• July 1, 2007
  • By Jim Dickie, partner, CSO Insights

Money Matters

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The sales teams have used the CRM system to segment the marketplace, generate leads, track opportunities, create bids, generate proposals, and process orders. So what's next on the rep's mind? Money. He wants to be shown the money--to know how much he's getting paid. CSO Insights's research reveals that when most companies try to do so they leave the civilized world of CRM and ERP and enter a world of shadow accounting and spreadsheets. We have benchmarked firms that have implemented these jerry-rigged approaches for managing incentive management, and we always hear horror stories about duplicate data entry, information inaccuracy, slow reconciliation times, reps being overpaid, and reps being underpaid. Although these firms complain about how arcane their approach to managing commissions is, fewer than 10 percent of them have actually done anything about it. However, as the CRM-solution community continues to move to address the problem, the situation should change dramatically over the next two years. Early applications in this marketplace, while they were very sophisticated systems, were also difficult to navigate. The resources required to get the applications to work were significant, and so big systems were normally affordable only by big companies. Today, I see a different landscape. First, the incentive management capabilities within CRM systems have been--and continue to be--enhanced, but what will really drive market acceptance is the new generation of employee incentive management systems. Firms like Callidus, Centive Systems, and Xactly are now offering systems that are easier to implement and easier to manage, and offering them at price points that make the systems much more cost effective than in the past. Second, the support of consulting firms that help companies design and implement the right types of incentive management programs to drive appropriate rep action is considerable. Accenture, Alexander Group, Deloitte, and Towers Perrin, along with technology integrators like Arcadia Solutions, have proven track records in project management success. This year our project reviews of firms that have replaced in-house commission management systems with one of the new breed of commercial offerings (especially on-demand offerings) saw win-win-win results. The win for the reps is they can easily see how much they are getting paid and why. The win for sales managers is the ability to see specifically what impact their commission plans are having on behavior. And if companies do want to change compensation plans they now have the ability to model the impact those changes will have on future margins. Last, the finance departments win, because just about all the headaches they have been getting each month or quarter around "fixing" the mistakes from their old systems will be eliminated. When it comes to showing reps the money, be aware that there is now a better way for all. Jim Dickie is a partner with CSO Insights, a research firm that specializes in benchmarking CRM and sales effectiveness initiatives. He can be reached at jim.dickie@csoinsights.com.
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