Create Compensation Plan (Sales Compensation)

Owned by Jana Volencová (Deactivated)
Oct 30, 2023
6 min read

  1. Go to Sales Compensations > Compensation Plan.

  2. Create a New Compensation Plan, using one of these options:

    1. Individual Compensation – Plan for an individual seller.

    2. Group Compensation – Plan for a team where members have the same individual conditions (but there is no team goal to contribute to). Teams also allow you to work with validity (members belong to the team for a defined period of time etc.).

    3. SPIFF (Sales Program Incentive Funds) – Plan for a seller group. This type is targeted for quick and easy creation of typically short-term incentive plans to drive sales of specific goods or for limited time period. Seller groups are based on Master data.

The plan creation consists of the following steps:

1. Header Level

On the header level, the package provides standard input entries, summarized line item compensation, holdback value and forecast value, also grouped by Condition Type.

User Inputs (* means it is mandatory):

  • Start Date(*) – Enter the start date of the period for the analysis.

  • End Date(*) – Enter the end date of the period for the analysis.

  • Customer(s) – Allows you to choose one or more customers for the analysis.

  • Depending on the selected type:

    • Team(*) – Allows you to select a team if it is a group compensation.

    • Payee(*) – Allows you to select a seller if it is an individual compensation.

    • Payee(s)(*) – Allows you to select a seller group if it is SPIFF.

  • Payout Currency(*) – Allows you to select a payout currency and affects all the calculation values. The currency list displays according to the condition: CcyFrom = DM Currency and CcyValidFrom <= startDate <= CcyValidTo
    The values are taken from:

    • Currencies DS – CcyFrom, CcyValidFrom, CcyValidTo

    • Compensation Plan – Start Date

  • Holdback – Allows you to enter how much of the compensation should be held back from the payee and paid only in the last period of the plan. This mechanism helps you ensure that you do not overpay your Sales Agents in case of cancellations/returns etc. You can configure to take e.g. 20% of compensation from every period and pay it back to the seller in the last period.
    The holdback is defined on the header level and is applied separately for every payout (Compensation Record). It is defined in Holdback Type as either percentage of a compensation earned in the payment period or by a flat value.

  • Forecast Method – Allows you to select a Forecast Method to calculate Compensation Forecast:

    • Seasonal Naive

    • Average

  • Sales Goal Increase % – Input number

  • General Filter – Allows you to set up a generic transaction data filter.

Calculated Results

Calculated Result show the following details:

  • Compensation Detail

    • Previous Compensation

    • Current Compensation

  • Forecast

    • Compensation Forecast

    • True-up

    • Compensation Forecast Comparison Chart

    • This Year’s Sales Forecast Table

    • This Year’s Sales Forecast Chart

  • <Grouped by Condition Type>

    • Current Compensation

    • Compensation Forecast

2. Line Item Level

On the line item level, the package provides standard input entries, compensation and forecast value, charts, compensation type info.

  1. Go to Items tab.

  2. Click the Add Items button.

     

  3. Choose the Condition Type you want to add and enter values at the Line Item Level. There are more than 15 condition types, for details see .

When any of the Sellers defined in the plan are missing a Salary (configured in the Seller Salaries SX) in the Payout Currency of the plan, the Variable Pay Linear Amount, Variable Pay Multi Target Amount, and Variable Pay Stepped Amount condition type are hidden from the items selection in the Compensation Plans.

You can set the following inputs:

User Inputs

  • Customer(s) – Allows you to choose one or more customers for the analysis. It overrides the customer input on the header level.

  • Product(s) – Allows you to choose one or more products for the analysis. The inputs are generated based on each condition type you selected on the line item.

  • Compensation Cap – Allows you to set a limit for the compensation. Only the amount of compensation for a given period which exceeds the cap is paid out. It is applied only on the line item level where each item can have its own specific details – see an example below.
    Note: If “Quota For“ is set to “Payment Period“, this input is set to “Payment Period“ and is read only.

  • Payment Period – Allows you to choose a payment period. The options are:

  • Quota For – Read-only, taken from SC_AdvancedConfiguration. Quota is minimal amount of sales needed to be eligible for compensation.

  • Deposit Scheme – Read-only, taken from SC_AdvancedConfiguration. The scheme decides if the calculation is split by the number of periods in the target time span (needed in case Quota For is set to "Plan Duration").

  • Baseline Field – Read-only, taken from SC_AdvancedConfiguration.

Let’s assume the following scenario:

  • Line Item caps:

    • LI 1: 500 – yearly

    • LI 2: 400 – monthly

    • LI 3: no cap

  • Payout months:

    • M1:

      • LI 1 compensation is 400, so no cap applied

      • LI 2 compensation is 100, so no cap applied

      • LI 3 compensation is 500, so no cap applied

    • M2:

      • LI 1 compensation is 150, so a line item cap is applied, because 400 + 150 = 550 > 500, payed out 100

      • LI 2 compensation is 800, so a line item cap is applied, because 800 > 400, payed out 400

      • LI 3 compensation is 300, so no cap applied

    • M3:

      • LI 1 compensation is equal to 500, so payed out 0

      • LI 2 compensation is 150, so no cap applied

      • LI 3 compensation is 800, so no cap applied

In case, you added a line item and then changed some values (Quota For, Deposit Scheme or Baseline Field) in SC_AdvancedConfiguration, the read-only inputs are not updated accordingly. We suggest that you should NOT change this configuration after the deployment but if it is necessary, you need to delete an existing line item and add it again for the update.

Calculated Results

  • Compensation Detail

    • Baseline Value Field Label – Shows the field label to use for calculating the Baseline Value.

    • Previous Baseline Value – Total sales for a validity period of the agreement – 12 months.

    • Current Baseline Value – Sum of the Current Baseline Value based on the Start Date - End Date.

    • Previous Compensation – Compensation value based on sales from the previous period (current contract validity – 12 months) and current quota input conditions.

    • Current Compensation – Sum of the current compensation from the current period and current quota input conditions.

  • Forecast

    • Forecast Method

    • Sales Goal Increase %

    • Forecasted Baseline Value – Sum of the Forecasted Baseline Value

    • Compensation Forecast – Sum of the Compensation Forecast

    • True-up – Equals to Compensation Forecast - Current Compensation

    • Compensation Forecast Comparison Chart

    • This Year’s Sales Forecast Table

    • This Year’s Sales Forecast Chart

  • Compensation Type Info

    • Quota For

    • Deposit Scheme

    • Payment Period

    • Payee Name(s)

    • Customer(s)

    • Product(s)

    • General Filter

    • Payout Currency

Color coding:

  • Previous Compensation: blue

  • Current Compensation > Previous Compensation: green, else red

  • Compensation Forecast > Current Compensation: green, else red

  • If value does not change, it will be orange.

3. Input Validation

The system will show a warning message if:

  • Input for the required fields on the header/line level is missing.

  • Input for the required field that is less than zero.

  • Seller termination date (configured in the Sellers master data) is less than Start Date input on the Compensation Plan.

Sample of input validation:

After the details on the header and line item level are filled in and the inputs are validated, the final step is to submit the Compensation Plan.