Why Consumer Choice is Driving Compensation Plan Complexity

The rise of consumer choice and power has been good news for shoppers but has created formidable challenges for businesses.  The digital economy has allowed organizations to broaden their geographical reach and speedily bring new innovations to market, but it has also exposed them to intense competition from new rivals and fickle customer loyalty.  The new business mantra of “customer-centricity” has arguably vested too much power in the hands of the consumer, allowing them to drive product pricing and product/service delivery.

In an environment in which customer retention has become more problematic, sales management are having to invent ever more imaginative ways of configuring and bundling products and services in order to secure customer relationships and win new deals.  One consequence of these developments has been the steady rise in deal complexity and commissions structures and for the unwary CFO, this can lead to loss of control, excessive risk taking (to win new business) and sales margin erosion.  In more extreme cases it could encourage behaviors that maximize sales commissions but jeopardize strategic alignment.

Self-evidently these highly complex transactions cannot be satisfactorily modeled in a spreadsheet. So is there a better way of managing sales commission and compensation planning?  In a newly produced Executive Briefing we discuss the need for a more holistic approach based on a new breed of analytical platform able to cope with the deep granularity, volumes, and complexity associated with compensation planning on a multinational scale. You can download your copy here.