My last blog was around avoiding failure in your sales acceleration project which built on the ideas from another blog around business readiness. This blog focuses on incentive compensation.

This blog was inspired by a few failed projects I’ve either seen or learned about recently. The common thread to all was that different audiences were perceiving the value of the project differently and ultimately those with the checkbook cancelled. They didn’t know or couldn’t measure what value their team was getting. How can you avoid buying a costly system you either don’t implement or cancel? How can you make sure your executive audience knows the value your end users may receive or are already receiving?

The blog series will continue to focus more specifically on how to maximise success in three sales acceleration projects with large ROIs – incentive compensation, CPQ (configure price quote) and call technology – using examples from some of the largest vendors.

The ROI that firms usually advertise with their glossy marketing material (‘our customers see a 50% cost reduction’) usually references those successful projects.  Those statements are absolutely true, for those successful stories, and likely replicable. And yet, we know projects fail. No one wants to fail as a project sponsor or manager. Worse, a failed initiative can make the organization as a whole more weary to invest and consider other important initiatives. How can you start to prevent failure to become a ROI hero at your company and poster child for a successful change initiative?

This blog will focus on incentive compensation.

Project preparation

The most important part of a incentive compensation strategy is not the technology that underpins it, but the strategy and plan itself. If you want to know more about how to get a stellar sales incentive compensation strategy in place, please check out my blog ‘Putting the Incent back in Incentive Compensation

ROI

There are a number of vendors who offer some compelling ROI models. Sales Benchmark Index also has one here. Putting together data around this will hugely help sell this to a wide audience. I suggest also asking any vendors that you meet with for their model – there are some great ones out there.

Benefits

According to G2 the main benefits of sales compensation technology are

  • Less error-prone compensation
  • Automated and time-saving processes
  • Greater visibility into compensation process
  • Boosted motivation and competition between salespeople
  • Analytics of compensation plan effectiveness
  • Increased sales

Unlike most sales acceleration technology, these benefits go across a number of audiences, most notably finance and HR.  Its very important these groups are a key part of decision making and project deployment for benefits.

Finance

The largest benefit for finance is visibility and predictability. Compensation plans usually include accelerators, different rates for different tiers. Accurately projecting payment exposure versus a forecast is nearly impossible without a system such as this. Sales compensation is such a large component of a payroll these figures are often quite material. An error rate of 3% is a huge cost, even 1% is a figure finance will really care about.

HR

Sales compensation is often a topic of ‘battle’ between sales and HR because most HR departments are not familiar with how to use variable compensation to measure and incent sales. I’ve seen a number of times where both groups create time consuming models and disagree with each other. This is a great way to get on the same page.

Sales

The important consideration here is not just sales management and performance management but sales reps themselves. Have you selected a tool that’s easy and intuitive to use? Can reps predict what they might earn on certain configurations? Is this something that actually makes it easier for the to sell things based on the central sales strategy? Does this tool motivate them to sell more?

Technology evaluation

sales compensation g2There are really two big players in this space, Xactly and Callidus. The chart here shows the G2 Crowd evaluation of vendors in this space.

I’ve seen some clever custom built functionality for very small orgs, but if you have 30+ reps or any product complexity, looking at such a solution that can integrate with your CRM and ERP (and anything else) likely makes a lot of sense.

I would highly suggest a proof of concept (PoC) with at couple vendors and seeing how your plans perform for a payment cycle. This is probably one of the most straight forward tech implementations there is IF your plans are solid which brings me to my final point.

Next Steps

If you would like some help building a incentive compensation plan, evaluating vendors or project managing an implementation, please contact Sales Ops Help.

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