Double or shared commission
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Two simple principles how to handle commission when selling to customers with operations in two or more of your sales regions
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Double or shared commission
- 1. Double or shared commission? A common challenge when selling in multiple regions Daniel Maurer – January 2016 Software Vendor Management Guide www.softmanguide.com
- 2. A presentation for you who… • Is the CEO of a software company • Shall take over as CEO of a software company • Member of the management team of a software company • Is a board member of a software company • Is the owner of a software company • Is an investor in a software company • Wants to start a software company • Are generally interested in how software companies are managed and developed
- 3. Content Here is how to handle sales commission when selling to customers with operations in two or more of your sales regions
- 4. The challenge A customer can be present in several regions at the same time… …and one sales rep may have made all, or part, of the actual sales work… …but the deal ends up in a different region… …because of the customer’s business or location
- 5. The result can be that… …two or more sales reps claims commission for the deal… …because the customer’s business or location… …not necessarily… …match your sales regions
- 6. The solution is two simple principles
- 7. 1 – Never double count sales
- 8. Ok, but… …isn’t letting everyone involved… …credited with the sale… …and pay commission for it… …that the easiest way to make everyone happy?
- 9. No, not really! Reason number 1 The sales reps will still experience that it’s unfair because everyone involved probably didn’t put as much work into getting the deal
- 10. No, not really! Reason number 2 If the commission shall reflect the sales results – which it shall – this connection has now disappeared
- 11. No, not really! Reason number 3 There is a risk that this can be systemized since it’s profitable for everybody involved… …except for the Company
- 12. No, not really! Reason number 4 Sales commission will be more expensive than necessary
- 13. 2 – Let ”Efforts Made” rule
- 14. ”Efforts Made” is the best way… …to govern the commission because… …the most plausible is the fact that the sales rep… …who put the most work into the deal… …should also have largest part of the commission
- 15. Please share the commission… …but since principle 1 applies… …the distribution will only be done… …so that the total sum is no more than 100 %
- 16. How to determine ”Efforts Made”? Well, either you let the sales reps themselves agree on the distribution… …or… …you let the Sales Manager or another Senior Executive decide… …after having listened to all involved, but… …be clear from the beginning that this decision… …can not be appealed
- 17. So… - Never double count sales - Let ”Efforts Made” rule - Let the sales reps agree on the distribution, or… - Let the Sales Manager make a no appealable decision
- 18. Double or shared commission? Thank you for your attention! Daniel Maurer – January 2016 Software Vendor Management Guide www.softmanguide.com