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Sales Compensation – Is It Time for a Change?

Posted Monday, August 1, 2016 by Linda Bishop, President of Thought Transformation.

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alt textIs your sales compensation program getting you the results you want? Does it help your company get new customers, win new opportunities, and maximize wallet share at existing accounts?

Does it motivate your team to sell bigger solutions, as well as daily transactions to keep your plant busy?

What about profitability? Does your compensation program encourage your team to maximize margins?

Sales compensation is supposed to motivate salespeople to perform. Programs have many forms including:

The majority of sales people in our industry work under the model where there is a draw against commission. This model works well under the following conditions:

Back in the 20th century, this system worked well in the printing industry. For one hundred years, printing was a growth market because customers dedicated significant amounts of their marketing budget to printed communications. Buyers had plenty of pain points, such as inconsistent quality, and frequently shopped for better partners. Back in the good old days, offset was king which meant the sales dollars generated by individual transaction were larger, too.

During the last two decades of the century, the Internet changed the world and digital marketing was born. When the country experienced a major recession in 2008, shrinking budgets prompted marketers to shifted money away from printing to lower cost solutions like email marketing. Forced to compete for smaller slices of a shrinking pie, printers improved quality and service, eliminating many traditional pain points. Digital printing technology also improved, causing marketers to make the switch, cannibalizing business and reducing run sizes.

As a result of all these upheavals, today’s salespeople operate under the following conditions:

No matter what compensation system you use, the question to ask is, “Does my pay plan ensure that my sales force is working hard enough and performing the right tasks to drive growth?”

The right tasks include:

alt text Charles Darwin said, “It is not the strongest or the most intelligent who will survive, but those who can best manage change.” If you see weakness across a large segment of your sales force in critical areas, consider how changing the compensation plan could positively impact behavior and identify ways to improve.

Linda Bishop is the founder and president of Thought Transformation, a national sales and marketing consulting group. She is a subject matter expert on sales and marketing, writes regularly for Canvas magazine, and is a regular speaker at industry events. To drive revenue growth today, Linda believes companies must treat sales as a process, develop a core competency in business development, and provide marketing support for the sales team. She can be reached at lindabishop@thoughttransformation.com