Seventy-nine percent of companies say that increasing sales productivity is a strategy they’re using to reach growth targets in 2019, but actually meeting this goal may be a challenge as only 35 percent of average-performing sales reps’ time actually goes to selling. These average-performing reps spend nearly five weeks a year, or 10 percent of their time, checking their commission reports, trying to understand them. There’s a simple solution that will help streamline this issue and create more time for sales reps to spend actually selling the product or service: implement a sales and compensation system that’s transparent and easier to understand.
While that concept may seem simple in theory, for businesses operating at an enterprise level, it means creating a process that applies to thousands of employees around the world. With factors such as state and country legislature and compliance laws, as well as the difference in basic cost of living expenses, it can be challenging to find a solution that works globally, or even nationally. This is where technology comes in. Instead of spending weeks attempting to understand how many more sales an associate needs to meet his or her quota, advanced technology can deconstruct the process to deliver clear goals and real-time updates, as well as implement incentive programs.
Sales incentives are meant to attract and retain top talent, keeping them engaged in their work. With Gallup estimating that the cost of poor management and lost productivity from employees who are not engaged is between $960 billion and $1.2 trillion per year, it’s essential that organizations implement methods to keep their employees engaged if they want to increase their bottom lines.
Let’s take a look at three ways that technology can help streamline your company’s SPM strategy and meet your goals.
Uncovering Data Insights
SPM systems have significant potential to make selling more substantive to an organization through data analytics and insights. In fact, according to a recent study by Aberdeen, companies that used SPM technology improved their profit margins at an 88 percent greater rate year-over-year. These SPM analytics can provide sales reps with more time for actively selling by providing insights that would typically take significant time to uncover and understand. For example, a sales rep may be serving two separate channels within an industry, and managing this manually with spreadsheets not only takes time, but there’s also a great likelihood of human error. SPM technology can provide a multichannel solution that creates real-time accurate reports for the sales reps, clearing the time and potential for mistakes. The advantages SPM strategies can provide for sales teams are vast; giving reps clear direction, driving more profitable sales results, pinpointing sales funnel issues, and automating tasks are just a few.
Artificial intelligence and machine learning are particularly useful in analytics for SPM strategy, as the program can recognize patterns, better predict performance, and allow compensation managers to adjust sales compensation models to impact performance. In a similar vein, machine learning can optimize quota-setting by analyzing existing revenue and quota data to create more realistic quotas that align with company goals. Since AI-driven models are derived from historical data, current revenues and desired thresholds, the models are able to spread the quotas more evenly through the year, creating a more accurate picture for sales managers and associates. When quotas are done well, sales people are happier, and therefore more engaged, which creates a more productive and effective sales team.
Transparency in sales reporting is often undervalued, even though a lack of it may lead to less engagement among employees, as well as confusion in their pay and commission structure. Lack of transparency can also lead to inaccuracy within a company’s compensation calculations. Integrating transparency into SPM reporting creates trust among sales reps, managers, and compensation administrators by defining goals and metrics along with a compensation structure that makes sense to all parties.
For companies that leverage partners, dealers, and distributors to augment their sales teams, a streamlined SPM solution can make it easier to manage multiple channels by creating full transparency into results and more accurate payment details. Real-time reports and incentives provide another level of transparency and reduce admin costs, improving relationships across all channels. This transparency also plays a big role in maintaining employee engagement and satisfaction.
Retaining Top Talent
The annual turnover among salespeople in the U.S. is up to 27 percent, nearly double the rate of the overall workforce. Employees, particularly in a commission-based industry like sales, need to understand that they’re being fairly compensated for their work. Through SPM technology, companies can produce the easily understandable goals, quotas, and compensation plans that sales reps want and need to understand to stay motivated. Additionally, using SPM technology to reduce the administrative tasks involved in selling, such as budgeting and forecasting, allowing reps more time to make more sales, thereby bringing in a higher commission.
Personalized incentive programs are another advantage SPM technology can provide for sales teams. Understanding your employees and tailoring their rewards to their needs is a surefire way to keep them more engaged. SPM technology can, for example, analyze a rep based on her age, role, and location, and compare those details with external benchmarks and data to create a compensation model that will provide the best motivation for that employee.
As sales continues to evolve, technology needs to advance accordingly, providing easier methods for sales reps and managers and creating a system that allows companies to fully leverage data analytics, provide transparency, scale across states or countries, and retain top talent. With this in mind, what’s next for your company’s SPM strategy?
Mike DeLeonardis is the president of North America at beqom, a cloud-based total compensation and performance management solution. Mike has 20 years of experience managing enterprise cloud software and service businesses.