SiriusDecisions analyst Joe Galvin accurately observed that salespeople will respond to two things: "what they get paid for and what their manager makes important." What managers make important typically involves process and performance. And in the arsenal of sales performance tools, nothing has more power to steer sales behavior and drive superior sales performance than a strategically designed and well-managed sales compensation plan.
So what does it take to get sales compensation right? You start by designing plans that directly align individual and corporate goals. Then you manage the compensation process by providing transparency and visibility in such a way that your compensation system is viewed as a trusted sales performance tool, rather than an erroneous, back-office commission calculation application.
When your sales representatives have real-time visibility into performance and earnings and trust in the accuracy of the commission calculations, every contract becomes as good as cash. As new contracts come in, reps instantly see what that contract means to them in terms of commission earnings and quota credit. They know how that contract will positively impact their commission check at the end of the month, and they hunger for more. Your compensation plans become your most strategic sales performance management tool to motivate and focus the sales team to meet and exceed sales targets.
‘Sales representatives were constantly disputing their commission statements.’
Best practice sales compensation management systems provide continuous feedback on individual performance and earnings and a direct link between behavior and rewards. They also equip sales managers with the tools to measure and benchmark performance and replicate success throughout the sales organization. Peter Drucker is famously quoted as saying, "You can only manage what you can measure." Unfortunately, many companies are still struggling to measure—and manage—sales performance because they continue to rely on spreadsheet-based compensation and sales performance systems. These systems provide managers with little information until after the close of each period—when it is too late to "manage" performance in time to make a difference.
No visibility
Savvy sale executives are turning to on-demand sales compensation systems to resolve this performance issue. One Chicago-based technology company, for example, previously managed sales compensation with a series of spreadsheets and a lot of manual intervention. Sales representatives were constantly disputing their commission statements—which came to them four weeks after the close of each quarter—and they had no visibility into their sales performance until the commission reports were delivered. Without the ability to track progress, reps were never sure where exactly they stood in attainment and earnings or which deals to focus on to close the gap.
Today, that same company has automated its sales compensation system with an on-demand solution that provides secure, continuous web-based access to sales earnings and performance data. In addition, through an automated integration with their CRM system, reps are able to identify which opportunities in their pipeline they need to close to meet their performance targets. Sales managers can see how each of their subordinates are performing, giving them the ability to focus their attention appropriately. As a result, sales performance—and sales morale—has improved measurably in just the first three months following deployment.
Real-time visibility into key performance and earnings indicators is essential in helping companies leverage their sales compensation investments strategically to drive sales performance and navigate to business success. By providing sales management and individual sales representatives with real-time access to accurate sales compensation and performance data, you effectively empower your sales organization. Managers have the information they need to better manage, coach and motivate their subordinates. Sales reps can eliminate performance inhibiting activities like shadow accounting and disputing commission calculations, and instead focus on closing their next deal. For reps, real-time visibility into commission earnings essentially turns every contract into cash—instantly and reliably. And this has a tremendous motivational power.
Performance-tuned sales compensation systems help sales managers and executives to benchmark sales performance and determine what practices, tools, skill sets and behaviors lead to meeting and exceeding sales targets. Executive analytics tools, such as rankings, comparison graphs and attainment models, help managers track team performance and identify leading and lagging sales producers over time. Armed with tools and data, managers are in a position to continuously improve sales performance and ensure that individual and company goals remain aligned.
Ultimately, you want predictability in sales performance and revenue attainment. With an automated on-demand sales compensation system in place—one that provides real-time performance visibility, direct connection between results and rewards and the tools to benchmark and replicate leading performance—companies are better equipped to navigate to business success. The ability to turn every contract into cash motivates the sales team and keeps reps focused on achieving and exceeding quota, and it provides managers with the tools they need to deliver predictable, repeatable results.