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Xactly-Sponsored Research Uncovers Key to Achieving Best-in-Class Sales Performance Management

(Jan 03, 2007)-- Xactly Corporation announced the availability of a new Aberdeen Group study, underwritten in part by Xactly, that details how companies can leverage sales incentive compensation to closely align sales efforts with corporate goals and optimize sales performance. According to the study, companies must automate their compensation process, consider adding non-cash rewards programs to their compensation mix, and implement analytics to improve management decision-making in order to maximize the impact of sales-compensation spending.

Titled "Sales Compensation Management: Coin-Operated Productivity," the Aberdeen study reveals that today's increasingly complex compensation plans, "developed out of the need to increase market share and sales productivity," make it difficult for sales organizations to understand how they are being paid, thus negatively impacting sales motivation. At the same time, back-office administrative time "skyrockets with endless calculations and questions from the field." The cure, according to the study, is not to simplify compensation plans, but rather simplify the process of creating and managing those plans.

"A majority of companies -- up to seventy-two percent -- still rely on spreadsheets to support their commission processes, with the goal of keeping them understandable and easier to manage. As a result, they are severely challenged to achieve top sales performance," said Gretchen Duhaime, senior research analyst, Aberdeen Group. "In contrast, best-in-class firms understand that simplifying the process -- instead of the plan -- is a better way to achieve their goals. In reducing their reliance on manual methods and spreadsheets, they can implement more effective plans, dramatically slash administrative efforts, improve payment accuracy and timeliness, and provide real-time insight into compensation, which is the true motivator of any sales force."

According to the study, best-in-class companies spend an average of 60 percent of their revenue on compensation. To maximize return on this investment, these companies are increasingly leveraging technology to automate compensation plan design and maintenance, and to provide real-time visibility to sales reps as to how they are paid. Eighty-five percent of best-in-class companies also intend to make plan-documentation workflow an integral part of their compensation management solution in order to streamline plan distribution and approval, and support Sarbanes-Oxley compliance.

In addition to pursuing plan and workflow automation, the study also recommends that companies add non-cash rewards programs to their compensation plans. Sixty-five percent of best-in-class companies intend to integrate their non-cash rewards programs into their compensation management solution, which will help them "launch surgical strikes at particular products or markets in need of a boost in sales."

A final key recommendation is the implementation of analytics to support management decision-making. Forty-seven percent of best-in-class companies have done this to some degree, and another thirty-seven percent plan to within 12 months. The benefits, according to the study, include a better understanding of the underlying drivers of sales productivity, so that companies can optimize their strategies for increasing market share and profits.

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