Importance of Planning and Automation in Incentive
Compensation Management
Incentive Compensation is one of the most crucial factors for business success in modern times. Businesses rely
mainly on incentive compensation to drive the salesforce to improve sales and overall business performance.
The primary objective of a sales incentive plan is to align sales representatives’ behavior with strategic corporate
goals. A good Incentive compensation strategy acts as a catalyst to keep the sales teams motivated and helps
businesses meet their sales and performance targets.
However, the impact and benefits of incentive for sales and sales management system mainly depend on several
factors. The right incentive compensation plan must adhere to some key guiding principles to ensure maximum
results with minimal effort.
How To Design the Right Incentive for Sales Compensation Plan?
Incentive compensation can significantly benefit you if you have the right sales incentive plan design that aligns with your business
needs. Here are some key elements that an ideal incentive plan should have.
Alignment to Strategic Goals
The incentive program must have a clear strategy that aligns with the marketing efforts, company goals, and
overall business objectives. It helps you target the right customer segments, align performance metrics with
corporate goals, and define what success really means. The right incentive plan structure ensures sales
teams adhere to activity guidelines resulting in better sales outcomes and operational results.
Pays for Performance
The good sales incentive plan design should ensure that sales representatives are getting paid for true performance and not just for behavior. Ideally, the representatives who are able to increase their market share or grow the volume in their territories in the current period should get paid much more than others.
Provides Equal Earning Opportunities
The incentive plan should be designed such that it takes into account local anomalies and ensures that everyone within the team has an equal opportunity to make their on-target earnings (OTE). Ideally, things like historical product volume (size of territory), historical market volume, etc., should not be the key drivers for higher earnings and that should primarily be driven by real sales representative performance.
Financially Responsible
Ideal sales incentives plans are financially responsible and ensure that the incentive payout outflow is aligned with the national sales forecast achievement. The incentive plan should be designed to share the broader successes and failures with the salesforce. The sales teams should ideally have the potential to make a lot more incentives if they are able to help organizations beat their goals while they should be ready to share failure in case of weak team performance.
Simple to Communicate and Understand
One of the major mistakes businesses make while planning an incentive program is making it too complex. It affects sales performance as the sales teams struggle to understand what will make them successful. In addition, the inherent complexity also makes the incentive calculation process a lot more tedious and error-prone. This results in managers spending a lot of time answering representative queries on the incentive plan design and calculations rather than focusing on actual on-field training. Therefore, an ideal incentive plan has to be simple yet effective in achieving business goals.
Long-Term vs. Short-Term
While planning an incentive program, sales compensation plan designers must mainly focus on more long-term objectives while trying to accomplish more short-term goals using SPIFFs and sales contests. Ideally, the incentive plan must motivate the sales teams to deliver consistent performance over the long term while ensuring that they are getting paid frequently. This improves sales performance and retention of top performers while significantly improving sales outcomes.
Benefits Of Having Efficient Incentive Compensation Management
A good incentive compensation program (ICM) provides several benefits for a company. Take a look at the various benefits you get with the right IC plan.
- Increased Sales Outcomes due to High Net Selling Time
- Reduced Administration & Operations Costs
- Improved Employee Engagement and Performance
- Higher Motivation & Retention of Top Performers
- Enhanced Transparency & Data-Driven Actions
Why Do You Need Automated Sales Management Systems?
Well, as you can see, planning the right IC strategy and implementing the most efficient sales performance management system are the primary keys to the success of the sales incentive compensation (IC) plan.
However, with the constantly changing business environment, managing sales incentive (IC) plans using excel spreadsheets and legacy systems can be really tedious and costly resulting in significant loss of time, and money as well as higher response time to business changes. The automated sale incentive compensation solution can help organizations be ready for evolving market needs and also prepare them to take proactive actions for higher performance outcomes.
With an effective platform like the Incentive Manager from Aurochs, you can completely automate your sales incentive programs and significantly reduce the processing time and total cost of ownership related to sale incentive compensation management, all while boosting operational efficiency.
Here are some benefits of implementing Aurochs Incentive Calculation Manager:
- Calculate high-quality incentives and performance in a timely manner
- Manage incentive programs effortlessly with the help of user-friendly dashboards, embedded workflows, actionable reports, etc.
- Experience up to 70% faster incentive plan implementations and ongoing change management
- Handle incentive programs in multiple business units in different locations through a single centralized tool.
- Model incentive plans and compare results with existing plans easily
- Get access to all your data at any time
Automate Your Incentive Program Now!
Clearly, incentive program automation is the best strategy for your business. It helps you overcome various limitations associated with manual/traditional incentive calculations and empowers you to change your sales performance game.
So, if you are designing a new incentive bonus program for the new year or looking to improve the performance of your existing program, all you need to do is get in touch with Aurochs.
Get the best incentive calculation manager for your incentive program and experience an overall performance boost.
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