So, while it may be tempting to leverage Excel for sales performance management, here are some reasons you might want to think twice.
5 reasons to ditch spreadsheets for sales commissions
There’s a temptation to leverage what you know by relying on spreadsheets. However, as an organization grows, the simplicity of spreadsheets becomes not so simple, with multiple linked sheets and can be error prone.
1. They are not sufficient
At their core, spreadsheets are great for handling calculations. You create the formula you need (the one that calculates commissions, for example), you drop in some numbers, and it tells you the answer (the commission earned). The problem is that you need to manually update the spreadsheet in order for it to do what you want.
On a small scale, this is fine, but once you grow both in terms of sales staff and the number of products you sell, it becomes very obvious, very fast that there is a ton of manual effort involved. This means that you’re either going to need to have someone dedicated to entering numbers all the time or someone on your staff has to stop doing something more valuable, in order to enter in the data. However you look at it, it’s not the best use of company resources.
2. They don’t scale well
If you’ve ever looked inside a giant spreadsheet, you know exactly why scaling can be a problem. While technically spreadsheets can be used to manage a task for one person’s data or one hundred people,, once your business hits a certain size, it becomes almost impossible to manage all that information inside a spreadsheet accurately.
Segmentation, overlays, distinct roles within the organization, and complex compensation plans all add to the complexity of managing commissions in spreadsheets. The more layers that get added, the harder it gets to manage the spreadsheet in a way that’s not only productive, but also free from error.
3. They are error-prone
Excel and other spreadsheets aren’t error-prone, per se, since they rely on people manually entering data, but they do have some quirks that can lead to some pretty costly mistakes if they’re not caught in time.
It’s one of those problems that most people probably never considered when working with spreadsheets, but it’s been found that close to 90% of business spreadsheets contain at least one error. Now, one error might not seem like a huge problem, but that one error could be affecting every calculation you do inside the spreadsheet, costing you significant losses in terms of overpayments.
4. Lack flexibility when making frequent changes
Spreadsheets are very rigid creations. They can only do what you tell them to do. This means that they’re great if nothing in your business ever changes, but let's be honest, that rarely is the case. How often does nothing ever change in your business?
Everything from different commission rates on different products to limited time spiffs have to be accounted for in a sales commission program. And, if you’re using a spreadsheet, everything has to be adjusted manually each time something changes. This adds to the workload of whoever is in charge of managing calculating commissions.
5. Knowledge transfer can be a problem
Perhaps the single biggest issue with a spreadsheet is that they can be difficult to figure out if you’re not the person who set them up.
This is one of those things that people don’t often think about until the person who designed the spreadsheet leaves the company and someone else has to take over. Suddenly someone else has to figure out where the equations came from or why equations are set up the way that they are. Even a standard equation might have required some customization at some point to better reflect your compensation program.
How you can replace Excel for sales commissions?
The best way to replace Excel or any other spreadsheet from your sales commissions program is to find a software solution that’s designed to manage sales compensation programs.
With a designated application, you get something that can not only track sales automatically, but all the different variables that make up a sales commission plan. This includes things like temporary spiffs, different commissions for different products, and unique rates based on role, including roll ups.
Not only that, but you get a platform that scales along with your business, without becoming too complex to manage.
At Performio, we can help you manage all those details (and more). Our sales commission software can help you manage any kind of sales compensation program you run. Want to find out more? Contact us today.