Incentives and Compensation Management Software 2021: Complete Guide

Incentive management gets fairly complex especially in large sales organizations with complex product bundles and plans. Sales management struggles to ensure goals are met and also keep the teams motivated with timely payouts. Traditional methods of using papers or spreadsheets are error-prone and do not help in accurate and timely reporting.

Businesses today are a lot more agile and complex and need an incentive management tool that can keep them nimble, with data ready on their fingertips to course correct the steer at will. These tools also help managers to design and implement plans around incentives and commissions to improve win rates and quota attainment.

Tag cloud above shows the popularity of the business processes implemented by ICM tools, whereas the below three are the most popular ones:

• Incentives and Compensation Management

• Sales Review and Feedback with the sales rep

• Engagement Management with the team

It allows sales managers to create incentive management plans for salespeople, so that they can track their quotas and incentives in real-time, in one place. One can also create a workflow to handle disputes, manage over-rides and automates the compensation process. It forecasts the budget and gives performance reports for the sales managers. Some tools enable territory and quota management by aligning incentives accordingly.

It gives direct visibility into how earnings/incentives are related to performance bringing in transparency to the compensation process. The idea behind these tools is to keep the incentives within the margins and this helps to maximize sales revenue for the organization.

Business problems solved by these tools include

The Existing Process is Plagued with Inefficiencies

Using ICM, one can create automated processes using business-friendly wizards and schedule the processes to run at the right intervals for your organization. Information sharing becomes easy through hierarchies managed by rules and workflows to determine access which provides the ability to email individuals or teams.

Inaccurate Data and Lack of Trust

ICM software allows one to create rules and automatically update data tables, therefore results are consistent and easy to reconcile. Data can be refreshed often and details can be shared so salespeople do not have to keep manually checking on results or calling the Administrator with questions.

Changing Business Priorities and Goals

ICM lets you work in conjunction with HR and the Sales team to tweak plans, quotas, or territories. Together, the team can stay aligned to business objectives. Account Executives and Managers particularly can be on top of their sales targets thanks to dashboards with visualizations for fast feedback and extra motivation.

Reporting, Audit and Managing Risk

By using ICM, not only can one calculate commissions accurately and efficiently, but also get audit capabilities satisfying regulatory and compliance concerns. In addition, with proper design one can be sure that all reporting uses the same information. Consistent, accurate and transparent results reduce the legal risk.

Improve Internal Engagement

To build a successful sales team, one needs to build a motivational and effective incentive scheme. This scheme must be well balanced so as to reward an employee’s performance, and the results obtained, in a fair and proportional way. ICM tools help one achieve this consistently at scale by engaging all the stakeholders through the sales journey. A good ICM tool will greatly help in driving the right behavioral changes in the sales team.

ICM tools are designed to be used by all members of the sales team and each of the stakeholders have different benefits by using the tool as mentioned here:

Sales Leadership

ICM tools help Sales leadership to plan the mix of the products and plans to be sold and create the necessary budgets so as to hit the organization’s goal. Some of the tools have analytics and forecasting abilities to help decide the incentive structure.

Sales Management

Most ICM tools have dashboards to monitor the performance of their sales team and keep them engaged and motivated. These dashboards help managers ensure that they achieve their targets and not overshoot their budgets too.

Sales Representative and Sales Team

Certain ICM tools also have apps that help the team members especially sales rep track their targets, incentives, and payouts. Such apps help the team’s motivation and also reinforce their trust in the system.

Forecasting, Analytics, and Reporting

An important feature that ICM software needs to support is having robust analytics and forecasting features, as it helps the sales teams to be prepared and on top of their targets.

Reporting is also a must, with the ability to create custom reports for the leadership team, finance, and admin teams, who look for different aspects of the current state of the sales engine.

Dashboards and Notifications

Good ICM tools have dashboards which are built specifically for the leadership team, sales rep and sales manager to periodically get real-time status of their performance. Good robust notification and alerts also help keep the team engaged and motivated.

Artificial Intelligence (AI) and Big Data

ICM tools deal with lots of data, which are business critical and with deep insights on the performance of the company. Therefore a lot of intelligence is locked within these tools and the businesses are actively looking for newer technologies such as AI and big data to unlock the secrets in this data.

Though it’s very nascent, the newer breed of ICM tools are coming with deep analytics and AI to predict and forecast more accurate results.

Selecting the right-fit ICM tool for your business needs you to understand the underlying problem plaguing your current system and then choose a tool that has the best features to solve your need. You can also try cuspera.com, where our AI advisor will help you find the right fit based on your requirements.

On-Premise vs Cloud

Cloud variants of ICM tools are popular with organizations. They come with a variety of flexible plans which are suited for organizations of different sizes. Cloud deployments are easy to manage without administration hassles. But some large organizations might still prefer on-premise deployments due to enhanced security and data governance requirements.

Capabilities

The software should support extensive reports and dashboards as it is important for sales managers and leaders. It should provide easy to use tools to create and modify incentive plans.

Integrations

Compensation Management software should integrate with CRM and payroll systems. It is common for Sales Performance Management systems to have compensation modules built into them. If not they should integrate with the organization's SPM tools.

Challenges and what to watch out for

Similarly, if you are using any other analytics or BI tools in the company to generate your analytics and insights, you would need to ensure the ICM tool can either generate the reports in the format that suits you or are able to export data in the format that is acceptable to your existing tool.