Sales Commission Management Best Practices Series

In a recent article published in Destination CRM, Bob Conlin, CMO at Centive, reviews performance-oriented sales commission plan design for sales commission management. Although plan modeling and forecasting greatly impacts sales performance, most companies fail to successfully model plan variables and attainment scenarios.

Says Conlin, “The first best practice step in sales commission management begins with modeling sales commission plans to ensure they reward the rep and the company in equal measure. You can do almost everything else right when managing sales teams--but if your plans don’t work, results won’t meet expectations.”

Best practice sales commission management starts with building and modeling sales commission plans and involves the creation of multiple what-if scenarios so that a myriad of variables and changes can be evaluated. Companies then analyze and forecast related commission earnings at both a macro (plan) and micro (individual) level, and then choose those sets of sales commission plans that best fit corporate parameters for sales performance, revenue, and commission budget. Once the most effective plans are rolled out, sales and finance executives actively monitor actual attainment and compare it to modeled results. In the event of unforeseen internal or external developments, the company is able quickly to identify the trend and promptly respond by making appropriate changes in strategy, plans, people and processes.

As the leading on-demand sales commission management solution, Compel® provides complete modeling capabilities, including sales commission plan and participant modeling. With Compel Modeler, users can easily create and compare multiple scenarios and automatically calculate commission costs at the company and individual level. Customers forecast commission expense and model plan changes to ensure optimal and effective sales commission plans. The Compel Commission Forecaster empowers the sales team to forecast their own earnings for the current period, thus enhancing the motivational power of the sales commission management system.