Tuesday, June 24, 2008

Sales Performance Management Glossary

There is a lot of very specific terminology used in the world of sales performance management. Different vendors may use different terms, so it is important when starting a project to make sure everybody understands what is what to avoid any confusion.

Callidus has an excellent lexicon of incentive compensation terminology. Here are some important terms used frequently:

Bonus: A performance-based reward or payment to an individual, team, business unit, or work force, made in cash, stock, options, or other form.

Calendar: A set of continuous, non-overlapping periods that define when a compensation plan is in use.

Commission: One type of incentive, often expressed as a percentage of sales, gross margin or dollar amounts per unit sold.

Credit: The amount of credit received for making a sale, where revenue is usually the measure for sales credit, although sometimes the number of units or some other measure is used.

Draw: Cash payment advanced against future income. There are two types: non-recoverable and recoverable.

Formula: A method of calculating compensation that relates pay opportunity to performance achievement, generally falling into one of three categories: 1) Unlinked incentive formula; 2) Adjusted-value incentive formula; and 3) Linked-incentive formula.

Lookup Table: Multi-dimensional: Created by the user to store values for use in rules and formulas.

Participant / Payee: Person participating in your company's variable compensation program.

Plan: A collection of rules that specify how to compensate the participants assigned to that plan.

Position: Defines a specific, unique job.

Quota: A predetermined sales performance goal, expressed as a percentage, percentage change, in absolute numbers, or in units sold.

Quota Attainment: The percentage calculated from dividing the amount of sales credit earned (represented by a performance measure amount) and the quota for a performance period and participant.

Rate Table: One-dimensional: A lookup table used for calculating commissions. The first column in the table represents ranges of quota attainment. The second column represents the pay-out rate for transactions within that range.

Rule
: A way to filter and calculate in the form of an "if-then" statement. The "if" contains a Boolean expression that selects objects from the database (for example, which transactions to use). The "then" part contains formulas that calculate and save new values.

SPIF: Acronym that stands for "Sales Promotion Incentive Fund." SPIF is a loose term referring to an on-the-fly addition to the compensation plan used to motivate the sales force in a particular way by providing additional sales credit or payment for certain types of sales.

Territory: A way of defining which transactions a participant should be credited with. It is usually a geographic area, but could also be an industry or a specific set of customers.

Title: Occupational grouping, such as engineers, systems analysts, etc. Titles are used to group similar positions related by job function across the organization.

Transaction: The original sales data, wich includes sub-line data on an order.

Variable: A placeholder in a rule or formula for a fixed value, rate table, or territory.

4 comments:

Nigel Walsh said...

Julien, you make a very valid point here - the interesting mix to add to this is when you start to compare terminology across geo's - each country seems to have different ways of referring to the various parts, even more challenging when you are the insurance provider paying and managing accross these geos - so its important to have the flexibility to change these lexicons as needed with new or more relevant terms to make the managemet process as easy as possible in each country. Something that is easily achieveable with the the right application.

Julien Dionne said...

Hi Nigel,

That's interesting, I have always been looking at EIM from a North American angle, often with offshore operations adapting to our terminology. Would you have some concrete examples when terminology differs across geographies? I'd be curious to find out how it can differ.

I have also never seen SPM projects in non-English languages, but I would imagine this could also be a good way of increasing confusion and make a glossary even more important.

Finally, I should have mentioned this, a glossary can particularly be useful to bring new team members up to speed, particularly when they are new to SPM.

Thanks for your comment,
Julien

Gareth Downing said...

I would agree with Nigel but don't assume that it's just non English language clients who might refer to the definitions provided by a different term. As the leading provider in Europe we see a vast range of terms being used and as a consequence we have to be very flexible. Using the wrong term can be a major block on understanding.

Nigel Walsh said...

the language of commissions is pretty clear, the necessary outcome being the accurate payment of a bonus or incentive - one thing is for sure, no matter what country or language, this comes above everything else.

My guys have worked on projects with the like of Accenture and other SI's who have deployed this Poland, France, Belgium, New Zealand, Germany, Romania, Portugal, Turkey, Egypt, South Africa, Korea, Mexico.. the list goes on and on.. Happy to send you some example screen shots so you can see it in double byte characters - it’s quite amazing, but still offers the same agility to the organisation.

Maybe we should look at an industry lexicon - so any of our customers like Vodafone, Sprint, Telus or otherwise or retail financial services like Barclays, BofA, Wachovia, WaMu, HSBC, ING, Standard Life - maybe this might be more relevant than a geo lexicon. I'll certainly publish the same question to our internal customer forum which is growing rapidly and see what the feedback is there too.

The SPM industry itself evolving, if you look back 10 years it was EIM, then ICM - both bundled in with the overall "CRM" piece - where it all got a little lost. SPM has really moved the needle on this over the last 2 years finding its own two feet, but Pervasive Performance Management (PPM) is now the next big arena to watch out for.

Cheers
Nigel

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Ottawa, Ontario, Canada
Julien Dionne is a well-rounded consultant with global business management experience and outstanding technical, business and leadership skills. He earned a Bachelor of Applied Science in Software Engineering from the University of Ottawa, Canada, and he is a member of the Canadian Professional Sales Association. The views posted within this blog do not reflect the views of Julien’s current or previous employers and clients. Julien can be reached at julien.dionne@gmail.com