A distribution company pays its salespeople entirely though commissions on sales. The philosophy is “you eat what you kill.” Salespeople keep their accounts permanently after making a sale. Many tenured salespeople earn several hundred thousand dollars a year, mostly by selling to long-time customers who provide a continuous and stable source of revenue and income. These veterans are basically order-takers who feel no urgency to develop new business. Yet as market growth slows, the company can’t attract and retain new salespeople because it’s too hard to build a sufficient book of business to earn a living. Annual salesforce turnover is 57%. Sales leaders want to realign accounts more equitably across salespeople to give newer salespeople a better chance to succeed while providing customers with better service. But they fear this will anger top earners and prompt them to leave and take business with them.
Is Your Sales Force Addicted To Incentives?
A distribution company pays its salespeople entirely though commissions on sales. The philosophy is “you eat what you kill.” Salespeople keep their accounts permanently after making a sale. Many tenured salespeople earn several hundred thousand dollars a year, mostly by selling to long-time customers who provide a continuous and stable source of revenue and income. […]
July 11, 2011
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New!
HBR Learning
Marketing Essentials Course
Accelerate your career with Harvard ManageMentor®. HBR Learning’s online leadership training helps you hone your skills with courses like Marketing Essentials. Earn badges to share on LinkedIn and your resume. Access more than 40 courses trusted by Fortune 500 companies.
Learn how to communicate with your customers—strategically.