Trade Show Marketing

Paying the Piper...
Sales Compensation Plans:  An Integral Part of the Market Plan.

This column has looked at many aspects of marketing. Some have been serious and others not so serious. One of the serious topics that has not been discussed is that of sales force compensation. In the next couple of columns, I hope to provide you with some ideas for establishing a system that is both workable and equitable for all involved.

Before attempting to develop any plan, some basic questions should be asked:

1. What is the selling task to be accomplished? Is is purely sales of a product or does it encompass more, such as servicing, training and communicating with the customer after the sale? How much time is actually spent selling?
    
2. Do the sales people have total control over their ability to succeed, or are they subject to uncontrollable factors such as economics, client failures, production restrictions, employer cash flow or competitive forces?
    
3. What is the competition doing in the area of compensation? If you don't know... find out.
    
4. Does the system recognize the difficulty of assessing the impact of different sales persons within a reasonable period of time?
    
5. 5. Do you want to grow a long-term relationship with the sales force that will provide them opportunities to move into management?

There are 4 basic components to compensation systems and they are the core of all plans: Salary, salary and bonus, salary and commission, and straight commission.

Selecting the right plan is critical to any venture. It is especially difficult when the person charged with developing the plan is a non-sales-type person. Unfortunately, many companies play games with compensation plans hoping to finally hit on the the one that will make everyone happy. This is not a play area! Mistakes are costly and, in some cases, can sap a new company of needed capital as well as reputation.

If you are a new company hiring a sales staff, establish your pay plan first. Don't hire guinea pigs. Sales people need to feel that you are in control of your company and will give them a stable base from which to operate.

No market plan will be successful until the same research and development effort that is put into the product is given to the method of selling that product.

If we recognize the two important factors that nothing happens until something is sold and a satisfied customer has great value, then we must ask the question: How should we deal with the people responsible for dealing with our customers... How do you pay the piper?