Accelerators: Tier Payout & Marginal Payout Rules

Accelerators boost commission earnings when specific performance milestones or targets are met. They increase commission rates or payouts once salespeople exceed thresholds like sales quotas or product sales targets, providing extra incentives for higher performance.

They are used to reward a sales rep for their superior performance and in turn, motivate them to achieve higher levels.

Accelerator Table Example:

Spiff offers two common methods to apply accelerators: Tier Payout and Marginal Payout.

Tier Payout Rule:

In this method, all sales for a period are commissioned at the highest rate achieved. For example, if a rep generates $220,000 in ARR and falls into the second tier at an 8% rate, all sales will be commissioned at 8%, resulting in a total commission of $17,600. The tier payout function in Spiff is like the VLOOKUP function but for a range, using a Range Table to determine the applicable rate.

Steps to Calculate Tier Payout Rule in Spiff:

• Navigate to Spiff Designer from the main dashboard.
• Select or create a commission plan, ensuring users are assigned to the plan.
• In your plan, go to the "Payout Rules" section and click “New Payout Rule”.

• Create a range table ‘Training_Plan_RangeTable’ with tiered structures:

• Prepare a datasheet ‘Training_Plan_Datasheet’ with fields for Opportunity ID, Close Date, StageName, ARR__c (Annual Recurring Revenue) including data for opportunities closed within the specified periods.

• Create a calculated field named AccumulatedARR to sum ARR for opportunities closed within the defined period, applying the filter based on Close Date.

• Calculate TierPayoutRate using the function:?

tier_payout(AccumulatedARR, Training_Plan_RangeTable)

• Calculate TierPayout with the formula:?

TierPayout = ARR__c × TierPayoutRate.

• Summing these values up, we get our actual Payout Amount for the rep in that statement period.

Marginal Payout Rule:

This method commissions each amount within its respective tier rate. For a rep with $220,000 in sales, the first $150,000 is commissioned at 4%, and the remaining $70,000 is commissioned at 8%, resulting in a total commission of $11,600. This approach may create "blended rates," where a deal is partially commissioned at different tier rates.

Steps to Calculate Marginal Payout Rule in Spiff:

• Navigate to Spiff Designer from the main dashboard.
• Select or create a commission plan, ensuring users are assigned to the plan.
• In your plan, go to the "Payout Rules" section and click “New Payout Rule”.
• Create a range table ‘Training_Plan_RangeTable2’ with tiered structures:

• Prepare a datasheet with fields for Opportunity ID, Close Date, StageName, ARR__c (Annual Recurring Revenue)? including data for opportunities closed within the specified periods.?
• Create two calculated fields:

- AccumulatedARR: Sum of ARR__c for opportunities closed within the period.

- PriorAccumulatedARR: Subtract ARR__c of the current deal from the total accumulated ARR__c up to the previous deal. This ensures that the current deal's ARR__c is not included in its own calculation. This calculated field will be considered as the initial value in the mpercent function for calculating the marginal payout.

• Calculate MarginalCommissionRate using the function:?

mpercent(ARR__c,Training_Plan_RangeTable2,PriorAccumulatedARR,"CorporaterRate")

• Calculate Marginal Payout with the formula: ARR__c*MarginalCommissionRate.

• Summing these values up, we get our actual Payout Amount for the rep in that statement period.

Implementing both marginal and tiered payout rules in Spiff Designer creates a fair and motivating compensation structure for your sales team. These strategies work together to build a comprehensive framework that drives performance and aligns incentives, ensuring your sales reps are effectively rewarded for their achievements.

Author: Lakshmy R | Jr. Software Developer | Amdrodd Technologies LLC.