Manufacturing Today - Volume 18, Issue 2 - 11

MARK DONNOLO  |  COLUMN BY

ally adopts the plan more readily and
regards it as a tool for individual and
company-wide success.
Ultimately, meeting the objectives
of the plan means meeting the objectives of company leadership. The message is woven into the measurement.

Challenge Two: Motivating
Sales Reps through a Long
Sales Cycle

K AYS ENGINEERING

VOLUME 18, ISSUE 2 manufacturing-today.com

S ALES PERFORMANCE
N EWS

T OOLS

L EGAL

A LFAB INC.

Many manufacturing companies sell
products that require major capital
expense from the customer and have
a long sales cycle that can extend a
year or more. If the sales mix doesn't
account properly for several decision
makers within the account and the
long progression from lead to opportunity to conversion, companies are
likely to experience attrition of sales
team members. This can extend the
sales cycle even further.
Solution:  Sales incentive plans
need to have a balanced pay mix, setting base salary and target incentive
pay to keep salespeople engaged and
motivated during the sales cycle. This
can frequently mean that the pay mix
is shallower for long sales cycle roles,
for example, 80 percent base salary
plus 20 percent incentive pay. The incentive pay must be attractive enough
to make the time investment worthwhile for sales team members while
giving them enough salary to stay the
course; a difficult balancing act. The
salary must also consider any sales
training that new recruits must undertake before being given a territory.
Along the way, measurements in a
sales incentive plan may be focused
on progress toward a sale and not just
the sale itself. While a short sales cycle
plan may only focus on revenue, a long
sales cycle plan may include pipeline
creation, sales qualified opportunities
as well as the revenue that is generat-

S U P P LY C H A I N

and the incentives for the reps to be
compensated largely by the revenue
and gross profit in their own territory,
the company allowed the sales reps to
better control their own earnings potential. The overall company finances
were still critical, so the total company
profitability was still measured, but
not as large a percentage as the individual rep territory. This clarity greatly increased sales rep motivation,
awareness of performance needs and
positive results.
Incentive compensation planning,
while usually driven by sales leadership, sales operations and general
management with input from other key departments, should include
sales team members from an insight
and assessment perspective. Through
interviews, sales call observations,
focus groups and surveys, team members can weigh in on the positives and
negatives of current incentive plans
and share how their roles influence
the sales cycle. A sales organization
that has a voice in the assessment
and design of an incentive plan usu-

B UY AMERICAN

size of the organization, you will have
a mix of both "hunters" and "farmers"
balancing out your sales organization.
Solution: Working with an industrial manufacturing company that had
difficulty keeping the sales organization engaged and performance-focused, we determined that the sales
team didn't think they had control
over the elements they were measured against. Overall, the team members didn't have a clear understanding of how they were performing or
what incentive pay they could expect.
The original incentive plan included
measurement of EBITDA (Earnings
Before Interest, Taxes, Depreciation
and Amortization), but sales reps felt
they had no control over the company's expenses, and the measurement
of overall profitability had too many
variables. This lack of clear targets for
plan participants led to confusion, apathy and lack of retired quota.
The solution was to identify measures that could be influenced directly
by sales reps but would also drive company profitability. By shifting the focus

11


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Table of Contents for the Digital Edition of Manufacturing Today - Volume 18, Issue 2

Contents
Manufacturing Today - Volume 18, Issue 2 - Cover1
Manufacturing Today - Volume 18, Issue 2 - Cover2
Manufacturing Today - Volume 18, Issue 2 - 1
Manufacturing Today - Volume 18, Issue 2 - Contents
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Manufacturing Today - Volume 18, Issue 2 - Cover3
Manufacturing Today - Volume 18, Issue 2 - Cover4
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