Sales Incentive Compensation Management Software Overview
What is Sales Incentive Compensation Management (ICM)?
Incentive compensation management (ICM) involves designing, implementing, and optimizing a strategic plan around sales commissions and incentives. The goal of ICM is to improve sales performance by keeping sales people motivated, while keeping incentive schemes within a margin—theoretically, this allows the organization to maximize revenue.
Sales ICM Software = Commission Tracking + Incentive Schemes
Sales ICM software helps organize and automate this type of initiative. Thus ICM software products fall under the umbrella of Sales Enablement and Productivity, since they diminish the administrative load for sales managers and facilitate the financial component of a sales acceleration strategy. ICM platforms are particularly useful for organizations with complex, hierarchal sales crediting rules, as well as for organizations that want to fine-tune their existing sales incentive programs or develop new, agile incentive programs.
Two major benefits of sales compensation management software are that it enables visibility into the relationship between performance and costs/earnings, and that it promotes transparent accounting related to Sales. Although sales incentive compensation management tools may alternately be called sales commission software or commission tracking software, more advanced ICM products go beyond tracking commissions with the ability to set-up more nuanced compensation plans and incentive formulas (sometimes including gamification and contest features or non-monetary rewards). Many also include functionality for forecasting projected earnings/payouts and modeling hypothetical changes to the compensation plan.
Key Factors to Consider
Most of the leading sales ICM vendors offer on-premise or cloud deployment options. In some cases, different packages are available for companies of different sizes or complexity, with hierarchal schema, security, and admin capabilities increasing with price.
Scalability should be a key consideration during the evaluation process, as reviewers have noted that not all sales compensation solutions scale well, and often businesses looking to optimize incentive strategically already have large a sales force or are planning to grow.
Most products focus on tools for sales operations and sales managers to create and modify the incentive program, but many also include dashboards and reports for sales reps. Mobile functionality is especially important in products that offer dashboards and updates for individual salespeople.
Sales ICM products should integrate with the company's CRM and may integrate to payroll systems or other sales tools like gamification software or SPM platforms.
Sales Compensation Management vs. Sales Performance Management
The term “Sales Performance Management” (and its acronym, SPM) can be confusing with regard to ICM, because some vendors brand their sales compensation products as SPM solutions. While the marketplace may use these terms interchangeably at times, when evaluating software products it is important to understand the distinction between incentive compensation management point solutions—which can contribute to or fuel a sales performance management strategies—and SPM software, which goes beyond compensation to consider other levers and dials affecting sales performance and outcomes, such as buying cycles and specific selling behavior.
Some vendors offer ICM as part of a sales performance management suite. In addition to incentive compensation management functionality, SPM products tend to include more in-depth analytics around sales performance and sales cycle trends, built-in best practices, sales training/coaching features, and/or tools for managing the sales pipeline. We have included some SPM products in the incentive compensation management category where ICM is the vendor’s focus or where they most often compete with point solutions.
Sales ICM Software Features & CapabilitiesSales incentive management tools should support users (often sales managers) with features around the following tasks and priorities:
- Sales compensation plan creation: Easy for Sales to create incentive compensation plans without IT assistance.
- Complex sales crediting: Users can set up complex crediting chains to attribute credit for sales to multiple tiers of employees and/or partners.
- Sales compensation process automation: Automates processes related to sales compensation, like incentive and quota plans, approvals, dispute resolution, payroll processing, etc.
- Incentive auditing/regulation compliance: Internal workflow and tracking elements create an audit trail and help ensure regulatory compliance.
- Sales compensation dashboards & forecasting: Analytics tools give sales ops managers and/or reps a view into sales performance in terms of sales vs. quotas, as well as earnings so far and projected payouts. May include competitive stats.
- Incentive modeling: Includes a sandbox or testing environment for users to explore what-if scenarios and develop incentive compensation strategies.
- Agile incentive strategy: Incentive plans are flexible; users can create and adjust compensation plans and incentive rules in order to strategically adapt to changes in sales performance/the marketplace/corporate goals.
- ICM mobile visibility: Real-time reports about sales performance and compensation are accessible on mobile devices; may also allow managers to update plans and/or reps to submit questions, disputes, etc.