CRM - October 2007 - (Page 40)

SALES COMPENSATION for sales personnel (internal and external), and track and report on results and performance-based payments.” These generally include “tools to model and analyze compensation strategies for influencing selling behaviors.” In short, SCM applications let you plan, execute, and track payout schemata for your salespeople. You might think that all of this is already being taken care of by sales managers, the finance department, or some other people with insight into your accounting system. And you’d be right, in a way. But these people often must contend with complex product lists, requiring equally complex compensation schedules, with nothing more than a spreadsheet to manage it all. Complicating matters further is the other group that tracks these numbers: the salespeople themselves. It’s called shadow accounting, and refers to the tracking of performance and expected pay separate from the company’s system. It’s another spreadsheet, another set of potential conflicts, and a lot of otherwise productive time spent not selling. But because of the current state of SCM in most companies, it’s a necessary evil; people whose pay varies widely based on the number of deals they close are naturally going to want to know how much they can expect to earn in the next pay period, month, or quarter. weekends to do it right. In the front office, salespeople spend up to two days [each month] on shadow accounting. And everybody has a different spreadsheet to tally sales, bonuses, and SPIFs,” he says, referring to sales performance incentive funds. Having multiple versions of the truth is never ideal, but the complexities of compensation and bonus plans generally mean that each party is likely to have different results—and those discrepancies must be reconciled. Pombriant says that spreadsheets and other disjointed, offline tracking methods create compensation bottlenecks. “With complex payout schemes, accounting can find itself running one special spreadsheet per person, which doesn’t necessarily interact with the larger picture. Managers want to incent the proper sales behavior, but lack the database to back it up.” Incenting proper sales behavior is a critical factor for businesses. The compensation system is one sure way for salespeople to know what the company wants them to focus on; compensation programs also motivate them to make their numbers. “The typical buying centers (such as sales or finance) are concerned with improving processes to define and track rewards for sales performance, specifically commissions and bonuses, as well as incentives for promotions,” writes Michael Dunne, Gartner research vice president and author of the MarketScope report. “Sales ICM applications should help organizations gain efficiencies, insights, and versatility in creating, deploying, and administering compensation plans meant to guide and motivate direct and indirect sales personnel.” Extending sales resources throughout the company is an emerging best practice, and there’s some evidence that the industry is beginning to take notice (see sidebar, “The Payoff Looms for Paying Off”). But the benefits of SCM in the sales department are actually twofold.“There are sales process enablers—things managers can do to make the workflow go smoothly in the department—and individual enablers, which make each worker more efficient,” Aberdeen’s Boyd says. “SCM hits both.” www.destinationCRM.com TIME’S A-WASTIN’ “Salespeople can spend time either selling or not selling,” says Andrew Boyd, senior vice president and research director for CRM and customer experience management with Aberdeen Group. “If they’re not selling, what are they doing? We’ve picked up that a lot of their time is spent shadow-accounting. Reconciling multiple spreadsheets among the sellers, the managers, and the finance department is a huge task that eats up valuable time and resources.” “Incentive management is a backoffice issue with important front-office ramifications,” says Denis Pombriant, founder and managing principal of Beagle Research Group. “On the back end, managers and finance spend lots of time and effort trying to set up and tally compensation plans, working nights and THE PAYOFF LOOMS FOR PAYING OFF Gartner estimates that only 5 percent of sales organizations have deployed sales compensation management, but the market is poised for considerable growth. Some of the key factors listed in the report include: ■ ■ ■ ■ ■ ■ ■ Low market penetration, with most organizations still employing Excel or home-built solutions Large enterprises migrating from inflexible, unmanageable custom-built solutions or upgrading older prepackaged application installations A need to improve compensation support for complex selling models, team selling, and partner channels, particularly plan creation and administration, as well as reporting for sharing commission details A desire to improve governance of outlays for leveraged resources (particularly when commission costs exceed the equivalent of 5 percent of revenue) Greater spending in key vertical industries, such as insurance, communications, and high tech Increasing interest in the software-as-a-service delivery model, which has made solutions appear more accessible to a broader audience, thereby increasing deal flow Demonstrated value of systems in producing operational efficiencies (reduce errors by more than 90 percent, and reduce administrative and technology staffing requirements by more than 50 percent) Source: Gartner, “MarketScope for Sales Incentive Compensation Management Software, 2007” 40 CUSTOMER RELATIONSHIP MANAGEMENT | OCTOBER 2007 http://www.destinationCRM.com

Table of Contents Feed for the Digital Edition of CRM - October 2007

Contents Front Office Reality Check Customer Centricity Coupons Without the Clipping Something Special in the Air Oracle’s Name Game Market Focus: Sports & Entertainment: CRM Scores for Sports Franchises Statistically Speaking The Pulse Required Reading Are We There Yet? Help Them Help Themselves The Chain Gang Pay Day OutClick Media Gets a Second Opinion Best Kiteboarding Makes a Splash with NetSuite True-Blue Service Documentation Secret of My Success The Tipping Point Re:Tooling Pint of View

CRM - October 2007

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