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3 Questions You Need to Ask Before You Buy Sales Compensation Software

So, you’ve got sales compensation software on your mind. Today, you might be managing sales comp in spreadsheets, or you have an ICM platform that’s a headache to use.

Lucky for you, sales compensation software is going through a radical transformation. The new ways of executing sales compensation are markedly more efficient and strategic than traditional methods.

This blog will help you navigate the chaos of choosing a new solution and break down your organizational needs so you can make the best decision for your brand.

Admittedly, we at Forma.ai are a little biased towards our platform. But we’ll be the first to admit that it’s not for everyone.

We thrive in highly complex sales compensation environments, which frankly, is overkill for some small to midsize teams.

So yes, this blog does feature some of our competitors…hi guys ???? . We’ll be nice, promise.

Question 1: How often does your sales compensation plan change?

One year is the standard timeline. But consider the number of minor adjustments made throughout the year. Splits, SPIFs, bonuses, and general plan optimization all come to mind. If the thought of administering any of the above on short notice sets you into a panic, read on.

Your chosen sales compensation solution should easily make plan changes and allow you to integrate short-term incentives like pre-planned SPIFs (the best kind of sales SPIFs) and bonuses into your core ICM plan.

If your compensation plan has few changes and is relatively simple, then a modern, self-managed formula builder like Spiff or CaptivateIQ should meet your needs. These solutions are relatively user-friendly and are much easier to use in day-to-day operations than more traditional ICM vendors like Xactly and Varicent.

If you’re managing larger sales teams and regularly deploying SPIFs, splits, and other plan changes, consider Forma.ai or another next-generation enterprise solution. Forma.ai shifts the burden of formula-building and implementation to a powerful, standalone platform managed by a team of experts — allowing changes to be made through simple requests and implemented faster than a self-managed solution. It’s like asking Alexa to order your takeout, except Forma.ai never messes up your order.

Question 2: How complex is your commission structure?

Hierarchies, product lines, sales activities, and splits (among many other things) add complexity to your commission structure but are necessary to align incentives with your business goals.

Today, you may be limited in how complex your commission structure can be. It could be that your tools aren’t powerful enough, or a knowledge gap in your organization is preventing you from deploying a more robust commission structure. Maybe you’ve already built a complex commission structure, but it’s become paralyzed due to a lack of standardization.

This issue is common in organizations that have deployed an enterprise incentive compensation solution without the internal ability to maintain the system. Every time a new consultant comes in to fix the commission structure, it further fractures your system and makes you more dependent on outside help.

A complex compensation plan can leave you paralyzed if you don't have the tools or in-house expertise to manage the structure. Click To Tweet

In both cases, the best course of action is to start over, get your ducks in a row, and find a vendor that you can partner with to build a sustainable commission structure.

If your commission structure is relatively simple, has few team hierarchies and few exceptions, then a simple formula-building tool should be enough to manage. Be forewarned, the initial setup, structure, and data intake may fall on your team. Ensure you have the proper training and knowledge in place to execute. Even the most straightforward plan design can be a headache to implement because of one pesky exception.

If your commission structure is complex, differs across many teams, hierarchies, and requires multiple data sources — or you have aspirations to build a more complex system — then consider a more sophisticated solution that can do the heavy lifting for you. At this level, you should expect the vendor to assist in aligning all your data sources and creating a flexible rule structure that’s built to last.

Managing highly complex commission structures requires a heightened level of standardization and data flexibility. You need to take data from multiple sources and fit it into a format that can’t afford to fail under the weight of a growing team or intensifying complexity.

“Being a sales compensation manager is a ton of work, and it’s a pretty thankless role. I knew there was a way to do this that didn’t cause Stryker as much pain. Something that could help any comp manager, so they didn’t have to do it all.”

Nabeil Alazzam

After witnessing Stryker’s “enterprise-grade” system falter for this very reason, Nabeil Alazam was inspired to create a new kind of sales compensation solution for enterprises.

Question 3: What kind of compensation team do you want to build?

The reality is your team is going to change, whatever software you choose.

The makeup of sales compensation teams in leading organizations is undergoing a massive shift. What was once dominated by spreadsheet administrators has become the strategic core. As new roles in Sales Operations and Revenue Operations proliferate, strategic and analytical competencies in sales performance are highly sought-after skills.

If you want a team of administrators who spend most of their days addressing disputes, fixing automation logic, and making plan changes, then you should invest in technical training and outside sales compensation consultants. Administrators can manage sales compensation day-to-day, but few have the skills or frankly the time to handle a yearly overhaul. If you choose this route, know that plan changes will be slow, and you will be limited in how strategic and complex your commission structure can be.

If you want a flexible team of orchestrators who can conceive, design and deploy complex sales compensation plans, you should partner with a vendor who can relieve the administrative burden of sales compensation. No more formula-building, no nights spent fixing automation logic because of a plan change, no more disputes. This team style is more strategic because they can focus more on why a sales compensation plan is effective and less on how to deploy the plan. These teams also require less technical knowledge of formula-building, so you can cast a wider net when recruiting.

The Future of Sales Compensation Software

In the coming years, the role of the sales compensation analyst and administrator will become increasingly strategic and less administrative. Enterprises will enable this transformation by partnering with a Sales Compensation Software vendor who can minimize the burden of complex administrative tasks.

Soon, administrative tasks like formula-building and workflow administration will be shifted out of the sales organization and become the vendor’s responsibility. It’s far more efficient for a vendor to administer these tasks because they can maintain a team of highly technical comp administrators who benefit from knowledge-sharing, economies of scale, and AI-enabled rule building.

Sales compensation strategy will still be orchestrated by your strategic core, but will now be built faster than ever before by a team of experts.

“Call it a ‘democratization’ of Sales Performance Management.”

Nabeil Alazzam

At Forma.ai, we’re making this vision a reality. Our unique approach reduces administrative burden by 99%, reduces lead times for yearly planning by 90%, and our plan changes deploy 3X faster than the competition.

If you’re an enterprise that’s serious about taking your sales compensation to the next level, reach out for a demo here.

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