Is it Time to Revise Your Sales Compensation Plan?
If you're paying your sales reps straight commission, you're using an obsolete formula.
If you're paying your sales reps a straight salary, you're also using an obsolete formula.
Both of those formulas are vestiges of an earlier, simpler time.
You may be like thousands of other companies who are using compensation plans that
served them well in the past. In the last few years, however, a number of changes in the economic environment have combined to render some of those compensation plans ineffective.
Even though the last couple of years have been good for many companies, most will admit to a general uneasiness about the demand for their products. Markets are leveling off, and customers are
much more conservative than they used to be. Constant change, growing competitors, and ever-increasing expectations on the part of customers have combined to wreak major changes in the business environment.
Another significant change that is often overlooked, but which has tremendous implications for sales force compensation, is the growing sophistication of your computer software.
This gives you the ability to easily measure performance more and more precisely. For example, a few years ago you could probably easily measure sales and gross profits per territory. Anything much beyond that may have been very difficult to get at.
Have you learned the lesson that only a few people ever get? That excellent sales management is not a matter of reacting to every phone call and email that comes your way. Instead it is a matter of proactively implementing a system that helps focus sales people, keeps them accountable, and continually improves their skills and their
performance. Burst out of the average, and become exceptional. Let us show you how. Join us and a dozen of your colleagues in this eye-opening, career-changing workshop in the Kahle Way® Sales Management System in Dallas on November 30th and December 1st. The results can be breathtaking.
"We have never had such an immediate, positive and measurable result from any training. This
has been the single most significant investment in training we have ever made. It's changed the nature of communication within our sales team in such a way that we expect better sales representative retention rates, more highly motivated managers and sellers, a greater degree of accountability and, yes, increased profitable sales as a result!"
-William A. Fidler, Executive Vice President Brenntag - North America, Inc.
Seize the moment. For more information, click here, or call 800-331-1287. Now, however, many companies have the ability to easily measure things like gross profits per line of billing, profitability per customer, profitability per product line, and sales costs as a percentage of gross profit per
territory.
This increase in information sophistication should be viewed as an opportunity for increases in sales productivity. With this newly acquired ability to measure the results of sales behavior more finely comes the corresponding ability to reward sales behavior more
precisely.
All of these relatively recent changes combine to create a climate where smart companies should take a close look at their current compensation plan to decide if it really is meeting their needs.
There are a number of potential benefits to doing so.
1. Increase productivity -- and therefore the bottom line.
Pressures on margins are not going to go away. It's likely that you'll be averaging a couple points less a few years from now than you do today. If you're going to survive, much less prosper, in that kind of an environment, you'll need to become more productive, to do more with less margin.
Until recently, you have probably reacted to the need to become more productive by concentrating on internal costs. You've reduced your inventory, streamlined the warehouse, and are probably on your third generation of computer software. But during all this time that you've focused internally, you've kept hands off the sales force. It is, in all likelihood, costing you the same percentage of gross profit today that they did a few years
ago.... [click here to read the entire article
online]
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