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Commission splits can be a powerful tool to encourage sales teams to collaborate and reward team based sales efforts. They are common in situations where design and purchasing activities are separated by space and time. A sales rep may be working with an engineering team to get a product designed into a product whose manufacture and/or distribution can occur in a completely different site, state or country.
As with most elements of the sales compensation process, if done correctly a commission split can be a powerful motivational tool for sales & finance managers. Done incorrectly, they can be a painful source of distraction and lost productivity to your customer facing field sales teams.
We’ve summarized a few Best Practices below to help guide your efforts in developing and deploying this powerful tool.
An interesting piece titled "Using the ‘IMPACT’ Sales Eligibility Tool to Decide Who Gets a Piece of the Pie" by Summer F. Barnes and Jonathan Minor over of Sibson Consulting touches on this topic. While their work focuses on credit eligibility by position and role, it can also be used to guide discussions regarding credit split allocations. They introduce a tool called the 'IMPACT Sales Eligibility Tool' that can be quite useful in credit allocation discussions common with commission splits. Sales executives may find that if they substitute the word person for position; the tool becomes very relevent to commission split discussions.
As with any process related to sales compensation, simplicity is your friend. Seek clarity and avoid complexity if it leads to confusion.
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