What Does an Ideal Commissions Program Look Like?

Reimagine Commissions

I’ve spent the last 15 years in the CRM ecosystem as a Sales Executive. Like all salespeople, it’s important to me to have a clear picture of my payments per deal. I get reassurance when the payout is calculated correctly and paid on time. This way, I’m freed up to do my job; generating new opportunities. 

The average enterprise company spends roughly 10% of its annual revenue on incentive sales compensation. Of course, management wants to use this money efficiently. For this reason, it is important to have an efficient sales compensation program in place to control your sales process.

In this blog, I will discuss the importance of a well defined incentive compensation strategy and the current issues encountered with a manual commissions process. For large sales teams, an automated process is imperative. 

Without further ado, an ideal Commissions program contains the following:

Motivation and Efficiency

Sales Commissions motivate the sales team to meet the business’s goals. And to drive the desired behavior to achieve those goals. It allows the team to be more efficient so they always know where they are from a commissions standpoint. So it frees up your team; they don’t have to track compensation on their own to feel confident it is correct. If they feel there is an error, they have the ability to submit a dispute, research the discrepancy and resolve the issue.

Team and Plan Performance

Allow the sales leaders and managers to know how their teams are performing through comprehensive dashboards and reports. For instance, is the team over/under performing to plan? Who is over/under performing? Who is leading the team and who may need some coaching? Monitoring through dashboards will allow for a high performing team with the right adjustments and timing.

Operational efficiency

Looks at commissions from a maintenance standpoint. How easy is it to administer the plans? How easy is it to change those plans? Are there a large number of disputes? Who handles them, and how? How much time and effort does it take? An efficient sales team is spending more time selling, not calculating their commissions.

Finally,

Strategic Alignment

Focuses on meeting the objectives of the business. Are the incentives resulting in the expected behavior? IS your company meeting its strategic goals and objectives? How are the results affecting the bottom line? Applying and adjusting the correct incentives will lead to a profitable sales process.

While some highly efficient sales teams have already begun using automated systems to manage their sales incentives, an estimated  47% to 70% of today’s organizations are still using spreadsheets. So manual processes present a variety of common pain points to those organizations that haven’t yet moved to automation. Check out our Reimagine Commissions webinar, where I cover some of these challenges, and discuss addressing them with automation.

Lastly, please leave any questions or comments below, or reach out to #teamasar for more information on smarter CRM.

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