Should You Automate Sales Commissions Spreadsheets?
Spreadsheets; whether you love them or hate them, you can’t live without them. In his book Shoedog, Phil Knight, the founder of Nike, describes how one of his early employees, Del Hayes, loved working with Excel: “Nothing gave him more pleasure than laying waste to a hoagie and a bottle of vodka, unless it was doing both while studying a spreadsheet.”
Even if you are lucky enough to have a finance person like Hayes, they likely have higher value priorities than manually populating spreadsheets and double checking calculations. The promise of automation is that it frees up time for higher value work, improving productivity. Many of the companies we work with at Palette previously spent anywhere from hours to days each month manually managing sales commissions with spreadsheets.
Even simple comp plans can require significant effort to manage. As an example, think about a fairly straightforward commission structure - a set percentage of new sales - and then layer in some basic complications:
- Different commission rates for different product lines (because lower margin products cannot support higher commission rates)
- Different commission rates for different customer segments, based on their average lifetime value
- Different commission rates for different sales roles and seniority levels
- Clawbacks when customers cancel subscriptions within the first quarter
Now add in more of the complexities that companies face today: the business may prioritize different product lines during different seasons or in different territories; commissions are paid out only after customer invoices are received; there is a money back guarantee during the first 30 days; and so on and so forth. Those spreadsheets are going to get real janky, fast.
An automation tool connects with all of your different systems, pulls in data, calculates commissions, and triggers payouts - all based on your rules. A good automation tool should provide dashboards and visibility for all stakeholders, from finance directors to sales reps. Even if, like Hayes, you love pouring through Excel spreadsheets on Friday nights - are manual commissions worth the time and effort they require?
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