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one two three four [Music] welcome back to Clarity quartercast podcast I'm Sergey yermakov your host today and my guest today is Danielle Harbert and Daniel is covering uh sales Performance Management in North part of the Mia region for sap and he's a subject matter expert in this area and we had the chat with Daniel a few weeks ago and decided that it would be good idea to Showcase sales Performance Management as like essential part of the quote to cash process Danielle uh thanks for coming to the show I'll let you introduce yourself before we start yeah thanks for having me Sergey my name is Daniel I'm responsible at sap for the sales Performance Management business on the sales side for the Emir North Region so the Uki and nordics Benelux and France as well okay perfect so I think that you have seen many good examples across the region so I think that it would be a good conversation and you'll share a lot of insights for our audience but let me start first like with a little bit of an introduction and definition about the sales Performance Management what it is because maybe there will be someone who who hasn't like faced this piece of technology and this process so sales Performance Management uh is the process of aligning organizational sales strategies processes and resources to achieve desired sales outcomes so basically the goal of sales Performance Management uh is to improve the organization sales productivity and efficiency and now I think that today one number of businesses are changing their business models and moving from the product Focus organization to service focused approach uh there is a clear need to have a process that would help to ensure that organization is changing and these changes are aligned with the Strategic goals of the company and I think that uh what sales Performance Management does is covering the uh most one of the most important parts of the organizations uh like and covering this process from the sales perspective so I think that my first question to you will be the following uh how do you see businesses change and how they could support their people to change the way they do business and how at the same time people would accept this change so how does it happening from from your experience and your perspective you know I mean in today's world everybody's talking about are we changing our business model or we're going through so much change like everything is changing and it's changing faster and faster and faster and what a lot of organizations forget while they change the products they sell from products to actual services like you just mentioned they forgot to take the people away from the journey because you're basically making a 180 degree turnaround in what you are doing as an organization but you need the people to execute so aligning people to this change and taking them on the journey is an is an important piece and from my perspective yeah compensation plans and incentives are just the way to enable your strategy because this is really how you're then aligning your organization on what you want to achieve as a company so if you're moving away from product a and go to product B why do people want to change people who want to change people are are used to like developing habits and doing the same thing all over again of course we all are motivated to also develop but the first reaction to change is always is it needed is it dangerous it is something new like that's just the natural reaction so taking people on a journey and making it beneficial for them to go on this change bringing incentives in this is when you can really enable your strategy as an organization yeah make this change because if you want people to stop doing what they have been doing and you want them to do something else well show them how to get there give them something which is a goodie or something which just shows if you're really doing this this is what is it for you and with this kind of boost your your strategy shift and take the whole organization with you yes I think this is like if we especially if we uh look at the process of going from selling the product to selling services I think that uh this process also helps you really to manage the expectations of the people because then it it gives you ability to uh have kind of you know structured way to communicate these expectations uh and provide like also employees with information about what they need in order to be successful in the new environment and uh I think that also like having uh on this good understanding of the capacity of the organization and also the capacity of the sales people uh it helps you really to get this you know achievable uh expectations achievable uh realistic goals to be Set uh for the sales people that is I think extremely important especially when you have like this kind of you know uncertain uh transitioning process yeah it's like you you want to take the people on the on the journey I said and when you're bringing in like targets and you have to think about okay where should the ceiling be like where do we really want uh people to be and say okay this is where your target should be I mean it is a very important process because if you're aiming for something too high people will just be like come on let's be realistic there's no chance I'm going to do that so you're not motivating them you're actually like pushing them down and they will not be able to perform at their best because it's just too far away on the other side you don't want to lowball it because if people achieve their targets in February well what do they do the rest of the year of course achieving that even more makes them even more successful but it's not really motivating and pushing them to just like really fight hard go the extra mile and and really go for what is out there from a potential perspective so but it is an art for itself um I think data can help that can happen in a lot of things so just to understand okay how are we performing in the past how does the current market look like and this is really from my perspective an evolving process so it's not like okay we changed now our business model and therefore we change our Compensation Plan and our Targets this is something which from my perspective has to has to change constantly I mean I don't think there's any organization out there which said oh we're going through a change of our business model and then after a year they said okay we're done and now we're just in in a in a mode where we just put in autopilot and we're running like things keep changing so whenever you keep things changing also your Compensation Plan has to change with it what kind of kpis are incentivizing people on what the targets are maybe even during the you want to make some adjustments so it is really an art as such I don't think there's a there's a blueprint that you can use to say okay this is how you do it and then you'll be successful and everybody will be happy I think that's that's unfortunately not possible here but the art and this is to just keep evolving keep listening to your organization and keep looking at what is out there in the market and just think about what do we want to achieve as a company and what can we give our people to go on this journey with us and enable us to be successful with this yes and I think like uh from my perspective two things here like first of all you have to constantly adjust your uh incentive programs right on the regular basis and I think that probably once per year at least it should be done uh and uh I think that another thing is that uh basically you are able to also monitor the progress and also adjust the system as you go during for example during the year on the quarterly basis on a monthly basis like for example special incentive programs could be introduced if we are lacking the the result or maybe yes the additional motivational components of the program could be introduced for those who has overachieved significantly [Music] I think apologies I think we have a delay just one thing I wanted to add here it's like ultimately you want to drive the behavior of people because if you can drive their behavior into the direction that you as a company go you will be successful and therefore there's constant changes needed but you will not be able to motivate people and drive them in a certain direction if they if they just don't see oh how am I performing actually where am I against my target why am I maybe missing out because out of the three kpis that I measured on in two I'm just overachieving but in one I barely I barely achieve anything so just having this transparency is key to just understand okay are we on the right course that we maybe have to readjust a little bit to be successful together foreign yes you are you are right uh I think that like if we look at this uh from the typical challenges uh perspective that customers face so what you would be indicating as the primary challenge uh the companies face when they're setting up their compensation models and what would you offer like as a kind of a solution for that I think the the main challenge is is process Wise from from what I'm just seeing in the market is that a lot of companies come from a point where they say oh we also have to do sales incentives now what are the typical one or two things that you normally pay your sales teams on to be successful and they're kind of trying to roll it up from there whereas in reality you should come from an angle to really sit down and think like what do we want to unders what do we want to achieve as a business like where do we want to go and then you have to break it down from there and say like okay how can I transfer this to all the different levels in my organization so they can focus on the right things because if they focus on those things and they will be successful with that that will roll up again and will make us as a company a successful so I feel like a lot of companies are starting from the from the wrong angle and don't look at it holistically to really think like ultimately it's about being successful as an organization and not about having sales and centers for the purpose of having them and the reason for this is because a lot of companies use use spreadsheets to to do the management and Excel is great Excel can do a lot of things let's be honest so the world wouldn't be the same without without Excel spreadsheets like it's keeping us all alive but if you're reaching a certain size as an organization in a certain complexity relying on Excel is isn't in my opinion is just not the way to go it will bring you into difficulties either it will become such a mess with different sheets different tags all links and macros and pivot tables and you know what else you put in there so as soon as a person leaves and somebody else comes in have fun just deciphering what was actually being built there it works but have fun figuring out what actually happened there once it happened so so that's the number one part it's just getting really messy messages to administer that and therefore also errors happen because there's people involved there's manual errors we're only nobody's perfect we all make mistakes that's not a plan to to anybody but that just causes errors ultimately and an error in the calculation or in the management of those incentives will cause to ultimately an error in how you're paying people and if you don't get paid right Sega I think you wouldn't be happy you wouldn't trust your employer and if you don't trust your employer how should you perform how should you make them successful you know it's like it's such an important piece so I think the typical challenges is really coming from the right angle to set up the plan in a way which is set up for success for the company and then to really get some some some technology or some process in place that just have to be on spreadsheets so you get away from this tactical we have to make sure that the calculation is right and you can start thinking about how can we evolve throughout and throughout and make small adjustments bring in a multiplier this bit of changing the bonus component to keep this alignment while you're while your business is changing yes you raised an extremely good point you know and um I have my personal experience with the with such a was such a transition to the compensation uh application when uh the the idea of the company was to introduce the tool that would be helping basically employees to first of all track their progress in the real time understanding how how uh like their opportunities are getting closed and what they would be compensated on the quarterly basis and then it turned out that the systems system was not implemented uh correctly which basically resulted first of all the wrong information provided to the people which was like demotivating them a lot uh second thing was that they hasn't been paid accurately uh and at the end it turned out that company overpaid because they were not able to calculate the the commissions probably and uh this basically resulted that uh I mean first of all the decision was not to ask them to return the money of course but from the other side we clearly see the consequences of such decisions right so first of all you are getting demotivated people secondly you are just losing money in some cases or you are losing like the employees that you have because they they they maybe uh like get this impression that they wouldn't be paid at the end properly and they start looking for another job and I think that these like are super critical things that uh companies should also consider when when they think about like properly compensating their sales force I'm sure you have like more examples from your experience would be maybe share some some good ones I shared the bad one maybe the good ones are more interesting but but it just shows I mean most people who get incentives are are in the sales world and if you're looking at the different departments that an organization has the sales department is the department with the highest turnover rate and if you're asking sales people why they leave the number one reason they will give you is compensation so if you wanna it is highly competitive market for good sales people if you want to stick out you don't necessarily just have to be the highest paying one but you have to be the one that pays accurately on time and that gives transparency because the one thing every salesperson does is sitting in the morning with their Excel spreadsheet just to figure out like okay how much am I going to be paid at the end of the month with my three days close like they all do it just if they say they don't don't believe them they all do like it's it's an obvious thing they do but if you give them something like a mobile network where they can track it that's the difference they don't have to like build these Excel treats themselves there's like people they don't like it so there's one fancy dashboard a mobile app for that you can just see it so having this experience just can justify I don't know 10 15K Less in OTE but your compensation is straight like they know what's happening they know how to be successful and they don't spend hours every week just to figure out okay what do I actually have to do to get through this OTE and and make it worth working here they're just on a cycle to what you just uh engage with as a bad example positive example I mean I can from my own experience if you're looking at sdp where I'm currently working on sap went through one of the biggest changes you can think about coming from an old on-premise world people still know sap for for being an on-premise company and wanting to become a cloud company I mean it's a huge it's a huge task if you think about it with all the Legacy in history that comes with it to make this shift and it all starts with getting your organization into the same boat so if you shout into the market hey we want to be a cloud company well that's great but you have to start acting like one and once acting and not just people on a board level it's the people in the field that connect with customers partners and everybody out there on a daily basis so you have to get them on board and they have to live the cloud mindsets what is the easiest way to get them there how do you get people to change well if you suddenly stop paying them for on-premise Revenue on-premise Services and all these kinds of things and you start only incentivizing them on on cloud Revenue that that's when it slowly starts like that's when people realize okay I have just a limited time of hours every week there's a lot of things I can do there's a lot of things I can focus on but actually the only thing where I get a personal benefit from is if I'm focusing on the cloud part not the on-premise part anymore so this is like how sap started to make the shift to get away from okay also being an on-premise company and behaving like one and starting to go into the direction of becoming an account company it starts with the with the incentive scheme I know this was one example to bring in another one potentially um thinking about one of one of one of the clients we have Global labor technology the sunglasses company from Hawaii everything alola Ohana um they were in full growth mode they put in a solution because they said we're growing so much we cannot handle it with spreadsheets anymore we notice errors we got it or something and everything was about growth but then this lovely thing called covet happened uh and things changed it's not said to be closed and a lot of companies also my gym had to go away from being just driven for growth that was just not possible anymore going all the way through okay we have to think about our margins we have to stay profitable to get through this time so shortly after rolling out a new compensation plan for the beginning of the year covered hit in February March time frame and everything had to be re-changed if you're then in a position that you can quickly make these adjustments and throw overboard your Compensation Plan and just two weeks or something like that like that's a key difference if you need half a year if you change your Compensation Plan just because you have to rebuild all those spreadsheets you missed six months of covet your compensation plans are not reflecting on what is realistic and you're missing out on on what you need to achieve as a company and they were able thanks to technology to make this ship within a few weeks to be ready for the covert times and incentivize people on margin based kpis rather than a really growth perspectives which help them to get through the time pretty successful as well okay it just raised a very interesting point so uh like several episodes ago we had a discussion about CRM and how CRM has changed after the covet and what is the business Readiness and I think that in in from this perspective this is essential component really on how to get ready for this kind of the uh lockdowns and basically uh some kind of the you know um reasons that is affecting and dramatically changing your business model and I think from that perspective this agility of the system is something that really allows you to react faster also from the business perspective yeah and it can be such significant things like a new covet wave and with that a new lockdown but it can also be it can just be smaller things you're looking at your at the numbers for the quarter and you're just realizing oh we're missing out as a company on the revenue in this division or in that region our margin is not amazing here our net promoter score is not where we want it to be and for sort of part of our business but if you can analyze those things and you just have those insights but you need to act quickly if you can see in May that actually you won't take your your quota numbers but if you just need two weeks to make changes and bring in a bit or a multiplier to like make people focus on this specific API you still have all June to fix it and to maybe achieve your Target still so having these abilities to not just see and understand what's happening but also react quickly I think Kobe just just told people also in the compensation space that agility and flexibility is key to just be fast and and adapt on the on the spot to create create the right business outcomes and drive the behavior into into the respective Direction yes I think that this is like a very interesting perspective and uh this is really bringing a lot of value uh in addition to all the measures that companies are taking during the lockdowns and covet and similar cases so yes I think that we covered quite quite a lot of benefits already but uh if we like summarize what we what we discussed a little bit in a way that um we try to uh create several recommendations for the companies who are like stepping into these transitions like for example moving from the product into the subscription world or like changing radically changing their business models what would be your recommendations for for this type of the companies where they should start and how to to make this uh transition a success from the sales compensation and the motivation perspective foreign this let me mention three things that are that are coming to my mind that I just wanted to to bring up here number one just look at your compensation plans think about what are we paying people on and what kind of behavior does this trigger like what were people focus on based on their current Compensation Plan and then next to this you put what you actually want to achieve as an organization and if those two things don't match that's when you when you should be looking at okay we gotta change something about our compensation plan because it just doesn't motivate the behaviors or trigger the behaviors that actually make us successful as a company so that's number one make really sure that your compensation plans are aligned to what you want to achieve as a company number two think about the people who have to make this work every single day there's people in your organization that are responsible to make sure everybody gets paid correctly when it comes to their owners their sales incentives their commission however you want to frame it if they use Excel manual processes it's a hell of a job to make it right and if they don't make it right the people who receive the payment are suffering because they will be paid for uh wrongly and then you're losing trust and you're losing step-by-step the best people in the organization because they will get the right payment somewhere else where they feel trusted where they feel that their compensation is reliable so help those people automate the calculation and give them the possibility to get away from from tactically just making sure the calculation is running to get them into a direction where they can just think like okay how can we improve this are we getting the benefits out of this that we want are we triggering their behaviors that we want to like have the capability to be and to stay involved in and be ahead of the game so to say well your business is changing and that your teams have just the capacity to also let the compensation plans evolve and then the third thing talk to your sales people they're the ones getting the getting the payments they're the ones getting the the commission talk to them and ask them hey what do you think about this process is this go is it going well are you happy with it with the amount of times we pay you the accuracy the transparency that you get throughout the the period already before the payment is coming how is it if you feel like something's not right it's the dispute process in a way which makes it easy for you that you understand why your payment was made in a certain way and is it then handled quickly or does it take two weeks just get an answer back from somebody talk to them and get the feedback that one's experiencing it and they will be able to guide you into into the direction uh where there might be some things you want to treat going forward yes I I would only add to that so for all the businesses who are looking into the way to how to set up their subscription or Services model like what kind of the pricing like what is the best way to define it and how the systems should be integrated in order to perform in the best way I think that this is like additional component that should be a must for every strategy of a business uh model change and yes what I really like that we managed to look at this um at the quota cache today from from the different perspective and I think it brings a tonal value to the companies that are basically moving that direction So Daniel I would like to thank you for being with us today it was very valuable and I think a lot of people would would really find this uh useful in their Journeys and uh for uh listeners so as always our subject matter experts so we are one click away at clarity.show you could reach out to us and we will provide you any additional information that you require on the topic and yeah thanks for listening thanks Daniel appreciate for having me again looking forward to more conversations around you thank you I look forward