Sales Type - A New Twist on Commissions

 

bcwilson's picture

As developers of business software, it is a core practice for us to "eat our own dogfood," which means using xTuple ERP software to run our own business. Usually we do a very good job of this, but sometimes we hit a roadblock. Ever since the Enhanced Commissions package came out, over a year ago, we have been dying to use it to manage our own sales commissions, but it was missing a key feature for us. Until recently, our own commission software did not have a way to assign different commission percentages based on the lead source. It was a gap we were highly motivated to fill.

In December 2012 we took a step toward the solution when we introduced the concept of Sales Type in xTuple 4.0. This feature was added primarily to allow more flexibility in accounting: Sales Type allows a different set of Sales Account Assignments for different types of sales. For example, a counter sale to a customer might be recorded differently from a call-center sale. This was great for sales accounting, but didn't fix our problem. To meet our need, we had to make the concept of Sales Type also apply to sales commissions.

The latest update to the Enhanced Commissions package, just released in May 2013, allows Sales Managers to set commission levels based on Sales Type. Sales Type allows for commission scenarios where you want to pay a sales rep a different commission based the context of the sale. For example, you might pay a different commission if the rep dug up the customer themselves, or received the lead from a lead-generating website. Or you might increase the commission for sales made at a particular event. 

Sales Type adds yet another dimension to the already sophisticated set of tools in the Enhanced Commission package. Here's what the assignment screen looks like now that Sales Type has been added:
 
Commission Assignement Matrix
 
As you can see, this matrix allows you to assign commission plans in many different ways. So, for example, you could assign different commissions for different product lines (Product Category), or you could set commission by Sales Rep Group. Or, you could do both: you could have a different commission for each Product Category AND Sales Rep Group. You can combine the different criteria to create very specific commission assignments. Add Sales Type, for example, and you could create a commission system like this:
 
EXAMPLE OF COMMISSION ASSIGNMENTS
Sales Rep Group Product Category Sales Type Commission
Inside Sales Reps Shoes Regular Sale 08%
Inside Sales Reps Shoes Trade Show Sale 12%
Inside Sales Reps Hats Regular Sale 6%
Inside Sales Reps Hats Trade Show Sale 12%
Outside Sales Reps Shoes Regular Sale 10%
Outside Sales Reps Shoes Trade Show Sale 17%
Outside Sales Reps Hats Regular Sale 12%
Outside Sales Reps Hats Trade Show Sale 18%
 

You can further specify commission assignments that would override these commission assignments for and apply only to specific items, customers or sales reps. Creativity and the needs of your business are the only limiters here.

Another feature of the package is the ability to adjust the commission percentage based on the actual price that the rep charges the customer. So, you can scale the commission down as the discount goes up.

The Enhanced Commissions package is an excellent option for businesses with a large sales team, as it gives sales managers flexibility to create commissions programs that motivate sales people and accommodate the needs of the business. We developed the package over a year ago in partnership with a sponsoring customer, and we are excited to finally be able to use it ourselves. If it sounds like something that might be useful to your organization, you can visit the Enhanced Commissions product page on the xChange to learn more, or contact us at sales@xtuple.com