How to Avoid Whiplash in the Planning Process

In our Experts in ICM Q&A Series, we’re sitting down with leaders from across the incentive compensation and sales performance management space to explore learnings, trends and opportunities that exist for today’s ICM and SPM professionals.

We asked three planning experts how they keep agility from turning into instability. Their answers reveal how strong governance, transparent communication, and connected systems can turn change into momentum instead of whiplash.

Today’s panel represents the cross-functional brain trust that makes modern sales planning truly work:

• Katia Terentyeva, Head of Global Sales Compensation Operations at Elastic. 
• Saurabh Mehreja, Senior Director of Sales Incentives at Siemens. 
• Johnathan Warren, Director of RevOps at CaptivateIQ. 

Let’s explore how they’ve navigated shifts in their sales plans — and their advice for reducing seller whiplash along the way.

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What's the biggest risk you see when organizations stick to a rigid planning process versus being a bit more dynamic and fluid throughout the year? 

Johnathan: One of the biggest risks is that static plans are out of date on day one. I've spent go-live weekends perfectly balancing books of business and headcount models for a fiscal year kickoff. 

[BLOCKQUOTE
| Quote: Perfection can’t survive outside the spreadsheet.
| Author: Johnathan Warren
| Title: Director of RevOps, CaptivateIQ
]

I'll give you an example of some of the flaws in static planning from a territory lens. Imagine you have an SDR, let's call him Jordan. Jordan kicked off the year in January with 600 accounts. But you've done the math, and based on his activity levels, Jordan can work 100 accounts a month. So, he can get two full passes through that patch per year, and we want Jordan to book four meetings a month. 

Now, let's assume Jordan's a rock star and consistently hits that four meeting target every month. Each month, four accounts are taken out of circulation. After 12 months, that's 48 accounts — leaving, effectively, 552 available by the end of the year. 

No biggie. Right?

Next layer: Jordan's going to disqualify roughly 10% of the accounts that he touches for normal reasons — poor fit, a company went out of business, they're locked into a long-term competitor contract, etc. That's going to be roughly 120 unique accounts that are disqualified. So, we subtract that and now our effective territory starts to drop even further. Now, we're at 432 accounts. 

It's starting to get a little interesting. 

Then, let's add a cool-off period. We don't want to sequence the same accounts. We want 90 days between sequences, so that means that roughly 300 of our accounts are going to be on the bench at any given time, so that's half of the original patch.

Now, we have a far less effective group. We're going to take our effective size of 432 down another 300. We have 132 accounts that are actually workable at the end of the year. And then the real kicker is there's this quality drift in play, as well. Jordan is smart. He started the year focused on the strongest prospects.

As the year progresses, the remaining effective pool skews toward lower quality accounts. So, not only does the pool shrink, but the average fit gets worse. And the downstream effect is predictable, right? Jordan's going to have to spend more time prospecting to find the viable targets, which then steals attention from ongoing outreach, causing our conversion rates to slide as a result.

On the capacity side, any misallocation done early in the year, when static, is just compounded throughout the year. If you over-cover your shrinking segments and you under-cover the emerging ones, you'll likely spend the back half of your year dealing with exception management and retro calls instead of building momentum for the rest of the year and the next. 

The bottom line, for me, is this: you're going to ship something, but with static planning, you’re just shipping unwanted surprises. 

How does the static nature of planning start to impact trust and morale when adjustments are needed? How would Jordan’s morale, in Jonathan’s example, be affected by this process? 

Saurabh: At the end of the planning cycle, when the sales reps are handed their plans, they're taking a leap of faith on the data and the processes that went into those numbers. 

Yes, reality catches up with them very soon, and we absolutely need to be continuously planning to be ahead of the curve and at least identify potential pitfalls early.

But, from a compensation perspective, it is very important to see how those outcomes or how those analyses impact the plan design that has been handed to them. 

[BLOCKQUOTE
| Quote: While you are in a continuous planning mode, imagine the rep is also in a continuous planning mode on how to achieve those targets that were given to him or her.
| Author: Saurabh Mehreja
| Title: Senior Director of Sales Incentives, Siemens
]

A parallel, continuous feedback loop for sellers — even if it is based on reality — can really become tricky and counterproductive. 

It really is about the outcome of those continuous planning cycles. In the example that Johnathan gave, the best way to ensure that the trust is retained is to do everything possible to uphold those quotas, and help those reps to attain them.  For instance, offering quarterly relief credits based on new market realities.

That way, we are not changing the compensation plan, but we’re at least trying to do something for the reality that the plan number was incorrect. If maybe 10% of his prospect list went out of business, there was an M&A, or the original potential was not realistic to begin with, a credit signals that the company still stands behind its reps.

It's always about how you react to the outcomes of those continuous planning cycles. 

By offering that sign of goodwill, you can at least continue to build trust, even if your static plans are not meeting the needs or driving the outcomes that you're wanting for the business.

How are organizations protecting employees from this whiplash?

Katia: Continuous planning does not mean instability in the finance world, because we are the beacon of stability. We need people to rely on the data we provide, and they expect us to provide consistent and comparable data.

That is what’s important for us. 

Each month, we evaluate the results: What are the outliers? What is not working, if anything? Are any outliers an indication of a fault in original planning, or do they just mean that the objectives were set incorrectly? 

We don't necessarily just jump into quota and territory corrections. We try to keep territories stable, because they impact not just the field sales, but the overall organization. Still, it's important to provide that constant feedback, as well.

We are also looking at the booking trends. Are the compensation trends aligned with booking? You don't want to see a rep outperforming, but bookings not growing. 

Being “static” in some ways helps us, because everyone relies on us for the information. But, dynamic information also helps with modeling and forecasting, because nothing is stable in this business. Based on how we see the bookings evolve, we adjust and maybe introduce additional incentives throughout the year to adapt to these trends.

Yes, the dynamic nature of our market is not a free pass to introduce endless change to your organization, because that creates instability. It's nuanced: Static planning doesn't mean set it and forget it, and continuous planning doesn't mean change it every day.

How have you been able to keep stability in the organization, but also keep trust when you're trying to enforce any constraints or enforce the plan that you've come up with for the year? 

Katia: We rely on our business partners — sales operations and sales finance. We analyze the trends. If we hear concerns or general unhappiness, we'll look into it and try to respond. Again, this response doesn't necessarily mean the plan is going to change. It often means that there is some other action. But, in some cases, there could be some additional bonuses offered to remediate the situation. 

The conversation never stops — especially after the month closes and we see the actuals. That's when additional meetings are held to see whether there is anything we need to discuss. We have several steering calls to review pace to plan. We also have a territory change board, which is held once a quarter where we sit down and see if there are any broader changes which we need to address.

Sometimes people think of sales planning as separate from the incentives modeling. Yet, incentives are actually the insurance policy for hitting those outcomes. How do you see incentives in the broader sales planning process? 

Saurabh: I am definitely a proponent of sales incentive leadership being at the table during the planning cycle. 

When incentive planning teams are not involved in sales planning, it really gives the compensation team less time to find pitfalls, operational challenges, etc. And sometimes because they're brought in at the end of the game, you are at the point of no return and you are just stuck operationalizing those decisions.

The compensation community can identify the operational challenges in the plan, for example. One thing that gets overlooked is the technology piece of it. There are usually some planning components that are more or less fixed. The compensation community can give the technology teams a heads up to at least start working on the aspects which are almost firm instead of waiting for everything to be delivered as one decision packet.

Change management is also relevant here. If you know that the forecasted quotas are drastically different from the previous year, you can build the change management exercise sooner to have more lead time. 

Katia: It's very important from the beginning to ensure that the plan addresses strategic initiatives. We always work closely with the IT team to understand whether the plan is executable or not. Do we have stable data? Is the data in Salesforce? The sales reps need to be able to understand and easily verify the data that they're basing compensation on; because, otherwise, if they don't, the plan will fail.

When we are close to design finalization, it’s important to make sure everyone is aligned and has a plan to execute, because you have the beginning of the next fiscal year as your deadline. Will all the tools be in place for the sales reps to be able to work on these plans and be measured?

Have collaboration, continued dialogue, and modeling. We had some scenarios when the idea sounded perfect, but when we plugged in the numbers, the outcome was drastically different from what we expected. We ultimately abandoned it, because it was not demonstrating the desired outcome and was financially ineffective. 

[BLOCKQUOTE
| Quote: When you wait to bring in sales and incentive compensation teams at the very end, it is a recipe for disaster.
| Author: Katia Terentyeva
| Title: Head of Global Sales Compensation Operations, Elastic
]

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