Conference 7.286::digital

    How about a combination of the old Digital and the new...
    
    "Do The Right Thing" becomes
    
    "Get Compensated For Do(ing) The Right Thing More"

    
    Commission doesn't HAVE to mean overselling. But it does condone and in
    fact encourage it.
    
    If you get an extra $1000 in your pocket for selling a higher-end
    system, even if the customer doesn't need it, you might be even more
    tempted to do so.
    
    To me, this re-enforces a very negative implication: Digital doesn't
    HAVE low-end solutions, or Digital doesn't VALUE its low-end solutions.
    
    I don't think either message is good for business, especially from our
    smaller customers.
    
    But then, maybe Digital doesn't value small customers.

    Two comments:
    1.  Do you believe that every other computer (or other) company paying
    commissions got where they are by overselling?
    2.  In my experience, customers are usually smart enough to prevent
    this practice - if DEC management hasn't already prevented it.
    
    

    The Q4 1% "commision" plan will hopefully assist us in turning a
    profit in Q4. 
    
    The majority of our customers know when they are being oversold. It's
    been a long time since overselling was popular at DEC. It had been
    very popular at Big Blue. (most VAX shops run at 70-80 % capacity
    versus 30-50% at IBM shop)
    
    Bringing in former IBM'er to head sales means commission plan.
    Since  we are still led to believe it's the 90/10 plan with a 
    cap, I doubt this will encourage abuse.
    
    The 1% plan will encourage reps who know they won't make their
    number this year and possibly would wait 'till next year to
    bring an order in.
    
    The next 2 months will be very interesting.
                                               

    re: .2
    
>   To me, this re-enforces a very negative implication: Digital doesn't
>   HAVE low-end solutions, or Digital doesn't VALUE its low-end solutions.
    
    A friend of mine makes middlin' six figures selling PCs and
    workstations on a 50/50 commission split. You can't get much
    lower-end than that.
    
>   But then, maybe Digital doesn't value small customers.
    
    I don't see your point here. I'm about as small a consumer as
    exists, and I buy goods from commission salesmen every day. It's
    a way of life, and I don't expect a VP of GM to show up and take me
    out to lunch just because I'm thinking of buying a new car. Nor do
    I hold it against the sales clerk when they start suggesting ties
    to go with my new suit. It's my money, and it's my responsibility
    as a consumer to be informed. I know the customers that I deal with
    are extremely value-minded, and they don't buy stuff they don't need.
    Whether the salesman get paid $5 or $5,000,000 is irrelevant to them.
    
    Geoff

    re .3
    In my experience,the management I have seen in DEC has a fetish for
    large numbers including any number near to or over their budget.Quality
    of business doesn't matter-shift numbers from one product line to
    another to be sure the numbers in the PLs are ok.So,as far as
    management controlling things is concerned-dream on.
    
    Let me tell you a true story.Yesterday we had a customer meeting-with
    the manager of all internal networking of a large European
    customer.During lunch I heard the account manager saying 'buy Teamlinks
    now-there are special prices if you buy before June 30th!'
    Is this the kind of company you want to work for-maybe the account
    manager is not up to it but it could just be that the commission idea
    brings out the worst in people but if this is the reaction it makes us
    look like a cheap outfit.
    Not for me

    re .5
    
    I'm glad that your customers are "value-minded". I think there's a HUGE
    difference between buying a suit and buying a computer. I know that I
    could probably be talked into buying a larger computer if I had a
    rather large budget and minimal knowledge. It may be that this problem
    is more acute when dealing with the military... that may have been what
    I was thinking of.
    
    I'm not talking about add-ons. I'm talking about selling a main frame
    computer to someone who needs a PC network.
    
    But hey, if its only happening "here and there", then I guess the
    overall result is a positive one. I really don't have ANY problem with
    the salesperson who sells me a tie with my suit. Its the person who
    sees me in the $100 suit section who criticizes the cut of every suit I
    try on and ends up dragging me over to the $600 suit section. EVEN if
    the suit looks great on me, I'm still going to feel annoyed. With $70
    in tailoring, the $100 suit will probably look good as well...
    
    I personally think the salesperson who gets me to the $600 suit section
    is greedy, and not a "smart seller".

    re. 7
    >>I think there's a HUGE
    >>    difference between buying a suit and buying a computer
    
    There might have been a huge difference but the difference is shrinking
    every day. Computer hardware is becoming a commodity with software soon
    to follow. Buy the model that you want at the cheapest price, just like
    a suit. The more features, quality and designer name, the higher the
    price. The huge difference is in selling complex solutions, not box
    sales.
    
    I think commissions is a good thing. Good reps won't over sell or they
    will not get repeat business, hence cutting off their income stream in
    the coming years. The most successful reps will build trust with the
    customers, and get constant business over a long period of time.
    
    Commissions will help prevent the "I've made my number in Q2 so I can
    take the rest on the year off" mentality that is pervsive in the DEC
    sales force now. The word is "if you are not selling SI, you are not
    going to be working for DEC". The commodity sales are all going to be
    pushed through the volume channels. With comissions, as long as you are 
    selling you are constantly making money for your self. Give the reps a 
    chance to get rich if they bring in a lot a business for DEC. It won't 
    matter what quarter you are in. I hope that we go to a much more radical 
    commission structure that 90/10. 50/50 or 100% would be a real
    motivators. If you don't sell, you don't eat. The cultural shock wave
    would blast through every corner of DEC, I mean digital.
    
    my 2 cents.
     
    regards,
    
    Ed

After being initially opposed to commission sales, over the years I've
come to be a fan.

The overwhelming reason is, for me, the sales personality. Good sales reps
value the ability to have their income a function of their success in
an immediate and obvious fashion. It's really and simply a part of the
entire personality makeup that the sales personality has. So being on
commission is important to them.

In the past, when computers were magical and IBM had infinite trust, that
led to a lot of abuse. A lot of major equipment purchases had that
chacteristic however, including such things as bulldozers and airplanes.
Part of the major restructuring that all businesses are going through 
involves killing those kinds of deals. Buying from someone because they
buy you expensive presents, trips, or services is fading away from the
corporate scene - not as fast as some would hope, but it is a real trend.
For example, I don't belive that Microsoft or Novell have any corporate
jets.

One way to cure some of the more immediate commission abuses is to base
commission on the sales after delivery to customer plus 6 mos (or so).
This focus the sales rep on relationship maintence as opposed to bookings.
Debooking is a lot easier than returning equipment after some period of
time, so collaborating with the customer to nasty ends is much harder. 
This would also force DEC to decide if the company wants short term
immediate sales (like Compaq the computer manufacturer) or long term
relationships (like Anderson Consulting). This would give the sales reps
clear messages about how and when to sell, which I don't think we have
for the field right now.

This is in line with the general concept that commission structure gives
the company a great deal of control over the sales reps. Doing that 
requires the company to be clear about what the strategy is. Anything
that forces DEC management to define and promote a clear strategy is,
in my opinion, mandatory for the success of DEC in today's climate.

			Bernard Hayes
		(8+ years in field SWS (but not sales))

Last year (before Ken's retirement was announced)  Bob Palmer gave a 
speech about how the company would serve its customers better if we
did not credit a sale until the customer had accepted it -- that is,
until every last piece of the sale is in place and working at the
customer's site and the customer has agreed to accept delivery.

The result would be less of a push to shove things off the dock and
more of a push to hurry up and get the customer the last $10 cable
that is needed to get the whole thing up and running.

The same idea can and should be applied to commissions.  We need less
emphasis on getting hardware out the door and more on making customers
happy with what they've gotten.

	Enjoy,
	Larry

PS:  I haven't heard anything more about this idea since Palmer was
tapped to be CEO -- maybe he figures he has enough other problems
right now!

    re: .10 and basing commission on customer satisfaction
    
    It is a good idea, and it has helped several companies do very well.
    But it is not a panacea.  And it doesn't help if Manufacturing and
    Admin groups are still goaled solely on "shoving things off the dock."  
    
    This company can't tolerate incompetent or abusive sales reps, period. 
    We will not survive if we don't have the best, most talented sales reps.
    The commission plan should be oriented toward attracting and retaining
    the best sales talent as a primary goal.  Everything else is secondary.
    
    As a side note, %100 commission plans has a major drawback: even a
    minor glitch in sales generates a remarkable amount of stress for
    the sales rep (wondering where the next meal is coming from). They
    can't afford to be loyal and try to stick it out; they will jump ship
    in a second.  
    
    Geoff

    The comments in the early part of this notes file show how far removed from
    reality many people in Digital are.  You assume that the current
    environment does not encourage selling as much as possible to a
    customer?  Examine that assumption.
    
    You assume customers buy what they need?  It's very rare that a
    customer buys what they should.  Most often they buy the absolute
    minimum (sometimes less) than they can get away with.
    
    If the sales force is going to take the brunt of the criticism for the
    state we are in, why not move towards "industry standards"?
    
    Are you afraid sales people will make more money than you?  I'll bet
    thats it!   
    
    If it's such a cushy job, I suggest you try it for a while. A mile in
    my shoes and that sort of thing.
    
    

Point of clarification:

Before joing DEC I worked in a REAL commission shop.  That meant that I made
a small base and earned 2,3 or 7% of each sale, depending on the product or 
service.  My income was not capped.  If I didn't sell I starved.

The sales compensation plan announced for FY93, but never implemented, was 
definitely NOT a commission plan.  For those who don't know, the sales rep
"loses" a percent of salary, and earns it back by achieving budget (quota).
Bonus dollars could be earned by exceeding budget.  The maximum bonus is $50K,
but the rep has to EXCEED BUDGET BY 250% to earn that much.  Now, salary plus
$50K surely ain't something to sneeze at, but consider that a salesperson who 
sells that much would earn one heck of a lot more in a commission environment.
The Digital plan is really an incentive (though some would say de-incentive!)
plan, designed to "punish" non-performance and reward the over-achiever.

Sales is supposed to be a risk/reward profession.  I personally believe that
too many Digital sales reps have been skating for years, making good salaries
but generating too little revenue.  The new plan, if implemented correctly,
is certainly a step in the right direction.

Bob


PS - the 1% bonus plan for Q4 is commission by definition, but I don't expect 
this kind of plan to be implemented next year.

I am convinced the attitude that DEC is too good to have commision based 
sales people is a simple outgrowth of our "customers don't know what is 
good for them" mentality.  Do people think that customers are actually less 
intelligent than our sales people?  Do you think that sales is simply 
pushing boxes and using premiums to buy a customers attention?  Dream on!

Our customers are well informed and buy the bare essentials (sometimes less 
as was pointed out earlier) and usually plan the next purchase and 
potentials for expansion.  I suspect that we Digits like to think we know 
more than our customers do and we have to restrain ourselves or customers 
would buy too much from us.  It is interesting that I see some notes about 
how poor our sales force is and others who think the sales force is so 
powerful that if we took the leash off of them they would eat the customers 
and competition alive.  From a cursory look at the notes, it seems that the 
same authors often hold both opinions.

If we can benchmark DSO, inventory, and DOA, then we ought to be able to 
benchmark sales plans.  If we have the worst one with respect to meeting 
our company objectives, then we need to change it.  It should be that 
simple.  It will take a strong willed sales manager to drive this.

I have had engineering jobs where I was envious of sales, then I had a 
sales job with a 20-80 commision (the 80 was the at risk part) and I lost 
my envy.  I did not starve, but for several months I did not eat 
expensively.  I eventually made enough to eat extremelly well.  I got to 
like that.

Now I peddle software and services (no hardware) for DEC.  I eat average. 
Less than our engineers, much less than support people at other 
companies, and not even in the same districts as my collegues at other 
companies.

We can build a commision plan that is guided by the company metrics.  This 
would require that the company actually have metrics.  Customer 
satisfaction, reorder rate, profit margin, new products, target products, 
can all be built into a very simple comp plan.  It will take 2-3 days of a 
committee of 2 people to create.  Since we are in DEC, it will (has) 
take(n) 18 months to approve.

Too bad our competitors are not waiting for us.

Matt

    RE: .12 Get off your high horse, some of us have worked in sales and in
    much more adverse environments than the computer environment.  Now I
    know a lot of good sales reps, and I know a lot of bad ones.  Go to a
    20% base and a 5% commission.  You sell $2 mil of gear, you get 100k of
    $$$$.
    
    
    
    
    Mike

    oops, that was supposed to be 10K base.
    
    
    
    mike

    NO.  60% of current salary, 5% HW, 6-7% s/w, svcs and 'targeted
    products and services...

    re: .17  5% HW number
    
    I'm confused. Five percent of what?  Gross revenues? Net profit?
    
    Anyway, there are a number of people walking around right now with
    spreadsheets full of commission plans.  But the requirements still
    remain the same:
    
    Attract top notch sales people and incent them to go after (and win)
    profitable business. Hardware/software splits, targeted products,
    and accurate forecasts are nice, but they are secondary. We need to
    get back to basics on this problem.
    
    Geoff Unland

Greetings,

The Commission plan you speak of is apparently modeled after the Canadian 
system which has been in place here for a few years now.  Just to shed some 
light I'll tell you how it works.  

There is a 10% holdback - sort of.  It's actually based on the level of 
Sales your at (ie: SRI, SRII, SRIII, SEI, SEII).  You get the money back by 
acheiving portions of your budget in the following way :

					SRI	SRII	SRIII	SEI
					===	====	====	===
 50% of Budget	=	15%		 750	1050	1200	1500
 75% of Budget	=	20%		1000	1400	1600	2000
 90% of Budget	=	25%		1250	1750	2000	2500
 100% of Budget	=	40%		2000	2800	3200	4000
					============================
					5000	7000	8000	10000

Once you acheive DEC100 you get payed a commission(?) based on the size of 
the budget assumed.  For every 1% overacheivement is goes like this ...

	Budget		$ per Percent
	======		=============

	< 2.0M		150
	2.0-2.9M	200
	3.0-9.9M	300
	10.0-19.9	400
	20.0-49.0	600
	50+		1200

So if you have a $17M budget like us (we're team-goaled) and end up the 
year at 140% you would get (40 * $400 = $16,000).  While it's not a perfect 
system I find it quite reasonable.  In addition we have something called the 
"Preffered Product Line" which is equipment that is stocked to a certain 
config.  You get a PPL list every few weeks and if you sell a system that 
matches you get (our team splits) 1% of the price - providing it's not 
allowanced (only DBA - tougher than it sounds).  If you do allowance the 
order you can get .25%.  This PPL stuff I think is temporary for Q4 
incentive purposes.

As to your comments, I don't want a higher % commission yet!  Digital has a 
very tough time counting my VALID numbers because of the disparate booking 
and antiquated/uncoupled systems that we have.  I don't like starving 
because DEC can't count my sales - and my distributor bookings lag a couple 
of months.  

As to selling the customers more than they need - WHAT A JOKE!  Most 
customers never buy enough and always skimp on training and services.  As 
to upselling - I laugh.  I have 3 DEC100s and have never sold a system 
larger than a VAX 4400.  It's all been workstations and small servers.  
Client/server all the way folks.

Hope this helps,
Mario

Greetings,

I forgot to mention that CERTS is a dodo bird in Canada.  We did away with 
CERTS last year.  Therefore, systems must SHIP before June 30th or you 
don't realize revenue credit.

Ciao,
Mario

    How does a sales rep influence the length of the time between the
    receipt of the purchase order and the fulfillment of the order?

    re .21
    By beating the crap out of order admin thers money on them thar trucks
    homer.
    
    Wunder

    re:.22
    Tell that to Mario. He's been closing the same deal all year
    
    wunder
    

	re .21:

>    How does a sales rep influence the length of the time between the
>    receipt of the purchase order and the fulfillment of the order?

	The same way 

	- a marketing manager influences the training and effort invested
	  by the sales force in selling the product he or she is measured
	  on

	- a product manager influences "the field" (and all the subsidiaries
	  out there) to sell his product and make the number he or she
	  has committed to PAC (good thing they never check back!)

	- a customer influences Digital as a whole to do what he or she wants.

	That is to say, whatever mixture of cajoling, threats, and silent
	prayer you judge best.

	/Tom

    Hi,

    If we all had the attitude of "Only measure me on what I have total
    control over", then I'm sure that most goal sheets would be very short
    on metrics.

    We need to trust our suppliers and customers.  Yes - cynicism (sp?) is
    healthy in small amounts.  Yes - it is useful to tell your suppliers
    (eg: A&L) and customers what you expect to happen (and gain their
    support).  Yes - it is useful to listen to the Marketing & Product
    managers and take up the training offerred.  All these things are true
    - and many more.  However, we all need to take some risk in order to
    heave this company back on the rails.  For me - this includes accepting
    a Goal Sheet that depends on a lot of other people playing their part
    in the companies success - from Bob Palmer to the Installation Engineer
    - from my AGM to Engineering.  I find this uncomfortable and a bit
    nerve-wracking at times - but I'd rather strive to succeed than be
    comfortable in a sinking company.
    
    regards
    
    Chris
    
    ps: I'm less nervous now I see Bob Palmer, Chris Conway and others
    really pushing and playing their roles to the full.  Its starting to
    become exhilarating!

    Ah... "trust" the last refuge of the naive.
    
    There's an adversarial relationship around information, contacts, etc.
    _precisely_ what a sales rep needs to do/needs to do to influence what
    he or she doesn't directly control.
    
    If only sales people could just get questions answered with having to
    "justify" it to bureaucratic information-hoarders.
    
    If only sales people had the flexibility to get matters that were of
    relative insignificance regarding products, configurations, etc. fixed
    to the customer's satisfaction before they were "elevated".
    
    If only sales people could get phone calls returned.
    
    The bottom line is that without sweeping changes in the policies,
    politics, and attitudes of non-sales people, we'll find ourselves
    losing good, aggressive, effective sales people, while retaining
    complacent, "trusting" ones.
    
    Selling for Digital is more about impatience and confrontation and 
    demanding accountability than it is about trust.

    re.27
    Hear Hear Sweeny. I have been in Digital Sales for 12 years and the
    most frustrating events are not at the customer site, rather right in
    the administration of the delivery, the rules around order taking and
    the downright deciet that goes on when you try to track some of this
    stuff down.
    I took an order for used 8650 memory in a critical situation after
    being assured that it was in stock at the warehouse and would take less
    than two days to turn aropund. Next I found out via another source that
    there would be a delay of one week to delivery . Then I found out we
    didn't have the memory in stock and it had to come from the states ....
    on and on and on for three weeks. 
    Yes I am on commission... but I still took the time to try and save my
    customer the extra money on refurbished memory even though I could have
    jammed new at them when they had no choice.
    I have modified large fixed price contracts in the spirit of
    co-operation even though I knew it would affect cash in the bank...When
    my customer needs help I give it no matter what the consequences to
    myself...In all fairness I am not that noble but I do recognize that I
    am here for a few years delivering a huge POS contract and I will
    benefit more by doing the right thing than jamming them at every turn.
    
    Commission works...It  increments my standard of living and incents me
    to bring in extra revenue to pay for the salaries of the people that
    won't help on their own. We are losing money right now and we have to
    take different measures to fix the problem.
    I want to part of the solution and still have a decent job.
    
    regards,
    
    Steve from Cnnada                

    Your reply assumes there is an order admin somewhere in the territory,
    and that there is someone to track the order so that you receive
    appropriate sales credit.  Here in the west we are TFSO'ing all of our
    Sales Measurement people and 70% of the order admin.  Next will come
    the sales support reductions and the "final reorg."
    
    	It will be downright hilarious to see this company ATTEMPT to
    implement a commission/bonus structure in FY94.  They won't realize
    until November that they haven't a clue as to what anyone did anyway,
    much less how or what to pay for it.
    
    	Good salespeople will not stay at Digital if they don't make top
    dollar.  The beauracratic inefficiencies are so widespread that they
    simply will not tolerate the confusion.  In short, they will be nibbled
    to death by ducks and leave for greener pastures.  Those that remain
    won't be worth much anyway.

    Apparently, as sales reps realize that their 1% bonus is earned only
    for equipment that _ships_ in Q4 (ie before July 3, 1993) and not for
    what _certs_ in Q4, the sales reps are waiting to see if the deal for
    Q1 is going to be better for them to enter the order in June or in
    July.
    
    As what the sales compensation picture will be in July, the sales rep
    haven't been told.

    There is also the question of will a sales rep get revenue commision 
    on a sale in June FY93 that ships in q1 FY94.  If it certs in June and the
    sp2 payment results in 2000$ but there is a commision of say 1% on 
    certed and shipped in FY94 business, which would result in 10000$ then you
    can expect to see some cancel and rebooks happening in Q1 FY94.