Money Talks: Motivating Sales People
Article courtesy of SmallBusinessComputing.com.
A carefully designed compensation plan based on quotas, commissions and bonuses can be a powerful motivator for sales personnel. And knowing on a day-to-day basis how much they are — or are not — earning spurs sales people on in the short term. This is the premise, behind Incent from Xactly Corp., an add-on to Salesforce.com that integrates tightly with the Web-based sales force automation application.
With Incent, sales transaction data is taken directly from Salesforce.com in real time and plugged into Incent, which automatically calculates commissions and bonuses based on formulas provided by the subscriber. (Incent, like Salesforce.com, is a subscription-based software as a service, or SaaS, offering.) It then posts results on the subscriber's branded Salesforce.com Webtop, where employees, managers and supervisors can see them instantly. (Employees see their own results, supervisors see their team members, and managers see everything.)
New York-based staffing agency Markinekt implemented Incent about three months ago and has seen immediate benefits, including increased sales, reduced administration and fewer disputes about what is owed to whom. “It is absolutely resulting in increasing sales,” says Christopher McCarthy, Markinekt's co-founder and managing partner. “And the feedback we've gotten from our people is that they're satisfied. That's all I need to know.”
Markinekt, formed five years ago, is a boutique staffing agency with aspirations to becoming a major player. It has quite deliberately pursued a “narrowly focused strategy” — helping media and entertainment companies, advertising agencies and marketing departments within consumer goods companies find creative personnel. The firm currently employs 12 full-time workers, most of them sales people, spread between two offices, one in New York city, the other in Los Angeles.
Backing a Winner
The firm's partners planned from the beginning to grow Markinekt into something more than a boutique. It has seen double-digit growth each year so far and continues to expand. Because of the partners' ambitions and because McCarthy had a background with technology companies, the firm has taken a less seat-of-the-pants approach to building a “technology architecture” than most small businesses, he says. The cornerstone of that architecture is Salesforce.com, which Markinekt has used from the start.
“I think we backed the right horse,” McCarthy says, referring to Salesforce.com's phenomenal success in the last five years. “The cost benefits are astonishing. You don't just get a shared on-demand database that's accessible from anywhere. Salesforce.com is also paying attention to all the other issues — security, server uptime, backups, database integrity. They roll so many things into the service. It just made a lot of sense to build on top of that platform.”
To implement an in-house system that provides the same salesforce automation and customer-relationship management (CRM) functionality even a few years ago would have cost the firm $60,000 to $100,000 in upfront costs, he says. Markinekt pays $50 per person per month — about $600 a year — for Salesforce.com.
The success of Salesforce.com has spawned a mini industry of add-on products, including Xactly Incent. When McCarthy, who is always on the look out for new technology to improve his firm, first heard about Incent earlier this year, he immediately saw how it could benefit his firm.
Egging Them On
The sales incentive benefit is the one Xactly promotes first. The company's slogan is, ‘Incent right. Sell more.' “It's very motivating to sales people to be able to see instantly where they are at any time, to know what their earnings are and be able to calculate how they're going to do for the quarter,” McCarthy says.
The motivational benefit works in a couple of ways. Sales people who see that they're behind plan — something they might not have been as aware of on a day-to-day basis without Incent — start working harder to make up ground. “We've seen an uptick in activity from people when they fall behind that we didn't see before,” he says. But it also stimulates employees who are already doing well. “They can see what their total pay-out is going to be, and as it goes higher, they get more and more excited.”
That's the essential value proposition for Incent, and although Markinekt can't yet quantify sales growth attributable to using the product, McCarthy is convinced it's making a difference. It makes a difference in other ways as well.
Resolving Disputes
One problem in some organizations is that sales people maintain a shadow record of their performance and earnings — sometimes inaccurately. In most cases, selling is a team activity and individuals don't get all the credit for a win. They understand that, but may misinterpret how the company has valued their contribution. Then at the end of the quarter, they discover the discrepancy and find it upsetting.
“It tends to be an emotional thing,” McCarthy says. “They want to know, ‘Why did this happen?' With Incent, they can tell right away [how they're being compensated for a sale] because it's reflected instantly on their Webtop. If there's a discrepancy, they can bring it out right then, not three months later when no one can remember what happened.”
Being able to see how they're doing on a day-to-day basis may also help dissipate frustration and misdirected anger against the company that sales people sometimes feel when they're not doing as well as they had hoped and expected, McCarthy says. “To me that was one of the big benefits.”
Saving Time
Before Markinekt adopted Incent, the quarterly task of calculating bonuses and commissions fell to McCarthy. It was a tedious and time-consuming job that involved manipulating a complex set of interlocking Excel spreadsheets. That job is now off his plate, another significant benefit the product delivers, he says. It used to take him a couple of days of effort spread over a week. That has now been reduced to a couple of hours and delegated to the firm's operations and finance director.
“That frees me up to work on more high-value tasks, such as growing the business and expanding the types of things we sell,” he says. “It really has taken a lot of the burden off me.”
Even before he discovered Incent, McCarthy had been trying to figure out a way to automate the calculations. The firm looked into developing a custom Excel-based program to do it. Incent was a far better alternative. For now, the process of populating the Incent Web pages that employees see is only semi-automatic. An e-mail generated by Salesforce.com cues the operations and finance director to review and then upload data on a new transaction to Incent, which calculates the compensation.
Incent is capable of totally automating the entire the process. “We're doing it this way now because it's a newer implementation,” McCarthy says. “If things seem to be working fine for a few more months, then we'll automate it.”
Simple Implementation
Implementing Incent at Markinekt didn't take long, but it was not a job it felt it could do itself. It hired Astadia Consulting LLC, a firm that specializes in Salesforce.com and Xactly implementation work. Astadia took the compensation formulas Markinekt uses, plugged them into the Incent module, ran a beta test and then turned the solution on. “Within a couple of weeks, we had a working version,” McCarthy says.
Total cost: less than $8,000 for the work Astadia did, plus about $4,000 a year for Incent.
There isn't much McCarthy doesn't like about the product, he says. His firm, being small and fairly simply structured, isn't using many of the advanced features. Incent makes it possible to divide a company up by geographic region and maintain multiple ways of calculating compensation for different types of employees and products, for example. Markinekt doesn't need any of that, or at least not yet.
About the only thing he'd change is the product's dashboard feature — the charts and graphs it generates for quick viewing of Incent data. They could do with a re-design, McCarthy says.
Based in London, Canada, Gerry Blackwell
has been writing about information technology and telecommunications for a variety of print
and online publications since the 1980s. Just for fun, he also authors features and columns
on digital photography for Here's How, a spiffy Canadian consumer technology magazine.
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