Case Study: Speakeasy Finds Xactly What Its Sales Compensation Program Needs

Challenge: With more than 60 sales representatives — evenly split between direct and channel sales — fast-growing Speakeasy found itself quickly outgrowing its sales compensation management system. As with so many companies, Speakeasy had come to rely on a sheaf of Excel spreadsheets that had to be manually maintained and aggregated.

By 2006, it became clear that the compensation management system was producing problems. The spreadsheet-driven process was simply not scalable enough to gracefully handle the escalating flow of new people, new sales tasks, new quotas and constantly shifting personnel assignments. Separate spreadsheets had to be created for everyone and painstakingly linked to tables and formulas. Salespeople, meanwhile, had no visibility into exactly what they were getting paid on, and time-consuming compensation disputes were multiplying.

Errors also were finding their way through the system, often simply because of someone hitting the wrong key. As a result, reps were being paid for things they shouldn’t have been compensated for and shortchanged on things they should have been paid on. Finance, meanwhile, was becoming increasingly concerned and annoyed, while payroll was perpetually cutting new checks. And everyone’s faith in the accuracy of compensation payouts was eroding.

“As we grew, the old process was no longer good enough and was fast becoming a detriment,” said Andy Hyde, chief financial officer of Speakeasy. “It was essentially a process of calculate and pay, with all the problems and issues surfacing after the fact and burning up everyone’s time and energy.”

One of the biggest pain points revolved around the company’s inability to use variable compensation strategically. “We’d learned what works and what doesn’t, but we lacked a tool to make our compensation strategy visible to the reps. The sales force simply didn’t understand,” said Hyde.

A second major issue was that individual reps were trying to maintain their own “shadow” accounting systems — usually other spreadsheets — to track their performance. This became a major time-sink for the sales force. Rather than providing critical sales, they were spending substantial time each day trying to keep track of closed deals to make sure they received sales credit.

In answer to these issues, Speakeasy resolved to find a sales compensation management solution that would:

Solution: In developing a solution strategy, Speakeasy quickly determined that whatever compensation management solution was implemented, it could not be allowed to tax the company’s IT department. “Speakeasy’s IT group has enough work to do without having to burn cycles on something as specialized as compensation management,” explained Hyde. “Hence, we decided early on that an on-demand solution was the best way for us to go.” Speakeasy also determined that its old spreadsheet-driven process had to be scrapped, and so needed to deploy a new system as quickly as possible, which argued further for an on-demand solution.

Since Speakeasy was already using Salesforce.com’s CRM application, the ability to seamlessly integrate that pioneering on-demand application with the new compensation management solution was another “must have.” Just as important was the ability to help drive Sarbanes-Oxley (SOX) compliance. Though it was a private company at the time, Speakeasy desired SOX compliance and understood the key role that a compensation management system could play in that endeavor. Now that the company is part of publicly held Best Buy, the wisdom of that decision is readily apparent.

At the end of 2006, Speakeasy selected a Web-based, on-demand solution that met its complete range of needs: Xactly Incent. And by the next month, Speakeasy was fully up and running with Xactly — designing, implementing, managing, auditing and optimizing its sales compensation management program.

As before, one person currently manages the program. But unlike before, that person has considerably more time to focus on the strategic aspects and not merely on data entry and spreadsheets. The effect has been liberating, but has hardly stopped there. Xactly Incent was quickly configured to accommodate Speakeasy’s complex sliding-scale rate table (with its 12 distinct formulas). New people can quickly be added to the system – “Ten minutes, and now I’m done,” claims Teresa Wahl, commissions analyst at Speakeasy. “Salespeople can see precisely what is being paid out and for what. New plans and plan components can be quickly implemented. And inaccurate payments are a thing of the past.”

Benefits: Increased profits

With Xactly Incent in place, Speakeasy is able to devise and implement incentive programs that drive profitable sales. Explained Wahl, “We incent on gross margin. Our salespeople now see how they can make more money selling certain products. They can see the exact payout and which customers lead to a higher payout.”

Sales reps are also able to see cancellations, and the resulting take-back of commissions. This, said Wahl, “incents them to stay on the customer and ensure satisfaction, which of course often leads to further profitable sales.”

Enhanced sales productivity

For the Speakeasy sales team, Xactly Incent has eliminated a major point of pain and contention — compensation inaccuracy — enabling the team to spend more time selling and a lot less time calculating and disputing. “Before Xactly, the sales people were spending far too much time wondering if they were getting properly paid out instead of interfacing with customers, and I frankly couldn’t expect them to trust me,” said Wahl. “Now that it is easy to get in via the Web and see what’s going on, I hardly hear from them at all: I have to call them, which is a big, positive change.”

“What they’re able to do now is ‘work’ the future, instead of worrying about the past. And because they can see where the best payouts lie — and how each of their customers stacks up in that regard — we can now use variable compensation to closely dovetail sales efforts with corporate goals and objectives,” said Hyde. “In short, we’re able to now ‘pull the sales team into the program’ because they can see for themselves precisely how the plan works.”

New competitive advantage

A more focused, productive and strategically motivated sales force has in itself proven to be a significant competitive advantage for Speakeasy. But beyond that, Xactly Incent enables the company to stay abreast of changing market conditions by easily modifying plans and introducing new plan components. In addition, Speakeasy intends to leverage Xactly to quickly introduce sales performance incentive funds (SPIFs) that will help it outgun the competition.

Low total cost of ownership

Having gone with an on-demand, hosted solution, Speakeasy has avoided additional server costs and software maintenance expenditures. With its IT group largely out of the loop, people costs are also kept low — with the extra advantage of IT being able to remain focused on Speakeasy’s core business. Moreover, according to Wahl, customer service is better with Xactly “because I don’t have to wait in the queue for IT resources to be freed up.”

New trust and confidence

“There has been instant trust in the new system by the salespeople,” said Wahl. “That trust is coming from the data and the fact that they have visibility into every single line item and the payout for every single customer.”

Ensured compliance and management visibility

Even as a private company, Speakeasy pursued SOX compliance and realized that its former spreadsheet-driven sales compensation process was its Achilles heel. There was essentially no way to stop mistakes. Now, as part of the Best Buy family, Speakeasy brings with it the tools to support public-company compliance — including sales compensation audit trails. “Having the Xactly solution will help smooth our merger with Best Buy,” said Hyde. “Best Buy will be able to get the information it needs directly from Xactly Incent online. Without Xactly, we would be scrambling right now.”

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