Every company undergoes an annual sales planning process to revise and align incentive compensation plans with their long-term strategy. A company can have many plans for different quota-carrying reps and depending on function and complexity level the management of these plans can become complex very quickly.
Many sales incentives professionals just finished their year-end commissions and experienced pain through this process, especially, if you are using spreadsheets or manual systems.
Undoubtedly, you have heard this several times before, but it’s worth mentioning again: 9 out of 10 spreadsheets have errors.
Calculating sales commissions can be a crucial part of running a business, but it can also be a nightmare when done in spreadsheets or in manual systems. Here are 10 reasons why:
- Time-Consuming with No Automation
Manually loading all necessary data into spreadsheets can take hours, days, or even weeks, depending on the size of the sales team and the complexity of your commission structure. Spreadsheets simply do not have the capability to automate commission calculations, which can lead to a lot of manual work and errors.
- Error-Prone & Inconsistent
You may have to change the formulas you use in your spreadsheet often. You create a complex model and come back after only a week to redo it. As your team grows, adding changes or updates will only become more complex at scale. All it takes is one error to cause havoc in your commission plan, and it is nearly impossible to avoid it. Manual calculations can also be prone to inconsistencies due to human input, leading to inaccuracies in the commission amounts paid to salespeople and a waterfall of other inquires and disputes to follow.
- Shareability & Collaboration is Complicated
Managing spreadsheets among cross-functional teams may seem like an easy task, but formatting and version control can quickly become a headache to maintain across different business units, managers and sales teams. There are going to be numerous review cycles with your reps, making it tough to communicate commissions without the benefits of an automated platform. If a rep’s data needs some changes, then the manager's data should also reflect the same and making sure that everything is in sync is a big hassle. Complexities and complications continue to rise when you have different incentive plans for your reps.
- Data Integration is Nonexistent
To get your commission calculations right, you need to access the latest data from your CRM, ERP, HR and Payroll systems. Spreadsheets aren’t connected, and you’ll have to do it all by yourself to keep your commission plan updated with the latest data.
- Making Changes is a Headache with a Lack of Scalability
Your plans likely aren’t going to be the same year over year. You will need to do the necessary adjustments periodically; be it adding new people, altering the quota or commission rates, SPIFFs, etc. Making these changes is going to cost valuable time recalibrating commission formulas in spreadsheets. Also, every time a team changes or a rollup needs to change, the model breaks and you might need to alter everything. As the business grows and the sales team expands, it can be difficult to scale the commission calculation process without some level of automation or simplification.
- Difficult to Handle Complex Commission Structures
Spreadsheets may not be able to handle complex commission structures or tiered commissions, which can make it difficult to accurately calculate commissions for salespeople.
- Real-time Data is Inaccessible
When commissions are calculated in spreadsheets, your reps do not have real-time visibility and must wait until the end of the month or quarter. They cannot point out the errors beforehand leading to frustrated and, often times, underperforming field teams.
- Knowledge Transfer is Challenging
When an Ops person moves away from the firm, the complex calculations that are in the spreadsheets cannot be easily picked up by a new administrator. This leads to slow knowledge transfer and likely the creation of new sheets from scratch. This may take some weeks, or months to develop.
- Limited Reporting Capabilities
Spreadsheets do not have the capability to generate detailed reports, which can make it difficult to track sales performance and identify underperforming plans, reps, territories, or managers.
- Resolving Disputes is Challenging
Since spreadsheets and manual systems don’t provide any traceability for the reps to understand why/how they received their commissions, disputes between what the reps believe they should receive vs. what they were actually paid will ultimately end up in additional work for your team to resolve.
Though manual comp administration can work for some businesses, calculating sales commissions in spreadsheets can be a nightmare for growing organizations. Due to the time and effort required, the lack of functionality, the potential for errors and inaccuracies with difficulties collaborating. A sales performance management software solution can automate the commission calculation process, ensure accuracy, and allow for easy collaboration, making the process much more effective and efficient.
Spend less time chasing down numbers in spreadsheets and more time generating revenue. No coding. No spreadsheets. Just happy, motivated teams. Reach out to us to get you started with a sales performance management solution.