“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.” 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 pushing a particular product or brand, preferring to maintain a neutral posture and seeing their role as primarily fulfillment, rather than promotion, whereas manufacturers tend to focus on “sell- ing 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. www.savta.org 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 sales territories to ensure compatibility with that particular compensation structure. It’s highly recommended that you simulate (model) how a new system will work before rolling it out, especially if this is a replacement system. You can use actual past data and compare old versus simulated new system outcomes. It’s best to avoid surprises. You should be able to use the simulation to illustrate how the new system will work and then make any necessary changes. When you introduce the new system, you can use the simulation information again to help explain and gain acceptance from participants. Expect that such new systems will likely be met with skepticism, but resistance can be diminished by shar- ing the simulated data. Many companies strive to establish sales territories in a man- ner believed to be efficient. One common approach is to carve out discrete geographical sections such as counties. Obviously, you’d prefer to avoid having your sales force traversing each other’s routes/territories, and excessive windshield time is expensive. If your sales force is large enough, you may find it effective to channel your salespeople into specific vertical markets or even segments. For instance, you might have a healthcare specialist, an education specialist, etc. Even if you don’t have such special- ists, you may elect to have your salesperson(s) focus upon such segments as part of a systematic marketplace mapping initia- tive. Where are all the hospitals, schools, etc. located within my operating area? Or perhaps you will decide to focus on the xxx market segment for the next 60 to 90 days. Salespeople’s Activity Reports Unfortunately, for many good salespeople, paperwork is their kryptonite. For inexplicable reasons, many who are really good at closing sales are absolutely horrible at getting their paperwork done accurately, completely and on time. May/June 2022 | SAFE & VAULT TECHNOLOGY 13
