Are you someone who thinks that humans are rational? What about Sales reps? The fact is that not everything we do is either smart or rational. In fact, understanding the patterns behind why we often make irrational decisions sets the stage for deeper understanding of human decisions and can yield some very surprising results.
Sales Performance Management Best Practices Blog
We are happy to share with you the following 'guest post' contributed by Clinton Gott & Ted Briggs of Better Sales Comp Consultants focused on recent research they conducted focused on sales force turnover. In addition to some solid findings related to turnover, there are some tremendous best practices the pass along in the form of 'turnover counter moves' that may sound simple, but can be very hard to do well. Enjoy ...
World@Work recently posted an interesting interview that touched on an often overlooked aspect of the ‘Sales Performance Management’ analytics discussion which focuses on sales force feedback.
We came across a Sales Analytics presentation by the sales consulting firm AGI a while back which highlights many reasons why it is so important to consider any investmnts in improving sales performance. Simply stated, for investments in productivity tools such as Sales Commissions Software - The payback is astronomical. Below are six data points that jumped out at us from this presentation which highlight the importance of continuous focus on improving sales performance and the payoff for those who get it right.
Celent recently conducted a survey involving 11 major insurance carries managing thousands of sales reps/agents/producers seeking to understand the state of automation for processes such as distribution management and sales commissions & incentive compensation. This type of research is valuable to sales business leaders in all industries as the dynamics and insights we can glean for the experiences of those who compete tooth & nail for every dollar in this mature industry provide lessons for all.
After reviewing the results of this survey I tried to distill everything down to a few insightful ‘nuggets’ tovshare.
- One very surprising nugget pulled from the survey is the fact that executives at these companies though that it is more important that their sales compensation be accurate than to be effective. Said another way, it is more important to calculate commissions and incentive compensation in a timely and accurate manner than to have plan designs which are completely optimized to driving desired behaviors.
- Take away lesson; focus on putting in place the infrastructure you need to scale your process and ensure the timeliness and accuracy of your process then once this is established, turn your focus to fine-tuning your sales compensation incentive plans.
- In a mature industry like insurance, approximately 70% of the carriers surveyed still rely on spreadsheets & custom build ‘homegrown’ (read: inflexible) software as the backbone of the commissions system. The author speculates that this technology situation is driving the views on the importance of calculations accuracy. As discussed her many times before, spreadsheets have an inherent 3-7% error rate simply due to human error that manual systems often exacerbate.
- Take away lesson; delays in migrating from spreadsheets and homegrown solutions to sales compensation solution (like NetCommissions ) will only prolong the pain of a slow and inaccurate process.
- A significant hurdle for 40% of the survey respondents is fragmented data and disparate technologies used to administer and assimilate this data. This results in inefficiencies as administrators have to put in place imperfect manual work arounds to patch these systems together as best they can.
- Take away lesson: an important aspect of scalable infrastructure mentioned in the first bullet is not only improving calculation accuracy, but also collapsing the cycle time and improving the quality of the data management process involved with sales commissions.
Does any of this sound familiar? If so, not to worry, you’re not alone and others in a significant industry like financial services are struggling with many of the same challenges we’ve heard across industries.
How to meet these challenges?
- The use of sales compensation software (such as NetCommissions) seems to be correlated with fewer problems in managing the sales compensation process.
Reference: Source: Celent, Strategic Issues in Distribution Management Survey April 2015
Simplicity is a phrase that comes up often when discussing sales compensation. Phrases like "Plans need to be simple so they can be understood clearly", "keep the measures to less than three or four so it does not get too complicated" etc. are common for a reason. It is hard to focus on and do many things well. This philosophy transcends just talk of plan design and should impact your view your whole sales comp process. Execution of the entire process has to be as important as the elegance of a well designed sales compensation plan. To execute, it helps to narrow your focus to just a few items and do them well.
Improved Sales Performance Reporting (New Years Resolution #1) is a vital element of your Sales Performance communication strategy, but it is just one element of a broader effort. When you are dealing with a sales force that is spread out geographically, the quality of forethought that you put into your communication strategy can be the difference between success and failure.
Topics: Sales Comp Plan Fundamentals, EVP/Sales Leader, Sales Performance Reporting, Communication/Reporting, CTO, CFO/Finance Leader, Sales Compensation Professional, CEO, Human Resources, Sales Operations
With New years Resolution #1 aimed at improving the clarity with which you report and communicate sales performance to your sales and executive teams, it makes sense to be sure that the results and data which we are communicating are as accurate as possible.