As anyone who has worked with them knows, incentive programs are hard to scale. A simple percent commission gets the job done for small sales teams, but when multiple locations and currencies come into play, it won’t effectively reward sales pros of varying experience and tenure, or help them prioritize an ever more diversified portfolio of products or contracts. And as that monster formula for calculating incentives grows more complicated, the human resources department has to spend more and more time digging through Excel spreadsheets. The compensation process becomes cumbersome, time-intensive, error-prone, and opaque.
One way that businesses deal with this situation is with sales compensation software through their ERP system or an integrated sales compensation program. A common tipping point when companies turn to a sales compensation product is when the cost of accounting resources to calculate and distribute commissions becomes more expensive than purchasing a software package that can automate it.
Though this is the main justification businesses use for implementing a sales compensation system, these programs offer advantages beyond freeing up time in the accounting department—advantages that are more difficult to attach a dollar value but are nonetheless valuable.
For the sales team
After implementation, sales compensation software should become a one-stop shop for commission information and processes. Most compensation software packages include a sales portal where sales team members can check their payout status and see how they stand in relation to their team. It’s a place to see the incentives they’re earning off a sale and where they are in the payroll process. It also gives them an avenue to file payout disputes that feels (and probably is) more audit-able and official than an unwieldy email chain.
More importantly, salespeople are given access to different reporting dashboards. This shows them their personal metrics trending over time, in reference to personal and company quotas, and in relation to how their team is performing as a whole. Visibility into performance metrics feeds sales teams’ natural competitiveness and holds team members accountable—with little to no effort from management. Members can keep upping their personal best and launch their team past quotas, all while watching their own commissions accumulate.
Compensation is a learning process. Figuring out what motivates a sales team while maximizing profits requires some experimentation and some hard analysis.
Once the incentive program is automated through a sales compensation software, all compensation data will finally be in one place where administrators can more easily dig into it. Reporting portals allow for slicing and dicing of the data and helps highlight where sales teams are underperforming or where profits are trailing. Some programs even have forecasting tools to measure what-if scenarios before trying out a new commission structure.
Then, once a new and improved incentive strategy is hashed out, implementing it is just a matter of adjusting the existing commission formula, and it can be rolled out by location or by sales team to test early effectiveness.
Scaling incentive plans is inevitable as sales forces grow and sales strategies develop. Simple automation of the commission process and relieving your spreadsheet-weary HR staff are the basic and immediate benefits but it’s also an opportunity to sync the goals of the sales team and management. With a transparent incentive program and an optimized compensation strategy, sales teams can sell better.
Of course, not all compensation platforms are created equal. Some will be more intuitive for sales members to log into and use, and some will have more robust reporting capabilities for management. Visit G2 Crowd’s Sales Compensation category page to compare products and see what users are saying about their tools.