Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

48
© 2006 Ceridian Corporation. All rights reserved. Boosting Sales Productivity Through Re-Engineering the Sales Commission Process Lisa Ard Master Black Belt

description

 

Transcript of Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

Page 1: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved.

Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

Lisa Ard

Master Black Belt

Page 2: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 2

Agenda

• Ceridian Overview

• Project Background Commissions Processing Terminology Input from the Sales Commissions Reporting DMAIC project

• IDDOV: Sales Plan Reengineering

• Validation of Results

• Lessons Learned

• Conclusions

Page 3: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved.

Ceridian Overview

Page 4: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 4

Ceridian: An Introduction

• A global provider of human resource solutions.

• Fortune 1000 company

• Over 70 years experience in the service industry

• Over 7,800 employees in 80 locations

• HQ in U.S., UK and Canada

• Provide payroll in more than 40 countries

• Provide EAP services in over 100 countries

• $1 billion in revenue

• Publicly traded on NYSE as CEN

Page 5: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 5

Our Customers

110,000 customers with over 20 million employees worldwide

80 Fortune 100 customers

338 Fortune 500 customers

562 Fortune 1000 customers

Page 6: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 6

Ceridian Solutions

Page 7: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 7

Multinational Payroll Solutions

Ceridian Owned (4) High Volume (11) Low Volume (23)

Germany

France

Switzerland

Belgium

Netherlands

PolandIreland

Czech Rep.

Portugal

Spain

Countries as at January 2006

Finland

Sweden

Norway

Dubai, UAE

Estonia

Denmark

Hungary

Australia

Hong Kong

Greece

South AfricaArgentina

Cyprus

India

Japan

Luxembourg

Philippines

Singapore

Turkey

UK

USA

Morocco

Italy

Austria

Sri Lanka

Bangladesh

Canada

*Mexico

*Bureau & Managed Services available

Page 8: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved.

Project Background

Page 9: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 9

Commissions Processing

• Sales Commissions Processing Within Ceridian:

Sales Plan Creation Order Entry Sales Plan and Commission Support

Outsourced: Commission calculations, processing &

reporting

Page 10: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 10

Terminology

• Sales Order Value = an estimated annual value of the order

Commission rate x SOV = Commission payout SOV comparison to actual revenue results in a

commission adjustment

Page 11: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved.

Input from the Sales Commission Reporting DMAIC Project

Page 12: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 12

Business Case

There is high dissatisfaction with the sales commissions reporting and auditing process. Difficulty reading reports, complexity in researching issues, a lack of resources for assistance and untimely report delivery are examples of the issues.

Team

Objective & Deliverables Project Benefits• Outline commission report requirements based on customer needs. Deliver to FIS as requirements for Oracle 11i upgrade.

• Improve employee satisfaction with reporting from 2 to 3

• Reduce employee inquiries to the Commissions Team by 25%

Sales Ops

Commissions

Financial Information Systems

Sales

Account Executive

• Increased sales productivity

• Improved employee satisfaction

• Facilitate requirements gathering for in-house commission reporting process

DMAIC: Define

Page 13: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 13

Page 14: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 14

DMAIC: Define

Pete Anderson, Finance

Stakeholders:

Inputs: Suppliers: Process Name: Customers: Outputs:

Purpose:

Process Performers:

Process Owner: Systems:Oracle, Synygy, Data WarehouseShareholders

Sales registers, open item reports, ranking report, commission statementTo provide accurate documentation

on sales commissions/SOV attainment to facilitate communication, auditing, forecasting, budgeting and resource management.

IT, Business Analysts, SRA, Synygy, Commission Administration, Sales Ops

Data feeds, revenue, Synygy payment data, plan data

Oracle, Synygy, Signature, CTS,

Reporting Sales reps, Sales mng, Sales Execs, Corporate mng, Finance, HR, Corp Accounting, KPI Report Analyst, Sales Ops

Measures:

# of inquiries, employee satisfaction (report users), Cycle time (report distribution - booking), Deviation from reporting due dateSources of Variation:

Data not sent/received on time, data errors, system issues, system conversions, human error / manual interventions, multiple hands, seasonality, different levels of understanding in interpreting reports (training issue)

Critical Measures:• Employee Satisfaction• # of Inquiries• Cycle Time

Finance

Page 15: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 15

Process Flow Chart

DMAIC: Define

Sa

les

Sa

les

Ad

min

SR

AO

racl

eS

ynyg

yC

om

mis

sio

ns

Te

am

Start

Weekly audit of Detailed

Sales Results Report

Send files to Synygy

Synygy processes: Calculate commissions, transaction processing, adjustments, FOP, grow for AE, Units/monthly revenue payouts, reporting, Mbil (25% adv comm), 1st bill

Verification Reports Audit &

ResponseReports received File received

Forecast Report (FOP, Adj) received

Report received via e-mail

Stop

day 1-3 in month

Month End calculation of losses, 3rd party payouts, revenue history, revenue sweep, PS billing payout

Order Entry

Month End Processes (Participant

Maintenance, Deviation Input,

Rep on Quota, as needed

spreadsheets, etc.

goal: day 4

goal: day 5

goal: day 10

throughout Synygy processing

Run Uploads into Oracle, send

Payroll & GL files

goal: day 12goal: day 13

goal: day 13 goal: day 15

daily runs accessed in VISTA

Page 16: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 16

Voice of the Customer

• Settle on the questions to ask our customers Initial Survey (1) Initial Focus Group

• Refine the questions and measure the broader voice of our customer Web Survey (2)

• Test root cause theory and gather input on opportunities Final Focus Group (3)

DMAIC: Measure

Page 17: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 17

Sales Commission Survey Results

• 73% are not satisfied with delivery timeliness 88% would find it acceptable or better to receive reports by the

15th business day in the month

• 97% satisfied with e-mail delivery 30% would prefer web delivery

• 57% have never received training

(2)

DMAIC: Measure

Page 18: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 18

Sales Commission Survey Results

(1)

DMAIC: Measure

Hours spent monthly on commission reports

Avg, 5.4 Avg, 5.8 Avg, 6.3

Avg, 4.1

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

Other Sales Admin Sales Manager Sales Rep

Ho

urs

Page 19: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 19

Sales Commission Survey ResultsResources for Report Questions

27%

17%

44%

23%

48%

12%

0% 10% 20% 30% 40% 50% 60%

Sales Admin

Other Sales Rep

Sales Manager

Sales Reporting Admin (SRA/Billing Specialist)

Commissions Team (Kathy Fisher, MichelleLienemann, Beth Maus)

Other

Lack of clear inquiry process

(2)

DMAIC: Measure

Commissions Team

Page 20: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 20

Sales Commission Survey ResultsAll Respondents

(2)

Importance Scoring: Must Have, Above Average, Average, Below Avg, Not Important, Do Not Use

Satisfaction Scoring: Best Imaginable, Very Good/Happy, Good/Acceptable, Not Very Good/Poor, Poor/Angry

DMAIC: Measure

Importance vs. Satisfaction Current Sales Commission Reports

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

ICC

om

mis

sio

n

Sale

s D

eta

il

Sale

sS

um

mary

Open I

tem

s

Importance - Must have or above average Satisfaction - Acceptable or better

Page 21: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 21(2)

Importance Scoring: Must Have, Above Average, Average, Below Avg, Not Important, Do Not Use

Satisfaction Scoring: Best Imaginable, Very Good/Happy, Good/Acceptable, Not Very Good/Poor, Poor/Angry

DMAIC: Measure

Importance vs. Satisfaction Ranking by Sales ManagersCurrent Sales Commission Reports

0%10%20%30%40%50%60%70%80%90%

100%

ICC

om

mis

sio

n

Sa

les

De

tail

Sa

les

Su

mm

ary

Op

en

Ite

ms

Dis

tric

tD

eta

il

Fo

reca

ste

dF

OB

Ad

just

ed

Dis

tric

t V

iew

Na

tion

VIS

TA

Importance - Must have or above average Satisfaction - Acceptable or better

Sales Commission Survey ResultsSales Manager Responses

Page 22: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 22

Focus Group ResultsBefore & After Comparison of Report Usefulness

0%10%20%30%40%50%60%70%80%90%

100%

Eas

e_IC

Com

mis

sion

Eas

e_S

D

Eas

e_S

S

Eas

e_O

I

Eas

e_D

D

Eas

e_F

OP

AD

J

Eas

e_D

VN

Eas

e_V

IST

A

Cal

c_IC

Com

mis

sion

Cal

c_S

D

Cal

c_S

S

Cal

c_O

I

Cal

c_D

D

Cal

c_F

OP

AD

J

Cal

c_D

VN

Cal

c_V

IST

A

Info

Nee

d_IC

Com

mis

sion

Info

Nee

d_S

D

Info

Nee

d_S

S

Info

Nee

d_O

I

Info

Nee

d_D

D

Info

Nee

d_F

OP

AD

J

Info

Nee

d_D

VN

Info

Nee

d_V

IST

A

% a

ns

we

rin

g Y

es

Before After

Reports are simple and easy to use

Understand the calculations within reports

I have the Information I need

Reports (in order): IC Commission, Sales Detail, Sales Summary, Open Items, District Detail, FOP & Adjustments, District View Nation, VISTA

(3)

DMAIC: Measure

Page 23: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 23

54321

95% Confidence Interval for Mu

2.12.01.9

95% Confidence Interval for Median

Variable: C2

2.00000

0.78220

1.87615

Maximum3rd QuartileMedian1st QuartileMinimum

NKurtosisSkewnessVarianceStDevMean

P-Value:A-Squared:

2.00000

0.93046

2.08494

5.000002.000002.000001.000001.00000

2572.68E-040.6143780.7222760.849871.98054

0.00016.431

95% Confidence Interval for Median

95% Confidence Interval for Sigma

95% Confidence Interval for Mu

Anderson-Darling Normality Test

Descriptive Statistics

Sales Commission Survey ResultsOverall Satisfaction

Satisfaction Scores:5 = Best imaginable with known technology4 = Very good / happy3 = Good / acceptable2 = Not very good / poor1 = Poor / angry

(2)

DMAIC: Measure

Page 24: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 24

Voice of the Customer

DMAIC: Measure

Very Satisfied Customers

Fully Supplied Customer

Need

Very Dissatisfied Customers

Did Not Address

Customer Need At All

Latent Needs

Articulated Needs

Basic Expectations

KANO Model

• Pull own reports• Real-time reporting• Drill down capability• Within self service

• Info on owner of task• Description of action

• User friendly reports• Timely reports• Standard processes• Commission value shown on report

Page 25: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 25

Initial Root Cause Analysis

DMAIC: Analyze

Problem Why? Why? Why? Why?

1 Oracle reports don't match to booking paperworkBooking at product line item and Commission Reporting at attainment type Non-integrated systems

Finance need for revenue reporting at detail level vs. Sales need to see it at summary level

Finance needs to validate revenue starting, commission payout accuracy

Manual calculations of SOV

Non-integrated systems (other pricing tools vs. Oracle)

Billing input not followed up by SOV check Lack of Training

2

Reps don't understand difference between SOV eligibility and NSR eligibility (doesn't go toward accelerator) Lack of training

Sales Plan complexity Pricing complexityStrategy complexity

3 Too many line items Sales Plan complexity Pricing complexityStrategy complexity

Need ability to research by product line item Sales Plan complexity Pricing complexityStrategy complexity

4 No roll up to customer level Reports roll up to contracts, not customers

Complex process to access invoicesNon-integrated systems (billing, invoice)

Only Sales Admin have access to system

Oracle ID cost, limited # of ID

Lack of Training5 Too many codes Sales Plan complexity Pricing complexity

Strategy complexity

MBILpolicy to pay upfront and then adjust

Why is the overall satisfaction with sales commission reporting so low?

Many root causes were outside of the project scope and upstream from the sales commission reporting process

Snapshot of 5Whys?

Page 26: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved.

IDDOV: Sales Plan Reengineering

Page 27: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 27

Complexity in the sales plan is driving costs to bring commissions processing in house. Rep movement, payment timing, the number of plans are examples of the complexity in the current plan. This team will design a new sales plan and delivery method aimed at reducing complexity and the cost to deliver, while maintaining incentives to sell and retain/attract personnel and improving employee satisfaction.

Team

Objectives Project Benefits• A simple plan, easily understood by those receiving payment and those administering payments• A market-competitive plan, one that ensures payment accuracy and timeliness• A plan that minimizes risk to the company• One that provide incentives to sell those products determined by management• Flexibility within the plan to accommodate year-on-year changes• A plan that is cost effective to administer and provides for sales force efficiencies

Finance

Sales Operations

Commissions Team

Financial Information Systems

Human Resources

Compensation

• Improve productivity

• Reduce cost to administer

• Improve employee satisfaction

Identify

Business Case

Page 28: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 28

Project is in the Verify Phase and at Project Closure

Page 29: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 29

Project Steps1. Validate Process Characterization (TV) Screens

2. Develop Customer Requirements thru Voice of the Customer (VOC) Grid

3. Validate and prioritize VOC thru discussions with customers using the Analytic Hierarchy Process matrix

4. Determine internal (design) requirements using the House of Quality

5. Develop concepts that meet design requirement targets

6. Optimize the concepts with a Failure Modes & Effects Analysis

7. Verify plan thru modeling using historical order information

Page 30: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 30

Start: Initial Project Plan MtgEnd: Final approval of plan changes from prior year

Steven Rodriguez

Stakeholders:

Inputs: Suppliers: Process Name: Customers: Outputs:

Purpose:

Process Performers:

Process Characterization TV Screen

Systems:

Process Owner:

ShareholderEEsExternal CustomerAudit

Market DataHistorical Data/ AnalysisEE Turnover DataExecutive InputManager Survey DataProject Manager Plan

3rd Party SurveysCommission ReportsSales ReportsHR SystemExecutives (BU owners)RVPs, DVPs

Sales Plan Design Finalized Sales PlanSales Plan Revisions

Motivate productivity in sales, drive desired business results, and compensate to attract/ retain "A Players".

Sales OpsCompensation Business Unit Owners

Sales TeamSRA/ Comm AdminISExecs

Measures:

Cycle Time: Start to End; Delivery Date; Sales Business Results (compared to desired business results); Retention; Payout: Target -vs- Actual per role; EE Survey Feedback (motivation/ rates/ comprehension…); # of revisions; ROISources of Variation:

Final decision: Timing/ lateness of final budget/ quota; Org Changes; Number of plans; Plan complexity; Competitive market/ Industry competition, market conditions; Product variation; Emerging markets, acquisitions, partnerships, segmentation

Define

Address complexity to meet project objectives

Sales Operations

Page 31: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 31

• Brainstormed customer requirements and benefits using the Voice

of the Customer Grid

• Approached three customer groups to validate the customer

requirements and understand the relative importance of those

requirements

• Tools VOC grid

Analytic Hierarchy Process

customer interviews

Establish the VOC

Define

Page 32: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 32

Voice of the CustomerCustomer Requirements Benefits

Direct internal Sales Team Easy to understand Sales force efficienciesOpportunity to get paid at higher rate (accelerators) Incentive to sellAbility to value a sale / measure performance Performance measureMarket competitive Rep retention

Timeliness of payments, reporting Provide incentiveMinimize risk

Accuracy of payments, reporting Minimize riskClear and timely communications about plan, implementation and backlog (transition)

Awareness

Modeling tools for commissions forecasting Understanding of financial impactSales Management Ability to handle sales promotion strategies Flexibility to provide incentives

Productivity driven Maximize revenue, minimize costMeets all business unit needs

and all sales team listed reqCommissions Team Simple to administer, research Efficiencies

No deviations EfficienciesAbility to measure (i.e. volume reporting) Performance measureAutomated and accurate accounting transactions Efficiencies, accuracyInterface to payroll Efficiencies, accuracyClear and timely communications about plan, implementation and backlog (transition)

Awareness

Sales Reporting Administration Simple, easy to understand (ease of booking) Efficiencies

FISSimple / lower complexity Ability to deliver with system,

efficienciesIntegrated Ability to deliver with system,

efficienciesClear and timely communications about plan, implementation and backlog (transition)

Awareness

Sufficient lead time (i.e. contest, plan changes) Ability to deliver with system, awareness

Execs Cost neutral Accurate forecastingSales Order Value (SOV) inform investors / revenue

forecasting

Productivity driven Maximize revenue / minimize cost, labor efficiencies

No deviations Fairness; forecasting accuracyCost effective to administer Maximize revenue / minimize costPaid on revenue Minimize risk

Customer

3 Main Customer Segments:

Sales,

Finance &

Executives

Page 33: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 33

Voice of the CustomerComparison

Define

Sales Finance / FIS XOPSEasy to understand Simple to understand, administer, research Cost neutralOpportunity to get paid at higher rate (accelerators) Ability to measure (i.e. volume reporting) Ability to measure

performance (SOV)Ability to value a sale / measure performance Automated transactions and interfaces Productivity drivenMarket competitive Clear and timely communications about plan,

implementation and backlog (transition)Cost effective to administer

Timeliness of payments, reporting Sufficient lead time (i.e. contest, plan changes) Paid on revenueAccuracy of payments, reporting Ability to control process (SOX)Clear and timely communications about plan, implementation and backlog (transition)

Accurate expense recognition

Modeling tools for commissions forecasting Ability to reconcile b/n expense & paymentAbility to handle sales promotion strategies Accurate and timely financial reports Productivity drivenMeets all business unit needs

Some shared customer needs, some competing needs

Page 34: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 34

Analytic Hierarchy Process• To prioritize customer requirements within the project

Which customer segments are most important? Which of the customer requirements are relatively more important?

• AKA Full Pairwise Comparison Generates a prioritized list of characteristics after answering the

question “How important is A vs. B?” for all possible pairs of characteristics

Advantageous because the human brain finds pairs of items the

easiest to rank.

This method works best for 7 ± 2 characteristics

Page 35: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 35

AHP: Steps to Completion• Load the customer requirements in the rows and column headings to

build a matrix• For each cell in the matrix ask:

Is this Row Characteristic (RC) more important than the Column Characteristic (CC)?

If NO place a (/) in the cell. If YES use the following 9-point scale:

1: Characteristics are of equal importance. 3: RC is somewhat more important than the CC. 5: RC is moderately more important than the CC. 7: RC is much more important than the CC. 9: RC is extremely more important than the CC.

For each (/), enter the inverse (i.e. 1/3 if corresponding value is 3) Normalize each column to 1 Total and Average each row

Page 36: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 36

Relative importance of customer requirements for Sales

Define

Instructions: Eas

y to

Und

erst

and

Acc

eler

ator

s

Mea

sure

per

form

ance

Mar

ket

com

petit

ive

Tim

elin

ess

of p

aym

ents

, re

port

ing

Acc

urac

y of

pay

men

ts,

repo

rtin

g

Cle

ar,

timel

y co

mm

unic

atio

ns

Mod

elin

g to

ols

Sal

es p

rom

otio

n st

rate

gies

Pro

duct

ivity

driv

en

mee

ts a

ll bu

sine

ss n

eeds

TO

TA

L

AV

ER

AG

E

Easy to understand 0.04 0.05 0.07 0.05 0.08 0.08 0.12 0.18 0.14 0.09 0.08 0.98 0.09 Opportunity to get paid at higher rate (accelerators) 0.19 0.07 0.10 0.12 0.12 0.16 0.11 0.19 0.20 0.09 0.10 1.45 0.13

Ability to value a sale / measure performance0.07 0.04 0.06 0.05 0.08 0.11 0.09 0.07 0.12 0.09 0.11 0.90 0.08 Market competitive 0.20 0.15 0.11 0.05 0.17 0.04 0.10 0.07 0.12 0.05 0.09 1.14 0.10 Timeliness of payments, reporting 0.15 0.22 0.21 0.18 0.08 0.15 0.11 0.10 0.05 0.25 0.17 1.67 0.15 Accuracy of payments, reporting 0.17 0.26 0.18 0.23 0.21 0.19 0.16 0.18 0.13 0.25 0.19 2.16 0.20 Clear and timely communications about plan, implementation and backlog (transition)

0.04 0.05 0.05 0.04 0.05 0.08 0.06 0.05 0.02 0.02 0.05 0.49 0.04 Modeling tools for commissions forecasting

0.02 0.01 0.01 0.02 0.05 0.04 0.04 0.03 0.02 - 0.03 0.27 0.02 Ability to handle sales promotion strategies

0.03 0.03 0.02 0.06 0.02 0.04 0.04 0.01 0.04 0.04 0.05 0.37 0.03 Productivity driven 0.08 0.10 0.16 0.17 0.10 0.08 0.13 0.09 0.09 0.09 0.10 1.18 0.11 Meets all business unit needs 0.02 0.01 0.02 0.03 0.03 0.04 0.05 0.04 0.07 0.02 0.05 0.38 0.03 TOTAL 1 1 1 1 1 1 1 1 1 1 1 11 1

Page 37: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 37

• Take prioritized customer needs and translate into design

requirements

• Develop targets to ensure design requirements meet

customer needs.

• Tools House of Quality Matrix

Design Requirements

Define

Page 38: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 38

1 W

orst

2 3 4 5 B

est

0.09 9 9 9 9 3 9 9 9 9 9 5 2 3 9 0 0 3 00.13 9 3 2 7 60.08 3 9 9 9 7 7 9 9 9 9 7 0 0 9 0 1 3 00.10 9 9 3 2 20.15 3 3 5 2 9 7 2 7 9 9 9 6 9 90.20 2 9 9 9 3 9 9 9 7 9 9 1 9 90.04 0.02 0.03 0.11 9 -5 3 6 7 9 5 6 3 40.03

4.53 0.9 3.76 3.76 4.38 1.8 4.51 5.16 4.26 5.66 6.44 4.69 1.74 0.91 4.22 0 3.54 0.51 1.88% 2% 7% 7% 8% 3% 8% 9% 7% 10% 11% 8% 3% 2% 7% 6% 1% 3%

0 0 13 12 0 5 1 0 1 10 0 1/1 30-day day: 710 1 201 1 5

per product plan elements, payment methodology

Minimal / no adjustmentsMinimal / no deviationsFew payment pointsPayment on revenue stream, monthly as it occursMinimal / no exceptionsMinimize payment methodologies (plan elements)Definition of an order (unit)Minimize year to year changesDefinition of the payment triggerDefinition of reporting requirements (i.e. product rollup)Exceed close schedule timingAccess to ongoing training / informationAutomated draw calculationsCommunications scheduleNotice of changesProcess flow with identification of control points

#REF!Improvement

Direction

Sales Customer Requirements Imp

ort

ance

Min

imal

/ n

o ad

just

men

ts

Min

imal

/ n

o de

viat

ions

Few

pay

men

t po

ints

Pay

men

t on

rev

enue

str

eam

, m

onth

ly a

s it

occu

rs

Min

imal

/ n

o ex

cept

ions

Tie

red

paym

ent

goal

s

Acc

ess

to o

ngoi

ng t

rain

ing

/ in

form

atio

n

Aut

omat

ed d

raw

cal

cula

tions

Min

imiz

e pa

ymen

t m

etho

dolo

gies

(pl

an e

lem

ents

)

Def

initi

on o

f an

ord

er (

unit)

Min

imiz

e ye

ar t

o ye

ar c

hang

es

Def

initi

on o

f th

e pa

ymen

t tr

igge

r

Ben

chm

arki

ng &

Sur

veys

Clear and timely communications about plan, implementation and backlog (transition)

Customer Competitive Assessment

Easy to understandOpportunity to get paid at higher rate (accelerators)Ability to value a sale / measure performance

Com

mun

icat

ions

sch

edul

e

Not

ice

of c

hang

es

Pro

cess

flo

w w

ith id

entif

icat

ion

of c

ontr

ol p

oint

s

Def

initi

on o

f re

port

ing

requ

irem

ents

(i.e

. pr

oduc

t ro

llup)

Exc

eed

clos

e sc

hedu

le t

imin

g

Rep

ort

deliv

ery

exce

ed s

ched

ule

Technical Importance: AbsoluteTechnical Importance: Relative

Modeling tools for commissions forecastingAbility to handle sales promotion strategiesProductivity drivenMeets all business unit needs

Market competitiveTimeliness of payments, reportingAccuracy of payments, reporting

Target ValueUSLLSL

Units

DesignRequirements

Correlation: ++ Strong Positive + Positive - Negative - - Strong Negative

HOUSE OF QUALITY – Sales

Steps:

1. prioritized customer requirements

2. brainstorm internal/design requirements

3. assess correlation

4. develop targets

Define

Page 39: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 39

One payment trigger Adjustment method based on actual revenue Simplified definition of an order and unit Simplified draws against commissions Reduced the number of rates Simplified some payment calculations Tightened rules around order booking

Sales Plan ConceptDriving out Complexity

Develop

Page 40: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 40

Optimize the Design

• Failure Modes & Effects Analysis (FMEA) using the project objectives

• Mitigating Actions:

Data analysis

Reporting / analysis to monitor behavioral changes

Control point in process flow to avoid complexity build up with future

sales plan changes

Optimize

Page 41: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 41

Verify the Design• Validate the plan through data analysis

Source Data: Using sales history and an assumed commission rate

Impact of changing commission payment trigger Financial impact / accounting treatment

No change Impact of cancelled orders and rep terminations

1% of SOV at risk Accelerating Commission Timing

Minimal expense impact in Year 1

Impact of change in Adjustment method Applied proposed method to historical sales

Distribution of order adjustments showed minimal dollar impact Few outliers investigated and ruled out as issues

Verify

Page 42: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 42

Initial Validation of Results• Project Objective: to improve overall satisfaction from a 2 to a 3

10/2004 Mean satisfaction score: 1.9 10/2005 Mean satisfaction score: 4

• Productivity gains projected 10/2004 Managers spent 6.3 hrs monthly reviewing reports and managing inquiries 10/2005 Managers projected their current monthly hours (avg 8.2) and the savings they

anticipate (avg 3.1). Average savings: 38%

• Qualifier: Small sample size Based on training (mocked up) reports Control plan includes follow-up survey

DMAIC: Control

Satisfaction Scores:5 = Best imaginable with known technology4 = Very good / happy3 = Good / acceptable2 = Not very good / poor1 = Poor / angry

Page 43: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 43

54321

95% Confidence Interval for Mu

2.12.01.9

95% Confidence Interval for Median

Variable: C2

2.00000

0.78220

1.87615

Maximum3rd QuartileMedian1st QuartileMinimum

NKurtosisSkewnessVarianceStDevMean

P-Value:A-Squared:

2.00000

0.93046

2.08494

5.000002.000002.000001.000001.00000

2572.68E-040.6143780.7222760.849871.98054

0.00016.431

95% Confidence Interval for Median

95% Confidence Interval for Sigma

95% Confidence Interval for Mu

Anderson-Darling Normality Test

Descriptive Statistics

Validation of ResultsOverall Satisfaction

54321

95% Confidence Interval for Mu

3.02.92.82.72.6

95% Confidence Interval for Median

Variable: Please rate

3.00000

0.80443

2.59322

Maximum3rd QuartileMedian1st QuartileMinimum

NKurtosisSkewnessVarianceStDevMean

P-Value:A-Squared:

3.00000

1.01104

2.88329

5.000003.000003.000002.000001.00000

149-1.9E-012.81E-020.8026480.895912.73826

0.0007.691

95% Confidence Interval for Median

95% Confidence Interval for Sigma

95% Confidence Interval for Mu

Anderson-Darling Normality Test

Descriptive Statistics

Satisfaction Scores:5 = Best imaginable with known technology4 = Very good / happy3 = Good / acceptable2 = Not very good / poor1 = Poor / angry

• Mean satisfaction moves from 1.98 to 2.74

Source: 2006 Sales Commission Survey

Page 44: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 44

Importance vs. Satisfaction with Sales Commission Reports

0%

20%

40%

60%

80%

100%

IC Commission Sales Detail Sales Summary Open Items

2005 Importance - Must have or above average 2006 Importance - Must have or above average

2005 Satisfaction - Acceptable or better 2006 Satisfaction - Acceptable or better

• Assessment of the importance of reports remains stable

• Satisfaction with reports has increased

Validation of ResultsIndividual Report Satisfaction

Source: 2006 Sales Commission Survey

Page 45: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 45

Survey topics: 2005 2006

% satisfied with report timeliness 27% 73%

% having received training 43% 32%

Hours spent in audit / follow up each

month:

• Sales Managers

• Sales Reps

6.3

4.1

2.2

3.2

Validation of Results2005 vs. 2006 Survey Comparison

Source: 2006 Sales Commission Survey

Page 46: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 46

Lessons Learned• Focus groups allow for in-depth, qualitative

discussions

• Surveys offer statistically-significant data

• Distinguish VOC by customer segment

• Understand the relative priority of requirements using the Analytic Hierarchy Process tool

• Use the HOQ – to a point -- to develop internal requirements and targets

• Alternatives available to piloting a process

Page 47: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved. 47

Conclusions• Reaching the Voice of the Customer through surveys

and focus groups was instrumental in: Providing our baseline project metric Ruling out theories Prioritizing our list of customer requirements Establishing our sales plan design targets Providing verbatim that fed our root cause analysis Substantiating the financial benefits of the project Providing the data to manage competing needs amongst

customer segments Providing ongoing process performance monitoring

Page 48: Boosting Sales Productivity Through Re-Engineering the Sales Commission Process

© 2006 Ceridian Corporation. All rights reserved.

Questions?