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Sales Compensation: Who Gets Credit for the Sale?

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Sales crediting determines who is paid for a successful sales result. As buying processes grow more complex, teaming becomes increasingly prevalent. A byproduct of team-centric selling is the need to award sales credit among two or more sellers. Without concrete rules, establishing sales credit among multiple parties can result in confusion and potentially demoralizing outcomes for sellers. Multi-factors affect the selection of sales crediting practices.

Fundamental Elements of a Sales Crediting Policy
There are two types of sales crediting: vertical and horizontal. Vertical crediting is the simpler concept of the two. It occurs when a subordinate’s performance rolls up to the supervisor. Such an approach ensures sales managers and subordinates have aligned sales objectives.

Horizontal crediting is more complex. It occurs when more than one frontline seller deserves credit for the sale. Such selling configurations take many forms, such as an overlay support resource supporting a field seller, an account manager quarterbacking an opportunity with both centralized and decentralized buyers, or two field sellers supporting two points of influence. Horizontal crediting can apply in many different ways, each with merits for driving desired behavior for specific job roles and sales processes. Management needs to establish sales crediting rules when more than one seller is contributing to the sales success.

Double Credit or Split Credit
With a horizontal crediting policy, it is important to determine whether the crediting policy uses a double or split crediting approach. Double crediting provides two or more sellers with full credit. Split crediting occurs when two or more sellers split credit (a proportional share) of the sale outcome. Each option has its benefits and drawbacks.

Double crediting policies can maintain fiscal alignment with proper modeling and analysis. However, this requires the added step to estimate the expected amount of multiple crediting scenarios in the compensation budget planning process. Individual quotas are then increased to account for the anticipated double crediting scenarios. Despite its many benefits, there are risks. Without any monetary penalty for “sharing” the sale, deploying a double crediting policy may result in sellers unnecessarily bringing other sellers into the process who do not persuade the customer to act in the financial benefit to the company.

While deploying a split crediting policy is the simplest from a budgetary standpoint, it creates the need for clear rules of how to split the credit. It also is the most viable scenario for commission-based plans to ensure fiscal alignment. Without proper management oversight, deploying a split crediting could deter sellers from not engaging all necessary sales partners in opportunities. This split crediting scenario may motivate the seller to put the opportunity at risk for the benefit of not splitting credit with other sellers who could help win the sale. To minimize this likelihood, there are five basic approaches that sales compensation professionals can consider when designing the mechanics of the split crediting rules.

Five Crediting Approaches for Splitting Credit

  1. Equal credit. Assign credit equally by the number of sellers involved in the sales process. This is the simplest split crediting approach and the easiest to communicate. If three sellers can claim credit for a sale, each seller gets one-third of the crediting dollars available. Conversely, this approach has limited flexibility and may not be commensurate with the value that each seller brings to the process, and thus makes escalations more likely.
  2. Fixed split. Management determines a fixed credit split policy for all sales outcomes. For example, the account manager earns 75% credit and the technical overlay sales specialist earns 25% sales credit. While this removes the complexity of resolving each sales situation, it leaves little flexibility to reflect degree of sales contribution.
  3. Split allocation range. Identify each seller’s impact on the buyer stakeholder touchpoints. Provide a defined range of sales crediting allocations. For example, the crediting policy may document that the primary influencer earns 60% to 80% of the sales credit while the secondary influencer earns 20% to 40%. One example where this is appropriate is when there is a common customer purchasing process with consistent influence points. Sellers negotiate within the bounds outlined in the crediting policy based in the nuanced customer scenario. This is slightly more complex and requires more management oversight. It drives teaming, but it also requires early agreement of roles during the opportunity pursuit.
  4. Sales process defined. Assign crediting around the sales process activities completed in the sales stage. This can get prescriptive based on the sales process. While it is easy to administer and minimizes escalations, it lacks flexibility based on the degree of value each sales activity has for specific scenarios.
  5. Seller discretion. Allow the sellers to determine the appropriate sales credit slit for each successful sales pursuit. This aligns influence with credit and it is flexible, however significant discretion can lead to distracting and time-consuming debates over crediting, negating the value of having crediting rules.

There are many considerations and approaches when determining who and how to credit sellers for influencing the sales process. There is no single right answer, but management must provide a policy that effectively and efficiently motivates teaming and appropriately rewards the point of persuasion. Doing so not only manages costs and encourages teaming, but often results in incremental revenue growth through collaboration.

About the Author

John Stamos, CSCP, is a manager in the Alexander Group’s Chicago office. Follow the Alexander Group on Twitter or connect with Stamos directly on LinkedIn.

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