Sales Compensation: Spreadsheet v/s Automation

Sales compensation is one of the most important aspects of a successful organization. The effectiveness of any sales incentive plan can have a significant impact on the company’s sales and profitability.

In the modern business world, there are many tools available for managing sales compensation. You can choose from manual spreadsheets or automated solutions.

Excel Spreadsheets, access and similar tools are the most commonly used by sales organizations to maintain and sales performance management and compensation/ incentive data. More than 75% of organizations rely on spreadsheets and as a result on individual expertise for sales performance tracking and incentive payouts. In other organizations, close to 20% build their own tools with in-house IT teams or develop bespoke solutions with the help of IT software development companies.

There must be a good reason for this, right? Spreadsheets are the easiest way to maintain and calculate any kind of data, including Incentive Compensation Plans, because they're convenient and transferrable due to their ubiquitous use. Legacy tools are what makes you comfortable, and building bespoke solutions on top of your ERP, CRM solutions for managing incentives is an intuitive idea, right? Because, how hard can it be to calculate sales commissions?

Then, why is it that many large organizations are buying pre-packaged Automation Solutions for managing Sales Incentives? If you are one of them, you surely have seen the benefits of it :

Accuracy and Timeliness

Salespeople in any organization are driven as much as by their variable compensation as with the passion to sell. If a high performing team member is not paid accurately at the end of the quarter, he may not retain the same passion to go to your customers and sell? More than 80% of spreadsheets are found to contain one or more errors in calculations. A single mistake can lead to over or underpayments in thousands of dollars, both of which can prove very costly for the organization

How Automation helps with Accuracy and timeliness: Automation of incentives can help you with saving time, eliminate dependency on individual expertise and ensure accuracy, suitability and traceability in the calculation of payouts.

Shadow Accounting

With sales incentive data being maintained in Excel, it is not possible to provide real-time visibility and transparency of incentive earnings to individual salespeople. As a result, they depend on their own manual working and spend hours keeping track of various conditions and riders which may impact their pay-check.

How Automation helps in making sales person's job easy: Through a real-time tracking software integrated with your source systems (ERP, CRM and HRMS), it is possible for each salesperson to know exactly where she stands with respect to their current earning and shortfall, that they need to make up.

Disputes and Field Queries

Spreadsheets further compound the inefficiency due to incentive payout errors and resulting disputes. As the reps do not have any way to know if they are being incorrectly paid, they can’t check with the operations team and get it resolved till the time payout is complete. And any resolution post payout is more clumsy and time-taking.

How Automation helps get rid of anxiety: Through Automation, Sales teams are always aware of their earnings and the underlying parameters, in terms of what they have achieved and where they have missed out, which deals are accrued and which are resulting in commission calculations. Through this in-depth data availability, they can at any point in time, know their earnings and in case of any inconsistency, call out and get the error rectified.

Then, Why not legacy tools or in-house development

You probably know the answer to this, if you have built or bought a large scale tool for your organization or are using a legacy tool with limited functionality? A tool for Sales Compensation similarly can also be costly to build, maintain and keep relevant to changing business needs. And of course, you have to start from scratch and make sure, you design, develop and implement without committing any mistakes.

So, What do you do? With already available automation tools configured and implemented for your organization, you can be assured and use Sales incentives as a powerful medium to drive performance instead of letting it become a nuisance for yourself.