Companies are automating their sales commission calculations for several reasons. Foremost among them is that manual calculations produce too many errors.
The reasons for sales commission software
Commission errors make for unhappy salespeople adding redundant work for staff to make corrections and communicate them to the affected parties.
Another reason has to do with ever more complex incentive plans. To better motivate salespeople, companies will create elaborate compensation plans and rules. Thus, commissions take a longer time to calculate or, depending on the size of the sales force, more people to do the calculations.
The cost of staying manual
Staying with spreadsheets comes with a price—the more errors made in commissions, the less confident the sales force. Salespeople rightfully wonder if their company values their contribution. Instead of focusing on their primary task—selling—they have to spend time doing on shadow accounting to make sure their commissions are correct.
Should miscalculations continue, some salespeople may even look for more reliable opportunities elsewhere. At that point, a company's employee retention becomes a problem—additional time and resources to find a suitable replacement.
Then there's the extra time HR or Finance has to spend correcting errors and communicating corrections to affected salespeople, payroll, and supervisors. Companies may conclude that commission errors happen, and fixing them is just part of the process. But if there were fewer (or no errors at all), people involved in the sales compensation process would have time for more productive tasks.
There's no hard and fast rule as to what ROI a company can expect from implementing sales commission software. Companies can undoubtedly expect a reduction, if not elimination, of commission calculation errors and correction time. Less measurable gains are the boost in confidence and felt appreciation of the sales force. Easy to understand sales performance dashboards can even serve as a recruiting tool for new sales hires.
One way to gain an understanding of ROI from sales commission software is to learn from other companies that have successfully implemented such systems. Here's what customers using Performio to automate sales commissions have to say.
"Before, it would take a regional business manager a good four days of work to calculate the commissions for their five markets. And we have 20 regional managers doing calculations like that. When you do the math, that's 640 hours—every month. With Performio, one admin person uploads all that data, kicks off the calculations, and we get commissions for 100 markets in a couple of hours versus 640. That's pretty significant savings. Performio puts time back in our pockets."
Mark Van Horn, Director of Regional Business Managers, Nexstar Media Group, the largest TV station operator in the country
"Performio definitely makes my life easier in that I can spend more time working on bigger picture things, not be in the weeds of calculating commissions all the time. I can have more time working on analysis, seeing if our plans are actually working, what changes we may want to work on. The sort of stuff that's bigger than the calculation."
Brandon Graham, Incentive Compensation Manager, OnDeck, provider of loans and credits to small businesses
"Today, errors are really a non-event. So that's been a huge time saver. Plus, as we're recruiting and onboarding new sales reps, it's really nice to have something that looks as nice as Performio does that we can introduce them to. That's been really big for us, too."
Brian Maring, Senior Financial Analyst, Service Express, provider of third-party data center maintenance
"From our team's perspective, in addition to the accuracy of our payments, our ROI is in the time saved in processing commissions and disputes. Before we had 20 incidents per month, averaging at least two minutes of each person's time. When you take that portion of salaries of everyone involved over the course of a year, it adds up rather fast. And then all those emails you have to type up, attach, and send out to everybody. All that time saved is money earned."
Joe Briegel, Finance Manager, Veeva, provider of marketing software for pharmaceutical companies
Performio is the only enterprise-grade sales performance management software that is easy to use and gets you up and running in weeks. See if automating sales commissions is right for your business by completing our business case template.