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Evaluate your sales compensation program

The Alexander Group recently joined the eRewards Sales Compensation Summit to share how companies are adapting their sales compensation plans to support their pivot to modern revenue growth models. Matt Greenstein, principal and digital practice leader, and Jamie Riley, principal and Alexander Group’s London office leader, discussed practical observations from recent research and project work.

What is the Digital Revenue Organization?

How companies engage with customers and enable the marketing, sales and service organizations to execute has fundamentally changed. This seismic shift is driven by new customer journeys and consequently new means of customer interaction. The Digital Revenue Organization delivers consistent customer engagement and effective commercial team enablement built on three foundational elements: data, process, and systems and tools.

A New Buyer Journey
B2B buyers no longer follow a clearly defined, linear decision-making process. Much of their decision is made before a potential vendor is even aware they have a need. Buyers conduct organic search, interact on social media, attend multi-format events, absorb content, and more as they form opinions and narrow the field of would-be suitors.

Modern Buyer Engagement
Marketing and selling to buyers in this new paradigm is far more complex. There are new motions to execute requiring a more complex mix of people, process and technology. Influencing a customer demands a broader set of marketing tactics. Customers must be proactively nurtured long before budget has been confirmed. The sales organization must be prepared to effectively interact with customers in-person and virtually. Sales must quickly and seamlessly bring to bear an inhuman amount of expertise. They must deliver an immersive unparalleled customer experience.

New Motions and Roles

As companies make the shift to the Digital Revenue Organization, they scope new motions. Marketing architects a campaign to promote the latest solution. Emails are sent, social media comments are posted, content is pushed. As customers interact and self-identify they are scored. Lead generation representatives are then deployed. A digital relationship is nurtured through needs-based messaging, events and one-to-one interactions. As needs are identified the relationship is transitioned to sales. Sellers leverage an infrastructure of people and technology to promote solutions, conduct demonstrations and craft proposals.

This data, process, and systems and tools driven engine changes WHAT individuals are responsible for. New jobs emerge and legacy roles are adapted. Sales compensation is an alignment program. If the job intent changes, the program must be adapted. Sales compensation programs must be calibrated to promote new motions and should avoid short-circuiting changes in strategy.

Omnichannel Implications

Digital makes engaging with the customer in many capacities a reality. New modes of interaction and transaction create complexity in the sales compensation program. If a customer can transact via an e-commerce platform, distributor and company seller, how do we credit for sales compensation purposes? The customer may have engaged with both the distributor and the seller to make their decision but opted to transact online. Who should get credit for the deal?

Omnichannel requires companies to clearly articulate strategy, anticipate conflict, adopt omni-principles, and flex sales compensation designs to align with a well-intentioned, customer-centric strategy.

How Are Companies Adapting Their Sales Compensation Programs?

Buyer journeys breed new motions. New motions require new roles and channels. As companies make the shift to the Digital Revenue Organization, programs like sales compensation need to be adapted. The most tangible changes can be found in the principles used to guide design activities, as well as with plan eligibility and the measures used to translate performance into pay.

Align Plans with Strategy and Jobs
Before the Digital Revenue Organization, program principles were straightforward. Design guides included statements such as “keep plans simples,” “pay for performance and persuasion,” “limit crediting to one person,” and others. As more complex revenue growth models emerge, these principles need to be rethought.

Eligibility
It is no longer abundantly clear WHO won the deal. A killer marketing campaign, an immersive demo experience with a virtual expert, or the seller themselves could be the difference in earning the customers business. As companies wrap more roles around the customer to execute motions, lines blur. It is more common for lead generation and post-sales customer success roles to be on a sales compensation plan. Additionally, marketing roles responsible for driving personal customer engagement are being considered for plan participation.

Measures
Stable, democratized data makes almost everything measurable. The menu of options that leaders and plan owners have at their disposable to hold eligible participants accountable and motivate behavior has hit an all-time high. These advanced data environments demand a fresh look at plan measures. A second component may be appropriate. Advanced mechanics such as multipliers and hurdles might be the right application of new metrics. Scorecards – once the bane of a plan administrator’s existence – are more easily supported and appropriate for certain job types.

Conclusion

Sales compensation is an alignment program. As strategy shifts and structure is adapted to execute, programs like sales compensation must move in concert. Digital is one such strategic shift. Just as you may revamp your tech stack or bring new talent into the organization to bring the Digital Revenue Organization to life, evaluate your sales compensation program. Ensure it supports new roles, leverages new capabilities and drives a well-planned growth strategy.

To learn more or to schedule a briefing contact the Alexander Group.

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