Tuesday, October 18, 2011

What is a Sales Engineer (SE)?

A Sales Engineer is a part of a technology sales team, for an organisation trying to sell Hardware, Software or Services. The sales engineer's role is to ensure the technical part of this sale removes any obstacles and helps ensure the deal happens with a good value to the seller.

There can be different types of SE roles and ways of structuring an SE organisation.
Types of Sales Engineer Roles
The Structure of an SE organisation

A Sales Engineer is usually compensated like a Salesperson, with commission paid on business revenue :
How should SEs be Compensated?

The value an SE adds to a deal
The Value added by a Sales Engineer is defined in both higher success rates than a commercial effort alone, higher success rates of implementations, and a quicker way of doing business by removing these technical obstacles.

Typical tasks performed by an SE
What does a Sales Engineer do?

Answering RFPs, RFIs, RFQs (providing information to customers)
Procurement Processes
RFI Time - Answering an RFI

Presenting the product in Technical Demonstrations
The Demo Doctor
Demo PC rebuild
Webinar tool use to minimise travel
Using GoToMeeting to deliver a Sales Demonstration
5 Easy steps: How to do a Great Tech Demo!

Perform Proof of Concepts to ensure customer is satisfied at product capabilities
Proof of Concept
Customer Unready to Evaluate

SEs need training - it is not a magical skill that only certain people possess, but it is an art that can be improved over time.
Training for Sales Engineers
WeirdSE Launches Wisdom Apple Apps

5 Easy steps: How to do a Great Tech Demo!

One of the key things that a Sales Engineer can do well, that a gifted development engineer or consultant cannot, is present the product/solution to a mixed audience of technical and business buyers and ensure that it is at the same time compelling and interesting to all parties.

How do you do this?

1. Make the demo SEXY!  
OK, maybe sexy is too strong a word for this, but ensure that you start the demo with the most exciting part, that shows clearly why people will buy your solution rather than another, and rather than thinking this stuff is too hard.
Remember, companies choosing to do nothing is the biggest enemy to selling products.

2. Create a demo plan
A plan is your storyboard - making sure your demo flows from one point to another - staying relevant to the customer, but also helping them formulate a solution to their problem as you go.
If you start sexy - as I explained earlier, you will need to explain how you arrived at the beginning.  You need to prove your value.
As part of a good plan, you need to decide what features and solutions are actually relevant to this customer.  No two demos should be the same, unless you decide each customer's need is exactly the same.  Unlikely.

3. Practice doing your demo
Practice makes perfect. Even if you can't get a practice audience - and anyone will be better than no one - make sure you go through the demo plan, and that you know what you will say at each point of the demo, and where you will pause to hear response, and have questions asked.
Practice the demo in exactly the same format as the real one, and make sure you can see the demo as your audience will.  If you are doing a webinar, have a monitor showing the demo back to you, or else record it and watch the recording afterwards.  For a live meeting, try and record the meeting with a video camera.
Make sure that you understand the technology you use to present, your content, and what your plan is for this customer.
Practice your demo 10 times or until you know you are ready.

4. Rehearse with the rest of the sales team
A demo shouldn't be an isolated part of the sales pitch. It is a good time for asking the customer some of the big questions.  Make sure your Sales reps understand the demo, are interested in it while you deliver, and if appropriate that they tease out questions from the customer or underline the strong points where they know this customer is interested.  Without this dynamic activity, your demos will be flat and less interesting.

5. Make the demo end with a Bang!
Start out sexy, follow a plan and make it end with a bang.  Make sure you keep a nice tempo to your demo, long aimless demos that meander will find it harder to impress people - or at the end they might forget what they asked in the first place.
Pretend you are taking your customer on a journey: show them how you can help them fix their pain, or even better, have them realize themselves that this demo shows how your product is the best solution and uniquely fits their needs.  To do this, you need them to understand how you got to the sexy screen you started your demo with, and what it means to them.
You will need to make sure they understand the key steps, and why each step takes them forward and away from their problems.  Have a flip-chart or whiteboard next to you while presenting, and point out as you move through milestones.

SO that is the way to make a Great Tech Demo.  I found one of the best books on the subject is  Great Demo! by Peter E Cohen.

Friday, October 7, 2011

Compensation: Do you earn a healthy commission as a Sales Engineer?

I recently have been asked by a colleague if more senior SEs really get a higher proportion of their compensation as commission.

I found the following article at Monster.Com Salary Commission guide: Sales Engineer which is actually sourced from data at payscale.com - real life data.

They are grouping the median pay and commission by numbers of years in the company.

My graph below shows bar charts for each group.

SE Salary to Commission ratio
It shows that the very junior SEs have a low commission pay out, but it quickly rises to a bit over 20% as a median.  Its key to note, the extreme ends of SE payscales are at 0% and 50% commission - but here we are talking about medians - the middle of the road.

Based on information at thesalesengineer.com article (Are You Missing Out on Bonuses) we see the following graph which shows that the rank of SEs within a team can affect the proportion of commission they are paid.

Low and High commission ranges by SE Rank

The other interesting bit, is that the SEs who have been there the longest (20 years+) are not the highest paid.  It is the second longest serving group - 10-19 years that are the highest.  I guess this means that the best get promoted out of Sales Engineering?  Indeed the numbers by years experience show the numbers of respondents in the Monster.com article dropping.  Of course this might be that long serving SEs rarely need to respond to this kind of thing.

Tuesday, October 4, 2011

How should SEs be Compensated?

What is the best way to pay your Sales Engineers?  Are the SEs part of a sales team, do they work on their own, are they part of services?

Most SEs should be closely aligned with Sales to ensure they maximize the value that they add.

As such, each SE team has the target of supporting particular sales people, who have their own targets that they are aiming for.  The SE team will feel closely aligned if their rewards follow the rewards of the sales team.
Remember, incentives will drive activity. If the SEs find that they actually get paid more doing services, then they will maximize the number of services days they perform.  Is this best for selling your products? You decide.

So reading this article at SalesEngineer.com  - Are you missing out on bonuses? The first thing to note is the kind of compensation to pay SEs.

Fixed compensation
Should it be fixed or variable?  Fixed bonuses are about hitting targets or achieving a result. They are either paid or not.  This can be good at ensuring that the SEs get the result, but if $2.9 million is almost as good as $3 million for the company, why pay a bonus only if they make the full amount. Sometimes this might be written more as an MBO than a commission plan.  Sell $x million, get paid a bonus.

Variable compensation
With variable comp, the main thing to think about is how much does it vary? Should it have a cap? Should more senior SEs have a higher proportion of their OTE as commission?

Typically, sales people have a high commission to base pay ratio.  Many have 1:1 (half their target income is commission). Some have even more, like 2:1 or perhaps even operating fully on commission.
SEs tend to have a higher base pay. The SE relies on the sales reps on bringing in opportunities and developing them to a certain stage.  SEs usually have a longer tenure in the company - and good SEs need to be kept in good times and bad.

SE variable comp can range from 5-50% of their OTE.

Some comp plans provide for accelerators as a higher level of commission has been earned.  This increases the incentive to overachieve, and keeps the SE working harder all year long. An example of this is, after the SE has met 100% of revenue targets, the commission rate goes up 50% or 100%.

A cap is a limit on the amount of comp to be payed.  This could be a limit on one deal, or limit on the overall amount. If they have a cap, then commission becomes more like a bonus that can be earned incrementally.
The only benefit to a cap is that it means the SE is unlikely to retire off one deal.  However if the total commission has been paid out for a year early on, there is little drive for further activity that year.

Cost of the deal?
The downside of the commission to the company is that it increases the cost of deals.  The sales person takes their commission, and then the SE team, management and anyone else involved might have a share too.  Too many layers of overlay and support for sales means increasing costs.  Sometimes 20% of a sale might be paid out to people on commission.

Group vs Individual targets
The final piece of a comp plan is working out exactly what deals each person gets paid on.  This could be simple for a single SE in a tightly defined territory or company.  However when you have multiple SEs, the question needs to be asked how to compensate the team.
Is it a group pot - each SE gets targeted and measured on group numbers?  Often you will have some SEs more active than others.
Do you work out who worked on each opportunity? Sometimes SE roles mean they make smaller contributions on many deals.  Some deals take many SEs and it is hard to work out who did what.
Subject matter experts could be paid just on their area of expertise
SEs who support particular sales reps could just be paid on that revenue.

The targets need to be tailored to encourage teamwork, but reward individual efforts well.  As an SE work out what you do well, how to maximize your personal revenue and try to prove your value.
Remember, an SE's value to an organisation is about maximizing the revenue, and regardless of how you get paid, people are always watching and knowing who is making it happen.

Further reading -
Compensation of Sales Engineers
Statistics for SE Reporting
Paying Salespeople
Christine Comaford: How do you keep your Sales team motivated
thesalesengineer.com: Are you missing out on bonuses?