Growing up fly fishing I always found something peaceful and calming about casting my fly into the crystal clear waters with my dad. Surrounded by beautiful nature, the trickling sounds the water made, the smell of the fresh mountain air. Now as an adult, I still find myself drawn to the water and exploring uncharted territory outside of the streams I grew up fishing. On a recent fly fishing trip to Alaska with my father, we didn’t know the terrain or area so we hired a fishing guide. And are we glad we did.
Not 15-minutes into casting and we were chased out of our fishing hole by a Grizzly bear. The guide knew exactly what to do, reacted calmly, and instructed our group on exactly what to do in order to be safe and make the right decisions.
Now, as scary as incentive comp can be (our CEO Grayson calls it the Wild Wild West, and he’s not wrong), it likely won’t have you squared off against a Grizzly bear. But, the point is, when you’re faced with unknown and complicated terrain, like determining which ICM is right for you, you need a guide, and we’re here to help.
So…You’ve decided to find a better solution for sales compensation management. Perhaps you’re moving away from spreadsheets, or maybe the dedicated platform you’re currently using just hasn’t lived up to expectations. Either way, you’re exploring your options for Incentive Compensation Management (ICM) software.
It’s a big decision. ICM solutions are a long-term investment involving annual or multi-year contracts, deep administrator training and onboarding of internal teams, and required integration with existing ERP, CRM, and HRIS systems. And once an ICM solution is implemented, it’s no simple thing to switch providers. So you need to get this right.
But how do you go about making such an important selection? We’re here to help.
In this article, we’ll go over how an ICM should fit with your business, cover the four main types of comp solutions, describe five attributes of an ideal ICM solution, and offer four tips for a smooth selection and implementation.
And for even more detailed guidance, check out our free ebook, A Buyer’s Guide to Incentive Compensation Management Software, including a checklist for comparing different solutions.
So…You’ve decided to find a better solution for sales compensation management. Perhaps you’re moving away from spreadsheets, or maybe the dedicated platform you’re currently using just hasn’t lived up to expectations. EIther way, you’re exploring your options for Incentive Compensation Management (ICM) software.
Understanding what you need from an ICM
Whether or not an ICM will suit your business comes down to two major factors: product fit and implementation and service fit.
You need to know how well the ICM will manage the unique needs of your business. Put the vendor through their paces, and have them use a demo site so you can see how your data is reflected using their software. Always check how much of the functionality is ready to go “out of the box” as opposed to custom items that must be configured. And look for a user experience that you will be able to control.
Implementation and service fit
Once you’ve found an ICM candidate with product fit, you then need to consider what the implementation process will be like. Find out exactly who will be working on your account and their level of expertise. Business software implementations don’t always go according to plan, and if you end up with account managers who don’t know their software well enough, you could end up with a long (and costly) onboarding process.
You also need to consider customer service when evaluating options. Multiple ICM solutions may offer the functionality you need, but they may have vastly different approaches to customer service in terms of availability and expertise.
The 4 main types of sales comp solutions
Broadly speaking, you’ll come across four main types of solutions for sales compensation management: spreadsheets, legacy solutions, newer solutions, and ideal solutions.These can be divided into four quadrants based on their overall functionality and ease of use.
-Easy to deploy, use, and change
-Hard to maintain
|Hard to use||Easy to use|
Many companies start out using spreadsheets for sales comp, and they can get the job done for very small teams. But spreadsheets simply don’t scale well. The more sales reps you add, and the more complex your compensation model becomes, the harder it is to maintain rows upon rows of data, keep data secure, and avoid costly errors.
2. Legacy solutions
A step away from spreadsheets is a step in the right direction, but most older solutions, such as Xactly and Varicent, don’t go nearly far enough. With many legacy apps, you’ll still end up relying heavily on spreadsheets because the software just doesn’t offer the flexibility you need. You’ll be faced with lengthy implementations, rely heavily on vendor services, and find it difficult to make changes.
3. Newer solutions
A number of newer solutions, like CaptivateIQ and Spiff, have come to market to try to pick up the slack, but they aren’t all of equal caliber. Many of these solutions are built with modern user interfaces, which makes them look like fine solutions in the demo stage. However, they’re usually built to handle straightforward compensation plans—and they may lack the necessary functionality to manage more complex variable compensation scenarios. This means they look great at first, but the shine wears off quickly when you outgrow them. Evaluate solutions like these closely to be sure they’ll actually meet your needs.
4. Ideal solutions
Having weeded out the types of solutions with obvious deficiencies, you’ll be nearing the goal. An ideal ICM should be easy to deploy, use, and change as needed. It should offer all the functionality you require, without relying on additional services. And it should scale with your business, adapting to all your comp plans and processes.
The attributes of an ideal ICM solution
Let’s dig a little deeper into how an ideal ICM should operate, showing you what you should look for as you make your selection. Solutions in this quadrant of our evaluation matrix share the following characteristics.
1. An ideal ICM seamlessly integrates with your data
According to Gartner, data integration can take up around 50 percent of your implementation process. An ideal ICM integrates your data automatically, significantly reducing the time you spend on implementation.
Far too many solutions can only accept data via specific restrictive formats. So you have to spend your time modifying and massaging spreadsheets to line them up just right—all so your ICM can accept them for integration. And if you’re using custom fields the ICM doesn’t recognize, you’re forced to do extra coding or wait for the vendor to provide a solution before it’ll integrate at all.
Be sure that any solution you consider can handle all of your data directly and automatically—without needing to first perform modifications to the data or the solution itself.
2. An ideal ICM is purpose-built for compensation management
Just because a solution is advertised for compensation management, that doesn’t always mean it started out that way. An alarming number of ICMs have actually been pieced together from acquisitions and different third-party vendor’s products. They may look fine during the demo, but such piecemeal solutions tend to cause significant usability problems down the line.
You want an ICM that was built from the ground up for sales comp. It should be a single unified solution that purposefully brings together data integration, comp plan design, workflows, reporting, and analytics. That’s what Performio offers. Other solutions may leave you guessing as to how they were pieced together.
3. An ideal ICM speeds up workflow and improves collaboration
Managing sales comp means working with a team, and the more of that teamwork you can keep within the ICM, the better. Otherwise you’ll have a trail of separate communications—via email, Slack, or whatever else—that you’ll have to keep track of.
Your ICM should automate everything and back it up by an audit trail. At a minimum, expect your ICM to automate approval workflows, dispute resolution, and lock periods, while providing internal messaging capabilities that let you respond directly to any sales questions.
4. An ideal ICM gives you transparent reporting and analytics
Transparency is key to keeping your sales reps happy and motivated. They need to know how they’re doing so they can stay on top of their quotas, and they shouldn’t have to rely on homebrewed calculations to figure that out. Despite this, many solutions treat reporting and analytics as an afterthought.
Look for a solution that lets you configure payee reports and compensation analytics yourself, without needing separate tools or extra services. It should let you report on all the data in the system, rather than limiting you to certain fields. You should be able to analyze metrics like payables trends, OTC distribution, achievement distribution, targets, forecasted spend as a percent of revenue, and commission cost of sales. And it should all work seamlessly out of the box.
5. An ideal ICM is intuitively easy to use
You want an ICM that eases your load by helping you manage sales comp. The last thing you need is for a so-called “solution” to become an extra hassle that you have to stay on top of to get it to do what it’s supposed to. Your ICM solution should just work.
You shouldn’t have to create extra code, pay for additional services, or constantly rely on support. It should do everything you need right out of the box with pre-configured plan components, providing all the flexibility, control, and reusability you need.
How to select an ICM solution
With the ideals to look for in mind, here are four additional tips to help you choose your ICM and initiate a smooth implementation.
1. Develop use cases for your solution to address
To find the right ICM solution for your business, we need to start by defining what you hope for it to accomplish.
What challenges are you facing with your current solution? Tired of dealing with spreadsheets? Inaccurate reporting? Concerns about security? Lack of transparency? Poor support? Make a list of the problems you need your new ICM to solve.
Then articulate that list as your desired future. “I want data integration to be automated.” “I want to streamline the reporting process.” “I want greater transparency to increase trust among my sales reps.”
Each of these statements represents a use case against which you can evaluate your options. Prepare a sample data set for each use case that you can share with hopeful candidates to demonstrate how well their solutions will address your challenges.
2. Articulate your security and compliance requirements
Don’t leave the security of your data up to chance. Know your security and compliance needs, and make sure any ICM you consider lives up to your requirements.
Look for things like full encryption with phishing prevention and secure password enforcement, 24/7 monitoring for threats, and role-based visibility to ensure everyone has access to the data they need and nothing more. And be sure it operates in compliance with the latest standards and regulations, keeping you out of trouble and avoiding fees.
This protects you. It protects your company. It protects your employees. And it saves time you’d otherwise spend fixing things after the fact.
3. Shortlist three vendors
You have a lot of options to choose from, and it can take time to deep dive into any one of them well enough to give it a full evaluation. Based on the broad strokes of what you need your ICM to do, try to narrow the list down to around three of the most likely candidates. Then reach out to each of them for a full demo to see how they really perform.
This will save you time. But it will also free you up to give each final candidate the attention it deserves. That way you won’t rush into a decision you may come to regret later.
4. If possible, meet the implementation team before you sign
A good ICM is about more than just the software itself—it’s also about the people who stand behind it. You’ll be working closely with the implementation team as you move your data and processes over to get up and running, so it’s important to know that they’ll have your back.
Look for people who demonstrate a high level of proficiency with their product, while being tuned in to your requirements and understand your use cases. They should respond intelligently to your specific needs, rather than offering stock responses. Provide them with the use cases and sample data you prepared, and see how they’re able to handle it.
Additionally, make sure they involve the pre-sales team in the initial kickoff of the implementation. This will help with the transfer of knowledge.
If you’re buying an ICM solution, consider Performio
You won’t regret taking the time to invest in the selection process. Finding an ICM solution that fits your organization and meets every requirement will save you countless hours, improve productivity, provide added security, and give you peace of mind.
We built Performio from the ground up to give you everything you need for sales compensation management. Performio is easy to use, offers seamless integration with your data, requires no coding or extra services, provides transparent reporting and analytics, and keeps your data safe. And we stand by our product with unparalleled support.
But don’t just take our word for it. Our customers most often say that they chose Performio because of the attention we give to their use cases during the demo, along with our ability to implement effectively. You can see for yourself with a sophisticated proof of concept before you buy.
If you need a little more guidance to make this decision, download our free ebook, A Buyer’s Guide to Incentive Compensation Management Software: Six Vital Steps to Maximize Your ROI.
And if you’re ready to see what Performio can do for your business, request a demo today.