Sales Compensation Data Management  

Sales Compensation Management

Sales compensation is typically the largest part of cost of sales. A well managed sales compensation leads to well managed sales cost.


Sales Compensation Data Management


This page provides various data management related issues related to Sales Compensation

Data Management is related to Data Quality and Management issues around source systems and how do they impact the data integration and down-stream business intelligence efforts.

Following are key issues for Data Management in sales compensation:

Non-production/special incentive sales compensation:

Sales compensation can be directly linked with the actual sales production/closure. This part of sales compensation (sales commission, bonus linked to sales revenue..) is generally calculated by the core production systems OR the compensation calculation systems tightly integrated with core systems.

However, mostly (unless your sales management systems are highly flexible) the non-production sales compensation (many a times used as a way to work around the guidelines laid out by the regulators) like training reimbursements, special sales incentive schemes etc. are worked out by the stand-alone systems. These stand-alone systems are needed to be manually controlled, so that they are using same master tables related to sales staff, products and schemes. The other challenge is to have a separate reporting system, which provide a combined view of the entire compensation paid to a sales person (Production + Non-production Sales compensation). These are the kind of scenarios, where an independent data-mart/warehouse comes into play.

Sales person attrition

When a sales person leaves an organization, there may be some work-in progress sales under his name. Different organizations have different formulae in terms of how to handle the compensation of the WIP cases related to the exiting sales person. This may range FROM- giving the complete sales compensation to the sales person, even after he leaves TO 'giving part' TO 'giving none'.

Once the sales person is de-activated in the core system, there may be issues in terms calculating the sales compensation. Sometimes, it is needed to do a work-around to achieve this objective. You may assign a different sales person (OR a dummy sales person), to let the case proceed in your system. However, after the sales compensation is calculated, you have to make sure that it is sent to the right person. The method you apply should also be aligned to the Extraction, Transformation and Loading routines you are making.

Definition of Sales Compensation and Sales Revenue

Most issues related to sales compensation come, when sales people don't understand the sales compensation rules. Simple example is 'Sales Revenue'. A sales revenue could be:

  • Gross sales revenue OR
  • Gross Sales revenue minus discounts
  • Gross sales revenue minus returns
  • Gross sales revenues minus taxes in the invoices raised.

Another example is on, when sales revenue is booked. A sales revenue recognition for the sake of accounting vs. for the sake of calculating sales compensation could be different. For example- a sales revenue could be considered as booked once:

  • The Purchase order is raised.
  • The sales delivery is done.
  • The grace period for 'Returns' is over.
  • The actual cash is received from the customer.

The above are two among many examples which can create confusion. There should be ideally a business rules repository to clearly define those rules. Secondly- there should be a clear terminology for different terms.