How Commissions are Evaluated for Calculation
Commission rules, based on a credit amount, determine how commissions are
applied for each user for a given credit.
When an order is processed in Xactly Incent, the application evaluates any commissions to which each person associated with the order is entitled, and grants them.
A simple commission rule might be for a manager who gets a yearly commission
based on a flat rate. The Attainment Measure for this commission would be
TotalCreditAttainment based on the number of bookings. There is no conditional statement for this commission rule to determine under what circumstances it is granted. It is simply granted yearly based on the attainment measure.
Three types of commissions can be calculated:
• Flat Rate—This type of commission is based on a flat rate.
• Rate Table—This type of commission is based on values in a rate table.
• Highest Rate—This type of commission is based on the highest rate tier available in
the rate table.
Any commissions based on rate tables include rate tier calculations. Rate tables can
have any number of tiers, but always include a low and high attainment level and a
rate at which a commission will be paid.
Sample Commission Rule
The following sample commission rule is based on printer sales for a given year.
• The commission is based on the amount of printers sold during 2006.
• There is one condition statement that says the credit type must be printers.
• The rate table defines rate tiers as follows:
| Tier Name | Low | High | Default |
|---|---|---|---|
| Tier 1 | 0 | 50 | 2.0 |
| Tier 2 | 50 | 100 | 3.0 |
| Tier 3 | 100 | 125 | 4.0 |
| Tier 4 | 125 | 150 | 5.0 |
• The quota value is $1,500,000 worth of printers sold.
• The current order has one printer on it and the amount of that order is $1000.
• When the sales representative receives credit for this order, his total year-todate
credit equals $75,000.
• He achieved 50% of quota in 2006, and his commission is therefore calculated
at Tier 2, or 3%.
The application does the following to calculate the commission:
• Determines that the sales representative has met 50% of his quota.
• Determines that Tier 2 and 3% will be used for calculation.
• Multiples the rate (3%) times the current credit ($1000):
3% X $1000 = $30 commission payment
Sample Clawback Commission Rule
A clawback commission rule allows historic commission rates to be used in processing
new commission results.
note: Using historic commission rates in new commission results is based on matching
the Person, Related Order/Item Code, and Credit Type. The CreditType of the
original and clawback credits must be the same if clawback commissions are to
process successfully.
You can use a clawback commission rule to calculate commissions in a new order
based on rates calculated in a Related Order. The company organization we are
using is the same as in previous examples.
This rule is set up so that Joe, Bob, and David receive credit (Credit Type = Booking) from the original and clawback orders.
Orders are processed as follows:
• A new order (Order1) is processed and Joe, Bob, and David receive credits
(Credit Type = Booking). Commissions are generated for:
• Joe (Position: Sales Rep 1)
• Bob (Position: Western Region Director)
• David (Position: VP Sales)
• Another new order (Order2) is processed, and Joe, Bob, and David receive
credits (Credit Type = Booking) with Related Order (Order1). Before Order2 is
processed, Joe, Bob, and David are changed to a compensation plan with a
flat rate of 2%. Clawback commissions are generated for:
• Joe (Position: Sales Rep 1)
• Bob (Position: Western Region Director)
• David (Position: VP sales)
The rate used to calculate the original commission is used to process the clawback
commission, using the formula (credit amount X original rate). If any of the
criteria is not met that matches the current order to the related order (Person,
Credit Type, Order/Item Code, or Commission rate exists), no clawback commission
will be generated.
note: Commission clawback rules are suitable only in cases when the original order
item generates a single commission result. This includes cases when a commission
rule (with a single result) produces two commissions (such as when walking a rate
table). However, commission clawback rules are not suitable in situations where
there are two (or more) commission rules generating commissions, or when a single
commission rule generates two or more results.
Sample Commission Rate Tier Match Rule
This section illustrates a sample commission rate tier match rule. Consider the following scenario:
Professional Services annual quota: $1,000,000
Professional Services rates:
• 0 – 100% of quota pays at 2% (Tier 1)
• 100 – 150% of quota pays at 3% (Tier 2)
• Over 150% of quota pays at 5% (Tier 3)
Training Services are paid based on attainment of the Professional Services
annual quota (on an order line item basis) at the following rates:
Training Services rates:
• 0 – 100% of quota pays at 1% (Tier 1)
• 100 – 150% of quota pays at 2% (Tier 2)
• Over 150% of quota pays at 3% (Tier 3)
To define this scenario in Incent, you need to do the following:
1. Define the Professional Services annual quota to be $1,000,000.
2. Define the Professional Services rate table to match the three tiers presented
above.
3. Define the Professional Services commission rule with the following criteria:
• Processed
• Based on the corresponding quota and rate table
4. Define the Training Services rate table to match the three tiers presented
above.
5. Define the Training Services commission rate tier match rule with the following
criteria:
• References the Professional Services commission rule
• Based on the Training Services rate table
The following table shows the credits produced after calculations are completed:
| Order Code | Item Code | Credit Amount | Credit Type |
| Ol1 | 1 | 75 | PS |
| Ol1 | 1 | 25 | TRAINING |
| Ol2 | 2 | 50 | PS |
| Ol2 | 2 | 15 | TRAINING |
| Ol3 | 3 | 100 | PS |
| Ol3 | 3 | 50 | TRAINING |
The following table shows the commissions produced after calculations are completed:
| Order Code | Item Code | Credit Amount | Credit Type | Rule | Credit Applied | Rate | Rate Tier | Rolling Attainment | Commission Amount |
| Ol1 | 1 | 75 | PS | PS Com Rule | 75 | 2% | 1 | 75 | $1.50 |
| Ol1 | 1 | 25 | TRAINING | Trng Com Rule | 25 | 1% | 1 | $0.25 | |
| Ol2 | 2 | 50 | PS | PS Com Rule | 25 25 | 2% 3% | 1 2 | 100 125 | $0.50 $0.75 |
| Ol2 | 2 | 15 | TRAINING | Trng Com Rule | 7.5 7.5 | 1% 2% | 1 2 | $0.075 $0.15 |
|
| Ol3 | 3 | 100 | PS | PS Com Rule | 25 75 | 3% 5% | 2 3 | 150 225 | $0.75 $3.75 |
| Ol3 | 3 | 50 | TRAINING | Trng Com Rule | 12.50 37.50 | 2% 3% | 2 3 | $0.25 $1.125 |
note: The commissions paid using the commission rate tier match rule leverages
the percentage of credit paid at each tier of the primary commission rule, and
applies that credit percentage to the credit of the commission rate tier match rule
to determine the credit to be paid at each tier.