Petra Lindqvist· Benefits Analyst, Lumen Biosciences
Asked in Sales Compensation ·
Clawing back commission when a customer cancels inside the first year
Subscription software for small businesses, headquartered in Lyon, 70 sellers in France, Spain and Belgium. Average contract is small, about 4,000 euros a year, paid monthly, and around 22% of new customers cancel within twelve months.
We pay full commission in the month after signature. Finance now wants to recover commission on any customer that churns in year one. Our employment counsel has warned that deducting from pay already made is difficult in France and differs again in Spain.
How are others handling churn in a high-volume, low-value model without straightforward deductions from salary?
1 helpful · 1 insightful · 4 replies · 11 views · 2 following
Accepted answer· by Wren Zhang
We avoided recovery altogether by changing when commission is earned. Half is paid after signature and half once the customer has paid for four consecutive months. Nothing is taken back because the second half was never paid. Our counsel was much happier with a condition on earning than with a deduction after payment. In our data, four months was the point after which a customer was very likely to stay the year, so it catches most early churn.
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