  2. Business Continuity: How are tech companies adapting traditional go-to-market capabilities and techniques to accommodate a remote work environment? How do tech companies nurture and build relationships in a period of social distancing?
  3. Sales Quotas and Compensation: Are tech companies contemplating quota relief or sales compensation plan changes? How will organizations adjust to keep themselves and sellers whole through the crisis? What techniques are companies using to maintain pay-for-performance culture in an environment where performance is challenging?

This article summarizes some of the most interesting tactical and strategic actions that tech companies are utilizing or contemplating to help effectively manage through the pandemic.

Business Planning and Strategy

Overall, among both our survey population and virtual roundtable audience, there was a split between those responding fairly immediately to the onset of the crisis and those in more of a “wait and see” mode. Among those who were changing strategy permanently or temporarily as a result of COVID-19, several key themes emerged:

  • Compress Focus─Combat uncertainty by shortening performance horizons. Instead of focusing on annual plans, focus on half-year or quarterly objectives.
  • Be Transparent─Provide teams with transparency on key business metrics so that commercial teams (sales, marketing, service) understand the degree of downturn and can focus on a path to improve key metrics as opportunity returns.
  • Digital as the “New Normal”─Prepare for an environment where face-to-face selling and travel is offline for a year to 18 months or more. Significantly increase training on virtual demos, value proposition and deeper product/solution knowledge. Take advantage of easier collaboration opportunities for sales and pre/post-sales technical support capabilities.
  • Relentless Focus on Pipeline─Drive more understanding of the nature of pipeline in the organization; are we burning through existing pipeline, are we creating new pipeline, is pipeline “stuck” at certain stages longer than is typically the case? Some companies have instituted new sales fields such as “COVID delayed” to designate postponed technology projects for continued nurturing. Sales pipeline is the best single leading indicator companies possess to gauge the relative strength or weakness of their businesses.
  • “Seed the Clouds” for Future Demand─Though demand may not be currently robust in certain tech sub verticals, many tech companies are doubling down on creating future pipeline by utilizing freemium or shareware trials. Some are extending pilot periods and focusing on user adoption and loyalty to fashion ready-made pipeline when companies begin spending again.

Business Continuity

One of the more palpable sentiments from our virtual roundtable audiences was a desire to return to normal as quickly as possible. This is partly a normal human response to an unsettling event, but also a recognition that many tech companies were performing quite well prior to the onset of the pandemic. Business continuity, in this context, is about preserving pre-crisis momentum by effectively managing the downturn and the resurgence. Our community of tech revenue leaders identified several interesting focus areas designed to bridge the gap between the current uncertainty to a “new normal” at some point in the future.

  • Management Communication─Many of our tech participants highlighted the need for increased frequency of communication from executive leadership during this time of upheaval. Weekly all-hands, Executive Leadership Team (ELT) videos (similar to investor calls), live town halls were just some of the ideas utilized by companies in our roundtable audience.
  • More Prescriptive Sales Management─One of the themes that came up consistently was utilizing techniques more commonly associated with inside sales for management of outside teams during social distancing. Daily team meetings, daily 1-on-1 rep manager meetings, additional best practice sharing sessions, blitz or campaign driven contact activity, more centralized prioritization of sales activities were just some of tactics shared. Some companies have connected field sellers to productivity and management software normally reserved for inside teams to routinize and track expectations on selling activities.
  • Focus on Customer Base─Many companies are using this time to drive deeper intimacy with existing customers. Customer success managers are reinforcing business value drivers with customers, driving usage and solution assurance, and watching for signs of churn. Several companies have diverted demand generation resources temporarily to support or hunt within existing accounts. Most importantly, many tech revenue leaders cite the ability to drive empathy in challenging moments as a means to demonstrate true customer advocacy. A VP sales for a data analytics SaaS provider told our roundtable audience that his company has decided to relax the policy of suspending functionality in past due SaaS subscriptions for up to 90 days as a show of solidarity with customers in difficult times.
  • Emerge from Crisis Stronger─Anyone who has spent any amount of time traveling for business knows that it can be a significant time sink. Companies in our tech community are taking advantage of a captive audience of their Sales, Marketing and Service teams to make human capital investments that often get deprioritized in the normal run of business. One Tech revenue leader reported a 150% uptick in usage of online Learning Management System (LMS) modules since the onset of COVID-19. Another told the group that his channel managers have conducted more business planning meetings with partners over the last four weeks than they have in the last two years. Another channel leader told us her reps were forging deeper relationships with their partner network by hold “coffee chat” virtual training sessions each week focused on product training, virtual sales pitches, and socialization. Great leaders utilize times of crisis to strengthen their capabilities.
  • Celebrate Success─Celebrating success is more important now than ever. A CRO at one of our roundtables told us he is sending a note to all marketing, sales and service teams celebrating significant weekly wins. An EVP of sales described how he’s reinstituted a “ring the bell” culture which blasts out sales successes to the entire organization to boost morale and publicize wins. Not only can celebration of success be a welcome diversion, it can also convey a sense that the business is still operating effectively in a challenging environment.

Sales Quotas and Compensation

The decision to alter sales quotas and compensation is fraught with complexity. Many companies want to ensure they keep their reps whole during a downturn when normal performance levels are difficult or impossible to achieve. Conversely, changing sales quotas and compensation at an unusual interval can be unsettling to the organization and places the financial outcomes of sellers over that of the rest of the company. As of this writing, more than 2/3 of companies surveyed by Alexander Group have enacted or are considering quota adjustments and more than 80% have enacted or are considering providing guarantees to sellers as a result of the COVID-19 downturn. Alexander Group captured several themes in our roundtables as tech revenue leaders contemplate changes to quotas, sales compensation plans, or both.

  • Soften or Eliminate Sales Comp Plan “Sticks”─It is common in tech compensation design to utilize mechanisms that create negative outcomes for reps if they fail to achieve minimally expected performance. Some examples of such mechanisms include: thresholds, hurdles, modifiers, linked measures and many others. Several revenue leaders told us at a roundtable they were suspending sales compensation plan sticks for the first half or full calendar year 2020. For example, one VP of sales ops from a large tech company told us that his plan normally links SaaS bookings with Total Bookings; if a rep doesn’t sell enough SaaS, they do not get fully paid out on the Total Bookings measure. That linkage has been eliminated for all of 2020 and reps will get full credit for both SaaS and perpetual license revenue with no penalty for missing a minimum SaaS target. Another company has removed all thresholds from all plans for the first half of 2020.
  • Adjust Goals without Changing Quotas─Some of roundtable participants indicated a willingness to insulate reps from quotas that have become unrealistic, but were hesitant to adjust the underlying quotas themselves, fearing it would be difficult optically to return to normal levels once the crisis abates. One revenue leader simply implemented a credit multiplier; quotas remain the same, but each dollar of booking retires 1.5 dollars in quota. Another company re-indexed performance around 70% target attainment. So again, quotas remain the same, but sellers are being “graded on a curve.” In this case, a rep hitting 70% of the target is paid out 100% of variable sales compensation, and the entire curve shifts accordingly.
  • Truncate Pay and Performance Periods─Many companies in our survey and in our roundtables are shortening pay and performance periods. One of our roundtable participants shared that they’ve gone from a yearly plan to discrete quarterly plans that provide them the ability to adjust both sales compensation, quotas and guarantees on a quarterly basis moving forward. Preservation of operational flexibility in uncertain times is important to ensuring company survival while treating commercial personnel equitably.

Read here for additional actions Tech revenue leaders are taking to mitigate business disruption due to COVID-19.

The Alexander Group recognizes the challenges facing businesses during these uncertain times. We will provide information as it becomes available while the situation unfolds. We are available to answer any questions or provide additional insight on how organizations are managing through and eventually, out of this crisis. Please visit our Insights page, where we will continue to share insights and practices.

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