What Should a Commission Report Look Like?

According to research conducted by the Commission Research Foundation, when a commission program is properly designed, it may enhance performance by up to 44%. When we talk about commission programs, a sales commission report is very crucial. A sales commission report must be visually appealing, with accurate facts and figures.

But, when we think of a sales commission report, the first thing that comes to mind is an excel sheet filled with data. However, with the change in market dynamics and modernization, it gets difficult to cope with all the data and keep it focused and purpose-oriented. And most importantly, does it motivate your sales reps to step up to their potential and achieve (if not exceed) their targets? 

Assuming your answer is "No."

Don't worry; we will guide you on how to make it happen.

What is a sales commission report?

Sales commission reports provide valuable insights into the performance of each sales rep and the overall team. A good sales commission report includes metrics such as sales targets, actuals, commission earned, customer satisfaction, performance trends, and more. This gives sales reps an idea of their progress and encourages them to strive to reach their targets. Further, sales commission reports can be used to publish leaderboards to create healthy competition, boosting morale and motivation.

When it comes to your organization, are you certain that the sales commission report you offer your sales reps provides them with these kinds of impactful, understandable, and actionable data points?

For example, students receive a report or scorecard indicating their overall performance and grades. However, for more helpful insights, the scorecard should also display their scores across all subjects and tests during the year. Such a scorecard needs to be of more use, and it's only when you add the other insights mentioned above that the student is motivated to improve and perform better.

Similarly, if a sales commission report helps sales reps strive to achieve more meaningful tasks, it benefits the organization.

For example, you work in an insurance company as a Sales Ops Personnel. Assume that 20 of your sales representatives sold life insurance policies at varying premiums. How will you distinguish their report with utmost clarity so they can easily understand their achievements, shortcomings, and potential? If you do it in spreadsheets, multiple rows and columns may need to be understood by every sales rep causing confusion rather than clarity. This chaos often results from neglecting certain aspects while providing sales commission reports which

Lead to queries

Creates a communication gap and disputes between sales reps and the organization

Causes distrust within an organization

Leads to a turn-off as employees feel a lack of support

An effective sales commission report can change all of these for you. How?

A modernized automated sales commission report is visually appealing and well-arranged, making it simpler to understand. Let's look at a few points that demonstrate its benefits:

1. Motivation

Motivating sales representatives with sales commission reports can be accomplished in various ways. One option is to provide frequent insights to display each sales rep's progress toward their sales targets. Depending on the industry, this may also be accomplished by;

     • The volume of sales made vs the target

     • Income/Margin/Profitability earned

     • Leads generated in the process

     • An opportunity for reps to simulate and obtain greater commissions

     • Rewarding outstanding performance of sales reps

Consider your role as a Sales Operations Personnel at an insurance firm where sales representatives sell insurance policies at varying premium rates. Demonstrating the sales reps' progress and the potential for earning more commissions will boost their confidence and performance, leading to instant motivation for further progress.

Simply put, providing clear data and visualizations for commission based on each parameter will help them perform better.

2. Ability to plan

Let me ask you a question: How do you plan your day, and what motivates you to prioritize your objectives? A prepared list or a report shows you how far you've come and how far you still have to go. That motivates you as you watch yourself progress. For sales reps, it's an effective sales commission report which helps them plan their targets accordingly. A good sales commission report provides sales reps with the data and information they need to make informed decisions about maximizing their commissions. 

How? Look here:

It provides comprehensive information about their sales performance aided with data points such as; 

     • Performance trends over successive periods

     • Required run rate vs expected run rate (at the beginning)

     • Relative performance vs your potential & against peers

The above may differ by industry, though the key point is the ability of sales reps to plan their strategy and target customers to maximize their commissions. This allows reps to use customer feedback, industry insights, and analytics to improve their strategies.

3. Transparency

Have you noticed a communication gap between your sales reps and the organization? If so, it indicates a need for greater transparency within the company. How is this related to a sales commission report? Well, it is. 

Let's delve deeper to find out.

What happens when you provide a sales commission report to your sales rep?

Do they have queries related to their calculated commissions? Does the question get solved easily?

If you don't have accurate answers to these questions, you know there is a communication gap between your sales reps and the organization. To bridge this gap, you must provide your sales reps with transparent, detailed, and easy-to-understand sales commission reports.

An effective sales commission report includes all relevant information about how the commission was earned, including deductions, amount differences, and other pertinent details. It ensures that the sales rep is aware of and understands their commission structure and helps eliminate confusion or misunderstandings. 

To bridge this gap, you must provide your sales reps with transparent, detailed, and easy-to-understand sales commission reports.

4. Low Attrition

When there is attrition in an organization, you know something is wrong. The question then arises: how do you identify and address these issues?

The top 4 reasons for attrition are-

     • Lack of reward and recognition

     • Poor management

     • Low engagement

     • No value recognition

According to the survey by Sirius Decisions, 89 per cent of salespeople leave their organizations due to insufficient commission. Well, an automated sales commission report is a perfect solution for you.

When sales reps sell an insurance policy and achieve their target, they expect appreciation from the organization. Sales rep's importance in a firm is only recovered if they are appreciated or acknowledged.

Poor management and low engagement reflect the company's culture, as does the lack of maintaining accurate and timely records. The expectation-performance gap leads to turnover. You can give it a full stop by appreciating their hard work and acknowledging it the most through an effective sales commission report that guides them through. 

5. Healthy Competition

Using spreadsheets for calculating and publishing commissions is challenging as it does not allow you and the salesforce to gain additional information beyond the commission amount. Lack of insights like, who has performed better, has progressed and needs to improve adds significant value. As criteria differ because of regional variations, product penetration, local competition etc., it becomes tricky for salespeople and you from an administration standpoint. This leads to unanswered questions for salespeople and incorrect commission calculations, contributing to a toxic work environment.

The above image represents a sales commission report that overcomes these issues by presenting team performance and informing sales reps who performed better and why. This fosters healthy competition among sales representatives, motivating them to perform even better in the future. 

Wrapping up: 

Well, it is factually proven - organizations that use commission programs experience a 79% success rate in achieving their established targets when a reward is offered. An automated sales commission report helps your organization grow and reinforces a better culture, resulting in a healthy work environment for all employees.

Thus, a commission program is a path to a well-managed organization, and an automated, simple-to-understand sales commission report is key.

About Author

Amit Jain

Sales Compensation Expert, Founder, Mentor - Helping organizations transform their sales incentive programs into growth engines