Restructuring Sales Roles and Compensation
SituationA computer software and services company’s compensation plan had three components: commission, product bonuses, and business plan objectives. The company’s sales staff was tasked with many activities that were unrelated to selling. Sales reps felt they didn’t have time to sell, be productive, or make more money with this added administrative burden. Because they were on a commission plan, they did not like the idea of being dependent on the “draw” much of the time.
DGM interviewed the firm’s sales director, VP of marketing, and representative sales staff. We identified the roles and responsibilities and time spent on each activity, confirming that the sales team was wasting time on non-sales activities.
Working with the client, DGM:
- Reallocated responsibilities to sales support staff and product managers
- Changed the commission plan to provide for greater account penetration
- Revised the product bonus to emphasize more profitable products
- Permitted sale representatives to modify pricing within profitability guidelines.
The firm’s sales force was able to direct time and energy to sales activities because they were relieved of “non-productive” work. They were able to penetrate existing customers and respond to referrals more quickly, resulting in higher sales.