Sales Compensation Software Enterprise Buyer's Guide

Overview

In our years of deploying sales compensation solutions, the most satisfied buyers centered their buying decision around one thing:

Total automation of sales compensation processes.

Today, most sales compensation teams are drowning in administrative tasks: juggling spreadsheets, trying to merge disparate data sources, or updating workflows to automate commission calculations and payouts.

The best software for sales compensation teams relieves them of tedious administrative tasks, so they can focus on analysis, strategy, and optimization.

The more you can automate, the higher you can elevate your comp team, and the greater the benefits for the organization.

In this Sales Compensation Software Buyer’s Guide, you will learn:

• The types of sales compensation solutions available

• How to identify your organizations’ needs and priorities in an ICM solution

• The right questions to ask to identify a solution that meets those needs

• How to choose a solution that elevates your team

Most importantly, you will learn that there’s a better way to run a sales compensation team — and it doesn’t include learning a new formula building language or reskilling your entire team.

What is Sales Compensation Software?

Every Sales Compensation Solution allows you to calculate and track commissions, and provides a platform for you to automate your organization’s incentive compensation processes.

At minimum, any sales compensation solution should allow you to:

• Design complex compensation plans tailored to your unique needs.

• Align incentive compensation planning and results with your overall business goals.

• Automate some or all of your sales compensation calculation and administration processes.

• Inform users from sales reps to CFO about sales performance and incentive payments using dashboards and/or reporting.

When is the right time to invest in Sales Compensation Software?

Small businesses rarely have trouble processing sales commission payments because the number of people involved—and therefore the complexity—is low. Anything under about 100 sales reps is relatively easy to manage from the corner of a finance admin’s desk, in a spreadsheet. There are also some clever software solutions for organizations at this level.

As soon as a business scales beyond around 100 reps, sales compensation administration using spreadsheets becomes a resource-guzzling trap. And the more the sales comp admin department grows, the greedier it becomes.

Sales compensation software helps organizations automate away the administrative burden as they scale, allowing the sales compensations teams to focus on optimizing incentives and driving improved sales performance.

Other reasons to invest in a sales compensation solution include:

• Your current sales compensation solution is too complex and difficult to master.

• Your sales compensation administrator is ready to move on, but you can’t manage the current system without them.

• You’re overly reliant on outside help to manage your current sales compensation solution.

• You want to be more strategic in your approach to sales compensation but are limited by your current solution.

• You just used our Total Cost of Ownership Calculator and were appalled by what you found.

Why choosing the right Sales Compensation Software matters

Sales compensation planning and management is the backbone of any organization’s sales strategy.

The right solution for your enterprise should be powerful enough to handle the complexity of a robust compensation plan but simple enough to allow any user to get the information they need.

The right compensation solution will have built-in tools that support customer privacy, audit trails and compliance, and maintain succinct data integrity.

The software you choose should do more than support the status quo —it should enable you to evolve your sales incentive strategy.

The space has evolved quickly over the last few years. Many vendors are still playing catch-up to meet the rapidly evolving needs of modern enterprises.

Avoid inadequate solutions by looking out for these red flags.

Vague SLAs

Every vendor will promise the world in the boardroom but not when it’s time to put ink to paper. At the very least, a true enterprise vendor should guarantee payouts that are accurate and on-time. Always ask for it in the SLA. Anything less should be a sign of what’s to come.

Low Base Cost

A low base cost may get you through the door, but beware of the tremendous hidden costs that come with such solutions. Prepare for poor support and zero help preparing your data for intake. You will pay the equivalent, if not more, through premium service, extensive training, and platform consultants.

Franken-ware

Many vendors in the space have grown their offering through acquisition, and as a result, their product is a mess of bolted-together systems that run asynchronously. They maybe able to check every box in the RFP and say, “we do it all.” But can they “do it all” together? Usually not.

Why bother?

The benefits of using sales compensation software

Administer Complex Plans at Scale

Accounting for hierarchies, product lines, roles, and margins in your compensation plans is time-consuming to administer with spreadsheets. An enterprise-grade incentive compensation solution should allow you to execute complex company-wide and individual-level compensation plan changes quickly and easily.

Always Pay Accurately and On Time

One typo in a spreadsheet or misaligned data source is all it takes to set-off a costly chain reaction that will impact finance, HR, sales and operations. A sales compensation solution will help with data validation and ensure higher accuracy when calculating commission payments.

Automate Calculations and Reporting

Spreadsheets are rife with repetitive and redundant data entry. Most sales compensation tools enable you to build your own custom rules, formulas and automations to reduce the administrative load. More advanced AI platforms can automate this process completely.

Improve Organizational Agility

All it takes to break some sales compensation software is a single, unplanned commission rate change. If the architecture of your system wasn’t built to isolate a particular product line or SKU group, it means rebuilding the automation, sometimes from the ground up. Enterprise-grade ICM software should allow you to make enterprise-level changes without major overhauls.

Optimize Forecasting and Alignment

Enterprise-grade sales compensation solutions should leverage your historical data to forecast how plan changes and rate adjustments will impact future revenue and target achievement.

5 Steps to a winning sales compensation software

The process is a journey, not a race. Follow these steps to find the best Sales Compensation Software for your needs.

1. Define your business needs

• Outline the typical scenarios that your run on an annual, monthly and weekly basis.

• Define what each of the stakeholders needs from the solution.

• Rank what your business priorities are when it comes to software ownership.

• Write down what your ideal solution would do for you.

2. Calculate your current costs

• Include software, salaries, consulting, and missed opportunities.

• Use this simple Total Sale Comp Cost Calculator if you need help.

3. Shortlist Vendors and Kick Off Discovery

• This shortlist will vary depending on your organization’s needs.

• If you have over 100 sales reps, don’t forget to reach out to Forma.ai. We specialize in large, complex sales compensation management.

4. Test Scenarios with Vendors

• During demos, ask vendors to demonstrate how they handle complex plan changes specific to your operation, not just general demos or blank state setups. Setting up new plans and rules is fairly easy. It’s changing them in a year’s time that’s the hard part.

5. Carefully Review the Service Level Agreement

• Push vendors to guarantee outcomes, like payroll delivery. If an ICM vendor tells you “nobody does that,” come and talk to Forma.ai. We guarantee you make payroll as part of our SLAs.

How will your team benefit?

What to look for to serve the needs of your enterprise

Sales Compensation

• Relieve the administrative burden of formula-building

• Rapidly implement plan changes, adjustments and exceptions

• Implement workflows to increase efficiency over time

• Generate and batch send performance reports

• Forecast next-quarter sales to set effective quotas

Finance & Accounting

• Track commission payouts against revenue realized accurate track accruals

• Pay commission amounts accurately and on-time in compliance with ASC 606

• Calculate the ROI of quota adjustments and short-term incentives

Sales

• Track quota, SPIF, and bonus attainment using real-time dashboards

• View detailed commission breakdowns by customer

• Managers: view and optimize rep performance

IT

• Enhance cloud data security

• Protect sensitive information and data

• Integrate multiple data sources

Is it the right time?

• How often are you correcting mistakes in sales commissions?

• Is your sales team over 100 or growing at >20% per year?

• Do you have the time and resources to learn a formula building platform?

• If you are already using a formula-builder software, are you still relying on outside consultants?

• If your sales compensation administrator left today, would you be able to execute your sales compensation plan effectively?

How much will it really cost?

Break down each vendor’s offering into three cost buckets:

• Initial Costs (Licensing, Setup, Training)

• Ongoing Costs (Subscription, Professional Services, Admin Resources)

• Hidden Costs (Commission Errors, Employee Burnout, Shadow Accounting)

Key takeaway: don’t let a base cost fool you.

For a more detailed breakdown, read How Much Does Sales Compensation Software Cost?

The evolution of sales compensation

We’ve come a long way since spreadsheets. A.I. will eliminate the burden of administrative tasks, and allow sales compensation to evolve into a truly strategic discipline.

Spreadsheets

Process: Manual

Advantages:

• Cheap

• Ubiquitous skill set

• Fit for low-complexity sales comp plans

Limitations:

• Error Prone

• No audit trail

• Barebones functionality

Cloud-Based Spreadsheets

Process: Manual

Advantages:

• Enhanced security

• Work with larger data sets

• Fit for infrequent planning

Limitations:

• Custom builds are slow to market

• Expensive to change

• No rules-base engine

Legacy SPM Software

Process: Formula Builder + DIY Automation

Advantages:

• Can automate simple repetitive tasks

• Enhanced visibility

• Improved accuracy

Limitations:

• Automation logic breaks often

• Does not eliminate admin burden

• Dependent on expensive outside consultants

Forma.ai

Process: Tailor-made Automation + AI-powered Forecasts

Advantages:

• Eliminate 99% of manual admin burden

• 3x faster platform deployment

• Unbreakable automation

• Astoundingly accurate forecasts

Limitations:

• Overkill for simple IC plans

• Higher base (but possible lower Total Cost of Ownership compared to Legacy SPM)

Raise Your Standards

Forma.ai has developed the world’s first AI-powered sales compensation platform that learns how to automate your ICM processes for you. This is a totally new way to manage sales compensation.

We handle 100% of the set up

Onboarding, formula-building, data integration and validation: we do it all for you as part of our base price. No training required.

We guarantee payroll output

Forma.ai accurately calculates and administers 100% of commissions and guarantees on-time delivery to payroll in the SLA.

We deliver rapid change management

Our AI-powered platform forecasts the impact of comp plan changes based on historic data, and then implements the winner for you.

Sales Compensation Has Evolved.

Our platform fully automates sales performance administration and forecasting, creating highly flexible incentive plans that drive revenue, instead of rigid commission structures with little measurable impact.

We handle more than $1 billion in annual managed commissions.

Any Plan. Any Rules.

Spend 30 minutes with us and we’ll show you how.