Most distributors have already eliminated the under-performers within their organizations and slashed truly non-essential costs in reaction to today’s economy.  Now reductions to the sales force carry with them the legitimate concern that as personnel is eliminated revenues will be as well.  The question many distributors are asking is, “How can I reduce costs without losing sales?”  For many distributors it is challenging to even understand how to look at the risks.

With the recent attention in this industry given to strategic pricing, distributor who change their pricing structures must consider developing new sales compensation plans that reward improved profits.  Before attempting a change, consider all appropiriate structures and take steps to avoid implementation pitfalls.

Here’s a question for you: Suppose you have one sales rep who sold $2 million worth of product last year and another who sold $1 million last year at the same profit margin. Who should have been paid more? If you said the one that sold $2 million, you are in the majority and may benefit by reading the rest of this article.

Many wholesale distributors become so frustrated with their sales force that they resort to paying directly for activities instead of results.  Others get into trouble by favoring percentages over gross profit dollars.  Avoid these common traps by making sure the proper prerequisites are in place for your sales compensation plan.