Sales Performance Management: Not Your Parent’s Compensation Calculator
March 25, 2015
Sales Performance Management (SPM) has truly evolved over the last 10+ years from the days of having an on-premise solution that primarily automated the compensation calculation process with basic reporting, to a new dynamic frontier with extended capabilities. Gone are the days of data being pushed from upstream systems, clunky user interfaces automating the comp plan rule logic, and basic compensation statements with drill-through capabilities. We have been ushered through the age of Incentive Compensation Management (ICM) being the buzzword 4 to 5 years ago into an age of where the focus is now on the performance. Now sales compensation administrators and sales personnel are interested and looking for improved ease of use, greater data transparency, and self-service for process automation and modeling of results.
I first started hearing the rumblings from enterprise customers during and after implementations about 8 years ago. They were questioning the licensing and implementation costs for what they felt was an automated calculation engine simply replacing more manual Excel or MS Access based processes. Administrators clearly saw the merits and benefits from migrating the manual, time intensive, and error-strewn processes but the exposure, breadth and depth of the new platforms left them immediately yearning for more.
Once the Sales Compensation Admin team embraced the new current state of less time being focused on manually collecting data into tabs-upon-tabs of spreadsheets, maintaining and running complicated formulas and macros, and parsing out results by sales teams to manually email out, they were asking software vendors for functionality allowing them to put this additional time to productive use with these systems.
Likewise, the Field Sales Team evolved from just being excited about the new platform, to having data with drill-through reporting capabilities and accuracy of the results. Field sales was now expecting improved capabilities to continue moving them up the curve from reactively reviewing results to being three steps ahead of the results to edge out their competition.
The capabilities, which are enabling sales teams, globally, are continuously evolving. Competition and Cloud enabled product vendors to quickly bring to market improvements on the ICM and SPM technology products. There has been new and improved functionality going from just being on a long product road map to rapid reality for end users. There are a number of key aspects that are evolving in the SPM world, making operations and processes more efficient:
- Stand-alone Territory & Quota Management Modules are now being incorporated into systems. While these lack some of the mapping functionality of specialist territory alignment software, they present a broader range of capability. The ability to undertake real-time, online quota setting discussions creates a richer process with more buy-in. This ultimately is enabling companies to improve transparency and reduce the number of pain points. The entire OpenSymmetry TQM framework identifies the current state and leverages best practices so that a future state can be reach and sustained, with the right people, processes, and technology.
- Compensation Plan Modeling and Forecasting can be a disjointed process with lots of iteration as excel versions pile up. SPM software now enables better-informed plan “tweaking” and redesigning using historical sales performance data already in the system and next financial year sales targets. Executive and sales management needs to evaluate various scenarios and be able to do it in a manner that allows for quick turnaround on modeling. Extended redesign processes can be shortened allowing plans to be launched on time and with greater design accuracy. The sales force can now proactively plan instead of receiving data mid-sales cycle..
A savvy sales person is already strategizing which opportunities will return the results required for each measurement period. For example, as the end of the quarter or the month approaches, sales teams are determining where to put their effort in order to obtain or exceed quota and deciding where to spend time and effort to return the greatest payout benefits. The more complex the sales compensation plan the more critical such ‘what if’ scenarios are for an effective salesperson. Technology solutions for ICM/SPM/CRM enable the capabilities to do this in real-time with alignment on evaluating sales forecasting and its impact on incentives, all combined into one view - connecting the cause and effect of various actions to drive or motivate behavior. It is also important to note the expansion capabilities that go beyond just the ICM/SPM/CRM integration. Vendors are also looking into cross-functionality with corporate performance management solutions. This is bridging the gap between sales planning, costs, and execution, so that organizations are able to get a holistic view of their processes and people as it correlates to business growth and driving the right behaviors.
In terms of technological advancements, the use of mobile technology means that data is readily accessible anytime, anyplace allowing for dashboards and reports to be served up to the sales person and sales management. This accessibility allows for easy access to track a team’s performance and provides context on areas to improve and coach, enabling sales performance guidance to get the whole team over the line.
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