by Sarah Van Caster | October 16, 2017
Behavioral analytics is a newer form of business analytics typically applied to consumer behavior to help create targeted marketing campaigns. The rationale is that the more intelligence you have about your customers, the more informed decisions you can make about how they will interact with your products. Thus, strong behavioral analytics enable marketers to create more successful campaigns. 

If we extend the concept of behavioral analytics as an intelligent means of understanding what humans (not just customers) do, we can leverage data and applied intelligence across multiple areas of business, including sales. Sales performance is a priority for most organizations and traditionally, selling behaviors are influenced through incentives. Poorly designed sales incentives generate confusion, underwhelming performance and creating high churn. However, if we make our sales incentive programs more effective, we can better align behaviors with desired business outcomes, while saving time and money.

Since the late 1800s, "pay for performance" has been the standard reward exercised to motivate sales. If you want more out of your sales teams, reward them for higher performance -- a "carrot." Additionally, the ultimate "stick" has been the threat of termination. 

Fast-forward to today where the business world is global, fast-paced, and constantly changing. Endless amounts of data and information are instantly accessible. The work we do has changed and so has our motivations. The role and responsibilities of a salesperson are as different today as that of a manufacturer. 

The work of behavioral economists has concluded the traditional carrots and sticks are no longer effective in the modern workplace. Merely paying people more does not ensure increased performance. According to several studies conducted by the Harvard Business Review, when not designed properly, "rewards can actually undermine the same processes they are designed to enhance." And while the looming threat of termination may momentarily increase performance, it ultimately leads to unsatisfied workers and high turnover. 

Today's sales incentive programs are complex because the work we do is more complex, as are the products and services we sell. It is not just about cash anymore. Managing sales incentives requires a mastery of both art and science that balances and aligns individual motivations with organizational goals. In this era of abundant data and global hyper-competition, the difference between companies that succeed and those that do not can come down to the ability to target and influence key behaviors. 

Salespeople need the right incentives at the right time to truly drive motivation, but incentive changes are often based more on intuition than data. Most reports are in hindsight and adjustments are made well after there is any potential to change behavior before the end of the quarter or end of the year. What if optimal changes could be identified mid-period and put in place well before it is too late? 

Behavioral analysis helps us identify which incentive programs are working, which are not, and what changes need to be made quickly to make programs more effective. By nature, behavioral analysis can be predictive and even prescriptive in making proactive recommendations. Machine learning capabilities can improve sales incentives by proposing intelligently designed plans, quotas, and territories; cross-sell and up-sell recommendations; and optimal price or discount levels designed to maximize commission potential. 

Behavioral analysis is all about applying learned data to prescribe more economically efficient business decisions. All sales incentives apply the disciplines of psychology and behavioral economics to prompt people to make desired decisions. But, when you combine principles of behavioral economics with the power of behavioral analysis, then you create the potential to optimize your sales incentives and truly drive business outcomes.  

Sarah Van Caster is the director of product marketing at Apttus, focused on the Incentives portfolio, including Incentive Compensation, Promotions, and Rebate Management. She has experience in the high-tech, communications, and logistics industries and designs innovative, customer-focused content and solutions.