“The sales performance management market grew 14%, to $1.099 billion, in 2019.”
There was a time when prospects were completely dependent on their sales representative’s advice and expertise to take the final purchase decision. For the sales team, incentive structures were simple and directly proportional to the number of units sold. With the dawn of the internet/information era, the role of sales reps changed drastically, with a lot of new variables like external market, competition, internal influences, and trade policies coming into play. The elite and educated consumers present a higher resistance to traditional selling efforts. And, in the last year, with little or no face to face client discussions and longer than average buying cycles, the sales reps’ job became tougher than ever before. In a similar vein, designing a sales incentive mechanism has become tedious and over complicated, leading to poor sales motivation and even poorer results.
Designing an optimized sales incentive mechanism
“By 2022, 40% of B2B companies with over 100 payees will deploy SPM solutions to reduce hidden incentive compensation overpayments.” Gartner Magic Quadrant for Sales Performance Management, 2020
Sales leaders are always looking for the optimum combination of individual selling, team collaboration, organizational objectives, and growth to design modern incentive plans. Teaming these with the right sales behaviors that overcome competitive pressures and drive enhanced customer experience is again not very easy with rigid incentive plans. Overcompensation is another big challenge in designing such plans. Here are four key aspects of an effective enterprise incentive management and sales planning tool.
- Quick incentive calculation
This is a key requirement of the incentive management solution as accurate and timely incentive payouts go a long way in boosting seller motivation. Leading tools have the capability to automatically import HR data, ensuring that employees are compensated on time for their respective roles. They also optimize the speed and accuracy of compensation data by automating complex calculations that ingest multiple input data at an individual, divisional and organizational level.
- Real-time visibility
The incentive solution should provide real time access to sales performance. This empowers both sales leaders and the frontline team to take quicker action and meet organizational objectives. Access to sales performance data and compensation structures also minimizes internal disputes and facilitates the sales leadership to intervene and take corrective action when needed.
- Scenario planning
Some of the leading incentive management tools in the market allow the modeling of multiple potential compensation structures and assess their effectiveness before rolling them out to the sales team. This enables the study of potential changes and their impact on the plans. Models with different combinations of territory and quota information allow quick modification of compensation plans to drive business priorities at a particular point of time.
- Predictive analytics
Integration of intelligence in the incentive management solution can help forecast compensation earnings and quota attainment trends. These, in turn, help allocate budgets and take preventive/precautionary measures in case of not so positive forecasts. Analytics also help sales leaders determine whether the program is giving the desired results, enabling the sales team to achieve their targets, delivering enough returns, etc. Predictive analytics solutions see much higher trust and accountability with the sales team.
Quicker incentives drive sales culture – A case in point
A top telecommunications company was unable to scale up their sales reporting process which took an average of three weeks. Their outdated, manual systems inhibited the free flow of information, increasing call center interactions from . Adopting a simple and efficient incentive management solution allowed real-time visibility into sales and incentive data, bringing down sales reporting time to one week. The system also reduced error in payment margins from >10% to <1%, and enabled quality incentives based on sales tactics. All these highly improved sales morale and enhanced team performance.
Rewarding deserving sales behaviors
Incentive structures should first achieve what they were primarily designed for, that is motivating sales folks to add to the top line, become the successful interface with the client while furthering the organization’s larger business objectives. An optimized incentive solution will ensure a fair compensation and reward deserving employees. The key would be to identify and retrofit one that matches the unique challenges and requirements of an enterprise.