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Greg: Good morning, good afternoon, good evening everybody. This is Greg Alexander, CEO of SBI, a sale and marketing consulting company dedicated to helping you make your number. This is the weekly SBI podcast series. Today we have a great guest, Amy Slater. Let me introduce Amy to you. Amy is the senior vice president of Word wide sales operations at Rovi Corporation, a provider of solutions for the discovery and personalization of digital entertainment. It provides things like interactive program guides, interactive listening of programs, etc. Customers include: Facebook, Dish network, Charter Communications, and several others. They employ about 1200 people and they do a little over 500 million in annual sales. Amy is responsible for driving transformation and continuous improvement in the effectiveness of the sales force in pursuit of revenue growth. She has over 25 years of business experience, with stops at some of the worlds great companies, such as Cisco Systems and Salesforce.com. She received her degree from U Cal of Berkeley. Amy, welcome to the show.
Amy: Hi. Thank you so much, Greg.
Greg: All right, today’s topic is an interesting topic. It is the annual strategic planning process as seen from the desk of sales ops. Amy, Rovi’s fiscal year I believe begins January 1, is that correct?
Amy: That’s right.
Greg: As a publicly traded company I assume there is some form of an annual strategic planning process, is that true?
Amy: Yes it is, and you actually caught me right in the middle of it. We do, what we call long range planning process. We are in the throes of it as we speak.
Greg: Perfect. I’m glad to hear that because that is what I want to talk about. I love the terminology here, the long range planning process. What’s the definition of long range?
Amy: Really we look not only at the year to come, but another two years out. We really look at a three year horizon for our long range planning.
Greg: Wow, that’s fantastic. Some of my clients can’t get past the next 90 days, and you’re looking three years in advance.
Amy: Yeah. I have to say we spend a lot of our time in the 90 day cycle as well. In order to really plan properly from a product road map and making sure we have, what we call interlock between our sales and our business groups, we really need to look at that entire horizon of three years not just the short term.
Greg: That was a great lead in, I was going to ask you about that. The strategic planning process, sometimes in companies it’s driven by the product road map,. It sounds like maybe that’s the same in your company.
Amy: Yes it is. It’s really dependent upon that mutual collaboration between the product team and the sales and sales leadership teams as well.
Greg: Very good. This long range planning process, within the calendar year, when does it kick off?
Amy: This year it kicked off about mid jun and it will carry through til about the end of August.
Greg: Okay, very good.
Amy: It really proceeds the budgeting. From a sales planning as well as the PNL budget all of this long range planning gets done first, and then we launch into setting quotas and then the budget and the expense for the coming year as well.
Greg: I’m going to get to those nitty gritty details, the quota, things like that, in a moment. Before we jump into that, just for the purpose of the audience, typically the way that this works, and I’m speaking in generic terms here and then we’ll apply this to Amy’s situation in a moment, the CEO and the board take a fresh look at the corporate strategy in early to mid Q3 is when we normally see it. Obviously your company’s doing that a little bit earlier, which is great. During this period assumptions are made, things such as what are we learning from market research, who are the competitors, strengths and weakness of our offerings versus their offerings, any change in customer behavior. Take a look at assumptions around, go to market model, in terms of which channels you use, which ones don’t, and all that kind of stuff. What comes out of that at the board level is a revenue and project target for the next year. From there all the operational plans get built. It’s very much a board driven, share holder driven, top down approach usually. Amy, it sounds like maybe you guys do things a little bit differently than that. Is that true, or is what I just said fairly representative of your plan?
Amy: I would say it’s fairly representative. There are the targets, but we also take that bottoms up approach. I think some thing thoroughly unique about Rovi is our product teams are pretty intimately involved in the customer engagement and the customer experience. They’re certain that when they’re designing product road maps that they know by customer what the needs and expectations are. While we’re doing all of this, there’s also the aspects that you mentioned around market research, competition, customer behavior. We did a huge effort around that about in the last 90 days and released about 150 page report on the market dynamics. That preceded the long range planning process. Very similar that we did a lot of that market research in advance so that we really have some [inaudible 00:06:24] as they move forward.
Greg: Okay great. It’s fantastic to hear that you outward in. You started with the market, the customer needs and worked backwards. That’s one of the things that we advocate for. Unfortunately, sometimes companies claim to be customer centric but then when it comes time to do the effort and produce a 100 page report on what’s happening in the marketplace they can shy away from it at times. Congratulations on that effort. Then normally from there we get into the late Q3, Q4. Here the functional leaders, sales, marketing, product etc, start building their strategy. Then we cascade down from there. We get into the nitty gritty detail around designing territories, hiring profiles, head count plans, com plans, quotas, organizational structure, and stuff like that. The reason why I’m just laying this out in our first segment here is because I just want to make sure that the audience, which largely consists of sales and marketing leaders, can contrast what you’re doing there at your company and this generic here’s how it normally happens from an organization that’s January through December, then we can dive into the details. When you start functional planning … from your perspective in sales ops, when you start doing these sales strategy related items, does that happen in the forth quarter?
Amy: Yeah. A lot of it starts the end of Q3 and then we move into some of that finalization around Q4. I think that’s accurate.
Greg: In your business is it a transaction revenue stream, is it recurring revenue?
Amy: There’s both. I’d say a big portion of our revenue is around customer renewal, but then we have a ….. I would say the transactions, I wouldn’t call it transactional business per say. There’s certainly long range larger deals. Fewer deals in a quarter, about 20% generated by revenue business.
Greg: The reason why I ask that is sometimes companies that have predictability in future revenue streams, which it sounds like you do, are able to do long range planning because there’s some stability there. Whereas organizations that have to manufacture the revenue every 30. 60, 90 days, sometimes they can’t do long range planning. Is there some stable ongoing revenue in your business model?
Amy: Yes, certainly, if you would say that anything in business is stable. In comparison, we’re not resetting the clock at zero every yer. When I was at Cisco it was a very different model, you set the clock back to zero, at least on the product side, maybe not on service. On the product side it was a new year every year. You had to do the whole thing over again. Absolutely, we do have a foundation that we can look from.
Greg: Yeah, okay. Great contrast with the Cisco example, that’s what I was trying to get to. All right, very good. We’re going to take a quick break here. When we come back from the break we’re going to speak to my about how she translates corporate goals, such as revenue and EBITDA targets to sales objectives. If you’re interested in improving your annual process, follow some of the things that Amy does. I would encourage the audience to get a copy of the SBI magazine, which is what I’m holding up here. The reason why that is, is that we spell out in the magazine several other use cases like Amy’s on how to do the planning process correctly from the sales ops office. It can be very helpful. If you’re not familiar with SBI magazine, don’t know how to get it, there’s some information on it.
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Greg: Welcome back everybody. This is Greg Alexander, CEO of SBI, sales and marketing consulting company dedicated to helping you make your number. This is the weekly SBI podcast series. Today I’m joined by Amy Slater of Rovi Corporation, she is the senior vice president, world wide sales ops, so to speak. We are talking about the annual planning process. Right before the break Amy was contrasting how they do things there with this generic model that I submitted to the audience today that we see. There’s some interesting things that they do differently. Most notably, they start with the market, they work backwards from the needs of the marketplace and anticipate opportunities and threats. Then they lead to long range planning, which happens in the middle of the year and then they cascade down to traditional strategic planning which is great. That’s a model for all of us to follow. Let’s pick up the conversation where we left off, which is when sales leadership needs to translate corporate objectives into sales goals for the year. Amy, how do you set quotas for the sales team?
Amy: We look at the total revenue objective, certainly by product and by region. Then we back it out from there. We take a look at certainly the revenue that you were just talking about, that we know is predicable. We look at a growth factor and then we add that on. We have teams that do some work, like you said, the transactional type business, and then others that do more that account management. We also take a look at how many renewals we have in our price line, in our funnel, and we make sure we begin those renewal conversations well in advance. We take the renewal into account when we’re setting those quotas. There’s that anticipated revenue that we are fairly confident is going to come in.
Greg: There’s a historical revenue analysis that says, Mary-Sue sales rep in Chicago did a million dollars last year, we want her to grow her territory by 20% this year so her numbers a million-two. I know I’m over simplifying, but is that something ….
Amy: Yeah, I’d say we get pretty granular. We set growth objectives for every single customer.
Amy: We do the roll up. It’s not … because our business is fairly unique, and I’d say we have a fairly finite set of prospects, it’s not, again, like a Cisco, that pretty much every company could buy something, or salesforce.com where you have an entire market. We have a very specific market segment. We get down to certainly on our probably top 100 customers, we assign some type of a target to each customer, and then we do a roll up by individual.
Greg: That’s fantastic. I was going to ask you about that because that’s the perfect way to do it. Now, if you’re in a business where you have thousands, if not hundreds of thousands of customers, that can be tough to do. If you’re in a business like your business where there’s a finite number of people who can buy your stuff, it’s easier to do. I’m glad to hear you guys take forward the effort to make that happen. That tells me that different sales people have different quotas, and the quotas reflect the opportunity in their account base. Is that correct?
Amy: That’s correct.
Greg: Okay, very good. From here the calculation of head count, how do you determine how many reps, and managers, and directors, etc are required? How do you handle the math on that?
Amy: Typically we look …. there’s a big focus right now going from the inside out, how you just described. Inside out meaning inside being he customer. We look at our customers and see what type of account relationship they require. It’s not purely a calculation based on revenue per head. In some businesses it’s much easier to do that. Again, in a company that has more transactional business and have an infinite number of prospects. We first take a look at what is required to have the right customer experience, and then we will determine the head counts that support that. We do also try to look at ratios, some of the ratios we look at and we’ve done quite a bit homework on it recently, how many engineers you need to support the client directors. We’ve recently launched a client director model. Really how many of the engineering researchers do you need to map to the number of sales resources, so that we’re not too heavy on the sales side. Such a a big part of our business is around the engineering expertise.
Greg: You guys are doing so many things that are right out of the best practices playbook, which is great. You’re starting with the desired customer experience. What does the customer wants, and then you’re doing head count planning, and basically your account level organizational design. It’s not just how many people, what types of people, which is really great. I wish everybody did it that way. How do you figure out the desired customer experience? Is that unique per the customer? Do you just ask them and they tell you? Is it generic across market segment? How do you figure that out?
Amy: Some of it, because we have specific industries that we target, service provider, consumer electronics, there certainly is a profile of customers. We are in the process also of launching a new customer satisfaction program and customer sat survey, because I think we felt we needed to be more in tune with our customer. Some of this is certainly nirvana and this is how we’ve practiced. It’s the goal that we have in mind for it. It’s really looking at what is the market segment that the customer is in, and then we try to get pretty specific to the exact customer based on feedback, based on the solutions that they’ve deployed from Rovi.
Greg: You mentioned you’re recently deployed the client director model. Your terminology. What does client director, what does that mean?
Amy: Sure. The client director is a person really from an enterprise best practice that we believe owns the entire account relationship, the total lifecycle from prospect to delivery of the solution, and that they own that end to end relationship. Something different from what we had done before, which was more opportunistic. That we let the opportunities drive the engagement. You might have five different people calling on one client selling different solutions without really a coordinated effort and account number. We moved to the client director model, so the client director owns that end to end relationship. Then we have supporting product specialists that support that client director. We feel that that’s a better way to improve customer engagement and customer intimacy.
Greg: I think it’s a great model, especially given your business where there’s a finite number of customers you can sell your solutions to. It makes sense to over invest in a senior person, like client director, who spends his or her time understanding the customers needs and then does a resource wrapping back into your company to figure out how to best support them. I think that’s great. A lot of organizations have a version of that – maybe not exclusively, but they’ll have something like a key account or global account program that mimics that in some way. The resistance going to that model is it’s expensive, because these are very high skilled people. There’s a fear there that we’re going to over resource this account with things like product specialists and pre-sale support and all that stuff. When you guys made this move, which sounds like it was in the recent history here, did you have to overcome that objection that the cost of sale was going to go up? What was the business case?
Amy: We’re in the process of doing just that. We launched this new model mid January and we’re still fine tuning what the resource allocation looks like, because we changed the model and we’re still in the process of morphing what the resource modelling looks like. Especially when you have a global company like Rovi, how do you gain resources in places like Asia [inaudible 00:19:04], typically the resources have been housed in North America. How do you do that and how do you scale? We’re in that process right now, we’re right in the thick of it, trying to determine where you put these resources and really building the business case often and around customer engagement.
Greg: Obviously this is probably the reason why you’re going through this new customer satisfaction process that you mentioned earlier, because inside the engagement there’s probably input into some of these resource allocation decisions. Is that how you plan on using that?
Amy: Yes, absolutely.
Greg: Then when you go to a model like this and you have all these sales support people, which are usually non quota carrying people. Everybody gets hung up on the ration between quota carrying and non quota carrying people, which to me that doesn’t make much sense. It now puts the compensation plan on the table. Have you had to change your comp plan when you made this move?
Amy: We had to enhance it. Certainly when you have folks like product sales specialists, it’s not that new revenue, is overlay revenue. You just have another organization, the sales professional organization, that’s helping to mind the fields. You are having to look at compensation, how do you compensate other people for actually supporting the same revenue.
Greg: The learning for the audience there is that if you’re going to make this organizational change, whether it’s to something like the client director model or some other organizational change, keep in mind that often times you have to change your compensation plan to reinforce that stuff. All right, we’re going to take another quick short break. When we come back, Amy and I are going to talk about launching the sales strategy in the first quarter. Up to this point we’ve been talking about the inputs and the decision making process that determines what we’re going to do. Then normally to sales kick off we roll it out. That represents a whole different set of challenges. If you’re enjoying our podcast, you’re going to love SBI TV, which is our monthly television program. If you haven’t checked it out yet, it’s really good. We’re getting some great feedback from it. There’s some information on SBI TV.
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Greg: Welcome back everybody. This is Greg Alexander, CEO and founder of Sales Benchmark Index. This is SBI’s weekly podcast series. I’m joined today by Amy Slater, SVP world wide sales ops at Rovi Corporation. Today we’re talking about the annual strategic planning process from the sales ops desk. Up to this point we’ve talked about the planning exercises that happen in the third quarter and the fourth quarter, even in Amy’s case well before that in the long range planning cycle. Now we’re going to turn our attention to Q1, which is when the sales strategy gets launched. Amy, a lot of companies have this thing called sales kick off, otherwise known as SKO. It’s this big moment, you bring everybody together one time a year and launch all the new initiatives for the year. Does your company do that?
Amy: Yes. In fact we relaunched and categorized our sales kickoff this year, extending it from about a day or a day and a half. We increased it to about a three day event. Yes, we do that.
Greg: Going from a day, day and a half, to three days given that number of people, that enhances and grows the budget quite a bit. What was the compelling reason to extend it?
Amy: One of the big reasons is what we were just talking about before the break, which is all around the client director model. We were launching the new model at sales kickoff. We knew that we also had to include conversations around the new model, and we did some additional product training because there was a lot of cross training that had to be done across the sales organization.
Greg: Who attends the sales kick off event. Is it everybody in the company, is it a select group? Who attends?
Amy: It’s a select group. Certainly the core being the sales people, then the various supporting entities, several folks out of our marketing organization, and certainly legal as well. Different operational functions that are all working to support the sales people.
Greg: Does the executive team, does your CEO make an appearance?
Amy: Yup, actually he does a keynote launching of the event, as well as he did a closing keynote.
Greg: I’ve been to many sales kickoff events, I speak at my clients kickoff events all the time, and I think it’s a great exercise. Sometimes my clients cancel them for budget reasons. They say, Hey we can’t make a business case, what’s the objective of sales kickoff and how do I measure it’s return? Which is a really tough thing to measure. Have you cracked that code? Can you prove an ROI on sales kickoff?
Amy: I have to way we’ve tried to do the same thing. I think from my perspective, you can’t put a price or an ROI on culture. Especially when you’re making changes like we did, really significant changes to how the sales organization functions across the company, you’ve got to do it for cultural reasons if for no other reason. Making people feel apart of something. People are afraid of change. Anytime you can help calm anybodies fears about change, then you take that opportunity. I think one of the biggest benefits of any sales kickoff is really getting that camaraderie. One thing that we did differently this year when we did the sales kickoff is we renamed it and called it the word wide sales kickoff, because those events sometimes become so US centric that the folks that are in the outer geographies don’t feel like they’re apart of a global company. We really made a consented effort this year. We also launched the theme for the company this year, which was one One Rovi. That theme has permeated the entire organization. It’s in all of our communications to the entire company.
Greg: I often tell people, just because it can’t be measured, doesn’t mean you shouldn’t do it. People criticize me because our company’s called Sales Benchmark Index, and we’re the ultimate measurement guys. You’re right, culture matters. Terminology reinforces culture, so making that shift to world wide, or coming up with a theme, One Rovi, these are all cultural touch points, cultural reinforcement messages that are so critical for the sales folks to be successful.
All right, let’s pick up on our journey here a little bit. Kickoff happened, Q1 has come and gone, now it’s time to refresh our strategies as the year moves on. It’s not necessarily time to redo them all, but in every strategy we have a set of assumptions and then things happen and those assumptions either hold up or break down. We want to make little tweaks. Normally what we see there is some from of this cadence, let me et this out and then get your reaction to it or your explanation as to what your cadence is. Normally we see a weekly strategic alignment call between the CEO, head of product development, marketing and sales. Here they review this thing called hierarchy of objectives. We’ve got the revenue goal, the profit goal that gets translated to product specific numbers, which might get translated to market share gain. Even little things like leads generated, etc. Then the goals of this communication, or the goal of this weekly alignment call is to make the CEO strategy go all the way from him, through the organization, to the end customer with as little message distortion as possible, which is hard. The companies that do this tend to outperform those that don’t. The weekly cadence inside of your company as it relates to reinforcing the culture, and keeping everybody on message, and makings sure there’s a little message distortion as possible, what happens?
Amy: I’d say that that weekly cadence takes place with our ELT and then it gets translated. We do monthly operation reviews that include not only sales leadership, but the general managers of the product teams. That’s where we make sure that we’re staying in sync. At the very highest level they may have that weekly connection. Then we do our interlock on a monthly basis during our operation reviews.
Greg: Okay, very cool. The ELT, executive leadership team, has a weekly meeting, that translates to monthly operating reviews which includes a lot of people, including general managers and product lines, etc. I love that term, interlocking, that’s how you keep everybody interlocked. During these monthly operating reviews, what type of data or you looking at? Is it forward looking, backward look, is it KPI is it more qualitative? What’s the content of those meetings?
Amy: It certainly there’s a financial review portion that takes up probably only about thirty minutes of that. Then the rest is really talking about …we look at individual customers, we look at product road maps, and what are any of the hurdles that we’re facing. Sales will talk about any type of challenges or road blocks that need to be removed in order to move forward with our various customers. We talk about market trends, we talk about the competitors, and we do it on a product by product basis.
Greg: Wow, that’s a lot of outward in mentality. Outward in meaning the market, which is great. Sometimes you get at these meetings, and we audit them at times for our clients and try to help them do them better. It’s all those internal stuff, things that you just mentioned there. There’s a quick financial review, which leads to individual customer feedback, market trends, competitive analysis. What’s all market facing activity, which is great. I wish more companies would follow that.
All right, if we continue on our journey here, last part of this process, if you will, is trying to close the loop on our annual strategic planning process is the quarterly business review. Otherwise known as a QBR. Here the CEO usually has one with his director reports and the functional leaders do it with their team as well. These sessions accomplish one very important thing which is reallocating resources, specifically people, money, and time away from failed initiatives and towards promising projects. It’s the more, the monthly operating review, on steroids, if you will. Given your communication cadence, which is rather thorough and very agile, do you guys bother with QBR’s? If so, how are they different than the monthly operating reviews?
Amy: I actually just returned from a business trip last night where we did our sales leader QBR. Our chief revenue officer held a two and a half day meeting with the regional sales leaders. We actually had a lot of conversation around the long range planning, around required resources to get to the number. It’s a look back for the rest of the quarter, and then it’s a look forward of what are we going to do between now and the end of the year to accelerate and boil out the number.
Greg: Awesome. For the audience, just to quickly recap here what you’ve heard from Amy, which is best in class. Weekly communication that reinforces a strategy, which leads to monthly and the quarterly, which naturally flows into the long range planning process, which flows into their annual process. That’s a circle and then it repeats itself. That’s an example of how to do it. If you’re struggling with communication, and you would know that if there’s big knowledge gaps from one level to the next in an organization, you run into a team and they’re understanding of the company is six to twelve months old. You run into that the you know that you’ve got a communication problem. Refer back to this podcast and Amy’s example as to how to possibly fix that.
We’re going tot take one more break. When we return Amy and I are going to summarize this into two to three things you can do immediately following this show to set yourself up for success in 2016. If you’ve found this podcast informative, but prefer your content in shorter form, you should subscribe to our blog. Each day we publish a best practice that can be read in under five minutes on your mobile device. Here’s some information on the blog.
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Greg: Welcome back everybody. This is Greg Alexander, CEO of SBI. This is our weekly podcast show. Today I’m joined by Amy Slater of Rovi Corporation. We’re discussing the annual planning process and then some all around how to set yourself up for success in 2016. Amy was walking us through several best practice examples that they’re using at their company I think we can all mimic. Amy, I’m going to put you on the spot here and have you speak directly to the audience. If you were to tell them two to three things to do after listening to this show, specifically to nail the strategic planning process heading into 2016, what are the first two to three things that come to mind?
Amy: I would say first and foremost just having robust communication across sales and product teams. It can be a very lengthy process and it creates quite a bit of fatigue across the organization. Being organized and orchestrated in good communication is fundamental I would say as a first step. The second word I would say is transparency. It’s an opportunity to take the strategy, translate it into dollar. Make sure that that communication between sales and products that you not only are setting realistic targets, but then of course stretch targets, because there’s always that, I want to say healthy tension between the product teams and sales. Sales being protective and holding back a little bit, and product pushing the envelope. It’s how do you bridge that gap between the excitement around the products and the cost part of sales. It’s really how do you bridge that gap and come to an agreement on how you’re going to grow the business and [inaudible 00:34:59] the strategy.
Greg: Very interesting. Specifically you calling out not only robust communication and transparency, but specifically between two groups, the sales team and the products team, which I think is great advice. Let me offer my two sense and two resources I want to point the audience to. The first is we just published our annual research report titled: How to Make Your Number in 2016. This is the 9th year that we’ve done it. In it is our attempt to recommend a set of best practices around the annual planning prices. There’s all kinds of best practices in there. I would encourage the audience to download a copy of that. That might be a good reference material to use as you go through your planning process. Here’s how you can get it: salesbenchmarkindex.com/2016-report. The 2016 is 2-0-1-6, it’s actually the numerical representation of that. The second part would be I would schedule a workshop with one of our subject matter experts who can help you stand up a process, like the one we discussed today, inside your company. If you want some help here, the way to schedule your workshop with one of our sales strategists is the same website, salesbenchmarkindex.com/2016-workshop, 2016-workshop. You’ll be glad that you did.
Amy, on behalf of our listeners, thank you for unselfishly giving us your time and sharing your wisdom. You have made all of us smarter today, including myself. We owe you one. Thanks a bunch.
Amy: Thank you. I appreciate the time, I’ve enjoyed it. Thanks, Greg.
Greg: To our listeners, I want to thank you for turning in. I want to wish you the best of luck as you try to make your number. Take care.
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