Idea Exchange - October/November 2010

Pay Sales Staff Effectively
What is a good ratio between salary and sales incentives for sales managers and associates? Rick Pontz, owner of The Lawn & Garden Performance Group LLC and a veteran business development expert in the lawn and garden industry, offered his perspective (in a recent eNewsletter) to retailers struggling to achieve a balance between fair and competitive sales compensation.

The average ratio in the lawn and garden industry is 80:20 salary to sales incentives. In cases where the ratio is 70:30 salary to sales incentives, retailers report that the salesperson proves more influential in customers’ purchase decisions.

Alternatively, sales managers and associates who are paid 90 percent of their compensation in salary more often are employed by businesses with largely stable and consistent sales. The most important determination is the role sales representatives play.

What is their role? What is the nature of the product being sold? What is price competition in the marketplace like? What is customer loyalty like for the product or business?

Consider the requirements for sales managers and associates to reach success and the amount of influence they have on customers’ purchasing decisions. The more important the sales manager or associate is in the customers’ decision to buy, the higher a business should make the sales incentive component of compensation.

Deal with Late Payments
Some customers have a hard time paying their bills. In a recent article, Anne Field, an award-winning freelance writer who has covered business topics for websites and publications such as New York Times, Business Week and CNNMoney.com, offered these suggestions for businesses seeking payment from customers, especially from long-time customers who usually pay their bills on time.

First, tread lightly when dealing with these customers. They simply might be going through a hard time. Also, determine the customer’s lifetime value to your business.

Next, talk to the customer face-to-face. Try to pinpoint the reason for the late payment. Perhaps the customer has non-paying clients or a cash flow issue.

Once you determine the cause of the late payment, decide on a solution. Consider alternative payment plans or payment in-kind. Whatever solution you choose, it should offer at least two methods of payment.

Last, talk to someone with authority over payments. Businesses want to ensure the person can push payments through quickly.

Use Time, Money Wisely
Time really is money, according to Scott Allen, a 25-year veteran technology entrepreneur and executive, in a recent article. By taking a hard look at the value of their time, Allen said people can make changes that put more money in their pockets and improve their quality of life.

1. Use appropriate communication channels. For example, use e-mail to communicate small chunks or lists of information. The telephone or in-person communication provide better results for negotiations or building rapport.
2. Buy the right tools for the job. New software might seem expensive, but if it saves time then it can pay back the original cost.
3. Work in “batch mode.” Multitasking does not work because people can focus successfully on only one thing at a time. Working in “batch mode” means a person sets boundaries and works on one task for as long as reasonably possible, and then moves on to the next item.
4. Delegate appropriate tasks and empower others to finish the work.
5. Get seriously organized. Planning, organizing and tracking your time and actions cost time, but studies show that it almost always provides a net gain.

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Idea Exchange - October/November 2010

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