SaaS Model for Sales Compensation: Raving About Xactly Incent

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I'm a CODIE judge again this year, and that gives me the opportunity to see some impressive products. One that stood out was an offering called Xactly Incent, which is a software-as-a-service sales compensation tool.


This stood out for me because in one of my first high-tech jobs, I managed sales compensation for a good chunk of IBM. At the time, we largely did it on Lotus 1-2-3. A lot of companies still do this on spreadsheets. Our excuse in the '80s was that the only other choices were unacceptable: using a calculator and ledger system, or trying to get IT to create yet one more screwy mainframe-based utility that would be obsolete and probably not work by the time it was done. Now there is no excuse for not using a current-generation tool.


The Reason to Do Sales Compensation Right


If you've ever done sales compensation, you know what a pain in the hindquarters it is. You've also learned that if you do it poorly, you can sink the company. In my case, I watched as executive management changed the program unintentionally, which forced out our leading salespeople. That turned a profitable $750 million unit into one that was struggling to do $250 million and was drowning in red ink. It is funny how few people seem to remember that compensation actually sucks as a motivator but is incredibly effective as a de-motivator. (Reading up on Maslow helps.) Taking something as important to your bottom line and using a limited tool like a spreadsheet to manage it is asking for trouble because it is way too easy to make mistakes. Overpaying or underpaying a sales rep is simply asking for trouble.


In addition, salespeople tend to game their commission plans. If you don't have solid monitoring tools, you probably won't see the related trend before it is too late and you have to dig out from a big hole. One sales rep I knew actually bought products because at certain commission break points, he made enough profit to easily pay for the incremental hardware, which he likely resold on the gray market or shipped to a landfill. Either path clearly does not point to fiscal responsibility.


Why Xactly Incent Looked Good


Xactly Incent truly is based on a SaaS model and isn't just a hosted piece of traditional software. This means you pay for it as you use it, and you don't worry that much about software updates or patches because you aren't running the thing locally. With a SaaS offering for this class of product, you should be able to model future compensation changes and see what the impact is likely to be at different sales levels. This could help prevent situations where sales reps are personally buying products or commission plans move deals into the red for the company. Both happen way too often in my experience.


Because it is a service, regulatory requirements that affect its users, such as Sarbanes-Oxley compliance, are handled as part of the service. You don't have to buy updated products to address these concerns.


Wrapping Up


Other than getting a chance to look at this product as part of my CODIE efforts, I have no connection to this company. I've never met with its representatives. However, in looking at the offering, I was impressed that it appeared to address the concerns I had when I managed compensation programs. Were I still doing that, it would be on my short list. I'm suggesting that if your company manages compensation -- and odds are it does -- you should look at this offering as well.