Incentive Calculation in Excel Sheets: 11 Problems & Solutions

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Incentive calculation in Excel has dominated the spreadsheet market since the 1990s, and it remains a powerful tool for data analysis. It is a powerful tool for handling various financial and commission calculations.

Don’t get us wrong. Excel is amazing because:

It’s versatile
Makes data collation easy
Let’s you summarize & visualize data
Supports formulas
Is used across the world

However, one study found that 88% of all spreadsheets contain one or more severe errors. Don’t we all remember the JP Morgan London Whale debacle, where JP Morgan was hit with a $6 billion trading loss caused by none other than an Excel error back in 2012.

So, whether you're managing sales commissions, employee bonuses, or other incentives, Excel can simplify the process. However, like any software, it's not immune to issues.

In this blog, we'll explore the common problems people encounter when calculating incentives in Excel and provide solutions to fix them.

Problems with incentive calculation in Excel sheets & how Xoxoday Compass helps fix them

Spreadsheets were never built to calculate incentives. They were built to automate simple mathematical calculations, which had more math than logic. They were never built as a heavy-duty programming language that could simplify 28 levels of nested ifs.

So, let’s stop forcing them to do something they are not meant to do.

Here are the common problems with incentive calculation in Excel sheets & how Xoxoday Compass helps fix them.

Manual and time-consuming
Prone to human error
Lacks real-time visibility and transparency
Not built for scale
Expensive
Not auditable
Not sharable
Does not integrate with your current systems like ERP, CRMs etc.
Not built for financial reporting & legal compliance
Cannot automate payments
Not built for incentives

1. Manual and time-consuming

Excel sheets cannot import data from existing sources and must be administered manually, which is tedious, time-consuming, and leaves plenty of room for manual error.

Data to be analyzed has to be copied and pasted or, even worse, manually entered. It can be done for a handful of reps with little effort, but as the rows and columns in the data increase, it becomes virtually impossible, making it extremely slow.

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With Xoxoday Compass, you can easily capture live data and leave it to Compass to auto-calculate in real-time.

2. Prone to human error

Besides being extremely time-consuming, Excel sheets are prone to manual errors. It is not primarily a coding language and can only handle complex mathematical calculations but not complex logic.

Incentive calculation is the exact opposite. It is more logic and less math. This is exactly where human intervention is required. This is where a business analyst builds a query with 50 indexes and 25 nested ifs to calculate incentive. God forbid if one of them goes wrong. It's fatally easy for user error to creep into the process and skew the results, potentially overpaying or underpaying your sales reps.

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With Xoxoday Compass, you can easily build complex incentive programs with the familiarity of Excel within a few clicks.

3. Lacks real-time visibility and transparency

On Excel sheets or even its online versions, unless someone is manually updating it every minute, the data quickly becomes outdated. Excel sheets are not connected to live CRMs and ERPs and, hence, cannot be updated real-time. As a result of this, there is no transparency or visibility of data.

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With Xoxoday Compass, the sales reps, managers, admins, HR teams, finance team, and the management have real-time access to incentive statements. Having this data readily available motivates sales reps to see what they’ve earned and how they can earn more.

Apart from motivating your sales team, Compass provides complete transparency into the actual calculations behind the numbers, and your team can trust the numbers they see because they have visibility into how they’re calculated.

4. Not built for scale

Experts describe Excel as a functional programming language. Even though Excel combines data analysis, visualization, and programming together, it only works well when the data is small and limited to hundreds of records, can be entered manually or can be copied and pasted, and the logic is more mathematical than complex.

Organizations face significant challenges when they try to build incentive software within Excel that requires complex logic, making it impossible to calculate incentives at scale.

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With Xoxoday Compass, you get the best of Excel, like an intuitive interface along with variables and payout options, and it is scalable for small and gigantic enterprises and start-ups alike.

5. Expensive

When you use Excel for calculating sales incentives, you put in significant resources, technology, human resources, and time, and these resources have a cost associated with them.

Considering that 88% of the spreadsheets contain errors, every time you come across an error, you incur the cost of all of these resources again, making it uneconomical at all levels, thus shattering the balance.

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With Xoxoday Compass, you can automate the process and all changes can be handled with just a few clicks. It also saves a lot of time and eliminates inaccuracies and allows your team to spend time on other critical areas of the business.

6. Not auditable

Have you ever returned to your Excel sheet only to discover that it is not how you left it? Or have you ever overwritten your formula only to find #ERROR! across cells? If this gives you a sense of Deja Vu, let me tell you, you are not alone.

Excel doesn’t offer a history of every change made to each cell, and you can’t see who made the changes or if they even had the approval to do so. You also can’t set up a chain of support. Despite Google Sheets introducing features to overcome these problems, checking the change history for individual cells is impossible.

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With Xoxoday Compass, you can easily track history and make auditability easy by showing users who changed what and when. It also facilitates automation and lets you easily add an approval hierarchy.

7. Not sharable

Excel is easy to share, right? Just drop it as an attachment in an email.

Perhaps it is. But not when you have a massive team of hundreds and thousands of employees who want to access the same file. This is where Excel collapses. You can create an incentive spreadsheet in Excel for your company, but what if you want to share it with 50000 reps?

Now, imagine those reps are grouped across 15 different incentive plans. Now add in the complexity of team leaders being able to see the incentives of their team members but not other team members.

You can build your Excel spreadsheet, but you can’t divide and share it in a way where the users can only see the information that they need to see. This is precisely what makes it non-sharable and challenging.

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With Xoxoday Compass, you get user controls. You can control who sees what data and it is always shared between stakeholders.

8. Does not integrate with your current systems like ERP, CRMs, etc.

Excel, despite its online versions, is not connected. Complex incentive calculations need real-time data for all sources like CRM, ERP, and payroll. It is almost impossible to extract data from these sources, work on them, and keep them updated real time. This process is slow, manual, error-prone, and not real-time.

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With Xoxoday Compass, you can easily pull this data from your existing systems. You can integrate Compass via webhooks, APIs or SDKs. Link and add gate filters in case of multiple data sources.

9. Not built for financial reporting & legal compliance

Excel is a business tool built for mathematical calculations with a simple input, process, and output mechanism. It does not allow you to configure tax implications, let alone based on slabs or geographies, and makes financial reporting and legal compliance independent of incentive calculation and payouts.

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With Xoxoday Compass, apart from enabling fair, error-free, and transparent incentive calculations, takes care of user authentication and all security measures like GDPR or ISO and handles geographical tax implications and compliance.

10. Cannot automate payments

Excel is a calculation tool that can help you with the final incentive calculation. It cannot go even a step beyond that. It keeps incentive calculation independent of incentive payouts.

To process payouts, you will have to manually release payments through the bank or through gift cards, which leaves plenty of opportunity for manual errors. Excel does not allow you to connect it to any APIs or payment getaways to process payments.

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With Xoxoday Compass, you can handle geographical tax implications and compliance before incentive payouts. You can consider any or all types of incentive payouts like bank transfers, a reward catalog of more than 20000 digital gift cards, prepaid cards, experiences, and wallets across 80+ countries, credit notes, or good old bank transfers. Payouts can be managed across multiple geographies & currencies seamlessly.

11. Not built for incentives

Excel is a blank canvas with two dimensions. It cannot handle complex calculations coupled with layers of logic. You will have to resort to using 10s and 20s of nested ifs and indexes to arrive at the final value. God forbid if you go wrong with one of those 20.

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With Xoxoday Compass, you can quickly build a logic with n number of variables where your only input is defining the variable, and Compass will take care of the rest. Apart from easy incentive calculation, Compass helps you motivate your sales reps with gamified sales contests with a library of templates to choose from. Compass is also created to handle complex tax implications across geographies and tax brackets to enable seamless payouts.

Case Study: A German luxury auto brand improves its top-line sales with incentive automation

A luxury automotive company faced the challenge of effectively communicating their commission programs and engaging their ever-expanding sales team, dispersed across 33 different franchise locations. They sought a unified platform to assist their sales team in navigating incentive programs and fostering a connected community with their franchisee sales force.

Solution

The luxury automotive brand turned to Compass to enhance sales representative productivity with a multifaceted approach. Compass provided a centralized hub for seamless communication of compensation programs, streamlined incentive distribution processes for sales representatives across the country, and increased transparency regarding earned incentives.

Result

Compass was pivotal in enhancing engagement within the luxury automotive brand's sales team by offering features such as community groups, Nudges and notifications, and Game templates. Through Compass, the luxury automotive brand achieved the following:

Configured monthly incentive payout programs for sales executives and team leaders.
Managed and distributed incentives through a centralized team based on a single guideline.
Leveraged Plum, an extensive redemption portal, to provide over 1700 payout options, including branded gift cards, cash cards, experiences, and more.
Launched engagement programs, trivia, and quizzes within various groups.

Impact

The implementation of Compass yielded significant results for the luxury automotive brand, including:

An 11% increase in unit sales in less than 90 days.
A 5% increase in the number of qualifiers in less than 90 days.
An impressive 92.8% adoption rate of Compass by sales teams.
A remarkable 96.2% increase in the adoption of payout options.

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Xoxoday Compass ensures a 100% reduction in processing time, 10% savings due to budget leakage, an 80% increase in sales productivity, and 0% opaqueness in communication.

Supercharge your sales team with the world’s leading incentive calculation and automation software. Book a demo now!

Conclusion

Excel, while a versatile tool, faces limitations when it comes to complex incentive calculations. The potential for manual errors, lack of real-time data, and difficulties in scalability can pose significant challenges.

Xoxoday Compass offers a solution that streamlines incentive calculation processes, automates payments, and enhances transparency and accuracy. Leveraging Compass, businesses can supercharge their sales teams, reduce processing time, increase productivity, and eliminate communication opacity, all while ensuring the precision of their incentive calculations.

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Incentive Calculation in Excel Sheets: 11 Common Problems & How to Fix Them