1) How do you position Paypoint HR as a critical / must have tool and not just a “nice to have” tool?
We often work with companies who have no idea what sales compensation is costing them, or how to control it. There is little connection between revenue generated by a sales rep and what they are paid, due to “special deals” made with their managers – often costing the company hundreds of thousands in “overpayments.” Our process and software instantaneously demonstrate the impact of compensation plan design on “the bottom line.” We do not consider managing profitability as “nice to have.”
Answer: Business owners and key executives within the company – President, CFO, VP Sales, VP Human Resources – they are all impacted by the weakness of bad compensation design and see the significant value / impact of getting it right. The biggest challenge is often the CFO, who believes they can solve compensation design via excel spreadsheets. As they eventually learn, it is way more involved than that.
Paypoint HR’s process works very effectively regardless of revenue levels and size of sales force. It is extremely effective in handing multiple regions within a company, where a unique compensation solution may be required for each.
4) What does the competitor landscape look like, i.e., Paypoint HR is unique with no real competition, or, the best of a similar bunch of companies in this space?
Paypoint HR’s process connects compensation design to the company’s P&L. Revenue, fixed and variable expenses, commissions paid and targeted profit are collectively factored into the commission plan calculation through incentive HR’s proprietary software tool.
Competitors use spreadsheets, quartiling and Monte Carlo simulations to “guess” at proper comp plan designs. Their calculations do not directly connect to the P&L. Compensation is targeted at a “percent of total revenue” to what can be paid out and still achieve a defined profit target.
Paypoint HR’s process looks at each sales rep as an individual, assessing their actual individual performance on a revenue distribution curve.
Competitors look at sales reps on a bell curve, creating plan designs that “fit the curve” rather than each individual and their actual revenue produced.
Paypoint HR’s process takes a bottoms up vs. tops down approach by taking into account the psychology of the sales rep. Successful compensation redesign requires alignment between the goals of management and those of the sales force in a win-win relationship.
Competitors focus on the math, what the company can afford to pay, without concern for sales rep “pain.”
Paypoint HR’s process utilizes a proprietary calculation called the Optimal Fully Productive Equivalent based on Pareto Optimality, which is best described as “the best that can be achieved without disadvantaging at least one group.” This calculation ensures we design the best commission program options for the sales reps while still protecting the company’s bottom line.
Competitor approaches do not take into consideration the relationship between fixed and variable expenses as related to each sales rep’s production and compensation plans in a competitive environment. Most plan designs fail to recover the necessary company margin to support profit objectives while keeping the sales reps motivated.
5) What is the estimated time frame for each project once you get started to completion / implementation?
Answer: Based on the size and complexity of the client, the project timetable for the core offering can range from three to six months. We had one client engagement that continued over two years (fourteen projects in one engagement). The time frame for each project is determined by engagement scope, sales organization size and complexity, and the pace at which the client wants to move forward. Our process is designed to move forward at a fairly aggressive pace. (A current state assessment, the first step in the process, typically takes two weeks once all the data has been received.)
Answer: On-going relationship time is important to becoming a “trusted advisor” to the client. We work hard to ensure the client leadership team remains fully involved in the project and “owns” the compensation plans designed for their sales force. The better the implementation, the less follow up (post implementation) is required. Implementation success is often determined by client leadership’s “ownership” of the implemented solution, the adequacy of manager training on how to roll out the new plans, and sticking to the new plans as designed – no special deals. We have developed an “on-going relationship agreement” to maintain support to ensure on-going solution success (i.e. additional training, periodic plan updates).
Answer: Analysis is not significantly impacted by the size of the sales force. Multiple regions within the sales organization each requiring unique compensation plan designs will extend the time frame, although economies of scale will help. Larger sales forces do take longer to roll out than smaller ones, based entirely on the number of people company management will have to communicate with. Our roll out process is designed to be as efficient as possible in engaging sales reps in the new comp plan roll out.