Winning Strategies: Taking the Mystery Out of Outside Sales Compensation

Print and sign shop owners are always seeking the ideal compensation plan for their outside sales representatives. A few years ago I published a guide to educate print and sign shop owners on the various methods I have seen in the graphic arts industry. Throughout the guide, I give my recommendations that will help you to craft your ideal compensation plan.

One caution: A well-written compensation plan will not ensure a sales representative’s success; however, that plan should be fair to reward your sales staff for their efforts. Changing a compensation plan for an existing salesman will not automatically change the way they perform although you may be able to change their habits.

Good marketing, top-notch training, coaching, regular sales meetings, a well-defined sales process along with a compensation plan that attracts and rewards sales representatives are the keys to sales success.

Print owners who are moving into the digital print world for the first time, or from the traditional commercial printing world, are usually clueless on how to compensate their sales staff in selling digital print jobs. Their perception is that these digital jobs may be smaller or harder to sell. In reality, we have found just the opposite to be true. The average digital print job is over $1,500 plus many jobs are repetitive or part of an on-going print marketing program. Some jobs such as 401K statement generation are either monthly or quarterly. Programs can be developed to add special incentives for your sales staff to be on the lookout for digital print jobs from their regular customers.

Sign owners who want to grow are ever increasingly looking to add a sales person to their operation.  There is very little sign industry information on finding, hiring and compensating outside sales representatives. 

The guide defines the various compensation options that exist in the graphic arts industry. Most owners modify their compensation program every few years as new issues and incentives are needed to retain sales representatives and hire new ones. Keep in mind that most owners of printing and sign companies desire full commission programs because their sales costs will always stay in line with revenue generated. On the other hand sales representatives today more than ever want either to be paid a guaranteed salary or a draw plus commissions to minimize their risk and provide a steady income stream

Based on my consulting experience, I have seen four basic types of compensation plans in the graphic industry plus many options within each as far as reimbursing expenses, benefits offered and bonuses:

1. Salary only
2. Salary plus commission
3. Commission only
4. Draw against commission

Each type of compensation plan has its plusses and its minuses. Some work better for brand new sales people and others work best for seasoned sales staff. Many companies start new sales people on a salary and after a probation period which can vary from three months to twelve months switch to one of the other plans.

One large issue that I have seen time and time again is that owners have different plans for different sales people. Usually this happens as a result of why and when they were hired. First off, the sales people talk amongst themselves which leads to mistrust of management; secondly, it’s simply not fair for all and lastly it’s hard to administrate two or three different plans.

No matter what sales compensation plan you implement, you need to control the total cost of your sales compensation. You need to provide the proper incentives that reward your sales staff when quotas and goals are met or exceeded.

Profitable shops keep their sales costs at no more than 15% of their total sales. Costs include:

·         Compensation, which includes all salaries, bonuses and commissions, paid out to sales representatives and sales managers.

·         Company payroll taxes paid for sales representatives and sales managers.

·         Company paid benefits for sales representatives and sales managers and include medical, dental and life insurance, workman’s compensation, pension contributions, 401K contributions, profit sharing etc.

·         Expense allowances or reimbursements for such things as cell phones, client lunches, client gifts etc.

·         Car allowances or reimbursements.

You must realize you have other sales costs such as inside support staff, sales meetings, sales training, marketing specifically designed to back up your outside sales effort and most important your time if you are acting as the sales manager.

My complete “Owner's Guide to Outside Sales Compensation” is available to order on my website www.mitchevansconsulting.com.