CRM - October 2007 - (Page 42)

SALES COMPENSATION It’s also important to consider breaking out the data used for SCM into other parts of sales management. “Few companies have a system in place to tell them if they’re spending salary expense efficiently,” Youngjohns says. “How do I incent my sales team? How do I wrap analytics around it? The real value is for [companies that are] spending hundreds of millions of dollars on sales compensation but don’t have any insight into the cause and effect—spending $1 on compensation generates ‘X’ dollars’ ROI in sales.” Pombriant also believes analytics and data modeling are among the best practices for SCM.“Modeling feeds analytics,” Pombriant says. “‘Show me deals valued at greater than $100,000, which are likely to close this month, by territory’ isn’t a question you can get an answer to without good analytics.” Meanwhile, he adds, “Incentive management lets you see what each seller is doing, so you can predict your pipeline, so you can make accurate forecasts, which in turn become projections for next year that you can track and refine. It’s a self-feeding system.” Sales compensation management is more than just a smart thing for your internal sales team, though; it’s a weapon and a potential lifesaver for your entire corporation. “Among the companies with the most need for SCM are those with a large external sales force of brokers, agents, or dealers, spending large relative or absolute money on sales compensation,” Youngjohns says. “In the insurance business, for example, the ability to pay brokers accurately and on time is a huge competitive advantage. If you mess up your direct sales, they won’t be motivated, but if you mess up your dealers, they’ll sell somebody else’s product.” Best-in-Class: Current/Planned Investment in Sales Process Enablers 100% Currently Leverage Plan to Leverage 80% 14% 60% 21% 29% 31% 21% 19% 33% 40% 60% 20% 52% 50% 50% 50% 50% 50% 0% Incentive Compensation Management Order/Quote Generation Contact Management Software Customer Relationship Management Salesforce Automation Product Configuration Forecast Management Best-in-Class: Current/Planned Investment in Managing Sales Data 100% Currently Leverage Plan to Leverage 80% 60% 43% 36% 23% 31% 40% 33% 20% 36% 36% 45% 21% Forum for Sales Representatives to Share Insights/Lessons Sales Knowledge Management 17% Mobile Access to Sales Information 0% Sales Analytics Competitive/ Market/Sales Intelligence Tools Source: Aberdeen Group, “Sales Effectiveness: Getting Sales Back to Selling,” July 2007 DEVELOPMENTS Compensation management is important enough on its own, but as with other aspects of enterprise software, it’s not necessarily going to remain standalone. The sales application field is already showing signs of convergence, and the trend is toward combining SFA, incentive management, social networking, contract and proposal automation, 42 and other aspects into a unified sales management suite. Gartner cites increasing interest “in sales performance management (SPM), which complements sales ICM by integrating functions for planning, designing, allocating, and managing sales territories, quotas, and compensation plans,” as a prevailing trend through the next two years. “Best-of-breed vendors will be at the vanguard in generating interest in this market, expanding functionality and offering solutions through alternate delivery models.” According to Boyd, Aberdeen’s view on the growth and confluence of salesfocused applications is similar. “There is serious convergence between sales compensation management, sales effectiveness management, and human capital management,” he says. A July 2007 Aberdeen report (see charts, above) showed where the companies identified as best-in-class will be spending their sales management budgets. It’s an easy jump to assume that a company that can provide several or all of these functions—and do them well— will have a highly compelling offering for sales organizations. Youngjohns, whose company is aiming to drive the convergence of compensation and other aspects into sales effectiveness, certainly agrees. “Sales compensation management is part of a broader process—sales performance management—focused on what’s happening among agents and territories to try to understand what palette I have available,” he says. Still, he adds,“There’s a huge potential for making mistakes even with the proper tools in place. Tools don’t stop people from failing to think through their business processes.” However, a sensible compensation plan will prevent that, so don’t be afraid to ask for help. Contact Senior Editor Marshall Lager at mlager@destinationCRMcom. www.destinationCRM.com 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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