How to Measure Success in Commission Calculations

by | May 13, 2020

A sales compensation plan of any kind plays an important role in the performance of your team. If the way that plan calculates commissions, incentives, and bonuses proves effective, it will drive more sales and galvanize your workforce. If it’s not effective? Well, we’ve talked about that before.

But how do you measure that effectiveness? How do you know if your commission calculations are successful? There are a few telltale signs that will indicate that what you’re calculating is working. Since we’ve been doing this for a while, we’ve learned to recognize those signs. And we’ve listed them out below.

There are a few telltale signs that will indicate that what you’re calculating is working.

5 Ways to Measure Success in Commission Calculations

  1. More People Logging Into the Sales Portal: When salespeople tune in and log in, that’s a sign they’re motivated. The action of logging into the sales portal allows a salesperson to keep tabs of their progress in meeting their goals. This level of interest demands that managers and commission administrators share details of commission calculations in a timely and clear manner. When management can achieve that, their commission calculations succeed.
  2. Fewer Complaints from Salespeople: If your calculations are successful and your salespeople are sufficiently motivated to sell, then you’ll hear less from them. They’ll be less likely to complain about their pay or dispute a payment if they understand how their commissions and incentives are being calculated. That is a sign of a workforce that feels informed and connected with their compensation plan. If they get it and they’re working to succeed toward their sales goals, the commission calculations are doing their job.
  3. The Commission Administrator Doesn’t Dread Work: If the person calculating commissions dreads the calculation part of their job, that may mean those calculations are overly complicated or they don’t have the right tools. If commission calculations require lots of work to the point that the commission manager spends late nights reckoning multiple rows on a spreadsheet, it may be too complicated to be effective. It’s better to keep it simple, keep the commission manager happy, and keep it understandable for your team.
  4. Sales Team Turnover Slows: Employees tend to leave when they feel neglected by their employers in some way. Sales people experience this when commission calculations become overly complicated and difficult to navigate. If they can’t understand how to reach their goals or have someone clearly explain it to them, they’ll lose interest and start searching for an employer willing to accommodate them. When that turnover slows, it means those same salespeople know they’re appreciated because, among other things, their commission structure makes sense to them.
  5. Higher Payout in Commissions: While it may seem counterintuitive to someone hoping to keep costs low, paying more commissions is a positive sign. The higher the commission payout, the more successful the sales team and the more revenue earned by the company. After all, commissions and incentives aim to drive salespeople to sell. If they’re doing their job, they earn more money and so does their employer.

Core provides the tools employers need to administer a successful commission plan and easily calculate it every pay cycle. Having resources at your hands like our incentive building tools or the Rapid Report Builder can support commissions managers and provide cost-effective methods to continually deliver accurate and consistent commission pay to your payees. Contact us and we’ll show you how!

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