"With our old system, there was only one person able to program it," said Ron Willie, senior sales analyst at the electronics manufacturer NEC-Mitsubishi. "We had to contact an information services person if we wanted to run a contest. Now we can change the way we pay someone, or a group of people, very rapidly."
About a year ago, the company replaced a DOS database with an online system from Incentive Systems Inc. to help drive a 130-member sales team to sell flat-screen LCDs.
Sales force incentives were no afterthought at NEC. The company sought a way to change the weighting of compensation on a dime, depending on the goals for its three key product lines. If 60% of an NEC salesperson's compensation was based on selling monitors, 20% on imaging and another 20% on flat-screen LCD monitors one month, NEC wanted the ability to change the weights to emphasize LCD monitors the next month.
"With incentives, we can spread the weighting through the categories, choosing whatever we want more help on," Willie said.
"Overnight, we can change the weight to make our sales force concentrate more on one line of product," Willie said.
For Willie, there was no real choice. NEC had determined it would completely revamp its sales compensation system, which managed the pay for both inside and field sales representatives. With an approved budget for a costly upgrade-such systems cost in the range of $750 per payee, or $150,000 to $200,000 for a platform that supports 200 people-NEC was after software that could handle both day-to-day sales compensation management and sales contests.
The shift to Internet technologies is forcing change in the $4 billion sales compensation and incentives industry, according to AMR Research Inc. Stalwart vendors such as Maritz Performance Improvement Co. and Olsen Performance Group, which for years have run paper-based sales incentive campaigns for large corporate clients, increasingly find themselves challenged by Internet interlopers.
Among the challengers: Do-it-yourself Web sites like GiftCertificates.com and Giftpoint.com, which handle the basic selection and fulfillment of corporate gifts; consumer loyalty networks, such as Netcentives Inc. and MyPoints.com Inc., which have dabbled in providing corporate incentives; and online compensation systems, such as those developed by Incentive Systems, Callidus Software Inc., Westport Consulting Group and Trilogy Development Group, which allow for more flexible construction of sales contests. And, finally, b-to-b specialist Salesdriver.com, which is attempting to develop an online service for structuring sales incentive programs that's about as easy to set up as an auction listing on eBay Inc.
"Our most popular items today are merchandise [vs. travel] incentives," said Mark Sullivan, VP-sales at Salesdriver.com. "We see a lot of folks interested in high-end electronics, DVD players, television sets and MP3 portable music players. And then, interestingly enough, there are a lot of practical household items-vacuum cleaners and children's toys."
Don't go overboard
While the new technology allows a sales manager to launch a contest quickly, NEC and others have learned that too many contests too quickly aren't necessarily a good idea.
"If you let your sales force monitor all the contest transactions, they spend a lot of time looking in their queue rather than selling," Willie said. "We have had some problems with sales people spending half their day in there." NEC eventually opted for more static contests.
However, automated systems do free administrators from spending days just trying to weed through the smallest details of a contest, said Nina McIntyre, exec VP-marketing and strategic alliances for Incentive Systems.
"People do best when you tell them what the goals are and how they can compete against those goals," said McIntyre, whose company uses a carrot in its logo. "The time and money companies today spend on modeling, managing and pushing out incentive results and commission statements is extraordinary. The idea is to do it more easily so that the salesperson can see how they are doing in real-time."
The complication of running contests was the issue at Autodesk Inc., a software company that sells to architects, engineers and mechanical designers. The company had grown weary of paper-based incentive contests because they took too much time, said Bob Southard, inside sales resource coordinator for Autodesk Inc.'s East region. Moreover, because Autodesk relies on resellers to push its products, contests often led to squabbling over how sales were calculated when multiple partners were involved.
Recently, however, Autodesk concluded a paperless, Internet-based sales contest that delivered bang-up results. The competition awarded a reseller $50 every time a demonstration of the company's product was offered, and additional awards to the top performers in the quarter. A reseller channel of about 60 companies "took to it like a duck to water" with the average number of demonstrations rising from about one per week per reseller to one per day. Sales for the quarter were 20% higher than forecasted, in part because of the contest, he added.
"Running a contest internally was cumbersome in terms of creating, communicating, reporting and administering," Southard said. "As a result, unless it was absolutely dirt simple, we tended to shy away from it."
Autodesk already used a SAP AG system to manage its internal compensation systems, so it wasn't about to revamp its entire infrastructure to make sales contests easier. Instead, it tapped Salesdriver to run its most recent promotion. That Web site allows companies to structure their own contests in exchange for a promise that award recipients will purchase goods from a rewards catalog of more than 1,000 items at the Salesdriver site. Autodesk is now in the midst of a follow-up contest this quarter.
Sullivan said more than 400 contests are currently being run on the site, which allows sales managers to structure a contest that awards as little as $500 in incentive dollars. While administrative cost savings are the biggest benefit, other key advantages include the neutrality of a third-party administering the program and the fact that all participants have easy, online access, he said. Salesdriver makes its money by selling the incentive items, as well as add-on tracking and content services.