Vital to Our Economic Recovery: How Sales and Marketing Organisations Can Overcome these Eurozone Debt Crisis and New Regulations
These days, any conversation about EU markets tends to be overshadowed by the Eurozone Debt Crisis — with rather gloomy predictions. But at the recent British Excellence in Sales and Marketing Awards (BESMA), held on 28 February in London, UK Prime Minister David Cameron offered this optimistic perspective in his introductory message to attendees*:
“The success of Britain’s businesses is going to be absolutely vital to our economic recovery, and it is the innovation, enterprise and dynamism of our incredible sales and marketing industry that is going to help make this happen. Sales is the frontline of our economic recovery, demonstrating that Britain is very much open for business.”
Sales organisations are indeed on the frontlines of the economy across the UK and Europe, and they have taken a beating in recent years. Government austerity measures have led to dramatic cuts in industry sectors such as healthcare. Other industries, such as financial and insurance markets, are still working out how to comply with new regulations such as the UK’s Retail Distribution Review (RDR). The RDR is part of the UK Financial Service Authority (FSA) consumer protection strategy, and aims to drive structural change throughout the retail investments industry to help establish accountability in the financial advice, products and services that are sold to consumers. The RDR affects firms across the value chain from the product manufacturers, such as insurers and asset managers to the distributors, such as banks and wealth managers.
The RDR focuses on several key aspects of the distribution of both retail investment products and corporate pensions, from status of advice, standards of professionalism, adviser charging and platforms. The changes required by the RDR are likely to have wide reaching impacts across all financial services organisations, as two of the most significant measures include:
- Changes to incentive compensation practices and
- Raising the professional standards of all advisors by setting minimum qualifications for different types of advice
The Balancing Act: Achieving Compliance Without Sacrificing Sales Performance
Managing these changes will likely require significant updates to business and technology operations. For instance, as the rules governing commission change, firms will need highly flexible and transparent compensation processes that can be quickly updated based on regulations, while still driving sales incentives that encourage and reward advisor performance. To attract and retain critical talent and maintain RDR compliance, all organisations will need to:
- Create a tiered incentive compensation system based on levels of individual sales performance
- Ensure that compensation plans can be administered fairly and transparently so sales people can track their incentive payments and minimise disputes
- Maintain well-documented reports of all sales and compensation transactions in case of an independent audit
The Good News: Regulations are not Expected to Hinder EU Sales Force Growth
While new and complex regulations such as RDR may seem to dampen incentive-based sales performance, from our discussions with EU business leaders it appears to be quite the opposite. A “pay for results” mindset is quickly being adopted, and these organisations are looking to optimise their compensation plan design and processes in an effort to grow their organisations and revenues.
Supporting this growth will likely require new investments in sales performance management (SPM) technology and processes to help ensure regulatory compliance, enable transparency and automation and increase sales force motivation through appropriate and reliable compensation payouts.
*From the 2013 BESMA conference overview brochure
Is your company based in the EU? How are you adapting to new regulations and growing your sales force? We’d love to hear from you in the comments below.