April 3, 2011

SPM Keys to Success - Interactive versus Static Statements

Continuing from a previous post on Ensuring Goal Alignment,  project teams must agree on the type of commissions statements that will provided to payees.

Interactive versus Static Statements for Plan Participants
When organizations start to implement Sales Performance Management Software to manage the commissions process they are given the opportunity to change the way commission statements are delivered.  By leveraging the capabilities of modern SPM technology they are able to deliver interactive commission statements.   Arguments for delivering function-rich electronic statements are:
  • When viewing statements plan participants can access the underlying transactions that make up the statement. This provides the recipient all the details to see exactly how the commissions were calculated which in turns provides insight and instill confidence that the statement is correct.   The result is fewer calls into the Commissions Team trying to understand how the commissions were calculated.
  • Providing drill-down in statements can provide valuable analytics for plan participants.  Having a look at Sales by Product, by Customer Group,  by Category, by Channel, by Time can all provide insight and help them relate their activity with results and drive the right behaviou in the next few months.
  • Peer group comparisons and rankings are often a motivator for sales teams.   With most SPM technologies these can easily be added to existing statements.
These capabilities all appear to provide significant value, so why would anyone not want to deliver more capability to their plan participants?   The argument is that many organizations believe that one of the biggest frustrations sales organizations have is how little time sales people actually have to spend with their customers.   According to a recent CSO  Insights survey[1] sales teams spend only forty one percent of their time selling.   Most sales departments believe that increasing this percentage is a high priority in the upcoming year.  They are motivated to drive as much administration, and non-customer facing time out of the process as possible.

Delivering concise, timely and accurate statements to sales teams, means that sellers will reduce the time the look at statements, reduce time working with operations on disputes and inquiries, and reduce the amount of time they spend updating their own shadow accounting systems.     Providing additional charts, graphs and slice-n-dice adds time to the project, adds distraction for the payees, and takes away from valuable selling time and might realize a drop in the already low forty-one percent.    A five-hundred person sales team spending two additional hours a month reviewing the additional functionality embedded in their statements results in twelve thousand hours a year of lost selling time.  This translates into the work of six full-time sales people.

Sales advocates would suggest that a better use of effort would be to have one business analyst hired to do the analysis and provide guidance on where sales teams should spend their time.   The theory is that the right person doing the job once and sharing the results with sales would be more effective than each of five hundred sales people replicating the same analysis over and over.  This is often at conflict with the operational goal of reducing administrative time and effort in managing commissions.

The challenge for project teams implementing Sales Performance Management software is to determine which, if any, of the advanced capabilities provided by SPM software are most appropriate for their plan participants.  Increased insight is a good thing as it helps align the sales force and drive the behavior that you are looking for.   Charts and graphs that look nice, but don’t help the recipient improve performance do not improve the overall commissions management process and should be left out.

[1] 2010 Sales Performance Optimization – Sales Management Analysis, CSO Insights 2010

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