Let’s face it! Although mission-critical, sales commissions can be a real headache to deal with. Sometimes, multiple systems provide the sales data you need, and you also need to prepare and transform this data. Often, commission rules are quite complicated, or require special handling (ex: claw-backs). Dealing with all this yourself can be quite overwhelming as it requires some unique expertise and consumes many hours of your time.

For those reasons, you need a knowledgeable partner with decades of experience with SPM solutions, such as McAlign Consulting. We recommend McAlign because they are familiar with all available software solutions, and have a ton of real-world expertise with sales commissions. Another thing we love about McAlign is their ability to accurately estimate project costs.

Using McAlign (and SPM solutions such as Sales Cookie), you can automate the whole commission process and:

  • Eliminate the need to generate / send / revise / archive commission spreadsheets
  • Delegate tasks such as data preparation or normalization
  • Centrally manage all your commission and incentive plans
  • Automatically calculate all commissions and reduce errors
  • Provide reps and managers with real-time dashboards
  • Improve accounting & legal compliance

In this blog post, we asked the McAlign team about their experience with sales commissions. Please reach out to McAlign for excellent advice regarding sales compensation and automation.

You’ve Analyzed Many Commission Structures – Which Common Mistakes Do You See?

Sales incentives can be a phenomenal growth engine. Selecting the appropriate incentive strategy can boost profits, improve performance, and reduce costs. Great incentive programs impact every level of the organization, and keep everyone focused on key goals. Unfortunately, many companies struggle with sales incentive design. Here are 5 common mistakes we often see during the planning phase.

Using Outdated Metrics

Often, incentive plans are based on outdated metrics, such as total sales volume, which are only specific to one role. Instead, shift your focus on compensating for exceptional end-to-end customer experiences. If you treat your client the way you want to be treated, you will reap plenty of rewards. Focus on each customer – individually (instead of just gross sales volume).

Using Irrelevant Metrics

Woohoo! Your sales rep came back from a trade show with 50 new leads. The catch is, most of those are cold leads. If you reward your reps for those 50 cold leads, you are using a flawed performance metric. You will both waste time and money because the metric you chose is not correlated to actual sales performance.

Forgetting Key Contributors

If you only reward high-performing hunter reps for closing deals, you’re probably making a mistake. Hunters wouldn’t exist without Gatherers, who identify quality leads, nurture them, and keep your sales pipeline full. Make sure to compensate every contributor (instead of just the more visible ones).

Delaying Compensation

Don’t wait to motivate your sales reps and announce incentives. The longer you wait, the less likely you are to get a positive reaction. Delayed compensation can even reduce sales motivation and generate churn. Compensating reps after the fact isn’t as productive as announcing incentives upfront.

Only Offering Monetary Incentives

Money brings joy, but non-monetary rewards add to that joy. In the words of Dan Pink, “Just using financial incentives creates a focus that adversely impacts performance.” Broaden your vision, and consider rewarding your employees with softer, personalized incentives. For example, letting your reps work outside the office, or offering a paid membership to a club.

Just using financial incentives creates a focus that adversely impacts performance.

In Conclusion

To design effective sales incentive plans, avoid these 5 key sales compensation mistakes. Consider spending extra time designing a meaningful and efficient compensation process. By eliminating key design mistakes, your sales compensation strategy can drive not only revenue, but also long-term value and growth.

How Can Sales Commission Automation Help?

Every organization’s goal power of attainment (vs. goals) depends on:

  • Highly efficient sales processes
  • Few implementation errors
  • Higher sales volumes
  • Increased profitability
  • Great employee retention

Everyone, from sales reps to the CEO, thinks those goals are important (and talks about them daily). The problem is that everyone follows a pragmatic (not systematic) approach. Unfortunately, ad-hoc approaches often fail. Using modern sales tools, sales teams can achieve a lot more. Automation makes them more efficient. However, those tools and processes must be compatible with the organization’s unique communication fabric. Also, those tools and processes must be configured correctly for organizational goals, sales behaviors, and incentives to be aligned. Here are some of the key benefits of using a consulting partner such as McAlign to automate your commissions.

More Efficiency

A well-design sales compensation process saves significant time and pain – every pay cycle! It also allows sales operations staff, sales managers, and IT professionals to focus on more important business operations. McAlign can free your team from routine tasks such as:

  • Collecting and merging sales data
  • Implementing an error-free sales compensation process
  • Generating meaningful reports and analytics

More Accuracy

A great incentive automating platform should integrate with all existing sales processes. This is the only way you can verify payment accuracy and eliminate over-payments. McAlign can provide a fast ROI by doing the following:

  • Selecting the right sales compensation solution
  • Automating sales compensation calculations
  • Providing comprehensive audit trails and reports
  • Delivering a streamlined dispute resolution process

Less Shadow Accounting

The ability to recapture a fraction of every rep’s time wasted checking commissions, and convert this time into active selling, will always result in a high ROI. Using technology to automate incentives, reps can easily access clear commission statements. Self-service, on-demand online statements will earn their trust. McAlign can help eliminate shadow accounting and improve transparency via technology.

Better Goal Tracking

Organizations who constantly monitor progress towards goals accomplish them more often. Using technology, you can better surface goals and progress to individuals and managers. Automation makes your commission process more agile, so switching strategies or updating quotas become much easier. McAlign can help you:

  • Analyze and build effective incentive plans
  • Balance out short-term vs. long-term goals
  • Help you communicate and manage change

Reduced Turnover

More visibility on financial performance increases trust. Transparency makes it easier for individuals to take action when they spot a problem or fall behind. Managers and individuals feel they are working together and contributing to a common effort. McAlign can help dramatically reduce sales turnover by providing reps with real-time access to their goals and progress. Automation is guaranteed to increase employee satisfaction because they know you are investing in them!

In Conclusion

McAlign provides a combination of technology and expertise, with an immediate and measurable ROI. Sales compensation is any organization’s biggest controllable expense. Even a small improvement in efficiency can result in significant ROI. Imagine the payback you’ll get using a streamlined and integrated technology solution! Visit McAlign online to learn more and become your sales team’s hero.