Zane Koeller, Domain Principal, Sales Performance Management, Anaplan
Tips to manage your sales compensation planning more effectively
It is an accepted truth that well-incentivised salespeople will strive to reach more customers and strike more deals. As a commission-based profession, building the right compensation packages is a crucial, strategic task for business leaders. Unfortunately, they are frequently the last part of a sales plan to be created. Why is this, when the long-term impact of such plans is known to have significant benefits to staff productivity and business success?
The simplistic way of thinking about sales compensation planning as a linear process needs to be abandoned, as the optimal plan cannot be developed in a vacuum. A strategic planner should think of the context, of the people, of market forces, before developing the compensation packages and be willing to make alterations to meet changes in circumstance, market behaviour and business need.
There are a few simple steps business leaders can follow to improve sales compensation planning:
Be adaptable – at many companies, managing the compensation plan is an exercise in fighting fires: so many issues arise each day that simply keeping up with them is a challenge. The best compensation plan managers side-step many of these issues by planning for them from the beginning. They split their time between running the current plan and modelling out future scenarios, using data from other divisions in the company—finance, supply chain, HR, and marketing. Doing this keeps your plan prepared for changes coming down the line.
Increases in headcount, a focus on a new industry, a revised product roadmap, revisions to the marketing strategy: all may necessitate changes to your compensation plan. But, if you wait until after these events have occurred to start figuring out how to modify it, you’ll not only leave your reps confused, you’ll also add unnecessary delays to your company’s sales cycle.
Communicate – if any single activity can ensure success or derail your plan, it’s communication.
In many companies the responsibility of sales compensation planning can be confusing — in some companies it’s HR that manages the compensation plan, in others finance does, or marketing – even IT. Vagueness about responsibility can itself cascade down the chain, leaving reps and leaders unsure what they should be selling, or why, so it is important to define and communicate the roles before the design process begins.
Then, importantly, communication of that plan shouldn’t stop after rollout, nor should it be one-directional. You should communicate in multiple formats. Include a formal presentation, create brochures and documents, post an FAQ on line and recommunicate plan specifics after the first pay-out, when reps are most likely to have questions.
Report – to measure the ongoing effectiveness of the plan, companies need to produce regular reports. Best-in-class companies generate different reports for different stakeholders — salespeople, managers, leadership, administers — each with its own metrics and its own progression. When done right, your compensation strategy should tie together a host of other stakeholders, each requiring information that prompt reporting can provide. These include:
- Finance, which needs your pay-out information to build budgets
- Supply chain, which wants to make sure they can deliver the products you sell
- HR, who manages headcount
- Marketing, who is (ideally) promoting the products your compensation plan incentivises
Reflect and Improve – after you’ve generated the plan, rolled it out, and tweaked it to accommodate feedback from the sales force, you should plan a wrap up session to discuss what went well and what didn’t. Survey the sales force after rolling out the plan, then clarify points of confusion and use feedback to inform your future plan designs (this is a practice that many companies fail to consider, to their peril). It’s important to take input from all stakeholders — including reps, who are often overlooked in the plan design process, but who have valuable insight into how effectively a plan incentivised them to prioritise certain behaviours. Aim for finding the most common problems and assess why they are persistent. After reflecting, use the information to update your foundational programme.
It is crucial to understand these steps as highly interconnected elements of a complicated process and their importance should not be underestimated. Incorporating continuous forecasting into the planning, executing and modifying process will make the planners more agile and paying more attention to how plans are communicated will increase their effectiveness.
Another important fact to bear in mind is that these steps will never be completed per se, as the sales compensation plan requires ongoing care and attention to ensure that it is up-to-date and competitive. These mindful steps, in the long run will help you run a sales compensation scheme that will make your salespeople and your customers happy.
OUTSOURCING YOUR IT SOLUTIONS CAN SAVE YOU FROM COSTLY DOWNTIME
Amir Hashmi, CEO and Founder of leading IT and Cloud services provider Zsah, discusses why you need full-time professionals if you want to avoid the money pits of IT downtime
A lot of wealthy business owners will uphold the following infamous statement – time is money. Many CEOs believe that it should be at the heart of your business strategy. They aren’t wrong, and it is no different when it comes to IT. Therefore, it is high-time that businesses consider the real risks and costs associated with IT downtime, and do all they can to avoid it
In the midst of a post-pandemic technological revolution, it’s now more important than ever to carefully consider who manages your technology. It is essentially the motor that drives productivity, efficiency and growth, and if therefore, if there isn’t a thorough and dedicated system in place, businesses risk system failure, which can risk everything.
Something so essential to a company deserves to be taken more seriously than just to deploy the services of an IT help desk when there’s a significant issue. The answer isn’t necessarily to consider ways in which you can fix a problem once it arises, but instead to ponder upon ways of preventing an issue from occurring in the first place. This is what leads us to managed IT support services: your personal, dedicated team of IT experts that not only fix issues when they occur, but that also constantly improve the software and hardware so there is less chance they ever take place.
The real cost of downtime
Whenever your IT isn’t functioning at its full capability, you are losing money. Even the shortest of gaps in service can severely impact the customers’ experience, your reputation, and the output and efficiency of your entire staff.
In 2017, ITIC sent out an independent survey to measure downtime costs. It found that 98% of organisations say that a single hour of downtime costs over USD $100,000, with 81% putting the figure at over $300,000. For 33% of businesses, 60 minutes of downtime would cost their firms between $1 million and £5 million.
Figures from Statista.com reveal 24% of organisations worldwide reporting average hourly downtime costs amounting to between USD 301,000 and USD 400,000, with 14% reporting greater than USD 5 million in costs.
Elsewhere, IHS Markit surveyed 400 companies and found downtime was costing them a collective USD 700 billion per year – 78% of which was from lost employee productivity during outages.
Managed IT solutions are the key
Though we may never know the full cost of downtime, it is evident that it costs individuals and businesses a large amount of money. Don’t wait until your next emergency to remedy a problem; get the professionals in now to prepare for the future, rather than just fix problems in the present.
When you work with a managed technology services provider, your network and infrastructure are supervised 24 hours a day, all year round. As with any IT service, this means that issues will be fixed – however the real advantage is more long-term. As technology service providers perform regular proactive upkeep, there will be a reduced chance of suffering from issues in the first instance, and when (or if) they do occur, it will be far simpler to recover data thanks to full cloud integration.
HOW TRADITIONAL INSURERS CAN USE TECHNOLOGY TO IMPROVE THEIR RELATIONSHIP WITH CUSTOMERS
The customer experience with insurance is anomalous, in that one is only required to engage with their insurer if things are going wrong for them. To add value to the relationship, new technology and methods should be adopted, in turn driving loyalty and business growth, writes Oliver Werneyer, CEO and Co-founder of Imburse
Insurance is one of the oldest industries in the world and it is still, to this day, considered a grudge purchase. Looking back, insurance has a history of having a challenging relationship with its customers. According to an IBM study, in 2008, only 39% of consumers trusted the insurance industry. This percentage has stayed largely similar over the years, having reached only 42% in 2020. For any business with growth ambitions, good customer relationships are crucial.
I believe that now more than ever, the insurance industry not only needs to continue investing in improving relationships with customers, but to really think about new ways of doing so. At a basic level, the moment of truth for an insurance customer is when either they need to pay or are getting paid. Insurers can have the best policy wording, quick claims processes, apps and advisors, but if the experience to pay premiums or to receive a claim is bad, the customer immediately loses trust.
The pandemic has exposed this tenuous relationship between insurers and its customers. The need to move everything online and provide personalised services has exposed significant shortcomings in the service insurers provide. The industry has been too slow to adopt newer technologies and move engagements closer to the customer (self-service and empowered). This is largely due to the legacy systems and processes that insurers failed to modernise over previous years.
This means that the better-positioned incumbents have stronger customer relationships and benefit disproportionately from the pandemic, as they are able to win more new customers and convert customers from other insurers. They also benefit from significantly lower customer acquisition costs and much better growth, as illustrated in this McKinsey report. Even new entrants or InsurTechs are benefitting massively by focusing on improved customer experience and customer relationships.
However, it is never too late for insurers to build better relationships with customers. The main way to build a good relationship with a client is to make life easier, live up to promises and add value through the relationship with them. By working on these key elements, insurers can start building strong relationships with their customers, and, through the right partners, deliver this in a timely and non-disruptive manner.
Insurance products often get a bad reputation because they cost money, but the benefits might only come much later, or never. Customers don’t get to experience a positive relationship with insurance products, either because they never claim and feel like they lost out, or they claim and they’re in a bad situation. By either embedding other services into the insurance experience to deliver a more transactional engagement, or embedding insurance products into general customer experiences such as online shopping or rewards, insurers can enrich customer relationships to generate value.
This way, insurers become a value-adding part of the customers’ everyday activities and not just a product that they have to pay for and may never get anything back from. One example is to embed micro-savings capabilities, often found in banking, into pension savings and insurance products. This can allow customers to save more for pension, attract younger customers and build a portfolio of fiscally disciplined customers.
Tailored journeys and personalisation
Customers have come to expect personalised journeys and engagements from product providers. Streaming services, social media, e-commerce or mobility services have shaped the customer expectations. Now, customers are also expecting personalisation for insurers.
Insurers need to invest very heavily in delivering personalisation and customisation to customers as they engage with their products. Failure to deliver this puts renewed strain on the value perceived by the customer and their relationship with the insurer. This applies not only to customer interfaces, but to aspects such as payments. Insurers should make it easy and pleasant for customers to pay and get paid. As the main moment of truth, payment experiences need to work optimally.
Perceived customer value metrics and delivery
The value customers derive from insurance products is, generally, monetary. Therefore, insurers must invest in product enhancement to increase its perceived value. Perceived value is not tied to a monetary value. By being able to choose between multiple payment options, such as a $300 pay-out to a bank account or a $320 Amazon voucher, the customer has a higher perceived value of the payment. This can be achieved by leveraging non-insurance products that can be purchased at a discounted price, exclusive access that the customer would otherwise not have or conversion into a form that is more useful to the customer.
Payments, for collection and pay-out, are at the core of delivering this value. An excellent payment experience immediately influences the customer to be positively inclined toward a product (PwC report). In order to offer this, insurers need to leverage multiple technologies and providers, offer any speed of transaction in any market, and deliver faster automation and better risk control. The key is to transform insurance products into transactional value-adds to customers’ lives and use this opportunity to continuously build on relationships with customers.
The main roadblock for insurers is still the operational implications of these activities and the costs that arise. In looking to build a better customer relationship, insurers need to look at partners that are operational enablers to deliver this. Partners that can solve the integration and speed-to-market problem so that insurers are enabled to deliver new capabilities, not bombard them with new ideas and no path to delivery.
Imburse, for instance, enables insurers to access all the global payment providers and technologies available in any market. Through a single connection, insurers can deploy any payment capability into any channel, for collection and pay-outs, without ever again needing to build a direct operational integration to the providers. This gives them full freedom to leverage payments as a key value driver and customer experience enhancer.
Building a better relationship with insurance customers is key for the insurance industry to close the protection gap. Incumbents are in the prime position to look at Insurtech and Fintech partners to rapidly and significantly modernise, digitalise and transform their own capabilities to deliver major enhanced value to their customers.
Imburse is an advanced universal payment connector that enables businesses to gain cost-effective access to complete global payments technology, regardless of the service provider. To learn more, please visit www.imbursepayments.com.
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