Sales compensation software helps organizations automate and streamline the process of sales incentive plans and calculating commissions.
The software also gives sales teams a way to track their quota attainment, earned commissions, and short-term incentives. Reps can view their potential commissions based on current deals, motivating them by letting them understand their true earning potential.
Today, the sales compensation software category can be broken down into three main groups:
Sales Compensation as a Service (SCaaS): The newest category, a holistic, SCaaS is an output-driven approach that delivers end-to-end sales compensation automation tailored for enterprises.
Web 2.0 Incentive Compensation Startups: A younger category of products that disrupted traditional formula building with modern design, more user-friendly plan and rule builders, and improved communication capability.
Legacy Incentive Compensation Management Software: The original sales compensation software that became predominant in the 2000s and replaced spreadsheet administration.
Sales Compensation as a Service (SCaaS) Solutions
This category emerged as an alternative to traditional incentive compensation management software for enterprises that required full automation of crediting rules, rapid plan iteration, and sales rep transparency.
Today, it’s considered the gold standard for enterprises in SaaS, Insurance, Telecommunications, and beyond for its flexibility, accuracy, speed, and innovation runway.
Currently, there’s only one vendor in the sales compensation space offering this breadth of capabilities.
Forma.ai was created to rescue a Fortune 500 company from a disastrous legacy incentive compensation software implementation. Forma.ai eliminated commission errors, gave reps an audit trail they could trust, and provided flexible data integration that ensured all inflows and outflows were accurate.
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Forma.ai helps organizations architect plans and completely automate tedious administrative tasks. Our AI-powered platform utilizes an extensive library of plan structures and workflows and was purpose-built to manage global enterprise-scale incentive compensation programs.
Thanks to our solution-orientated approach, several Fortune 500 companies have already entrusted us with their core compensation processes. Despite our relatively small scale, Forma.ai already manages over $1.5 billion in commissions annually because we can deliver results no one else can.
The following elements characterize Sales Compensation as a Service Software:
Commissions are guaranteed in the contract
SCaaS got its name because it’s more than just another platform or software — it’s guaranteed results. SCaaS providers guarantee at the SLA level that all payouts will be delivered accurately and on time.
There’s no formula builder = no learning curve.
Part of SCaaS’s offering is alleviating the administrative burden of sales compensation. Your sales comp analysts no longer have to spend endless nights re-architecting a plan to satisfy a plan change. All these actions can be executed with English language requests through an intelligent ticketing system.
Provides reps incredible transparency
With SCaaS, reps and partners can track quota attainment in their dashboard, but they can also break down their earned commissions at the deal level. That gives them peace of mind and reduces shadow accounting because now they can see how and when they’re getting paid.
SCaaS solutions are built for enterprises, offering custom reporting, powerful workflow automation, ETL, and third-party API integrations.
This category of sales compensation software emerged in response to hard-to-use Legacy SPM platforms. The term “spiffy” is meant in a good way: these are good-looking and well-designed toolkits. These startups promise to simplify the formula-building process with slick UIs, improved data integration, and more straightforward plan builders.
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These solutions work well with Small to Mid-Market organizations. They enable sales compensation analysts to administer plans themselves with fewer roadblocks and errors. However, they will often struggle with the complex needs of a globally dispersed enterprise sales team.
Here are some of the big players in the space.
Users are drawn to Spiff’s modern design and layout. Sales teams appreciate the transparency into their commission calculations and the performance dashboard.
As a formula-builder (albeit an object-oriented one), there is a learning curve to building plans. Spiff can handle complex compensation plans to an extent, but users may struggle to build logic for multi-layered crediting rules without help from support.
Many users noted that the reporting capability is quite limited. Reports are limited in their customizability, difficult to understand unless you’re familiar with the formula-building process, and can be difficult to generate at scale.
CaptivateIQ offers a flexible and automated approach for delivering sales compensation.
Their plan builder is described as a “workbook” similar to Excel with a more structured step-based approach. That makes it an easy tool to pick up for teams transitioning off spreadsheets but certainly comes with a learning curve. Some noted that the plan builder could be sluggish at times.
All around, users agree that CaptivateIQ is an easy-to-use platform. The one exception is custom reports which one user described as being “convoluted” compared to the rest of the app.
QuotaPath positions itself as the sales compensation software built by salespeople for salespeople.
Plans are not built with formulas but with “paths” (hence the name) which can be layered to account for increasing complexity in a sales compensation plan. That means an easier learning curve than its peers.
Reviews from SMBs are glowing for the most part, with users raving about the ease of use and transparency. Some users noted that QuotaPath doesn’t support their comp plan structure, pointing to some limitations in their plan builder.
The following elements characterize “spiffy startup” incentive compensation software
Improved data handling, but not quite enterprise-grade
These solutions do offer reporting with limited customizability, some workflow automation. They can integrate with data systems, but they are often limited to a finite set of partners like Salesforce or DocuSign.
Medium learning curve
Very flexible, sometimes to a fault
Most (but not all) of these platforms put very few limits on how you build the logic behind the automation. That delivers greater flexibility in theory, but large businesses often get into trouble because analysts have different ways to make the rules. When you’re attempting to debug a commission error while dealing with multiple layers of logic that someone else created, you hit roadblocks pretty frequently.
This category of sales compensation software emerged early to mid-2000s as an innovative alternative to spreadsheet administration. Inspired by Salesforce, Legacy SPM promised to improve accuracy and transparency using cloud technology. Administrators could finally make calculations, generate reports, and make payouts all in one place.
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Unfortunately, most of the legacy platforms haven’t evolved much beyond their initial innovations. Unless you’re already deeply embedded in a complimentary ERP or CRM system, these systems may offer flexibility and control over the inner workings of the compensation plan automation. However, the realities of maintaining this type of system may cause integrity issues in the long term.
Varicent’s Incentive Compensation Management (ICM) can automate manual processes like data collection, compensation calculation, and commission statement distribution. It’s an enterprise-grade solution with enough flexibility and scalability to build complex compensation plans.
They’ve recently partnered with Symon.AI to bolster their data processing abilities and identify trends related to sales performance, seller churn, and customer attrition.
6. Xactly Incent
Xactly Incent is a cloud-based incentive compensation solution that allows users to design, implement, and manage their compensation programs. It has an extensive module suite of SPM tools.
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Although some users struggle with usability, Xactly’s plan builder can manage most complex formulas, and the platform integrates with existing ERP, CRM, or HCM solutions.
They also have a mobile app that gives reps access to commission results, and managers view individual and team performance.
Oracle has a range of sales and sales operations applications, including Oracle Incentive Compensation. It’s a solid solution for existing Oracle customers with the relevant data required to calculate commissions in their Oracle database.
Plans are executed through a series of calculations and data pulled through SQL. Experienced Oracle SQL coders should have no problem processing so long as they can integrate non-Oracle data if needed.
8. SAP Commissions
Formerly known as CallidusCloud Commissions, this enterprise commission management software was bought by SAP. It’s highly configurable and allows organizations to manage very complex incentive compensation processes.
The platform comes with some pre-configured compensation plan logic, reporting, and analytics and allows for APIs to integrate with external systems.
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Like Oracle SPM, this could be a sound choice if you’re already entrenched in the SAP ecosystem and have the skilled resources internally to manage the system.
The following elements characterize legacy incentive compensation management software
Reliant on platform experts
These platforms aren’t for the faint of heart. Becoming a modestly competent administrator can require long hours of training. When the time comes to make complex plan changes, internal administrators often don’t have the experience to rebuild the system themselves. That forces organizations to hire expensive consultants or professional service providers to plug the expertise gap.
Many players in this space have broadened their offering not through hours of engineering and design but rather through acquisition. They’ve strung together the systems to create a marginal level of integration, but for the most part, systems work in silos. They often can only speak with one another through manually uploaded spreadsheets.
Prone to data drift
These systems weren’t designed to speak with multiple systems at the same time. As a result, data from CRM, ERP, HRIS, and other sources that feed the compensation system is merged asynchronously, leading to sales commission errors and long hours of dispute resolution.
What’s right for you?
The sales compensation industry is going through a renaissance. After years of legacy vendors dominating the space, new entrants have begun to disrupt with improved processes and more robust functionality.
As you shop around, it may not be easy to discern what solution is right for you. If you’re looking for more guidance, you can download our Buyer’s Guide for Sales Compensation Software below.