Sales Comp Plans, Revisited –FarquharsonMay 2012
RE: Your column idea
TJ, your “Take no prisoners” column on sales compensation in the April issue brought back a lot of memories and really got me thinking about the subject. As you know, the subject matter is a lightning rod for controversy regardless if you’re setting up a new plan, changing an existing plan, or writing about it for Printing Impressions. But allow me to take a walk down memory lane.
There are a lot of reasons to get into sales. For me, freedom was a leading factor. So was income potential. The job of “sales” is as close as you can get to being an entrepreneur without actually walking that tightrope. You are in charge of your own destiny, for the most part, and your income is directly related to your success at your job.
I remember my brother pulling me aside to show me the wad of cash he was carrying. He had just gotten his first commission check as a salesman and he had never seen that much money in his life. Neither had I. It was at that moment that I decided to follow his footsteps and go into sales.
One of the things you touched on in your column was coming up with a compensation plan for salespeople that struck a balance between the profitability of the job and maintaining sales ethics. The point you made was that a salesperson could possibly be swayed into suggesting a print solution on the basis of his or her commission, instead of what’s right for the customer. I agree and have experienced that issue myself.
The company that I first worked for when I left college—in truth the only real job I’ve ever had—paid 8 percent commission for new business and 5 percent of the order for repeat business. We were very well-trained and taught to look beyond the price of the job and do our best to reduce the cost of using that printed piece. Our goal was to come up with a different solution, very often something completely new and different. And untested.
So let’s say I do what I am trained to do and I create a new print solution for a client. The customer currently uses 100,000 pieces a year. The cost of my new design is $50,000. My commission for a list price job would be $4,000. In 1982, that didn’t suck.