Here at Sales Cookie, we help customers setup all kinds of sales incentive plans. A fairly common one is monthly plans with quarterly sales target. Those are plans which:

  • Pay sales commissions monthly
  • Are based on quarterly goals

Those types of plans allow sales reps to be paid commissions every month while also focusing on more strategic quarter-based goals.

Depending on the plan’s structure, reps may receive smaller commissions at the beginning of the quarter. As they approach the end of the quarter, their commissions may get larger if they manage to reach or exceed quarterly quotas / goals.

Creating The Plan

Consider this example:

  • The goal for Q1 is 250K
  • Under 50% quota, the payout will be 3%
  • Between 50% and 100% of quota, the payout will be 7%
  • Above quota, the payout will be 12% (no limits)

Here is how you would configure your plan in Sales Cookie:

  • Create a monthly (NOT quarterly) incentive plan
  • Choose “As Percentages of a Quota” as the target
  • Add 3 attainment levels and associated rewards


The Tricky Part

Suppose that today is March 31st (the end of Q1). You’ve already paid sales commissions in January and February based on the above schedule. It’s now time to calculate sales commissions for March.

Here is the tricky part. For your March commissions, we must calculate commissions starting from January 1st – NOT from March 1st. If we just calculated commissions from March 1st, reps would never be able to reach their quota because we would take into consideration only one month worth of sales.

Allow us repeat this. Each monthly calculation must start from the beginning of the quarter, NOT the beginning of each month to check how they are progressing towards their quarterly goals. Here is an example:

  • For January commissions, use Jan 1st to Jan 31st as the calculation time period
  • For February commissions, use Jan 1st to Feb 28th as the calculation time period
  • For March commissions, use Jan 1st to March 31st as the calculation time period

Avoiding Double Payment

So what’s the catch? Consider March commissions again. You already paid commissions for January and February sales activity. You don’t want to double-pay commissions for the same sales transactions when selecting Jan 1st to March 31st as a calculation period. Yet, you need to assess the entire period (Jan 1st to March 31st) to determine whether your reps met their sales targets. What’s the solution?

At Sales Cookie, the way we solve this problem is by automatically adding a deduction for already paid sales commissions. We essentially do the following:

  • Check if there is another calculation for the same plan and beneficiary
  • Check if this calculation had the same start date (ex: Jan 1st) as the current one
  • Check if this calculation had its rewards released (approved) – i.e. it was paid
  • Check if this calculation had an earlier end date than the current one

For example, if you run a calculation for Jan 1st to March 31st, we will locate two released calculations for January and February. We will then include a deduction to notify the beneficiary that commissions were already paid in January and February.

Here is an example:


In Conclusion

As you can see, monthly plans with a quarterly target are easy to manage if you use an SPM solution. All you need to do is define your sales goals, attainment levels, and run calculations every month starting from the beginning of the quarter. We will automatically identify overlapping past payments and include deductions in payouts. Sign up for our free trial and give it a try!