Companies today struggle to establish and maintain effective sales compensation programs. One survey by the Alexander Group found that only 20 percent of companies have complete alignment between sales compensation and company objectives. So when a company manages sales compensation well, people sit up and listen.
Intuitive Surgical, a U.S. manufacturer of robotic surgical systems (notably the da Vinci Surgical System), is one such company. My Anaplan colleague, Solution Implementation Manager Liz Schaffer, spoke with Erik Holm, Intuitive Surgical’s Senior Compensation Manager, at Anaplan Hub 2017. They discussed the challenges Intuitive Surgical faced in calculating compensation for its sales team and Erik’s experience implementing and using Anaplan.
Liz Schaffer: So Eric, tell us about your background.
Erik Holm: I’ve worked in sales compensation for 18 years. I started at Intuitive Surgical in 2016 to manage the sales compensation team for our global sales organization. That covers the U.S., Europe, Asia, and Latin America. My team handles administration of the system, compensation calculation, accruals, forecasting, and budgeting. It’s a complex process, and we do it all on Anaplan.
LS: Tell us why Intuitive Surgical looked for a new compensation system.
EH: Our first Anaplan use case was territory and quota planning but we quickly expanded into incentive compensation management (ICM).
The reporting in the ICM solution we previously used was all out-of-the-box and didn’t provide the flexibility we needed. It lacked the visibility our sales reps wanted on how they were being paid and why. So we would close a month, then spend several days trying to cram all the data into the system and calculate payouts, without visibility throughout the month. My team needed a good-sized timeframe for sales to see the results and ask questions, but we just didn’t have that time to spare. Most of all, the system couldn’t handle the complex calculations we were moving toward with our compensation plans.
Implementing Anaplan addressed those issues. Finding that Anaplan has the ability to accommodate our complex calculations, along with the flexibility for dashboard design, was fantastic. With Anaplan, all the sales data is integrated and we have a daily feed. The sales team can see both month and quarter builds with only a one-day delay—this delay was previously about a month. Sales can now see where their compensation is headed and be proactive rather than reactive.
LS: Can you explain the complexity of Intuitive Surgical’s compensation plans?
EH: Compensation calculation is complex at Intuitive Surgical because we calculate it in a few different ways at different levels of granularity. For example, our sales reps are compensated on the sale of each individual robot, but then also comped on the number of uses of that robot and the number of times that robot performs surgery. With our old system, we simply could not reach that level of granularity for sales crediting.
Anaplan helped us address this complexity but, at the same time, keep the plans as simple as possible so that reps understand their plans. And we’ve kept the main drivers simple: Sell robotic surgical systems and get surgeons to use them to improve patient outcomes. However, we’re in a changing market, and while we’ve been the dominant player in the space, we’re seeing competition coming in. To respond to that, we’re trying some new things, and that will result in increased complexity of our compensation plans.
For more insights on sales compensation:
- Watch Intuitive Surgical discuss their implementation of Anaplan for sales compensation at Hub, our global user conference
- Watch the on-demand webinar, “Creating motivating and personalized incentive plans”