Xactly Unleashes Cloud Sales Compensation Tool From Salesforce.com

Xactly on Monday released a new version of Express, its cloud-based sales compensation management software for SMBs. Its mission? Get sales teams out of Excel and into the cloud.

Version 1.6 includes Express Estimator, which allows users to predict their compensation based on sales variables, such as product or service mix and length of the deal. It's also now available as a standalone solution; previously, Express was only available to Salesforce.com users. Salesforce.com is both an Xactly customer and one of its strategic investors.

Xactly was founded in 2005, but it's just now getting its sea legs in the hyper-budget-conscious, time-strapped world of small and midsized business (SMBs). During its first four years, the sales performance management software provider found that its typical customer had around 300 salespeople, which translated to 1,000-1,500 total employees -- hardly small companies.

"One of the things we found was precluding us from getting into the SMB market was the implementation," Xactly CEO and president Chris Cabrera said, noting that Xactly's typical per-seat, per-month price point of $30-$40 was rarely a roadblock. Rather, it was the cost and time to go live, usually $10,000 and eight weeks, at bare minimum, that gave SMBs pause.

Express launched in November 2009 and was designed for a client profile of 100 or fewer seats, though there's no actual limit. Setup cost is around $1,500, and the monthly subscription is $30 per user. Time to launch, once a matter of months, is now about one business day. Xactly expects to reach 100 Express customers by the end of the year, with an average of around 15 seats each.

Andy Drogo, Xactly's product manager for Express, said that almost all new customers coming onto the platform were previously using a spreadsheet to manage sales compensation. "99.99% of the time, they're using Excel." Drogo said this opens organizations and salespeople up to costly mistakes as a result of broken formulas, incorrect references to sales, and other errors.

Like chefs who eat their own cooking, Xactly's 20-person sales team uses Express in its day-to-day operations. Cabrera said the company has introduced two changes this year to its own compensation plan as a result. It added an incentive for signing multi-year deals, and employees could monitor their progress within Express.

In 2009, prior to the new bonus component, 49% of deals closed by Xactly's sales force were for longer than 24 months. So far in 2010, 71% of contracts signed are for more than two years. Likewise, the company has seen a double-digit percentage increase in the number of deals that secure cash up front after adding a similar incentive to its compensation plan.

"We are the great poster child for our product," Cabrera said. The ability for users to monitor their performance and see how different deals might impact their wallets appears to be a key selling point -- pun intended. Sean Mulvihill, director of marketing operations at ClairMail, calls this the "scoreboard mentality." The San Rafael, Calif.-based mobile banking and payments firm has been an Xactly Express customer since January 2010.

"It's not just about seeing how you're doing at the end of the month, but seeing where you're at every day," Mulvihill said. ClairMail's previous spreadsheet-based process was "equivalent to waiting until the end of the game" to gauge performance. Mulvihill said he knows of least two bonuses achieved by sales reps that would have been missed without the daily visibility into performance. He added that the ClairMail management team shut down two incentives and doubled another as a result of performance monitoring, and estimated that the sales organization has saved 100 hours of time as a result of efficiencies gained on the platform.

While Mulvihill gave Xactly high marks across the board, especially for its customer service, he noted a non-monetary cost of relying on the relatively young software: "Each time there is a version change, there are some burps," he said. "You have to be able to withstand the impact of changes. We have that tolerance." Mulvihill manages about a dozen enterprise applications, nine of which are cloud-based.

China Martens, senior analyst with The 451 Group, said that the SMB market for sales compensation software in the cloud remains relatively niche at the moment.

"When's it going to go mainstream? How do you get to that next level? I think that's what [Express] 1.6 is all about," Martens said. "There's still so much evangelism to do, especially in the SMB space, convincing the market that they really need this functionality."

That's what Cabrera aims to do in the coming year: "We're going to be exploding our sales organization and hiring lots of people that can do it," he said.

The decision to make Express available to non-Salesforce.com customers will be a key to unlocking a wider door to the SMB market, according to Martens.