Sales incentive software, also referred to as incentive compensation software and incentive management software, helps organizations administer, manage, and measure their sales incentive programs. Incentive compensation management (ICM) software helps automate manual tasks, connect data between systems, calculate commissions, and measure overall commission plan performance, making it easier to manage sales incentive programs without high overhead.
Specific benefits of using incentive compensation management software typically include plan administration automation, automated calculations and payouts, dashboards for sales teams, and plan performance measurement for sales leadership.
ICM Software Features
Incentive plan design and modeling: ICM often allows organizations to design and model various compensation plans, taking into account different performance metrics, goals, and payout structures. Users can simulate different scenarios to assess the impact of plan changes on overall compensation expenses.
Data reconciliation: sales incentives typically require data from multiple data systems to interact. For example, incentive payouts might take CRM data as well as billing and revenue data into account, in order to account for clawbacks for customers who cancel a subscription in the first 30 days. Payroll data is also involved, in order to ensure that sales reps are paid based on how much they have sold. Incentive compensation management software connects with all of the systems a company uses in order to cross-check data and ensure calculations and payouts are correct. Admins can review findings to ensure final payouts are based on the correct numbers.
Compensation calculations: One of the most error-prone areas of incentive management, compensation calculations are often tricky and require multiple rounds of edits. Incentive compensation management software auto-calculates how much each sales rep should be paid out, resulting in significant time savings for teams that use spreadsheets to manually calculate these numbers.
Compensation approvals: Once compensation is calculated, approvals can be done within the software, saving teams lengthy email threads and confusion over file version control. One of the primary benefits of sales incentive management software is the ability to review and approve commission payouts at the click of a button. This software should also integrate with payroll software, making the process seamless.
Visibility and dashboards: Sales reps can often be left in the dark around their performance and how much they will be compensated at the end of each period. Incentive management software provides dashboards at the company, team, and rep level, giving clear and consistent visibility to all stakeholders. Only those with the necessary permissions would access these dashboards; for example, reps might only see a dashboard with their own performance. This helps remove confusion for the rep, as they can see how much they need to close by the end of the period in order to reach their desired incentive level.
Plan performance tracking: sales incentive software helps sales managers track the impact of changes to their incentive plans. By providing an accurate view of performance, at the company, team, and rep level, this software can demonstrate the impact of changes to the incentive structure and how it has impacted sales across different areas of the team.
Who Should Use Incentive Compensation Management Software?
Sales incentives are often one of the biggest expenses for companies with sales teams. Even organizations with relatively simple incentive structures can benefit from incentive compensation management software, as it can reduce errors in compensation payouts, resulting in significant cost savings for the company. Organizations with complex incentive structures have even more to gain as they can free valuable time from manual operations and administrative tasks, allowing staff to focus on higher value activities. Generally speaking, organizations with over 5 sales reps will gain greater benefit from sales incentive software.
In addition, incentive compensation management software reduces overhead, eliminates manual tasks, provides valuable reporting on sales activities, and ensures organizations have the insights they need to optimize their incentive programs to maximize revenue. Keeping sales reps motivated can be challenging in today’s economic environment, and well designed incentive plans are key to engaging sales teams.
Benefits of Using Incentive Compensation Management Software
The primary benefit of incentive compensation management software is making revenue generation more efficient. Sales teams are motivated by their incentive plans; ensuring these plans are properly optimized and paid out properly requires data and automation. Sales incentive software allows sales leaders to closely track what is happening with sales performance, and how incentive plans are impacting individual reps and larger teams. Rather than having to pull different pieces together across multiple systems and files, sales managers can see all of their incentive plan reporting in one place, accurately.
Incentive management software also helps companies reduce errors and save costs on erroneously paid commissions. Oftentimes, errors are caught by reps when there is an underpayment, but not always when there is an overpayment. ICM software ensures that incentives are paid accurately every time, regardless of the case.
Similarly, ICM software also helps reduce overhead and save time by automating manual tasks across sales, operations, finance, and HR teams. Tasks which previously required several days, multiple checks, and approvals at the end of each period can be automated and time spent is reduced to a few hours. This valuable time can be spent on higher value tasks, improving productivity among all teams involved.
ICM software can also help drive positive culture change within the sales team as well as across the larger organization. Dashboards providing visibility demonstrate the company’s commitment to transparency and help ensure fairness, as reps know where they stand, what they need to accomplish each period, and have complete oversight into incentive accruals and payouts. This also helps create a data-driven culture across the wider organization, as operations and finance teams come to expect and demand high levels of accuracy and clear reporting across multiple arenas beyond sales incentives.