Executive Summary: Commission calculations are vital for businesses relying on sales commissions, but manual processes can quickly become overwhelming. This article explores the signs that indicate the need for commission software, like: sales team growth, complex commission structures, transaction volume, accuracy, transparency, and auditing.
Commission calculations are the lifeblood of businesses that thrive on sales commissions.
But let's face it – manually crunching numbers, reconciling data from multiple sources, and dealing with mounting errors can quickly turn into a nightmare.
But when is the right time to invest in commission software?
In this article, we will explore the signs that indicate the need for commission software and how it can benefit your organization. We’ll also highlight a powerful commission software that you can use.
5 Signs That Indicate The Need for Commission Software
Commission software can bring several benefits to businesses that rely on sales commissions. Here are some key reasons why you should consider buying commission software:
1. Sales teams grow
One of the primary signs that suggest the need for commission software is the growth of your sales team.
Imagine your sales team is on a rocket-powered growth trajectory.
It can expand in terms of:
- The number of members or teams such as AE, SDR, Account Management, Solution Engineering, etc.
- The geographic spread across the country or the world.
This means your sales team is not only growing in size but also expanding across multiple countries, dealing with different currencies, and managing diverse payout requirements.
Suddenly, commission calculations become even more complex. From doing manual calculations for 10 reps, now you’re dealing with 100s of reps located in various parts of the world, receiving payouts in different currencies.
Read: Why spreadsheets don't scale with your sales team
Just imagine the amount of time and effort involved in calculating commissions for each rep, reviewing them, and resolving any discrepancies. It's enough to make your head spin!
2. Complex commission structure
Complexity can arise from various factors, including the number of rules and criteria involved in commission calculations.
Not only are there numerous criteria to consider, but also the challenge of reconciling data from various sources, such as your CRM and invoicing systems. It's like piecing together a complex puzzle.
Let's take the example of calculating Net Revenue Retention (NRR), a sales KPI that many companies rely on for compensation. It's a real head-scratcher because you have to synchronize contract start and end dates, analyze invoicing details, and factor in data on new and existing deals and products sold.
Commission software simplifies these complex calculations and ensures accuracy and consistency.
3. Transaction volume grows
As the number of transactions increases, so does the complexity of handling them efficiently. Each transaction involves reconciling data from various sources, including usage records, billing systems, and customer relationship management (CRM) platforms.
Moreover, subscription-based businesses often experience significant transaction volume growth. Imagine the complexity of identifying upsells, downgrades, and churn rates amidst a sea of transactions.
It's like searching for a needle in a haystack!
Without a streamlined process, reconciling these data points can consume valuable time and resources, leaving little room for strategic decision-making.
4. Accuracy and transparency
Inaccuracies in commission calculations can be detrimental to your business and cause friction between sales reps and admins.
With the increasing number of salespeople and transactions, the error rates increase too. In fact, most companies start seeing error rates creep up to 10% of their payslips.
This can be due to a lack of a centralized system and sales reps and admins using emails, phone calls, and Slack messages for communication. These undocumented back-and-forth conversations can become hard to keep track and audit.
5. Auditing becomes impossible
As your business grows, auditing commission payouts can become a challenging task.
Imagine this scenario: You're six months into your compensation plan, and out of the blue, your auditor questions why you paid $300 instead of $500 on a deal.
You try to look for an explanation. Was it an adjustment? Or perhaps the deal was split between two reps?
The answer is lost in the abyss of countless emails.
Retrieving specific information about deals, adjustments, or split commissions can be time-consuming and prone to errors.
Use ElevateHQ for All Your Commission Calculations
ElevateHQ is a commission management software specifically designed for expanding sales teams. It offers an intuitive commission plan designer, enabling users to effortlessly create personalized sales compensation plans, even when dealing with intricate workflows and logical conditions.
Here are some of its features:
- Automation: Automates the process of calculating and tracking commissions, saving time and reducing errors as the sales team grows.
- Flexible rule definition: From tiered commissions and placement fee splits to clawbacks and bonuses, ElevateHQ can handle any level of complexity.
- Scalability: Designed to handle large sales teams and can accommodate different team structures, territories, and currencies.
- Rule-based calculations: Allows you to define and manage complex commission rules and structures, ensuring accurate calculations based on various criteria, such as deal size, product type, or sales performance.
- Audit trails: Users can set up audit trails, approval flows, override rules, and access controls to ensure compliance and accuracy in the commission process.
- Centralized data: Serves as a centralized repository of commission-related data, making it easier to access and track information, thereby improving transparency.
Wrap Up
Investing in commission software becomes essential when certain signs start to emerge within your organization.
Sales team growth, complex commission structures, transaction volume growth, accuracy and transparency issues, and challenges in auditing and compliance are all indicators that it's time to consider implementing commission software.
By automating calculations, ensuring accuracy, and streamlining processes, commission software can save time, reduce errors, and improve overall efficiency in managing commissions.
Evaluate your organization's needs and choose a commission software solution that aligns with your requirements and goals.
