Sales Planning

The pandemic hit the North American insurance workforce hard, with 67% of insurers reporting furloughs and 68% reporting layoffs. More than half of these companies reduced insurance agent commission rates and other compensation while another third planned to do the same. There were similar effects on raises and bonuses, while most promotions were frozen.  Post-pandemic things are unlikely to change. Rapidly shifting distribution models and other financial pressures suggest that insurers and their finance departments must look to further rationalization to ensure operational and financial stability. In fact, according to a recent Deloitte survey of insurance executives, 39% of respondents believed they would need further rationalization of compensation and headcount.  But rationalization isn’t just about cuts. It’s also about designing creative solutions to drive revenue growth, increase operational efficiency, retain top producers and reduce risk. Many of these solutions are driven by innovative insurance commission rate structures focused on critical KPIs. However, insurance sales compensation is notoriously complex. Here is what you need to know.  Tie Insurance Sales Compensation to Business Goals and KPIs   The days when compensation was determined by annual or semi-annual reviews with managers and dictated by politics and the bottom line are over. New approaches to compensation link it directly to KPIs and the data tracked for each KPI by your finance department. Whether you are planning to scale, looking to retain customers or sales staff or hoping to increase revenue, your KPIs should reflect your intentions. And so too must the sales compensation plan that drives each of these metrics.  Insurance Commission Rates Commissions are the lynchpin of compensation in the insurance industry and can come in various forms, all of which are tied directly to sales KPIs or metrics. Commission rates will often vary according to product and according to a salesperson’s experience and production. Products with higher profit margins, such as group life insurance, will usually garner higher commission rates as a company passes some of that higher profit to its salesforce. Companies often pay their highest producers 100% commission so production is another important KPI for insurance companies to track.  Upfront or first-year commissions are attached to the initial sale and are generally designed to promote growth and revenue. Trailing or residual commissions are also often linked to policies and these payout for several years as customers renew their policies. These commissions provide salespeople with an incentive to perform periodic reviews of policies and at the same time help ensure insurance companies meet their customer retention goals.  When a policy ages or a salesperson retires or leaves a company, agents may also be assigned a service fee to ensure loyal customers a certain level of service on their policies. While these are not really commissions, they do provide servicing agents with a specific percentage—often just 1 or 2%—of the renewal fee. This servicing can include periodic reviews as well as assistance with claims or the reporting process. Insurance companies will also include a chargeback or clawback clause in their compensation packages to protect revenue goals. Essentially, this means that if a salesperson earns commission in advance on the sale of a subscription, they must pay a portion of the commission back if a customer cancels the subscription before the end of a specified term.  Chargebacks can be tricky. While they protect the company and its customers from overly aggressive salespeople, they can also provide some unwelcome surprises for good salespeople and that in turn can adversely affect morale. There are also legal considerations regarding clawbacks, particularly in states such as California, so carefully check the rules for your state or province.   Insurance Commission Structures  There are also several forms of commission structures. Each is best suited to a specific product type and designed to help the company focus on a unique set of KPIs.  Heaped commission structures are most commonly used for individual life insurance. In this structure, paid commissions are highest on the sale of a new policy and considerably lower for renewals. This structure helps companies with KPIs or outcomes targeting growth in sales volume or new customers.  A level commission structure provides the same commission rates for both new clients and renewals. This structure addresses KPIs that focus on customer retention efforts. Group life insurance, such as that sold to employee groups or unions, where customer retention translates into significant profits, will often employ level commissions. In the third type of commission structure, known as levelized, insurance companies pay higher commissions for new clients than renewals. However, the difference between the two is not as significant as with a heaped structure. These keep some focus on retention efforts while still incentivizing new sales. Other Forms of Sales Compensation for Insurance  While commission is perhaps the most significant form of compensation for insurance salespeople, there are several other forms of compensation to consider. Bonuses can be attached to specific metrics, such as sales targets, long-term employment or even maintaining certain commission levels. These can also come in the form of contingent commissions tied to specific metrics or supplemental commissions tied to things such as profitability, premium retention or premium growth. Bonuses serve as both a retention effort and to incentivize sales efforts.  Salespeople are also likely to receive company benefits, including profit-sharing incentives and access to support staff and equipment. Finally, compensation packages for insurance employees will often include an expense allowance for equipment purchase or even office space.  Challenges of Distribution and the Need To Innovate The COVID-19 pandemic has accelerated long-brewing changes in the insurance industry, particularly a move to remote or virtual distribution. This, too, is driving a new look at compensation structures as salespeople struggle with lead generation and other issues critical to their revenue.  Many companies are, for example, investing in a team approach by allowing for split commissions and customer information data and tools sharing. This will enable agents to team up with others who may have different product experience and help each extend their customer reach. Others are expanding distribution partnerships by linking with marketing organizations and developing affinity relationships, which help agents, particularly virtual agents, positively impact scale and revenue.  Investing in enablers is also critical to compensation structures. These can include digital tools for the agents and customer tools, both of which can increase upselling and cross-selling opportunities for agents. And, more importantly, enablers can help with critical lead generation. According to a McKinsey study, 60% of agents were willing to pay between 0.5 and 2.0% of their annual income for enablers leading to quality leads.  Data is also crucial to designing the best compensation plan for your workforce. It does little good locked away in a legacy system or a filing cabinet. Quick access to data means insurers can respond quickly to changing customer demands, identify potential churn and candidates for cross-selling or upselling and develop opportunities for agents.  Tying all of this data to KPIs allows insurers to develop the best compensation plan to help them maintain a strong salesforce and meet company goals for growth. Streamline the process with Vena’s Insurance solutions. 

How you assign your sales quotas. The territories you give your most productive sales reps. The new segments you decide to introduce.  There are a lot of ways your sales territories define your business. Which means getting them right is key to whether or not you meet your sales targets. All of which makes sales territory planning critical to your business success.  A solid sales territory business plan can help you set the right quotas for your team and align their strengths and weaknesses with the segments they represent. What’s more, it can help ensure you’re pursuing the right leads as a business and that you’re not ignoring potentially lucrative markets along the way. But getting your territory plan right means accessing the best data and putting it to work. To do that, start with the following: 1 What is territory planning? 2 Why is territory planning important? 3 5 steps to creating an effective territory plan 4 More best practices for successful territory planning 5 Planning for success What Is Territory Planning? Sales territory and quota planning enables you to map out your sales territories for maximum impact, ensuring that you’re targeting the right prospective customers. Territories are usually based on geography, but can also be separated according to other criteria—from industry to customer type. Your sales representatives will be assigned to a territory based on their experience, strengths and weaknesses, as well as the sales potential of the territory in question. Once you’ve planned out your territories and understand their sales potential, you can start to build quotas for your team and create a sales forecast that your entire sales and operations team can plan against.  Why Is Territory Planning Important? By thoughtfully planning out your territories, you can set your sales team up for success—and put your organization on track to reaching its sales goals. A successful sample territory plan does that in several ways: It expertly segments your sales opportunities: While many territory plans are based on geography, some go further to segment based on factors such as industry, company size or market. These kinds of segmentations empower your sales representatives to become experts in their area of interest, with a deeper understanding of a sub-segment of the business, not just a specific location. It aligns your sales representatives with the number of potential leads: Every territory isn’t created equal when it comes to the amount of sales potential it has. But if your territories are planned properly, you can even up the odds—balancing the load to ensure no opportunities are missed. It assigns your best sales reps to your busiest territories: Every sales territory may not be the same, but neither is every sales rep. Some are more experienced and can handle higher sales quotas, while others may be excellent when faced with the challenge of forging a new market from scratch. The better you understand your sales territories and team, the better you’re able to assign the right sales representative to the territory where they can have the biggest impact. It lets you dig deeper into the data to achieve the best results: Territory planning isn’t a one-time thing. By following your performance data, you can get a deeper understanding of how each territory is faring and whether it’s meeting its potential or not. That data can feed into your sales forecasts and future quotas and let you tweak your territories or sales team distribution if need be.   In other words, a well-executed territory plan lets you position your team for more targeted, smarter selling and puts your organization on track towards greater gains—now and in the long run. It can also help increase your overall sales by making your team more productive and cost effective as a whole.  But to create an effective sales territory plan, you need to put in the work to get it right. 5 Steps To Creating an Effective Sales Territory Plan   So how do you go about planning the best sales territories for your business? These five steps can help: 1. Analyze the Customers You Already Have By determining how your existing customers are spread out, you can start to recognize trends and see how you might segment and approach prospective customers as well. Are your customers best segmented by geography or industry? Are there emerging markets or industries you’re starting to see new business from? Where are your top or most lucrative customers based? Look at sales data over time to better understand what the sales trends are and what segments have the most growth potential. 2. Analyze Your Current Territories and Team Now you want to look at your current sales team and the territories they represent. Which reps have the best track records and highest quotas? Which have the busiest sales pipelines? Which territories are the most profitable or have the most growth potential? By looking at how you’re currently doing things, you can start to see where you might make changes—where your top-ranking sales associates will have the biggest impact or where your most ambitious might be able to open up a new segment for growth. A SWOT analysis can help with this—providing a model for identifying the strengths, weaknesses, opportunities and threats that exist in your current territories and team.  3. Look at Your Potential Market After you’ve examined your existing customers and territories, it’s time to look more closely at where your most promising future potential may be and compare the two together. Are you targeting your Total Addressable Market or are potentially profitable segments being ignored? Using your Ideal Customer Profile, analyze the market to identify where you might have been missing opportunities all along. How big are those segments and how can you best add them to your current territories to explore them better? You’ll want to balance your territories against the potential of each. 4. Articulate Your Goals and How You’ll Achieve Them Using a top-down approach, you can start to set your overall sales goals and yearly quotas, determine whether any new territories are needed and start making any necessary adjustments to your existing territories. Analyze your data to determine your most and least profitable territories historically and set your quotas accordingly. Consider the overall sales pipeline and whether it will support your goals. Do you have the marketing leads you need in each territory to justify the quotas you’ve set out? What strategies will you use to make your goals a reality?  5. Measure Your Results Don’t just assume you got it right the first time. There’s room for improvement even in the best sales territory plans. By measuring your results, you can continue to optimize your territories to maximize their potential and make any necessary changes to your sales pipeline to set your entire team up for success. You can also keep an eye out for any emerging trends: territories that have diminished or increased in potential, increasing costs or sales representatives that aren’t measuring up. Check in on metrics such as gross sales, gross profits, conversion rates and total commissions at regular intervals to keep an eye on your ongoing success. By following these steps, you can create a strong sales territory plan and quotas that will push your team to maximize their potential—then continue to optimize your plan for continued success. Some additional best practices will help you along.   More Best Practices for Successful Territory Planning So what else do you need to know to build an effective territory plan? A few more best practices will keep your sales territory planning on track and your sales team moving toward your business goals:  1. Make Balance Your Objective With the right balance between territories, you can be confident knowing that your sales representatives are spending the bulk of their time on the most high-potential leads and that none of those potentially fruitful leads are being ignored. 2. Don’t Rock the Boat Too Much  While tweaking your territories will help optimize your results, a mostly steady sales territory plan will work in your favor, better enabling your sales team. After all, too much change can make it hard for your sales reps to develop the relationships they need to succeed. 3. Explore New Ideas  While a lot of companies use geography to divide their sales territories, other segmentation possibilities may work better for you. Don’t be afraid to explore other ways to divide territories, such as account type, industry, product or something else entirely.  4. Set Smaller Goals for Bigger Results Your sales representatives may have their own quotas, but you can help them reach those objectives by putting in place smaller goals along the way—the number of emails they should send in a day or the number of follow-up calls they should make to pursue a lead, for instance.   Planning For Success A thoughtful sales territory plan will set your sales team up for success and put your entire organization on the path to meeting its sales goals. More than that, it can help you identify and explore new territories and find more efficient segmentation options—giving you the power to set even larger objectives. Build a successful sales plan with the help of Vena’s sales performance management tools.

Compensation management is easier said than done. Just when you think you have a firm grasp, you realize that revenue operations (RevOps) professionals have questions and your company’s sales team is in the dark.  But that doesn’t mean you should give up and hope for the best. The overall health and well-being of your company depend on your ability to maintain full control of the compensation component of every department and employee.  Decisions about pay can and will have a long-lasting impact on your company. When managed carefully, all employees—from the top down across all departments—are in a position to get on board with your company’s strategy and reach their peak performance. Conversely, when compensation is managed poorly—or not at all—it can result in: Unnecessary RevOps challenges Unmotivated employees High turnover rate (and higher training costs) Misaligned objectives across the company which can decrease efficiency Sales professionals who don’t understand incentive compensation So, this leads to the million-dollar question: What’s the best way to manage compensation payout to keep RevOps happy and sales informed? How To Keep RevOps Satisfied The manner in which companies approach revenue continues to evolve. And for this reason, it’s critical to have a compensation management plan that aligns with RevOps.  The RevOps structure within your company brings together key areas of responsibility, including but not necessarily limited to operations, sales, marketing, and customer success. Here are three steps you can take to keep RevOps satisfied: 1. Actively Prioritize Budgeting and Forecasting A company that’s not prioritizing budgeting and forecasting or actively improving its internal processes to better manage compensation payout is a company that’s playing with fire. Even if you’re able to get away with it on some fronts, it’ll eventually come to a head. And that often happens with an unhappy RevOps team.  Streamlining budgeting and forecasting allows you to not only better manage your compensation payout to keep RevOps happy and informed but also save time for further in-depth analysis. More specifically, how to: Shorten your budgeting cycle Plot your path to future growth Create rolling forecasts  All of these details are important to the stability and growth of your organization.  2. Use Scenario Planning The best way to keep RevOps happy is to prevent surprises. This is where scenario planning comes to the rescue. Through the use of what-if analysis and advanced financial modeling, you can test for any and every scenario imaginable. This includes best-case, worst-case and any scenario in between.  When you provide RevOps with the results of multiple scenarios, they can better plan for the future.  3. Make Financial Reporting a Priority Financial reporting isn’t something you should put on the back burner. It should be at the forefront at all times because it’s something RevOps require in order to stay the course.  Fast, efficient and accurate financial reporting allows you to: Analyze customer behavior Review and share key business insights and metrics such as cash flow, customer lifetime value and customer acquisition cost Share reports and analysis with RevOps  What About Sales? Sales is the lifeblood of any organization, so it’s imperative to keep this department informed. This includes everyone from sales development reps to account executives. Sales professionals need to know how they’re performing across the board, including quota planning, territory management and more.  They want and need to know how their compensation is calculated. But they don’t want to jump through hoops or be forced to crunch complicated numbers. An accurate, simple-to-comprehend presentation is all they want.  This is why incentive compensation management is so important. With the right system in place, it’s not only easier to manage incentive compensation, it’s also easier to share the requisite information with sales professionals. Take these two steps to better manage compensation payout to keep sales informed: 1. Finding Your Sales Performance Management Solution The use of sales performance management software can be the difference between a happy, informed sales team and one that’s confused and disgruntled. With our sales performance management software, you can carry out your quota planning, capacity planning, territory management and incentive compensation management activities.  Forget about manually tackling these tasks and gain back the hours it takes to do so. The right software allows you to plan accordingly and to share the necessary information with your sales team. 2. Implementation of Incentive Compensation Management (ICM) Any incentive compensation management program should be designed with two words in mind: efficiency and transparency. That’s what you want and that’s what every salesperson needs.  With the help of the right technology, you can take advantage of benefits such as: Improved payment accuracy More timely payments  Automated compensation calculations Efficiency is all about saving time, avoiding mistakes and scaling without challenges.  Transparency makes it easy for you, your department heads and sales managers to provide sales professionals with an easy-to-understand overview of their total compensation and incentive structure.  Final Thoughts Compensation management doesn’t have to keep you up at night. The right strategy and tools can help you implement a system for efficiently and accurately managing compensation, which will benefit RevOps, sales and everyone in between. Vena for Incentive Compensation Management provides you with full control over managing your compensation payout. From sales incentive programs to workers’ compensation management—and that’s just the start—you can simplify the process, automate tasks and manage all of your data in one place. 

What does the future hold? Where are you going in the month, quarter or year ahead? For sales and operations teams, answering those questions can play a critical role in helping to set sales goals and build successful processes to meet them. Goals and processes that help your entire organization thrive. That’s why the best sales planning processes start with a sales forecast. Sales forecasting helps you use the data and expertise you have to predict where you’re going to go, allowing you a better look into the future and giving you a stronger understanding of what you need to do to empower those objectives. When used correctly, a sales forecast offers you a roadmap that can enable your team, align your sales and operations planning (S&OP) processes and catapult your entire organization forward. Read on to discover the best way to integrate forecasting into your sales and business plans. 1 What is sales forecasting? 2 4 Steps To Preparing an Accurate Sales Forecast 3 Sales Forecasting Methods 4 Integrating Forecasting Into Your S&OP What Is Sales Forecasting? Sales forecasting combines historical sales data with market projections and industry insight to predict what your salespeople will sell in a given week, month, quarter or year. It helps you set goals, improve your sales budgeting and know when to hire, while also offering you a view into potential issues that may affect your sales projections. In turn, it empowers you with the information you need to try to get ahead of them. But to get the most out of your sales forecasting, you need to draw on the right data and ensure your forecast is as accurate as possible. You also need to align your sales team based on the results so that everyone knows where they’re going—and doesn’t end up somewhere else instead. So how do you go about doing that? And more importantly, how do you make sure you get it right? 4 Steps To Preparing an Accurate Sales Forecast Creating a solid sales forecast isn’t always the easiest of tasks. But the best strategic sales plan examples will get your sales and operations teams where they need to be. Which means making sure your sales forecast is as accurate as possible is critical to the success of the sales planning process.  To make sure yours hits the mark, follow these steps:    1. Formalize your sales process Building a formalized sales process helps ensure everyone is on the same page, with a baseline in place to ensure everyone on your team better understands the entire sales journey. This includes the steps your buyers take towards their final sale, knowing what it takes for a prospect to move from one stage to the next and making sure everyone is working with all of the same definitions along the way. That all may sound obvious, but you’d be surprised how many companies have a sales process without a clearly defined exit criteria to move them from one stage to the next.  To formalize your sales process, then, start by establishing a better understanding of your process as it already exists. How long (on average) does it take to close a deal? How much time do prospective customers stay at each stage? How do other teams, such as marketing and operations, contribute to your sales goals? Creating a single source of truth will create better transparency and help you understand the sales journey more clearly, while letting you determine the level of support you should be offering throughout the sales process. Only with this understanding in place can you start predicting how future buyers are going to move through your sales cycle—and plan for how your sales team can help them at every step. 2. Consider the data By looking at historical sales data such as your conversion rates, average contract value and sales activity data—among other metrics—you’ll be able to get a better idea of what a typical sales cycle looks like in your organization and how individual members of your team contribute towards it. This data will help inform the forecasting process. Meanwhile, the data you have available will also influence the forecasting method you choose to use (more on that later) and determine whether you can use tools such as predictive analytics to help with your predictions. But your sales history shouldn’t be the only data that factors into your planning—at least not if you want your forecast to be as accurate as possible. Market and industry shifts will also come into play, as will the revenue targets you’re hoping to accomplish. Your sales planning could be affected if your competitor releases a new product, for instance, or if the economy shifts. You may also need to accommodate for sales slowdowns,  take a different approach if there have been regulatory changes that affect your particular market or hire new sales representatives if you’re going after significantly higher revenue targets than in the past. It’s important to keep on top of those types of influences in order to get a fuller picture of where your sales may go. 3. Set quotas The next step to building a sales forecast is to start putting all of that data to work, building out quotas for each member of your team—giving them set goals to work by and creating a baseline to use as a comparison in your sales forecast.  Quotas are usually derived from historical data and top-level revenue targets, but don’t just look at that data in aggregate. There are often natural trends in sales performance throughout the year, including regular, slow or busy periods that may change by region. When you’re creating your quarterly or monthly quotas, then, keep in mind those natural peaks and valleys and how they might contribute to your individual and company goals. Also consider operations-level data and the trends it reveals on territory and segment performance, merging that with top-level targets to spread your ultimate goals appropriately. 4. Determine the best forecasting method(s) for you How you approach your sales forecasting will depend on a variety of factors, from the size of your sales team and maturity of your business and forecasting capabilities, to the data you have available to you. We’ll go over the most popular methods available in the next section, but getting the most out of your forecasting efforts may mean using more than one to inform your future goals. Whatever the case, once you choose the best method(s) for your business and start the sales forecasting process, you’ve still got more to do. Ensuring accuracy means continually evolving that process and making sure you're pulling on the best data to get to the best results.  Achieving success also means keeping your entire team in the loop—using your forecasting efforts to inform the feedback you give them and keeping them accountable to your overall goals. By bringing in the entire sales and operations team, you’ll make sure you have the support you need to meet those goals—and put everyone on the path towards them. Sales Forecasting Methods As already mentioned, there are a variety of sales forecasting methods you can choose from to help support your sales planning efforts. Read on to learn about three of the most popular approaches. Qualitative Forecasting Methods Like the name suggests, qualitative forecasting methods rely on qualitative data—that is, observations, experience and instinct-led insights—as opposed to quantitative data that’s more numbers based. This kind of forecasting draws on the expertise of experienced managers and consultants as well as other sources such as customer survey results. Qualitative forecasting can be used when you don’t have a lot of reliable data to work with, and/or can supplement the data you do have to account for market, product, regulatory or industry changes you know will change your sales forecast but aren’t able to quantify. It gives you the flexibility to look at areas of your sales plan where numbers may not exist. This type of forecasting requires experienced team members or consultants that are able to use that experience to predict customer behaviors and patterns ahead. Just be aware: since it’s based largely on personal perspective, there may be blindspots you don’t recognize until too late. It’s important to understand where those biases may exist. Time Series Forecasting While qualitative forecasting is less reliant on hard data, time series forecasting—a popular type of quantitative forecasting—requires years’ worth of it for the most accurate results. By drawing on a wealth of historical data, it allows you to better understand past performance and how sales performance is changing. By examining that data over time, time series forecasting lets you see any patterns or trends that may exist: for example, the effects of sales promotions, seasonal differences, changing growth rates and so on. With the assumption that those patterns and trends are likely to repeat themselves in the future, this information can help fuel your sales forecast and allow you to be better prepared for what’s ahead. Where this type of forecasting sometimes falters, though, is when your market or business environment changes and historical data no longer applies in the same way. Causal Forecasting Models An even more sophisticated method of forecasting, causal models rely on a combination of data and analysis to identify the causal relationships that exist in your sales pipeline. Causal forecasting may incorporate sales data, market surveys and even the data from your time series analysis to forecast future results. By assuming a cause-and-effect relationship between independent variables, causal forecasting looks at all of the factors that may have an impact on future outcomes to predict future sales scenarios. Effective for both short- and medium-term forecasting, it can work well alongside what-if style analysis, but requires a large amount of data if you’re going to get effective results. This type of forecasting also depends on consistent relationships between the variables you look at—if those relationships change, causal forecasting becomes less effective. Integrating Forecasting Into Your S&OP  Sales forecasting is just the start, though. To put it to work successfully and truly enable your entire team towards the goals you’re setting, you need to integrate that forecasting into your S&OP process.  S&OP incorporates all parts of your business, for a big picture view of your entire operation— including marketing, finance and operations. By extending your sales planning through the entire process, you remove any departmental silos and get every team working towards your goals. After all, your sales forecast isn’t much use if you don’t have the internal infrastructure in place to achieve those objectives. You need marketing leads, inventory for your team to sell and the reps available to onboard your new customers. That takes a team effort. Your sales forecast is the first step to building that S&OP roadmap, coordinating your future sales projections with the rest of your organization and putting each department on the path towards them. And it’s an important step—one that can lead to increased profits, better customer service, quicker response times and more.  Your Sales Performance Management Build better sales performance management processes with Vena.