In 2020, this AdTech client launched an advertising group to offer a “modern, full-service, personalization-driven advertising offering rooted in insights and rich first-party data.” This new group seeks to maximize the ROI of the brand by “combining the scale of more than 9,000 stores and 100+ million loyalty members with advanced data modeling. This group delivers unique and custom-built audiences tailored to brand goals and objectives.”
The existing sales force had been placed on an annual incentive plan (AIP) and management incentive plan (MIP) compensation program, including financial incentives to drive performance. However, to gain the maximum from their technology investment, this client was challenged to develop new compensation plans for its core sales roles, including sellers, first-line sales managers, specialty sales and account managers.
Leadership contacted Alexander Group because of our deep expertise in sales compensation and the Media and AdTech sectors.
Aggressive growth goals to FY25, projecting 104% growth
A 3X digital media acceleration from FY22 to FY25
Increase headcount to deliver on existing commitments to drive additional ad and revenue growth
Achieving these growth goals, especially for a newly formed organization, required instituting best practices, appropriate metrics and incentive programs that align with business objectives and compensation philosophies.
However, existing metrics reflected only MIP plans. The advertising group provided all sales roles with an annualized salary, including a target MIP and deferred cash bonus over three years. They discovered that these compensation plans did not motivate sales team members to generate more ad revenue or motivate them to work cross-functionally.
The advertising group required sales compensation expertise to build out a program, using expert assistance, that both incentivized and rewarded sales teams appropriately. Alexander Group first analyzed existing performance data, which was minimal due to the recent launch of the organization. Therefore, instead of historical analysis, our project team relied upon corporate targets and goal philosophies to set thresholds and points of excellence. This approach would help the advertising group enhance its focus on sales efforts as it expanded the organization.
Alexander Group’s analysis indicated this ancillary retail media group could generate significant revenue by leveraging existing relationships, supported by ongoing ROI analysis based on the net revenue change generated by the advertising group for future clients.
The expected growth rates of 10X to 50X are typical of retail revenue streams and provide an attractive investment opportunity. In addition, vertical integration could bring in additional revenue, for instance, by buying up ad-providing channels on cooler doors, car chargers or DSPs, but warrants further discussion.
The project team’s specific recommendations focused on central goals for sales compensation plans that included:
being market competitive from a mechanics and upside perspective
fostering the right balance of individual performance and collaboration, including teaming measurements
setting up the sales force with a simple plan structure that can grow over time, including advanced mechanics and measures as Revenue Operations capabilities develop
Alexander Group designed plans which were acceptable from a target incentive percentage point of view and reduced the cost of sales for the additive dollars the advertising group generated for the overall company.
The final compensation plan motivated the sales force to meet ad revenue and digital media growth objectives while laying the foundation for future compensation plan design changes. Working as a startup organization, the advertising group realized it must offer attractive compensation and motivate all team members to work cross-functionally to accomplish business objectives.
Updated growth plans include growing ad revenue by 23% by the end of FY23 and adjusting their headcount projection to +23 by mid-year.
Finally, the team is considering restructuring and building out the sales department as the entire organization continues to achieve its growth goals.
We can help with all elements of your sales program.
Alexander Group understands your revenue growth challenges. Since 1985, we’ve served more than 3,000 companies across the globe. This experience gives us not only a highly sophisticated set of best practices to grow revenue—we also have a rich repository of unique industry data that informs all our recommendations. Aligning product, marketing, operations and finance efforts behind a successful sales organization takes insight and hard work. We help the world’s leading organizations build the right revenue vision, transform their organizations and deliver results.
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