Sales compensation management is the most underutilized tool for driving positive sales behaviors, states a report from Optymyze, provider of a sales performance management platform and software. In its report, “The ROI of Sales Compensation Management,” Optymyze lists five points of pain that can be improved by a more effective sales compensation process:
Operations – Efficient operations save time, money and resources; inefficient ones, such as manual processes and ill-suited tools, do the exact opposite. So, it’s surprising to see that many organizations still handle parts of the sales compensation process, such as data management, manually receiving data and approvals over email, merging data from different spreadsheets, and cross-checking data entries. All these tasks require resources and take time to execute. Most importantly, manual processes dramatically increase the possibility of errors in calculation.
Errors and disputes – Incorrect distribution of compensation ranks as the most serious direct cost. Since people don’t, in general, race to report overpayments, they often go unfixed. Underpayments are equally undesirable and expensive, as they lead to dissatisfaction and frequent disputes.
Shadow accounting – Salespeople may become so preoccupied with finding errors in their paychecks and getting them corrected that they lose focus on their core activity — selling.
Revenue and communication – When sales operations and sales management can’t clearly explain the details of the sales compensation plan, salespeople
fail to develop strategies for maximizing earnings. Instead, they continue to embrace techniques that lead to “good enough” outcomes, unaware that a change in behavior would be financially advantageous, and unable to see any real benefit to going through the extra trouble to make one.
Turnover within the sales team – While sales turnover happens for many reasons, the primary one is the sales force’s dissatisfaction with sales compensation. Inaccuracies, delays in payroll distribution, frequent errors and a lack of connection with management’s strategies are all symptoms of a weak sales compensation process. The belief that territories and quotas are unfair and negatively impact earnings also drives high sales turnover.
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