What Is Sales Commissions Software?
Sales commissions software are tools that automate the calculation, tracking and disbursement of commissions and bonuses to sales representatives when they fulfill or exceed their sales quota.
Besides aiding HR departments in calculating incentives across teams, these tools uphold employee morale by providing them with forecasted earnings if they close deals in the pipeline. Stronger morale boosts sales and, ultimately, lets companies scale up.
To calculate and administer accurate payments, sales commissions software factors in the following:
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Sales commissions structure (flat-rate, tiered, trailer, split or marginal plans)
- Sales types
- Projected sales quota
- Frequency of payments
- Relevant taxes
Deployment Methods
There are two approaches to deploying incentive software:
On-premise: These programs store data on company-owned servers. You'll need to purchase, deploy, and operate servers to handle storage. On-premise systems are accessible via a computer program. The common pricing model for these systems is an upfront user license. In addition, you might have to pay for recurring upgrades.
Cloud-based: Without the need for your intervention in setup, these services host data on the vendor's server. Often, they have yearly or monthly membership options. You can access cloud solutions on an app or through browsers.
Primary Benefits
The sales force is a crucial cog in any enterprise, and when reps receive proper compensation, it can result in significant ROI. However, sales reps suffer due to longer sales cycles, increased rejections, and problems with trailing prospects.
Now more than ever, companies need automated incentive management to combat sales representatives’ frustrations. Alongside these issues, entrepreneurs are looking to revamp their sales strategies with digital solutions that eliminate the inflexibility of spreadsheets.
Here are the key benefits of deploying incentive compensation software:
Automate Incentivization
Besides automating the calculation and payment of commissions, incentive software includes real-time dashboards to track sales performances. These solutions contain gamification tools that motivate sales reps to fulfill their targets.
Sales representatives can leverage powerful customization options to choose between long or short-term incentives, bonus types and compensation frequency that motivate them.
Ensure Fair Payments
Commissions software secures fair compensation for the entire workforce and individual sales reps.
For instance, if a representative secures substantial revenue from a single account instead of several small accounts, it's counted as a single sale despite the company's profit. Smart solutions can override single payments in such unique circumstances.
Incentive software also adjusts between commission plans(e.g., trailer commissions for new joiners) to ensure fair remuneration every step of the way.
Eliminate Errors and Disputes
Sales commissions software draws up several years’ worth of audit records and analyzes performance reports with little room for error.
Additionally, these tools eliminate human errors with Excel sheet formulae, leading to shadow accounting by sales representatives.
Shadow accounting engages reps in calculating their commissions instead of concentrating on sales. This issue leads to disputes and job turnovers.
Users can manage all of this with commissions software.
Implement Sales Coaching
Managers can use the expanded dashboard to monitor who’s performing well and who’s falling short of the goal. They can then train and mentor to enhance the performance of the sales force as a whole or a particular employee.
This strategy contributes to an educative culture that focuses on representatives receiving proper training and developing a sense of trust with the company.
With incentive software, you inculcate convenience, a healthier sales culture, procedural fairness and enhanced performance.
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Implementation Goals
In order to maximize the effectiveness of sales commission software, it’s important for companies to have clear goals when implementing it into their operations.
Goal 1 Prompt and Accurate Calculation | Set up a system to reliably and rapidly compute commissions, so reps receive payouts as soon as they accomplish a sale or linked task. Incentive software dashboards feature parameters like customer ratings, number of referrals and tax deductions due to every employee. Post calculations, these systems pass data ahead for managerial approval. |
Goal 2 Reward Exemplary Performances | Focus on offering incentives for high productivity among employees through reward programs such as bonus payments for meeting specific targets within preset time periods. Incentive softwares design bonuses that inspire reps but present tangible rewards for hard work. Commissions software fosters competitive workplaces while maintaining fairness, openness and accountability. |
Goal 3 Benchmark Goals | Regular reports help managers monitor the performance of individual reps and measure them against set benchmarks by policymakers. When adopting sales commission software, firms must have defined goals to optimize the usefulness of this technology. These solutions also enable managers to track development and measure achievement. |
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Basic Features & Functionality
Commission Calculation | Account for various metrics like compensation plans, years of experience, targets and goals while calculating individual payments. Sales compensation software includes customizable criteria that sales reps can adjust to explore the incentive amount due under various circumstances. |
Commission Scheduling and Tracking | Automate the distribution of incentives based on agreed-upon frequencies — whether weekly, monthly or quarterly. Users can throw in short or long-term variations in the payout schedule to suit sales rep preferences. Leverage the software to keep track of processed or paid sales commissions. Dashboards display real-time data across teams, regions and years. Incentive software also allows for commission overrides based on performance and unique situations that would otherwise warrant human intervention. |
Incentive Management | Manage incentive programs, calculations, payment rubrics and approvals from a single platform. Incentive compensation software can integrate with gamification tools to encourage healthy competition in the workplace and enhance sales. |
Integration | Keeping customer loyalty in mind, companies browse commissions software that integrates with CRM tools. Additionally, the software must tie in well with your payroll systems. A custom data mapping structure allows for greater data input flexibility. Generally, users must transform CRM data before it pays out, so this functionality is essential for a modular approach. |
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Advanced Features & Functionality
Reporting and Analytics | Comprehensive and transparent reports are the stepping stones to building a winning sales team. However, crunching historical data across teams to create sales performance reports is error-prone and time-consuming. Commissions software provides a flexible solution by reporting significant change in sales data. HR managers can deploy advanced analytics to observe sales engagement and compensate employees accordingly. Enhanced performance report transparency frees sales reps from constantly tracking their earnings. |
Auditing | Maintaining consistent paperwork is crucial to preventing disputes. Sales incentive software automatically compiles all user-performed audit logs across teams over several years. Payment logs and commission reports are open for anyone’s scrutiny. This accessibility results in securing transparency and retaining sales representatives. |
Automate Workflows | Gain control over overcrowded document line-ups by deploying incentive software that automates the flow of data. With user-initiated processes, the system guarantees that incentive-related files get seen by the relevant individuals and don't get lost in a sea of emails and spreadsheets. You can customize, track and approve commission documents within the organization. |
Sales Insights | Sales incentive software helps you standardize organizational performance. Deep business insights also equip you to benchmark data which, in turn, helps reward and retain top performers. Mentor and coach under-performers to meet benchmarks and reorganize sales quotas based on seasons, cycles and rep capabilities. |
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Current & Upcoming Trends
Volatility might be the strongest undercurrent affecting the workforce that returned post-COVID-19. Let’s paint you a picture:
The 2023 QuotaPath survey finds that 90% of leaders don't trust their compensation structure, yet compensation is the driving factor for 86% of sales reps joining a firm.
How do incentive software address this gap? Let’s dive into some trends.
Deal Closure Is the Most Important Commissions Milestone
As the economy recovers and businesses compete, commission-based compensation models become increasingly popular.
Last year, we saw an upshot in the number of companies offering performance-based pay plans. These schemes reward top salespeople with higher commissions for exceeding goals or meeting certain milestones.
Regardless of the total revenue, the majority of reps receive commissions when they close deals. Other milestones for payouts include invoice generation and more.
Trust in Sales Incentive Software Skyrockets
The Sales Compensation report by QuotaPath above states that nearly 80% of sales reps are paid incorrectly in the industry. That’s not a surprise, given the widespread manhandling of spreadsheet data.
It's high time to transition to incentive software. Sales representatives agree:
In 2023, commissions calculated by software ranked 3.8 out of 5, as indicated by reps. In comparison, spreadsheets ranked 3.5.
Transparency and Standardization Drive Confidence in Commissions
As salespeople understand their compensation plan, their confidence in commissions grows.
The aforementioned report also reveals that representatives who are unsure about their payout arrangements (3.25 out of 5) are often doubtful about the legitimacy of their commission checks.
Representatives that trust in their compensation schemes (4.35 out of 5) trust in their commission.
To that effect, 86% of companies standardize their compensation plans using software. Everyone with the same quota has the same earning potential when you standardize.
You standardize the structure of your sales commissions, including commission rates, incentives and OTEs.
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Software Comparison Strategy
When you're in the software market, choosing a system with features that match your requirements is the desirable outcome. But there are numerous options, so the task can get quite tricky.
Here are a few ways to compare top offerings:
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Consider deployment methods: Cloud-based solutions are highly scalable products that you can expand to accommodate growing operations by adding new features. If you'd like your system to operate on an exclusive network, then on-premise solutions make sense. Companies that adopt these solutions have to sponsor their maintenance and support.
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Conduct market research: To choose between products, research the market and consult with subject matter experts. Before choosing a vendor, look for a track record of quality customer service, consistent software upgrades and free trials.
Cost & Pricing Considerations
Sales commissions are the most significant investment for B2B companies. They concern multiple stakeholders across departments like sales, finance and HR, so selecting the right incentive software is essential to prevent costly errors.
Here are a few guidelines to consider:
Features Checklist
Take stock of the features you’d like to see in your system and apply them as filters. Free tools in the market offer limited tracking options, but they aren't scalable.
Costs will stack up if you’re looking for integrative capabilities across your company's accounting, CRM and payroll systems. Additionally, simulation and forecasting tools, multi-channel support and privacy controls like SOC2 are other good-to-have features that come with added costs.
Make sure your system doesn’t require third-party intervention for reporting assistance.
Ask the vendor about hidden implementation costs and maintenance fees.
Considering your company size and deployment methods (cloud-based or on-premise), browse the market for the leading commissions software.
Total Cost of Ownership (TCO)
Low-cost sales incentive software can cost $10 per user monthly, after which plans get costlier to include more employees. It’s essential to take stock of the total cost of ownership because customizable solutions differ in price from off-the-shelf tools.
You might want a tool customized according to your unique needs, but if those functionalities need upgrades, then costs can add up.
The best approach is to chalk out your budget, revenue targets, company size and features list before making any investments.
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Questions To Ask Yourself
The first step in choosing the ideal incentive software is to ask yourself a few questions. Consider the following internal questions when deciding:
- What is your total budget?
- Do you require a unique tool or an all-in-one product?
- What level of customization and support do you need?
- Who will use this solution?
- How many sales representatives are under your administration?
Questions To Ask Vendors
After you've filtered out vendors and solutions, starting with a few questions regarding the product and the vendor is wise. This practice allows you to assess the vendor's presence in the market while also exploring the product's features before investing.
About the Software
- How well can the software integrate with other software like performance management tools, performance management systems and workforce management software?
- What's the learning curve, and is training provided to support user adoption?
- How intuitive is the UI — navigation, wording, feature accessibility and screen layout?
- To what extent can the software automate tasks?
Here are a few questions to ask potential vendors to help you learn more about the software.
About the Vendor
- How often do you offer updates and enhancements? Do they impact accessibility?
- How do you plan to stay relevant in the next five years?
- What customer support and training do you offer?
- What company sizes do you typically work with?
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Next Steps
A significant amount of time, resources and money go into building a high-performance sales team. After the 2020 pandemic challenged the sales landscape, companies rushed to reinvent their strategies with the aid of artificial intelligence and automation.
Today, it makes sense to shift from manually taxing, error-prone and opaque spreadsheets to a transparent automation system that offers maximum transparency.
Using our guiding questions and software reviews, you can make research-backed choices in commissions software. For more help, here’s our free comparison report.
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