Stripped to its essence, managing sales commission is like managing a garden. Just as a gardener must carefully tend to each plant to ensure it grows and thrives, a sales manager must carefully manage the sales commission process to ensure the team members are motivated, productive, and satisfied. Learn the tips and tricks to manage sales commissions effectively.
Managing sales commissions requires periodic reviews and adjustments of the commission structure by the sales manager.
Moreover, for the sales commission process to be effective, it should be aligned with the organization's goals.
But that's not all!
A sales manager must also ensure that the commissions are paid out in a timely and accurate manner to reward and motivate their team.
With multiple moving parts, managing sales commissions clearly requires a heady blend of skills, intuition, expertise, and the right tools.
In this article, I’ll cover 10 amazing tips to help you manage sales commission easily. I’ll also highlight five amazing sales commission tools along with their key features, pricing, and user ratings.
10 Tips to Successfully Manage Sales Commission
Sales commission is a form of compensation that is paid to salespeople for selling products or services.
It is typically a percentage of the sales price of the product or service sold and is intended to incentivize salespeople to sell more and earn more money.
Interested to learn more?
Check out our detailed guide on sales commission plans.
There are various types of commission structures to consider:
- Straight commission: Sales representatives receive a percentage of the sales they generate.
- Salary plus commission: Sales representatives receive a base salary plus a commission on their sales.
- Tiered commission: Sales representatives receive a higher percentage of commission as they sell more.
- Profit-based commission: Sales representatives receive a commission based on the profit the company makes from their sales.
- Territory-based commission: Sales representatives receive a commission based on the sales they make in a specific territory.
- Hybrid commission: Sales representatives receive a combination of different commission types, such as a straight commission on some products and a tiered commission on others.
Clearly, there are various structures and factors at play – making them difficult to manage.
Let’s take a look at a few tips for managing the sales commission process:
- Keep it simple: Make sure the commission structure is easy to understand and implement. Avoid complex processes that can create confusion and mistakes.
- Avoid capping salaries: As a thumb rule, don't cap sales commissions. Salespeople should be able to earn as much as they can by selling more products or services.
- Focus on the right product: Focus on setting commission rates based on the products or services that generate the most revenue and profit for the company.
- Tie commissions to your goals: Always align commission plans with your business goals to incentivize behavior that drives growth and profitability.
- Adjust quotas and territories: Ensure that sales quotas and territories are realistic and achievable. You can always make adjustments as necessary to keep salespeople motivated and on track.
- Make data-driven decisions: Use data to measure sales performance and identify areas for improvement. You can then leverage this information to make informed decisions about commission plans and sales strategies.
- Use automation tools: Use technology to automate commission calculations and reporting, reducing errors and saving time.
- Communicate clearly and regularly: Communicate commission plans clearly and regularly to ensure everyone understands the rules and expectations. You can also provide ongoing feedback and coaching to help salespeople improve their performance.
- Provide incentives for high performance: Offer additional incentives for salespeople who exceed their targets or achieve exceptional results. This can motivate them to work harder and achieve even more.
- Monitor and evaluate performance continuously: Finally, continuously monitor and evaluate sales performance to ensure your commission plans are effective and aligned with business goals. The idea is to make adjustments as needed to ensure ongoing success.
Top 5 Tools for Managing Sales Commission
Manually managing the sales commission process can be a herculean task.
Here are some of the common issues that you may face:
- Human error: Be prepared to tackle mistakes if you're managing your commissions using a spreadsheet. Note that spreadsheets cannot support the weight of intricate compensation schemes, and they frequently produce errors that are impossible to identify.
- Lots of manual work: The Operations team may end up spending a significant amount of time and energy to make the spreadsheet work.
- Inflexibility: Spreadsheets work well only if you need a little amount of data, like in the case of fewer sales representatives and a straightforward sales incentive scheme.
- Zero transparency: Until they’re actually paid, reps have no idea what their commissions will look like. They’re completely unaware of their motivations in real time. This is a serious issue since the perception of the commissioners and their actuality can diverge, leading to numerous internal conflicts and a significant loss of motivation.
But… don’t worry!
You can use sales automation software to tackle these issues and easily manage sales commissions. Let’s take a look at a few tools with their key features, pricing, and user ratings.
1.ElevateHQ
ElevateHQ is a sales commission software suitable for small to medium-sized sales teams. It can help boost sales performance, motivate teams, and manage as well as automate the sales commission process.
Key features
A. Customizable commission plans
- Create custom commission plans that align with their specific sales strategy and goals.
- Set different commission rates for different products or services, and assign different commission rates to individual salespeople.
B. Automated commission calculations
- Automate the commission calculation process, eliminating the need for manual calculations and reducing the risk of errors.
- Calculate commissions based on different variables, such as sales volume, customer type, and product type.
- ElevateHQ provides real-time performance tracking, so salespeople can see how close they are to their sales targets and how much commission they can expect to earn.
C. Commission reporting
Generate detailed commission reports that help you to:
- Track sales performance.
- Monitor commission payouts.
- Identify areas for improvement.
D. Sales pipeline management
ElevateHQ integrates with popular CRM platforms like Salesforce, HubSpot, and Zoho, allowing businesses to manage their entire sales pipeline from one place. This feature helps sales teams work more efficiently and effectively, increasing their chances of closing more deals and earning more commission.
E. Commission approval workflows
It offers commission approval workflows that ensure sales commissions are paid out accurately and on time. This feature also helps businesses comply with legal and regulatory requirements.
Pricing
Pricing starts at $25/user per month.
User rating
G2: 4.7/5 (100+ reviews)
Capterra: 4.9/5 (50+ reviews)
2. CaptivateIQ
CaptivateIQ enables companies to manage and automate their sales commission processes.
Key features
- Automate commission calculation, removing the need for manual calculations and reducing the risk of errors.
- Allows companies to create and customize commission structures that align with their specific sales goals and strategies.
- Provides real-time reporting and analytics, allowing companies to track sales performance and commission pay and make data-driven decisions.
- Integrates with popular CRM and sales tools, including Salesforce, HubSpot, and Shopify, to streamline the commission management process.
User rating
G2: 4.7/5 (2100+ reviews)
Capterra: 4.8/5 (750+ reviews)
3. Performio
Performio is a sales commission management tool that automates and streamlines sales performance processes.
Key features
- Allows businesses to automate their commission calculations, ensuring accuracy and reducing errors.
- Provides real-time sales analytics and customizable dashboards, giving them greater visibility into their sales performance.
- Allows businesses to gamify their sales performance processes, motivating their sales teams to achieve better results.
- Create customized sales compensation plans based on their unique business needs and goals.
User rating
G2: 4.3/5 (250+ reviews)
Capterra: 4.3/5 (300+ reviews)
4. Xactly Incent
Xactly Incent is a cloud-based platform that helps organizations improve their sales performance and motivate their sales teams.
Key features
- Design and manage their sales compensation plans. The software provides tools to create and modify commission plans, quotas, and incentives.
- Automates commission calculations, ensuring accuracy and reducing errors that can occur with manual calculations.
- Offers real-time reporting and analytics, allowing sales organizations to track their performance and identify areas for improvement. It provides dashboards and customizable reports to help users monitor their progress.
- Helps sales organizations manage territories and quotas, ensuring fair and equitable distribution of sales opportunities.
User rating
G2: 4.2/5 (300+ reviews)
Capterra: 4.2/5 (200+ reviews)
5. QCommission
QCommission helps calculate and manage sales commissions for sales teams. It is suitable for SMBs as well as enterprises.
Key features
- Automates commission calculations based on sales data, commission plans, and rules set by the organization.
- Allows organizations to set up custom commission plans based on different criteria, such as products, services, or salespeople.
- Provides sales performance tracking tools to help organizations monitor sales and commission-related metrics.
- Integrates with various CRM, accounting, and payroll systems to import sales data and export commission data.
- Offers reporting and analytics tools to help organizations analyze commission data and track performance.
User rating
G2: 4.6/5 (25+ reviews)
Capterra: 4.4/5 (180+ reviews)
To Wrap Up
Overall, managing sales commissions requires careful planning, clear communication, and ongoing monitoring and adjustment. With the right approach, you can create a commission structure that motivates your sales team to achieve their targets and drive business growth.
To make your job easier, leverage ElevateHQ, an all-in-one compensation management software to monitor every aspect of the sales commission process – from user onboarding to payouts, seamlessly.
Sign up for ElevateHQ today and skyrocket your sales productivity!
