Salespeople are often characterized as emotional and impulsive, and some managers are reticent to expose their sellers to data that might affect their sales strategy. It’s rapidly becoming clear, however, that sales teams who integrate data into their selling strategy are more successful and efficient than the organizations that fail to utilize this data to its full potential.
One type of data that is critical to improving sales team performance is accurate sales forecasting. A sales forecast that anticipates realistic numbers allows a company to better plan its fiscal year, and makes it easier for sales managers to set attainable sales goals for employees.
Encouraging smart sales forecasts
Accurate sales forecasts are the result of employees who make intelligent predictions based on their previous sales experience with certain regions or clients. Businesses need to encourage this type of smart decision making, and can make sales forecasting a part of an employee’s overall compensation plans.
“Compensation can encourage smart decision making.”
This is currently a strategy at some of the top-performing companies, according to Aberdeen, a research group. While companies are not abandoning the traditional salary-plus bonuses and commission model used by sales teams over the years, they are tweaking this system with an eye toward accurate sales forecasting. Under the new systems, employees who correctly forecast their sales are able to earn a higher percentage of their bonus than workers who fail to accurately predict performance.
Aberdeen notes that more than 80 percent of companies currently use commission-based compensation structures, and that the most successful of these organizations have introduced compensation systems that modify commissions as a result of forecasting.
The need for compensation management
A compensation system that incorporates bonuses for sales forecast accuracy will be complex, and may be difficult to track using traditional methods. In a piece for the Harvard Business Review, Mark Roberge, a former HubSpot employee articulated the value of a transparent sales plan, saying it improved employee motivation because salespeople knew where they stood in relation to overall goals. If forecast accuracy is incorporated into a compensation strategy, salespeople must be able to easily identify how their forecast will affect their pay.
Iconixx makes it simple for a sales manager to introduce and track complex compensation strategies, and gives employees the ability to see their progress toward overall sales goals. This allows business to implement effective compensation plans and provides the tools needed to manage these strategies.