This week’s Thought Leadership in Finance blog features a review of three
As recurring revenue models continue to transform our economy more and more into a subscription economy many companies need to redefine their definition of success in this environment. In the
David also shared other compelling survey results from their 2013 Professional Services Maturity™ Benchmark Survey of PSOs and trends relative to the annual survey back to 2010. Among the key results relative to the dynamics of the PSO world:
- 2010 was about Sales
- 2011 was about Execution
- 2012 is about Talent
- 2013 was about Profit
- 2014 is about All of the above
Perhaps most notably, David discussed the 5 key performance indicators that define company success in the subscription economy, why each is important, and what companies can do to impact each KPI. The 5 KPIs that matter most are:
- Annual Revenue per Billable Consultant
- Annual Revenue per Employee
- Billable Hour Utilization
- Project Overrun
- Project Margin
Discover what it takes to succeed in the world of recurring revenue by viewing the recording of the SPI Research: The 5 KPIs That Matter for Professional Services Companies webinar HERE.
The expanding realm of cloud computing and evolution of Cloud ERP solutions continue to transform how companies do business. In the webinar, Cloud ERP Inside & Out: What’s New & Relevant to Drive Business Growth, Martin McNicoll, President, ERP Guru, shared his insights relative to 3 main trends in the realm of Cloud ERP: Mobile ERP, Two-Tier ERP, and Social ERP. Martin also discussed how the value proposition of a Cloud ERP solution has evolved over the past five years. The evolution has focused on the value offered in developments in functionality that have allowed Cloud ERP to go from an
Attendees of the Cloud ERP Inside & Out: What’s New & Relevant to Drive Business Growth were also fortunate to hear from Will Gregerson,
You can learn more about Schaeffer Manufacturing Company's journey and success in the Cloud, and where we are, and we are headed, in the realm of Cloud ERP by viewing the recording of the Cloud ERP Inside & Out: What’s New & Relevant to Drive Business Growth webinar HERE.
A well designed and managed sales compensation plan allows the office of the CFO to accurately develop more reliable forecasts and better map resources to changing business markets to maximize profits. The webinar, Achieving Growth and Profitability through Better Compensation Planning, featured the co-founders of Colletti-Fiss, a leading consulting firm in the arena of sales compensation planning. Jerry Colletti and Mary Fiss, shared specific profit measures that should be considered and adopted by companies: year over year customer revenue retention %, deal discounting, and deal profit margins. Jerry discussed the 4 pillars of analysis to assess the profitability of specific sales opportunities:
- Product line financial analysis
- Are there significant differences in the gross margins of the products or product lines that the sales force sells?
- Can the differences be measured and tracked?
- Sales process analysis
- If discounts, allowances or other types of pricing concessions are delegated down into the sales organization, are proper controls in place to monitor concessions?
- Customer analysis
- Who are profitable customers and, how are they characterized?
- Sales territory analysis
- Which territories are the most profitable?
- How do sales reps in high profit territories produce these results?
- What profit oriented sales techniques are easily transferrable?
Mary Fiss shared specific insights and advice around which metrics companies can leverage in delivering profitable sales:
- Grow revenue profitably
- Overall revenue retention achievement
- Performance vs. contract terms
- Overall margin compared to comparable customer set
- Improve margins (customers, contracts)
- Margin performance compared to goal
- Value add-ons such as solution sales vs. a single product sale
- Percent of discounted deals with full price service, shipping
- Reduce discounts
- Percentage of deals sold with 100% contract terms compliance (e.g., shipping or other delivery related terms)
- Price realization (discount off list or ASP)
- Margin ($s or percentage) on sales
Mary also discussed how companies can create an action plan to impact the selling behaviors of sales reps to fuel profitable deal wins. The key elements of an action plan for change include:
Education - educate sales reps as the definition of profitability for a deal and provide them a clear set of job responsibilities- Resources & tools- discovering what resources sales rep have and need to be successful in terms of deal profitability metrics
- Timeline- Identify resources gaps (what is available vs. what is needed) and communicate with sales reps when and how resource gaps will be filled
- Outcomes- Identify cultural, management, and systems indicators that support shift from current measures to measuring sales profitability, and define indicators of Action Plan success, i.e., what outcomes or milestones must be achieved to demonstrate progress toward “end-game”.
Mary also shared specific examples of the architecture of effective, profit-oriented incentive designs, and key decision criteria for a company to leverage in determining if implementing profitability metrics into sales compensation plans is right for them.
You can learn more about how to create alignment between sales and finance to drive profitable sales growth at your company by viewing the recording of the Achieving Growth and Profitability through Better Compensation Planning webinar HERE.