In Channel Enablement – Part I, we laid out some air cover for the territory SE to demonstrate responsibilities best owned by corporate. In Part II, I want to both recap how an SE should be contributing to corporate channel initiatives as well as show what functions an SE should manage on their own within their region.
Are you missing out on bonuses?
September 6, 2011 By
I regularly receive questions pertaining to bonus splits for SEs. Many want to know what their variable comp should be given their seniority. Others have brought in a big deal and didn’t feel they got a fair shake. In this article we’ll explore some common scenarios and what you’re likely to find as you move up the food chain.
What’s Your SE “Bus Count”
June 20, 2011 By
I came across a new phase here the other day. The term is “bus count.” As in, how many of your people could get hit by a bus before your team/company/etc was in real trouble. That gave me a good laugh and it got me thinking about the sales and SE organizations in a company.
In any technical field it can take a long time to rebuild lost expertise. The ramp time for a typical SE is 2-4 months, and that’s just for basic profieciency. Mastery of course takes much longer.
This timing varies by industry and product portfolio, but a theme I’ve recognized is that the more depth on your team (your bench strength) the easier it is to rebuild and maintain talent levels. That means it’s much easier to replace talent that exists elsewhere on your team than it is to gain a new competency.
I think there are a couple reasons for this. The primary one being the mentorship equation. If someone can be “shown” how to do it, it’s far simpler than asking someone to figure out how to learn something new on their own. Receiving direction, having a sounding board, and even the perception of having a safety net helps immensely.
The implications for SE Managers then becomes 1) keeping an accurate inventory of your critical skills, 2) keeping an eye on your perverbial bus count to insure you’re not in the danger zone, and 3) always be looking for ways to operationalize the skills acquisition process so that you have learning paths in place before you really need them.
The implication for SEs is far simpler: Specialize where your team’s bus count is dangerously low. Also see Unique Value on TSE more on this.
Why you will be outsourced
March 10, 2009 By
You can relax a bit. It won’t be for a long time and won’t be as bad as you think. A more accurate statement is that the role of sales and sales engineering will eventually be handled mostly by firms that specialize in the sales function.
Why have I recently come to this conclusion? The long-term trend suggests that relentless focus on cost reduction will force companies to eventually outsource everything but their value creating operations. Sales can generate additional revenue but is not a value-creation activity–it’s value transference. If you disagree, think of how much revenue you can produce without something to sell. 
The marketplace will eventually produce companies that are very efficient at providing sales forces to other businesses. At this point Sales becomes the value-creating activity for these new companies.
Don’t let the slow, monolithic beasts of today’s outsourcers fool you. As businesses become better at measuring their own operations by using correct metrics, we will get better at constructing mutually beneficial agreements. Today’s outsourcing agreements are hundreds of pages and provide each party an outline of the minimum duties they can get away with performing.
We will get past this phase of infancy. It just may take us another 10-20 years. From what I am seeing now, though, I believe economic pressures will exert a huge influence on removal of value transference activities.
[EDIT: note I said outsource, not offshore. No, I do not believe face-to-face sales can be fully replaced]
[EDIT: Reader JP pointed out a great example of company doing just this for SE work - http://pre-sales.com. Thanks!]
The Organization of Last Resort
January 6, 2009 By
Yes, I’m talking about the SE organization in most companies. The SE org is a nexus in terms of capability and communication. We are able to relate to people, comprehend our technology/services, and match technology/services to business problems better than the competition. Not only do we interact with virtually all internal departments, we also interface deeply and continuously with customers.
This is a good thing right?
Absolutely, but there is a catch. Sales is in the (enviable?) position of being exposed to all of the internal and market shortcomings of its company and product. When Sales makes demands things usually happen. Those demands much of the time fall to the SE to provide resolution or workarounds.
What I’ve seen is that in very small companies the SE wears many hats. And this only slightly improves as a company grows. Product Managers invariably run into the same problem, but there is usually a high ratio of SEs to PMs so you can see where many requests end up.
I think that in any given day we could fill up our calendars working to solve perceived problems elsewhere in the company. Oftentimes we fall in that trap—I know I do. It’s in our nature to want to solve problems and be helpful.
But should we indulge ourselves for our customers and shareholders?
My answer today is much more of a resounding no than it used to be. In my earlier years I was more about highest and best use of my time from a shareholder perspective. I have gradually shifted to a sales territory perspective, which means the highest and best revenue for your sales team.
It isn’t because I caught the “not my job” syndrome, quite the contrary. I think it has to do with a slightly better understanding of human nature…
- If you solve an out of band problem once, people will expect you to keep doing it. This is because others’ forget about the problem because it has been temporarily relieved.
- It creates an inherent assumption that it is part of your job. Once you’ve assumed responsibility, it’s hard to back out of it.
- Unless you’re vying for a position in a separate department, you aren’t being measured/rewarded for it. This means it is unproductive for you.
If you are an SE manager you have to maintain a watchful eye that your team isn’t getting caught up in firefighting institutional issues. Keep them focused on solving customers’ business problems with the solutions in your bag.
If certain problems become so acute they cannot be ignored and they cannot be acted upon, assign a single czar/taskforce from your SE/manager ranks. Make sure all of them are dealing with problems the same way, carefully documenting progress, and publishing a very noticeable scoreboard of progress. Most times we cannot direct change, we can only influence. It’s a good thing we’re skilled at that sort of thing
At the end of the day we should be exerting effort to be the best we can be in the job we are assigned to. Taking our eye off that ball makes us less effective in our accounts.
Sometimes this simplest of axioms captures points most clearly:
Focus on that which you can control.
Sales Engineer MBOs
December 2, 2008 By
I recently covered some of the different compensation split options available for Sales Engineers at a very high level. This prompted a few questions, mostly around the use of MBOs. As a follow-up, let me go into the various options available to SE management as well as some common pitfalls.
MBOs are targeted performance goals. As such they should always follow the SMART approach. Even though a standard quota plan is just an example of an MBO, most sales/SE managers use the term more to apply to goals other than sales targets. For this article, I will refer to it in its more general sense.
The Four Pillars
Others may group them differently, but to me there are 4 categories of MBOs for SEs:
- Business/financial
- Employee satisfaction/enablement
- Customer satisfaction
- Process (continuous) improvement
This ensures that the 3 main stakeholders in business are accounted for: shareholders/owners, employees, and customers.
Business/Financial
These are the goals that concentrate on the financial statements and address the needs of shareholders or owners. I suppose this is technically a euphemism for “shareholder satisfaction” These are also the most common compensation plan metrics—sometimes the only one (over 70% of SEs have a bonus plan tied to sales/revenue). This is even more so for AEs. Here are some options that may be available depending on your company’s revenue reporting capabilities:
- Percent attainment of quota
- Number of new customers
- Number of tradeshows attended
- Percent time spent in customer-facing activities
- Percent growth in pipeline
- Percent growth in average opportunity size
- Percent decline in average opportunity age
- Percent decline in assigned opportunities without SE involvement/tasks
- Percent growth in deals won with SE involvement or specific activity (e.g. POC)
- Percent growth in deals won vs. competition or specific competitors
Employee Satisfaction/Enablement
There is a host of revenue generating activities that are not specific to one’s own accounts. Creating sales collateral and supporting other account teams are specific examples. This category also applies to activities that go to morale boosters which address the needs of the employee stakeholder. Examples include:
- Number of supplemental sales/marketing/support/implementation collateral created (and shared!)
- Number of opportunities assisting regional sales teams in your personal niche
- Number of posts on company bulletin boards or other social networking contributions
- Number of published trip/win/loss reports
- Number of informal training sessions (e.g. lunch and learns) delivered
Customer Satisfaction
Goals in this category encourage positive and long-term relationships with customers, which is in everyone’s best interest. These can include:
- Number of repeat customers (renewals)
- Number of published case studies or customer references
- Percent achievement on customer sat surveys
- Number of customer requested product features submitted to product management
Process (continuous) Improvement
Each of the other categories addressed a specific business stakeholder. Process improvement is a very broad category that concentrates on the foundational goals that generate continuous improvement in each of the others. This is best illustrated by the concept of moving the fulcrum over, or sharpening the saw in Covey terminology. It covers everything from contributions to business process improvement to personal development. Examples include:
- Number trainings attended
- Acquisition of a new skill or certification
- Percent of activities documented in CRM
- Contribution to special projects
- Time management goals
Flexibility
Each of these basic options can be tailored (and weighted too) in numerous ways limited only by your creativity and ability to get at the data. You can focus these goals on specific products, business segments, or even competitors so that they align to company strategy.
Pitfalls
With the ability to be flexible also comes the possibility of actually lowering productivity if you aren’t wise in how you approach them. Some of the most common pitfalls include:
- Not keeping them SMART. The biggest culprit here always seems to be measurability. In many cases a desired result is qualitative. In these cases I employ “correlated result” approach where I seek out measureable events that typically lead to (or are correlated with) the desired result I am after. Example: It’s difficult to measure someone’s product knowledge, so the measureable result is attending a training, passing a specific test, etc.
- Not publishing continuous results. We all need immediate feedback to make the biggest impact on results. If you’re only reviewing quarterly or (gulp) annually, you’ll find the process very ineffective and discouraging.
- Reliance on manual compilation. If you need to manually jump through hoops to get the data you need it is that much harder to integrate them into daily practice. Automate the process whenever possible.
- No scoreboard. Even if you just keep it in your team, your people need to benchmark. Friendly competition in my experience is good. The best will benchmark against themselves. Keep it updated frequently.
- Tedious recordkeeping. If your SEs have to spend an inordinate amount of time entering data so that you can report on it, your program is destined for failure (or minimally noncompliance).
- Unintended consequences. Over reliance on these metrics leads to pressure to game the system. Communicate the spirit of the goals and the behavior you are wanting to see.
- Top down only. When each of us is involved in setting our own goals, we feel natural ownership. Involve your team in the creation process, even if by a committee that standardizes them for the entire organization. No taxation without representation!
- Not communicating the why. If your SEs don’t know why something is important, you will have a difficult time getting ownership of the number.
- Metric overload. Anything over 10-12 goals starts to become overwhelming. Keep is short and sweet.
- Business only. We in Sales are naturally focused on business results. Over-weighting your goals in Business ignores other stakeholders and ultimately leads to lowered effectiveness.
Hopefully this gives you a head start on crafting your own MBO program. By no means is my list comprehensive and should be thought of as a starting point of discussion. Mastering Technical Sales also has a balanced scorecard that may be helpful that matches fairly well with this post. I’m also working on a template for me to use personally that I will include here in the future.
Carrying Buckets
November 25, 2008 By
Once a company expands its portfolio to 2 or more products, a question arises: Should sales (and SEs) be specifically incentivized to sell all of them. And, if so, how?
You run into ethical issues if you have competing products (such as stocks in a brokerage or mortgages for a loan broker) that encourage sales to put themselves ahead of the customer. We’ll assume your company has a portfolio of mostly complementary products and simply want reps evenly focused on all or other specific products.
Incenting SEs
Ways in which I have seen this done—both directly and indirectly—include:
- Directing specific incentives for sales reps – SEs typically have to, or should, follow the reps lead with a customer
- Quota buckets – Having separate quotas for each product
- SPIFFs – a bonus for specific sale or activity
- MBO – a bonus typically not tied to specific quota attainment
While these are usually monetary based they could also be tied to awards or rewards such as club attendance.
Trouble Spots
Here are a few things to avoid when leveraging the options above.
- Not inclusive – Only incenting reps has two problems. 1) it creates a dividing line between reps and SEs, and 2) it can create animosity when SEs are doing a lot of the specific work to drive the desired behavior and are not seeing any of the direct reward.
- No alignment – Don’t have competing objectives. The simplest way to ensure rep/SE alignment are to have comprehensive programs meaning both take part in the same programs rather than creating separate ones. I’ve seen misalignment more often than one might think.
- Not immediate – Year long programs don’t yield the results and focus that quarterly programs do. You need long-term programs to maintain momentum and continuity, but always try to attach quarterly milestones. This way the SEs receive immediate reward and the positive reinforcement.
- Not realistic – This is especially important for shorter-term programs. If your average sales cycle is 9 months for a product you’re promoting, don’t set the 1st quarter SPIFF on revenue goals of the product. The SPIFF money will only go to those that already have the sale in their pipeline. It also negatively incentivizes sales teams to push the sales cycle which may be poor for customer relations.
- Too complex – The bigger the product portfolio the more temptation exists to build in qualifiers and rules to address every situation and product. Keep the programs extremely simple and make the purpose behind clause easy to understand and clearly mapped back to corporate strategy. People are very willing to accept these decisions as long as they understand the reasoning behind them.
Finally, make sure all details are well communicated and understood as early in the term as possible. Poorly defined compensation plans are one of the biggest morale killers in a sales/SE force I have seen.