BUSINESS Managing Your Sales Force “In the best of times, few things are more important than the ability to generate a steady flow of profitable business at a reasonable cost.” f low to the salesperson. Application of such a system is much easier after a salesperson has become established because future commission earnings and timing become more predictable. If you employ such a draw method, it’s recommended that you not advance more than 50 to 60% of anticipated commis- sions. You don’t want to get too far out in front of what you will owe in commissions. It is important to have your salespeople eagerly anticipating their monthly commission check. Nonethe- less, don’t be surprised if some really good salespeople prefer an all-commission compensation plan, presuming the commission system is realistic and compensatory. Although not employed oſten, some sales forces are compensated at time of payment rather than time of sale. How to Enhance the Performance of Your Sales Force We should probably mention that any of the three basic com- pensation approaches can be enhanced by including incentive bonuses. In addition to direct compensation, your sales force can usually also be motivated by simple promotional incentives such as sales contests and placement listing results in appropri- ate high-visibility office areas. Awards and status badges such as Salesperson of the Month, Top Producer, Top Gun, Sales Prevention Leader (just kidding) and other visible symbols of success can of- fer prestige and coveted intramural bragging rights, which can be effective tools for invoking friendly competition. The only thing worse than being in last place is for everyone to know about it! But don’t make it a destructive process, and be sure to recognize that all territories are not necessarily capable of yielding the same results. Also, be sure to pay attention to the quantity, quality and distribution of company-provided leads to your salespeople. 22 KEYNOTES DECEMBER 2020 It’s absolutely imperative that the sales manager knows what’s in the funnel/pipeline! You may be familiar with the retailer practice of offering so called “spiffs,” which are essentially special rewards de- signed to promote sale of a particular product, line or brand. In similar fashion, you may elect to enhance performance rewards for your sales force. One advantage of this approach is that these extra promotional cash rewards can be turned on and off without upsetting the foundational salespeople’s compensation system. Another advantage of such spiffs is that they are typically funded by manufacturers of the products or categories being promoted. Just beware of the potential trap whereby your salespeople sell the promoted product rather than the most appropriate product/solution for the custom- ers’ needs and budget. Of course, you will want to weigh the pros and cons of what’s best for your suppliers versus what’s best for your company. You might want to consider some sort of reward for the sale of your higher-margin products. Many wholesale distributors overtly choose to avoid push- ing a particular product or brand, preferring to maintain a neutral posture and seeing their role as primarily fulfill- ment, rather than promotion, whereas manufacturers tend to focus on “selling in” their products and, thus, increasing their market share. Sales Territories When designing a sales force structure and compensation sys- tem, you need to consider your sales territories. This reminds me of a situation where I had just joined a well-known company as director of sales and marketing, responsible for a sales force of more than 100. A top priority for my new boss (the CEO) was revamping the unsatisfactory national sales force compensation structure. The new system was promptly designed, simulated and presented and was well received. So far, so good, but hold the champagne and cigars. Immediately following my introductory presentation of the new system, to everyone’s dismay, I went on to explain that — despite the intrinsic merits of this new proposed system — it would not work well under the current territo- rial structure. All North American regions and territories were subsequently restructured, and the new system went on to be very successful. That’s one in a row for the new guy, and don’t you just love happy endings? The point is that sales force structures and compen- sation programs should not be designed in a vacuum. Indeed, success may require intelligent realignment of regions and/or WWW.ALOA.ORG
