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Compensation Design with Data vs Instinct

Compensation Design with Data vs Instinct

Finding the right balance of sales territories and compensation incentives can challenge even the most seasoned of executives. 

Sales Executives Split on Preference for Data versus Instinct

Although more data than ever are available, a large percentage of global executives remain unsure how to perfect their team’s performance.

The uncertainty seems to stem from an excessive reliance on data and an undervaluing of executive intuition. These are among the findings from an Economist Intelligence Unit report based on a survey of 229 global senior executives, which is sponsored by Oracle.

Almost two-thirds (60%) of respondents to the survey said they lean predominantly on data in driving sales decisions. However, executives interviewed for the report admitted data can be misleading when they are incomplete or taken out of context.

Competitive intelligence and market forecasts are not always accurate, for example. This may be why at least one-third (32%) of executives in the survey placed “some reliance” on their “best guess.” Decisions unaided by intuition often result in a breakdown of desired results, prompting realignment, our survey found.

The report, Data vs instinct: Perfecting global sales performance, examines how global sales executives seek to make the most of their sales structures, territories, and incentive plans. Respondents were asked what sources of data are used in developing their plans and their evaluations of the outcomes.

Sales managers typically chose several sources of information and an array of resources to support their decisions. However, executives expressed concerns that their approach to data analysis and industry knowledge had failed to provide the desired revenue growth.

Those surveyed identified a number of key trends in managing sales territories and incentive compensations. These include:

  • Data drive the majority of sales decisions. Sales executives rely more on current and historical data (89%) than on forecast data to maximize sales resources. However, as much as 56% reported at least some reliance on their instinct to craft territory and incentive compensation decisions.
  • Insight is a team effort. As many as 71% of respondents placed great reliance on internal sources of data to identify sales opportunities, develop a consistent stream of new prospects and maintain customer contact information. Sales managers who responded to our survey identified internal marketing and sales operations as their primary support in making sales decisions.
  • Too much tinkering may backfire. While executives balanced their sales decisions against available data and personal insight, implementing change requires worker sensitivity. Executives interviewed for the study noted that continually realigning resources–whether based on data or instinct–may contribute to increased sales staff turnover or lackluster performance.

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