Choosing a sales compensation plan is a significant decision for any enterprise. It acts as a catalyst to infuse a sense of motivation among sales reps and increase their performance.

The compensation strategy is necessary to make the automation process smooth, or else challenges may arise. We start by evaluating around 100 organizations along with sales representatives and determine 6 cost categories caused by sales compensation problems.

Administrative Expenses

The operation managers, sales leaders, HR managers play a distinctive role in managing sales compensation plans, however, their time spent is restricted and valuable.

Now, when companies diversify their sales reps, they usually face a bunch of compensation challenges. Due to this, management of sales compensation becomes a costly affair on the staff working at present.

Cost of IT Resources

Sales compensation issues pertaining to systems can consume more IT time to solve mistakes, update software, and make sure all tools are working in coordination. Licensing third-party software and tools, updating infrastructure, and cloud technology all add up to the IT expenses.

Cost of Overpayments

For organizations that operate globally, it is normal for sales compensation problems to emerge that usually happen from overpayments and errors. Such losses are often triggered by technical problems that can scale up to $300,000/year, depending upon the payroll and many other variables.

According to Gartner, up to 8% of all sales compensation, expenses are overpayments or errors.

Turnover Cost

No doubt, the average turnover rate for sales companies is 35%. This is literally a matter of cost issue for any organization, particularly when any top sales reps resign from the company. Every year, when the average sales rep receives $3,400 in training every year, hiring a bunch more sales reps can actually affect the whole budget of a company.

According to ERE Media, for mid-level employees, it costs 150% of their annual salary to replace them.

Cost of Lost Sales

From shadow accounting, sales compensation queries to disputes – a lot of sales compensation problems reduce the selling time. Lost selling time can have a huge financial effect from thousands to millions of dollars in a year.

Cost of Low Motivation

What arises from low motivation and bad behavior? Well, it is the cost of sales compensation issues. When sales reps are low on morale, they naturally deliver low performance. There is a high chance for them to put in lesser efforts, target clients improperly which, further, impact their sales number and revenue percentage too.

Conclusion

These are some of the obvious problems a lack of automation can bring about. Not investing enough in sales automation solution can actually cost your business growth and revenue. So, collaborate with McAlign for a scalable and high-performance automation software that aligns with your sales goals.

  • Praveen R

© McAlign Consulting - 2021