https://www.loom.com/share/ee126cf5ed3a4eca91353ac3be9fbd1b?sid=d1b48243-ef97-48da-b039-55d4d5bf4089

Building commission plans in PREO that calculate commission correctly may be the most important task in the management of PREO. An accurate commission plan allows the Sales team to build deals with confidence and helps automate many of the workflows that are connected to the Proposal.

If you have the responsibility of managing commission plans in PREO, it is imperative that you understand your Region's commission plans before you get started building them in PREO. Take time to read the plan and test it using sample numbers in excel. Think of scenarios described in the commission plan and consider how a rep may optimize their deal to maximize the commission potential.

A good comp plan is designed to incentivize the sales people by driving the behavior that is tied to company initiatives. It is vital that PREO is able to support the behaviors that the plan is driving towards. You are the front line in confirming that PREO has the capability to support the commission plan.

Get started by navigating to your Admin Tools page. Click on Commission Plan Builder.

Create a New Plan, assign it to your Region, give it a name such as "Comp Plan Training" and ensure the Plan Type is "Sales Rep".

Congrats! You've created your first commission plan in PREO.

A plan without rules is no plan at all, so let us build some sample rules to learn the system.

Notice that comp plan builder has several sections of rules for Equipment, Software, MPS, etc. When a proposal calculates commission the following steps happen:

Let's say our comp plan has the following rules:

Equipment pays 4% of revenue and 25% of gross profit

Net New deals pay 2x commission

MPS pays 1 month and requires 36 month term

To build this plan we can create a single rule on equipment with a net new kicker and a single rule in MPS.

Create a new rule in Equipment. Give the rule an informative name such as "ESR 4% Rev / 25% GP. This name shows on the proposal and gives all users a description of what rule applied. (The Kicker will have it's own name)

Update the Max Revenue Commission Rate to 4.0 and the Gross Profit Rate to 25%

Now, create a Net New kicker with the name of "Net New 2X". Set the commission multiplier to 2. Save your rule.

Create a new rule in MPS with the name "MPS 36+ Months - 8.33%". Set the MPS term months required to 36 and the rate to 8.3333. (our requirement is 1 month, and PREO pays on annualized revenue. 1 month / 12 months = 8.3333)

Save your plan and then click Test Plan.

While we build our commission plan, we can test the plan using the Commission Plan Builder or assigning the plan to a user and building a sample proposal. It's recommended to use the Commission Plan Builder until the plan works within the tester. Testing on proposals should occur after this.

Select the Scenario from the list. Use the blue boxes on the left side to populate sample data. Click Save & Calculate.

Update the Office Equipment Cost to 10k and the Revenue to 15k and then calculate.

Notice that we see the 4% Revenue and 25% Gross Profit rates populate. We also have a list of Applied Rules that show the Rule Name and rates. This is similar to what the Sales team sees within the Proposal and is why the names are important.

Change your Scenario to "Net New Logo". What happens?

Notice that we now see the base rule AND the Net New kicker. The user can now see how the system came to the final result of 8% revenue and 50% gross profit.

Let's create a new scenario and name it "MPS". We will test our MPS rule in this scenario.

Add an MPS agreement with a 60 month term and $1,200 annual revenue. How much commission do you think will populate?

That's right, 1 month or 8.3333% of $1,200 = $100.

Our sample plan is quite basic. Your comp plans will most likely have many rules with various kickers and penalties. An actual comp plan may consist of over 50 rules! To ensure PREO selects the correct rule, it's important we set our priorities correctly.

PREO will sort the rules by lowest priority. Once a rule is applied for the category (Equipment for example) it will stop checking for Equipment rules. For this reason, you want to put the most valuable commission rules with the lowest priority value. After all, if the rep is eligible for the higher payout, we want to make sure PREO pays them properly.

Create a new Equipment rule called "ESR 2% Rev / 15% Gross Profit" with a priority of -100 (that's right negative 100. We can use any value in priority. We recommend using priorities in increments of 100 so you can easily insert new rules in between existing rules when required)

Now, run your scenario. What commission rate was used?

If your priorities are set like the example, we should see 2% revenue and 15% of Gross Profit. Even though the other rule pays more, we just paid the rep a lower amount simply because our priorities are set incorrectly!

Change the priority value to 100 and try again. You should see the original rule now apply.

When you start building real comp plans, you may need to use priorities with trial and error until you get the feel for it. Building comp plans is an art and a science and you will get creative and more efficient the more you work them!

Click on "Log"

The log shows the steps that PREO is taking to generate the list of applied rules. This can be helpful in finding out what rules are being applied and why.