How to think about and evaluate incentive compensation software

When a company hires its first salesperson, it’s a happy moment for all. At long last, you’ve proven out your first sales, the economics of the business, and you’re ready to start scaling the sales machine. Great news!

With one seller, it’s easy enough to put together a quick Excel spreadsheet to calculate sales commission. With two, it’s still pretty easy. With three, it’s every so slightly harder, but still not much of a pain.

Yet, at some point, the “Excel & email” approach to managing sales commission starts to break. There is no magic headcount number over which this starts to happen, but for higher volume sales organizations with more complex commission plans it can start with fewer than 10 sales reps. Large sales organizations with a few transactions per rep per month, by contrast, can sometimes get away without an incentive compensation management tool with a team of >75.

When should you make the switch to a professional sales commission management solution?

And if you do, what are your best options for sales incentive management software?

To answer the first question, there are several potential flags for switching to a dedicated commission:

  1. You are paying out > $1M in annualized commissions. If this is true, commission-related expenses are material enough that you can’t really afford not to track them in a centralized system.
  2. On a monthly basis, your commission plan references > 1,000 rows of data. In this scenario, half a dozen misallocated deals across a handful of reps will throw enough of a wrench in your commission calculations that you’ll have to manually redo calculations for half the team.
  3. One or more people on your company spends at least a week per quarter calculating and managing sales incentives. Assuming just one employee with a fully-loaded cost of $60k per year, you’re throwing away >$4k annually in labor. Professional sales tracking software solutions should allow you to cut down on overall cost while also providing the benefits of a robust, centralized system, that consolidates all compensation management workflow in one place

As for the second question, there is a select group of companies who are currently working in the sales incentive management space. In the industry, these are often referred to as ICM (incentive compensation management) solutions or, alternately, SPM (sales performance management) providers:

  • COMPGUN
  • Iconixx
  • Obero SPM
  • IBM Varicent
  • Anaplan
  • Optymyze
  • Nice Systems
  • Oracle
  • Callidus
  • Incentive Solutions
  • Xactly
  • SAP

Which provider should you pick?

Compgun. Here's Why.

  • Compgun costs you nothing to set up. We will completely configure your first plan for free. You can see your plan in Compgun, play with it, verify that all your numbers are correct to the penny.
  • Compgun is fast. We typically set up even the most complicated commission plans in less than a couple of hours. If you'd like to incorporate some slight adjustments, we can recalculate your numbers instantly and communicate the results to your reps automatically, on a schedule you choose.
  • Compgun is simple. If you understand Excel, you'll understand Compgun. You can make your plans as simple or as complex as you choose.
  • Compgun is versatile. We're proud of how users are empowered to configure and reconfigure their plans themselves, without having to resort of expensive professional services.
  • Compgun is transparent. Your reps will have access to row level data you choose to make available to them, allowing them to understand exactly why they're getting paid what they are.
  • Compgun is flexible. You can freely export any data you've imported to or generated in Compgun.

Your choice of provider is an important decision, and you should make it with the best available information. We're incredibly proud of our system and think you owe it to yourself to give it a spin. If you've been struggling with gnarly comp plans, you'll love our solution. Guaranteed.