Forecasting is one of the most valuable tools when companies work with commission and incentive models. The term covers the estimation of future revenues and thus also expected commission. For a sales organization, this means not only getting a picture of how revenue will develop, but also how wage expenditures and incentives will affect the economy.
Being able to predict results is crucial in a time when competition is fierce and when sales strategies are often adapted quickly. Forecasting acts as a compass that gives both management and employees a realistic picture of what is coming and how it affects everything from motivation to budget.
For salespeople, forecasting is closely related to motivation. When an employee can see a realistic forecast of how much commission can be expected in a given month or quarter, it creates a stronger link between effort and reward. Instead of waiting until the end of the period, the seller can continuously monitor how the pipeline, closed deals and achieved attainment work out in dollars and cents.
In practice, forecasting salary and commission can act as a psychological driver. If a salesperson sees that he or she is already headed toward 90 percent attainment in the middle of the quarter, it can provide extra energy to cross 100 percent and trigger bonuses or accelerators. The opposite also applies: if the forecast shows that the goal is difficult to achieve, managers can quickly intervene with support, training or adjustment of resources.
On the part of the company, forecasting the salaries of sellers creates a predictability, which makes it easier to manage cash flow. Commission is often a large expense item, and if it is only settled after the fact, it can lead to unpleasant surprises. With forecasting, management can plan payouts more accurately and at the same time communicate openly with both the finance department and the board of directors about expected results.
Forecasting, however, is not just about looking ahead against the backdrop of the current pipeline. It can also be used to simulate the effect of new incentive models by testing them against historical data. If a company is considering changing its commission structure, it is risky to implement changes without knowing the consequences. Here, forecasting acts as a kind of safety test.
Imagine that a company will introduce a new accelerator where the commission increases significantly at 120 percent attainment. Instead of guessing at what it will cost, one can take historical sales figures and run the model through the system. The result will be a simulation showing how the same group of employees would have earned if the model had been active last year. In this way, management can assess whether the model is financially sustainable and whether it provides the desired motivation.
This approach is particularly important in industries with large fluctuations in deal value and complex crediting rules. When multiple people have to share commissions, or when revenue varies widely from customer to customer, small adjustments in the model can have a big economic impact. Forecasting based on historical data makes it possible to see the effect across the team so that both fairness and budget control can be balanced.
Previously, forecasting was often done manually in spreadsheets. Management collected pipeline data from the CRM system and tried to translate it into expected revenue, and hence commission. This method was both time-consuming and marked by uncertainty. Spreadsheets cannot easily account for changes in real time, and the risk of errors was high.
With modern platform-based solutions, forecasting has become much more accurate. Systems like Prowi can pull data directly from CRM, link it with the commission model, and provide a continuous picture of what individual salespeople, teams, and the entire organization can expect in commission. At the same time, alternative models can be simulated so that decisions are made on an enlightened basis.
Automation also means that both management and employees have access to the same information. It strengthens transparency and eliminates many of the conflicts that might otherwise arise when commissions are calculated only after the end of the period.
In a Nordic context where fixed pay has historically filled more than incentive pay, forecasting is an important key to increasing confidence in commission models. When both salespeople and managers can see the consequences of a given effort or a new model, the system becomes fairer and easier to accept.
For investors and boards, forecasting is also a signal of maturity. A company that can show accurate forecasts of both revenue and commission costs appears far more professional than one that simply reacts to results once they are created.
When forecasting is automated and connected to both real-time data and historical simulations, it becomes the foundation of a modern incentive culture. That's why forecasting is super interesting to dive into either to understand new models or motivate your sales force.