3 min read

Motivating the right behavior with incentive compensation

Hassan Mahmood

Managing Director

In part four of Anaplan’s five-part webinar series with the Sales Management Association, Hassan Mahmood, managing director and founder of Voiant Group, joins Rowan Tonkin, Anaplan’s Head of Sales and Marketing Solutions, to discuss how sales leaders can drive desired sales behaviors with an improved incentive compensation plan.

First, some history: I call the 1980s and early 1990s the era of pre-ICM/SPM (incentive compensation and sales performance management, respectively). During this period in time, incentive compensation planning and management was either done in homegrown solutions or in Excel—which were non-transparent and required a lot of manual work.

Sometime around the late 1990s, we started seeing the emergence of what I call incentive compensation point solutions. These new tools were able to handle larger volumes of data while also improving the calculation process. However, challenges still remained—for instance, implementation of these solutions was often difficult and expensive, and gathering all the required sales data from multiples sources was still a tedious and time-consuming process.

Today, the availability of cloud-based solutions and the ability to, for example, run “what-if” scenarios brought us to what I call the beginning of SPM 2.0—an era where your ICM is part of a bigger suite of services on a platform, where all your sales data is gathered in one place, so you can drive the modeling, forecasting, and insights that your organization needs to stay competitive.

However, you may be surprised to read that even with the increasing availability of these cloud-based solutions and the advantages they offer, a poll found that the majority of webinar attendees still use Excel (45 percent) or a point solution (41 percent) for their ICM needs. These tools tie directly into an organization’s ability to do effective (or ineffective) reporting and analytics, so it wasn’t surprising when another poll found that more than one-third (36 percent) of webinar attendees are dissatisfied with the reporting and analytics capabilities provided in their companies.

This is important because when sales leaders combine sales data with data from finance, marketing, and HR, they can then truly gain insight into the effectiveness of their sales plans. For instance, they can see whether they are allocating the right amount of coverage in a certain region or see who the high-performing reps are. They can also start to understand the financial impact of their sales resources—for example, the better your territory and quota process, the better your sales crediting becomes, which, in turn, improves your incentive compensation process.

So how can you go about building an effective ICM plan that takes into account relevant data from across the business and use that plan to drive the desired sales behaviors? At Voiant, we recommend that sales reps start with the following three questions.

1. What is my attainment and how has that translated into incentive compensation?

This is a question that can be posed either by a sales rep or by management to the entire sales force. With this question, we’ll be able to gain insight into incentives and attainment calculations, with drill-down by product or customer, in real time to impact a sales performance period.

2. How much can I earn based on the deals in my pipeline? Where should I spend my time?

Asking this will lead to uncovering what opportunities are currently in the pipeline, and allows sales reps and managers the ability to model what potential attainment and earnings would look like. Managers can then provide coaching on where the team or an individual rep should be spending their time in order to maximize revenue for the company.

3. How can I improve forecasting accuracy and the success rate for closing business in my pipeline?

To answer this question, sales leaders should combine the pipeline information gleaned from the previous question with the sales process around messaging, coaching, and training assets. What this does is provide the sales force all the right tools, coaching, and sales of assets at every single deal stage, resulting in improved sales predictability and effectiveness for the organization as a whole.

Ultimately, sales leaders should focus on how to gather sales data, and consolidate it in one place. Simply doing this will enable you to do the forecasting, modeling, and analytics that you need to operate from a strategic position with your incentive compensation management process.

Interested in learning more about how to motivate the right sales behaviors with more effective incentive compensation planning? Listen the full webinar.

In the meantime, follow more of this webinar and blog series by checking out part three, which talks about creating a comprehensive sales forecast.

Topic: Incentive Compensation