If there's one thing that the big data phenomenon has made clear, it's that there is more than one way to look at anything. Organizations and people continue to have success with programs that are informed by both data insights and human inferences. The trick to getting the most of performance evaluation and management tools, whether they're for enterprise resource planning or sales compensation best practices, is to ensure that they are agile. If there is more than way to gauge success, why restrict compensation analytics to a single measurement? Ultimately, the value of using compensation analytics software to make decisions is that organizations have many different ways to ask questions and seek answers.
In a recent piece about ERP for Forbes, contributor Louis Columbus declared that the days of "brute force" planning - an approach that attempts to jam a "square" solution into a "round" need - are over. Legacy, linear systems that funnel data into decisions are built for efficiency, not adaptability. However, a dashboard or compensation analysis tools that prizes responsiveness over quality of insight can end up leaving a lot of juicy observations on the table. The same holds true for applications of sales compensation best practices. These legacy approaches do not benefit business leaders, employees or customers in the age of the consumer, because they enforce a "one size fits all" model for the objective, process and evaluation of engaging customers and sealing the deal.
Analytics tools help companies work with people, not problems.
One of the downsides of a brute force planning philosophy is that it sees a problem and manufactures a set of steps to get there. These steps are probably informed by past experience rather than the data on hand. This could mean that an employee is working with a sales strategy that is effective for some consumers and not others. Or, a sales strategy that works well for one employee could thrust another out of his or her comfort zone to the point that it's hampering their potential. It may be something of a paradox, but compensation analytics can help organizations better work with people instead of focusing solely on objectives, according to Baseline Magazine.
Sales compensation best practices benefit from increased agility. There does not need to be one road map or one set of rigid standards to success. Using data to a granular degree, even on the level of a single employee or customer, can help organizations brainstorm more adaptive practices. Compensation analysis tools can help illuminate and predict the extent to which a strategy will be effective. With more agility, there are more possibilities for sales success.
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 analytics 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.
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 businesses to implement effective compensation plans and provides the tools needed to manage these strategies.