What’s the best sales incentive structure to use? What is it that makes sales incentive projects successful, beyond calculating compensation numbers and ensuring payment accuracy? It’s a difficult question to answer. Mark Roberg, HubSpot Chief Revenue Officer (“The Right Way to Use Compensation”), correctly mentions that “the ideal plan is contextual — tailored to both the type of business and the [company’s] stage of growth.”
To identify some best practices common to all types of business, we examined three recent sales compensation projects we’ve done. They were all for companies that run large-scale sales operations - thousands of sales reps or agents, and millions of sales transactions.
- Large Canadian Bank – with over 3,500 mortgage specialists and investment advisors.
- Nationwide - ~15,000 in-house and independent insurance agents.
- A multinational consumer electronics brand (sorry, it cannot be named) – with over 5,000 global payees.
Below are five sales incentive tactics we’ve identified that are worth your consideration. (By the way, this blog post summarizes the content of an ebook called “How 3 Fortune 500 Companies Optimized Sales Compensation”, which you can read here.)
1. Make quicker payments once a sale is completed
Sales reps don’t like to wait for their payment; so the faster you can pay, the better. For example, by streamlining many of the manual tasks associated with variable compensation, the closing of payroll at the Canadian Bank now takes approximately 8 hours and payments are made on a biweekly basis, instead of once a month.
2- Automate manual sales processes
Managing sales incentives often involves time-consuming, error-prone processes like manual data inputs and adjustments. Take quota management. Sales managers often submit spreadsheets with quarter-by-quarter breakdowns, which are then reviewed by hand.
Instead, figures submitted by sales managers can be automatically validated against defined and configurable business rules. Quotas can be defined, for example, at the component level and across various time periods. Instead of working on a single quota spreadsheet at a time, operations analysts can immediately understand how any proposed change impacts system-wide quotas.
3- Improve visibility and transparency
Limited reporting that prevents drill downs and complete insight into sales performance is quite common. At large companies, this is often due to the high volume of data and its distribution among multiple IT systems.
By implementing centralized reporting, sales reps can get daily, on-demand statements covering commissions, bonuses, and fees. For example, the 6,000 sales reps at that large consumer electronics company use their iPhones and iPads to view a breakdown of their monthly and yearly compensation, and to produce projected earnings reports. Managers can analyze real-time team and individual performance data, and compensation analysts can run ad-hoc queries to verify payments and credit splits.
4- Handle compensation disputes faster
When a sales rep at the Canadian Bank had comp plan questions or an exception request, he or she would open a direct inquiry with a compensation analyst. This tedious process kicked off resource-intensive investigations and took a long time to resolve. Worse, management had no reliable insight into the volume or severity of open disputes.
After automating this process, representatives can instantly open a dispute from within their compensation statement with a single click. Administrative overhead has been eliminated, and management can weigh in with approvals and comments, having full visibility into the complete dispute resolution process.
5- Accelerate new compensation plan rollout
Implementing compensation plan changes was so complicated at Nationwide that it could take up to six months to launch a new plan. Mostly, this was due to a complex, disparate network of 10 different compensation systems. By standardizing on NICE SPM, Nationwide is able to introduce new and adjusted variable compensation programs with as little as four weeks of preparation time.