The objective of a good incentive compensation plan is to reward the sales representatives who meet and exceed their sales goals. Typically sales measures are based on revenue and or profitability, but there might also be additional expectations such as promoting certain products. Sales Reps usually find out what their incentive earnings are after the fact; after the order is booked or the product is sold, and processed through the commission application. However, if sales reps have the ability to project potential earnings and their expected attainment they can make informed decisions about where to focus their sales efforts.
Key Benefits of Estimating Commission and Bonus:
- Deal Prioritization: Using real-time data helps sales to focus sales activity and to structure opportunities to maximize payout.
- CRM Adoption: Increase use of your sales application by providing estimation based on leads and opportunities in the pipeline.
- Drive Sales Behavior: Providing this visibility, and helping participants prioritize their efforts, will help organizations to drive desired sales behavior. It also helps participants align their objectives with those of their company.
- Providing a tool to estimate incentives helps sales reps to understand the outcome of any transaction based on the expected revenue (and margin). The best tools use current compensation plans and actual attainment and earnings as a basis for these estimates. By estimating potential compensation against pipeline opportunities, sales reps can determine where to focus their efforts so they can meet their goals and earn their target incentives.
If the compensation plan is well designed and aligned with corporate strategy, evaluating current opportunities and focusing on deals that provide optimum results means your organization can achieve its desired sales goals. For example, the organization has designed compensation plans to promote a certain product line or focus on profit margin for your flag-ship products. When sales reps estimate his opportunities he will discover that his earning potential and quota attainment is greater for one deal versus another. This drives him to pursue that opportunity, by putting forth his best efforts.
Key Factors That Drive Estimator Tool User Adoption:
- Ability to instantly see what their commission might be for any sale before the sale is final.
- Ability to adjust the price, profit margin etc, or provide alternate products and check revised commission.
- Calculations are based on the current plan to which the sales rep is assigned.
- Calculations use current attainment levels so accelerated rates are used, if applicable – this is crucial.
- Launching Estimation:
- A simple and easy-to-use interface, where users can run estimation based on prospective deals.
- A web service that can be plugged-in to an opportunity or a quote module in your SFA applications.
The ability to estimate incentives is a major motivational factor in the sales cycle, giving sales representatives the impetus to push deals through and achieve a higher momentum. “Commission Forecasting” ability motivates, and educates sales in “Corporate Sales Strategy” that is incorporated into their sales commission plans and aligns them closer to corporate goals.
Oracle Sales Cloud provides the ability to estimate earnings based on current sales opportunities. This includes an Estimated Compensation feature as well as a web service. The feature provides an easy to use interface where sales reps can estimate their potential earnings and attainment by keying in their pipeline deals. The web service can be launched from a variety of places. It utilizes the same calculation data, such as current plan, attainment and earnings, regardless of where it is launched from.
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