I have experienced every incentive plan devised by manufacturers to get their reps to sell more. I have seldom seen these plans produce desired results.
Agencies are businesses that provide sales and marketing services; they are not simply salespeople paid on a commission basis. As businesses, they operate from a profit motive.
Reps know that selling is like planting a vegetable garden; they know that some of the vegetables will come up, but when and how many depends upon conditions over which they have no control.
At the same time, reps have to deal with their cash flow. How do I make payroll, pay taxes, healthcare, travel and entertainment expenses this month and support our people’s efforts next month? Oh, and if it is managed well, maybe there will be something left after the tax man gets through.
How can manufacturers effectively motivate their reps?
- Pay higher-than-standard commission rates.
- Pay shared market development cost. Draws on commission. Guaranteed income until offset with commission flow. Pay for activities.
- Pay commissions sooner rather than later.
- Discuss with reps how you can help their “business,” not just sell more products. More sales may just mean more cost (investment), and the rep has to look at the ROI.
Insanity has been defined as doing the same thing over and over again, expecting different results. Maybe someday manufacturers and reps alike will learn and venture forth on the new ground of motivation and cooperation — not just staying stuck in the same mud.
