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News Release from: Callidus Software | Subject: Enterprise Incentive Management
Edited by the Manufacturingtalk Editorial
Team on 19 June 2006
Revenue generation in Telecoms
Incentivising profitable revenue generation in the Telecoms industry
The Telco market is fast moving and dynamic Today, a typical mobile phone is obsolete within six to nine months of its launch and an increasing number of users avoid purchasing a service contract in favour of "pay as you go" plans
This article was originally published on Manufacturingtalk on 14 Apr 2006 at 8.00am (UK)
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Phones are constantly upgraded, made smaller, and more features are added.
We are at the point where nearly everyday a new mobile phone related product or service is launched, and the sales force of mobile and fixed operators in call centres, on the road and in retail outlets, must endure the risk of losing to the competition.
So what motivates a sales force? A major incentive is of course the promise of generous financial reward in the form of commission payments, which generally make up a large proportion of a sales executives' salary.
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Manufacturers in the telecoms industry, to encourage sales people to sell one particular brand, product or service over all others, in return for additional commission, commonly use "SPIF" programmes.
These are key in ensuring sales people are motivated to sell in a manner ostensibly calculated to drive maximum long-term profitable revenue.
Profit margins are constantly under attack as commoditisation, competition and innovation wear on the modern Telco enterprise.
To stay ahead in the incredibly competitive telecoms market, it is crucial for large players to shift sales strategy quickly to address challenges.
In order to do this, companies must consistently motivate its sales force to sell, and the most effective way to achieve this is to ensure sales representatives are incentivised properly for their results.
Ideally, Telco executives want to drive the market and either retain or increase profitable market share.
It sounds simple, but in reality the CXO responsible for managing compensation plans has the complex task of juggling a multitude of incentive programmes.
Sales representatives may be asked to push several different products, product bundles and services all at one time, and each and every product sold must be recorded, accounted for and payment allocated to the correct person.
The bigger the plan, the harder it gets to manage.
In addition, the more manual, antiquated, or contract-driven the business process, the more the CXO responsible must react to what is possible internally as opposed to what should happen externally.
It is not surprising therefore that confusion often ensues leading to internal disputes, whereby two sales representatives lay claim to the same sale, or payments are made to the wrong person, or not at all.
In fact, in some cases, the enterprise cannot even generate a desirable plan due to limitations with internal process and systems.
It is not just the direct sales force and managers telecoms companies must pay commission to.
Adding complexity to this scenario is the extensive indirect sales channel or dealer network of many large organisations.
Small independent partners, dealers, online retailers, high street retailers and specialist retailers also selling a manufacturer's products, are entitled to some form of commission on the sales made.
Whether internal or external, an enterprise has to gather information and turn that information into accurate payments to the right parties.
Errors, mistaken or intentional, are very costly and this complicated process is predictably prone to fraud.
Unless a tight reign is kept on what is being sold, and the commission due on each sale, a sales person could very easily outsmart this process.
Signing a customer up twice to a mobile phone contract to obtain double the commission, for instance, could go completely unnoticed.
In the telecoms industry, service providers already use contractual devices such as clawback and withholding commission to manage mis-selling risk.
Clawback applies when commission paid to a sales person is taken back due to the cancellation of an order.
For example, if a customer takes out a mobile phone payment plan with a two-year contract, the sales representative is usually paid for selling that plan upfront.
However, if the customer cancels, that sales representative might then have to give a percentage of his/her commission back.
Telecoms operators don't have an effective way of tracking this process, and therefore sales representatives might get away with not paying anything back.
Telecoms operators require a method of recording and tracking the date a service/product was originally sold, the end of the risk period - the time at which the sales person is entitled to keep the money, and the day it was cancelled.
It is then crucial for this data to be linked into the company's incentive compensation plan.
If an intentional error is so easy to generate, one can only imagine what happens when data is not accurate in a manually driven process.
The bottom line is that incentive compensation affects revenue, margin and turnover.
To ease the strain of managing large complex commission programmes and to enable decision-makers to more effectively manage incentive payments to employees, telecoms companies should consider implementing Enterprise Incentive Management (EIM) software.
EIM provides an insight into the telecoms business in terms of identifying key business drivers, who the top sales representatives are, and which are the top selling regions.
It can help telecoms companies to better align incentive structures with corporate objectives, drive sales more strategically, improve payment processing efficiency and increase profits.
Market leading EIM solutions have a built-in flexibility to allow enterprises to quickly release new product-lines, set appropriate sales forecasts and drive sales force performance to meet them.
Sales force management is only possible through automation and analytics, the first and second step in allowing the enterprise to drive selling behaviour through incentive pay.
EIM is particularly valuable in managing large dealer networks.
An operator might have up to 50,000 dealers selling one product and therefore must effectively manage and track the payments due to dealerships, as well individual sales representatives, and ensure they are paid on time and the correct amount.
In terms of future planning, EIM software can also give management the opportunity to undertake historical and modelling analysis to help accurately forecast exactly what should be paid to staff in commission payments to help drive the telecoms business forward.
The flexibility to roll out new compensation plans quickly and to test their effectiveness beforehand provides better visibility in a sales environment.
Driving sales performance to meet business and profit objectives is a clear benefit of successful incentive management.
The flexibility of EIM and its ability to react to market conditions can aid the telecoms industry enormously in achieving real return on investment in an industry that is constantly changing.
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