Traditionally, commissions were simple: you sold product X and earned value Y, which was usually a percentage or fixed value.
But product portfolios expand and compensation programmes are getting more complicated.
Shadow accounting is often associated with commission selling. It is not uncommon to find people recording their own sales and earnings on a personal ledger just to make sure their monthly commission cheque adds up.
This scenario becomes yet more complex when the dealer or reseller has many staff selling multiple products from different organisations.
Such organisations often use quick and easy systems with manual work-arounds to calculate how much to pass on to resellers, without providing a stable reconciliation of what has been paid and why.
For the reseller, this not only means many hours of their own reconciliation to ensure they receive to what they are entitled, but mistrust of the compensation system used.
Compensation systems have evolved along with competitive markets. Organisations striving for competitive advantage have had to compensate various channels as though they were internal staff.
For those using basic methods, such as Excel spreadsheets, this can spiral out of control as the product volumes, complexity and number of plans, and number of transactions increase.
Many start out with good intentions. They want to compensate staff for their performance. This is achieved by adjusting the ceiling on earnings to foster increased sales at the front line. This has implications.
Sales staff may easily be overpaid or even underpaid. In the US, mobile provider Sprint has been sued, with thousands of retail store employees claiming the company has failed to pay some $5m (£3m) in commission.
Sprint had begun to address the issue of incentive management across the company but, unfortunately, not in time to prevent a class action.
Systems that prevent this must also demonstrate compliance and an audit trail.
Certain applications can incorporate sales territories, quotas, incentives and channel management functions in one system.
The right set-up can offer:
• Faster processing and payment of commission each period
• Detailed commission statements with breakdown payment reconciliation
• Graphical performance reports for each compensation period
• Web view of current performance against targets, if any
• Embedded query management and online dispute resolution tools
Resellers who face uncertainty each pay period could push for a more automated and transparent compensation process.
Anthony Hutchins is director of sales and marketing at OpenSymmetry
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