The Commissions Riddle – Handling Overlapping Commissions and Outside Sales Channels Payouts in a Multi-Faceted Company
For a business that has various divisions or incorporates direct sales and partnership channels, preparing a compensation plan that rewards all those involved in bringing a sale can be a complex task. The business risks issues like overlapping commissions, overpayments, and sales conflicts. However, you can ease the problem by having a good compensation management system. Here are some tips you can use to account for the different sources of sales turnover and make sure you deliver fair compensation to your staff.
1. Have a clear sales crediting policy
Depending on the structure of your sales process and the nature of your business, different people may be involved in closing a deal. In such a process, you will need to clearly define who deserves to take credit for the sale and how much they should be paid for the work done.
The parameters that govern such sales processes need to be clearly captured in your compensation plan or the system you are using. This should include actual sales volumes as well as pipeline data used in determining who takes credit for the sale once it’s closed. However, you need to be careful to only give commissions based purely on actual sales.
2. Automate stock, sales volumes, and revenue reconciliation for sales channels accounts
When it comes to dealing with partnership channels, one of the hurdles you will be faced with is relying on third-party data to pay out commissions. You will need a way to verify the information given by your partners to avoid overpayments. While incorporating agreed commission percentages for each partner account in the system is good, you will need to automate the reconciliation of your stock, sales, and revenue.
This will ensure that no products are unaccounted for and that you only pay for products that are sold. It’s also wise to have your partners provide daily updates to make sure your data is up to date. This enables you to make timely payments that keep the staff motivated.
3. Use a sales commission management system that can capture different business/customer divisions
When offering diverse business solutions/products, you will hardly have universal sales representatives. For instance, if your corporation has software solutions and plant engineering divisions, it is better to employ specialized sales staffs to work in each segment. Since their work is different, their payment will also be determined by different parameters. To avoid overpayment or underpayment of either of your staff, the parameters governing the pay of different sales reps should be captured correctly in the compensation system. This is where versatile commission management software with the ability for segmentation or application of varying percentages comes in.
Irrespective of how complex your business operations are, the formula you use to compensate your sales staff should be easy to understand. When dealing with commissions in a company with a multifaceted sales strategy, have a clear sales crediting policy and specialized sales teams per business division. You should also automate your stock, sales volumes, and revenue reconciliation mechanism to make it as accurate as possible.