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Manual Entry Manual File Transfer Single Data Source No Data Cleansing Simple Calculation Limited Number Single Time Event No Past Reconciliation No Credit Splits Few Changes Few Adjustments Limited Updates Stable Quotas Stable Work Force Stable Territories Payroll File Management Reports
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tion needs allow users to have their needs exactly met The advancement of software development tools has reduced the time to develop such solutions while increasing the power and flexibility of the application However, changes will require software engineering support
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Eight
Dedicated application: Numerous vendors now provide dedicated incentive compensation application software These products are evolving and range from extremely powerful (and sometimes confusing) to very simple (but with limited capability)Two categories exist: standalone solutions that operate as unique applications and bundled solutions that are part of other front-office software suites
Finally, the sales compensation administrator can choose from several service models:
Installed solution: An installed solution is the most common service model Using this approach, a company builds or buys a software application and runs the application on the company s own information technology (IT) system Hosted solution: A second service model is to have the application hosted by a third-party vendor that provides data access and information processing via Web links or electronic data transfer methods This approach helps reduce the burden on internal IT resources Outsource: The third choice is to purchase outsourcing support where a third-party vendor provides the complete solution both application and administrative support Companies who wish to remove administration completely should purchase this type of service
Reporting
With rapid advances in information systems and Internet communications, a more expansive palette of reporting choices is now available:
Administrator reports: Administrators need ongoing reporting of program operation as regular production cycles occur: input audit reporting, exception tracking, and current status (organizational reporting, credit assignments, territory assignments, and quota assignments) Senior sales management reports: Sales leadership needs to monitor the effectiveness, cost, and results of the sales compensation program Key indices of quota performance, payout levels, and product sales provide a dashboard of metrics
TLFeBOOK
Administration
Field sales management: All levels of field sales management require immediate on-line access to current sales performance and trend information Special reporting capabilities provide information for sales analysis purposes Additionally, first-line supervisors use detailed sales performance information to help coach individual sales representatives Product management: Product management examines product sales information by various factors to gain insight on how to best support the field sales organization Finance: Finance accesses sales performance and compensation data to evaluate return on sales expense dollars, administrative compliance, and revenue and profit contribution Human resources: Human resources gather sales compensation payout information to evaluate external competitiveness and internal equity Executive management: Executive management evaluates the overall effectiveness of the program by reviewing summary analytical reports on program performance
How to Avoid Unnecessary Administrative Burdens
Without proper management, sales compensation programs can sometimes require unwarranted, elaborate, administrative systems and costly software solutions To reduce unnecessary administrative burdens, consider the following recommendations:
Limit changes: A certain number of changes need to occur during the program year but limit the number, extent, and scope of changes (quotas, territories, sales crediting, and formula calculation) Exclude volatile and uncertain items: Exclude from the sales compensation program factors that frequently change and treat them separately Examples include new product launches, uncertain mega orders, and special product campaigns Tolerate inequities: In some cases, trying to keep the sales force whole can create excessive tracking and accounting issues
TLFeBOOK
Eight
Control exceptions: Place a limit on what, why, and when exceptions will be considered Limit credit splits: Limit the use of credit splits and double crediting Use only when necessary Limit following credits : Do not have sales credits follow sales personnel to new territories or job assignments Buy out any credit rather than use tracking of actual credits
Summary
Policies, procedures and accountabilities, automation, and reporting are key components of the overall administrative support for effective sales compensation programs These administrative systems require substantial investment While not highly visible to sales personnel when functioning correctly, they become very visible (and distracting) when not operating effectively
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