The beginning of a new year often kicks off new strategies, methods, and processes. For some sales organizations, this may include revisiting the commission plan. Whether management wants to improve commission efficiency or rates need to increase to attract talent, changing a commission plan should be approached with care.
In some cases, a fresh commission structure propels sales performance. Starting off the new year with new opportunities for salespeople to earn can motivate a sales team. However, to make sure that happens, administrators should make sure that certain steps are taken.
A fresh new commission plan could be the motivation your sales team needs to reach new heights.
After 15 years of working with commission management teams, we’ve got a handle on what should happen in the process of changing up commissions. We built a checklist specifically for this process. Tick off each to-do and you’ll be off to a good start!
Identify The Goals of Changing Commissions
Any time an organization seeks to make changes to a commission plan, it should clearly lay out what problem it’s trying to solve. Perhaps leadership wants salespeople to reach a specific sales threshold before releasing payments. On the other hand, perhaps recruiters noticed that a more generous compensation plan would draw more talent amidst a labor shortage. Maybe it’s a combination of scenarios that triggered a review of commission structure.
Whatever the case, those goals and targets need to be pinpointed and outlined. Establishing what a good commission plan should do for the organization acts as a solid foundation for making changes.
Map Out Commission Changes
Once the team tasked with adjusting commissions has an understanding of what the commission plan needs to do, they can start developing a new plan. If the goal is to drive salespeople toward a minimum sales goal — perhaps a percentage of their quota — a sales decelerator may be effective. When the goal is to inspire teamwork, commission splits might come into play.
Whatever the new rules may be, it’s important to map these out clearly in a document. Having this resource will allow executives to review it before it’s implemented. Once in place, this same document might be used for salespeople to further understand what’s expected of them.
Test Each New Commission Rule
Before rolling out any changes, an organization needs to know how those new rules will add up. To do this, commission administrators should be included in the discussion so that they might carry out initial calculations. Applying the proposed rules to preliminary data offers a picture of how the new structure might play out in real life.
Core Commissions clients have the option of implementing a What-If Commission Estimator feature and a What-If Sandbox. Both tools allow administrators to take a closer look at proposed rules and calculations before deploying them.
Communicate Commission Changes Thoroughly
The most important step in discharging a new commission plan is communicating it with the sales team. At the end of the day, any commission plan aims to improve sales performance. In order to achieve that, sales reps need to know what performance will result in commissions. If they’re successful, their organization will also be successful.
Reliably Calculate and Distribute Commissions
Even if an organization incorporates the most effective rules, it makes no difference if commission calculations regularly include errors. To avoid errors and deliver reliable commissions every cycle, organizations turn to commission software, including Core Commissions. Our application eliminates errors almost immediately and connects with business systems to remove any additional opportunities for mistakes.
Explore how Core Commissions can help your organization navigate commission plan changes — or just give you the tools to reliably manage commission calculations. Contact us for more information or schedule a free demo and we’ll walk you through the application.