The more I get into this role at Notion Capital the more I realise how little I know and how much there is to learn. Every week we run workshops for our portfolio companies (which we often open up to friends in the ecosystem) on specific topics:-
- “How to sell to big banks” (with Lance Younger a procurement and banking specialist and Mark Taylor from Osborne Clarke who specialises in tech and financial services) was one of our best attended so far and one with the most interaction and has spawned a follow up session in a few weeks time on the specific challenges of “overcoming objections to public and private cloud in financial services” / regulated industries.
- We’ve run multiple sessions on “SaaS pricing” with Patrick Campbell from Price Intelligently that never fail to impress and have led to 1:1 interactions for Patrick with many of our portfolio.
- Ditto “Ideal Customer Profiles” with Bryan Richter.
- “Machine Learning” sessions with Google.
- “Account Based Selling” with DueDil and Salesforce
- We run Product Management meet-ups (2nd one coming shortly) and putative groups for our CFOs, CTOs and CMOs.
- “B2B sales and marketing alignment” with Raja Saggi from Google. The list goes on.
Every time I learn and every time it makes me think even more about the challenge our early stage founders face. We invest pretty early, and some are first time founders and teams. I loved the analogy Azeem Azhar used in his recent FT article Keep the founder spirit burning – quoting Steve Jobs – the very best founders are trying to put “a dent in the universe” they want to topple some edifice, to reshape the world to a different way of working. And that burning desire, with relentless focus on excellence, execution, products, customers and of course teams is what makes them great.
Founders are insurgents, with an owner mindset, and a front line obsession. Azeem Azhar.
But along the way they’ve got a lot of other stuff to learn and do incredibly well. And that’s where our single minded focus on investing only in B2B software companies comes into its own. What makes our companies great – and ultimately incredibly valuable – is always different, but there are many things they need to do the same as every one of our other companies and invariably we can find someone within the portfolio who is an expert on a specific topic or competency who is willing to help and share.
This week’s workshop on sales compensations and incentives with Mark Fellowes (SVP of Sales Development and Operations at New Voice Media) and Tom Castley (EMEA VP at sales comp specialists / platform Xactly) is another great example.
Compensation is one of the most important tools any company can use to drive behaviour, engage employees and help the organisation achieve its goals.
The goals of venture funded firms can change rapidly from early stage focus on simple client acquisition through to a focus on ideal customers, from revenue to margin, from new clients to revenue expansion.
Compensation must be aligned to overall strategy and then automated and optimised in order to motivate staff at every stage. Tom Castley.
Tom has seen some terrible plans automated, with the obvious bad results and recommends people to think clearly about territories, timing, talent and targets before putting any kind of platform in place. However, the challenges of managing any kind of incentive plan without a dedicated solution are pretty daunting.
Fewer than 3% of software companies in Europe use any form of platform for compensation, and if you think about it the room for errors and the drain on productivity is huge. For a company with 20 people on variable pay, with three variable components each adds a huge amounts of complexity. People need to know what they need to achieve and why. They need to know what they’ve just earned, what they are about to earn and what they will earn. The motivation and impact on performance of this transparency is key. Tom Castley.
Mark is at the helm of operations at one of Europe’s fastest growing SaaS businesses and has a relentless focus on:-
- Sales productivity – ensuring time and focus of sales people is optimised. By integrating NVM’s telephony capability with Salesforce Mark is able to gain complete transparency on the optimal time to engage customers and through a simple realignment of sales meetings, increased the conversion of outbound sales calls by more than 30%.
- By narrowing focus on a tightly defined market, combined with high quality content, NVM has increased conversion of MQLs (marketing qualified leads) to meetings from 7% to 15% over six months.
- And meeting to opportunity from 35% to 50%.
Combining this operational excellence and NVM + Salesforce + Xactly Mark is planning to dramatically shift sales performance and move sales staff towards overachievement and accelerated earnings.
Our sales people need to understand precisely what they have earned and are about to earn and I need to manage that to ensure that compensation is driving behaviour consistent with our overall goals. Mark Fellowes.
- Pay on what you already measure – identify the list of metric you already capture. If you need to pay one something else, then change your metrics.
- Don’t be a cheapskate – your compensation plan should be part of the recruitment and retention process – so you need to understand the market well.
- Use comp to bolster processes – but think through all the implications – so for example you may want to encourage people to enter deals early, for example at least 90 days before close. But what if it really is a bluebird deal? Do you want the sales person to delay the close by two weeks to avoid having their comp clipped?
- Use SPIFF (special pay incentive for fast sales) and gamification. Sales people are competitive leader boards work.
- Capping compensation is tempting but can be counterproductive and demotivating. It is better to decelerate compensation above abnormal overachievement.
- When you pay is critical, make sure it is clearly defined within the sales process and doesn’t cause unnatural behaviour or people doubling up unnecessarily between sales and customer success for example.
- Model your accelerated plans carefully from day one.
- Be clear about roles and responsibilities to avoid tug of war scenarios.
- Gen X sales reps are very “coin operated”. They will – above all else – maximise the plan so it is incumbent on you to get it right.
- Keep it simple – no more than three targets.Automation is critical and integration of incentive management with CRM is critical.
It supports growth, allows reps to see what they have and will earn and streamlines the process. It also saves time! Mark Fellowes.
My simple challenge now is to ensure that everyone of our portfolio sales leaders has the chance to talk to and learn from Tom and Mark and through this approach of shared learning we support our founders on their journey to build truly great businesses.
Posted by Stephen Millard, Chief Platform Officer, Notion Capital.