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6 Common Mistakes When Implementing a New Sales Commission Plan

By Mauricio Duran

Anything can happen to your sales commission plan no matter how well-planned it is. The scope of technology, the need to work, and cooperate with outside vendors, and even multiple stakeholders can cause complications. 

Pitfalls in a sales commission plan will affect a sales commission software implementation

Planning of sales compensation is essential in ensuring revenue growth for your company and maintaining the sales team. 

The challenges that the commission plan faces will have an effect on the sales commission software implementation. It, therefore, helps to learn of the various mistakes made during the execution of your sales commission plan in order to avoid them and ensure smoothness in your commission plan. 

Lets take a look at the six most common mistakes that will hinder the implementation of a good sales compensation plan. 

  1. Poor planning 

    A project that is poorly planned will set you in the wrong direction and have an impact on the running of the sales compensation project. From the beginning, it is crucial to ensure all the sides are in order. Here are some tips to help you. 

    Align the implementation and the testing methodologies with the vendor. This will ensure you clearly understand how the project flows. You will also understand how long your project phases last and the duration the whole project will take. 

    When planning contingency time, plan weeks into your plan. This will cater to delays, additional requirements and underestimated timescales that need compensation. 

    For the test and production environments, make sure you have in your possession hardware that is adequately sized, for example, databases and servers.

  2. Bad communication between teams  

    Executive sponsors will not be involved directly in your plan each day. You will, therefore, need to communicate effectively and openly to them. Make sure important information pertaining to the program is presented in the right forums. Set up meetings twice on a weekly basis to give updates on the plans and components of the project.  

    Your project manager should be experienced. Also, ensure they meet regularly with the project manager representing the vendor. 

    Pick within the team one person who will be the customer champion. Their role will be to understand the solution and work with the vendor. This improves internal communication between your teams because of the central contact point and SME. 

    Define your vendors’ and the team’s management structure. This will clarify the unity of command. Detailed discussions on contingencies have to be done too.

  3. Overcomplicated commission plans  

    Complexity and over-complication in practices are likely to result in quality, time and budget overruns. When used diligently, simplicity can be more productive and create value for your money. 

    Have a look at the processes in existence and then consider which ones work well and which ones do not. If there is a need for any re-engineering in business processes, the decision should be made early. 

    Do a contemplation of the 80/20 rule. You are likely to decrease the timeline and complexity by doing an implementation of the procedures which impact the majority. 

    Take time to do a survey on customers, process users, and identify their needs and also gauge the effectiveness and utilization of existing processes. 

    Identify the manual processes which can be done automatically and those that cannot. Together with your vendor, discuss the methods, and see if there are ways to handle them.

  4. Recycling the same commission plan over and over 

    There are companies that use the same plans every year even after realizing the strategy is broken and the performance suffering. Although your project for a particular year may have been successful, do not withhold from making a change to your current compensation plan. The move is necessary, and on most occasions, the benefits will be tremendous. 

    Do an evaluation of the compensation plans wholly and use analytics to do a breakdown and identify weaknesses and opportunities. Look for creative ways to reward and motivate the sales team, for example, through non-financial rewards.

  5. Rushing implementation 

    The sales compensation planning process ought not to be a speedy one. Some companies think otherwise and, therefore, allocate little time for previous data gathering, reviewing and writing the proposed plan. The right planning team made up of executives from marketing, sales, and operations with time on its mind is required in the vetting of the program before the implementation process is done.  

  6. Adjust the commission plan every time (management, etc.) 

    Historical data on sales performance accurately indicates what was able to work and what wasn’t. This data should be used as the primary driver behind your plans. This will ensure your sales forecasting is accurate and your strategy stronger.  

    Although there is a need for change in a company, this does not mean that you have to come up with a new commission plan yearly without analyzing its backstory. 

Conclusion

A strategy becomes more efficient and drives revenue growth results when these mistakes are eliminated.  A good plan equals excellent performance in sales. The stronger your program is, the more likely your company will be successful. Be sure to take this into account before implementing a sales commission software. 

Get in touch with us today to learn how Blitz can help you to increase sales! Save Time, Eliminate Commission Errors. Automate your sales commissions tracking process and maximize your sales team with Blitz: Commission management made simple. 

Tags: Commissions, Sales Performance

About Blitz

Blitz is a global software for sales commissions. We help our clients to track and calculate sales commissions effectively and on-time.