Imagine this all too common scenario. You’re preparing your companies commission plans in your usual Excel spreadsheet. The spreadsheet freezes (what’s new?!) and every time you switch between one of the 100 tabs on the sheet you notice errors. Each small error on every page takes you a little bit longer to find (if you find it) and correct. When it’s time to share the report with the team you have to save each tab as a PDF, email it to the correct person (hopefully) and then wait. You wait for the inevitable responses that there has been in error, because let’s face it, Excel isn’t error-proof. And commissions are just one piece of the complicated and limited puzzle.
With everything we know about the challenges of using Excel, why are so many people still using it to manage their Sales Performance? In a recent Forbes article, 3 Reasons Why Replacing Excel is Worth Money to a Boss, author Meta S. Brown analyzes three key issues with Excel’s limitations and its potential implications on a team.
First up, hands-on involvement is expensive labour
“We’ve already paid for Excel, our team knows how to use it, it can handle our plans.” Heard variations of this before? In theory it sounds simple. But in order to get Excel to calculate commissions, your team has to create formulas and references and don’t forget about formatting output. Building these spreadsheets takes time, which costs money. Beyond initial setup, maintenance and use of spreadsheets takes time. Every time new data is input, there is risk of error meaning that users have to constantly check cells.
The bigger the sheet, the more hands you need to maintain it. Many organizations have teams dedicated to maintaining their spreadsheets, when automating the process would help to alleviate the strain from the team, streamline the process and definitely reduce the risk of errors. By automating these processes, organizations are saving time and allowing their team to focus on more innovative and potentially profitable work.
Errors in Excel are a risky business
Here’s a kicker. Did you know that every 1 in 100 cells has an error? 1 in 100. And that’s a conservative statistic. You’re probably looking at your spreadsheet right now that has over 1,000 cells per tab.
Every error means that you’re opening up your organization to risk and potential loss. Your customers, management and regulators may be affected by any error, and there may be costs to you in lost revenue, damaged reputation, fines or other expenses.
One minor error of over or underpaying a rep each month can add up to big-time losses for an organization. Not to mention the time it takes for teams to find the issues, correct the issues and the back and forth involved in something that could easily be avoided. Isn’t investing in a software worth it to avoid those risks and expenses?
When the spreadsheet creator leaves, the knowledge leaves with them
For the most part, spreadsheets are created informally and almost always lack elements that make professionally -developed software more effective, such as:
- Designers with an understanding of user needs
- An in-depth review process to prevent issues as the software is being built
- Documentation for both developers and users
These are only a few of the benefits of a professionally-developed software. One big issue that we come across when talking to customers that use Excel is that the spreadsheets are constantly being changed and updated without any record of what has been done. And then what happens when the person who created the spreadsheet moves on to another job and nobody else on the team knows what the spreadsheet really does or how to access and use the information in it?
This can be an especially big problem for subscription businesses that are managing commissions across multiple departments. Subscriptions change, line items are added and removed and commissions are impacted. A minor change to one customer contract has the potential to impact several people’s commissions in an organization. Things move so quickly in these organizations that they need an audit trail to help track all of the changes. Amounts paid out for commissions have to reconcile fully with what’s been capitalized and amortized over time. This can be very difficult to track in Excel, especially if the person who manages the spreadsheet leaves the organization.
If you’re a subscription business looking to save yourself from Excel, let us know.