It’s pretty well established that sales pros do what they get paid to do. Sales commissions are a reward for bringing in revenues. SPIFs are rewards for selling certain products. Sales contests are competitions that reward winners for doing specific things for a specific amount of time.
Since we know that works, it also makes sense to use the same concepts to encourage other behaviors. We explored this idea in a previous blog, which pointed out that the evolution of business is such that these older methods of compensating sales reps, while still valid, need to be complemented by compensation for new sales behaviors. Those behaviors center around customer experience, training, and other things that make your sales reps better ambassadors for your company and, ultimately, lead to longer customer lifecycles, larger purchases and a greater return to your business.
These new incentives are aspirational, really – they incent sales reps for doing what your business hopes will pay off. To many, that seems like a bit of a mushy metric on which to base compensation. But what if you could pair a revamp of compensation plans with a predictive engine that could anticipate the impact of the behaviors driven by those plan changes? That would help take the argument in favor of alternative compensation out of the realm of “it feels like what we should do” and puts it smack in the middle of “the numbers show that this is what we should do” territory.
It won’t be long before sales managers have a platform to do just that: use compensation data to not just predict how changes to the compensation plan affect the commissions sales reps receive but to anticipate how the behavioral changes those plans drive will impact revenues for the business as a whole. Such a platform should also be able to spotlight how degrees of adoption affect sales performance, potentially a great tool for sales managers in explaining and selling alternative compensation approaches to their sales reps.
The reps themselves can be part of the data. After sufficient time on the job, each sales rep can be evaluated by performance; it’s not hard to imagine how a mathematical number could be applied to each based on their history of making or missing quota. Factor in their quotas, combine it with the predictive part of the next-generation compensation platform, and suddenly managers have visibility into how each individual member of their sales staff is likely to fare when he or she is motivated to sell differently. This is another great tool for sales managers: they can show reps what they expect them to do according to the numbers – and then challenge reps to beat the analytics.
Such a granular view will also allow sales managers to forecast better, even as they influence their reps’ behaviors.
The goal of any such platform must be twofold: first, to provide a degree of predictability based on past data, and second, to give managers a mechanism to put changes into action. Compensation drives the latter, and automated management of compensation provides the data for the former.
Compensation management is not a mere payroll tool – it’s more powerful than that. The businesses that realize that, and who start using compensation to drive sales behaviors effectively using next-generation compensation technology, will be able to boost sales productivity while gaining visibility and benefitting from predictability.