Commission calculation: Why create a tracking table for your sales reps?

Why set up a commission plan?

Commissions: what is it about?

The commission is a sum of money returned to the salesperson when a sale is made. The most common commission base remains the turnover, but it can be the margin made on the products sold.

It is generally used to remunerate sales teams and, in this context, supplements fixed remuneration. In itself, it is a recruitment argument. An interesting commission plan will allow companies to attract experienced profiles.

But that’s not his primary goal. Commission plans are primarily used to motivate the sales team, energize their actions and encourage sales.

How to set up a good compensation plan?

A good compensation plan is first and foremost a plan that the sales team buys into. This condition is essential to ensure its proper functioning.

For this, the commission plan must:

– be clear: even if it can be complex (see next section), the rules must be understood by all salespeople.

– be realistic: the conditions put in place to obtain variable compensation must be achievable. If this is not the case, this risks producing the opposite desired effect: demotivation of the sales team and stagnant sales.

– serve the commercial strategy: it is not enough to sell! The products or services sold must be in accordance with the commercial actions decided by the management. The commission plan is a good lever to go in this direction.

How to calculate the amount of a commission?

Simplicity is essential for the calculation of the amount of commissions. The simplest solution is to pay an established % of the turnover generated to the salesperson. This % does not vary, this is a fixed rate commission.

For example, with each sale made, Mr. X receives 3% of the turnover. His last sale amounting to €10,000, Mr. X will receive €300.

However, the use of differentiated rates is quite common. It is a question of varying the amount of the commission according to:

– the product sold: This makes it possible to concentrate the commercial dynamic on one product rather than another because it is new, more difficult to sell, etc. Concretely, the % of commissions may be higher on these products, temporarily or permanently. It is also possible to exclude certain products from the commission plan.

– customer type: used most frequently when it comes to a new customer in order to boost the opening of an account.

– quantity: a decreasing rate which makes it possible to better control the amount of remuneration but also to smooth sales. Thus, salespeople will have more interest in diluting sales throughout the year rather than selling as much as possible in a limited time.

– discounts: the use of discounts is a commercial method whose purpose is to facilitate sales. The commission % may vary depending on the discount granted by the salesperson.

Depending on the sector, the products sold, their specificity but also the competitors, the established commissions can vary greatly from one company to another. So no copy-pasting, finding the right commission plan can take time and requires iteration.

Benefits of using a commission calculation tracking table

Calculating commissions can therefore be complex, especially when dealing with differentiated rates. Setting up a collaborative table for calculating and monitoring commissions has several advantages, listed below. Especially if it is collaborative and easy to learn, like the one offered by RowShare!

1. Save time in calculating commissions

Once the commission calculation table has been established, the table can be filled in directly by the sales representatives, on a regular basis or when a sale is made. The information is not diluted in various means of communication (emails, excel files, etc.) and we avoid round trips.

Then, the corresponding commission rate is associated with the sales and the amount of each commission is calculated automatically.

2. Transparency

By offering a commission monitoring table accessible by the members of the sales team and by their manager, we create a unique repository to which everyone can refer to check the progress of their objectives, their commission to date, etc. Information flows smoothly and transparently between the salesperson and his manager.

Thus, as mentioned above, sales representatives can directly fill in the sales made in the table. In addition to saving time, the sales team retains control and a view of this variable compensation. A concrete view of what their sales generate and which will keep everyone motivated.

For his part, the manager can check and validate the information transmitted.

3. Information Sharing

This commission tracking table can be easily shared within the organization but also outside. It can therefore be used in the context of commissions allocated to resellers. But that’s not all, RowShare allows you to modulate sharing. Concretely, you can decide the view granted to the sales representatives: an overall view of all the commissions attributed to each member of the team or a more individualized view where each sales representative only sees his own commissions. The manager will benefit from a global view of the table.

4. Monitoring of the evolution of the amount of commissions in real time

This table is easy to complete and therefore allows each salesperson to update it regularly. The advantage is twofold: the manager has access to reliable and up-to-date information, the salespeople are all the more motivated as they see the regular impact of their sales efforts on their remuneration. Beyond monitoring the amount of commissions, this table is an opportunity to monitor the performance of the sales team and the achievement of objectives in a more general way.

How to set up a commission tracking table in your business

Adaptable to your commission plan

As mentioned above, the commission plan is specific to each company. The table model we offer is ready-to-use, it will easily adapt to your specificities. For this, we can support you in creating the ideal table and in line with your variable compensation policy, by adapting this existing model with you. Do not hesitate to contact us.

Ease of use

RowShare is an easy to use tool. It is easy to learn and quick to deploy within a sales teams. To make it easier for them to join.

“Our favorite thing about [RowShare] is how easy it is to use. We can manage sharing between users and access our data in a very simple way. We recommend the solution, for working on boards within small user groups.” – CaixaBank testimonial. Read all our testimonials.