The soft cost of vendor commission management using spreadsheet

There are certain situations where it seems like everything is going smoothly and you’re cruising through them. Suddenly, however, everything goes wrong.

I have no problem with spreadsheets. The fact that they have created a cult around their data management is impressive, with gurus and aficionados finding new, never-before-seen ways of managing it.

In regards to commissions management on spreadsheets, while they seem to be doing the job, aren’t quite hitting the mark, my friend.

If you’re still doing commission management using the spreadsheet, then let me give you five solid reasons why you should ditch the spreadsheet before it goes out the window.

1. It’s INSANELY time-consuming

As an example, you might have one or more spreadsheets containing formulas and tables that calculate sales commissions. Each pay period, you will need to copy your sales records onto your master spreadsheet, calculate your commissions using formulas, and share the spreadsheet with your reps and other members of your team.

Similarly, if any changes need to be made or data is missing, new spreadsheets will have to be generated from scratch. This will take forever! This process must be followed every pay period. A small sales team can handle it. You’ll spend all your time generating commissions if you don’t. Even analyzing the data won’t be possible if you don’t.

2.    Scalability is a no can do

In my opinion, spreadsheets are incapable of keeping up with growth. The asteroid that killed spreadsheets is growth if spreadsheets were dinosaurs. Running commissions on sheets becomes labor-intensive and an operational nightmare when scaled up.

As your sales planning becomes more and more complex, including multiple compensation plans (such as SPIFs, bonuses, draws, and accelerators), spreadsheets will no longer be able to meet your needs. This is inevitable.

As companies continue to grow, they will have to add layers of complexity to their commission management, which spreadsheets cannot offer, not today, not tomorrow!

3. Data integration with CRMs? What’s that?

There will be a lot of frowns and eye rolls when you ask your sales reps to update their CRMs. Nonetheless, CRM is a necessary part of the sales commission process. Occasionally, you may also have to use another accounting system. The CRM and spreadsheets do not sync in real-time, so you will need to transfer the data manually. There’s a lot of time wasted on something that can easily be automated. Additionally, manually migrating data is a very risky process. In addition, commission errors are not that easy to fix. Manually examining data and detecting the problem to ‘fixing the payment’ is a rollercoaster of horror you wouldn’t want to ride!

4. Zero-visibility possible for reps in real-time

With spreadsheets, reps are unable to predict their payouts until they receive a cheque. In the absence of visibility, reps have a tendency to base their expectations on their own calculations.

There may be a lot of nuances and conditions of the deals they close that make the reality quite different due to the complexities of compensation plans. What was the result? Motivating and disputing reps as well as reps and operations about who should receive compensation for a deal.

In addition, lack of real-time visibility also deprives reps of an opportunity to visualize their commissions on a deal-by-deal basis and adjust plans as needed to hit targets and even exceed them. What’s the point of giving up potential revenue growth because of your choice of a commission management tool? Stop and think about it.

5.  It’s a bouquet of red flags

Although I stated in my title that I’d share with you 5 solid reasons to move away from spreadsheets for commissions, as I was writing this post, I found even more reasons to do away with spreadsheets.

The familiarity and comfort of spreadsheets are sometimes even nostalgic. Yet, they are not designed for long-term data management, but only for short-term analysis. Here’s a list of all the red flags I’ve identified as my fifth point:

1. Spreadsheets are inflexible and hardly interactive
2. Spreadsheets offer limited accessibility
3. Math functions are complex, error-prone, and fail when the smallest changes are made
4. The audit trails you have are ineffective
5. Complying with accounting and legal requirements is practically impossible

Is it a good idea to continue? Of course.

Here’s the blazing question.

If Not Spreadsheets, Then What?

Reach out for payouts & commission management automation demo,

sales@analyticsfoxsoftwares.com