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Incentives and Compensation Management Software 2021: Complete Guide

Incentive Compensation Management is a key sales strategic approach to use incentives and commission as motivation tools to make sales reps achieve their business goals. They are incentivized to align their behavior to meet business objectives. This helps to improve the efficiency of the sales team. Large organizations have complex product bundles, mix and pricing structure, so ICM software helps companies to manage this complex process. Learn what is Incentive and Compensation Management, why it is important for sales leaders and how to choose the right ICM software.

Last updated: Apr 14, 2021

Incentives and Compensation Management Software 2021: Complete Guide

What is Sales Incentives and Compensation Management (ICM)?

Incentive and compensation is the strategy that businesses use to increase their sales by motivating their sales team to earn more by aligning themselves to the business objectives.

Incentive is typically the variable part of the compensation and is tuned to motivate the sales team to hit certain milestones to get more payout. The main objectives achieved by a business via incentivizing the sales team are:

  • Improve the efficiency of the sales team.
  • Ensure sales budgets are adhered to while achieving the business goals.

A few of the companies work with only the variable pay, which is also called sales commission, where the payout to the sales rep is a function of sales made.

What are Sales Incentive Management Software?

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.

What are Sales Incentive Management Software?

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.

Why is ICM Important

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.

Nothing boosts your sales team's excitement and energy more quickly and reliably than an incentive. After all, most salespeople are born competitors -- adding a compelling reward to the mix makes them even more enthusiastic.

Dan Tyre

Director, Hubspot

Who uses ICM Tools?

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.

Moving away from manual commission processing, better reporting, better visibility to the field sales, less shadow accounting and most importantly accuracy. Our sales teams have improved their attainments YoY, to bring higher revenue of over 100m


Buddy Peltier

Senior Manager, Compensation at Expedia, Inc.

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.

Enabling Sales reps - Sales reps have more details and information on their commissions being paid. It saves us time in not having to answer tons of questions because they now have the information.


Chinmay S

Manager, IT Finance & HR at World Wide Technology

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.

Makes it easy to use to see the commission amount coming to each individual on a bi weekly basis. Easy to know what needs to be corrected each time to improve ourselves


Jay Redman

Sales Associate at Belk

Key Features of the ICM software

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.

Current versions of the software are a bit light in the reporting and analytics space, requiring a user to have advanced knowledge of Crystal or Webbie reporting. Newer version upcoming hopefully remedies this with more configurable reporting options; allowing the most basic of users to pull data out of the system!


Stephanie P

Sr Compensation, Global Sales & Local Incentives at Ingersoll Rand

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.

A related space the data in ICM tools are having an impact is in a related area of “Sales performance management” (SPM) where incentive, performance, and coaching are tied together using AI and technologies such as language processing and transcription.

The greatest immediate impact today of AI and its best uses lies in helping organizations change the dynamic from one-to-many rewards to highly personal, individualized rewards.



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Buyer’s Guide - Guide to Choose the Right Compensation Management Software

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, where our AI advisor will help you find the right fit based on your requirements.

On-Premise vs Cloud

Buyers are recommended to consider peer reviews and expert opinions that are extensively available on Cuspera before making buying decisions. Cuspera’s AI based engine guides you through the requirement process to help you choose the right software.

Go to Cuspera

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.


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.


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

An important thing to keep in mind is integrations. As most of the customer and deal data are stored in the CRM, ensure you choose a tool that integrates easily with your CRM. Many of these projects get delayed due to poor planning of the integration and data migration efforts.

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.

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27 Incentives and Compensation Management Software