Modern Sales Compensation: Drive Predictable Revenue Smarter

Sales Crediting, Sales Quotas, and Sales Incentive Plans are being linked and streamlined with an increasing frequency, in an attempt to mitigate the misalignment of sales incentives, erratic revenue volatility, and lack of sales engagement.

Aligning sales crediting, quotas, and incentive plans, and breaking operational silos are some much-needed approaches in the sales compensation journey, but as most organizations today realize, that’s not enough anymore.

As businesses face increasing pressure to predictably and steadily grow revenue quarter-after-quarter, the next natural evolution in sales compensation is “Continuous Incentive Intelligence” or CII. CII refers to a dynamic, data-driven approach that continuously monitors, analyzes, and optimizes sales incentives to proactively link sales behaviors with desirable business outcomes.

In this blog, we’ll explore the concept of CII in detail, and understand how connecting data, behavior, and rewards continuously can power predictive revenue growth, also you can visit our – Linkedin page and Youtube Video.

The Shortcomings of Conventional Sales Incentive Plans

A traditional incentive plan runs on a fixed incentive cycle –quarterly, semi-annual or annual and only retrospectively rewards behaviors with little to no real-time feedback on quota attainment or incentive attainment.

An aligned sales crediting, quota, and incentive design is a great step in the right direction and can help avoid many of the disjointed approaches of a split model, but these designs can also remain largely reactive.

Here are a few common scenarios with static incentive plans and reactions only at period-end.

1. Missed opportunities: Misaligned quotas or crediting rules that only come to light at the end of the period

2. Revenue uncertainty: Incentives that do not drive behaviors that matter—for example, achieving plan if the quota comes from high-volume but low-margin, low-priority deals.

3. Sales attrition: Vague, unfair or unattainable incentive plans sap motivation and retention.

The idea of static designs falling short of meeting sales incentives with business needs is not new. But companies need a more holistic approach to not only align incentive elements, but also constantly adapt to market dynamics, sales performance and strategic shifts.

What is Continuous Incentive Intelligence and How Does It Work?

Continuous Incentive Intelligence or CII refers to a framework that looks at three key elements in sales incentives data, behavior and rewards—and monitors, analyses and optimizes these levers continuously to encourage desired behaviors.

Let’s take a closer look at each element and how organizations can collect the right metrics to understand performance from each, and then link these to targeted payouts.

1. Data: Monitor and collect sales performance metrics in real time from CRM, ERP, and Sales Compensation systems.

2. Behavior: Track the sales activities and specific actions of a rep or a sales team. This may include product focus, customer profile, or geographies that are contributing to sales outcomes.

3. Rewards: The structure of payouts or commissions that are linked to the behaviors that most positively impact revenue, margin and customer satisfaction.

Businesses can monitor these data points continuously to not only identify glaring misalignments between business needs and incentives but also the smaller nuances of sales performance that can benefit from iterative incentive adjustments to keep pushing desired behaviors.

Weaving data, behavior and rewards: A Framework for CII

1. Data-Driven: Collect real-time performance metrics from CRM, ERP and Sales Compensation data warehouses.

2. Behavioral Analytics: Track and analyze sales activities and specific actions linked to desired outcomes.

3. Targeted Rewards: Dynamically link incentive payouts to the identified behaviors that positively impact business metrics.

4. Monitoring: Use dashboards, alerts and analytics to track results against set targets or benchmarks in real-time.

5. Acting on Insights: Use iterative feedback loops to make adjustments to incentive plans, quota targets or crediting rules based on changing business needs or sales performance data.

Example: An enterprise software company noticed mid-quarter that most of the deals booked by reps were under the 10-figure mark. Further analysis showed that reps were rushing low-value deals for an early win as most of the 10+ figure deals were still in the pipeline and might carry over. Leadership changed the quota target for the rest of the quarter, and rebalanced incentives for more emphasis on higher-value deals.

The Objective: Deliver Predictable Revenue Growth through Continuous Incentive Alignment

1. Driving Predictable Revenue Growth: Continuous incentive optimization can proactively link sales behaviors to business outcomes.

2. Sales Engagement: Regular optimization cycles can keep sales teams aligned, engaged and motivated to close desired sales outcomes.

3. Closing the Feedback Loop: Actionable insights are also used to close the feedback loop with sales teams, create transparency and improve satisfaction with sales compensation design.

While the first phase of incentive design is focused on unifying the three pillars of sales crediting, quota, and incentives, the next natural phase for most businesses is to further close the loop with real-time or near-real-time feedback on quota attainment and target attainment, and adjust sales incentives accordingly.

Real-time Incentive Adjustments: How to Apply CII Best Practices

One of the exciting (and most powerful) aspects of CII is the ability to apply the derived insights and implement real-time changes. Here are some use-cases:

1. Quota Rebalancing: Based on mid-cycle sales performance or shifts in product portfolios, region focus, or other strategic needs.

2. Incentive Reallocation: Shifting more incentive dollars towards products, regions or customers that are underperforming or strategic.

3. Credit Rule Refinement: Make changes to credit allocation when multiple reps are involved on an opportunity to ensure fairness and maintain motivation.

Real-time, data-driven adjustments to incentive plans enable businesses to maintain predictable revenue growth while also building trust with sales teams with responsive, transparent sales compensation plans.

Benefits of CII: Continuous Incentive Optimization for Predictable Revenue Growth

1. Predictable Revenue: By closing the feedback loop in real-time, data driven changes to sales compensation can ensure continuous alignment between sales incentives and business needs.

2. Sales Engagement: Improved engagement and transparency with more visibility into sales performance, no surprises at close out, and better alignment with company’s strategic direction.

3. Behavioral Alignment: Ensuring sales behaviors are consistently driving desired business results like top-line revenue, profitability, or strategic focus

4. Operational Efficiency: CII leverages automation and insights-led decision making for iterative changes to sales plans and incentive parameters with minimal manual intervention.

The combined effect of unified design and real-time, data-driven optimization of sales incentives helps to build a consistent and closed-loop system of linking sales performance to broader company goals.

Continuous Incentive Intelligence: A Key to Unlock Predictable Revenue Growth

Uniting sales crediting, quotas, and incentive plans, and breaking operational silos, are a good first step in the evolution of an enterprise-grade sales compensation strategy. To truly drive predictable revenue growth, organizations must go a step further and look at CII or “Continuous Incentive Intelligence.”

CII is a powerful, holistic approach that uses real-time, data-driven insights to proactively connect sales behaviors with desired business outcomes through the three linked levers of data, behavior, and rewards. By applying these principles, businesses can move from a static, and often, a disjointed approach to sales compensation to a far more predictive and dynamic way of driving revenue growth.