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Loading ...Is the ‘very small’ sales force a viable niche market for SPM solutions? That’s what some market trends tend to indicate. What characterizes this small market is that they typically have less than 100 sales reps, not much IT knowledge, and not a big budget for incentive compensation overhead. That’s where some emerging Software-as-a-Service (SaaS) solutions can become a viable solution for these companies, offering low cost implementation or even self-implemented solutions, and charging a fee per month per payee instead of an upfront license fee.
Around the end of last year, Makana Solutions launched a new SPM calculation engine (Makana Motivator) targeted to companies with a small sales force – less than 100 employees. I reviewed their solution here - a self-served solution available at $29 per month per payee.
A month ago, there was a big announcement that Makana was acquired by Salary.com, which became interested by the Incentive Compensation Market. The exact terms of the deal were not disclosed, but some key Makana employees remained with Salary.com. And then there was a rumor…
The former CEO of Makana, Liz Cobb, was joining Xactly. Could it be true? Liz was also the founder of Centive, a main competitor of Xactly until its acquisition. And indeed, today Xactly confirmed that Liz Cobb joined them as General Manager of Small and Medium Business Solutions.
But this is not the only big news from Xactly this week. On the first day of the dreamforce event, Xactly announced the launch of Incent Express, another sales compensation solution for small-to-medium (SMB) businesses that use Salesforce CRM. According to Xactly’s press release, Incent Express can be deployed entirely on-line by a non-technical user in a matter of hours and will be priced at 29.90 per payee per month.
I have also reviewed other solutions earlier this year targeted to this market such as CellarStone’s EasyCommission.
The challenge in this market is really the size, and as with most SaaS applications, the secret to success will be volume. At $30 per month per payee – or $360 per year per payee, how many such payees does it take to make the solution sustainable? With only 1000 payee, or in other words twenty 50 payee customers, revenues would be $360,000. Or 2000 payees? 720,000$. It doesn’t seem like a bad proposition for the vendors.
But what about for the customers?
The biggest challenge for the adoption of such solution by customers is that for many, a cost of $360 per year per sales rep (or $18,000 per year for a sales force of 50 employees on top of Salesforce.com CRM fees) can be a pretty steep amount; particularly when Excel and Access can do the job for $0 per payee per year! And often, that’s true and there might not be a compelling reason to do the switch.
But sometimes, the benefits of an SPM solution, such as reports accessed on-line by the reps, real-time dashboards, and modeling of plan changes (just to name a few) can be good arguments to drop the spreadsheets and consider alternatives.
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