For a lot of organizations, Excel or other spreadsheets are their safe place. They’re easy to use, provide a fair amount of visibility, and are relatively simple to maintain. As a tabulation and calculation tool, it seems like a good fit for calculating sales metrics and overall sales compensation. With the option of running various formulas and keeping everything handy in one document, it’s no wonder that some view spreadsheets as their go-to tool for tracking sales performance and incentives.
While this may be tempting, know that it is not a good, viable long-term solution or strategy for your organization. There are many reasons why spreadsheets just don’t quite work and why modern enterprises look to sales performance management software for more functionality, control, and efficiencies. Here are a few:
1) They aren’t scalable
The main reason why spreadsheets don’t work for incentive compensation is that it just doesn’t scale with you. Your sales will grow, new sales reps will join, compensation structures may change — there are too many variables to list, and these tools are not equipped to deal with them efficiently.
What ends up happening is that too much time is spent updating formulas and double-checking spreadsheet results – all of which takes away valuable time from other work. As your business grows, it’s essential to use a program that can scale with your company rather than one that slows it down.
2) They make it difficult for sales teams to collaborate
The other issue with spreadsheets is that it makes collaboration a real challenge. As each person goes into the file to make an update, it becomes difficult to track what has changed by whom, when, and which version. There are spreadsheets on your personal computer, on Sharepoint, in emails, and in multiple versions (e.g. “draft”, “v1”, “v1b”, “updated by Connie”, “final”, or the best one yet – “finally approved no more changes!”). Sometimes keeping track of the latest version takes up more time than trying to update the file itself.
Incentive compensation calculations often require inputs and updates from multiple personnel and often distinct departments – this is why collaboration is so important and at the heart of modern sales performance management solutions. With a centralized solution and database, you are provided peace of mind knowing that all your data is intact, all updates and changes are carefully tracked, and accuracy is not compromised.
3) They don’t generate reports
To incentivize and empower your sales reps, they need transparency and accurate reporting of sales and incentive metrics. Carefully curated reports with performance metrics allow sales reps to understand their compensation and performance over time, to better achieve thresholds and targets, and help meet organizational objectives.
Excel doesn’t have a reporting feature suited for your needs. It’s not designed to generate incentive statements on a monthly basis for distribution to your end-users. And while you can piecemeal basic reports ad-hoc, it lacks the needed delivery functionality. This is where sales performance management solutions shine – they provide powerful reporting features to enable end-users with access to real-time data, results, and insights at their fingertips.
4) They are error-prone
Recent statistics highlight the riskiness of using spreadsheets, this is important when considering complex needs such as tracking and calculating sales and incentive compensation metrics. Marketwatch recently found that 88% of spreadsheets have errors – by face value, this means that if you’re using spreadsheets, your sales team is likely not being compensated as they should be.
Under and overpayments have serious, challenging, and often long-lasting implications that are difficult to overcome. While no sales rep will complain about an overpayment, it impacts the business’ budgets and bottom-line. On the other hand, underpayments can lead to two common challenges: (a) legal disputes and (b) employee mistrust. The former is very costly and the latter takes a long time to heal. Payment disputes and lack of trust become frequent headaches to deal with, making running an efficient sales operation challenging.
While spreadsheets may work well when your sales team is small, they are not designed to address a modern enterprise’s data, control, and efficiency needs. If you’re looking for an automated solution that empowers compensation administrators and sales teams alike, while taking care of complicated compensation requirements quickly and with full transparency and visibility, then you must look beyond.
Our Sales Performance Management solutions are designed to address the challenges that modern organizations face every day. Click here to read more about how these solutions can easily help you manage automation, calculation, and easily reporting complex incentive processes.