Is Your Compensation Program Missing the SPM Boat?

Aug 28, 2018
3 min read
Sales success requires more than just incentive compensation management (ICM). Learn why sales performance management (SPM) is key to drive performance.

When Xactly was founded more than 13 years ago, the company had a simple vision to democratize incentive compensation management and put powerful calculation tools in the hands of every company. At that time, companies were relying on spreadsheets to manage compensation - in some extreme cases reaching upwards of 50,000 or more tabs. And somewhere lurking deep within one of those sheets was all too often an error that would throw the entire compensation program out of balance.

Ultimately that one error created many issues–reps being overpaid, underpaid, or not paid at all. To say this wreaked havoc on sales morale and finance numbers would be a massive understatement. Errors aside, the compensation planning of these organizations was also stifled by what was possible to calculate manually, not what would give their organization the greatest opportunity and sales potential.

Fast-forward 13 years and it’s hard to believe that many companies are still living in this paradigm. An estimated 85 percent of organizations are still using spreadsheets to manage incentive compensation, sacrificing rep visibility and commission payment accuracy, as well as the ability to comply with complex new regulations, such as ASC 606 (IFRS 15).

Traditionally, when company leaders discussed sales performance management (SPM) they have used it interchangeably with incentive compensation management (ICM). However, while the two are  interlinked, they have come to mean very different things. ICM is just a piece of the larger SPM value chain that now encompasses everything from sales territory design, to artificial-intelligence driven decision making, to quota and compensation planning.

By moving beyond an ICM mindset alone and embracing a larger, connected, data-driven SPM strategy you will have the power to supercharge sales throughout your organization with:

Intelligent Planning

No place does the old adage, “garbage in, garbage out” ring truer than in sales planning. One often missed opportunity in the planning equation is optimizing territory planning. By better understanding and weighing your total addressable market per area, you can optimize territories, set fairer quotas for salespeople, and appropriately align incentive compensation programs to drive revenue growth. Happier reps, better insight into your sales potential...can you afford not to rethink your approach to planning?

Connected Insights

All too often, we still see compensation operating in a silo. In a connected system, compensation data is intermingled with CRM, ERP, CPQ, payroll information – giving you complete transparency into your sales ecosystem, from the first customer touchpoint through to the final compensation payment. This level of integrated insight is invaluable in understanding who your most profitable customers are and which are prime for additional upsell and cross-sell opportunities. The opportunity is immense…so why continue to operate with your compensation in a box?

Process Transformation

In today’s complex selling environment, your compensation program is critical to more than just calculating comp and paying your reps. Nowhere has this been more apparent than with the new ASC 606 (IFRS 15) revenue recognition standards that went into effect in December 2017 for public companies and goes into effect in December 2018 for private companies. To weather this regulation storm smoothly, you need an end-to-end solution to capture, track, record, and report commission data at the level needed for capitalizing commission expenses in accordance with the new guidelines. Are you confident your current process can keep you compliant?

Sales Optimization

There is no bigger transformation happening in the market than the data revolution. Companies are continually seeking ways to better understand what is driving success (or failure) in their business and how to gain a competitive advantage. If you are not one of those companies, your already falling behind the competition. Advanced SPM technologies apply predictive intelligence capabilities to identify potential problem areas before they become full-blown disasters.

For example, modern SPM solutions, such as Xactly Insights, can analyze sales rep behaviors and attrition patterns to predict who may be in danger of leaving by looking for signals such as their historical sales performance, a sudden drop off in deals, etc. When a potential red flag is identified, sales leaders will receive a clear, proactive “warning sign” allowing them to take needed action quickly.

Given the estimated average cost of replacing a sales rep is $115,000, and it can take a new rep up to six months to reach their full quota potential, this level of insight can be the critical link between hitting your numbers or falling short. Are you confident your best reps are not headed for the door?

Compensation management has come a long way from calculation alone. With the addition of intelligent  SPM technologies, you can take your incentive programs from simply calculating and paying comp to being a driver of performance. Can you afford to wait? Talk to a rep and schedule a personalized demo today.

  • Analytics and Technology
  • Sales Performance Management
Ron Rasmussen
Ron Rasmussen
Chief Technology Officer

Ron Rasmussen brings more than two decades experience in technology, including work with geo-location, social CRM software, and SaaS and on-premise products.