5 Tips to Focus on while Buying a Sales Incentives Solution

Introduction

Sales Incentives are key to motivating reps and driving revenue. However, it is difficult to strike a balance between setting them up effectively and choosing the right solution. More often than not, the more you veer away from the latter one, the more it leads to a drop in the effectiveness of an incentive plan. A good incentive plan is only effective on paper if it's not implemented properly. Below are a few tips to consider when buying a good IC solution.

Accuracy

As per Gartner, incentives/commissions are overpaid by around 8% on average. This can be a combination of complex incentive processes and the inability of solutions to accurately calculate them. If you are a 100-person sales team paying $20k per year in incentives, that totals $160k in overpayments. This is a huge amount, and organizations tend to ignore the math and end up spending more while trying to save on solutions. Keep in mind that the point here is not about choosing a costly solution, it is about putting the math together and understanding how much damage you are potentially exposed to. It is of utmost importance for organizations to focus on the accuracy of payouts; it is not always an overpayment; it can be an underpayment, which may hurt them even more, as it can lead to employee attrition.

Integration

One of the key reasons to buy a solution is to reduce the team's manual effort. A solution should be intelligent and flexible enough to integrate with upstream and downstream CRMs such as SAP, Salesforce, Workday, Microsoft Dynamics, and a range of other tools, ensuring sales operations, finance, and HR departments don't become bottlenecks because they can't feed information into the system. Moreover, manual uploads introduce the possibility of errors, which may lead to incorrect incentive calculations, delays in calculating incentives, and potential delays in crediting them to sales representatives’ accounts.

User Experience

Incentive solutions have evolved from being commission calculation engines to dispute resolution, quota setting and management, qualitative MBO management, reporting systems, and analytical dashboards. Layers of complexity have increased multi-fold, and there is a clear need to connect the experience with a clear customer journey. At no point would your customer/end-user feel disconnected, and they would eventually relinquish the thought of ever logging in again. It is the WOW factor that brings them back and keeps them hooked to the solution. As an organization, you should choose a solution that is easy to use yet capable of meeting your core requirements.

Ease of Customization

Incentive programs are not designed on a piece of paper or on a whiteboard in a room. There is extensive field research going on behind it. In the current situation, research outcomes are bound to vary quarter over quarter, and those need to be reflected in your sales incentive plan. Failure to do so may result in sales reps not hitting their quotas, which may eventually lead to dissatisfaction and higher attrition. A good solution needs to be nimble, with a minimal change-management turnaround time and the ability to implement the most complex incentive-plan changes.

Analytical ability

As an organization, are we paying for performance? This is a very important question that is often not asked or thought about. Organizations live in a delusion about their incentive plans, assuming they are the best. As organizations grow, it becomes increasingly difficult to monitor and be on top of these metrics. There are simple ways to do it, wherein incentive payments should be evaluated at the 10th and 90th percentiles and compared against the target payout amount. There are a few other examples like these where organizations should be aware of basic information, such as the top and bottom performers, the quality of quotas, etc. As simple or complex as it may sound, it is not done. Being on top of these metrics helps you evaluate and assess your overall Incentive plan and devise a strategy to update it to be in favour of the field force.

These are some other things to consider. The above checklist is not necessarily the perfect one out there. There are other criteria too that would be more organization-dependent; something like information security and multi-country scalability. However, these are good starting points if you are looking to start up and move away from legacy or spreadsheet-based solutions.