September 13, 2023

Leverage Commission Calculation Apps to Drive Sales

When we look at the major CRM applications for sales reps, we find that they have become functionally deep but in doing so have also become difficult to use their functional breadth, a symptom of all major software vendor products.

CRM applications start off being marketed as “easy to use”, but as buyers invest in the software, they demand vendors address other needs, The CRM applications become complex and difficult to navigate.

Don’t Get Distracted: Utilizing The Right Features

Application function expansion also leads to distraction from a business’ key objective for its sales team, to increase revenue. If we use Salesforce as a prime example, we see so many features that optimal use by any sales representative can be elusive.

Basic functions such as opportunity management and forecasting are not the problem. It is getting the reps to use expanded functions such as Einstein, that have clear value in meeting the key sales objective yet sit on the periphery of any reps understanding of Salesforce’s overall capabilities.

And many other capabilities stray away from what is the key motivator for the sales rep, namely “how much money will I make if I close this deal?” Instead, they often focus on data collection for upper management.

It is time to bring application focus more in line with the key sales objective. Having real-time commission calculations permits the rep to stay motivated and to make sound decisions about how to allocate their time and resources.

New Direction for CRM Systems

Early in the 90s I proposed a new direction for CRM systems. It was always my idea that the first thing any rep should see in a CRM application was the opportunities in progress as well as any deals previously closed.

For those deals in progress, an estimate of the commission on the deal would be provided along with the commissions earned from closed deals. This gives the rep income planning and progress against quota. Success in sales starts from getting the rep motivated.

Systems that spend huge amounts of time providing data for management reduce focus. Making commissions the focal point for all other activities ensures broad scale use of CRM application capabilities.

Success in Real Time Commission Calculations

Success in real time commission calculations requires a commission plan that is stable at least quarter by quarter but preferably on a yearly basis. The commission plan must be straightforward. If it approaches the complexity of many government tax plans, real time commission calculation may not be possible.

Also, it is important that management stick to the results presented to the rep; if management gets a reputation for claw backs and overturning what the rep sees, the calculations will be ignored.

Below is a sample of products that through their own descriptions, provide real time commission updates on deals in progress along with some of their unique marketing: These can be integrated with host products such as Salesforce and provide a seamless interface within. Currently real-time commission calculators must be purchased separately.

Everstage is a real-time commission calculator that keeps sales reps updated on potential earnings even as the nature of the potential sale changes.
Tpalti adds the ability to set up alerts so that reps are notified when commissions are updated.
Performio combines commission calculations with quota progress and other key metrics.
CaptivateIQ uses a predictive analytics engine using historical and current trends providing insight on which deals have the most potential.
Spiff – Similar in characteristics to Everstage in its description.

While we have not extensively reviewed these products, anecdotal feedback from several sales reps indicate that they are most effective for straightforward and infrequently changing commission plans. They may also require initial and ongoing customization and/or consulting services. Commission Calculation Commission Calculation Commission Calculation

Bottom Line

A sales commission plan should always be an outcome of an organization’s financial and other objectives. It needs to be visible, understandable and relatively stable by those who carry out the sales function.

A sales rep’s priorities are always a blend of matching the needs of the organization with an individual’s needs to support themselves and their family. Sales reps actions usually are and always should be based on a ratio of a return on investment of time for a given commission.

Delivering real time commission calculations at the time an opportunity is recognized and entered into any sales system is the only way to ensure that sales reps are always working on an organization’s priorities.

Namely, the most money is made by spending time on what the organization wants that person to spend time on. Real time commission calculations backed by well-structured common plans are the means to achieve this goal.

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