Customer Relationship Management: Implementing Royalty Solutions using an Incentive Compensation System

I am currently working on a proposal where a prospective client wants an estimate for the above. Preparing such an estimate is always more challenging because the client needs are generally not met by an off-the-shelf package meant for a different business scenario.

Incentive compensation systems typically operate in a business scenario where sales reps and sales managers are required to be compensated on their performance related achievements. Royalty Systems on the other hand, pay commission to the service providers of content based on the usage and the revenue generated by their content. The common feature here, as can be gathered, is that both systems calculate and pay commissions but the other aspects differ vastly.

The commission in incentive systems is typically paid to employees while in Royalty Systems; they are paid to a third party. To implement a Royalty solution using an Incentive system (IC), the first question is- How do I represent this third party entity in the system? If the IC system only allows ‘salesperson’ to be paid incentives, you will have no choice but to classify your ‘content providers’ as salespersons.

Royalty processes have an explicit need for formal contracts which need to be maintained and updated as and when changes occur. Incentive Management systems may not adopt such a formal approach. This could necessitate adding a contract management system to the solution or else modeling the ‘contracts’ as ‘incentive plans’ in the system.

Content providers may not have access to the company’s systems so Royalty systems need to possess capabilities to email Royalty statements or provide access to their partners to a portal where they may view the same. Incentive systems might not be burdened with the same requirement. This means that additional capabilities might need to be plugged in to your IC system to achieve the above.

Given the fact that there are so many differences why is this post relevant? Why would companies try and fit a square peg into a round hole, as it were? The answer is, in these times, companies no longer have the luxury to fund the best product for every business requirement and are willing to cut corners and costs. Many companies who need to fund investments on an IC and a Royalty system as well might chose to fund one of them and modify or customize the same to meet their other requirements.

Which one of the systems should get funded? Now that’s a whole other blog post.