Sales Compensation Automation Eliminate Spreadsheets; Increase Revenue and Profits www.makanasolutions.com
Sales Compensation Automation 2 Executive Summary Sales compensation is a powerful, strategic tool that small- and medium-sized businesses (SMBs) can leverage to optimize sales productivity and successfully drive revenues and profits. Typically an SMB s second highest variable expense (after salaries), it needs to be thoughtfully designed to ensure that it aligns with corporate strategy; and easily communicated and administered to ensure that quotas and rewards are clearly explained, costs are controlled, revenues are delivered, and the sales force is paid promptly and accurately. According to the Aberdeen Group, a majority of companies are using spreadsheets to support their commission process. But this limited tool can lead to numerous problems such as overpayments, unclear commission agreements, inconsistencies across incentives that actually de-motivate sales reps and lead to cannibalized sales, inaccurate or incomplete calculations, and no easy way to audit the process. So why do so many SMBs still rely on the limited capabilities of spreadsheets for one of their most important strategic functions? Most do it because they think spreadsheets are the easiest, most inexpensive solution. But how inexpensive is it when you lose money year after year because of poorly designed plans that do not deliver the revenues you expect? Or when an error in a single cell can result in overpayments month after month, year after year because your complex spreadsheet-based plan is copied frequently, and now you re not even sure how to go back in and make modifications? Automating the sales compensation process from plan design through payment frees SMBs from the limitations of spreadsheets, eliminates costly errors, and enables organizations to deliver effective sales compensation plans that appropriately motivate behavior and drive sales. Makana Motivator, from Cornerstone Software, is the only web-based, self-service software solution to automate the entire sales compensation process from plan design through payment. Makana Motivator provides best practice recommendations, modeling tools, automatic commission calculations, and graphical reporting tools that enable SMBs to design, administer and communicate effective sales compensation plans that GET RESULTS. Ineffective tools, like spreadsheets, can lead to misalignment between plans and goals, inaccuracy, late payments, and unintended costs in a sales compensation plan. Automate and integrate the sales compensation process to: Drive your company s strategy with tangible business results Get a high ROI from your sales compensation through increased revenues/ profits Motivate and retain your talented sales representatives
Sales Compensation Automation 3 Spreadsheets Fall Short for Sales Compensation When designed and administered effectively, compensation plans motivate profitable sales behavior, enabling SMBs to hit revenue targets and attract and retain top talent. Unfortunately, most companies are still using spreadsheets for this critical function. While figure 1 spreadsheets are powerful tools for organizing and manipulating data, they are cumbersome, time-consuming, and error-prone as a means for designing and administering sales compensation plans (figure 1). Salespeople have good reason to question the accuracy of their compensation research shows that 91% of spreadsheets contain errors, leading to incorrect payments. 1 Spreadsheets lack the integrated, automated environment that allows SMBs to seamlessly transition from plan design to the generation of commission agreements to the timely, accurate distribution of payments and reports. The limitations of spreadsheets can lead to: Problem Plans that don t properly align with corporate strategy Over-payments and unanticipated cost exposures Commission agreements that don t clearly communicate goals and are difficult to produce Late/Inaccurate payments High administration costs Lack of easy auditing Cause No built-in best practice recommendations for sale comp plan design No easy-to-use modeling tools to calculate revenue and costs across plans at varying attainment levels No integrated tools to easily produce graphical commission agreements with standardized terms and conditions Manual, complex spreadsheet calculations take time and result in errors Excessive time spent conducting manual calculations and researching and resolving disputes Changes can be made to any cell without traceability 1 Spreadsheets and Sarbanes Oxley: Regulations, Risks, and Control Frameworks, Dr. Raymond R. Panko, a professor of IT management in the College of Business Administration at the University of Hawaii, June 2006 research paper
Sales Compensation Automation 4 The lack of integration and the overall complexity of spreadsheet-based plans more often than not, cause an organization to lose sight of strategy, accuracy and effectiveness because they re so involved in the minutia of cells and tables. Multiple, complicated spreadsheets literally create a physical disconnect between the design, communication and payment of a plan which is how strategy gets lost and errors are incurred. They re just not the right tool for the job. How Sales Compensation Automation Drives Success Automating sales compensation reconnects your plan design to your company strategy and integrates your plan design with payments, eliminating errors. Software designed to automate sales compensation gives you the tools you need to design better plans that deliver the results you expect. More importantly, it drives revenue and profits because it enables SMBs to: Design sales compensation plans that align with corporate strategy Produce commission agreements that clearly communicate quotas and rewards Calculate commissions automatically based on plan design with one click Deliver payouts promptly and accurately building trust Generate graphical performance reports that motivate Modeling Tools & Best Practices Drive Design figure 2 figure 3 Powerful, easy-to-use modeling tools (figure 2) enable SMBs to properly manage costs, and avoid overpayments and unanticipated cost exposure. With a self-service software solution built specifically to design and administer sales compensation plans, organizations can easily create strategically aligned plans (figure 3) that provide consistency across departments, better encourage teamwork, and avoid unintended consequences. Automate the design of sales compensation plans to: Create more effective plans, faster Model various attainment scenarios to avoid unexpected cost exposure Appropriately motivate sales to achieve corporate goals Ensure consistent agreements through common terms and conditions. Increase profits Graphical, Standardized Commission Agreements Drive Performance In an automated, integrated environment, SMBs can also quickly and easily generate graphical commission agreements that clearly communicate quotas and payouts based directly on the plan you designed. These agreements enable sales reps to sell with confidence because they can see exactly how they will be compensated for their performance.
Sales Compensation Automation 5 The ability to define standardized terms and conditions enables policies and procedures to be consistently enforced across the entire sales team, and saves time and overhead when generating commission agreements for the team (figure 4). Accurate, Timely Payouts Build Trust Prompt, accurate payments enable SMBs to build trust and enhance motivation across the sales team. Automating the payment process improves accuracy and allows an organization to employ the best practice of rewarding its employees promptly and reliably. This in turn, builds trust and reduces shadow accounting so sales reps spend less time checking math, and more time selling products. It also reduces the amount of time (and frustration!) sales plan administrators spend resolving discrepancies and disputes. Makana Motivator Automates Sales Compensation figure 4 Designed specifically to meet the needs of SMBs, Makana Motivator automates and integrates the sales compensation process from plan design through payment. A web-based, self-service software solution, Makana Motivator enables SMBs to quickly design effective sales compensation plans, generate graphical commission agreements, ensure accurate and timely compensation payments, and deliver graphical reports via email or through an online portal. Key Compensation Planning Tasks: Define plan metrics, rates, and calculations Allocate quota Model costs at various levels of attainment Compare modeled payouts to historical payouts Document consistent terms and conditions Harness Best Practices and Step-by-Step Guidance Makana Motivator provides step-by-step guidance and visual feedback through the entire planning process. It offers best practice recommendations (figure 5) and empowers users with varying levels of sales compensation experience to build consistent, effective plans. Through on-screen tips and suggestions, Makana Motivator allows organizations to determine the proper incentive to base mix, the right number of goals, proper weighting of incentives, and that the plan pays as expected. figure 5
Sales Compensation Automation 6 Anticipate Incentive Costs and Revenue with Easy Modeling Makana Motivator allows users to leverage historical and projected attainment information to perform revenue cost-modeling at the plan, individual or figure 6 organizational level (figure 6). SMBs can create what-if scenarios and test plan outcomes based on various levels of attainment. They can also verify that their plans meet budget requirements, do not overcompensate under any scenario, and ensure corporate revenue goals can be met before rolling the plan out to the sales force. Move Seamlessly from Planning to Production All too often, once a sales compensation plan is agreed upon, organizations must undertake a completely separate effort to build new spreadsheets to calculate payments on these plans or pay a hefty implementation fee to a different service provider. With Makana Motivator, plans move into production for calculation, administration, and payment with a single click. With seamless integration between plan design and payment, rules and formulas from the plan are automatically applied to all orders to calculate payments. Makana Motivator offers: A web-based selfservice solution with no implementation costs Easy plan design with best practice tips Graphical modeling tools One-click from planning to production Management reports and commission statements via online portal or email figure 7
Sales Compensation Automation 7 Deliver Timely Reports and Feedback With Makana Motivator, organizations can share up-to-date graphical commission statements and management reports online through our sales portal, or via email (figure 7). Access to detailed commission statements builds trust across the sales force because it allows them to see exactly how their commissions are calculated. Regular, accurate statements keep sales reps focused on selling products and not busy double-checking math. Commission reports give sales reps visibility into their performance against their quota. They also enable the management team to clearly understand how each sales rep is performing. Get Up and Running Quickly Because Makana Motivator is a web-based, self-service solution, SMBs can get up and running in no time and work easily with colleagues anytime, anywhere. No upfront capital investments, implementation, or IT support is required, and upgrades are delivered automatically. Summary Spreadsheets do not provide an integrated, automated environment for designing, administering and communicating great sales compensation plans. It s just too easy to get lost in the weeds, spending more time wrestling with the constraints of formulas and cells than focusing on strategy, accuracy and effectiveness. Automating sales compensation from plan design through payment allows SMBs to streamline the process, improve accuracy, design plans that align with corporate strategy, better motivate their sales force, and increase their revenue and profits. To learn more about how Cornerstone Software can help you effectively drive sales and attract and retain top talent through your sale compensation plans, visit us at www.makanasolutions.com or contact us at 877-881-0001. www.makanasolutions.com 15 North Southwood Drive Nashua, NH 03063-1803 877.881.0001 sales@cornerstonesoftware.com Makana Motivator is a registered trademark of Cornerstone Software, Inc. 2012, Cornerstone Software, Inc.