Wren Zhang· Job Architecture Lead, Silverline Media
Posted in Sales Compensation ·
Our account managers at a food ingredients supplier in the Netherlands, 48 people, had a plan with five measures: revenue, gross margin, new product sales, customer visits logged and days sales outstanding. Each had a weighting between 10% and 35%.
When I interviewed them, most could name two of the five. Nobody could tell me what they would earn from an extra 100,000 euros of sales. The visits measure was being met by logging coffee meetings.
This year the plan has two measures, gross margin in euros at 75% and new product revenue at 25%. Collections went to credit control, where it belonged. Margin is up 4% on last year in a flat market. My conclusion is that every measure beyond the third is there to make a head office function feel represented.
1 helpful · 4 replies · 7 views · 6 following
Global Mobility Manager, Kestrel Aerospace
Fully agree on the politics. Each extra measure in our plan could be traced to a specific executive who wanted the sales team to care about their priority. We adopted a rule of no more than three measures and none weighted below 20%, and it has been a useful thing to point at when someone asks to add a fourth.
Total Rewards Manager, Steinbach Industrie
Benefits Analyst, Silverline Media
On the margin point: ours have discretion on price within a band, and we use a standard cost fixed for the year, so swings in raw materials do not reach the plan. Without those two things I would not have picked margin either.
HR Business Partner, Northwind Logistics
The test of asking sellers what an extra sale is worth to them is one I am going to borrow. I suspect most of our 150 would fail it, and we have only three measures. Simplicity is not just the count. Ours has a matrix linking two of them that nobody can do in their head.
