Sales Compensation Management Buyer’s Guide

sales compensation management buyer's guide

In today’s economic climate, organizations are tightening their budgets and spending money on software that impacts the business by creating value and operational efficiencies. Choosing the right sales compensation management solution is no different and should be treated as a strategic investment. 

Especially since this is your people and their money. 

“Money is emotional,” said Hilary Headlee, EVP, Sales + Customer Success Center of Excellence at Insight Partners. “You’re playing with people’s money and their livelihood.” 

But with so many options in the commission space (a market expected to triple its value by 2028), the noise has made it increasingly difficult to choose a trusted partner and platform. According to our 2024 Compensation Report, 15% of revenue leaders identified “automation” as their most needed improvement improvement in their sales compensation management process.

Businesses today, however, need more than just an automated commission management tool

2024 Compensation Report

See what 450+ Revenue leaders identify as their biggest blockers when it comes to sales compensation planning and management — and learn how to overcome them.

Read the Report

They need a solution that evolves and grows with their expanding needs. That pulls insights to inform your compensation strategy, motivates your revenue teams, and drives (and measures) performance at the team and plan levels. 

Your sales compensation management software should be an innovative, forward-thinking investment that addresses what your sales and RevOps teams need today, with the ability to model performance and meet anticipated growth according to your revenue and finance teams.  

Plus, with key business metrics changing amid the market’s volatility, organizations merit a partner that knows sales compensation and how to adjust your compensation strategy accordingly.  

This buyer’s guide will help you identify and prioritize the essential criteria for commission management software. Read on to feel confident that your choice will propel your business forward.

What is sales compensation management? 

Sales compensation management is a strategic business process that involves designing, implementing, and optimizing the incentive structures and reward systems for sales teams within an organization.

The primary goal of sales compensation management is to align the compensation plans with the company’s objectives, encouraging sales representatives to achieve specific performance targets and contribute to the overall success of the business.

Sales Compensation Management Software Core Considerations

Before you begin evaluating sales incentive compensation management software platforms, start here.

First, Identify the specific needs and goals of your Finance & Go-to-Market (GTM) team. Some goals might include:

  • Identify your team’s North Star metric (annual recurring revenue, gross revenue retention, customer acquisition cost, etc.).
  • Building and aligning competitive compensation structures and sales objectives according to the North Star metric
  • Partnering with a compensation strategy consultant to address the above
  • Establishing practices that motivate sales performance
  • Retaining top reps
  • Increasing sales compensation equity and fairness
  • Leveraging data-driven insights through a source of truth to measure the performance of incentive strategies
  • Simplifying administrative processes through more efficient methods of tracking and payment

Then, address the complexity and health of your commission structures.
Take our 1-minute quiz to evaluate the health (and complexities) of your existing or future compensation plan proposals.

  • How do your on-target earnings (OTE) compare to those of similar regional and industry roles? 
  • What are the pay mix ratios across your variable-pay-earning teams? 
  • Do your quota periods match your sales cycles?
  • What’s your North Star or key business metric?
    • How do your compensation plans drive those?
  • Would you consider your comp plans simple, logical, and fair?
  • Do your reps understand how they are paid?
image of sales compensation challenges report

Can your reps explain their comp plans?

Our 2024 Compensation Report found that it takes reps 3 to 6 months to understand how they earn commissions.

View Report

The above questions will help set the stage for evaluating sales incentive compensation management tools. This way, you can know how to describe your comp plan designs to providers and approximate the amount of plan design support you’ll require. Additionally, it will help you determine if you need guidance revamping your sales compensation strategy.

Below are a few other practices to think about and put into place before you begin your evaluation.  

Create a Comp Committee

Build a compensation commitmentee consisting of sales, RevOps, and finance. This will promote cross collaboration between departments and foster alignment early on in your process.

Keep in mind what is most important to a sales manager differs greatly from what matters to a finance leader.  

Understand the Volume and Structure of Your Deal Data

Remember that your commission tracking will only be as accurate as your deal data.

Do you use multiple sources to track deals?  Do you pay reps on contract closing or invoice sent,  or payment received?  Who manages each one of these tools?  Do you aggregate all your data in a warehouse?

What’s the average volume of deals per quarter?  Do you have cumulative quotas? 
Having a deep understanding of how deal information is captured, how it relates to your commissions, and who manages each tool is essential in understanding if a compensation platform will work for you. 

Most comp software tools will allow to integrate from one source, but will they allow for multiple fields from that source?  Will they allow for multiple deal sources?  Can you join fields to calculate a certain criteria?  

What Will Your Sellers Care About Most?

Keep in mind your end users: the reps.

Are you using teams and leaderboards? Contests? Is your sales team remote or in the field?  Will they rely on a mobile version?

Do you review attainment and earnings once a week? A month?  A quarter? 

Lastly, Don’t Forget Budget

Consider how much value you want to place on saving time, gaining team alignment, forecasting earnings, and modeling total costs of compensation and performance. Think about how many users and the number of admins your team will require. You’ll also want to consider your growth plans over the next year. 

Some solutions have minimum contract values and users, while others, like QuotaPath, do not. 

What about pricing? How easy is it to independently find how much incentive management solutions cost? The less you can find yourself, the more likely you will face higher and hidden costs later in your research. 

Sales Incentive Compensation Management Checklist

Great! With those initial considerations in place, you’re now ready for the evaluation checklist. 

Comp Plan Design– Platform includes the ability to easily build and test compensation plans
– Offers tailored (and proven) support and guidance for future sales compensation plan management changes and designs that align to your key business goals
– Ability to self-edit or adjust comp plans within app
– Provides resources, best practices, and compensation plan templates in-app 
Integration Capabilities– Single click integrations
– On-demand data syncs that keep you and your team informed in a timely manner
– CRM field mapping and customization
– Integrates with financial systems
Trial options– Ability to try full platform for free or proof of concept before purchasing
Accessibility, User-Friendliness, Adoption– Ease of adoption for admins
– Ability for admins to quickly make changes without support help
– Usability for reps
– Adoption rates of reps
– Implementation support
– Provides on-going training and onboarding
– Highly rated user experience
Time to Value– Clear (and fast) onboarding and implementation process backed by testimonials
– Minimizes GTM team disruption during set up
Accuracy and Reliability– Demonstrates how system reduces the need for time spent checking accuracy
– Shows earnings calculations behind individual deal dearnings with ability to ask questions or flag possible errors
– Ensures reliability of the system in various scenarios
– Provides customer testimonials in support of accuracy and reliability
Customization, Flexibility, and Scalability– Tailors solution to match unique commission structures and business needs
– Accommodates scaling teams
– Enables admins to self-implement changes, manipulate data, customize fields, and more
– Offers user views and permissions for reps, manager, and admins
– No user or contract minimums
Reporting and Analytics– Dashboards to measure team and individual attainment and commissions
– Ability to forecast future earnings and attainment based on pipeline data
Rep dashboards that provide holistic view on progress and plan details
– Admin dashboards that show total earnings, payouts and effective rates across organization
– Easily accessible views to measure performance of compensation plans
In-App Communication– Hosts and logs communication between reps, managers, and admins to flag and resolve commission disputes or deal discrepancies
– Administers compensation plan sign-off between leaders and reps
Task Management– In-app notifications and high-priority task alerts for admins and reps
Vendor Support and Reliability– Dedicated experience rep
– Easily accessible over various mediums
– Fast response rates (Goal: under 2 minutes)

Conclusion: Guiding Your Strategic Investment in Sales Compensation Management

In closing, the significance of choosing the proper sales compensation management solution cannot be overstated. 

As you’re evaluating, consider the level and access of support you’ll have to your vendor’s team. Think about your existing compensation plans and future proposals. Could they be better aligned to your business targets? Are they driving the behaviors you aim to see? Can the team you work with offer guidance? 

Look into customization options, ease of getting started, and how much you can run the platform autonomously when you need to make changes. 

We created our buyer’s guide to empower you to navigate the complexities and considerations that go into sales incentive compensation management solutions. As you embark on this journey, envision your choice as a tool and a cornerstone of growth, maximizing impact, and positioning your organization for sustained success.

Learn more about QuotaPath by scheduling time with our team, or explore our solution by signing up for a trial

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