Archive for the ‘Terminology’ Category

Sales Performance Management Glossary

June 24, 2008

There is a lot of very specific terminology used in the world of sales performance management. Different vendors may use different terms, so it is important when starting a project to make sure everybody understands what is what to avoid any confusion.

Callidus has an excellent lexicon of incentive compensation terminology. Here are some important terms used frequently:

Bonus: A performance-based reward or payment to an individual, team, business unit, or work force, made in cash, stock, options, or other form.

Calendar: A set of continuous, non-overlapping periods that define when a compensation plan is in use.

Commission: One type of incentive, often expressed as a percentage of sales, gross margin or dollar amounts per unit sold.

Credit: The amount of credit received for making a sale, where revenue is usually the measure for sales credit, although sometimes the number of units or some other measure is used.

Draw: Cash payment advanced against future income. There are two types: non-recoverable and recoverable.

Formula: A method of calculating compensation that relates pay opportunity to performance achievement, generally falling into one of three categories: 1) Unlinked incentive formula; 2) Adjusted-value incentive formula; and 3) Linked-incentive formula.

Lookup Table: Multi-dimensional: Created by the user to store values for use in rules and formulas.

Participant / Payee: Person participating in your company’s variable compensation program.

Plan: A collection of rules that specify how to compensate the participants assigned to that plan.

Position: Defines a specific, unique job.

Quota: A predetermined sales performance goal, expressed as a percentage, percentage change, in absolute numbers, or in units sold.

Quota Attainment: The percentage calculated from dividing the amount of sales credit earned (represented by a performance measure amount) and the quota for a performance period and participant.

Rate Table: One-dimensional: A lookup table used for calculating commissions. The first column in the table represents ranges of quota attainment. The second column represents the pay-out rate for transactions within that range.

Rule
: A way to filter and calculate in the form of an “if-then” statement. The “if” contains a Boolean expression that selects objects from the database (for example, which transactions to use). The “then” part contains formulas that calculate and save new values.

SPIF: Acronym that stands for “Sales Promotion Incentive Fund.” SPIF is a loose term referring to an on-the-fly addition to the compensation plan used to motivate the sales force in a particular way by providing additional sales credit or payment for certain types of sales.

Territory: A way of defining which transactions a participant should be credited with. It is usually a geographic area, but could also be an industry or a specific set of customers.

Title: Occupational grouping, such as engineers, systems analysts, etc. Titles are used to group similar positions related by job function across the organization.

Transaction: The original sales data, wich includes sub-line data on an order.

Variable: A placeholder in a rule or formula for a fixed value, rate table, or territory.