Compensating the Sales Force: A Practical Guide to Designing Winning Sales Reward Programs, Second Edition

This book deserves Two passes while you read it. First pass is to grasp the performance element of 2X and 3X payout rates which advance payouts at different pay rates (slopes). Author gives sage (expert) advice on preventing Lottery win scenario where rep makes big pay check then coasts or bails out on your company. Key point to remember is we as the employer are financing commissions in advance of receiving full payment or “in grievous error” paying out too much too early. For Example 1X payout is 40 degree upward angle of increasing sales to quota, then 2X above quota is 25 degree upward angle, with 3X payout at possible 15 degree angle without a limit and with extra spiffs for over achiever, such as company paid assistant or even a dedicated team, possibly a leased company car for our Babe Ruth home-run 3x leader. Tracking all-star Reps as Cost Center helps clarify what they really cost, why, and how much really great revenue each brings. * Remember the details! Only pay amount due under Accounting’s Revenue Recognition Rules [money received in a period that it’s no longer returnable because that stage of delivery is completed. ie paid in April, Finished in May, then Funds Recognised as non-returnable after 30 days or July 1] According to GAAP & Accounting Rules. ** When rep leaves the only cut of money due is what employer received “after” revenue is non-returnable, might be after end of next month after completion. ** As when rep leaves another must takeover the account, re-win the relationship and get paid for what the new rep must complete in remaining parts of the deal. Also take a serious look in the separate publication “Sales Almanac” annual editions to see how other companies are paying, benefits etc. FYI a 2024 sales comp almanac is using 2023-2022 data, 2023 almanac is 2022-2021 data, etc…. Each of David Cichelli’s works are a serious winner on the details of designing High Performer Sales Compensation Plans. *** Never mess with your Babe Ruth home-run hitters, just allocate the extra funds to enable both retention by providing what they need & growth of your revenue stream. When plan does change for your Babe Ruth’s ALWAYS OVERRIDE the first 60/90/120 days so they have NO DROP in pay NO LOSS IN MOMENTUM during the change. Huge Thank You is owed to author David Cichelli in Compensating The Sales Force & Annual Sales Almanac. These are the genuine recipe for success in major account sales. Thank you Sir! Semper fidelis, DC