10 Reasons Your Commissions Process Will Fail with Spreadsheets and Manual Systems
Apr 18, 20244 mins read
Every company undergoes an annual sales planning process to revise and align incentive compensation plans with its long-term strategy. A company can have many plans for different quota-carrying reps, and depending on function and complexity level, the management of these plans can become complex very quickly.
Many sales incentives professionals just finished their year-end commissions and experienced pain through this process, especially if they use spreadsheets or manual systems.
You have undoubtedly heard this several times before, but it is worth mentioning again: nine out of 10 spreadsheets have errors.
Calculating sales commissions can be a crucial part of running a business, but it can also be a nightmare in spreadsheets or manual systems. Here are 10 reasons why:
- Time-Consuming with No Automation
Depending on the size of the sales team and the complexity of your commission structure, manually loading all the necessary data into spreadsheets can take hours, days, or even weeks. Spreadsheets cannot automate commission calculations, leading to much manual work and errors.
- Error-Prone & Inconsistent
You may have to change the formulas you use in your spreadsheet often. You create a complex model and return after only a week to redo it. As your team grows, adding changes or updates will only become more complicated at scale. All it takes is one error to cause havoc in your commission plan, and it is nearly impossible to avoid it. Manual calculations can also be inconsistent due to human input, leading to inaccurate commissions paid to salespeople and other inquiries and disputes.
- Shareability & Collaboration is Complicated
Managing spreadsheets among cross-functional teams may seem easy, but formatting and version control can quickly become a headache across different business units, managers, and sales teams. There will be numerous review cycles with your reps, making it challenging to communicate commissions without the benefits of an automated platform. If a rep’s data needs some changes, then the manager’s data should also reflect the same, and making sure that everything is in sync is a big hassle. Complexities and complications continue to rise when you have different incentive plans for your reps.
- Data Integration is Nonexistent
Access the latest data from your Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), HR, and Payroll systems to get your commission calculations right. Spreadsheets are not connected, and you will have to do it all by yourself to keep your commission plan updated with the latest data.
- Making Changes is a Headache with a Lack of Scalability
Your plans are likely not going to be the same year-over-year. You will need to make the necessary adjustments periodically, be it adding new people, altering the quota or commission rates, spiffs, etc. Making these changes will cost valuable time recalibrating commission formulas in spreadsheets. Also, whenever a team changes or a roll-up needs to change, the model breaks, and you might need to alter everything. As the business grows and the sales team expands, scaling the commission calculation process without some automation or simplification can be challenging.
- Difficult to Handle Complex Commission Structures
Spreadsheets may not be able to handle complex commission structures or tiered commissions, making it challenging to calculate commissions for salespeople accurately.
- Real-time Data is Inaccessible
When commissions are calculated in spreadsheets, your reps do not have real-time visibility and must wait until the end of the month or quarter to see the results. They cannot point out errors beforehand, leading to frustrated and, often, underperforming field teams.
- Knowledge Transfer is Challenging
When an Ops person moves away from the firm, a new administrator cannot easily pick up on the complex calculations in the spreadsheets. This leads to slow knowledge transfer and likely the creation of new sheets from scratch, which may take weeks or months to develop.
- Limited Reporting Capabilities
Spreadsheets cannot generate detailed reports, making it difficult to track sales performance and identify underperforming plans, reps, territories, or managers.
- Resolving Disputes is Challenging
Since spreadsheets and manual systems do not provide any traceability for the reps to understand why/how they received their commissions, disputes between what the reps believe they should receive and what they were paid will ultimately result in additional work for your team to resolve.
Though manual comp administration can work for some businesses, calculating sales commissions in spreadsheets can be a nightmare for growing organizations. Due to the time and effort required, the lack of functionality, the potential for errors and inaccuracies, and difficulties collaborating, a sales performance management software solution can automate the commission calculation process, ensure accuracy, and allow for easy collaboration, making the process much more effective and efficient.
Spend less time chasing down numbers in spreadsheets and more time generating revenue. No coding. No spreadsheets. Just happy, motivated teams.
Contact us to learn more about how you can transform your business with a Sales Performance Management (SPM) solution.