Name: Managing Complexity in Consumption-Based Sales Compensation
Uploaded: 2026-03-03T16:16:11.387Z
Duration: 1 h 1 min 36 s
Description: Managing Complexity in Consumption-Based Sales Compensation

Transcript for "Managing Complexity in Consumption-Based Sales Compensation": Hello, and good morning, good afternoon. Welcome, everyone, to our webinar on managing complexity in a compensation based sales compensation world. If you're in revenue operations, sales compensation, you've heard of this topic, and we're very eager and excited to share with you, some insights, some case studies, and least of all, a group exercise. So today's session, as all of our sessions, are meant to be educational. They're meant to be interactive, and so we encourage your participation. That's including the group exercise as well as through the chat. So as you'll see in this platform, there's a chat function as well as a q and a function you can use either. But if you wanna keep it simple, just share your your thoughts on polling questions as well as any questions you have in general in the chat, and we'll we'll make sure to get to them. We'll give other folks to trickling in a couple minutes before we get started. And, yeah, thanks to to everyone that showed up right on time. This is usually when I play some music. Will there be music, or are we are you just saying you you you you would play music? We'll see. Yeah. Sometimes the music, I know GoCast has an option for it, but but I don't know. I think last time, Quinn, you played on your phone. Right? You just had, like, a little something going on. Yeah. If you're playing something, can't hear it, You that's hear. okay. No. Can you hear it now? No. But, I mean, I'm I'm I'm happy that you can hear it. We'll, yeah, we'll all just pretend that we we can hear it. Too funny. Alright. Let's see who we have. Okay. Folks are trickling in. Awesome. Again, just a quick reminder. We'll get started here in just about another minute. Thank you everyone for joining today's session on compensation based sales consumption based sales compensation, and wanna encourage you all to participate via the chat. We'll also have a group exercise sort of the middle of the presentation or webinar and really encourage you to participate, ask questions, and and make this as engaging and valuable for you as possible. Alright. So we're right at 09:03. I think we can go ahead and get started. Carmen, what do you think? Yeah. It looks like we got some people trickling in. Usually, it's the first five minutes or so. So, yeah, let's, let's get started. We are recording it. We'll send it out. So for those that missed maybe the first minute or so, they'll, be able to catch up. Okay. Over to you, Carmen. Yeah. All right. So welcome, everyone. Thanks for making the time here this morning, this afternoon. I see a lot of people are in The US, a lot of people are in Europe, so appreciate you making the time. As Kling mentioned, the webinar today, it's managing complexity. It's really about sales compensation, consumption based sales compensation, I should say. And I'm really excited because with me here today is Anthony Morzzetti from Akron. We'll get some intros in a moment, but this webinar is meant to be informative. It's meant to be educational. As Quang mentioned, it's also meant to be experiential. So we'll have a couple kind of just like group working sessions. Anthony and the Akron team have a great case study to walk through and kind of really bring these concepts to life. And, yeah, as again, just one last plug for, if you have any questions or comments, we encourage people to use the chat. We monitor it, we're active in it, and we try to bring conversation into the webinar. So it's not just people talking at you for for an hour. Cool. Alright. With that, I'll quickly talk about revenge. So we are a commercial growth consulting firm. And really what we do a little bit different is we focus on both the strategy and the execution. So our consultants, so like myself, Quang, who are partners at Revenge and then others that work at Revenge, We all have both consulting and actual operator experience. So myself, I've worked, you know, for global companies like SAP, like LinkedIn, leading compensation, leading go to market operations, and started my career in in consulting. And so we're able to take what a consultant is in terms of, you know, helping whatever whatever the project may be, but also understanding what does it take to actually bring that to life to execute on it. And so that's really what we do. We focus everything go to market, so that includes full scale implementation, and, of course, compensation design. And then with that, I'm gonna turn it over to my, my trusted colleague here, Anthony, for intro about him and and Acron. Yeah. Thanks, Carmen. It's great to be here. So I'm Anthony Marzetti, and I work at Acron. So Acron is an enterprise software company that is based in Italy but has global operations. And our flagship product is the Vuelki platform. And the Vuelki platform is a platform that is covering incentive compensation management and sales performance management from a to z. Everything from quota and territory planning to the actual execution on your compensation strategy to making sure that people get paid and the revenue intelligence that goes with that after you've gone through your sales cycle and improving on those processes. And we have customers across every industry across the globe and really large organizations. And myself, I have about twenty years experience in the enterprise software space. And what I hope today is to bring some of the experience that I of the customers that I've worked with to the concepts that, you know, Carmen will be focusing on when we talk about consumption based incentive compensation. So very excited to be here. Great. Alright. We'll go we'll we'll kinda kick it off. So the way that we're gonna structure this is we'll talk a little bit about what what it is. And I'm sure many of you, if if you're in the space, and many of you are, you do know what consumption based comp is. So we're not going to go too deep on it, but it is important to ground ourselves in what it is. We'll have a quick poll and then we don't really want to bury the lead, we'll kind of go into the key framework that we use to design compensation as well as the crediting around it. So on the consumption based comp side, I think what's important here is to just zoom out for a moment and recognize that this has been an evolution. It's not as if consumption based comp is just on the scene today. Of course, many years ago, the traditional license revenue model gave way to the SaaS revenue model. And these two were, from compensation design perspective, were relatively easy revenue models to build comp plans around. You you take the full amount of the the contract and and the crediting event is when it's inked, and you give the credit to the rep. The rep is paid based on their their pay curve. All is easy, all makes sense. And you can do that because U. S. GAAP or IFRS allows you to recognize that revenue at the point of contract execution. Consumption based is a little bit different. So this is an area that I've worked in for over a decade, starting with the media industry. So the media industry is inherently consumption based. There is at risk revenue, and you see this a lot in med device, health care, some of the other clients. But I will say in the last maybe two years, this has probably been one of the most talked about, most asked about topics even from traditional kind of SaaS companies. So we expect that the proliferation of companies looking to make the migration from SaaS to consumption only increase, which is why we took all of our collective knowledge, experience, learnings and built this framework that can help you regardless of where you are in your journey, make sure you're designing your comp according to best practice, aligned to your strategy, to your roles, but also tie it into the financial side, the system side and make sure that, you know, it drives behaviors you're looking for. So very quickly, wanna just point out there's a couple key stats on the next slide. Again, we won't go through all of them. I think the one here that stands out to me the upper left, 61%. And again, it really this is from OpenView, and it aligns to what we've seen, again, in the last two or three years, is that you have companies moving towards either completely or partially usage based kind of pricing, which means that depending on, you know, your your panel strategy and the rules that you're using, you need usage based comp. Otherwise, you have a complete mismatch of when you're collecting money and when you're paying it out, which, obviously, from a margin perspective, isn't always what a company is going for. So this sort of frames the problem. But the interesting thing is we've seen, you know, less than half, this is the the stat here, that have actually redesigned comp to match. Even today, we have a number of clients that moved to this pricing model, but their comp is still traditional sort of SaaS. And they know it's a misalignment, but they're they're they're kind of pushed back to us. Well, we don't really know where to start, so we're just gonna kinda keep things for now. Things are working. And so while that does work for a period of time, ultimately, the change to a proper consumption plan will have to happen. Question from the chat. Why the delay between the change in pricing model and comp? Yeah. It's it's a good question. I think I can tell you from my experience, and and, Anthony, I'd be curious if if you have any thoughts here. I think part of it is system side of things. I can tell you from my time at LinkedIn, I've I've I've owned designing all of the comp globally, and then I spent three years owning all the kind of system side of it. It's real ease in in many ways, it's easy to design a comp plan, especially if you know the frameworks and you know kind of what to think about and you know how to the the options. But if you can't manage it, systematize it, scale it, obviously, the regulatory aspects to this. So you don't wanna have a lot of manual intervention on the plan. You you might not even have the people. Right? So it'd be resource constrained. And so it's just this trade off that we see of, yes, I know the comp is suboptimal, but we don't have the systems to support it. I don't have the people to support it. And that's probably the most common reframe refrain that that that I hear, which interestingly enough, the question speaks to why we're partnering with with Acron is because, again, for us to advise our clients on on doing all these things, because we're execution oriented, we don't wanna say, here's here's your three options. We recommend option two. It's like, no. We wanna this is what you should do, and this is how you can effectuate it, but you need the systems and the tool side of this. So yeah. And, Anthony, I'm curious if if, you know, you have a POV on that as well. Yeah. No, I mean, obviously, Carmen, I agree with you that systems are obviously the piece that lags behind oftentimes. What I've seen throughout my career is that it's easy for the CEO and the business leaders to think about a new strategy and then think about a new way of going to market or evolving their business. And oftentimes, get so excited thinking about how to evolve the business that comp kinda gets left behind a little bit. And maybe you'll evolve the the comp model. But then what I think a challenge for organizations is that they then realize that, wait, maybe I don't actually have all of the data to track the new metrics that I wanted for for my comp model. And so they have this lagging period when the systems are actually trying to catch up to to the business is something that I I've seen a lot throughout my career. Yep. Yeah. And and I'm curious. So we now we'll get into the the the frameworks and stuff that, you know, people could take away and apply. But on that note, so just a quick poll from from the the folks in the audience. I I guess, what would describe your situation today? Is it, a, you're sort of we don't have anything that would our pricing model or revenue model is is either traditional license or SaaS. Something you're exploring but you haven't made any changes yet, you're kind of influx with that transition, or or you're there. And if it is d, for those of you that are fully consumption based, would love to hear any, you know, sort of feedback on the the good, the bad and the in between of that transition. So we'll give folks just a few minutes just type in. K. So, yeah, Yes. fully. One interesting comment is A, B and C, right? So then they're businesses, right? You're not necessarily in any of the buckets, but you have different products that you're selling that are in different business life cycles, let's say, which creates a different kind of complexity, I think. Yeah. It does. And I can speak to that just from my time at LinkedIn. I think I have a LinkedIn colleague out too. We have different business lines too. Right? So we have a media business line, which is, you know, more of the consumption, what probably the progenitor of of consumption, and then, you know, the the other business lines, which are which are SaaS based. So, you know, different models, different different way of paying people. So it's, yeah, it's very challenging. Alright. So it looks like for the folks that responded, we have there's a couple that haven't started yet, a couple that are in flux, a couple that are exploring. So it seems like it's a fairly good cross section of them. So I appreciate the responses. And the reason we wanted to take the poll is it helps us as we go through the rest of this, we can kind of frame it up a little bit. But if we go to the next slide, this is our framework for designing consumption based comp. So again, this is a combination of collective experience, both being responsible for comp design as well as working with clients collectively over the last twenty five years. So there's really two pillars. Pillar one and by the way, this is going to look a little bit different than traditional comp pillars. So I'm sure many of you are familiar with frameworks where it's, okay, these are the components of a comp plan. So you have your accelerator rates, your payments, your OTE, performance period. You have the guiding principles, attract talent and all of that. Think of this as sort of a subset of that. And it does look a little bit different, and the reason being is because it is different. So the first pillar is the financial side of things. This is the risk and revenue architecture. And so we'll get into this with the crediting strategy. So there's a number of kind of decision points that you need to make based on your business to determine what what your crediting strategy is going to be. Because with consumption based comp, that is probably the one of the main differences. Right? It's it's crediting either a partial amount at contract execution, milestone crediting, or just annuity, what we would call annuity crediting. So that's pillar one, is understanding that dynamic, right? What does that look like? Pillar number two, roles, quota, and metering. This is where this is where it you know, similar to the the kind of traditional comp framework, but different in the sense that it's much more reliant or it should be, I should say, much more reliant on technology. And the reason being is that depending on your business, you might have metering or usage that isn't necessarily trend series. You can't really rely on empirical data. There's it's much more sensitive to the macro environment. And so quota setting becomes much more of a statistical exercise than what we would typically refer to. For those of you that do quota setting, we always say it's an art and it's a science. Well, with consumption based comp, in order to get this right so that you're designing plans that reward high performers, it it becomes much more of a science than an art. And the only way to really effectuate that is with the technology side of it. So overlaying that is, you know, changing at the the coverage motion level. So as well as we saw in the poll, the line of business level. So you can have different lines of businesses, have kind of different strategies, and then even different roles might have different strategies in terms of how you build out the comp plan, which I know for many of you, especially in, like, enterprise organizations, it may seem a little unorthodox to say that an AU crediting strategy gonna be different than an RM or a CSM. But that really is what we're seeing, need to pull away from what we would call just the blanket standardization. And we'll see why in a moment. So the next slide. So this is that pillar one, that that crediting decision framework of the revenue architecture. The the six areas that we would look at here again, I'm not I'm not gonna go through each one of these, but you can kinda see it's one is implementation speed. So the quicker that you can go live, this means that you could be more aggressive in your crediting strategy. So quick example, we had a client, Med Device client, where their go live wasn't for sorry. I'm just gonna pause for I think there's some background noise. I don't know if it's one of us that you can go on mute. K. It might be it might be Anthony. He's eager to jump in. It's okay. Headphones some of it, and I'll put myself on mute while I can talk in Carmen. good. All good. Yeah. I just I wanted to make sure everyone else wasn't wasn't hearing it either. So implementation speed is a really big one. Again, client twenty four months before revenue revenue would hit. And this means that you have a rep that sells something. They receive a very small amount, you know, when the contract sells, and then they receive nothing for two years. And what exacerbates the problem is we'll see, and this is why consumption based comp becomes even more cross functional, is this particular company had a sort of blanket policy of changing territories every twenty four to thirty months. So you can kind of see the obvious problem there. Market dynamics, sales predictability. Again, the idea here is when we talk about crediting, if the more aggressive crediting, right, using this framework, you can say at the time the contract is signed, even though that revenue is technically usage based or at risk, we can probably pay closer to 90% or 100% to the rep because it's very low downside that we're not going to collect that. And likewise, you can be more conservative if it's on the other end of the spectrum where you'd say, okay, we probably don't wanna pay more than maybe 40% or 50% because there is much higher degree of risk that we're going to collect it. So really what the framework does, that first pillar, is it establishes the the assumption of risk. Is it is it on the company? Is it on the employee? And there's a balance to that. And so that's what makes consumption based comp very challenging. But what I'm gonna do is I'm gonna pause there because I know it's a bit academic for the last, you know, five, six minutes. I'm gonna turn it to Anthony. So Anthony, now that you have the noise canceling headphones in, he'll walk you through a real time case study. And I think what's important here is especially on pillar two, making sure that you have the right systems, not just an ICM, but a CRM, CPQ, all all of those things that flow into the entire workflow of of a go to market function need to speak to one another. So, Anthony, I'll turn it to you. Yeah. Absolutely. So, you know, here, I wanted to highlight a customer that I worked with, which is a a power company based in Europe. So it's a power company that's selling, b to b. So they're selling to other organizations, and they sell gas, electricity, value added services, you know, sustainable energy, etcetera. And, you know, Carmen talked about the media industry. The utilities industry is another industry that has historically been one that was based on, consumption based compensation. You think about it. Right? I've got somebody that goes and they they get a new customer, and then each month, the the billing for the electricity that that customer consumes is what they're credited on. And and one of the challenges in the utilities industry is they have lots of different products. And so they have different products that have different rates, and those different rates then have different compensation rates, for for their incentives. And so it becomes a very heavily data intensive purpose process, excuse me, just tracking the actuals of the business. In this customer, they had additional complexity because, you know, they would have individual reps. And when those individual reps would start, and start signing up customers, well, you know, they didn't have, income to then wait for the consumption to actually start. So what this organization does is they would give advances to the the the sales rep, let's say, until the the customer then starts producing, revenue based on their consumption. But what they would do is is that advance then would then be recovered based on the actual consumption. So it's almost like to get somebody started in their business, you you're giving them a loan. It's it's like a minimum guarantee in other compensation spaces that you you then, you know, tracking the balance of that over time. So that creates, additional complexity because the advances are then based on the, you know, forecasted predicted consumption of the individual customer, and, you know, there, they're trying to do that based on, you know, their past history with us other customers. But there's there's obviously, you know, macroeconomic factors, global factors that influence consumption and influence energy prices. And so here, there's, you know, a lot of data that they need to be able to manage to effectively be able to, understand, you know, what people are gonna be paid, what they need to be accruing, what what their, you know, their forecast looks like. And in this organization, because they've been doing it for a long time, they actually had a, you know, homegrown system, which homegrown systems can be great because they do, you know, fit for purpose exactly what you wanna do. But the the challenge that organizations find there is is that over time, they become unwieldy. You have one person that's the super mega expert guru that knows how to make changes in the system. That person leaves. Somebody gets trained up. And so these systems become a little bit less flexible over time because, you know, you know, if you touch one thing, you potentially can break another. And, you know, the other challenge that this organization was facing was they really just didn't have the flexibility in their existing systems to do accurate forecasting. So, when they wanted to make changes to their incentive compensation plans, they didn't really know what the effect was. They were kind of just, you know, feeling out, you know, which way the air was was blowing, the breeze was blowing, trying to make these changes. And so what we work with them a lot was to, you know, take their wealth of data and start giving them the tools to be able to plan more effectively, including being able to have, you know, consumption reporting for their reps so they understand when they're building their portfolio as well as reporting for the the office of finance when they need to make sure that they're accruing properly for the the future consumption. So I think there's a a question in the chat. Or is that okay. Yeah. Excuse me. I I I sort of yeah. I sort of answered it. It's it's it it's a complicated one. Well, it's not it's it's complicated in some sense. But, yeah, the the question is, would you pay the full commission on a projected annual contract? Do you pay a percentage of the collection monthly or quarterly? And then what happens if there's an expansion mid cycle? So if we go back, Kwang, to just the previous slide, This is where we would determine so the question Joshua, to answer your question is we would pay you should pay something in almost all cases. I would say in my experience, typically, I've seen 40% to 80%. And what you pay is really based on these six different scales. Right? So again, like, if you're paying if you have very quick implementation speed, if it's, if the sales predictability is strong, if it's market dynamics are there's not a lot of players in the space or you have a high industry based growth rate, you might pay more aggressively, right? Maybe that's 80% or even 90%. If the inverse is true, you might say, well, maybe I'll pay a little bit more conservatively. The financial stability side of it is, historically, if you have this data, what percentage of of revenue is is realized essentially from the from the projected ACV. Right? So all of those things would determine so the the short answer is yes. You should pay something. The second answer is, well, how much? Right? And this is the framework that helps you determine that. Now if it's an expansion if it's a true expansion in the sense of and and there's a couple different valences of this. If it's an expansion in the sense of you're just using more than what was projected on the baseline, then you're just paid that credit. If it's an expansion of you're you're your buying something new, a new application, or there's a new product or a new SKU, then that would be treated as sort of a a true expansion, meaning that the same logic would apply. Right? So if it's a then it's if it's an expansion, we're saying, hey. You you all are great. I wanna use your your module for this. Same same kind of decision making would apply. Okay. You're projecting you're going to use 1,000,008 or 1,200,000.0 ACV, a 100 k a month. Let's go through this crediting decision framework, and then we'll credit you 40% or 50%. You you can do it at a product level depending on what you're selling. If you have a lot of SKUs, you might just wanna have a blanket level. So, you know, there's a number of different ways to to approach it, but that's generally, what we would recommend in terms of the the crediting and then how to treat for expansion. Yeah. So in in the specific customer that I was working with, they basically had the estimated annual consumption of a new customer, and they would pay 80% of that annual consumption. And then they have true ups, obviously, if there's a higher degree of consumption. But another, you know, thing is is that maybe they had that initial payment and somebody then had you know, went six months into their contract and then changed power companies, then they would have, partial clawbacks of of some of those, incentives because they have a combination of, payments that are just commission payments, let's say, for the consumption themselves, but they also have contests and incentives for the number of new customers they would sign up or if, as you said, Carmen, there are extensions. So if somebody bought gas and then they bought, you know, electric as well or added another, you know, building in their business, what have you, then they would get additional credits for those customer life cycle actions. So it's a mix in terms of incentivizing the behavior of the sales reps together with a, you know, a more conservative strategy sometimes on that initial upfront payment. Yep. Yep. Yeah. And and I think that's where it just it's you follow the framework best you can, but then there's obviously so much nuance in in context. And I'm sure I'm sure also input from other cross functional partners. Did the, we have another question that came in. Did the system automatically deal with the true ups and clawbacks or lots of manual work required? That's for, I'm assuming. that's for you, Anthony. that's me. Yes. So no. So the system is, set up to automatically deal with the true ups and the the callbacks. So, there you know, generally, that becomes part of the logic. So you look for the events that, you know, the first piece, you know, the true ups is fairly easy in the sense that I know what I've paid, and then I calculate consumption. And I look at the difference between what's been paid year to date to what has been earned year to date. Clawbacks can be more challenging because oftentimes, the clawbacks don't necessarily have a one to one logic. But what's really important is having a system that's flexible to be able to adapt to the rules of the the business. And, you know, the the challenge here is, you know, tracking over time whether you're doing things on an individual, you know, buildings, utility meter basis, if you're doing it on a customer basis, if you're looking at the portfolio of the rep. You know, I've worked with a number of other, utility companies, and everybody has their own kind of special sauce as to how they they manage that. So but part of the challenge is the complexity of the the different business models that people have for that. But as much as possible, we wanna be able to do that inside of the system. Now the caveat of that is is is that, almost every customer that I've ever had has exceptions where they want to be able to edit information that's coming out of their ERP or their CRM, or they wanna make some sort of adjustment after the calculation has happened. Right? So you have kind of two different entry points in the overall incentive compensation process. One, where you're loading data into the system and somebody wants to actually be able to review and potentially correct data, inside that comes from the ERP or from the CRM before it gets fed into the key compensation engine, you know, we can manage that. Although I tend to be an advocate of as much as possible, make your ERP and CRM be the system of record. Right? I don't wanna be managing a bunch of exceptions. And if we do, I I wanna push them back to that system of record because, you know, that's what those systems are there for. On the other side, after things have been calculated, you know, a lot of times what you see in organizations is maybe they have goals for their sales folks. There's been a, you know, a macroeconomic black swan event. The customer canceled, something like that, and they don't necessarily wanna claw back everything because they say, okay. Well, you know, the change in behavior wasn't necessarily attributable just to the the sales rep. There are other macro factors that are impacting our business. In that case, within the incentive compensation system, we wanna have the flexibility for managers or, you know, sales ops leaders to be able to make sure that, know, based on their business decision, if they wanna make a, you know, salesperson hold, they have the ability to do that in the system and do so in a way that's, you know, audible and and tracked within the application itself. And on that note, have to do there's two more related questions. So I'll excuse me. What system were you using to advance the payment and the callbacks? I'm I'm assuming that was. Acron and then managed inside of Wiki in in Akron. okay. And the plans, typically are not cross year in the utility companies that I've seen. They usually have a new plan each year, but the customer book of business, obviously, is is going from, from year to year. So, oftentimes and and you can have actually planned the change within the course of the year. So a lot of what I've seen is is that maybe for a certain product, they're paying a certain commission rate, up until a certain point in the year, and then they change the priorities in terms of the products they wanna be pushing. And so they'll adjust the commission rates. The logical concepts behind the plan itself remain intact, but the strategic focus of what they want their sellers to focus on change based on on what their, commission rates or the spiffs or incentives that they pay out based on the other customer life cycle events. All right. Well, on that note, we'll skip. We're gonna go to the group exercise. Great engagement, and thank you all for the questions. Please keep them coming because it helps us bring these concepts to life. So just want to do a quick group exercise, nothing too involved. Put your answers in the chat, any additional comments. So on slide next slide, Kwang. So this is partly from an actual client. We've changed the names to protect the innocent, as they say. So let's say you have a company that sells industrial equipment powered by the hour model. You have the kind of three key players or sales engineer, account executive, and, in this particular case, field service manager. Sort of like a customer success type type of role, but called field service manager. The the engineer is, in many ways, leading this. I know it's, maybe not as typical typically of the AE that's that's leading it. But, in this case, we have a engineer that's sort of the lead. Five year contract, 40,000,000. AE, you know, is the one closing the deal essentially, processing it all that. And then you have the FSM is ensuring whatever those, you know, customer success metrics are, usage, utilization. And so the answer you know, the question here is, you know, what do you what do you pay? And and, when we say what do you pay, we're really looking for the the crediting side of things. So we talked a little bit about the percentage of credit that you give. And I know that we don't have all of the the details here in terms of the macro environment and the financial stability and all that. But, really, this is the second level down, which is how do you then determine, if if at all, differences by role type. Right? So in this example, the AE is really just there to close the deal. They're not necessarily managing the post sales relationship. Maybe that changes things. And of course, the sales engineer also has a high degree of what we would call causality in closing the closing the sale, a highly technical sale. So just put put kind of initial thoughts in the in the in the chat, and then we'll go through it, you know, in a a minute or so. This is where we should have the the Jeopardy music. I don't know if everyone here is familiar. I know if there's a lot of US based folks, but it's the Jeopardy song. I'm not gonna do it because I'm not musically inclined, and I'm just gonna make a fool of myself. But it's it's what they play when they're at end, you know, asking the questions. Exactly. Final Jeopardy countdown while they're writing. down. their last. answer. Yeah. It's a good question, Tanner. So most of these so by by definition, the the contracts are all cancelable in in the sense that you aren't necessarily committing to any revenue. Right? And this is where I'll use media as a good example as a parallel to this. So in media, if I come in and I'm I'm an advertiser and I'm I'm advertising with Google as an example, and I say, hey. I have a million dollars that I wanna budget for an ad campaign, and I wanna take 60% of that on Google search and maybe 40% of it on, you know, YouTube. Right? And there's they the rep says, okay. That's this many impressions that you're going to get. Here's your kind of funnel. There's no guarantee that Google is getting a million dollars. Right? I I could spend half 1,000,000. I can spend 1,200,000.0. I can spend nothing. Generally and this is why when this is why you see post sales roles like CSMs. You see them on a on a comp plan because the the the success of that utilization is depending on the company. Part of it is based on the product, and part of it is based on, you know, the experience. So if you have a really complex product in an at risk revenue model that monetizes through usage, you probably need a very robust, very attentive CSM team and probably low thresholds that qualify for CSM mapping. Right? Otherwise, you risk churn or you risk in during the life of, you know, the the sort of contract, if you will, you you you may not realize kind of what the ACV or even TCV was. So, yeah, that's the that's what makes this so challenging is that people can stop and start and leave at any time. Yeah. Some do have minimum usage clauses. I mean, I I what what we've seen is clients try to get to a place where so they have things called, like, business planning type of documents. Every company is different. Google has them. LinkedIn has them, all these companies have them, basically say, hey, can we commit to a certain level of spend? And if you do that, we'll provide you certain additional benefits. Right? Faster SLAs, access to more insights teams or creative teams for more personalized service, dedicated rep. So that's how they try to because legally, right, it's legally I shouldn't say legally, but under GAAP, you can't recognize that revenue. And so that's their way to sort of bridging it. Okay. So a lot of good answers here. Appreciate all of the questions and all of the thought it. So really quickly, if we go to just framing it up, Slide 13 or I think it's Slide 13. It is. So really, it's the sort of the design tensions. As we talked about, we've talked about a lot of these, but how they fit into this decision on how to comp these three individuals or these three roles rather. It's when to pay versus when revenue is recognized. The second is how to split credit. So this is something we haven't talked about yet. As you all know, and there's many names for this, double bubble, double crediting, there's split crediting. This also becomes a challenge too. I mean, split crediting, global crediting, it's been a challenge for as long as I've been in in the space, and it's it's also very difficult to get right. The attribution is very difficult. It's even more difficult when you have, again, crediting that's based on usage that you have to predict. And then also how to protect reps during the transition. The one thing I wanna say here that I think is super, super important, and one of the things that we implore clients with and even, you know, we do a lot of thought leadership and education. This is one of the things that I would say almost always is missed in by by comp professionals, which is if you design a usage based plan so let's take an example, and this is a real example of a very big global company, you know, hundreds of billions of dollars. They they they would credit so they would sell a software. It monetized through usage. That usage, it took about nine to twelve months for the implementation to kick in, sometimes longer, which meant that there was nothing happening for three fourths of a year, sometimes even longer than a year. The crediting rule didn't kick in until go live, which meant that a rep would sell something, receive a portion of that money, say in this case it was 50%, nothing would happen for a year, go live kicks in, but then they're only allowed crediting for up to twenty four months or up to twelve months after that go live. And and but what what would happen was that this company had sort of a firm policy of changing territories every eighteen to twenty four months. So you can kind of see the obvious problem. And when comp isn't as cross functional as it should be, these connection points get missed. And so what we saw was what happened, and by the way, this is real. You had the Department of Justice come into this company and public information, it could be Googled. But basically reps were selling 30%, 40% shelfware sort of deceptive sales practices because they knew that there was no way for them to hit their quota, which by the way also had been increasing 30% unless they kind of engaged in this practice. The rep coming in knew that that was the case, but they didn't care because they knew that it was not going to be their problem because the book was probably gonna turn over in eighteen to twenty four months. So the stability of the book, transition, the territory design, the segmentation, quota setting, all of that has always been important or should have been important for comp, but it's even more important now. Alright. That was my monologue. If we go to the next slide, we have about eighteen, seventeen minutes left. We're almost through the presentation, so I wanna appreciate everyone for Or thank everyone for bearing with us. I know it's a lot of content here. Really the answer that what the framework recommends And again, the framework is a starting point. All of your companies, all of your lines of business will be nuanced. This is not to say that this is absolutely correct. It's really more directional and like the construct of it. So with the sales engineer, we see roughly 60% at signing, and then we have milestone crediting. With the account executive, we see a higher percentage at signing. Then we see a little bit of go live, and then we might seem you know, might have one year of of crediting post go live. The reason for this, if you're in a hypercompetitive industry where you where landing accounts are very important, you wanna make sure that the account executives are being paid and compensated upfront, right? So you might front load some of those payments. And then the field service man field service manager, that's gonna be tied to uptime SLA, the 99.5% bonus pool. I think somebody else mentioned a bonus pool as well and then renewal rates. So you can see you have three different roles all working together on the same sale being compensated differently. Obviously, they have different OTs. They have different pay mixes. They have different accelerator rates. But you can see even even here where in traditional SaaS, the crediting would be, everyone gets a 100%. Right? And that's it. There's really nothing else to do after that. You can see here it becomes much more formulaic in some ways, but but much more systematic. And that's why this webinar was important to connect with the system side of things, which leads us to our next slide. Anthony, this one, I'm gonna turn to you. This is our metering. I know that the next couple of slides, you'll talk a little bit about it. But I'm curious, based on what we've talked about, we've talked about all of these different crediting rules, milestone crediting, annuity sort of based crediting, time lapse crediting. Curious on your side with Volky, how have you seen this play out with clients where they are able to be, I don't wanna say creative, but better designed comp plans to align to the sort of strategic reality. How has Vokey allowed clients to to do that? So, you know, before I actually talked about, you know, when I want to have adjustments to make the system of record be the CRM or the the ERP, but I need to amend that a little bit. Because when we start getting into these questions of consumption based compensation plans or, you know, any type of compensation plan that that's starting to take on kind of a more modern nuanced level, I need to start bringing in information that I don't necessarily have in those systems. Right? Right? So So the the flexibility of the application to be able to connect via APIs in a modern system landscape architecture to your data warehouse or other operational systems, I think, is fundamental. Because what we see is we see customers when they're designing their incentive compensation plans, they want to bring together we call them KPIs, but but, you know, meter and metrics, you know, however you wanna call it, different pieces of information that can be a combination of traditional financial KPIs as well as nonfinancial KPIs. So, you know, the the first thing that I think, organizations need to focus on is, okay. Where do I have the information that I need that I can align my compensation plan together with my strategy? And, you know, the the metrics that I want to actually look at, to drive the behavior of my my Salesforce or my, you know, broader cohort of of individuals that are managing and protecting revenue of of a customer. Because, again, when we get into compensation, it's not just the sales guy. It's that broader team that's really driving our our revenue. And so, you know, here, I think, you know, you've got, different metrics that are are things that I wanna be able to to manage in a compensation based world. And so I think, really, the first thing is just kind of figuring out where that information is gonna be housed. I think if we move on to the next slide, right, you know, one of the the challenges is not so much also just, you know, tracking those actual data, but then how can I take that actual data and start thinking about how I'm gonna forecast my consumption? Because, you know, as I'm changing my business model, oftentimes, I may want to to think about, you know, what are the leading KPIs that are gonna help me predict what the consumption of a customer is, and how can I group together customers where I can start having a a cohort of customers that is going to enable me to predict behavior when I sign up a new customer? Right? What are the attributes of my customer base that let me think about how they're going to behave? And so this is really important right now looking forward in terms of the the capabilities between, AI and machine learning models. And and I think what's what's really neat in the last, you know, twelve months with the emergence of, AgenTik AI is it's actually a lot faster to be able to build those type of analyses. So in the past where we had a very high reliance on, lots of data and a data scientist that would come up and and create you an algorithm to be able to manage those things, You know, technology is evolving very quickly that's enabling us to get better at that type of predictive forecasting. Obviously, you know, one of the the fundamental pieces for this, if we move forward, to to the next slide, is really about the modernization of technology. Because, as I mentioned beforehand, you know, a lot of organizations are facing this sort of legacy technology, problem when they're talking about sales performance management or incentive compensation or even, you know, when you look to your ERPs and CRM systems that have been implemented a long time ago and don't necessarily have all of the information. So organizations often find with legacy systems or homegrown systems or processes that are managed in Excel, that they have this sort of, fragmentation of their data, lots of manual processes, which leads to, you know, more errors, not getting people paid on time, not being able to have the right reporting for compliance. And so that's where really where a, you know, modern incentive compensation system can help you in that data collection and preparation process across the different inputs inside of your organization, but also, enable you to have a a system that evolves your incentive compensation plans on an agile basis as your organizational strategy is is evolving and, more importantly, providing transparency for, the the sales reps or, you know, the customer service reps within your business. So we haven't actually talked about that a lot, but one of the fundamental values of of having, you know, a modernized system is that, you know, sales reps can actually see what they're earning, what they can potentially earn, what their their portfolio of business looks like. And, you know, that's surprisingly rare sometimes that you know, where I've talked to sales folks at really large organizations, they really don't know what they're gonna make at the end of every month. And and when you provide this degree of transparency, that enables you to help shift the behavior of organizations to then align with your business strategy, which I think is is fundamentally what we're trying to get to. Well said. Sorry. I was coming off mute. Yeah. The, I think just in the last few minutes, we always try to keep a few minutes for folks. Last couple slides is really sort of, all right, what's next, right? So here's a high level consumption based scorecard. This is for the crediting side of things. So just a quick way to It's not going to replace a formal assessment as part of whatever your design function is, but looking at the different factors that we've talked about. And again, the idea is just to give you some indications, like, should we be a bit more aggressive with crediting or should we be a bit more conservative? Are we really not even ready yet? Or is it somewhere in the middle? The reality is it's generally in our experience, kind of follows a balanced approach like most things. But there are times where following an aggressive approach makes sense, especially if you have hypercompetitive industry and you want your AEs to land, it might make sense for that trade off to happen. But just a quick checklist that you can use. The next slide is really about, okay, what to do next? This is more a bit longer term if you want to incorporate this into the design of the planning kind of cycle, if you will. Number one, we just spoke about the consumption variance is something that's important. It's really part of pillar one, but it's okay if we collect or if we have estimated contract of 100,000,000 across all of these, when do we collect and how much do we collect? So we say, okay. In the first year, we collect 80% of that. Well, your crediting strategy could be maybe 70. Give yourself a little bit buffer, and then you have milestone or some kind of time based crediting. Then this one is something we've talked a little bit. You've heard me mention about the cross functional nature of this. One of the things that we're seeing, not just as a result of consumption comp, but really more so broader industry trend is or not broader industry, just put a broader trend within the compensation space is the sort of elevation of comp practitioners, being involved, understanding and how to speak the language of of the CFO. I think a lot of comp professionals are very, very in tuned with with HR, with sales operations, and depending on your role, whether you do design and admin, probably the system side as well. And, yes, FP and A, you know, is generally part of that that cross functional team. But as we move to more consumption based comp, having a good good relationship, good rapport with the CFO, especially in larger enterprise organizations where the CFO is heavy input into comp and margins become very, very important in more mature organizations, that would be what we would recommend is really start building a relationship with the CFO, understanding, you know, their concerns and and educating them as well. There's a bit of education that that needs to happen here. And then finally so we started, you know, quick snapshot, maybe next month, next thirty days, broader journey. So, again, the we opened this with, you know, where are you in your in your comm journey? And we saw, you know, about a third of people haven't started, a third of people maybe are are there, and, you know, some it's 30 or 40% in the middle. This is generally where we start. Some of these can be shorter, of course. Some of these can be longer. I think directionally understanding the sort of foundation, right, as we talked about the crediting, the consumption, doing doing the research on that that six box, that three by two matrix, then the design. Right? So it kinda follows traditional assessment design. Pilot pilot here doesn't necessarily mean let's carve out a specific role. It can. It can. There's clients that certainly do that. It really means more let's kind of look at, like, a shadow plan, what we would call them. Sure. There's other terms for that, but it's essentially you have the official plan, and then you run, okay. Well, if we were to do a consumption based plan and we were to design it this way, how would it run? So it's sort of in the in the shadow, right, pilot. And then, of course, the implementation and rollout. Now the good thing is this can all align with your normal design cycle. So it's not as if this is you know, needs to be in addition to two separate cycles. It's just part of your design. Right? So it's part of your analytics. It's part of your design sessions and everything else that you need to to do as part of, you know, new comp plans for the fiscal year for the for the half. So that is the webinar. We have about four minutes left. Really appreciate everyone's engagement throughout. You know, that I'd rather have it throughout than leave ten minutes at the end and have a whole bunch of questions. So really appreciate that. But in the last four minutes, are there any final questions from folks? Anything that we can answer or clarify? Alright. While we're waiting, Anthony, any parting words on on your end? So, you know, one of the things that I would say is is, again, you know, obviously, you wanna keep pace with the strategic changes inside of your organization, but start thinking early as well about how you make your systems evolve and and, you know, what type of process over time you want to be able to, let's say, run-in parallel as you manage your different op excuse me, different plans. I I think it's really important, you know, when you're designing incentive compensation plans and thinking about changing the way that you do business, that you really spend some time, forecasting and running simulations to understand what the total compensation of your people is gonna look like to make sure that they're they're paid, you know, fairly and and and that that behavior matches the the initiatives and strategic objectives that you're trying to drive for your organization. And, you know, that is an iterative process. It's something that, you know, you wanna try and get early indicators as well. Right? So try and and forecast things out. But after you've launched plans, you know, stay on top of those and and make sure that, you know, that things are are actually behaving the way that you expect them to. Because if not, you may need to make some some adjustments. Yep. Yeah. I I I agree. And and I think the the on that note, to dovetail into the one of the questions to close this out, what is a common pitfall for those making the transition to consumption based comp? I can say, for me, what I've seen, it's ignoring or maybe not ignoring, but not putting enough thought into the user experience. And when I say user experience, the rep experience. This this stuff is is you know, as we say, reps need line of sight. They need visibility. They need to understand how they can own their destiny. All of those phrases we've all heard if you've been in the comp space. But with with consumption based comp, it's even more challenging because I I it's easy for me to say, okay. I have a $2,000,000 quota. My ICR is you know, I'm just making this up, you know, 4%, whatever it is. I ink a half $1,000,000 contract. I take a half 1,000,000. I multiply it by 4%. Right? I I can and if it's a bonus formula, maybe it works a little, you know, it's it works a little bit differently. But, essentially, it's very easy for a rep to figure it out. Well, when you have consumption of a whole bunch of stuff, some things started nine months ago, some started, you know, six months ago, All of these different clients, especially if you're in, like, a CSM type of role where you might have hundreds and hundreds of these, the visibility, the transparency is going to be critical because you can have a perfectly designed comp plan. And if you don't have the systems to back it up, if you don't have the apps, if you don't have the visibility, that is going to to be problematic. And I think the last thing I would say is the more transparency that you can build into the process, the more reps will trust you and trust the process. So it's really all of those things. It's the designing the right way. It's the right software, the right tools, the right ICM, the right trust, the right transparency. And it really starts with, here's our framework for how we do this. So that would be my my parting parting thought. With that, you know, we're we're at time. So, again, appreciate everyone joining. We'll get, emails out and, follow-up with with all of you and, you know, of course, reach out to us with any questions. Great. Hey. Thanks, Carmen. It's great to be here. Yeah. Thanks, Anthony. Thanks for joining. Thanks all.