Rewarding Balanced Sales
Your product line is broad, but your reps want to sell their old favorites. What do you do? Listen to Rudy Schlacher, CEO of $59-million Washburn International, in Vernon Hills, Ill., a company famous for its acoustic guitars. To grow profitably, Washburn must sell its other products (like professional audio equipment), too. To keep his 16 domestic salespeople tuned in to the full line, Schlacher offers this incentive: meet the goal for each of six product categories and earn an extra 1% commission "override" on all products sold that month.
After three months 20% of the reps earned the override; a year later 75% did -- with Schlacher's guidance. "If they've satisfied one goal, I encourage them to go on to categories where they've met only 40% of their goal, and where I have more stock,' he explains.
In 1992 the CEO paid about $120,000 in override commissions. U.S. sales grew 31%, or by $10 million; Schlacher attributes $1 million of that growth to the incentive program. And inventory turnover is up 20%, saving $70,000 a year in interest costs. Instead of sitting on inventory and back orders, Schlacher says, "I'm able to deliver more product to my customer.'