Article Summary:
A sales compensation program that is administrated in a Sales-Rep-friendly manner eliminates barriers to increased sales productivity.
Sales Compensation Programs Increase Sales Productivity
Does your company have hassle-free processes for compensating sales people? Or does the following scenario sound familiar:
The individuals responsible for administering your sales compensation program are buried deep in your Finance Department, and they think Sales Rep’s are greedy whiners. In turn, Sales Rep’s feel the Finance people are unresponsive, uncaring and cheap. Frustrated Rep’s frequently ask, not totally as a joke, “I wonder if they get a bonus for paying out commissions below budget?”
The relationship between the two sides is best described as adversarial, with the biggest source of conflict being the process for resolving payment errors. These errors occur when an expected sales transaction is omitted, assigned to the wrong person or otherwise processed incorrectly. Invariably, the onus is on the Sales Rep to build a case to prove their claim and to subsequently stick-handle the matter to resolution via multiple submissions of information, follow-up calls and e-mails.
The issue here is not necessarily the error, though it goes without saying that these should be minimized. Rather, it is the cumulative impact of these errors on productivity. If Sales Rep’s are repeatedly calling Administrators to resolve payment errors, they are not calling potential customers.
So, what’s the solution? Let’s step back and look at companies’ priorities. Many strive to differentiate themselves through offering better customer service. When successfully executed, this strategy increases customer loyalty, generates repeat purchases, and contributes significant volumes of referral business.
If it works for external customers, then why not apply it to internal customers such as Sales Rep’s? Establishing a Sales-Rep-friendly approach to administration in general, and to error resolution in particular, makes sense because it minimizes avoidable administrative activities. To move in this direction, consider the following initiatives:
1. Set up Service Level Agreements (SLA)
The SLA should include both a confirmation of receipt of the error notice, and a standard time for resolution (usually one payment cycle). It should also specify what information Sales Rep’s need to submit when reporting an alleged payment error. Also, make sure statistics on SLA compliance are regularly reported by the Administration group to Sales Rep’s and management.
2. Institute a Dispute Resolution Process (DRP)
Despite everyone’s best efforts, resolution of some payment errors may be beyond the discretion of front-line staff or their managers. These cases usually involve disputes over policy interpretation or events not directly addressed in the sales compensation plan documentation. A standing DRP committee with senior representation from key stakeholder groups such as Sales, HR, Finance and Marketing can quickly resolve these disputes and ensure the resolution reflects a broader range of organizational perspectives.
3. Document the Processes
Providing good service is impossible without a frame of reference. A clear, easy-to-read document must be provided that describes the sales compensation program, administrative policies, payment error submission guidelines, SLA and DRP. Producing this document will take some effort and may require input from Legal and HR, but the effort ensures that everyone is aware of the rules and processes.
4. Change Hiring Practices
Managers usually recruit from Finance or Accounting for sales compensation roles because of the need for a strong analytical skill set. Instead, consider hiring individuals with a customer service background. For some companies this is easy as their call centres are full of suitable candidates. If you do not have a call centre, re-direct your recruiting accordingly. This can be an attractive career move for an individual who is looking to leverage under-appreciated analytical skills to transition into a corporate role.
Adopting a strong customer service orientation for the administration of sales compensation has real benefits. Sales Rep’s will become more productive – by knowing how they will be treated and by what date, they will have the confidence to focus their energies on selling, not administrative arm wrestling. Meanwhile, armed with an objective resolution framework, Sales Compensation Administrators will enjoy greater job satisfaction, work more collaboratively with Sales Rep’s and contribute to better overall sales results.
Greg Blysniuk, founder of TopLine Sales Compensation Solutions, is dedicated to helping companies improve sales performance by harnessing the full potential of their sales compensation plans. With experience dating back to 1991, he offers deep insights into the operational and strategic issues that are integral to effective sales compensation. For more information visit: Top LineSales Comp.com
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