Sales commission tools – what are they?

First, let us define the term “sales commission” to make sure that we’re all on the same page.

Sales commission is the compensation sales reps earn by selling a product. A sales commission is connected to a specific transaction or a commission event – which means it’s calculated using a fixed formula (though, of course, the rules can be different for different products), and the sales specialist earns it each and every time they sell that specific product or service. Of course, sales commission structure and compensation practices differ from company to company.

A sales commission software is a tool that automates and simplifies the process of calculating commissions. It can be immensely useful for companies of various shapes and sizes. In this article, we’ll show you precisely how it can help your business, based on the example of our proprietary sales commission system which we’ve implemented for companies in the financial, transport, telecommunications, media, and energy industries.

Sales commission calculations – the old way

How are sales commissions calculated without a dedicated software system in place? Usually, the hard way, using Excel sheets, or – in some cases – even pen and paper. This is doable when your organization is small, but it makes tracking the effectiveness of your sales teams and motivational programs difficult. When it comes to big enterprises, it creates a multitude of issues:

• You can’t automate the process – everything has to be done manually, which requires a lot of work from the commission team
• People make mistakes – you waste time finding and fixing the errors (and if you don’t find them, it’s even worse, as the sales reps start complaining)
• Rules aren’t always clear – sometimes, the formulas used for calculations are nearly forgotten, and people simply use Excel sheets created by someone else. This makes changing and customizing rules difficult
• Data leaks – manual calculations use legacy technology or paper notes that can be accessed by unauthorized people
• Other security issues – lack of proper authorization systems also means there’s a higher potential for fraud and similar problems
• Maintenance can be a nightmare – there are various rules for different situations, and it’s easy to get confused when everything is done manually. Managing this mess is time-consuming and difficult

Pretius sales commission software – advantages

Thankfully, a good sales commission system – like the one we’ve developed at Pretius – can help you deal with many of these problems. Here are the main advantages.

Automation – save time and money

You can define rules and calculate commissions for entire groups of clients. These calculations use existing data sources and predefined rules, so can be done at any time, not just when someone manually collects the data for a given period.

All of this means your employees save a lot of time which they can use for more productive and creative tasks – for example, they can lean towards analysis, simulations, and predictions, to improve the calculations and help the company come up with better, more beneficial rules for the partnerships it maintains.

Automation also allows you to avoid human errors, which means you don’t have to deal with partners who ask about issues they’ve noticed. In some cases, the implementation of a sales commission system even helps companies identify more serious issues with their calculations that remained hidden for years. This enables them to reach out to their partners to correct and rectify the situation, helping them avoid the opposite scenario (partner or partners finding out and thinking they’ve been intentionally wronged).

Better security – avoid issues and keep your data secure

With our sales commission system data from various sources is collected without human intervention. You can edit it at any time but we never overwrite data, so you can also access the history, and recreate any thought process, whenever necessary. You’ll always know when someone did something in the system, who modified the rates, on whose order, etc.

Moreover, the system uses a set of permissions that define the functionalities and data people can access. You can create various user groups with very specific permissions – even down to each single text field, column, etc., if there’s a need for that.

Clarity of data – the system is easy to understand

You can configure the system in such a way that the events are aligned 1:1 with the data sources. Based on a specific commission event (i.e., a payment), a commission object will be created (i.e., a transaction). Each component of a commission results from a transaction and the amount is assigned to this transaction. This is done for audit purposes, to take care of complaints, etc. – so we know why someone was paid as much as they were.

The system also does this so that the reports show what commissions we pay for which transactions – because this isn’t necessarily as obvious and clear as it may seem at first glance. For example, one sale transaction – e.g., a mortgage loan – may generate several different commissions for various sides: the partner, the agent with whom the contract was signed, possibly also their supervisor, or the place (like a shop) where the contract was signed, etc. Our system allows you to track these transactions and commissions easily.

The system supports corrections (in various types that we define together with the client), which is also important for many companies.

Integrations – connect to other systems easily and securely

Our sales commission system is easy to integrate with other technologies and applications (CRM, billing software, etc.). However, the data is always kept on our side – we understand the need to maintain full auditability with this kind of solution and we can never allow a scenario in which someone could question the results of the system’s calculations.

Great UI – user-friendly and customizable

Our system’s UI can be made to resemble Excel, so it’s easy to understand for employees who used that solution. You can also define workflows to fit the technology to your needs.

Pretius sales commission system – how does it work?

Our sales commission system is a database application with a graphic WWW interface. It’s fast, easy to use, very scalable, and configurable.

The system implements data from various outside sources, verifies the information, and uses it to allow automated, instant, “one-click” calculation of sales commissions. It was designed for continuous control of the commission process. It ensures great data quality, offers full auditability, advanced reporting options, and powerful security features including a customizable permissions system. You can define commission rules, and manage records of points of sale, offer availability etc.

The system created by Pretius has four different modules. We don’t implement all of them in each and every project – but we’re ready for every scenario.

1. Commission module – the main part of our system, responsible for the secure handling of data and commission calculations. This is the module where you configure and manage commissions, accept corrections and reclamations and take them into account, send data to an accounting software, run simulations, and calculate reserves
2. Evidencing module – it allows you to manage and monitor a distributed sales network with a diverse ownership structure. It helps you organize and automate various business processes (registration processes, updating the terms of cooperation and termination), and provides easy access to important data
3. Reporting module – gives authorized users the option to generate interactive reports (Calendars, Charts, etc.) in a web browser. You can download them, share them via e-mail or using the dealership portal module described below
4. Dealership portal – allows partners to view the commissions they’re due, manage billing reports, and distribute invoices. Offers them the possibility to accept charges and submit complaints

Sales commission tools – potential issues during implementation

As with any software project, there are some obstacles and issues your company might encounter during implementation.

1. Working with sensitive data – one issue that will almost certainly arise is the fact that a sales commission system requires and operates on very sensitive data – financial details, information regarding partners, and so on. For this reason (among many others), it’s important to choose your software vendor for such a project well. At Pretius, we have many years of experience with sales commission systems, we’re proud to be trusted partners of big companies in many different industries, and we’ve successfully implemented sales commission systems in several of them – namely financial, transportation, media, energy and telecommunications.
2. Fear of the employees – your company’s employees might also fear that a sales commission system will take away their jobs. This fear is understandable – a good software solution for calculating commissions can literally save you hundreds of hours spent on collecting data and manual calculations. However, it’s important to point out that it doesn’t have to mean people will lose their jobs. Their positions and responsibilities will simply evolve – instead of carrying out repeatable, menial and tiresome tasks, they’ll analyze data, make predictions, and look for ways to optimize rules behind sales commissions.

Conclusion

A sales commission tool can be very useful in many different industries. Automation will do wonders for many companies’ bottom line, saving a substantial amount of time, and money. The boosted security is also great to have – you can avoid many serious issues and problems that stem from data leaks. If you choose your technology right, you can get a system that’s easy to integrate with existing infrastructure – and that employees will quickly get used to thanks to a user-friendly interface.

Systems of this kind can be a pain to implement, but if you look out for a few issues and choose your partner well, the sky is the limit. If you’re interested in a vendor with a great deal of experience and knowledge regarding sales commission software, write us at hello@pretius.com or use the contact form below. We’ll see what we can do to help.

Sales commission tools FAQ

Here are answers to some common questions regarding sales commission software.

What is commission reporting software?

Commission reporting software is a type of software that helps businesses track and manage the commissions they pay to their sales staff. It can automate the calculation of commissions based on various factors, such as sales volume, revenue, profit margin, or performance goals. 

How do you keep track of commission sales?

You can use Excel sheets for that, but in bigger enterprises, the best way is to use a dedicated, automated sales commission system.

How to do commission software sales calculations?

It depends on your tool of choice. Most good platforms – especially custom systems – will do a lot of the heavy lifting for you, thanks to automation

What apps are good for sales commission?

There are many options on the market, such as Tipalti, Brokermint, or Performio. However, it’s worth pointing out that for big companies, a custom software solution will often be the best possible choice.