jointly presented by TerrAlign and Callidus Software at the TrueConnection: Sales Performance Management Conference 2007

1. Improve Financial Results by Optimizing Sales Territories
Ken Kramer
Director, Product Marketing
TerrAlign

2. The Financial Impact of Territory Optimization
• In this session, you'll learn how your organization can
increase financial performance through more intelligent
sales resource alignment
• Increase revenues and market share thru full utilization of
your sales resources
Decrease cost of incentives
•
Ability to identify the real stars (and the bottom 10%)
•
Decreased hiring, training, lost revenue during ramp up
•
Reduction of travel costs
•
The creation of a sense of fairness with equitable
•
territories
Right number of reps, with right quota, in the right place
•
© 2007 Callidus Software Inc. – Proprietary & Confidential

3. “One key aspect of improving the performance of a
sales organization is to align sales territories with the
abilities of the sales force and the revenue potential
of customers… Organizations that need a simple but
sophisticated approach for optimizing sales potential
through territory alignment should examine how
TerrAlign could help their efforts.”
- Mark Smith, VP Research
© 2007 Callidus Software Inc. – Proprietary & Confidential

4. About The TerrAlign Group
• Founded in 1987, TerrAlign has a wealth of experience
providing Sales Resource Optimization (SRO) solutions,
with a core focus on Field Territory Alignment &
Management
• Leverage domain expertise to deliver market leading
software and invaluable strategic consulting services
with a focus of making every customer successful
• Partner with other leading best in class vendors to
deliver best possible solution
© 2007 Callidus Software Inc. – Proprietary & Confidential

5. Objectives of Optimizing Territories
Creation of territories….
• that are balanced with regards to a strategic metric
• where workload/opportunity requirements are
equivalent to rep capacity
• that are geographically configured to enable reps to
work efficiently
• that help reps maintain relationships with accounts
• that are equitable and critical to setting equitable
quotas
© 2007 Callidus Software Inc. – Proprietary & Confidential

6. Why Territory Coverage Models Should Change
• To follow the same strategy used in designing comp
plans
• To balance territories based on a combination of
opportunity, workload, account/prospect information
and geography
• When your situations change
• Expansion or reduction of sales force caused by new
competition, new products, mergers/acquisitions
• Modifications due to new customer acquisition, personnel
changes
© 2007 Callidus Software Inc. – Proprietary & Confidential

7. © 2007 Callidus Software Inc. – Proprietary & Confidential

8. © 2007 Callidus Software Inc. – Proprietary & Confidential

9. © 2007 Callidus Software Inc. – Proprietary & Confidential

10. Integrating Territory Optimization into the
Compensation Process
“Through 2010, on average, enterprises will miss the equivalent of at
least 10 percent of total annual sales in quot;lost opportunityquot; revenue that
could have been captured with improved processes for defining,
assigning and managing territories, quotas, and incentives and
compensation plans (0.8 probability).”
Gartner, Inc.
Analyze/
Optimize Set and Calculate
Design
Set
Sales Incentive
Allocate
Comp Plan
Corporate
Territories Quotas Comp
Strategy
© 2007 Callidus Software Inc. – Proprietary & Confidential

11. Realignment Evolution
300.00%
250.00%
200.00%
Relative Value
Current
Optimized
150.00% Final
High
Low
100.00%
50.00%
0.00%
Territories
© 2007 Callidus Software Inc. – Proprietary & Confidential

12. Territory Opportunity vs. Rep Capacity
Opportunity by Territory Average Opportunity
Rep capacity
4,000
3,500
3,000
2,500
Opportunity
2,000
1,500
1,000
500
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Territories
© 2007 Callidus Software Inc. – Proprietary & Confidential

13. Territory Opportunity vs. Rep Capacity
Average Opportunity
Opportunity by Territory
Rep capacity
Lost Opportunity
4,000
3,500
3,000
2,500
Opportunity
2,000
1,500
1,000
500
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Territories
© 2007 Callidus Software Inc. – Proprietary & Confidential

14. Based on Sample 1000 Rep Field Force
Equivalent to 100
160
empty territories
140
% of Average
Equivalent to 100
120
unassigned reps
100
80
60
40
Under-utilized resources Opportunity Available
Productive Work Lost Opportunity
© 2007 Callidus Software Inc. – Proprietary & Confidential

15. Imbalanced Territories Create Over and
Underperformers, Regardless of Talent
Distribution of Attainment
25
% of Sales Force
20
15
10
5
0
50 60 70 80 90 100 110 120 130 140
% of Quota
© 2007 Callidus Software Inc. – Proprietary & Confidential

16. Improved Balance and Workload
Opportunity by territory
2000
1800
1600
1400
Opportunity
1200
1000
800
600
400
200
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Territories
© 2007 Callidus Software Inc. – Proprietary & Confidential

17. Balanced Territories Lead to Expected Incentive
Compensation Costs, Aligned with Revenue
Distribution of Attainment
25
% of Sales Force
20
15
10
5
0
50 60 70 80 90 100 110 120 130 140 150
% of Quota
© 2007 Callidus Software Inc. – Proprietary & Confidential

18. Let’s Do the Math
500 reps x $75k var = $37.5M
1000 reps x $2M quota =
$2B in expected revenue
500 reps x $150k - $75M
1000 reps @ $200k OTE =
Or $112.5M IC Spent
$200M
Same Revenue - $12.5 Over-spent
50/50 Base vs. Variable =
$100M IC planned
Distribution of Attainment
% of Sales Force
25
20
15
10
5
0
50 60 70 80 90 100 110 120 130 140
% of Quota
© 2007 Callidus Software Inc. – Proprietary & Confidential

19. More Numbers
Total Revenue
Re-Allocate work amongst top
expectation of $2B
and bottom 100 reps
Increase revenue by
Increase revenue by up to 10%
up to 10% with no
with no increase in resources
increase in resources
Equivalent to
Equivalent 100 empty $200M incremental
to 100 territories
Revenue
unassigned
Average
reps
% of
© 2007 Callidus Software Inc. – Proprietary & Confidential

20. In Summary
• Balanced territories improve sales and profits by 4% to
12%
• Territories that are more
efficient travel-wise reduce
costs on average by 10%-
15%
• Equitable territories reduce
turn-over
• Territories built on objective
business metrics provide
better management of
quotas and more
predictable incentives
© 2007 Callidus Software Inc. – Proprietary & Confidential