Flexible Solutions Meet Evolving Needs

Flexible Solutions Meet Evolving Needs

Single Source Systems recently conducted a survey on commission and rebate management trends. The results of the survey, along with insights derived from the findings, were compiled into a benchmark report now available for download.

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Survey Asks How Sales Managers or Executives Are Compensated

The Benchmark Report delves into several interesting points, including compensation structures and how managers are compensated. Survey answers show several different tactics are used, without one standing out as the definitive approach.

Compensation plans for executives can involve sizable outlays. Getting the totals right is essential for cash flow and harmony among the organization’s leaders. This isn’t the place to cut corners, settle for compromised data, or put haphazard tactics in place.

Factors Influencing Sales Agent Commission and Bonus Totals

Another interesting question examined elements used to factor commissions. For more than half (53%), commissions issued are not based on profitability. For 42%, commissions are based on company-wide profits. Unfortunately, only 11% look at a product line’s profits and 5% consider a department’s performance. Product-line and department profitability, though, may be much better indications of the sales agent’s efforts. The sales agent likely will have specific products, lines, or territories assigned. There may be several business units within the company that fall beyond the agent’s influence. Being penalized for lackluster performance in those areas may seem unfair.

Profitability.

For many companies, leveraging profitability metrics can be a challenge. Some ERP solutions are highly mature with sophisticated BI tools for factoring overhead costs into the bottom line. When the commission solution ties directly to the ERP, such analysis is available. Companies can use this information to reward sales agents who help keep margins high and cost of goods low.

Sales agents can’t influence all profitability factors, but the excessive reliance on discounts certainly is within the scope of influence. Discounts erode margins. Excessive Travel and Entertainment costs associated with customer sales calls also can eat away at the bottom line. Instead, sales agents can be compelled to help keep Cost of Goods in check—and rewarded when they do.

The more sophisticated the company’s commission program is, the more effective the company can be in driving desired behaviors. Rewarding simple sales volume, without understanding the Cost of Goods, may be shortsighted. Without oversight, sales agents may be tempted to rely on deep discounts or lavish customer dinners.

The takeaway, then, is that companies need highly flexible software solutions that can be tailored to business strategies and evolving maturity. Monitoring Cost of Goods will help lead to greater profitability.

IncentViz provides the Advanced Capabilities Needed

Companies need highly flexible software solutions that can be tailored to nuances in strategies or evolving maturity. IncentViz provides this kind of structure. The solution can contour to changing operational demands, adapting as needed, from rewarding all sales with the same commission level or factoring departmental or product line profitability into the calculations.

Learn more about IncentViz here.