Closing a large technology deal can require months of work from teams of sales specialists and engineers. How can Sonus ensure its sellers are fairly rewarded for their efforts?
Sonus uses IBM® Incentive Compensation Management to build sophisticated compensation plans that calculate and pay commission and bonuses based on each seller’s contribution to each deal.
Motivates sales teamsto focus on strategic targets through well-designed incentives
Boosts transparencyfor sellers by delivering compensation insight via Salesforce.com
75% savingon compensation management software licensing and maintenance costs
Business Challenge Story
Seizing a new opportunity
As a pioneer in the voice over internet protocol (VoIP) telephony space, Sonus built its original business model around providing leading-edge equipment to service providers. The company has achieved considerable success in this space: today, its security and interworking offerings power the networks of service providers in more than 50 countries. Bill Parks, Vice President and CIO of Sonus, comments: “Our market penetration among service providers is very high—in fact, we often say that if you make a long-distance phone call anywhere in the world, there’s a very good chance it has been routed through one of our devices.” In 2012, Sonus recognized that it had an opportunity to expand into a new market: selling its solutions to enterprises such as banks, airlines, government organizations and large retailers. Many of these enterprises were moving into IP Unified Communications solutions and experienced challenges securing their voice/video as well as cost-effectively consolidating their networks. “A large bank might have a central head office and thousands of branch offices around the world,” explains Parks. “With our solutions, instead of making dozens of contracts with local phone companies, they can set up a large session border controller at their headquarters, deploy a smaller box at each branch, and effectively act as their own service provider. This can be a major cost-saver.” To seize this opportunity, Sonus needed to create new sales teams that would concentrate on enterprise customers and products, while also maintaining its successful service provider-focused sales strategies. To motivate both sets of sellers, it needed to design appropriate compensation plans for each type of deal, and for each sales role. “We have a wide range of different specialist sales roles: account executives, sales engineers, channel account managers, regional managers, territory vice presidents, and so on,” says Parks. “Closing a big deal with a service provider or a large enterprise can be a lengthy and complex business, involving teams of sellers working together for months, or even years. “To keep people motivated, we need to make sure that each salesperson gets rewarded fairly for the effort they put into a deal, that they get paid at the right time, and that they understand how their performance is mapped to their compensation. That means the right compensation management platform is essential.”
Building a seamless compensation management process
When Sonus first started its compensation management journey back in the late nineties, it relied on a team of compensation administrators who used spreadsheets to track transactions and calculate compensation payments. However, as the company grew, this manual process became increasingly unsustainable. “We had got to a point where it was taking 15 or 20 minutes just to open the spreadsheets—we were almost at breaking point,” says Parks. “We could only give our sellers monthly updates on their performance towards their targets, and if they noticed a transaction was missing or misclassified, it took a lot of back-and-forth to get it fixed. This wasted time, and also reduced sellers’ confidence in the process—and sales folk worrying about compensation is a distraction that you don’t need when you’re trying to close a complex deal.” Sonus therefore decided to transform its approach by replacing its spreadsheet-based process with a comprehensive compensation management platform. “We were quite an early adopter of compensation management software, and many of the solutions available today didn’t exist back then,” says Parks. “We chose to work with Varicent, which was subsequently acquired by IBM, and many years later, we’re still convinced that it was the right choice. We’ve never encountered a calculation that the IBM Incentive Compensation Management engine couldn’t handle—and that’s very comforting for a CIO.” Today, the solution manages 10 different compensation plans, processes more than 40,000 sales transactions per month, and provides near-real-time insight into sales performance for more than 150 payees. “Aside from the powerful calculation engine, the best thing about the solution is the level of transparency it provides for our salespeople,” says Parks. “It is completely integrated with the Salesforce.com portal that our sellers log into every day—so if they want to check on their compensation, the latest data is only a mouse-click away.” The solution also provides built-in workflows to handle processes such as inquiries and adjustments. If a seller wants to query a particular transaction, they can send a message to the compensation team within the system, and the whole process is automated and tracked, so that any adjustments can be easily audited. Finally, the solution makes it quick and easy to adjust sales plans to support new products or sales campaigns, or encourage more effective selling practices. Sonus typically makes one major revision to its plans each year, as well as minor tweaks throughout the year. “To handle plan changes, we work with ZS Associates, an IBM Business Partner that specializes in sales performance management solutions,” says Parks. “They do a great job of helping us update our calculations, and they deliver the changes very quickly and at a low cost.”
Promoting effective sales behaviors
IBM Incentive Compensation Management gives Sonus the flexibility it needs to design compensation plans that accurately and appropriately reward sales teams for their success, as well as motivating sellers to meet the company’s strategic sales goals. Parks gives some examples: “When we launch a new product or identify a new type of opportunity, we can create ‘spiffs’ – specific incentives to reward sellers who make those deals. We can also do much more sophisticated things, such as splitting out a bonus payment over time depending on the stage that a deal has reached. For instance, we could pay part of the bonus when the order is booked, part when the client signs off the project, and the final part when the invoice is paid.” The power and versatility of the platform makes it easier for Sonus to set goals for its sellers that not only motivate them to close more deals, but also to sell solutions that truly deliver business value for clients. This helps to protect Sonus’ reputation as a vendor that has its customers’ best interests at heart, rather than a company that is only interested in short-term profits. The company’s sellers also benefit from the solution, because it gives them peace-of-mind that their efforts are being properly rewarded. As Parks says: “Our sales teams love the charts and graphs, and the fact that they can get an accurate view of how they’re tracking against their quota without leaving the comfort of the Salesforce.com interface. They can see how the figures add up, and how their behavior directly contributes to their compensation, so they trust the system and don’t have to spend their time second-guessing it. “On the rare occasions where there is a problem, it’s never a system error—it’s usually just that someone has misclassified a transaction. When that happens, the workflows make it much quicker and easier to resolve, both for the sellers themselves and for our compensation team.” He adds: “As another nice bonus, IBM Incentive Compensation Management is very cost-effective for us—I’ve seen other companies our size spending three to five times as much per year on similar solutions.” With the solution in place, Sonus has been able to adapt its sales strategies to win new enterprise clients, as well as maintaining its strong performance in the service provider sector. Parks concludes: “IBM Incentive Compensation Management has played a key role in helping our sales teams open up a whole new market for the company. By designing and implementing compelling compensation plans for both enterprise and service provider sellers, we can motivate our sales teams to go the extra mile in closing new deals and help new and existing clients build solutions that deliver real business value.”
Sonus Networks, Inc. brings the next generation of cloud-based SIP and 4G/VoLTE solutions to its customers, helping enterprises intelligently secure and prioritize real-time communications, and service providers deliver reliable, secure real-time services for mobile, unified communications and social applications.
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Take the next step
IBM Incentive Compensation Management helps organizations improve sales performance and gain operational efficiencies with better management of incentive compensation plans, and smarter administration of sales territories and quotas. Visit us at ibm.com/spm to learn more about how IBM Incentive Compensation Management can help you improve the effectiveness of sales teams and support your organization’s growth objectives. Additionally, get the latest sales performance management insights by following us on Twitter at @IBMSPM and join the conversation #IBMSPM.