Sales incentives are one of the essential components that align the salesforce with organizations goals and keep them motivated and engaged to perform better at their job. Effective sales incentive plan designs can have a multi-level impact on the organization including higher sales outcomes, retention of top performers, better customer engagement, etc. Thus, there is a need to design the right sales incentive compensation plan that meets organizational objectives while ensuring that other stakeholders are completely aligned and understand their expectations from them.

However, finding the right balance between the key guiding principles for effective sales incentive plan design is the most difficult task. It is thereby important for any business to evaluate what is more important for them as an organization - pay fairness/equal earnings opportunity vs. easy to understand, motivational vs. fiscally responsible, flexible vs. easy to manage.

While designing an incentive plan, it is desirable to ensure that plan adheres to the following design principles:
Alignment with the business objectives (related to revenue goals, customer segments, product lifecycle, etc.)
Pays for performance (ensures that salespeople who are able to grow their territory more make more money)
Provides equal earning opportunities (every salesperson should be able to make money irrespective of the historical performance or territory size)
Financially responsible (total incentive payout outflow is aligned with national brand performance)
Competitive in the labor market (on-target earnings and upside potential earnings in case of beating target aligns with the industry standard to ensure retention of top performers)
Easy to understand and implement (sales incentive plan is designed to be easier to understand for the salespeople and can be easily implemented and managed on an ongoing basis with calculation errors)

It is very important for an incentive plan to be designed such that it can be easily understood and thus lead to the proper execution of the plan bringing positive results for both the salesforce as well as the organization. Setting up an effective incentive plan takes into account several factors such as regional dynamics, territory sizes, customer spread, and many more that are difficult to translate into qualitative terms. An organization needs to set the right goals for its salesforce for its productivity and effectiveness with the right Incentive Compensation Plan.

Incentive operations are the backbone of the success of the overall incentive program management. Organizations can have a great incentive plan design but the lack of a proper operations framework can have detrimental effects on the morale of their salesforce. It is desirable to automate every step of ongoing operations right from data collection, transformation, incentive measure calculations, incentive payouts, approvals, and final reporting so as to improve the effectiveness of the incentive program. An incentive calculation is something that must be performed with utmost care as any type of payout error may result in salespeople questioning the entire program. Aurochs automates this process of calculation end-to-end and enables a high level of accuracy in incentive payouts.

Organizations should also aim for creating and distributing visual and intuitive sales performance dashboards on a periodic basis so as to provide timely visibility and transparency to salespeople about their sales incentive payout calculations. This enables salespeople to understand underlying performance parameters while actionable nudges motivate them to perform better. In addition, performance summary dashboards can help organizations understand the effectiveness of their sales incentive plan and evaluate the performance of individual salespeople so as to guide the entire coaching process.

Managing sales incentives calculations and reporting using excel spreadsheets or legacy systems can be tedious. Performing data transformations, exception calculations, and report generation manually is no easy task as lots of effort, time and resources are to be committed to the whole process. The manual incentive calculation process is prone to errors and change rollouts are always chasing the system instead of the other way round. It is thereby recommended to automate the whole calculation process using the right platform.

About Aurochs:

Aurochs specializes in providing sales incentive management solutions for the life sciences industry. The company leadership has over 100+ years of incentive compensation management experience that spans all business, functional and technical areas. We have a deep understanding of life sciences data structures and process quality requirements. We provide platforms and solutions that are highly intuitive, easy to use, and designed to bring efficiency to business operations. Platforms and solutions design is driven based on thousands of hours of life sciences sales operations experience which allows our clients to achieve high levels of automation and operational efficiency.