The Alexander group recently conducted a survey of sales compensation trends with 135 sales organizations. The survey was conducted at the end of 2017 with expectations for 2018 an integral part of the exercise. Now at the mid-way point in 2018, an interesting question is not only how your sales organization matched up with the survey groups results & expectations, but now with six months in the books, what, if anything, has changed and why ? We take a look at several takeaways highlighted by the survey as ask a few questions to consider as you take stock of 2018 at the half way mark.
Sales Performance Management Best Practices Blog
When growing your business, setting up and managing compensation plans for sales reps can be a daunting task. The temptation to add too much complexity too fast can sacrifice the strategic benefit of simplicity and clarity. The goal at the beginning should be to start with a solid basic plan structure that can evolve and adapt as your sales team grows and specializes.
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.
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 ...
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
Those of us who sell, or are involved with administering the sales commission plans of, service based products such as SaaS software and/or Professional Services know them to be, well, unique (to say the least). Sales compensation plans for these product types always seem to vary from company to company and never seem to be as easy to manage as they should be.
The linkage between your sales comp plans and administering them in a world class fashion is critical to successfully transforming sales compensation into a competitive weapon. The following snapshot walks us through the basics of how to address several fundamental questions related to plan design that you should be thinking about every time you review your plans and their design:
This is part of a series of blog posts related to helping build an understanding of sales compensation plans and some of the mechanics that go into building a great plan that takes full advatage of your Sales Performance Management software. Our goal here is to break this down into a series of bite sized topics that are easily digestible. The topic today is an advanced one (more sales compensation 201 than 101 level) related to Performance Periods.
This is the first in a series of blog posts related to helping build an understanding of sales compensation plans and some of the mechanics that go into building a great plan. Our goal here is to break this down into a series of bite sized topics that are easily digestible.