CRM - October 2007 - (Page 41)

SALES COMPENSATION Even indirect sales personnel can benefit if you have the means to properly leverage company knowledge. “Noncommission people need compensation management, too,” says Allison Stamm, research analyst for human capital management with Aberdeen. “As both initiatives grow, they start to come together into a single set of processes.” Other technologies can also play a part—for example, incentive management combined with social networking allows any employee to be a potential contributor to a sales effort, since anyone can provide insight, make introductions, or share specific expertise that the salesperson lacks, and receive a bonus for it. Robert Youngjohns, president and chief executive officer at Callidus Software, a provider of EIM and sales performance management (SPM) software, provides an anecdote that helps illuminate the issue: “Telcos try to measure sales reps on this magical thing called ‘reducing churn,’ but they don’t have a clear definition of what that entails and can’t do it,” he says. “The second prime measure is selling new contracts or phones no matter what—but this increases churn.” A telecom company could spread out the responsibilities by using dedicated customer service reps to mollify at-risk customers and free up salespeople to sell new stuff to people who actually want it. Both would receive commissions for their successes, and if one managed to do the other’s job, he’d get paid for that as well. INSIDER ASSESSMENT Bob Conlin, chief marketing officer at Burlington, Mass.–based Centive, a vendor of software that automates incentive compensation management (ICM), writes about the recent surge in industry analyst reports on the topic of ICM, as well as trends in the industry and companies that have recently implemented automated compensation software. Industry analyst firms at all levels, such as boutique outfits like Ventana Research and SiriusDecisions, as well as major players like Gartner, IDC, and Forrester, have either issued or are in the process of issuing research reports on ICM in 2007. Gartner’s recent “MarketScope for Sales Incentive Compensation Management Software, 2007” estimates the sales compensation management (SCM) software market captured approximately $250 million in revenue worldwide in 2006, and continues to grow “by at least 15 percent year over year.” Joe Galvin, vice president and research director at SiriusDecisions, attributes the increasing interest in SCM to the availability of advancing solutions that provide measurable results. “Sales ICM systems are gaining significant traction in the marketplace,” Galvin says. “Companies are increasingly realizing the direct and measurable impact these systems have on overall performance, due to their ability to provide sales representatives and managers with real-time visibility into sales attainment and performance data.” Although most companies still rely on spreadsheets, companies of all sizes are increasingly turning to on-demand SCM as they hear about the tangible sales performance benefits to be gained, and because of the comparatively low risk associated with deploying on-demand solutions—there is no software to purchase, install, or maintain and no huge up-front license fees requiring capital expense approval. For example, the North American sales force at Draeger Medical, which counts among the Top Three worldwide in the business of acute-care products and solutions, recently began using Centive Compel in place of spreadsheets to automate its SCM processes. Draeger now uses Compel, which was up and running in just 36 business days, to model sales compensation plans, forecast commission costs, and automate day-to-day plan management. The company’s sales representatives and sales management now have secure dashboards that provide real-time visibility into key performance metrics, as well as reporting and executive analytics features to support in-depth analysis of individual and team performance. Draeger’s finance executives also like the new on-demand software, since it supports their financial-compliance initiatives for commission accounting—and because it provides an accurate and secure solution hosted in an environment compliant with SAS 70 Type II, a widely recognized professional audit standard. (“SAS” stands for Statement on Auditing Standards.) BEST PRACTICES At this point, though, one of the smartest things to do about compensation management is simply to get some. “The best practice is to stop using spreadsheets and start to centralize the information,” Boyd says.“The need to align employee behavior with company goals is especially important with sales, because they bring in the money,” Stamm adds. Youngjohns illustrates their point with an example from his own experience. “I once was talking to a car salesman, and shopping for a discount. After several back-and-forth messages, he said,‘I’ll give you that 2-to-3-percent price break if you www.destinationCRM.com fill out the dealership customer satisfaction form and give me straight As.’ This told me his commission goes up more for doing well on his report card than the discount was worth.” It’s not always in the best interests of the company to let their agents make deals like this. Compensation management “lets people and organizations become more nimble,” Stamm says. “If something isn’t working right in the compensation plan, it can be quickly and easily fixed. New initiatives can be added as needed. This gives sales and finance a sandbox for designing the best and most effective compensation plans. It also improves morale; if the plans keep changing, nobody knows how to approach the day or what to sell hardest.” 41 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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