Every single business exists to sell something, and without sales there IS no business. Compensating the sales team appropriately can make or break a business – it’s directly related to your overall company strategy and your bottom line, Unfortunately, many small businesses are flying by the seat of their pants when it comes to compensating their sales staff, and they are missing out on the chance to maximize their motivation, focus, and results.
We asked Liz Cobb, Founder, Chairman and CEO of Makana Solutions, to share some tips on creating an effective compensation plan, and explain how specialized software like their Makana Motivator can help.
Is there really a need for software to help know what sales compensation to pay?
Yes, sales compensation is often the 2nd highest variable expense for most businesses, and one of the most important levers a business has to drive strategy. However, senior managers often struggle with spreadsheets to create their sales compensation plans and frequently encounter a wide range of problems, including:
- Poor alignment with company strategy
- Most models don’t encourage teamwork
- Sales compensation is too complicated for sales to understand
- Sales compensation costs are not properly modeled leading to cost over runs that impact the bottom line
- There are many other unintended consequences such as incenting sales to sell the wrong product mix
Not only do spreadsheets provide less than optimum results, but they require significant time and effort to create – on average many managers have to put aside weeks of time to compile sales compensation spreadsheets. This is valuable time that could be spent doing other things.
There is absolutely a need for software that helps businesses know what sales compensation to pay their employees. Unfortunately, despite its direct impact on profitability, efforts to increase market share and other strategic goals, sales compensation planning remains misunderstood by the majority of small- and medium-sized businesses. Few are aware of related best practices – sales compensation planning is rarely taught in business schools – and most do not have the solutions in place they need to quickly see how plans impact budgets, morale and other factors that directly impact the performance of sales operations and companies.
Are all sales compensation software products the same? If not,what are the differences?
Most solutions on the market today are designed for larger companies and they only help with the calculation of payments. They often require costly implementations.
Makana’s solutions are unique in that they:
- Are self-service and don’t require any implementation
- Feature easy to use wizards that guide users through the process
- Help with the design of sales compensation plans as well as the calculation of payments. (The proper design of such plans is more strategic and provides significant upside in terms of revenue and profits.)
- Best-practice advice is built-in
- Focused on smaller companies
- Offer an affordable on-ramp – our $19 per month planning tool is designed to address the unique needs of SMBs. (Most small businesses don’t have the financial or IT resources required to implement software solutions designed for large enterprises. And most sales compensation solutions available today are designed for those much larger organizations.)
In contrast, Makana’s on-demand solutions require little more than an Internet connection and are offered at a price point that is accessible and empowers SMBs to utilize the software’s capabilities to achieve strategic goals, whether it’s to increase market share, motivate employees or increase the net profit on deals. Our sales compensation planning solution, Makana Motivator Express, is available for a monthly subscription of $19 at MakanaSolutions.com. And users can instantly upgrade to Makana Motivator Pro to add payment capabilities for an additional ten dollars per payee per month.