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January 5, 2023

How to Stop Overpaying Commissions to the Wrong People

Dharmesh Singh

Founder

There is no topic more sensitive than seller commissions. When disputes arise, they are often solved by paying multiple commissions which eat away at a company’s margins. These issues occur for a deceptively simple reason.  Most organizations have no ability to track who worked on what account when. 

Wait, but Salesforce is your source of truth, correct? Absolutely, for tracking and managing deals, but not your GTM plan. CRMs, like Salesforce, are transactional systems that are not designed for planning, carrying out, and tracking the critical GTM functions necessary to maximize the efficiency of revenue operations.  Your CRM is not able to ‘effective date’ or keep historical data on GTM plan changes that are needed to audit or pay commissions accurately.

That’s why a single GTM record of truth is needed to support planning and operations.  Having a single record of truth for your GTM plan prevents complications down the road particularly when it comes to managing assignments and paying your team fairly and accurately. 

Tracking Territory Assignments

If your company is like most, your territories are living and constantly-evolving entities. There are many reasons territory assignments will change.  Turnover has skyrocketed in recent years. Sirius Decisions data shows that almost half (45 percent) of B2B sales organizations have average turnover rates above 30 percent. Or you may be growing and adding new roles. Or integrating an acquisition or introducing a new product.  In any of these cases, change is a constant.

In order to successfully execute on your GTM plan and eliminate any downtime or confusion in the field, it is important to be able to update territory assignments quickly and efficiently. This applies to sales reps but also any other revenue team members, like SDRs, Sales Engineers, or Customer Success reps.

To pay team members accurately, you need to know important information such as:

  • when a person is terminated;
  • whether there is temporary coverage;
  • when a replacement is starting;
  • the ramp profile for the respective role; and 
  • if any holdouts may apply.  

A Broken System

Unfortunately, when it comes to tracking role and assignment changes there are not many good options. Your CRM does not track effective dates or support the concept of an account team. It is not possible to save historical data about additional GTM team members such as SDRs, Sales Engineers, Customer Success managers, and others.  Nor is this data stored in your HR system. These systems may save start and termination dates but typically do not contain reporting history, information about ‘to be replaced’ roles, or productivity models that will inform your GTM plan.  

Instead most Ops teams write custom code to track changes in the CRM, while others manage the data with spreadsheets or Google calendar reminders. This approach may work for a small company with under twenty sales reps, but will fall apart as soon as your company starts to scale. Additionally, it is common for reps and managers to make handshake deals that are not reported to the Ops team, adding further confusion and tail-chasing when it comes time to pay commissions.

At the end of the day all of this data must make it into commissioning and payroll systems.  Without a record of truth, some poor soul needs to chase down all the changes (often stored in memories or as tribal knowledge), which is a manual and time-consuming effort.  It is no surprise that 83% of organizations have commission payment inaccuracies that wreak havoc on sales performance and productivity.  

A Muddled Mess: Sales Crediting Example

In a perfect world, your sales process looks like Figure 1 where Rep 3 reports to Manager 2 and has three clean deals close. 

Figure 1

The reality looks more like Figure 2.  Rep 3 leaves the company and two of his deals are re-assigned to Reps 1 and 2 who report to Manager 1.  Eventually the VP is fired and Manager 1 takes over the VP role while continuing to manage his territory.  Rep 2 is promoted to Sales Engineer so a holdout is put in place and the deal is handed back to Manager 1.  Now try to figure out which Managers and Reps get paid what when. If you are struggling to figure this out you are not alone. Your CRM and HR system will not reflect any of these changes, leaving your Ops team to make sense of a thorny mess and deliver the correct data into the commission system. 

A sales crediting mess
Figure 2

What is a GTM Record of Truth?

A GTM Planning or Territory Management system complements your CRM and acts as a GTM record of truth. It enables you to build your GTM plan and manage changes to the plan with agility.  Ops can proactively schedule territory and role changes within the  system and automatically deploy these changes to the CRM when they occur.

One of the most important capabilities of a GTM Planning Platform is the ability to effective date role changes for the entire account team. For example, if the Sales Engineer on the account leaves her role mid-deal, the system automatically removes that person from the account team in Salesforce on the effective date and tracks any new additions to the team. This historical data provides an audit trail of the changes and ensures proper crediting.  

A GTM record of truth also improves Ops productivity and accuracy by eliminating spreadsheets and manual updates. It prevents the “Oops! I forgot to add the new sales rep to the CRM” on their start date. The platform enables Ops to pre-schedule role changes and proactively set productivity profiles, while at the same time providing visibility to the entire team.  

Conclusion

Today’s revenue teams are being asked to do more with less.  A GTM record of truth is a simple yet powerful tool that improves revenue operations efficiency and company profitability.  Companies that automate these processes avoid disputes that sap the energy and motivation of sellers and dollars from the bottom line.  The clarity provided with a GTM record of truth will have both your sales and finance teams thanking you.  

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Sales disputes lead to commission payment inaccuracies and crediting issues. Here's how to solve this thorny problem.

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How to Stop Overpaying Commissions to the Wrong People

Sales disputes lead to commission payment inaccuracies and crediting issues. Here's how to solve this thorny problem.

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How to Stop Overpaying Commissions to the Wrong People

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