And the credits roll on screen. As you quietly applaud in your front seat, you can’t help but wonder: who are you cheering for? The bold producer, the visionary director, the brilliant scriptwriter, or the main actor? Each contributed to the success of the film, and they all deserve the acclaim they are bound to receive. Yet who should ultimately be acknowledged as the one behind this new money-making machine? Who deserves a larger financial reward?
These questions are all too familiar to many sales managers, especially to those who have recently experienced a resounding success. They close the deal of the quarter, profits reach an all-time high, but when it comes to divvying up the incentives, they have no idea where to start. Who gets primary credit for the sale and the comparatively large bonus that comes with it? The salesperson, the team leader, or the manager himself?
That’s what sales crediting tries to answer, and that’s what an incentive compensation platform can help you manage. However, before touching on automated incentive compensation plans and their ability to adapt to complex sales cycles, we should analyze crediting from a management perspective.
1. How Many People Should be Rewarded?
The answer here is easy to anticipate: it depends. Whether to credit one as opposed to multiple people is not only tied to each company’s selling process, but to the number of members on each sales team and their area of expertise. If the company’s main product is targeted to a large number of consumers and routinely sold in great volume, the teams will probably be made up of people who share similar skills and responsibilities.
Selling consumer goods, while not without its subtleties, usually follows a predefined pattern. In most cases, each sale can be traced to a particular individual: the one who eventually closes the deal. But even these seemingly routine types of transactions can evolve into complex processes that require cross-territory collaboration between multiple salespeople. For example, supplying a retailer with a substantial number of fast-moving goods within a short period of time may surpass the powers of the local team, who consequently might seek the collaboration of reps or even teams from other territories to meet the deadline.
In other cases, it’s the product itself that’s complex, requiring sales teams whose members have the necessary knowledge and skills to guide the buyer through his or her journey. These teams must collaborate to attain a single outcome. For example, if a company happens to sell commercial airplanes, even the most talented salesman or team leader may not be able to close a deal on his own. To get a face-to-face meeting with the client, he or she may need to rely on the help of a teammate who‘s in charge of identifying the sales opportunity in the first place. While this teammate might not know the full specifications of a commercial airplane, he could be an expert at differentiating a lead from an actual prospect.
2. Is There a Proper Way to Reward Team Members?
When it comes to crediting multiple sales roles over the course of the same project, two main options are available: multiple sales crediting and split crediting. With the first approach, each team member who participates in the sale receives full credit and is equally compensated. This works particularly well when teams are clearly established from the beginning, and when the reward itself is part of a larger, pre-determined incentive, not a percentage of the actual sale.
With multiple sales crediting, team members know exactly how much to expect from day one. While a sizable, guaranteed incentive is bound to motivate your reps, the expense incurred when a whole team performs at or above expectations can be steep. This is especially true if the reward is relatively easy to attain. Thus, a manager who mobilizes his sales force with this strategy must try to strike a balance between costs and profits.
Split crediting is also team-based, but here, members receive a percentage of the final sale based on their individual contribution to it. Split crediting is especially useful when the company needs to quickly seize new opportunities, when the final number of people or teams that will be involved is unknown, or when the incentives are commission-based. But while the approach can be more efficient in terms of costs and selling speed, it also has its downsides. Often, the most highly performing reps will team up, leaving other teams with fewer experienced members. This is especially true when a particularly lucrative sales opportunity appears. Also, if the expectation for each team’s collaborative success lacks clarity from the start, team members may end up trying to gain as much individual credit as possible.
3. What Other Factors Can Influence the Process?
Several other factors, such as the existence of multiple selling channels that target the same consumer base, can influence the sales crediting strategy. For instance, a vendor might sell car parts at the local auto shop as well as online. A good sales crediting strategy will take multiple channels into account and reward all those involved in a successful sale. Each location at which the customer is approached or interacted with, as well as the location of the final point of sale, should be included within the strategy, along with many other factors. The online consultant is just as important to the sale as the shop manager, if their activity results in success.
Another aspect that can potentially affect the success of the crediting plan is the sales team’s familiarity with it. Salespeople, whether working individually or on a team, must be made fully aware of both the percentages and the maximum rewards they’ll receive when they close a deal. The sales crediting process should be clearly communicated in advance, along with the expectations the leader might have from each member. This will help build trust in the management and encourage collaboration between team members.
4. Should Sales Crediting Be Automated?
Generally, by the time a company chooses to automate systems, a working sales crediting model is already in place. But sometimes, complex events can make automation an unexpected but necessary step for an organization. For example, take a company that relies upon a commission-based plan with a split crediting model in place. The model works well until the number of reps more than doubles due to a company merger. At this point, managing splits for such a large sales force becomes difficult. Managers can try to parameterize the splits, but maintaining parameters is an equally laborious task, one that quickly gets complicated. The solution? Partial or complete automation, along with – in this particular case – an overhaul of the existing crediting process. It’s essential that the automation platform include strong incentive compensation management.
As with many similar processes, the consultants behind the software must be just as good as those who depend on it. Ideally, such consultants will meet your individual needs, whether that means helping you establish a sales crediting model that’s tailored to your business, or offering valuable advice for optimizing your existing model. Experienced consultants will also offer full support in implementing and managing your plan over the long term.
Sales crediting is a delicate yet critical issue, one that will inevitably come up when you’re designing and executing your incentive compensation program. Once the success of your teams is no longer a goal but a fact, the importance of your sales crediting process comes fully into focus. So when your company achieves its next big success, bring on the applause with confidence. Your sales reps will be more than happy with the credits.
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