Some Actual Glocent ROI Client Benefits
Case 1 – Eliminated fourteen full-time positions
Prior to implementing Glocent, the client employed fourteen full-time employees whose sole responsibility was to administer incentive payments. Glocent streamlined the process so effectively that only one employee was tasked with managing the entire process. Since the redundant positions included both business analysts and programming engineers, the client was paying approximately $113,000 a month to manage the hundreds of thousands of transactions being processed for incentive calculations. The reduction of overhead costs and commission over payments created an immediate return on the client’s investment.
Perhaps even more important to the client was the discovery that the costs associated with the previous process were not producing the results that were expected. Following the installation of Glocent, it was discovered that the amount of money being lost from inaccurate data collection (even before commissions or bonuses were calculated) totaled in the millions of dollars each month. Because none of the other financial systems collected all the transactional data generated by the stock trades, but stored portions of it in different systems; only after all the data was stored in Glocent, did a true reconciliation process occur.
Case 2 – Improved dispute process
When a commission dispute surfaced under the previous, manual process, the client’s sales rep would either contact her manager or report it directly to the commission administrator. Once it was reported, the dispute was researched by the administrative staff to determine why a sale did not receive a commission, or a reduced commission, and reported back to the sales rep. If the commission was not included because of error, the administrator would make the necessary adjustments, sometimes during the following commission cycle.
After implementing Glocent, this client now had the benefit of Glocent’s powerful on-line dispute resolution module. Since Glocent captures the full detail of all sales transactions, the sales reps were immediately able to clarify and resolve any issues before incentives were paid; so disputes rarely surfaced. If one occurs now, it is the rep’s responsibility to fill out an on-line form that demonstrates that all activities related to a sale have been completed. The vast majority of the time, the sales rep discovers that something in the required process was not completed; a credit check was not done, the account is not current, etc. This new process reduced the administrative costs by providing more detailed information on-line to the sales reps and shifted the responsibility for proving the discrepancy to the rep who made the sale.
As a result, the overhead costs associated with supporting disputes were virtually eliminated.
Case 3 – Reduced effort to prepare for commission calculations
Since Glocent is designed to allow the user to make changes to sales plans, product definitions and other variables in a short period of time, the preparation needed to run each commission cycle is reduced. As a result, there is more time available to initiate the cycle, allow the reps to review the payment details and resolve disputes. As a result, the commission data is sent to the payroll system much sooner than was previously possible.
Companies using manual sales compensation management processes will close a pay cycle; and then allow from one week to several weeks to compile the sales data and calculate commissions. Following that process, sales reps are sometimes allowed a week or so to review the calculations and possibly detect errors (a process with promotes shadow accounting and lost sales time). Since many manual processes can’t provide sales details to the sales reps, it often leaves both the reps and administrators unsure of what the incentive should actually be.
This breeds uncertainty and mistrust. For this reason, once a solution is installed that provides full transparency into the transaction details, and ensures that everyone sees the same information, the time to issue payments is often reduced from six weeks to just a week following the close of a pay cycle.
Case 4 – Eliminated errors due to process flaws
As the Client uses Glocent over an extended period of time, many types of calculation errors are uncovered. Some are as straightforward as commission over-payments due to calculation errors. The more costly errors, however, are not always that simple to detect. Such errors also typically impact the entire sales force, and not just one or two reps.
In one instance, during the first reconciliation of Glocent with a former in-house system, it was discovered that there was a discrepancy rate of over eighty percent. In this case, Glocent reflected that the majority of the discrepancies reflected over-payments; and most of these were tied to a single process that evaluated if a sale occurred within an assigned territory.
In this particular case, the previous system was not designed to detect out-of-territory sales. If a rep made the sale, it was assumed by the system that the sale occurred within the assigned territory. Somewhere along the way, however, the sales department decided to provide a larger incentive for sales that occurred in specific locations where it was working to increase its market share. Unfortunately, no one understood that the previous system actually assigned the territory to the sale based on the sales rep’s ID. Many of these types of errors go undetected because they are nested inside very complex Excel formulas several hundred characters in length.
Only after Glocent was deployed, and accurate qualifiers were created to evaluate each sale, did the client uncover the error. There is no telling how long the previous process had been falsely assigning territories to the sales force; because the particular formula that was used to make that distinction had been left undetected for years.
Case 5 – Allowed restructuring of commission structure to RGUs
After the Client became confident in Glocent’s accuracy, it decided to test its flexibility by changing its entire commission strategy. Rather than base commissions on individual products, it converted the measurement to a “value of sale” model.
The past model tied compensation to each product that was sold. Unfortunately, with this particular business, it made sense to tie a variety of products and services together to create one packaged offering. Additionally, elements of the package could be exchanged for other elements based on the specific customer requirements. It became a tracking nightmare to determine the value of each sale.
Since Glocent supports what we refer to as “virtual” products, which allows products, events, contract terms, etc. to be either joined or treated distinctly, the client opted to move from evaluating each product based on the terms under which it was sold, to assigning a value to every element based on its value as a revenue-generating unit.
This allowed the client to combine products and services in a completely different manner; and thereby commission their sales from an entirely new strategy. When asked how they would have converted to the new approach if they still used spread sheets, the response was, “We couldn’t have done this using spreadsheets.” Glocent has allowed an entirely new philosophy to influence the incentive management process.