There are three quick questions I have always asked when auditing an incentive plan:
- Does the plan pay for itself through increased revenue, profits and/or customer acquisition and retention?
- Does it motivate the RIGHT behavior, especially without causing short or long-term problems for the firm?
- Is the plan appropriate for the market?
Number three is often the last place that is reviewed or audited. This is because the availability of valid, timely sales compensation survey data has been controlled by leading compensation consulting firms and their annual collection of responses.
These reports were my primary benchmark for close to two decades of work. My clients would purchase a data set, data that was typically based on the prior year’s submitted information, and I would update and benchmark their results vs. the marketplace. We would compare that data to our gut instincts, asking whether the information fit our experiences in a given market, and then we would complete the incentive plan work.
Then Xactly called me.
From inception, Xactly had designed its multi-tenant SaaS platform to anonymize and aggregate sales incentive plans, results, and associated performance.
This data, consisting of tens of thousands of incentive plans, and hundreds of thousands of sales reps, is updated monthly and made available to customers via an in-product benchmarking tool. Clients can quickly and easily compare their latest results against the sales force compensation and team performance vs peers.
This was a game-changer.
Instead of pulling together different data surveys and updating them based on an assumed application of inflation and market data, I could start looking at actual data that was automatically collected and up-to-date. I did not have to worry about how old the information was, and how to best update the data set.
In addition, the surveys require submitting a full set of the prior year’s data – which adds a kink due to companies being on different fiscal years vs. the calendar year. Updating the overall results in this fashion can impact the numbers that are reported.
The second change was getting away from self-reported data. This is always a challenge in the data collection for any survey. Researchers in various fields have a similar challenge–people have a tendency to present themselves as better than they truly are, making some self reported survey data inflated (as Garrison Keiler would put it – all of our children are above average in Lake Wobegon).
When I would talk to clients about their data submissions to the survey companies, they admitted not submitting the data for the sales reps who had not made the cut (which resulted in showing a higher quota attainment than reality). They also went with averages, as there was not an easy way to pull percentile data of sales performance and remuneration. The result was a submitted average for a particular title that was potentially above average instead.
The final missing link was the ability to easily make comparisons of the survey data to the plans and teams of the customer. I no longer needed Excel to build out the reports, the reports were pre-built. I could click a few buttons or change a drop-down menu and instantly see how a particular client compared to their industry, an industry they were considering entering, and the market overall (as they often hired from different verticals as appropriate).
That made compensation consulting more of an application of the sales compensation survey data engagement – instead of spending my time (and the client’s money) on gathering and updating a data file.
Now with several years of experience with the Xactly data set, I am working with our team of data scientists and our Strategic Services team to dig even deeper. For example, we are able to report on trends in remuneration, such as how much more pay is now variable vs. fixed compared to 5 years ago (almost 10% more pay at target is now at risk).
Time can be spent on analysis, because the data is 100% empirically collected and validated and there is no room for interpretation of a survey question – making instead more room to interpret the results and decide how to respond to them.
Our clients are also finding more ways to leverage the Xactly Insights Sales Compensation data. For example, they are successfully recruiting and retaining top talent by ensuring that their incentive compensation plans are competitive. Customers using Insights are seeing higher quota attainment vs. their peers as well.
Higher performance, reduced turnover of key sales team members, and competitive plans. These were the goals of many a consulting engagement. With a better data set that is easy to access and quick to use to benchmark, more companies are hitting these goals. The game has changed.