describe the imageIncentive compensation management (ICM) is standard protocol today, but at the turn of the millennium I wondered whether the ICM application market would ever take off.

At the time, innovative finance organizations were seeking applications to facilitate incentive compensation management: they wanted to automate it, pay accurately and have an audit trail that would satisfy Sarbanes-Oxley. 

Fast-forward to 2013 and we still have organizations struggling with custom-coded legacy systems or Excel to pay sales reps, agents and brokers. For these technology laggards, the problems are somewhat the same as they were more than a decade ago:

  • Tremendous difficulty paying timely or accurately
  • Challenges with producing visual reports
  • Poor time to market
  • Too inflexible to make systematic changes to keep up with external competition as well as regulations

These seemingly ubiquitous problems with administering sales compensation have fostered the ICM marketplace’s tremendous staying power and very predictable growth. During the same time frame on the technology side, I see vendors evolving from ICM software to a much larger footprint and a new three-letter acronym: SPM or sales performance management.

So what’s the difference? A simplistic view of the difference is to think about the difference between viewing sales compensation as a control function and having finance administer it versus using sales incentive compensation as a motivation tool. SPM technologies are powerful enablers for sales operations (and finance) that provide organizations with five key benefits:

1. Track, measure and predict sales performance

2. Motivate behaviors

3. Intelligently recruit and on-board

4. Enable training

5. Provide coaching tools for sales managers

The technology now focuses on not just the cost side of the sales yield equation, but also on the revenue side. This increase in features and functionality from ICM to SPM has accelerated growth in the market. 

With core incentive compensation administration problems still unresolved for many companies, plus the increase of global competition and regulation, we see companies looking for technology investments that can increase sales effectiveness and efficiency, address both top-line revenue growth and lower the cost of sales—one of those tools is SPM.

If your company isn’t looking at the potential benefits of an SPM solution, you probably should be. If you’ve already invested in legacy ICM or a more contemporary SPM solution, now is the time to look at how to leverage the rich data set you’ve accumulated and stay abreast of the innovation curve. With analysts reporting 25% year-over-year growth and a potential $2 billion market, I’m no longer wondering whether SPM is here to stay.


Topics: incentive compensation management (ICM), sales performance management (SPM), Justin Lane