How to Select a New Sales Compensation System

Recently I have received a number of inquiries that go like this – “We are evaluating company A, B and C – which one would you recommend?”  Which one is best depends on what problems you need to solve.  The most common mistake I see during the software selection process is a checkbox focus on functionality versus ‘How can this solution solve problem x for us?”  In fact, many times the biggest mistakes are made before the first vendor presentation.  Let me explain.

When looking for a sales compensation solution the first thing you should do is understand the root causes behind your current challenges.   Where do you spend the most manual effort?  Where are stakeholders most dissatisfied with current outcomes?  These answers usually come quickly.  Then ask – why, why, why and why and this will help you identify the root cause behind your issues.  For example, if your current pay cycle requires a lot of manual effort, the why-why exercise may identify issues such as -

  • Plan designs incorporate measures that are not readily available from our systems, therefore we have to manually piece performance together
  • Sales leaders can’t meet reasonable deadlines and we only get the new plan specs on a napkin a week before the next fiscal years first pay period
  • We are understaffed with only 3 people supporting 1000 payees
  • We have very complex credit allocation rules that our current system can’t support

Obviously, a new compensation system is not going to solve all of these issues, therefore, if you want the new system to be able to work its magic, your implementation program is going to need to address more than just configuring compensation rules.

This exercise will also help keep you grounded in what you need when the software vendor starts confusing you with all of their terminology, pricing plans, special offers and add-ons.
Once you have a vendor short list, I would also recommend that you plan to visit the offices of the 2-3 final contenders to review how they propose to solve your problems.  I find that a visit can be helpful for many reasons including -

  • You can get a real feel for the company, quality of the people, culture etc.
  • When you ask a question in their main conference room, its tough for them to say they left the expert back at the office
  • Its an opportunity to begin building relationships with senior executives that may come in handy down the road

Over recent years Compensation Analytics has diagnosed dozens of  compensation operations and helped facilitate numerous software selections.  Feel free to reach out to us at or on (612) 919-6904 for a free half hour consultation.


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