SALES COMPENSATION

SOLUTION ACQUISITION

BEST PRACTICES GUIDE

 SALES COMPENSATION Best Practices Guide
SOLUTION ACQUISITION

Table of Contents
Introduction 3

Motivation for Change 5

Solution Acquisition Process 7

Effective ICM Solution Acquisition 9

Recommended ICM Acquisition Process 13

Model ICM Acquistion Approach 18

Analyst Bottom Line 20

Action Plan 21

About 27
INTRODUCTION SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 3

Introduction
Consider this tale of two companies. For the second company, the focus was on known performance, and the
success of the acquisition surprised no one because it had a benchmark.
One has a respected, 100-year-old brand that employs several hundred
sales people who are paid through a manual process for administering Figure 1 shows that less than 1% of questions in ICM RFPs analyzed while
commissions. While the need for relief from its manual process was researching this guide were related to benchmarks or best practices.
acute, there was anxiety about introducing change – even beneficial
change – to the sales compensation process. To acquire a solution, the
first company produced a traditional RFP because it was a familiar way
to acquire an unfamiliar solution.

The second company was newer with a sales force numbering between
400 and 500 representatives. It hired a new Vice President of Sales FIGURE 1: TRADITIONAL ICM RFP FOCUS: MISSED OPPORTUNITY
that came from an organization that used an Integrated Compensation
Management (ICM) solution. The new VP made acquiring this same ICM
solution a condition of employment with the new employer; no RFP was 1%
issued, just an order to the ICM vendor. 39%
Which company fared better in its acquisition?

Both acquired the same solution that capably addressed their needs. But
the focus of each acquisition was very different.
Features Benchmark data
For the first company, the emphasis was on the bells and whistles of the
& functions & Best Practices
solution. The fact that this acquisition process produced a good outcome
was almost accidental.
INTRODUCTION SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 4

This guide suggests a better process for acquiring an ICM solution. If, on the other hand, ICM solutions are implemented merely to automate
For many companies, sales compensation is the largest component of what may be a bad process, at best some efficiency gains are realized,
Sales, General, and Administrative (SG&A) costs. but the greater benefits are left on the table. ICM solutions are often
acquired through an unwieldy Request For Proposal (RFP) process that
The monthly calculation and payment of variable sales compensation is
too often focuses on solution features, while ignoring sales compensa-
often an arduous, manual process that must accommodate a number of
tion best practices.
exceptions and changes: rarely does a sales compensation plan start
and end a fiscal year intact. The purpose of this guide is to help companies that seek to acquire
ICM solutions take an approach that doesn’t simply automate an
The plan must survive the attrition and addition of sales representatives.
existing process, but reengineers it by introducing best practices that
It must accurately calculate and pay commissions on time, as there are
deliver measureable ROI.
risks and trust issues involved when it doesn’t. While the sales compen-
sation plan is, theoretically, an enabler of revenue growth, these charac- This guide will examine the problems that motivate ICM solution acqui-
teristics prevent it from scaling as the business grows. sition, the limitations of acquiring one through a traditional RFP, a
recommended approach, an example project plan, and conclude with a
Given these challenges to managing and administering a sales
discussion of associated risks and rewards.
compensation process, the motivation to automate, streamline, and
even reengineer it are high. However, the perceived risks of introducing
change to this often fragile process are high as well.
If ICM solutions are implemented merely to automate what
A number of vendors offer ICM solutions that are enjoying increasing
may be a bad process, at best some efficiency gains are
acceptance and adoption. Their potential value is immense if they are
realized, but the greater benefits are left on the table.
implemented using a consultative approach where the vendor and
customer partner to integrate best practices.
MOTIVATION FOR CHANGE
Motivation for Change
It’s important to create some context around the need for ICM solutions.
The motivation for change comes from the inconsistent performance of
the manual sales compensation process.
The scope of issues goes beyond the glitches that are a nuisance to
the sales compensation plan administrators; they impact the compa-
ny’s finances, break the trust between management and the sales
team, or both.
Addressing these issues may involve debugging Excel macros, and their
resolution is more like a Band-Aid than a strategic fix, leaving all parties
uneasy for the future rather than relieved.
Some of the common problems that motivate companies to investi-
gate automating the sales compensation process include restating the
numbers, incongruent goals, scalability, inefficiency, complexity, audit find-
ings, and “gut” feeling.
Any of the reasons described here are alone sufficient to motivate a
company to investigate getting relief through an ICM solution. The goal
is to fix a sub-optimal sales compensation process, but too often the
solution acquisition process is flawed as well.
SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 5
Restating the numbers
When public companies have to restate earnings, the
culprit is often the unexpected cost of sales.
Regardless of whether the miss raises or lowers earnings,
no CFO wants to restate earnings because it essentially
says, “we didn’t get it right the first time,” inviting scrutiny
from regulators, shareholders, and the media about what
else is incorrect.
Incongruent goals
The sales plan sometimes encourages, rarely intention-
ally, the pursuit of goals that are inconsistent with overall
corporate goals. If, for example, the prime directive from
the executive suite is to maximize profitability, but the
sales compensation plan rewards only revenue genera-
tion, goal conflict can easily occur.
This motivator occurs more often in companies that suffer
from organizational silos, but any organization that isn’t vigi-
lant in monitoring alignment can experience this problem.
MOTIVATION FOR CHANGE
Scalability
At some point, a manual sales compensation process fails
to meet the needs of the organization. These failures can
result in delays paying incentive compensation or inaccu-
rate commission checks.
Regardless of the form the failures take, they produce
concern in the sales force. Chronic failures create a crisis
of confidence that can lead to sales force attrition, and it is
rarely the low performers that decide to leave.
Inefficiency
Very much related to scalability, but deserving its own
discussion, is process inefficiency. A manual sales compen-
sation process may simply be too painful to sustain.
Assigning more human resources to it fails to tame it, and
worse, the resources it does consume are tied up admin-
istering the process, stealing time away from other stra-
tegic activities.
SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 6
Complexity
For some organizations, the complexity of administering
the sales compensation process is in the critical path to
closing the books each month.
This complexity introduces delays in key financial reporting
and prevents company leaders from having timely infor-
mation about profitability and margins.
Audit findings
Audits can reveal problems with the way sales compen-
sation is calculated and paid. What is troubling about this
type of problem is that an audit can uncover flaws that have
affected the process for quite some time.
When this occurs, it almost always results in expense and
legal liability for underpayment, or morale-damaging efforts
to claw back overpayments.
“Gut” feeling
Sometimes, management instincts lead to questioning how
well the sales compensation process is working. Are plan
earnings truly indicative of who is contributing the most? In
other words, are the top earners also the top performers?
When the answer is “no,” management should investigate
and understand why.
SOLUTION ACQUISITION PROCESS SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 7

Solution Acquisition Process

For decades, companies have used an RFP to acquire systems and solu-
tions. RFPs are familiar mechanisms for acquiring accounting, CRM, and It is entirely possible for a “successful” RFP to result in
ERP solutions. ultimate failure because the solution it leads to acquiring
doesn’t fix the flaws of the sales compensation process;
Why not ICM solutions as well? The perception is that an RFP works
it merely automates them.
well for more complex solutions, particularly where there is some
degree of risk.

There is a certain comfort level in producing a lengthy RFP, one that has
been thoroughly vetted to include questions about every possible solu-
tion feature and capability.

The RFP approach may work well for acquiring many types of solutions,
but the “traditional” RFP falls short as a means for acquiring ICM solutions.

The reason is that such RFPs are typically built on a flawed premise: the
automation of an existing, sub-optimal sales compensation process.
It is entirely possible for a “successful” RFP to result in ultimate failure
because the solution it leads to acquiring doesn’t fix the flaws of the
sales compensation process; it merely automates them.

This realization comes slowly, as there are almost always efficiencies

gained through automating any process, but if the core, underlying
process is unsound, the benefits are short-lived.
SOLUTION ACQUISITION PROCESS
There are two critical success factors for ICM solution acquisition that the
purchase process must account for: The Mathematical Model and The
Best Practices.
The ICM solution acquisition process must fully investigate both
the mathematical modeling and calculation capabilities of potential
vendors, and also the best practices and benchmark data associated
with sales compensation plans. The traditional RFP approach works
well for the former, but what about the latter?
The Mathematical Model
Can an ICM solution accurately calculate commissions,
bonuses, and incentive payments? While this success
factor is no trivial matter, the reality is that today’s ICM
solutions are very capable of performing the arithmetic.
By their own admission, they all are very good at calcu-
lating variable sales compensation, even when those
calculations are rather intricate.
With the proper collaboration, all reputable vendors can
automate a compensation model, account for exceptions,
produce reports, provide override or customization capa-
bilities, and generate payments in a timely fashion.
These capabilities are the focus of most ICM RFPs, yet if
the scope does not go beyond these capabilities, the buyer
is at risk of acquiring a solution with a short shelf life.
SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 8
The Best Practices
As stated in the introduction, sales compensation is
often the largest single component of SG&A expense
costs. Like any other expense, executives should expect
a reasonable return, and the way to maximize ROI is
through identification of best practices and the tools to
implement them.
ICM acquisitions that don’t also emphasize best prac-
tices essentially results in the purchase of expen-
sive compensation calculators that, while capable of
creating some efficiency, only provide a backward
looking view of the compensation process.
Companies need to know with precision if their compen-
sation plan is producing the expected results, the impact
of changes to the plan, and how the plan is expected to
perform in future months and quarters.
Ideally, a prospect for ICM could describe the type of perfor-
mance their compensation plan is intended to drive and get
vendors to share a wealth of best practices and benchmark
data to produce the desired outcome. Yet, very little content
in a traditional RFP interrogates to discover if vendors can
offer wisdom and experience in this area.
EFFECTIVE ICM SOLUTION ACQUISITION SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 9

Effective ICM Solution Acquisition

In this guide’s introduction, a tale was shared of two companies that FIGURE 2: ICM RFP CONTENT CATEGORIES
acquired ICM solutions using different approaches.

That anecdote effectively frames the acquisition discussion for ICM solu-
Features/functions 39%
tions. The company that issued the RFP may have identified an effective
solution, but the use of an RFP did not guarantee that. Business intelligence/
14%
Analytics
The second company did experience success. There are obvious differ-
ences in the processes used by these companies to acquire a solution, Technical/architecture 12%
and understanding these differences is critical.
Security 12%
The second company had a completely different focus, which was not
simply the elimination of the arduous, monthly manual process of getting Data integration 7%
commission checks out the door. Instead, the focus was far more strategic:
access to benchmark data and best practices expertise to enable collabo- Training/Support 7%
ration with the CFO on increasing the return on sales compensation.
Company viability 3%
The bells and whistles of potential solutions were not the primary acqui-
sition consideration because the new VP understood from experience Implementation 2%
that the ROI of the chosen ICM solution did not come from its features.
Company culture 2%

Instead, the focus was far more strategic: access to Differentiators 1%

benchmark data and best practices expertise to enable
Benchmarking/ 1%
collaboration with the CFO on increasing the return on Best practices
sales compensation.
EFFECTIVE ICM SOLUTION ACQUISITION
To better understand the content of traditional RFPS for ICM solutions, 15
actual RFPS used for this purpose were analyzed.
Companies in several different industries prepared these RFPs, which
were sent to a variety of ICM vendors, and on average, the RFPs contained
197 distinct questions. The individual questions in these RFPs were cate-
gorized to understand what potential purchasers were looking for in the
vendor responses.
The result of that analysis reveals the emphasis of the RFPs evaluated for
this study (Figure 2 on previous page).
Each of the RFP content categories has merit – there are none that don’t
deserve some consideration in the acquisition process. Rather it is the
concentration of questions in certain categories and the lack in others that
is startling.
This data supports a premise of this guide, that traditional ICM RFPs are
heavily focused on solution features and functions.
The position of this guide is that purchasers should place far more
emphasis on best practices and benchmarking data than is indicated
in this analysis.
SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 10
Of the 2,961 RFP questions considered in the analysis presented in
Figure 2, a mere six inquired about best practices or benchmarking
data.
In fact, only four of the 15 RFPs that were analyzed contained any ques-
tions in this category, and none of the RFPs adequately plumbed the depth
of the best practices information category.
The text of the six best practices questions found in this RFP analysis are
presented here, as they are representative:
“Provide examples of how you share best practice information with
your clients.”
“What reports and reporting best practices would you recommend
based on past experience?”
“Do you have any best practices for hospitality implementations?”
“If you have multiple integration solutions, describe your best practice
recommendation.”
“Describe and provide examples of any non-tool related training
that is available for managers and administrators (e.g. compensation
guidelines, compensation best practices, etc.).”
“What is the frequency of data file updates that are accepted/required
(weekly, biweekly, monthly, quarterly) following program implementa-
tion? What do you recommend as a best practice?”
EFFECTIVE ICM SOLUTION ACQUISITION SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 11

When acquiring solutions that must conform to a set of industry standards
or generally accepted principles, such as accounting software, RFPs can
work well.
For ICM solutions, however, feature and function-oriented RFPs are far
less effective because they provide no real indicator of performance.
If a traditional RFP is not the ideal way to acquire an ICM solution, then
what is the recommended approach?
It requires an approach that goes beyond the scope of a traditional RFP,
and instead evaluates the technology, assesses a vendor’s ability to
execute, and its ability to help your sales compensation process deliver
more value.

While an RFP might provide insights into the process
efficiency gains an ICM solution can deliver, what matters
more is process effectiveness.
From one organization to another – even within the same industry – there
is a high degree of creativity and variability in structuring compensation
plans, with several influences on how to structure them, including:
Figure 3 on the next page contrasts the scope of the traditional RFP with
the recommended scope of a more effective ICM acquisition approach:
There are various tools and resources that can support the broader
scope of the recommended acquisition process.
These tools generally include a streamlined, business case-oriented RFP
and an accelerated, agile Proof-of-Concept (POC) that aligns the POC
goals with ROI.

Market share Average deal size

Brand awareness Industry
Degree of competition Product positioning & maturity
Average sales cycle length Economic conditions
EFFECTIVE ICM SOLUTION ACQUISITION SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 12

FIGURE 3: TRADITIONAL RFP SCOPE VS. RECOMMENDED RFP SCOPE

Traditional RFP
Recommended Scope
Scope

Validate Validate Ability to Ability to

Technology Technology Execute Drive ROI

Does the solution do
what I need to do?
Does the solution do Can the vendor provide
what I need to do? professional services, im-
plementation support, and
is it financially viable?
Will the vendor co-develop
the business case, prove
ROI, and share best
practices to create a higher-
value process?
RECOMMENDED ICM ACQUISITION PROCESS
Recommended ICM Acquisition Process
The preferred outcome of an ICM acquisition process is the selection and
smooth implementation of the solution that:
Minimizes the inherent risks of administering a sales compensation
program.
Provides information that helps keep the compensation plan aligned
with corporate objectives.
Delivers the best possible ROI.
Before describing a recommended acquisition approach in more detail,
it’s helpful to briefly discuss how ICM solutions produce ROI: through
providing the means to directly link and trace sales compensation
payments to outcomes.
Since sales compensation plans are designed to encourage specific
behavior and outcomes, it’s always been important to understand how
well the payments are influencing the outcomes.
SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 13
Even without an ICM solution, most companies start out well aligning
their plans to the preferred outcomes.
However, as plans are implemented, most are “tweaked” to accommodate
a variety of situations. For example, new sales representatives who come
on-board during the plan year are granted exceptions.
Mid-year sales contests are launched. Other exceptions and exemptions
are made for reasons that seem logical.
Very rarely are the cumulative effects of these changes
and exceptions understood in advance. Making changes
to the plan without a means of understanding the impact
they will have is like driving in the fog down a steep,
winding road without guardrails – at some point, you’re
going to go over the cliff.
RECOMMENDED ICM ACQUISITION PROCESS SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 14

ICM solutions deliver ROI by serving as a set of guardrails.
They allow companies to not only see through the fog of plan changes
and exceptions, but also model them and forecast their impact in advance.
This capability delivers ROI by keeping an organization’s plan aligned with
company objectives.
Unlike a traditional RFP, a business-case RFP provides as much or more
information to vendors as it asks for in their response.
The goal of the business-case RFP is not to identify the ideal solution,
but instead to identify a short list of candidate vendors with which to
conduct a Proof-of-Concept implementation.

The use of an ICM solution from a vendor that provides benchmark

data and best practices equips the organization to make intelligent and
beneficial plan change decisions, not just take shots in the dark.

What then is the best way to acquire a solution and get this ROI?

While the traditional RFP described in this guide has limitations, a busi-
ness-case RFP that lays the foundation for the ICM business case is recom-
mended. Its scope includes:

Objectives for sales compensation plan

Forecasted growth of revenue and sales staff
Current challenges with the process
Known analytics and reporting needs
Sources of data needed to administer the compensation plan
Example exception or change scenarios
RECOMMENDED ICM ACQUISITION PROCESS SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 15

Figure 4, to the right, contrasts the previously shown traditional RFP FIGURE 4: ICM BUSINESS CASE RFP CONTENT CATEGORIES
response content categories with a set recommended for a business
case-oriented RFP.
Benchmarking/
25%
Once again, each of the response categories depicted in this chart are Best practices
important, but some deserve greater emphasis than others. As this guide
Differentiators 15%
has consistently maintained, benchmarking and best practices inquiries
represent the largest single area of inquiry in a business case RFP.
Company viability 10%
Next in importance are differentiators, company viability, and implemen-
tation because these aspects are not always fully addressed in a POC Implementation 10%

initiative. Business intelligence/

10%
Analytics
Finally, the remaining categories are touched on in the RFP, but not to
extreme detail, because questions about each are fully addressed during Data integration 5%
the course of a POC.
Training/Support 5%
The Proof-of-Concept, then, is the critical part of the acquisition process,
as this is where the customer and vendor collaborate on a reusable Company culture 5%
“mini” ICM implementation.
Features/functions 5%
This is work that isn’t thrown away at the end of the POC, but rolled into
production. Effective POCs have specific goals and are built using an ROI Technical/architecture 5%
model, so that at the end of the POC, customer and vendor alike clearly
understand the business case for ICM. Security 5%

Done correctly, the POC takes the risk and guesswork out of the acquisition.
RECOMMENDED ICM ACQUISITION PROCESS SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 16

Proof-of-Concept projects usually take one of the following forms: Quite often, traditional RFPs include a requirement for a custom demon-
stration, leading some prospects to conclude that there isn’t a signifi-
1 Pilot. This approach to a POC identifies a subset of users that will cant difference between the traditional and recommended acquisition
do a full, end-to-end contracting process with a vendor, an imple- approach.
mentation, and then use of the solution in production. While a pilot
The differences may seem subtle, but they are significant. Custom demon-
is the most costly of the POC approaches, it does the best job of
strations are designed to showcase features and functions, usually using
lowering the risk of the full deployment.
a subset of customer data. The purpose is to satisfy checklist items in an
2 POC. This approach doesn’t include the full contracting as with a RFP by showing that a solution can indeed perform specific functions.
pilot, but does assume some level of shared work and risk. This
Using customer data provides greater confidence; sometimes false confi-
approach does an implementation to address targeted business
dence. Custom demonstrations are highly choreographed and do not
challenges, such as accrual or managing SPIFFs. While not a live,
require high degrees of collaboration.
full-production implementation, it does show how well a vendor
can execute across the set of presented business challenges. This
approach is often the least expensive approach to a POC.
Most vendors can study the RFP, load the customer data
3 Parallel POC. This approach is the same as the POC described into their system, and perform an impressive “custom”
above, but is done with the top two vendors. Each vendor is demonstration. The customer is a spectator in the custom
presented with the same problems and process. Because this demonstration.
approach does require shared work and risk, more resources are
needed to complete a parallel POC, and it costs more than the
POC described above.
RECOMMENDED ICM ACQUISITION PROCESS SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 17

The crucial difference between such a demo and a POC is proof of ROI.
A POC essentially runs in a production environment, almost always in
parallel to the existing sales compensation process.
Because a POC is a “mini” end-to-end implementation, it touches on most
if not all of the critical factors for success, such as integration.
A POC may seem like a major effort, but in reality it’s no more work than
the traditional RFP process, and it yields a better outcome.
The amount of time required to draft a traditional RFP, (which on average
contains 197 questions), distribute the RFP, consider the responses, assess
the top vendors and finalize an acquisition is often 6-8 months.

The key differentiator between custom demonstrations
and POCs is shared risk: both the vendor and customer
collaborate in and commit resources to a successful POC.
The customer is a user in a POC.
At the end of this process, some uncertainty remains about how well the
chosen vendor will ultimately perform, and final determination of vendor
effectiveness must await implementation and productive use.
The recommended approach of an agile, business case-oriented RFP
and POC produces results as quickly, ensures that the buyer and vendor
have a stake in the outcome, and provides greater confidence in the
acquisition.

The following section of this guide presents a sample project plan for
In addition to the proof of ROI that a POC provides, the process creates
acquiring an ICM solution through a business case RFP and POC.
trust. The experience of working together during the POC demonstrates
to the buyer that the vendor has skills, knowledge, and expertise to effec-
tively implement and support the solution.

A proper POC also answers key questions about usability. ICM solu-
tions typically aren’t used everyday, so when they are used, they must
be very simple.
MODEL ICM ACQUISITION APPROACH
Model ICM Acquisition Approach
The ideal ICM acquisition process will typically include some or all of the
processes, tools, and resources described in this section.
Major projects that attempt to address critical flaws in the current
sales compensation process should consider each of the potential
plan elements below. Minor projects that are addressing lower impact
issues with sales compensation have the luxury of selecting those plan
elements that best serve the purpose:
Project charter. Any serious initiative should start with the end in
mind. Develop clarity about what the ideal outcome looks like, and
then get some level of management approval to pursue a solution.
What’s needed at the beginning is not budget approval, but acknowl-
edgement of the need and authorization for the search. Communi-
cate that the process will produce precise ROI estimates, which will
later serve as the financial justification for acquiring a solution.
Vendor Identification. Identify the pool of candidate vendors for
distribution of the business-case RFP.
SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 18
Draft the RFP. In conjunction with identification of candidate vendors,
draft the business case RFP that contains question categories that
reveal how solutions create value and how well vendors can execute.
Example questions might include:
“What is an optimal compensation plan in my industry?”
“How should I set quotas in my industry?”
“How does this solution help identify whether my top earners are
also my top performers?”
Make sure the RFP does more than ask for a list of solution bells and
whistles.
RFP distribution. Send the final RFP to the previously identified pool
of candidate vendors. Give vendors an appropriate amount of time to
respond. Since this RFP is not a traditional one, the response window
is shorter, allowing vendors to respond more quickly. A 30 to 45-day
response window is more than adequate.
Evaluate RFP responses. Review the responses and identify a short
list of two or three well-qualified vendors. Obtain references from at
least three current users of each short-listed vendor, and check them.
MODEL ICM ACQUISITION APPROACH SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 19

Issue POC invitation. Invite the most promising vendor to conduct a

POC.

Develop POC goals. Jointly develop specific goals, based on an ROI

model, which will serve as the criteria to judge the success of the POC.

Launch the POC. Run the POC through at least one payment process
cycle, and more if necessary. Test a number of real-world scenarios
during the POC, such as quota changes, a sales contest, or adding a
new sales representative to understand how easy they are to do.

Evaluate POC. Determine how well the ICM vendor met the goals of
the POC. If the goals were not met, prepare to repeat the POC process
with the next short-listed vendor.

Recommend solution. If the POC goals were met, take a recommen-

dation forward to management for acquisition approval. The customer,
not the vendor, should present the POC results and recommendations
to management.

Implement solution. Collaborate with the vendor to complete the solu-

tion implementation, reusing the work that began with the POC.

Based on the scope of their project, companies can select from these
processes and tools to create a plan for successfully acquiring and
implementing an ICM solution.
ANALYST BOTTOM LINE
Analyst Bottom Line
As stated in the introduction of this guide, sales compensation
is for many companies the largest SG&A expense.
As long as sales compensation is managed through a manual
process, it will remain an expense, with accuracy, consistency, and
efficacy an elusive goal.
Even when manual processes for getting commission checks calcu-
lated and work paid smoothly, they only provide a view of what
happened in the past. Since the sales compensation plan is in reality
the gate key to most of a company’s revenue, it should be viewed
as an investment, managed to achieve the highest possible ROI.
This can only occur through reengineering the compensation
process with automation tools that help users implement best
practices. Tools that merely automate existing, manual processes
are little more than expensive commissions calculators.
The cost of getting sales compensation wrong – delayed finan-
cial reporting, restated earnings, legal liability, or just plan/objec-
tives misalignment – is too high. While there is perceived risk in
the acquisition of an ICM solution for companies using a manual
process, there is greater risk in maintaining the status quo.
SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 20
Both types of risk are mitigated through the acquisition process
recommended in this guide. At the heart of this recommended
process is the POC, and it’s essential because only a POC
provides an accurate assessment of true performance and ROI.
The first imperative this guide encourages is to replace manual
sales compensation administration processes with best prac-
tices driven automation.
Companies are ideally strategic enough in their thinking to recog-
nize the value of doing this without having a negative triggering
catalyst, such as a restatement of earnings.
The second imperative is to then pursue the acquisition of a
solution using the process this guide recommends. Doing so will
ensure the right solution is implemented the first time because it
exactly solves the problems it needs to.
Tools that merely automate existing, manual processes
are little more than expensive commissions calculators.
- SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 21

SA L E S C O M P E N SAT I O N
ACTION PLAN
ACTION PLAN SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 22

1 Follow

2 Review Follow Proven Best Practices to Sales

Enablement Success
3 Organize
Follow our Sales Enablement Plan Playbook and set of premium
tools and templates to create a comprehensive sales enable-
4 Train
ment plan.

5 Measure

VIEW RESOURCE
ACTION PLAN SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 23

1 Follow

Review your Sales Maturity

2 Review

3 Organize Review our Sales Operations Maturity Assessment to identify

how your organization stacks up in this focus area.

4 Train

VIEW RESOURCE
5 Measure
ACTION PLAN SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE
1 Follow
2 Review Organize your Company’s Structure for
Sales Enablement
3 Organize
Use our Sales Enablement Roles Matrix to standardize roles and
duties for Sales Enablement.
4 Train
SALES ENABLEMENT
5 Measure ROLES
Senior
Management
RESPONSIBILITIES
Revenue Accountability
Staffing & Channel Management
Reporting to CEO/Board
Product
Management
New Product Development
Create Sales Tools/Guides
Messaging & Positioning
Build Reports & Dashboards
Sales Operations Monitor Sales Productivity
Data Management
Build Reports & Dashboards
Marketing
Marketing Systems Admin
Operations
Data Management
Lead Generation & Events
Demand
Branding & Social Media
Generation
Content Marketing
Customer Acquisition
Sales/Account
Customer Retention
Mgmt.
Up-sell/Cross Sell
Staffing for Sales Enablement
Human
Sales Training
Resources Performance Management
Customer Service/Support
Customer
Identify Sales Opportunities
Support
Customer Insight/Feedback
Roles Matrix
PROCESSES
Budgeting & Planning
Performance Reviews & QA
Recruitment & Retention
Product Launch
Win/Loss Analysis
Competitive Analysis
Sales Forecasting
Territory Management
Sales Compensation
Marketing Budget
Campaign Analysis
Lead Scoring & Nurturing
Advertising/Sponsorship
Lead Generation & Appointments Digital Asset Management
Tradeshows & Webinars
Sales Process
Opportunity Management
Contact Management
Recruiting & Hiring
New Rep Onboarding
Performance & Firing
Helpdesk (phone support)
Email Support (case/ticket)
Online Community Requests
TECHNOLOGY
CRM
Business Intelligence
MRM
Product Mgmt. System
Enterprise Feedback/Survey
Content Management
CRM
Proposal/CPQ
Sales Content Portal
CRM & Marketing Automation
Analytics & B.I.
Asset Mgmt. & MRM
Marketing Automation/Email
Event/Survey Management
CRM
Proposal/CPQ
Sales Content Portal
HRIS
Learning Management System
LinkedIn & Job Websites
Customer Support, Twitter
CRM, Order Management
Accounting/Billing/ERP
24
CONTENT
Thought Leadership Blog
Webinar Presentations
Conference Keynotes
METRICS
Revenue by Channel
Customer Lifetime Value, NPS
Return on Customer (ROC)
Data Sheets, Whitepapers
Case Studies/Testimonials
Competitive Analysis
Compensation Model
Market Share, Profitability
Brand Equity
Content Usage
% Quota Achieved
VIEW RESOURCE
TCO/ROI Calculators Sales Cost/Revenue Ratio
Sales Playbooks Incentive vs. Quota Ratio
Buyer Personas Sales Qualified Leads
Customer Journey Map Cost Per Lead (CPL)
Proposals, Presentations
Cost of Acquisition (CAC)
How-To Guides Campaign ROI, Email Metrics
Research Reports Marketing Qualified Leads
Webinars Contribution to Pipeline
New Features/Ideas for R&D % Quota Achieved
Objection Responses Renewal Rate, Revenue
Opportunity Metrics
Sales Scripts
Job Descriptions Avg. Time to Achieve Quota
Quality Assurance/Coaching % Unsuccessful Hires
Sales Training Manual # CV/Resume Submissions
New Features/Ideas for R&D Avg. Time to Resolution
Support Scripts % Escalations to Tier 2
FAQs, SLA Net Promoter Score (NPS)
ACTION PLAN SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 25

1 Follow

2 Review Develop an Education/Training Plan for all

Affected Personnel
3 Organize
Watch our eWorkshop Sales Compensation Solution Acquisition:

4 Train Getting to Automation & ROI, created to help organizations use a

more effective process for acquiring ICM solutions.

5 Measure

WAT C H V I D E O
ACTION PLAN SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 26

1 Follow

2 Review Measure the Success of your Initiatives and

Programs
3 Organize
Measure the success of your Sales Operatins initiatives and
programs with our Sales Operations Metrics Dashboard.
4 Train

5 Measure
VIEW RESOURCE
 About ANA

The ANA (Association of National Advertisers) makes a difference for indi-

viduals, brands, and the industry by driving growth, advancing the interests
of marketers and promoting and protecting the well-being of the marketing
community.

Founded in 1910, the ANA provides leadership that advances marketing excel-
lence and shapes the future of the industry. The ANA’s membership includes
more than 1,000 companies with 15,000 brands that collectively spend or
support more than $400 billion in marketing and advertising annually. The
membership is comprised of more than 750 client-side marketers and 300
associate members, which include leading agencies, law firms, suppliers,
consultants, and vendors.

Further enriching the ecosystem is the work of the nonprofit ANA Educa-
tional Foundation (AEF), which has the mission of enhancing the under-
standing of advertising and marketing within the academic and marketing
communities.
 About Demand Metric

Demand Metric helps Marketing teams get stuff done with practical tools,
training, and a simple, modern platform for managing work.

Our analysts identify best practices from fast-growing companies and

build Playbooks & Toolkits, Guides & Reports, Training Courses, and Project
Templates to help you optimize your processes, add structure to your depart-
ment, and get your team punching above their weight class.

Manage your work visually with our easy-to-use platform, built for small
marketing teams by design. See what your team is working on at a glance
so you can spend less time managing projects and more time knocking
stuff off your list.

Through strategic partnerships with the AMA, ANA, and AIPMM, our 1,000+
time-saving tools & resources have become the industry standard. Don’t
start from scratch! LEARN MORE
Sign up for a free trial at www.demandmetric.com
- SALES COMPENSATION SOLUTION ACQUISITION BEST PRACTICES GUIDE 29

© Demand Metric Research Corporation.

All Rights Reserved.

www.demandmetric.com

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