Gain insights and solutions to four highly common headaches that companies face in their sales performance management processes. Learn more: http://ibm.com/spm

1. Sales
Compensation
Management4
Common
Headaches with

2. Labor
Intensive#1

3. Many firms still rely on a patchwork of spreadsheets,
email, manual processes and outdated legacy systems
to manage and administer variable compensation plans.
Source: CSO Insights
Approach for calculating and
managing commission
Spreadsheets
51.6%
Do not know
3.4%
Manual calculations
10.8%
Commercially developed
incentive management
system 15.2%
Internally developed
incentive management
system 19.0%
51.6%
19.0%
15.2%
10.8%
3.4%

4. Legacy approaches are a drain on the company
Manual steps
Workarounds
Errors

5. Is it hard to imagine why?
=(IF(A7<='Flags(mth)'!$D$21;0;IF(A7<=Inputs!$E$19;IF(A7<In-
puts!$E$19;( (A7-MIN(A6;inputs!$C$13))/Inputs!$D$55-Inputd!$C$13))*-
LOOKUP( Inputs!$D$55;Notes!$E$8:$CB$8;Notes!$E$553:$C-
B$553)+C6;IF(A7= Inputs!$E$19;((A7-MAX(A6;Inputs!$C$13))/In-
puts!$D$55-Inputd!$C$13)) *LOOKUP(Inputs!$D$55;Notes!$E$8:$C-
B$8;Notes!$E$553:$CB$553);IF( Repayment!A7=Inputs!$E$19;OFF-
SET(Notes!$I$553;0;Repayment!REF!); IF(A7=Inputs!$D$61;OFF-
SET(Notes!$I$553;0;Repayment!REF!);IF(A7> Inputs!$D$61;OFF-
SET(Notes!$I$553;0;Repayment!REF!)/2))))))))*1000000

6. Is it hard to imagine why?

7. Analytics can help sales leaders improve
decisions about issues such as sales strategy,
sales-force size and structure, and the
recruiting of sales talent.
Legacy approaches can blindside sales forces
with undesired consequences in terms of
sales-force effort allocation and financial risk.

8. Costly#2

9. Cost of errors and
commission overpayments
estimated at greater than
$1 million per year.
- An IBM customer in
financial services

10. “Enterprises will miss the equivalent
of 5% to 10% of annual sales as
lost opportunities, which could
have been captured by improving
the management of overall SPM.”

11. Complexity#3

12. Rules for compensation calculations
can get complex

13. An example from an
IBM insurance customer
Has been in force for 8 years (TAC and SIA products)
and 10 years for SC+ products
And its amount increases from 1 year to the next
beginning in the 8th year (TAC and SIA products)
and in the 10th year for SC+ products
And its increase is 75% or greater
If a policy...
...then a persistent bonus based on the current policy
is paid to the agent on the policy at a rate determined
from a table of potential rates.

14. When to pay the sales reps is tied
to your business dynamics
@ Delivery
If rep needs to be
involved at point of
installation
@ Booking
If little likelihood of
order cancellation or
need for follow-up
@ Payment
Where customer
payment is
problematic
@ Shipment
If high rate (over 5%)
of order cancellation
between booking
and shipment

15. Sales incentive compensation
can be transaction intensive
One of our Incentive Compensation
Management customers processes over
transactions in a month

16. Shadow
Accounting#4

17. — David O’Connell, Aite Group
“Many plan participants maintain their own
compensation tracking documents that
they use to double-check their compensation
departments’ calculations.”
Not only does this lead to more disputes between
the sales rep and compensation manager around
payment accuracy; it also means sales reps are
wasting potential “selling time.”

18. In fact, only 1/3 of a sales rep’s
time is devoted to selling
Selling (face to face, phone, web)
35.0%
Other (travel, training)
11.6%
Post-sales tasks and
account management 16.2%
Lead generation and account
research 23.5%
Meetings and administration tasks
13.8%
Source: CSO Insights
35.0%
23.5%
16.2%
13.8%
11.6%
Salesperson time allocation

19. How can a
Sales Performance
Management
solution help?

20. IBM Sales Performance Management solutions streamline
and automate the process of compensation planning.
Administrators organize their business logic visually to
gain efficiencies, reduce errors and facilitate collaboration.

21. Sales rep dashboards provide instant visibility into
compensation payments and help reps understand how
they’re doing and how to target their future efforts.

22. — Huntington Bank
“Previously, they only received compensation
reports on a monthly basis;” now, they have
daily insight.
“By checking their own performance regularly,
they can keep themselves on track to hit
their targets.”
“By having transparency into the system, we
don’t have to worry about them saying,
‘Wait—I don’t get this.’”
“…spend more time selling”
— An IBM customer in mobile e-commerce

23. According to Gartner,
Sales Performance Management solutions...
Imagine the cost-savings!
Reduce IT and
administration
staffing
by more than
40%
FACT #2
Reduce errors
by more than
90%
FACT #1

24. Learn more about Sales
Performance Management
ibm.com/spm