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The Optimal Time to Begin Switching Variable Compensation Software (Hint: It’s Yesterday)

Change is hard. We humans are creatures of habit and oftentimes we opt for adaptation to ease the need to make a major change for as long as possible. It all starts at an early age too, it’s in our DNA. Remember back to when you were a child and it was finally time to remove the bandaid to let that scrape get some air and heal. Most kids shudder at the prospect of ripping the bandaid off. So often we parents appease and slowly peel it away one “ouchie” complaint as the bandaid is pulled, a centimeter at a time. 

But as we get older (and hopefully wiser) we generally come to our senses and practice ripping off the real bandaid, while still sticking to the regimen of slowly peeling it away when it comes to the bigger decisions in life. We know what needs to be done, but the overwhelming details of a big change often cause us analysis paralysis. We’re going to walk through the key points that will help you evaluate your current sales compensation solution and you can evaluate for yourself if it’s time to rip the bandaid off yet (our guess is yes). 

It’s never too early to start looking for a better variable compensation software solution. That’s true whether you’re still using spreadsheets for sales comp, or using a dedicated platform that can’t keep up with your business’s demands.

And you may already be paying the price for not switching. A poor sales comp solution introduces errors, creates conflicts, hurts morale, wastes time, and loses money. The longer you wait, the more these problems add up.

So if you’re wondering when you should get around to switching—the answer is yesterday.

In this article, we’ll walk you through the importance of switching variable compensation software before it costs your business even more than it already has, and we’ll point you in the right direction for finding a new solution.

If you need a better variable compensation software, you’re already too late

If you drive a car, it’s important to check your tires regularly. Once the tread wears down far enough, you need to have them replaced. It may not feel very urgent—after all, the car seems like it’s driving fine. But if you wait until you notice a problem from behind the steering wheel, it’ll be too late. Best case, you’ll end up stranded with a flat tire. Worst case, you’ll cause a much more serious accident, the costs of which will be far greater than the effort it takes to check the tires and get them changed at the appropriate time.

When it comes to switching variable compensation software, the same principle applies. Too many companies take an “if it ain’t broke, don’t fix it” approach to upgrading their software. But if you wait until you experience a major problem, it’ll be too late.

Not only will you need to find and migrate to a new software solution, but you’ll have to do it while fixing the mess made by your current software. And who knows how many errors will have been introduced by then?

It’s far better to begin evaluating your options before variable compensation challenges arise.

If your variable compensation solution is fine now, think ahead

So what is it you should be looking for? Besides the obvious—whatever calculation errors you can spot—you should be looking to the future.

How might your sales teams grow or shrink over the next few months or years? Will your sales compensation processes hold up accordingly? If your team doubles or triples, will your current processes become untenable?

How are your compensation plans going to change? As they grow in complexity, will your current calculations be able to keep up? Or will they become error prone?

Perhaps you intend to adapt or customize your current solution in response to future needs. If so, be sure to plan for how long that adaptation process will take and how expensive it will be. Weigh those costs against the option of simply switching your variable compensation software to a solution that offers more flexibility now.

Switching compensation software is time consuming

Unlike changing your car’s tires, which most shops can have done for you in about an hour, switching your variable compensation software is no short process.

First, you’ll have to do extensive research to compare your options and build a shortlist. Our ebook—A Buyer’s Guide to Incentive Compensation Management Software—will give you a leg up on that research, but you’ll still have to know your requirements and examine different solutions based on your specific needs.

Next, once you’ve narrowed it down to a few options, you’ll need to request demos, evaluate proposals, develop use cases, and see how well each solution fits with your business.

Then you’ll need to take what you’ve learned and make presentations to management for sign-off on the variable compensation software of choice.

And finally, you’ll need to actually undertake an implementation. The amount of time this takes can vary wildly depending on the tech being implemented, the size of the business, and other factors, but expect it to be somewhere from around four months on average to potentially years.

Switching too late comes with significant risks

The longer you wait to switch your variable compensation software, the more it’ll cost you.

Every sales period with a less-than-ideal comp solution is another period with likely errors—causing wasted expenses from overpayments. According to estimates from Gartner, businesses can save an average of 3–5 percent in compensation expenses by minimizing overpayment and underpayment.

And then you’re dealing with disgruntled sales reps, unhappy that they’re unable to gauge their true performance due to a lack of transparency. When they make less than they were expecting, it leads to potentially lengthy disputes, decreased morale, suffering performance, and (the sales team leader’s worst nightmare) attrition.

You also have your reputation to worry about. Who wants to work with a sales compensation team that doesn’t have their act together?

It’s never too early to start switching variable compensation software

Switching to a better software solution can save you significant amounts of time, effort, and expense, and the sooner you start, the better. Now is the time to begin your research.

We’ve put together a brief guide to get you started, and you can download our ebook for a more in-depth look at the process, including a checklist of all the key features you should look for. Start putting together your shortlist—and be sure to consider Performio.

Performio’s variable compensation software accurately calculates and reports sales commissions, no matter how complicated the compensation plan. It’s ready to go right out of the box, and you can configure it to incorporate new incentive plans without outside help.

Your sales reps will receive timely, easy-to-read reports and leader-board rankings. Management will learn how reps are performing and which incentives work best. We’ll keep your miscalculations to a minimum, and your performance at the max.

Performio has saved more than 500,000 administrative hours and calculated more than a billion dollars in commissions, and we’re ready to take your sales team to its full potential.

Request a demo today, and see what Performio can do for your business.

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