Most of us want more sales, right? But as a company grows, the complexities of managing sales quotas and calculating sale commissions also grow. That’s why it’s so important to have good systems so that you can design best-in-class sales compensation plans and automate the calculations so as not to get bogged down in doing it manually with spreadsheets.
In this interview, I’d like to introduce you to Chris Cabrera of Xactly. Xactly is a Web-based application to automate and keep track of sales compensation — and even integrate with your QuickBooks data, thereby avoiding duplicate data entry.
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Small Business Trends: Can you tell us a little bit about your personal background?
Chris Cabrera: About 14 years ago, I started with a company selling on-premise solutions, big heavy expensive on-premise solutions that solved the sales compensation problem.
Seven years ago I embarked on starting this company, Xactly, to really focus on smaller companies and to do it all on the Cloud. Today, we have 500 customers that include companies with two reps, 10 and 50, all the way up to thousands.
Small Business Trends: What kind of challenge is it, from a small business perspective, to handle sales compensation?
Chris Cabrera: For years small businesses have been precluded from being able to take advantage of these automated solutions to handle it.
A lot of these smaller companies don’t have a dedicated comp analyst or compensation manager. But the challenges are no less difficult and the benefit is no less great.
What is now happening is we are seeing small businesses waking up to the fact that they can now afford to use the best in class, the best practices, and the best software solutions that are in the cloud. The same ones that these giant public companies use.
When you think about sales comp, we are not talking about insignificant dollars, right? I mean if you are paying sales reps, chances are you are paying those reps $50,000 to $100,000 a year to sell your wares.
That is a lot of dollars that the company is spending. Yet, the way these sales comp plans are designed, often they are done in the back room and at the last minute. Again, by the CEO or the VP of sales. These are smart folks, but that is not their area of expertise.
So what we said to these SMBs is, “Hey, this is what we do for a living and this is all we do. So why don’t you let us help you design better plans that will drive better performance?”
Small Business Trends: Paying people on time, right away and what they are expecting, that goes along way to keep them happy I assume?
Chris Cabrera: It does. I’m always amazed that the paradigm today is that companies literally pay four or five weeks in arrears. They are at the end of their month or their quarter, then they start doing the calculations, and about four weeks later, they are giving their reps a statement with their check.
In the Xactly world, those reps can see, day by day, through the month or the quarter how they’re doing. Even if they are using a CRM tool, they can begin to look at a deal prior to them even closing it. They can do these “what if” scenarios that we have. The “show me the money” button where they can say, “How much can I earn if I close this deal?”
Small Business Trends: What kind of things should companies be on the lookout for when they develop a sales compensation plan?
Chris Cabrera: Some of the common pitfalls are people that tried to use the compensation plan do to too many things. As a quick example, I have gone into companies where they are using valuable compensation dollars and they are paying on deals only if it was put into CRM, as an example, right? So what they are trying to do is say, “I want to improve adoption of CRM so I am going to use compensation dollars to enforce that.” That is not a good practice, that is a management practice that should be handled by management.
You should not use your valuable compensation dollars for that purposes. What you should use your valuable compensation dollars for is driving whatever is in your business that makes you better. It is selling more widgets; is it selling more profitable widgets; it is discounting less; is it getting better payment terms; is it getting more cash up front.
I mean, everybody’s challenges are different. But comp can be used if used correctly and, by the way, it can change. It should change over time depending on the needs of the business change.
Small Business Trends: You say that CRM adoption is improved, but it should not be on the sales compensation plan, right?
Chris Cabrera: Correct. I mean you shouldn’t use the valuable dollars that you pay to drive the behavior, to get them to adopt CRM.
What our customers tell us is once they have installed Xactly on top of the CRM tool, the reps now have a reason to go into their CRM more often because they are going to see all of their commission’s right through the CRM tool. They have a reason to go into this CRM tool and make the data more accurate because they want to do these “show me the money” exercises to see how much money they can earn
Small Business Trends: You recently announced integrations with QuickBooks. How does that impact how small businesses do sales compensation?
Chris Cabrera: QuickBooks is omnipresent. Clearly one of the things that you need to pay compensation is order entry data. We already have partnerships with CRM vendors in particular, Salesforce.com, Oracle, and Microsoft. But we realized if we can get a partnership with Intuit, such that the data can be brought directly into Xactly, we are going to make it that much more seamless for SMBs to sign up and, in a very short matter of hours, become live. It pulls data right out of Intuit and displays all of the compensation right through their CRM system and then pumps the data right back to the payroll tool.
That whole process today is typically manual, usually in Excel, and is a nightmare. So this partnership with Intuit is really exciting and starting to pay dividends as SMB are coming and adopting this in droves.
This interview is part of our One on One series of conversations with some of the most thought-provoking entrepreneurs, authors and experts in business today. This interview has been edited for publication. To hear audio of the full interview, click the right arrow on the gray player below. You can also see more interviews in our interview series.