SPECIAL REPORT VARIABLE DATA PRINTING -- Compensating Digital
New equipment and processes can present a real challenge for employers because of the capital investment, training and installation they require. However, there are two other challenges that are often overlooked—revising your company's strategic plan and motivating employees to help maximize production and profit.
For printers that are getting into the digital/variable data arena, these two challenges are especially important. This article will address motivating employees to achieve specific goals through compensation plans.
First let's take a look at sales compensation plans. Sales commission and incentive plans have always been a challenge for the typical printer. And digital printers are no different. If your company has ventured into the digital arena from being a traditional litho shop, many of your salespeople may not be comfortable with or motivated for digital sales because the sales time is often longer and a single job is usually much smaller in price. "They're selling a service. . ." is usually how digital print shop owners describe print sales, "not a single job."
If your shop is 100 percent digital, the issues tend to be more traditional, such as consistent quota attainment and selling at (or above) target price in cases where competition is stiff. Below are a couple of methods both digital and traditional print shops have used successfully in their sales compensation plans.
To grow a business, obtaining new customers is critical. But what is the difference between a "new" client and an "existing" client? Do you pay a different commission rate for new business as opposed to old business?
Typically, the difference between commission rates for new and old business is about 2 percent.
It's an owner's dream come true—a sales force that hits quota each and every month in the fiscal year. Here are some ideas to consider:
1. Hitting monthly quotas requires extensive research and planning. The sales manager needs to work with each salesperson on his/her pipeline to ensure a steady stream of quality leads, month after month. A certain amount of time each month should be devoted to this task.
2. One type of sales compensation that encourages consistent quota attainment is the step method of increasing commission rates during the month. For example, if sales for Sally are below quota for the month, commissions are 6 percent, but if sales reach and exceed quota, then commissions from that point on are 7 percent. The key is to correlate the quota with the ideal commission rate.
3. If you have a large sales force, you probably have some turnover. With turnover comes account inheritance. The sales manager can use account inheritance as one reward for consistent goal attainment.
4. Quota attainment over a significant period of time is not easy. Thus, printers could use a bonus feature for meeting or exceeding quota for a particular number of months in a row, or a particular number of months in a fiscal year.
There is an overcapacity for certain types of print processes such as web and sheetfed, but digital printing is the fastest growing segment in the industry. Thus, target pricing and incentives for beating target price are a viable option for digital sales compensation plans.
Likewise, a small telephone survey of digital printers by the Digital Printing Council (DPC) reveals that most companies do not have an incentive plan for the non-sales work force. Of those that did, the plans were similar to "spot bonuses" or are part of a general profit sharing plan. One printer said that time off was a more effective incentive for his people than cash bonuses.
Incentive plans for CSRs are popular for traditional commercial printers, but are not very sophisticated. Typically, these plans are based on a percent of sales for the CSR's accounts.
However, because of distribution of accounts and account transfers and account inheritance, this type of plan can have its unexpected drawbacks from the CSR's perspective. Still, they have proven popular, and we've seen incentives based on 0.5 to 1.5 percent of sales (either gross margin or value-added).
Incentive and sales commission plans have always been a challenge for printers, whether they are digital or traditional. The Digital Printing Council's white paper, "Compensation, Incentive and Bonus Plans: Their Design, Implementation and Evaluation," which will be published this month, outlines in more detail the specific elements that are required in all plan documents. The report also provides sample plans and job descriptions for different sizes of companies and for different staff positions.
To learn more about the DPC and its membership benefits, e-mail jvinyard@piagatf.org or call Joanne Vinyard at (703) 519-8170.
PIA/GATF sells two books on sales compensation and incentive plans that contain sample plans from the industry. For more information, visit the PIA/GATF Bookstore at www.gain.net.
—Jim Kyger
About the Author
Jim Kyger is director of human relations at PIA/GATF. Based at its Alexandria, VA, office, he can be reached at jkyger@piagatf.org.