6 Ways to Reduce Sales Costs

Mar 05, 2020
4 min read
Current manual sales processes are costing you. Learn how sales process automation ensures your organization has the tools to drive continued growth.

There’s no reason to spend valuable time, money, energy, and man-power on repetitive tasks, right? Most of us avoid that, or do we?

Why is it then that many of us still maintain inefficient processes that are costing them time and money? Because the “pain of the same'' seems less arduous than the pain of change.

*hint* This is where automation comes into play. 

While automated incentive compensation solutions aren’t new, many organizations are still using outdated solutions to handle the entire sales compensation process. It’s simply a case of being used to the status quo *cough* Excel *cough* and not realizing there is a better way.  I mean, who doesn’t love getting more done in less time by cutting out menial, tedious tasks? 

Trick question—everyone does!

Moving away from manual incentive compensation management is a win-win situation—enterprises can eliminate time-consuming work and sales teams can focus their time on what they are paid for...bringing in the deals! Not convinced just yet? Here are six major costs you’re facing by relying on manual sales compensation processes. 

1. Efficiency

Taking calculated risks in business is part of the game, but the one thing you should never leave to chance is your organization’s ability to operate at maximum efficiency. In today’s fast-paced, and data-driven environment, those that can’t keep up on the basics will be left far behind the competition.

Fact: An automated sales incentive process minimizes errors and redundancies. The most effective businesses—that use automated workflow processes—see 2-3 times higher efficiency gains than competitors using manual or spreadsheet-driven processes (2019 Sales Comp Administration Survey). 

2. Time

Let’s be honest here: How much time is spent on manual, repetitive tasks in your company? Unfortunately, it’s probably a lot higher than most of us would like it to be. According to Xactly research, organizations spend up to 5 hours per month compiling and analyzing sales commission data from spreadsheets—that’s practically a full workday wasted on a task that could easily be done in minutes! It also doesn’t include the time spent manually correcting errors discovered along the way.

When you switch to time-saving workflows, you’re investing in not only in future positive outcomes, but you’re also freeing up your employees’ workday in order for them to focus on more engaged initiatives—this presents them with the ability to be more strategic and purposeful in their work.

FACT: 50% of homegrown or spreadsheet calculation mechanisms take four weeks or longer to payout— spoiler alert, that’s not good! (2019 Sales Comp Administration Survey)

3. The Ability to be Agile

Change is constant, and to stay competitive, sales organizations must adapt and adjust their strategies to continue driving growth. Agile enterprises are aligned in their planning and can adjust easily to any unforeseen changes within the company or market.

If you can’t constantly monitor your current plans when problems arise, it’s already too late to be proactive. At that point, you’re just in a reactive mode of business instead of being able to predict and adjust plans before problems arise

In a perfect world, your leadership team and individual reps would be able to see their performance and payout data in real-time in order to adjust and optimize behavior to make sure you’re always on track to hit your numbers. Oh, wait… that’s already possible! 

FACT: Of the companies able to provide daily or near real-time data, 39% are using automated reporting systems. (2019 Sales Comp Administration Survey)

4. Trust

When the sense of trust is strong between sales reps and compensation administrators, it adds efficiency and increases team morale. That’s because sales will stop walking over to the compensation department’s cubes and disputing their commission checks. Keep your sales team focused on selling with error-free and timely payouts that eliminate shadow accounting and payout disputes.  

These conflicts go hand-in-hand with inaccurate payouts, and they both take up a lot of time and resources. If you’re constantly making payout errors due to your out-dated, manual processes, your salespeople won’t trust you—and that’s never a situation you want to find yourself in.

Unfortunately, because spreadsheets require manual input, errors will happen when managing compensation this way. 

FACT: The 2019 Sales Compensation Administration Survey found that operating with as little as a 3% error rate means that 11% of sales reps will be mispaid at some point in the fiscal year.

5. Money

Inaccurate commission payouts wreak havoc on sales performance and productivity. As your biggest driver of sales performance—and one of your largest investments—it's crucial for organizations to minimize commission errors.

Mistakes happen every day, no matter the industry or company size. 

FACT: On average, businesses spend 10% of revenue on sales compensation; more than 40% of companies say they spend more than 20% (2019 Sales Comp Administration Survey). It’s safe to say, that even the smallest error is NOT pocket change for any sized company, even an enterprise!

6. Commission Accuracy

If you can't track it, you can't improve it. In order to be accurate, you need to be 100% certain in your calculation of commission payouts. Anything less and you run the risk of not truly knowing how well or, more importantly, how poorly your sales compensation is running.

FACT: 60% of organizations don't track the accuracy of their commission payments (2019 Sales Comp Administration Survey)

Opportunities ICM gives its users

Spreadsheets simply can't provide the level of efficiency and visibility into data that companies need to grow and scale.  For companies to succeed, they must continuously analyze their compensation processes and incentive plans and make changes to improve. The first step, if you haven’t already, is automating your processes. 

An automated system provides benefits that happen in a trickle-down manner. If you put data at the top, everyone receives access to real-time, accurate information they need to succeed—salespeople get visibility, managers find clarity, and leaders see a return.

Want to learn more, discover best practices, and hear about industry benchmarks for sales compensation administration from more than 90 companies? Read the survey report now.

  • Incentive Compensation
Emily Jahn
Content Marketing Manager

Emily Jahn is a Content Marketing Manager at Xactly. She earned a degree in advertising from The University of Colorado - Boulder and has experience in copywriting, social media, and digital marketing.