Sales Comp Plans, Revisited –Farquharson
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.
However, common sense says that before you print up 100,000 of the new and unproven solution, it would be wise to print up a smaller quantity of, say, 10,000. After the test order has been consumed, the remaining 90,000 can be produced. The only difference is that my commission drops to 5 percent on what is now a reorder.
The situation that I’ve just described is not a hypothetical. This was a real scenario and I was the rep with a decision to make: Do I do what’s best for the client or what’s best for me? Naturally, I assumed that the company I worked for had the customer’s interests at heart and would help me to find a solution. Ah, to be young, naïve, and stupid again, eh? No, Bill, they told me. Rules are rules. No exceptions.
So, it was up to me and it didn’t take me long to reach a decision. I called the customer and suggested the test run. There was just too much that was new about this design in the process and it was far too risky for the client to order a full year’s quantity. They called me back the next day and placed an order for 100,000 pieces just the same. Phew! I guess I got my cake and ate it, too.
Compensation, by definition should reflect the employee’s contribution to the company. Sales compensation, however, is different in that it adds a component of motivation to the mix. For example, I am fond of saying that if you want your salespeople to sell digital and variable data printing, use their wallets as your microphone. That is what they listen to. Overcompensate if necessary, but you will get the rep’s attention by waving dollar signs in one direction or another.