Skip to main content
AnalyticsIconixx Insights BlogIncentive Compensation ManagementSales Performance Management

The challenge of increasing sales productivity: How ‘what if’ analysis can help

By November 11, 2014June 11th, 2024No Comments

When sales executives see their quarterly figures, they often pay attention to revenue and other lines on the company balance sheet, but what about productivity? Employee productivity is key to helping firms accomplish their projected revenue growth, but there are some challenges that could hold them back. Workers’ lack of engagement with their jobs is a major factor while inadequate incentives are also a big contributor.

The U.S. Bureau of Labor Statistics reported labor productivity in the business sector grew 2 percent in the third quarter from the previous quarter. Output also increased 4.4 percent and hours worked rose 2.3 percent. While productivity and output saw improvements in the latest quarter, sales managers may still be concerned about whether they can hit all of their targets.

A survey of sales and marketing executives by Docurated found the vast majority of teams anticipate meeting their goals of 20 percent or more year-over-year sales growth. However, sales productivity will play a large role in whether or not companies are able to achieve these targets.

As companies face the challenge of motivating workers to maintain or increase their level of growth to meet targets, they should look into their sales team’s performance through sales analytics and craft meaningful incentives.

Importance of ‘what if’ analysis on productivity
The Wall Street Journal recently highlighted research from professors at the University of California, Los Angeles and Stanford University who sought to determine whether data analytics could help a company manage their sales incentive compensation programs. The researchers found that since the company in the study had trouble establishing the correct quota and ceiling for salary and commission for sales staff, it needed to play around with past performance data to properly set these incentives. They knew that if the quota was too low, sales staff wouldn’t be highly motivated to increase sales, which is a common problem for many companies. Too high, and the quotas can intimidate reps.

The professors used models to adjust the quotas and determine how the changes would impact productivity and sales. In sales compensation software, companies can do the same thing with “what if” analysis to try out different quotas and other productivity indicators to see whether incentives will be sufficient in engaging and motivating salespeople. Manipulating data allowed the company to increase its average revenue by figuring out that low enough quotas and no ceilings is the right combination. The researchers proved that “what if” analysis is a valuable tool for companies that are unsure how adjustments in their incentive compensation program will affect their workers.

Leave a Reply

×
Ballast Point Ventures

Ballast Point Ventures is a later-stage venture capital fund established to provide expansion capital for rapidly growing, privately owned companies in diverse industries, with a particular emphasis on companies located in Florida, the Southeast, and Texas. The BPV partners have more than 70 years of combined experience investing in and building high-growth companies in a number of industries, including healthcare, business services, communications, technology, financial services, and consumer goods. BPV has $200 million under management and seeks to make equity investments ranging from $3 million to $10 million.

×
Harbert Management Corporation

Harbert Management Corporation seeks to generate superior returns for their investors by identifying and investing in the most promising early growth stage companies in the Southeastern U.S. HMC seeks to capitalize on what it believes are compelling regional dynamics, such as a strong and fast-growing economy, significant research and development activities, and an established entrepreneurial community. The HMC team combines substantial investment, advisory, and operating experience with capital and networking contacts to support great entrepreneurial teams in successfully executing their growth plans. With offices in Birmingham, Alabama; Richmond, Virginia; and Gainesville, Florida, it’s well positioned to partner with entrepreneurs throughout the Southeast.

×
KBH Ventures

KBH Ventures was an early investor in Iconixx Software. KBH's investment philosophy plays a significant role in the firm's successful track record. KBH believes in running businesses to be cashflow positive and profitable every month. Startups and companies in a startup mode, such as one that has been purchased in distress, are expected to generate revenue within the first six months and reach profitability within the first 12 to 18 months. KBH also only invests in or acquires companies that are in the startup phase or have less than $20 million in revenues. KBH targets technology companies that offer business-to-business services.

×
S3 Ventures

S3 Ventures is an early expansion and growth stage venture firm with $200 million under management. It’s focused on information technology solutions that solve large business problems. S3 also invests in medical devices that improve the human condition. S3 invests in category-defining opportunities. It partners with the team and help focus methodically on what it takes to build a successful company. S3 today helps talented entrepreneurs take their technology and market knowledge and form valuable businesses in a repeatable fashion. Investment sizes start at several million or more for Series A, B, and C financing.