The Importance of Strong Incentives

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>>Hi my name is Gerhard Gschwandtner and welcome to Selling Power TV. Today we have the pleasure of meeting with Liz Cobb. She is the founder and CEO of Makana Solutions. Welcome Liz. Why is sales compensation so important for companies?

>>Liz: It's really quite simple, it is what drives sales behavior. So you want to drive good behavior and I've seen many different incentive plans that have all sorts of unintended consequences. It's the most powerful lever the V.P. of sales has is to tell their organization what they need to do.

>>Gerhard: Can you explain why so many companies struggle with their compensation plan?

>>Liz: Well for starters no one has gone to college for sales compensation. And there's a lot of legacy things and compensation plans that are brought from the last job by multiple people who are working on the sales compensation plan. They have lots of detail in their contracts. So it's actually a contract a little bit more like signing your house mortgage than what you would expect to be something that's motivational. And they have myriad spreadsheets sometimes hundreds of thousands of spreadsheets that are actually containing the real information about their sales compensation.

>>Gerhard: So they're actually just importing the mistakes they've made in one company to the next company?

>>Liz: That happens all the time.

>>Gerhard: So what is the Makana motivator for? Who is it designed for?

>>Liz: Makana motivator is designed in two pieces, there's a planning piece and we're very excited to be introducing our payment as well. The planning piece is designed for the person who has that job of coming up with the right incentive plan. In our market that's typically the V.P. of sales or in many of the small businesses we work with it's the business owners, the CEO.

>>Gerhard: Can you show us on a screen how does the motivator anticipate the cost of sales?

>>Liz: Yes that's a big reason some people come to us. They've found themselves in the position where they've had much higher costs and incentives than they had anticipated so getting ahead of that when you're in the planning stage is critical. And here in the screen shot you can see that once you've put in your historical information of how people are performing, there's just a percent of the payments. You don't need a ton of the transactions that you have to makeup. We will roll up all the information and you'll see in the pie chart what is the total sales you've got and then what portion of that is the incentive costs for all the positions rolled up. So it's good to incorporate the direct sales as well as the people who are supporting you as your paying incentive costs.

>>Gerhard: What about those graphs here?

>>Liz: On the left you're seeing a performance distribution curve. And this is something you absolutely want to take a look at. You would like your team to be performing, at least 60 percent of them, at quota or above because you want a team of winners.

>>Gerhard: Right, so you, on the left side you have the C players and on the right side you have the A players.

>>Liz: That's right.

>>Gerhard: And you want the core middle to be 60 percent and above.

>>Liz: Yes

>>Gerhard: Ok

>>Liz: And you want probably 10 percent to be in that point of excellence and above so you can always point to the fact that so and so in our organization made a huge amount of money. That motivates everyone else.

>>Gerhard: So how does modeling work? How does a sales manager quickly and accurately predict what the cost will be with an incentive plan?

>>Liz: That's one of the beauties of Makana motivator. We let you, you can do this with a free trial, you can get up and going very quickly on your own and all you have to do is load in your sales team and their percent attainment and if you're a salesforce.com user you can just pull that in automatically and then you have to enter the compensation plan elements themselves in a very point and click graphical way and the system automatically then rolls up all the costs. It gives you slider bars that you let you play with the percent attainment. So you can see what happens when they're at 120 percent of attainment or whenever everybody's at 100 or varying even by the person and the detail within their plan.

>>Gerhard: So people can go to MakanaSolutions.com and do a 30 day free trial?

>>Liz: Yes

>>Gerhard: And then instantly bill the plan and model?

>>Liz: Absolutely

>>Gerhard: For free?

>>Liz: Yes they may

>>Gerhard: And if they need help you have a help desk or?

>>Liz: We have a help desk and it's got compensation experts so you're not talking to someone who just understands software. You're talking to someone who's designed great incentive plans before.

>>Gerhard: Well I want to thank you for sharing your expertise with Selling Power TV. Thank you very much and background music log on to MakanaSolutions.com.

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==== Transcribed by Automatic Sync Techologies ====