Research First Look: Incentive Compensation and Sales Performance Reporting Practices: Webinar Recap
On September 4, Robert Blohm, Senior Vice President of Sales and Alliances at OpenSymmetry, and Bob Kelly, chairman of the Sales Management Association (SMA), discussed the latest findings on research conducted on incentive compensation and sales performance reporting practices, across a wide variety of industries. This research identified sales management’s priorities and challenges and surveyed emerging trends and best practice approaches for sales compensation.
In this blog, we will recap the top findings from the survey:
1. Reports may be accurate but not accessible.
Out of survey participants, seven in ten firms had reports that were sufficiently accurate, but surprisingly, firms found it more difficult to address issues related to report timeliness, distribution, and access than accuracy.
What’s the impact?
When reports are timely and easily accessible, more sellers make quota. Without the necessary transparency, sales performance is hindered and overall productivity decreases.
What makes report distribution difficult for so many firms?
When companies initially try to set up basic reports, the focus is usually accuracy, though reports may be tied to when payroll is produced. However, without having the future state of their reports in mind, companies are challenged in adopting new capabilities to serve better functionality for sales team members as time goes on.
2. Incentive compensation and performance reporting are not well-integrated.
One finding is that 64% of survey respondents reported that sales ops is responsible for sales reporting in their organization, but only 40% reported that sales ops is responsible for incentive compensation reporting. Incentive reporting was found to be more likely handled by non-sales departments including HR and finance. Because of this, incentive compensation and performance reporting are often not integrated into the same reporting.
What’s the impact?
Pay data and performance data are often not presented in a way that is most helpful for payees to project pay based on performance, since incentive compensation and performance reporting are not well-integrated. Additionally, the survey found that few firms show payees the earnings impact of their sales efforts – only 45% of companies reporting offering pipeline-based payee earnings forecasts. However, companies that are able to provide earnings projections based on pipeline and transaction projections reported 8% higher sales productivity than those who don’t.
How do firms better integrate incentive compensation and performance reporting?
According to Rob Blohm, it is important to put more thought into business requirements before deploying applications for performance reporting so that sales performance and incentive compensation data reside in the same place, ensuring higher visibility for users.
3. Firms desire easy-to-understand design in sales performance reporting – but most miss the mark.
The survey found that companies prioritize usability as the most important factor for sales performance reporting – but they often miss the mark. An in-webinar poll revealed that the factors that are most important to their organization’s efforts to report on sales performance and incentive earnings included easy to understand design (59%) and drill-through detail (24%), which both ranked as much more important than self-service access (10%), “What-if” scenario modeling (7%), and user ability to customize reports (0%).
This in-webinar poll echoed the survey results. According to the survey results, 91% of respondents reported that easy to understand design was the most important factor for sales performance reporting. However, only 52% of firms reported that they were effective at this, which reveals a large gap between what they desire and what they accomplish.
What’s the impact?
Without easy to understand design, users lack the knowledge needed for better performance, and sales teams lose productivity.
What factors compromise reporting efforts in most firms?
Apart from limitations in technology, the biggest factor compromising reporting efforts include a narrow scope of requirements upon first implementing sales performance reporting tools. In the beginning, the focus is on compensation plan design components rather than reporting, and with multiple objectives to satisfy, reporting gets undervalued.
4. Getting proper reporting capabilities right yields performance advantages.
According to the survey, firms effective in the following reporting capabilities are more productive than those that are not, measured by percentage change in firm sales objective achievement:’
- Drill-through detail (+22%)
- Self-service on-demand access (+21%)
- Mobile device access (+19%)
Additionally, these four capabilities correlate with salesperson success, as measured by percentage change in salespeople achieving individual quota:
- Drill through detail (+17%)
- Self-service on demand access (+10%)
- Customized to individuals (+10%)
- “What if” scenario modeling (+7%)
What’s the impact?
By focusing on improving these reporting capabilities, firms are able to increase productivity and revenue attainment.
Do firms underestimate the advantages of high-quality reporting?
According to Rob Blohm, firms often fall into two categories: 1. Considering sales compensation as a mere cost of doing business, or 2. Considering sales performance management programs as drivers of revenue and sales performance. Companies that fall into the second category consider high-quality reporting as an investment in opportunities to grow.
5. For success, firms need to improve on reporting on reporting.
As firms invest in sales compensation reporting, they may value many inputs, but effectiveness in evaluating metrics is varied. Measuring payout accuracy is the most effective means to report on reporting (71% of respondents) – and measuring sales territory potential is the least effective (34% of respondents).
Three metrics were voted the most important and least accurately measured of all sales performance metrics: salesperson conduct risk, quota attainment distributions, and incentive payouts vs. budget.
What’s the impact?
The survey found that the highest priority improvement areas for reporting on reporting are:
- Salesperson conduct risk: companies that can accurately report on risky conduct of salespeople are 8% more productive than other companies and report a 27% increase of salespeople achieving quota.
- Quota attainment distributions: companies that can effectively report on quota attainment distributions and identify irregular payouts are 8% more productive than other companies and report a 16% increase of salespeople achieving quota.
- Incentive payouts vs. budget: companies that can effectively report on incentive payouts against budget are 26% more productive then companies that cannot and report a 21% increase of salespeople achieving quota.
In conclusion, there are a variety of sales performance and incentive compensation reporting that impact salesforce effectiveness in terms of productivity and quota attainment. Report accessibility and integrated reports are just two pieces of the puzzle – and companies would do well to design initial reporting functionalities around the future state of their reporting.
For more statistics from the full incentive compensation and sales performance reporting study results, download the free report.