10 Things Most Sales Compensation Vendors Won’t Tell You

Jun 15, 2021

If you're shopping around for a way to automate sales compensation, there are a few things to be aware of that might not be immediately obvious but will have a big impact on the long-term success of your incentive compensation management process.

It's not that the major software vendors are trying to deceive you; it's just that these questions are often not easy to answer before implementing the solution, or are issues that only emerge in later years.

Nevertheless, these issues are pretty commonplace, and we've seen several companies run into these issues with their ICM software over the years. Here are some things to remember when assessing ICM automation solutions for your business.

1. How long it will really take to get up and running

The ICM software onboarding process is notoriously lengthy and challenging. It can be so complicated that some businesses take years to get things up and running fully. Not all the blame for this problem lies with the sales compensation vendors. They can’t tell you how long these installation processes take because they simply don't know.

Enterprise incentive compensation software isn't a one-size-fits-all tool, after all. In many cases, business changes add to the pressure on sales ops, and getting set up with a new solution becomes more of an ongoing struggle than a quick fix.

2. How much onboarding will really cost

The cost of onboarding is often several times the annual subscription fee. Many salespeople will leave these details out because they can't really calculate them, and it would only put you off. It's up to you to do your research and ask the right questions about what installation and features will best suit your business needs in the future and today.

Remember that with most sales compensation software, you’re buying a toolkit, not a complete solution. To ensure that a misstep or miscommunication doesn’t spiral into an expensive mistake for your company, ask for outcomes and deadlines guaranteed in contracts.

3. What good sales compensation automation looks like

Sales comp analysts typically aren't computer programmers, so if they set up the rules for your system, it's not going to be done in a way that a qualified engineer would do. The architecture is shaky because of this lack of programming expertise.

Most sales comp software vendors will happily set up the automation or tell you how to do it properly but at an additional cost. It's then up to you to ensure that knowledge is retained in the organization in the future.

4. How to design a good incentive comp plan

This one should be obvious, but most sales compensation software vendors will not tell you how to design a sales incentive plan — at least not included in the price of the software.

The only way they'll help is if you want to use their internal consultants or through a third-party consultant who specializes in incentive compensation plan design (and that will cost extra). Or, you can focus on building the expertise internally. Either way, improving your sales comp plan performance will require significant expertise in addition to ICM automation software.

5. How much time you'll spend programming the automation

If you believe some of the marketing out there, you’d think you could magically automate your sales compensation processes just by installing a new software package. Any seasoned sales comp expert will tell you that's simply not how it works. You'll need the right people, time, and resources to learn how these tools work before they start paying off. We like to think of them as enabling technologies: tools that enable you to do it yourself.

6. You still won't be able to “run a quick SPIF”

Don’t let your sales manager get too excited. You still won't be able to run quick SPIFs on the side of your main incentive compensation plans. Due to their complex nature and your lack of programming expertise, the automation architecture is often too rigid to make implementing a short-term sales promo worth the time it takes to program. We’re just telling it like it is.

If it's easier and quicker to do in a spreadsheet, then people will use that instead. Unless you’re hiring software developers for your sales compensation team (good luck!) you'll probably never have an easy time running one-off promotions with this kind of complicated system. It’s not their fault. It’s designed to be slow and hard to change because that was best practice in the past.

7. How to clean and organize your data efficiently

One reason onboarding often takes longer than predicted (and isn’t the fault of incentive compensation vendors) is that cleaning, sorting, and validating enterprise sales data is a painstaking process. Most companies massively underestimate the costs involved in making sales data accessible and reliable enough to be used strategically. That means that integrations often put an extra load on limited IT resources, leading to delays and missed deadlines.

Either way, data validation must be done to make any integration successful. How much you'll have to pay to get it right will depend on your internal processes and the support you get from the sales comp software provider you choose.

8. You'll have to reprogram everything next year

When the salespeople take you through the demo of their software, it's often with a blank installation. That makes it easy to play around and do whatever you want when setting up the plan. It always makes the initial set-up relatively straightforward (if often protracted).

Most issues arise when it gets to the end of the year. Several changes to the IC plan need to go into the system, and that means some or all of the rules and formulas need to be reprogrammed, which will be several times harder than doing it with a clean install.

Most enterprises end up hiring external support — either pro services or external consultant — or spend a ton of extra hours working on the plan and budget to get things set up for the new year while still making payroll and everyone's EOY bonuses.

9. Which changes will return the most ROI

Most sales comp software is only designed to let you automate the process yourself, which means it can't tell you how to optimize your incentive plan for boosting sales or increasing revenue. Even if you get external support in the plan design, that will only give you a good structure to work in the future: it will need ongoing analysis and optimization.

Even if you get help setting up reporting and dashboards in your new software, this will only give data about historical results, often in a lagging format that doesn't allow an analysis of current plans or any real forecasting. You can always export last year’s data into a spreadsheet and do it there, though.

10. How much it really costs

There are many reasons that most sales compensation software vendors won't tell you how much time and resources you'll have to pour into their software, but the main one is they simply don't know.

Sales compensation is a bottomless pit, and they're merely providing you with a tool to make it easier. There are many other costs to owning enterprise sales compensation software, some of them to be expected and others hidden, but just as consequential.

Most incentive comp solutions are designed for you to set up and manage yourself. That means the speed and efficacy of the whole system rely on your ability to execute within it. These platforms are incredibly powerful and customizable but, due to limited resources, often grossly under-utilized. It's like renting a crane and asking the owner how much it'll cost to build your house. They're only selling you a tool to automate a portion of the process. They're not building your house.

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Forma.ai takes a different approach. We can guarantee outcomes in our SLAs — like making payroll outputs on time — because our platform is more than just an enablement tool, it’s total automation. We build the house for you. We maintain it. And we teach you where to invest to increase its value too.

Think of legacy sales compensation software like (incredibly complex) cars. No matter how high performance or high capacity they are, you still need a driver. Forma.ai is the next generation of sales compensation software. It does the driving for you.

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