Accuracy and visibility are vital in maintaining a motivated sales force and rolling out new products.
In the world of insurance, independent distribution channels or large numbers of captive agents/brokers are all working to sell a product. Remember, those in your channel care less about your products than how they get paid.
So what motivates a sales force and what pushes them to sell one product over another? A major incentive is the promise of generous financial reward in the form of commission payments, which generally make up a large portion of a sales executive's salary. Thus, there is no doubt that the compensation and incentive process has a major influence on a sales team's behavior, and the profitability of an organization. Simply put, incentives are what drive a sales force to push one product over a competitor's.
In most cases, it's the finance/accounting teams who are responsible for tracking the sales of resellers. But their requirements are rarely addressed with a sophisticated software solution. As a result, companies lose millions each year due to inaccuracies or mistakes in payouts, and risk de-motivating their channel network.
When it comes to paying your sales channel, it's important to get it right. Many brokers and agents are simply unclear about their achievements against goals and corresponding payments. Reseller retention starts with accurate and timely information, which makes it easier for your resellers to do business with you.
Lack of transparency into incentive structures and payments can drive salespeople to spend valuable time on "shadow accounting" of their expected commissions. It is not surprising that confusion often leads to disputes, whereby two sales representatives lay claim to the same sale, or payments are made to the wrong person, or not at all.
In order to gain transparency, insurers need an IT solution that provides a 360-degree view of every detail of every agent and/or broker in an organization and distribution channel. Insurers must be able to track agent/broker demographics, licenses, appointments, continuing education, contracts and payment schedules. They also must have the ability to see the above in relation to dispute resolution, analytics and reporting tools.
Greater visibility and transparency will allow insurers to use sales compensation as a proactive tool to motivate the sales team and drive revenue. Sales representatives typically thrive on the day-to-day buzz of feedback to maintain their motivation and focus, and relish in setting and achieving short-term goals. The right software solution can provide sales executives with timely visibility into business operations and the flexibility to deploy new sales strategies on demand.
Market conditions change every week due to a number of factors outside a company's control or influence. What can be managed, however, is how employees, agents, distributors, resellers and suppliers behave and how their actions change in response to changing business conditions. This is achievable with a software solution that enables decision-makers to align incentive structures with corporate objectives and improve payment-processing efficiency.
The leading solutions in the market have a built-in flexibility to allow insurers to quickly release new product lines, set appropriate sales forecasts and drive sales force performance to meet them. For example, they could help insurers determine when, and if, product promotions will be beneficial and profitable to the business in the long term.
PRODUCTS AND MODELING
Products are major revenue drivers for insurance organizations. Insurance companies are constantly working to introduce new products and expand or adapt existing offerings to better meet customer needs and grow revenue. The correct incentive compensation solution is key to the rollout success of new insurance products. It is estimated that between 12% and 20% of a company's revenues are spent on compensation payments, but little attention is actually paid to the effectiveness of this spend.
Transparency can also give management the opportunity to undertake historical and modeling analysis. This will help accurately forecast exactly what should be paid to staff in commission payments to help drive the insurance business forward. It can also aid in the optimum management and timing of product launches and promotions.
As insurers are faced with the task of managing this process for distribution channels and large numbers of captive agents/brokers, transparency is the key to ensuring that this process is strategically planned and completed accurately.
By simply paying the distribution channel the correct amount of compensation in a timely manner, organizations can transform their business and reap the rewards of increased sales and a highly motivated sales force working together to meet the goals of the business.
Andrew Armstrong is VP and GM, international at San Jose, Calif.-based Callidus Software Inc.
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