Validating a Sales Commission Structure

A provider of job vacancies data was growing fast.  Conscious of the challenges that this presented, the directors built a spreadsheet model to map out the financial future of the company.  They were particularly interested in identifying the right sales commission structure for both their direct sales force and resellers.  Having built a comprehensive model, they asked MSC DataMan to verify that the calculations were correct as any mistake could lead to  incorrect decisions being made.

Our first step was to map out the structure of their business and the types of commission structures they wanted to explore.  Only then did we begin our work of validating the model.  Before long we discovered that their formulas for calculating reseller commission were incorrect and would severely underestimate the actual commission paid out.  We also corrected numerous minor errors and identified a number of ways of simplifying the spreadsheet model so that it was more resilient to any user input errors.

By investing in a single day of our time, the company saved itself from going ahead with an unprofitable commission structure that could have cost a lot of money.