Sales reps receive bonuses for opening new accounts or selling new products.
"As a sales rep, I never got extra commissions for opening new accounts," laments Bruce Shapiro. Now that he has his own school-supplies company, Creative Works, in Northbrook, Ill., Shapiro rewards reps who break new ground. Last year his 50 independent reps received a bonus of 2%, on top of their regular 5% commission, for opening new accounts. They also earned an extra $1 a case on the opening order of any new products sold to new or established accounts.
"I paid out thousands in extra commissions," says the CEO. "Did we give away money we didn't have to? That's hard to measure, but I do know the enthusiasm is there. I feel they are pushing for that additional item."
In fact, sales of the company's nine products -- unbreakable scissors, rulers, and other school tools in bright colors -- jumped from about $700,000 in 1991 to an expected $3 million in 1992. Creative Works expanded its customer base to 200 accounts in 1992, from 80 the previous year.
"We know reps won't neglect the old accounts because we've encouraged them to go back and get the line extension," says Shapiro. "Reps need that line extension, and so do the retailers." And, while two new products made Shapiro's top five in sales, the original three products (the scissors, a compass, and a protractor) are still his three best-sellers.