Incentives and Compensation Management Software 2020: Beginner’s Guide

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.

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.

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 need to support is having robust analytics and forecasting feature as it helps the sales team 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 sale 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.

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.

Business problem and goal

You should be aware whether the problem is the current process that you follow is plagued with manual errors, lack of transparency, lack of sales efficiency and motivation to choose a software that is specialized in that specific goal.

Decide the key and must process to be supported

If the business problem is with analytics, forecasting and budgeting at the leadership level then focus on tools stronger at these features.

If the issue is a lack of visibility at the sales manager level then focus on tools that have good dashboards so that the sales managers can be on top of their targets and goals. If sales managers are struggling to engage with their sales team, ensure you pick a software that has strong engagement management features.

If the issue is that the sales rep are complaining of a lack of transparency in their payments, then we need tools that share real-time data with the rep.

Also, certain finance and admin features such as reporting and payment control are also important to keep in mind.

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 are able to export data in the format that is acceptable to your existing tool.