Mark Smith's Analyst Perspectives

To help sales teams to maximize their value to the company, sales operations and management must find the right balance of compensation and incentives to motivate them to achieve their quotas. To do this requires the ability to design compensation plans that take into consideration products, territories and accounts and of course the number of customers and prospects. Sales managers also need flexibility so they can build plans that align to sales objectives and realistically evaluate the potential of products and services for each territory and customer opportunity. Our benchmark research on sales performance management found that many organizations fall short in these capabilities: One-third of research participants said they have no confidence in their existing sales operations and management, and 26 percent more said they are only somewhat confident in them. Faced with this negativity, many organizations are trying to improve their processes by adopting applications designed for these and related aspects of sales.

The sales performance management capabilities of Varicent enable a strong focus on sales compensation and incentives. The vendor has released version 7 of its flagship software that helps reduce the complexity and time not just of administering them but also of designing compensation models. The visual design capability helps sales operations teams define and assemble plans faster and create workflows of calculations through connectors that clarify the analytics applied to sales compensation. At any point in the process users can review closed deals by products and customers to determine what level of incentives have been earned. This ability also facilitates auditing of sales compensation if disputes or other issues arise. This method of incrementally building calculations adds visibility into numbers and calculations that many organizations have trouble handling with spreadsheets and formulas. The value of this is shown by our research finding that in almost half of sales organizations reliance on spreadsheets and their complexity directly correlate to lack of confidence in sales operations.

To further simplify sales compensation, Varicent 7 has built prebuilt models, rules, forms and reports. It also allows rapid modeling, scenarios and analytics to determine the best plans for particular business and financial objectives. We observe that demand for the use of analytics as part of sales performance management is growing in sales organizations (See: "Sales Analytics: Is Your Sales Organization Selling to its Potential?"). As well, it is not unusual when compensation plans are put into production that some calculations must be edited to adjust the plans, and Varicent 7 enables this. What's more, until recently, suppliers of sales performance management have paid relatively little attention to Europe. But now Varicent has added language support for French, Russian, Spanish and Swedish, which can help organizations with sales operations in both U.S. and Europe as well as local companies there.

Varicent's improved visualization of sales performance more easily presents progress toward quotas, and the company also has enhanced its flexibility in reporting. Varicent 7 is easier for sales reps to access and also more easily configured to provide quick access to information about the individual's sales and compensation activity. In addition a new level of communication has been added through a message center that provides methods for approval and review between sales staff, operations and management.

Varicent has been growing rapidly with its focus on sales automation and management of compensation and incentives. Only a handful or providers can match its capabilities, among them Callidus, Merced Systems, Synygy and Xactly. We advise organizations that they cannot achieve this kind of flexibility by using their current customer relationship management (CRM) or sales force automation (SFA) systems, which do not focus on these objectives. Varicent also offers a choice in how its software is deployed - purchased for use on premises or rented on demand in the model commonly referred to as cloud computing. Varicent continues to advance sales performance management through a strong focus on one critical aspect of sales: the optimal use of compensation and incentives to motivate sales personnel and increase profitability.

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Regards,

Mark Smith - CEO & EVP Research