Have you ever lost a key employee because he was unsatisfied with his commission settlement? Or maybe your sales team is frustrated because payouts are opaque, delayed, or full of errors?
In the renewable energy (RE) industry, where sales are key, managing commissions is not just a matter of numbers. It is the foundation of motivation, loyalty, results, and profit. However, many companies treat this aspect of their business without due diligence and commitment, which leads to problems that may cost more than you think.
The lack of clear rules and tools for managing commissions creates chaos. Instead of focusing on sales, salespeople waste time clarifying ambiguities in payouts. Their dissatisfaction quickly turns into a decline in performance and, in extreme cases—a decision to leave. Each such loss is the cost of recruiting a new person and, above all, the loss of potential revenue.
This article examines the most common mistakes companies in the renewable energy industry make when managing sales commissions, their associated risks, and how they can be effectively remedied. It is for you if you want to retain your best people and avoid a drop in results.
The renewable energy (RE) industry is experiencing dynamic development, but at the same time, it is struggling with many challenges. Companies must build strong sales teams to compete effectively with the growing demand for ecological solutions.
Moreover, sales in the renewable energy sector are different from those in other industries. Sales cycles are often long and complex, spanning from the first contact with the customer through the analysis of his needs to the finalization of the contract. The salesperson’s role is crucial here, as he must be an effective salesperson, technical expert, and advisor.
The assessment of the situation should also take into account changing market conditions:
In this reality, sales teams in the renewable energy industry play a key role in building competitive advantage. They acquire customers, negotiate contracts, and generate revenues that allow the company to invest in development. Their effectiveness largely depends on motivation, which is directly related to the commission’s remuneration system.
Properly managed commissions in the renewable energy industry are key to solving this situation because they ensure:
Errors in managing commissions in the renewable energy industry affect team morale, hinder the company’s development, weaken its image, and make competing with other market players difficult.
In theory, the commission system should motivate the sales team and support implementing the company’s strategic goals. In practice, however, many companies in the renewable energy industry struggle with problems that discourage traders, generate conflicts, and impede development. Below, we will discuss the phenomena that most often cause this situation.
The lack of transparent rules means that salespeople do not know precisely how their commissions are calculated. This creates a feeling of injustice and suspicion that the company is cheating them.
In turn, if commissions do not consider differences in the difficulty of individual sales, salespeople may feel a lack of appreciation for their extra effort and focus on customers who require less effort to acquire and are less profitable for the company.
Sometimes, extreme situations occur where favoring selected employees, and a lack of consistency in settlement rules may lead to a feeling of inequality within the team.
The order fulfillment process in the renewable energy industry can be complicated and time-consuming, which may cause settlement delays. For sellers, this means a significant delay in gratification, directly affecting their motivation.
Commission payments may also be delayed due to manual settlement processes. Companies that do not use appropriate commission management tools often struggle with extended data processing times.
Regardless of the source of the problem, for salespeople, the lack of timely payment means frustration and a loss of trust in the employer, significantly reducing the entire team’s morale.
Errors in commission calculations can also have various sources. In the case of manual calculations in Excel sheets, the process is susceptible to human errors, which leads to understatement or overstatement of commissions.
In the renewable energy industry, where sales can be multi-stage, commission models are complex, which means that even small mistakes can escalate into serious problems.
At the same time, the industry is characterized by expensive corrections. Correcting calculation errors takes time and additional resources, financially burdening the company.
Companies often use commission models that do not consider changing market realities, such as fluctuations in raw material prices or new regulations.
Additionally, the lack of implementation of commission systems adapted to the specificity of various sales roles (e.g., technical advisor, team leader) means that the system does not meet employees’ expectations and is perceived as unfair.
This situation prevents the company from responding to new challenges internally and using changing conditions to support its strategy. Without the ability to dynamically change the commission policy, the company misses opportunities to motivate the team during periods of key change.
The most common communication problems in commissions include a lack of regular feedback. Salespeople may feel excluded from the process and suspect unfair treatment if they do not receive reports on their performance and commission amounts.
Another communication error is unclear instructions regarding goals and principles in the commission strategy. Poor communication between sales and management often leads to conflicts and misunderstandings.
Each of the above-described commission problems in the renewable energy industry may negatively affect team morale, sales results, image, and the company’s overall condition. Worse still, accumulating these challenges creates spirals of problems that are difficult to stop later.
The most common effects of negligence in the commission system include:
The loss of experienced salespeople is associated with high recruitment, training, and implementation costs. It also means a loss of knowledge, relationships, and revenue. Key salespeople often build long-term relationships with customers, so their departure may result in losing these customers to competitors.
Such a situation often creates a domino effect—when the best people leave, the morale of the remaining employees drops, which can lead to further resignations and other problems.
Unclear, unfair, or delayed commission payments make salespeople feel unappreciated. This affects their productivity, causes frustration, and reduces engagement. A demotivated team does not achieve its full potential, reducing sales effectiveness and lowering results.
The commission system’s lack of transparency may lead to tensions between employees, sales departments, and management.
The lack of salespeople’s involvement translates into a decline in sales. At the same time, the quality of customer service decreases – demotivated salespeople may not focus on building relationships, which negatively affects customer satisfaction and may lead to the decision to choose the competition.
An inefficient commission system also makes it difficult for the company to achieve its strategic, sales, and financial goals.
A company that does not care for its salespeople quickly gains a reputation as a bad employer, making it difficult to attract new talent. Conflicts over commissions can also flow outside the company and negatively impact its relationships with business partners.
As a result, the company loses its competitive advantage. Organizations with staffing problems and low sales efficiency become uncompetitive in a dynamic industry.
Chaos in the commission system also blocks the company’s development opportunities. An inefficient model makes managing a larger sales team challenging as the company grows effectively.
Strategic decisions are delayed because commission issues consume time and resources that should be spent on scaling and innovating.
To sum up our considerations with an illustrative metaphor – neglecting the commission system in the company is like leaving a small hole in the ship’s hull – over time, water floods everything, leading to a disaster.
So, how can you effectively manage commissions to avoid these threats and create a stable foundation for your company’s development?
Improving the commission system is not only about eliminating problems – it is an investment in team motivation, company stability, and long-term development. Below are five steps you can take to improve commission management in the renewable energy industry:
The whole process should start with a solid foundation, i.e., an analysis of the current commission system. Identify what elements of your current commission model are working and which are causing problems.
Be sure to consider the sales team’s perspective. Conversations with salespeople and managers will help you understand their expectations and frustrations.
Also, assess the effectiveness of the tools – check whether the methods used are efficient enough and do not generate errors.
In the next step, it’s time to create a commission strategy based on the analysis and strategic goals of the company. At the same time, the specificity of sales in the renewable energy industry should be considered, and remuneration rules should be developed considering the long sales cycle, product diversity, and variability of market conditions.
Determine the commissions awarded for finalizing the sale or other key process stages (e.g., signing the preliminary contract). Ensure that the commission model supports the implementation of strategic goals, such as acquiring customers in new segments or increasing the value of transactions.
Once you have your strategy prepared, you must implement and optimize it. Consider where the most critical bottlenecks in the process are and how they can be improved.
Consider automation, such as using appropriate software to eliminate errors and speed up the settlement process. Define commission payment deadlines and ensure that they are strictly adhered to.
Design a flexible system that will enable the introduction of mechanisms for quickly adapting the commission model to changing market conditions.
If you want to go further and achieve a higher commission policy, invest in systems that automate settlements, generate reports, and ensure process transparency. Choose a tool that adapts to the specifics of your company and team.
At the same time, ensure that the technology used to manage commissions integrates with the company’s CRM, ERP, and other solutions.
Remember that managing a commission strategy does not work only for a one-time implementation. Plan for regular reporting and ongoing feedback.
Provide salespeople with transparent reports on their performance and commissions. Ask your team for feedback on how the system works, and make adjustments if necessary.
Regularly assess whether the commission system supports the achievement of business goals and motivates the team in the right direction.
Fixing the commission system is not a one-time task but a continuous improvement process. Thanks to the appropriate strategy and modern tools, companies in the renewable energy industry can avoid serious internal and image problems and build a lasting competitive advantage by attracting and retaining the best talent in the sales team.
Use the help of experts to gain time, transparency, and confidence so that commission processes motivate employees and are aligned with your company’s strategy. We offer full support from audit and analysis through process optimization to the implementation of a commission settlement system.
Take advantage of a free consultation to discuss optimizing your company’s commission processes: Schedule a free consultation with an expert.
Shortly (14-16/01/2025), you can also meet us at the largest renewable energy fair in Poland – Solar Energy Expo. Meet with SANDS Partners team and find out what cooperation looks like and what your company can gain.
