Running commission operations means knowing and using a slew of decision-based rules. Did the sale go through more than one agent? How does the rate change based on the policy sold? What is the overall value of the policy? What is the agent's commission agreement?
Whether policies, negotiations, or other calculations are involved, today’s agent payout rules make reconciling commissions tricky. Outdated software with simplistic calculation capabilities leaves most FMOs or BGAs struggling.
In this post, we’ll share why this issue continues to plague the industry, and what you can do about it.
To motivate and grow the sales team, FMOs and BGAs specifically tailor commission agreements to suit each agent. Variables like hierarchy, territory, quota, and chargebacks are some of the considerations often included.
Agreeing on when to pay is also another factor in an already complex calculation. Some commissions are paid out upon a sale, others not until the customer makes a payment or sometimes pays in full. Of course, a combination of all three can also be applied.
To get commission payouts right takes the ability to formulate a calculation allowing for all those considerations. The tool that can do this for you is called a “rules engine.” It’s software that takes your manual or imported input and applies an order of operations that makes even the most sophisticated negotiations possible.
A rules engine uses a type of true/false logic. In the case of agent commissions, predetermined rules or conditions are set up.
The “engine” starts when an agent submits an enrollment and a rule performs a check to see if that enrollment is eligible and complete. A "true" moves it to the next rule; a "false" flags it as an error. Additional rules are added based on each agent’s commission structure.
Each rule triggers another action, moving the data through the necessary steps to produce the final payout results. Everyday tasks and actions suddenly become automated and sped up.
When a rules engine optimizes current workflows, flexible solutions are delivered efficiently and without disruption. And there are no limits to the rule-sets that can be created, which means changes can easily be incorporated.
However, all rules engines are not created equal. A well-built one can handle conflicts in the input and determine the order of execution to ensure correct payout amounts.
With the right engine, managing enrollment data, flagging discrepancies, and even initiating protocols that clean or correct that data is possible.
A rules engine not only ensures accurate enrollment counts, but it also manages commission data based on your business logic. It’s a digital tool that provides the following advantages.
A bloated, needlessly complex approach to commission payouts doesn’t do anybody any favors. With the help of a rules engine, the process is streamlined and simplified. The heavy lifting is done for you by:
To be effective, commission operation systems need to respond quickly to changing needs and requirements. Flexibility is a must. The rules engine steps in here to provide:
A rules engine allows an agency to introduce new commission plans quickly. It also minimizes the tedious manual tasks often involved in managing commissions like:
Commission operations require transparency, plain and simple. Otherwise, you can easily get overwhelmed with errors and requests for payout explanations. The internal tools your organization uses mean everything.
Real-world results of incorporating a high-functioning rules engine into your system mean you get trusted payouts and:
With rules engine technology you are building a database of verified, reliable information. And by processing and auditing data much faster, errors get caught and corrected quickly.
It’s data you can trust, reflecting real-time updates and allowing better reporting. By leveraging the analytics produced, you can discover hidden insights you may have missed before.
With ad-hoc and immediate reporting capabilities, data can be used to track sales and an agent’s book of business. Commission reports are now automatically updated and provide reporting on any adjustments made — allowing better insight into commission calculations.
There are other ways to update your internal processes, but a smart commission system using an industry-specific rules engine allows an agile approach. Prioritizing that functionality means you can:
Invest in a solution that offers this type of robust technology and you’ll make a big step toward future-proofing your commission operations.
To learn more about how you can make your commission operations better, check out our guide on building trust through technology. Or contact us today. We’d be happy to show you how the Trusty Back Office Pro rules engine works and how the system will improve your business.