Are You Promoting the Right Kind of Sales?

By Andrew Paparozzi
In May 5, 2009

In our last post we talked about
value added, what it is, and more importantly, why you should care about it.
The next question to ask: Is your value added where you want it to be?

The graph below tracks value added
per salesperson for the top 20% (black line) and bottom 20% (red line) of NAPL
Performance Indicators
participants.
Figures are 12-month moving averages, with the top 20% and bottom 20% defined
for the 12 months ending in December 2008. (Value added per salesperson one
of 13 vital-few metrics in
NAPL Performance Indicators.

Metric Tip 5

As the graph shows, value added
per salesperson declined progressively through 2008 for the bottom 20% of the
Performance Indicators group.

Does your value added per
salesperson look like the red line? If it does, maybe your sales compensation
structure isn’t targeting the right sales. It isn’t uncommon: Over 70.0% of
participants in the soon to be released NAPL Sales Representative and CSR
Compensation Study, Second Edition
use gross
sales as the basis for determining sales commission, while only 17.8% use value
added and 4.7% use profitability. Yet many of those companies recognize the
need for their sales reps to focus more on consultative/solution-based selling
instead of traditional transactional selling.

What can we learn from all of
this? One lesson is that unless sales compensation is structured to encourage
selling projects with additional value added, sales people will almost always
chase after the easier transactional sales, as oppose to the much difficult
consultative/solution-based sales.

In an environment where
structural changes are making our industry more competitive than ever and
margins continuing to shrink at an alarming rate, ignoring value added in sale
representative compensation can be harmful to your bottom line. 

For more information on effective sales
compensation, contact NAPL Vice President and Consultant Mike Philie at 410-489-7188,
mphilie@napl.org.

Andrew Paparozzi

Epicomm's Andrew Paparozzi, Vice President/Chief Economist, is well-known for his accurate and thoughtful discussions on the economy and US commercial printing industry. A foremost author and speaker on economic business trends in the printing industry, Paparozzi heads Epicomm's Printing Economic Research Center.

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