Making Sales Compensation Models Work With Your Business Goals

Title_SalesCompensation

 

We recently looked at a sales approach to change the perception of your offering from a commodity to a premium product by identifying value and using it as a selling point to develop new business.

Delivering market insight to your prospect means providing a solution with their best interests in mind. But what is best for your prospect, your sales team, and ultimately your company may not always be the same.

To minimize this conflict, it is critical to have the right compensation plan in place. Let’s look at the importance of aligning the interests of your sales team with the interests of your company’s bottom line.

Times are changing…

To stay competitive and relevant, print service providers are working to forge deeper relationships with their clients, offering new marketing services such as data analytics, data mining, and multi-channel campaigns comprising not only print but also email, social media, augmented reality, mobile, and online components.

These services are heavily relationship-driven and provide opportunities for profitable high-margin annuity work. They also differ from traditional print services in that they entail longer sales cycles, shorter run lengths, easier re-ordering and sometimes a change in sales relationships due to self-serve web-to-print models.

This means new challenges for your sales team
With traditional offset, job revenue and sales compensation are both tied directly to run length. The larger the job and run length, the more profit available for all involved.

However, the advantages of digital print (personalization, quicker turnaround times, reduced waste) lend themselves to shorter run lengths. Jobs are now comprised of more valuable pages, but not necessarily more pages.

Digital print services have a lower price-per-piece when compared with traditional offset. An InfoTrends study, Sales Compensation in a Digital World, found that 80% of offset jobs had an average selling price of $5,000 or less, while 75% of digital print jobs were less than $1,000, and 50% of ongoing digital print jobs were under $500.

This, in turn, means new challenges for your company
How do you motivate your sales team to actively pursue jobs that take longer to sell and sometimes bring in lower prices? What incentive does your sales team have to pursue opportunities that are in the best interest of the company as opposed to what’s best for their own financial well-being?

You may find your sales team chooses to pursue work based on order cycle duration (how quickly can I get paid?) or average selling price (what cut of this job will I make?). Because of this, they may not actively seek out digital print and marketing-based sales opportunities…unless they are incentivized to do so.

It is critical to align compensation structure with business goals
As providers look to push marketing services and establish web-to-print solutions to capitalize on fewer touch points, higher profit margins and more repetitive work, compensation plans must follow suit to encourage sales teams to pursue these opportunities.

For example, firms can incentivize the selling of digital print services by offering salary and commission compensation models, while offset jobs may be established as salary-only compensation models.

A survey by InfoTrends found that 80% of responding companies do not offer differing sales compensation plans for ongoing digital print jobs compared with non-repeat digital print jobs.

When structuring compensation plans for repeat-order services, some questions to consider include: Will sales teams be compensated each time a repeat job is ordered? Will they be paid a lower rate since it’s a repeat job and will the compensation value shrink as time passes?

To successfully make the transition to a marketing services provider, organizations must be willing to reevaluate compensation models and create a structure that encourages their sales team to pursue opportunities that support the goals and direction of the company.

Base research for this article by InfoTrends

TIPS FOR MAKING SALES COMPENSATION MODELS WORK FOR YOUR BUSINESS GOALS
  • As emphasis is placed on selling of marketing-based services, compensation models need to be modified to entice sales staff to pursue these longer cycle, shorter-run length jobs.
  • Management should design compensation programs in a way that supports overall company goals and objectives.
  • Determining the right compensation model will depend on the company, how they are structured, what type of jobs they actively pursue, and other factors. Considerations include pay structure (commission-only, salary-only, salary and commission, draw on commission), bonuses for selling certain types of jobs, residual compensation for repeat or ongoing work, incentives for customer service representatives, and more.
  • Provide your sales staff with talk-tracks on the advantages of marketing-based digital print offerings. This video will show you how to communicate the benefits to your customers and prospects.
  • Training can help your sales staff in finding digital print opportunities. This presentation will walk you through beginning the search.
  • Web-to-print online ordering offers tremendous benefits to providers but create compensation challenges for your sales team. Take into consideration ways to properly incentivize your staff for securing repeat orders.
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