Artificial intelligence is no longer a nascent or experimental technology. A majority of modern companies are either using or planning to use AI in order to streamline business processes and save costs. Consider these statistics:
- 77% of businesses are currently using or exploring the use of AI (source).
- More than 60% of business owners believe AI will increase productivity (source).
- 54% of organizations have reported cost savings and efficiencies as a result of AI implementation (source).
This proliferation of AI has been met with both excitement and trepidation. Skilled workers wonder what they’ll be able to accomplish with AI– and at the same time, they fear a future in which their skills become nullified by a machine that will ultimately replace them.
If you’re a sales compensation manager, we’re sure you’re familiar with this sort of AI-driven anxiety. On the one hand, you’d love to be able to automate the more tedious and time-consuming aspects of commission management. On the other hand, you see how fast AI is evolving and wonder: is technology going to make my job easier, or render it obsolete?
Good news: we provide a definitive answer to that question in today’s blog post. Read on to learn about the power of AI for sales comp managers– and the limitations of AI that prove why your (human) skills and experience are still absolutely essential to your business.
5 Ways AI Will Support Sales Comp Managers
Naturally, sales comp management is one of the key strategies that businesses are looking to improve through the implementation of AI. It’s an incredibly complex process that necessitates a lot of operational and administrative work, and is prone to inefficiency and human error– problems that AI is uniquely positioned to solve.
Here are a few of the specific ways AI can help you improve your sales comp management process.
1. Eliminate the learning curve.
Sales comp plans are built on a foundation of highly complex rules and formulas. If you’re tasked with managing commission plans, you typically face a steep learning curve, as you must become a master of the nuanced logic used to build and optimize plans.
This learning curve is especially significant if you’re a new sales comp manager, or if you’re responsible for taking over plans someone else built. It can take countless hours to understand plan construction, the purpose behind each formula, or how to make changes without breaking the logic that’s already in place.
AI can significantly reduce these learning curves by translating complex commission calculations and logic into natural language. An AI-powered logic explainer can result in massive time savings. A single click of your mouse can explain a complex formula using language that’s easy to understand– no matter who you are.
Recommended reading: A Day in the Life of an Effective Sales Compensation Manager
2. Accelerate the plan building process.
AI can do more than just translate complex plans into natural language– it can also perform this process in reverse. In other words, you can input natural language and AI can use your inputs to build a complex commission plan.
For example: let’s say you want to build a new plan in which your mid-market account executives receive 5% commission on new business bookings and 6% commission on any multi-year deal.
With a traditional comp management process, you’re going to have to create and adjust formulas to generate these new payout rules, double-check your work to ensure accuracy, and assign the impacted AEs to this new plan.
AI is powerful enough to handle all of those steps for you. Instead of tinkering with complex formulas yourself, you can simply describe the details of the plan you want to build and let AI build it. The result? A plan that’s built in seconds, rather than hours, days, or weeks.
Recommended reading: 5 Ways to Write a Better Change of Commission Letter
3. Deliver insights that enable smarter plan optimization.
Building new commission plans is a time-intensive process– but continuously optimizing plans is equally demanding, if not more so. So many factors influence your ability to adjust and improve commission plans: shifting business goals, complexity and dispersion of commission data, sales team and individual rep performance, and more.
Analyzing all of these variables is a tall order, and even if you have the time to do so, it can be difficult to translate data into actionable insights for effective plan optimization. AI can do much of the heavy lifting for you. Algorithms are able to analyze historical sales data, customer behavior, sales performance metrics, and other key variables to identify patterns and trends. It can highlight which sales strategies, products, or territories are most profitable.
You can use these insights to continuously improve commission plans so that they align with your company’s shifting goals and incentivize the most effective sales behaviors.
Recommended reading: The Impact and Administrative Overhead of a Bad Sales Commission Process
4. Streamline communication with commissioned employees.
Communicating with sales professionals is a critical aspect of any sales comp manager’s job. It’s your responsibility to provide visibility into their earnings, answer their questions, and resolve disputes.
This compensation communication demands a lot of your time, especially if you oversee commission for a large number of employees. But, you can significantly reduce the need for constant back-and-forth by implementing an AI-powered solution.
For example, let’s say a sales professional looks over their statement and doesn’t understand how their commission was calculated for a specific deal. Their commission structure is fairly complicated, so it takes you a while to examine and then explain the payout rules that produced the dollar amounts listed on their statement.
Now, imagine if that same sales employee asks the same questions to an AI-powered chatbot. The chatbot is able to rapidly translate all of those complex variables into natural language that the sales rep can understand. The employee thus gains a better understanding of how their commission works, without ever needing to contact you for help.
Recommended reading: Using Automation to Address Sales Burnout
5. Predict future commission trends.
Predictive modeling is another major selling point for AI-powered technology. AI-driven forecasting tools can help you anticipate future sales trends and prepare for potential challenges.
This is a major benefit for sales comp managers, as it’s nearly impossible for you to manually keep track of every variable that influences forecast accuracy. AI has the power to rapidly gather and analyze historical sales data, market trends, and other external factors related to your industry and the greater economy, and then convert these insights into accurate sales commission forecasts.
Equipped with this information, you’re able to create budgets and sales capacity plans, allocate resources effectively, and report to leadership in order to keep your commission programs as current and impactful as possible.
Recommended reading: 23 Questions to Ask While Researching Sales Incentive Software
Why AI Can’t Replace Sales Comp Managers
Now, you might read the above benefits and be more anxious than eager to start experimenting with AI. You might be thinking: You just described the majority of my day-to-day responsibilities. Doesn’t that mean AI can do my job for me?
Fear not— the fundamental limitations of AI mean that it can’t, and likely won’t ever, be able to replicate or replace what you bring to the table as a sales comp manager. Here’s why:
Sales comp managers deliver value through strategic decision-making.
It’s true that AI presents a modern solution to a very modern problem: the over-abundance and complexity of data. AI-powered technology can gather a large quantity of data and quickly produce actionable reports and predictive models. But, truly effective analysis relies on much more than crunching numbers.
As a sales comp manager– and as, well, a human being– you possess analytical skills that no machine can replicate. You might not be able to organize data as fast as technology can, but you can put that data into context, alongside your understanding of your company’s unique objectives, your sales org’s goals and challenges, and the human factors that drive sales motivation and performance.
This valuable context is exactly what you’ll be able to drill deeper into– if you let AI handle some of the more tedious, purely numbers-driven administrative work. AI can help to inform your analysis, but it’s only a small piece of the puzzle.
Recommended reading: Ready or Not: Busting the Myth of Commission Automation Readiness
Human relationships are fundamental to the sales comp process.
Sure, an AI-powered chatbot can answer basic questions or translate data into natural language that sales professionals can understand. But, it can’t come close to replicating a human being’s communication skills– and these skills are essential to an effective sales comp management process.
As a sales comp manager, your success is due in large part to the connections you build with other employees. You need to understand their needs, identify the unique strengths and shortcomings of both teams and individual reps, and provide ongoing guidance– while also factoring in their thoughts and emotions when designing comp plans.
These relationships require emotional intelligence and empathy– uniquely human attributes that can’t be replicated by even the most advanced chatbot.
Recommended reading: 8 Soft Skills for a Successful Career in Finance or Accounting
Managing compensation relies on human judgment and ethical considerations.
Human judgment is essential in any role that involves establishing fair compensation practices and maintaining a healthy work environment. AI might be able to build a structurally sound comp plan based on algorithms and data, but it’s devoid of ethics or morality; a machine can’t adequately assess the human impact of the data-driven models it produces.
It’s your responsibility to run comp programs that balance the human impact and the financial impact. You have to be tuned in to how your efforts affect team morale, customer satisfaction, company reputation, quality of living, compensation psychology, and more.
Plus, managing sales compensation means navigating a number of ethical gray areas. Complying with compensation regulations and pay transparency laws requires a good deal of human judgment, as the lines between what’s legally required and what’s ethically right can often be hard to decipher. It goes without saying that putting these decisions in the hands of AI would be a massive risk.
Recommended reading: Ensure Your Sales Commission Program is ASC 606 Audit-Ready
Since the birth of science fiction, we’ve always been fascinated by the same storytelling trope: the machine that becomes sentient and asserts its dominance over the humans that created it. It’s no wonder why we’re all a bit wary of artificial intelligence at this precise moment, as AI inches closer to the all-powerful tech we’ve seen in the movies.
We hope today’s blog post alleviated some of your concerns and encouraged you not to fear AI. Instead, consider the ways this powerful technology can unlock your potential as a sales comp manager by eliminating inefficiencies, delivering fresh insights, and making data-driven recommendations.
Remember: AI is still just a tool. An incredibly powerful tool, of course, but one that only works with the right person operating it. It’s an instrument, not a conductor. AI itself would make for a lousy sales comp manager– but it can play a role in making you the best sales comp manager you can be.
Spiff is a new class of commission software that combines the familiarity and ease-of-use of a spreadsheet with the power of automation at scale- enabling finance and sales operations teams to self-manage complex incentive compensation plans with ease. Spiff is designed to facilitate trust across organizations, motivate sales teams, increase visibility into performance and earnings, and ultimately, drive top line growth. The platform’s intuitive UI, in-depth reporting capabilities, and seamless integrations make it the first choice among high-growth and enterprise organizations.