In the Era of Big Data, the Best at Analysis Win the Compensation Battle

We’ve said it repeatedly: automated commissions systems are much more than mere calculators that spit out checks for your sales teams. They do a lot: they eliminate the vast majority of disputes, they avoid overpayments and they allow commission plan managers think about strategic things rather than being forced to focus entirely on making the plan work. Era of Big Data, the Best at Analysis Win the Compensation BattleBeyond those valuable features, however, commissions management software does something else that’s very important: it collects a tremendous amount of data about the historical performance of your sales team. Systems of record may not seem exciting, but consider that we are smack dab in the midst of the big data era. Many of those who specialize in buzzwords have moved over to internet of Things as their jargon du jour, but the volume and velocity of data that had everyone wound up about big data is still with us, and still offers enormous potential. We’re not really in the Big Data Era. More accurately, we’re in the Big Analysis Era – a period where the tools to extract insight from data are getting faster, more effective, easier to use and nearly ubiquitous. By now, every company who really wants to extract insight from its data has the tools (or access to the tools) to do it. It’s table stakes, practically! So does it still represent a competitive advantage? Oh, yeah. As has been the case with many recent technologies that business has rushed to embrace (starting with social media and extending through the aforementioned IoT), the unspoken common denominator has been all about creativity. Yes, you can see a benefit using these technologies as-is, but their value is that they can be used to deliver very specific insights or deliver value that’s unique to the business using them. For analysis, that means not relying merely on the out-of-the-box reports. As with all these technologies, it means using something not often employed in business: creativity. I’m not saying that business people are not creative. Rather, they’re really busy (so they have less time to consider problems in a creative way) and they tend to be risk-averse (so a creative idea may run right into undue anxieties about lost opportunity, failure and potential negative career implications). So doing what every other company is doing is a safe option that can help businesses keep pace with the competition. But no one succeeded merely by keeping pace. Your commissions data provides you with the ability to incentivize sales behaviors in ways that give you a competitive advantage – but you have to be creative in order to harness it to maximum effect. Start with a desired outcome. For example, CPQ can identify a bundle of products and services that sells at a high margin, and your commissions management application may reveal that only one salesperson is using it to close deals. To replicate that behavior, you can then offer an incentive to the sales force when they employ that bundle. Another example: if your objective is to build longer customer relationships, you can use customer surveys at the end of the sales process to evaluate the effectiveness of each salesperson at delivering a great buying experience. Comparing the commissions data for high scorers on these surveys to the low scorers will show how effective the behaviors of the high scorers are at increasing the average total value of initial deals, and it will make it much easier to justify incentives around customer surveys in the future. Alternately, there may be a set of products that, over time, delivers a measurably better result on customer satisfaction studies. Determining the customer lifespans of those who responded favorably to those satisfaction studies could justify an incentive for selling that particular bundle based on the objective of longer customer tenure. Correlating commissions payouts against the amount of learning that a salesperson has engaged in or against the level of adoption of sales technology can indicate additional areas where an incentive may have an effect on modifying behavior. And commissions data can also help suggest when an incentive should be turned off, too. When incentives are used correctly, they don’t simply influence behavior today – they help salespeople recognize new and productive ways of selling that benefit them even after they’re no longer incentivized to use them. By studying patterns in commissions data, and seeing when an incentive starts to have less impact on performance improvements, sales managers can shift their incentives to the next area that needs improvement. Notice that these examples don’t rely on a single source of data. The most powerful insights come from correlations in different data sets, something that’s tough to do if you don’t have a connected set of solutions collecting data about various aspects of the sales process. If you want to use commissions as a tool to keep improving sales performance, don’t look at it as a mere means to pay salespeople. Look at it as a resource that can show you how to incentivize the salesforce properly to keep those performance gains coming.

By Chris Bucholtz | June 23rd, 2016 | Commissions

About the Author: Chris Bucholtz

Chris Bucholtz

Chris Bucholtz is the content marketing director at CallidusCloud and writes on a host of topics, including sales, marketing and customer experience. The former editor of InsideCRM, his weekly column has run in CRM Buyer since 2009. When he's not pondering ways to acquire and keep customers, Chris is also an avid builder of scale model airplanes.