Skip to Content
Business Trends
Author's profile photo Kevin Coxwell

Gaining Time and Reducing Costs by Centralizing Sales Compensation

When we think of ROI with automating sales compensation it largely centers around the accuracy of calculating sales incentives. While leading a panel discussion at #SuccessConnect2022, I was made aware of some significant savings that can be gained just by moving away from a decentralized process. This week at #NRF2023 I was reminded of this fact and that there are global brands that continue to place this financial responsibility in the hands of store managers.

At SuccessConnect, one of our customer panelists kicked off the session with a startling return they experienced by moving to a purpose-built solution. This large retailer with over 1600 stores realized a $1.6 M labor cost savings just by removing the task of store managers calculating sales compensation. On average these 1700 managers spend 40 min per week calculating sales compensation which adds up to nearly 60,000 hours annually. When they applied that against the average pay rate they quickly realized how many ways they could put that labor cost to better use.

By moving to an automated solution, store managers were able to #gaintime and focus on executing corporate objectives, helping customers, training staff, and providing better oversight to make sure the store has what it needs to be successful.

Some things to think about if your business is weighing the need to centralize how you manage sales compensation for the future.

  • Competency – Not all managers have the same level of proficiency with excel. Are you seeing/hearing about payment disputes, errors, and unhappy associates/ sellers?
  • Control – Decentralized processes give managers a significant amount of discretion on how sales compensation spend is distributed. Are you hearing concerns of favoritism or discrimination?
  • Time – Managers are growing fatigued, possibly on the verge of burnout due to the talent shortage.¬†Are critical tasks getting missed or failing to meet standards?

While at #NRF2023 I heard a significant number of retailers share how they were seeking greater ways of achieving profitability as we head into economic uncertainty. Consider gaining greater control with trained staff by centralizing this part of your business. As you seek out a solution to support this process be mindful that the application has enough flexibility to support the needs at a store level while also providing structure that enables you to operate at scale.

This is just one of the many hidden costs that can be gained by automating sales compensation using a purpose-built solution. Our team at #SAP is ready to help you formalize a business case that will help drive greater profitability through efficiency.

Visit the following links to learn more about how SAP SPM supports retail or about SAP Commissions.

Assigned Tags

      1 Comment
      You must be Logged on to comment or reply to a post.
      Author's profile photo Lian Ko
      Lian Ko

      Automating sales compensation can lead to significant cost savings and efficiency gains for businesses. By moving away from a decentralized process, as highlighted in a panel discussion at #SuccessConnect2022 and reiterated at #NRF2023, companies can realize savings by removing the task of sales compensation calculation from store managers. As mentioned in the post, one large retailer with over 1600 stores realized a labor cost savings of $1.6 million by implementing a purpose-built solution.

      In addition to cost savings, automating sales compensation allows store managers to #gaintime and focus on more critical tasks such as executing corporate objectives, helping customers, training staff, and providing better oversight to ensure the store's success. Decentralized processes can also give managers a significant amount of discretion on how sales compensation spend is distributed, leading to concerns of favoritism or discrimination. By centralizing this part of the business, companies can gain greater control with trained staff while also ensuring standards are met.