Why the Future of AI in Sales Compensation Is Contextual Intelligence not Transactional Automation

AI is capable of determining a sellers commission in a fraction of a second. What it cannot do is tell you why. Or help you understand the circumstances around that payout. And what should be done next. ** 

This is the difference between transactional AI and contextual intelligence.

There has been a lot of talk around how AI can help automate transactional tasks in Sales Compensation. Helping answer common payout questions, summarizing payout reports and creating payout statements. Detecting anomalies in your data. 

All of these things can be helpful. They will take away some of the grunt work from your team and allow them to respond to questions faster.

However its not going to take Sales Compensation to the next level.

Sales Compensation is so much more than processing transactions. Its understanding all of the information around those transactions. From the plans they’re on, to their quota, territories, products, customers and what the company wants out of their sales force.

When AI can begin to understand these things it will become very valuable to Sales Compensation and Revenue Operations leaders.

Its not just about paying out commissions faster.

Its about understanding the context around those commissions. ** 

1. Understanding Transactions vs Context 

Lets say you have 2 sellers who closed the same amount of business.

Using transactional AI you can calculate. 

Amount of Business x Credit Rule x Rate = Commission

You may come up with 2 different payouts for each seller.

But then what? You want to know why they are different.

One seller could be on a different plan. The transaction may have taken place before the plan change took effect. There could be quota differences. A credit rule difference. A strategic incentive applied to the product. Or even an exception that was given by finance.

The transaction itself does not give you the whole picture.

You need to understand what is happening around the transaction to fully understand the payout.

This is especially true when your sales organization has many different types of sellers, selling in many different countries, products and business units.

AI can help process the transactions but not without context around those transactions.

 2. Why Context Matters 

If a seller was asking why their payout was less this month. You could use AI to pull their payout statement and show them why they were paid what they were paid.

But if you wanted to understand why their payout decreased while their revenue went up.

You would need to understand more context. Their plan, how they are doing against quota, rates, if any thresholds are met and transactions that may have had an affect on their payout.

Once you have all that context you can tell them that although their revenue went up a portion of their business did not meet the threshold to credit towards their payout. Or maybe they had an adjustment that took effect in the current period.

You could also use context to answer questions from executives. For example what will happen if we change our weighting on certain products from 10% to 25%.

Not only can you calculate that but you can begin to understand what that may do to your sales force and how they may react to the change.

From understanding what happened to why it happened and what you should do next.

 3. Creating Value With Contextual AI 

There are many ways that contextual AI can create value for Sales Compensation and Revenue Operations leaders.

Plan Design 

You can start to understand what your plan is trying to accomplish and if there are any contradictions within your strategy, measures and weightings.

Plan Understanding 

Help your sellers understand why they are being paid what they are being paid by understanding the transactions and plan they are on.

Dispute Resolution 

When someone comes to you with a dispute you can start to understand why the payout occurred and help resolve the issue.

Simulation 

Before making changes to a plan you can understand how that may affect your sales force.

Selling Performance 

Understand how your sales force is selling against your plan and if its producing the results you are looking for.

Constantly Optimize 

Monitor your incentive measures throughout the year to ensure they are still helping drive your strategy and economics.

By using AI to understand the context around your compensation transactions you can create a lot of value for your business.

Not only answering questions but understanding the relationship between your strategy, plans, sellers and transactions.

Which is why Sales Compensation is so difficult and rewarding to do.

4. What to Ask When Evaluating AI Solutions 

So when your evaluating AI solutions for Sales Compensation you should be asking these questions.

Can it process my commissions? 

Yes 

Can it tell me why a seller was paid?

Great 

Does it understand the context around the payout?

Even better 

Can I simulate my decisions before I change my plan?

Amazing 

Can it understand how my sales force is reacting to my plans and help drive my economics?

Now your starting to see how valuable AI can be.

Not only replacing your compensation admin but helping your business make better decisions quicker.

AI can do a lot for Sales Compensation but its not about how many transactions it can process. Its about how intelligent your compensation decisions can be.