If the following apply, then it’s time to consider leveraging sales commission software. Click here to start your free commission assessment.
- Managing commissions takes too much of your time
- You’ve experienced sales commission calculation errors
- You’re manually distributing sales commission spreadsheets
- You’ve lost good reps over sales commissions
Those are just some of the more obvious symptoms that something might be wrong with your commissions. To objectively assess your commissions and determine if you’re ready for automation however, we have to dig a bit deeper.
At Sales Cookie, we’ve created a self-assessment wizard. It is easy to use, completely free, and entirely anonymous. You can click here to start a free assessment. We’ll even determine your level of readiness towards automating commissions.
Your Administrative Overhead
Do you manually generate & send commission spreadsheets?
You probably realized that that commission spreadsheets don’t scale very well. Having to manually generate, update, distribute, and archive individual commission spreadsheets is very time-consuming. Also, commission spreadsheets quickly become unmanageable from a reporting or compliance perspective. But did you know there were ways to automate the entire process and eliminate commission spreadsheets? Using a solution such as Sales Cookie, your reps can access their statements online (real-time) without having to manually generate individual commission spreadsheets. Our advanced automation is designed to bulk-calculate commissions, easily verify payouts, and publish commissions to your reps.
Do you have a large volume of commission disputes / enquiries?
A large volume of requests from your reps is unmistakably a sign that your commissions lack transparency, or aren’t accurate enough. Many sales operation analysts spend considerable time answering emails / voicemails from reps who didn’t understand how they were paid, didn’t have the right data to verify payouts, or experienced repeat calculation errors. To reduce the number of enquiries you deal with, you have to make it easier for reps to understand & review their payouts. You also need a centralized way for reps to submit detailed enquiries, such as Sales Cookie’s mini-dispute management system. We make it easy for reps to review their commissions, categorize issues, include relevant details, and help you automate resolution.
Is managing commissions taking too much of your time?
Any time you have a manual process which repeats itself, there is an opportunity to automate. The average salesops administrator spends ~20 hours per week managing commissions (including time generating spreadsheets, responding to reps, adjusting commissions, etc.). This is an extraordinary amount of time wasted on unproductive tasks, which also increases the total cost of ownership your incentive program. Automation can help ensure your time is spent on higher-value tasks. For example, using Sales Cookie, you can configure a single incentive plan, calculate commissions for say 100 reps in a few clicks, easily verify payouts, and publish everything to rep dashboards.
Your Reps & Their Commissions
Do your reps waste time self-calculating commissions?
In our annual survey, we found that the average rep spends 2 hours / week verifying commissions. This time, wasted on “shadow accounting”, could have been spent on more productive selling activities. Unfortunately, unless your commissions are automated and online, your reps might not have the exact same data as you, so their own calculations often won’t match yours. This in turn wastes your time, as you have to do some research, investigate discrepancies, etc. To reduce the amount your reps spend verifying commissions, consider simplifying your commission structure and automating calculations to make them more transparent to your team.
Can your reps access their commission statements online?
Unless your statements are online, your reps have to search for those statements (ex: in their mailbox). If they want to compare with the previous period, they have to search for the previous commission statement as well. And while on the go, they may not be able to access their commission statements since those aren’t available online. More importantly, they’ll never have real-time visibility on their commissions. Your reps close new deals every day, so why shouldn’t they be able to see how their commissions are tracking every day? Your reps don’t want to wait for a “final” commission statement at the end of the month. To satisfy their needs, you must be able to recalculate daily, and publish results available to them online. Only automated commission solutions can do this.
Are your reps usually paid their commissions on time?
On average, organizations pay commissions late 20% of the time. Paying commissions late sends the wrong signal. Your reps might wonder whether your organization is financially unstable, whether you’ve got your act together, whether they can count on expected income to pay their bills, whether they can afford that new car, etc. Paying commissions late damages your credibility and makes commission calculations more suspicious. However, unless you’ve automated the entire process, manual recalculation will take hours. For example, revised sales data may require you to recalculate commissions one more time, resulting in late payment. Automation is the best way to ensure your reps are paid the right amount, one time.
Have your lost reps because of commission-related issues?
Here, we’re assuming that your incentive program is competitive, and that a rep only quit because he/she felt screwed over commissions. Losing good reps over commissions is the ultimate red flag. Unfortunately, the impact of losing a good rep is significant. Think about the thousands of dollars you will spend finding, hiring, and training a replacement. Not to mention opportunity costs associated with neglected or abandoned customer accounts. Finally, departing reps can sap team morale, poach employees, steal customers, and worse. Taking into account the total cost of losing good reps over commissions, automation is incredible affordable and a no brainer.
Your Commission Process
Can you easily make changes to your commissions?
If you’re not able to make changes to your commissions, you won’t be able to promote the right sales behaviors. You have an commission agility problem. Over time, your commission structure is going to drift from what it should be. For example, you’d like to tweak commissions, but this takes too much effort, or could break things. Unfortunately, with commissions, change is the only constant. Roles change, territories change, quotas change, product catalogs change, margins change, commissions need to be adjusted, currency exchange rates change, etc. You cannot manage all these commission-related changes without properly tracking them. This means you need a system.
Do you often experience commission calculation errors?
In our survey, 4.2% of payouts were later identified as overpayments due to a lack of automation. Because 8% of revenue on average is spent on commissions, commission calculation errors can prove costly. In addition, calculation errors can upset reps, investors, and executives. They can affect your credibility and your reputation. They can impact financial audits, and even result in fines. Only automation can ensure your payouts are correct because automation uses a systematic process to calculate commissions (from assigning a value to each sale, to crediting the correct reps). Automation also allows you to more easily review and audit payouts.
Are your reps required to accept terms & conditions?
Unless your reps must formally review and accept terms & conditions, you are at increased risk of adverse legal action. For example, in many jurisdictions, declaring commissions as earned is sufficient for those commissions to be considered due, so it’s important to use the right terminology. Also, if you have different commission spreadsheets floating around, disagreements about payouts are more likely. Sales Cookie can enroll user, enforce acceptance of terms & conditions, and help ensure your incentive program is legally protected. In addition, Sales Cookie ensures there is only one version of the truth (not hundreds of floating spreadsheets with many edits).
Do your commissions comply with accounting requirements?
All organizations are now required to capitalize and amortize the cost of commissions. Any reasonable financial audit is going to uncover serious problems if you don’t follow the rules. Unfortunately, the amortization process is fairly complex because you need to a/ identify commission payouts b/ determine corresponding sales and c/ amortize the cost of commissions over each sale’s “contract duration”. For example, if your reps sell 2 year subscriptions, you must amortize the cost of subscriptions over a 2 year period. Sales Cookie offers tools to ensure compliance with ASC 606 and other related standards.
Your Automation Readiness
Do you have a system (ex: CRM) tracking all your sales?
Sales commission software is never a suitable replacement for a proper sales tracking system such as full-fledged CRM. Only CRM-like systems offer the breadth of features required to properly track sales (ex: creating opportunities, categorizing contacts, creating new forms, managing pipelines, etc.). Sales commission software is designed to pull data from your existing sales system, help you manage incentive plans, accurately calculate payouts, and publish commissions to your reps. There isn’t any good commission management solution which also provides excellent CRM features, so avoid looking for all-in-one solutions. Your goal should be to use both a best-in-class CRM system, and a best-in-class commission system.
Is your existing commission structure well-defined?
Commission software is there to help you scale – not help you figure out how your commissions should be structured. You should automate commissions only if they are fully defined (including all nitty-gritty details). Otherwise, you’ll just waste more time configuring commission software when you could have used pen and paper to better define your commissions. Commission software will provide much-needed commission agility, but only if your initial goal is crystal clear. We recommend calculating commissions manually for 1 period before automating, so you can uncover required exceptions / rules, and can fully validate your commission structure. This will ensure you’re ready to automate (in fact, we’ll configure everything for you free of charge once you have 100% clarity).
Do you have 8 or more payees?
If you just have 1 payee, it’s premature to deploy a commission software solution. You won’t benefit from the economy of scale offered by commission automation software. You’re better off calculating commissions manually without configuring automation. You might experience a net positive ROI with say only 3 payees, but there is an initial investment you need to make, and you’ll end up with one more dependency, so is it worth it? With 8+ payees however, you can be confident that automation software like Sales Cookie is going to save you considerable time because you’ll be able to calculate and publish commissions in bulk where manually generating spreadsheets was torture.
Use our free self-assessment wizard to identify commission issues and determine if you’re ready to automate your commissions!