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Clear, timely reporting remains the greatest hurdle to using profitability in the sales incentive plan. For the measure to be effective, sales people and managers must understand what drivers of profitability need focus with a degree of frequency that aligns with the sales cycle. Most challenging are sales environments with a high-transaction frequency, significant disparity in profitability across those transactions, and use of channel partners in the sale and distribution of the product.
There are a number of software applications for financial reporting and analytics; check for those prominent in your industry, and ensure targeted vendors have met the requirements of companies similar to yours. From a sales perspective, the best applications are those delivering only the needed information at a given time. The last thing you want your sales people doing is poring over lengthy reports, instead of selling.
Many times when auditing metrics and goal effectiveness we discover management and sales people simply don’t use the data, either because they think its not accurate or it doesn’t pertain to current priorities. Data accuracy has a number of root causes. For purposes of sales motivation and incentives, your quality metric is dead on arrival if there is widespread perception or poor data quality. Therefore, test the metric’s reporting accuracy thoroughly before applying to incentives. A good rule of thumb is the number of items requiring correction should not exceed one percent of the total data set – e.g., no more than 1 of every 100 goal-achievement scores in that month’s performance period requires adjustment due to erroneous data.
To help ensure sales management and reps actually use the reports (once accurate), include sales management in the process for defining reporting requirements, configuring the reporting interface, and other user-centric components. Once you are reporting the metric to the field, research and showcase best-in-class usage, using day-in-the-life examples and statistics on time savings. Appoint sales managers as technology champions to fully understand the application’s benefits, and espouse these benefits to the larger sales population. Monitor usage, and have in place close-loop process to address unintended consequences.
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