Sales Compensation Errors: What Causes Them?

What Causes Sales Compensation Errors?

There is an old saying that you never hear a sales rep complain about getting overpaid; only when they are underpaid.  For the sales reps, opening their pay stub  or checking their bank accounts and finding extra money from the company is a wonderful, joyous event. It’s like Christmas came early!

On the flip side, sales reps can sometimes find that they’ve been underpaid and that they didn’t get credit for all of the sales commissions that they earned.

Either way, someone’s going to be unhappy. A loss in confidence of the sales commission process can adversely impact the sales team.

In scenario number 1, the sales commission administrator  have to face the wrath of the sales reps when they have to be told that they need to give the money back – you know, since it wasn’t meant to be there in the first place.

In scenario number 2, they’d have to face the sales reps that are lining up right in front of their desk asking for an explanation, or demanding that they get paid their commissions.

What Causes Sales Compensation Errors?

When it comes to sales compensation, there is one thing that can cause a lot of misery for the sales compensation administrator: Manual Calculations.

Before the computer and use of Excel, everyone had to manually compute everything – including sales commissions. In this day and age, you’d probably still do fine with manual calculations if you only have 1 or 2 sales reps who get paid a fixed 10% commission on every sale that they make. Yet, most companies do not have “simple” sales compensation plans.  For example, a high percentage of companies calculate commissions based on gross profit which means tracking all the costs of a sale as well. But if you plan on growing, just like any normal business, then manual calculation is just not practical anymore.

Okay. So there’s Excel. That’s not completely manual, right?

Well, Excel is not as fool-proof as we’d like to think. There are hidden columns, hidden rows, wrong formulas, and plenty of room for human error. Don’t get us wrong. Excel is a wonderful tool for a lot of things. Sales Compensation is just not one those things.

The Solution

Automate, automate, automate.

There are a lot of things that we probably shouldn’t automate because a lot of things are still better with a human touch. But sales compensation definitely needs to be automated.

Automating your sales commission calculations will not only lift that mountain of stress off your sales compensation administrator’s shoulders but the sales team will have confidence that People are Paid Properly. Everyone’s going to be happier all around. With the right tools, your sales reps can get their sales commissions paid accurately and on time. No more over or underpayments.

There are many sales commission applications that can help make the transition to automated sales compensation easily (and easy on the pocket too). and are two of the most affordable solutions out in the market today.