Cichelli, senior vice president at the Alexander Group, offered his tips at WorldatWork’s Total Rewards 2013 Conference and Exhibition.
Here’s how he describes the three types of sales jobs:
|
Job Level→ |
Territory Rep |
Account Manager |
Key Account Manager |
|
Customers |
Many/Existing and Potential |
Several (20–30)/ |
Few (3–4) |
|
Orders |
Many/Small |
Average/Average |
Few/Large |
|
Sales Cycle |
Short |
Moderate |
Long |
|
Mix Leverage |
50/50/3x |
70/30/3x |
80/20/3x |
|
Pay Levels |
Market Matched |
10% Premium to Market |
15% Premium to Market |
|
Periods |
Annual Goal Paid Monthly Year-to-Date |
Annual Goal Paid Monthly and Quarterly Year-to-Date |
Annual Goal Paid Quarterly Year-to-Date |
|
Territories |
Alike |
Dissimilar |
Dissimilar |
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If you’re looking to improve your compensation program, it’s important to look at the base pay metrics for your organization. Join us for an informative webinar on July 9, and make sure your compensation program is optimized. Register Now
Solution Selling
Cichelli offers the following conditions needed for solution selling success (solution selling, he says, is “providing services” as opposed to “selling”):
- There is an enhanced product service offering.
- But existing product selling dominates.
- There are better margins with solutions.
- Buyers still buy products.
- Product selling has a short sales cycle.
- Solution selling has a long sales cycle.
|
|
Territory Rep |
Account Manager |
Key Account Manager |
|
Bold |
Higher Rate on Solution Sales OR Revenue Modifier for Solution Sales (based on % of solution sales) |
Certification Modifier (e.g., Solution Sell Revenue Modifier Sell and Reward Standard/Bundled Solution Purchases |
Solution Selling Account Planning Only Credit Solution Sales Reduce Credit Product Sales |
Pricing and Margin Improvement—Conditions
Under the conditions below, use the pricing and margin improvement suggestions in the table, Cichelli says.
- Sellers can influence price.
- Product mix can influence margin.
- Customer type can influence profitability.
- Contract length can influence profitability.
His recommendations for pricing and margin improvement at different levels:
|
|
Territory Rep |
Account Manager |
Key Account Manager |
|
Bold |
Price Realization Gross Margin |
Revenue/Price No Credit for Below Price Objective |
Reward with No Credit for Below |
Don’t miss our informative webinar on July 9, when we’ll discuss the key types of metrics to use when you’re trying to determine whether your salary ranges are appropriate for your organization. Learn More
Long Sales Cycle
Quota-based systems don’t work well with long sales cycles, says Cichelli. Under the circumstances listed, he recommends the approaches outlined in the table.
- Four months and longer sales cycle
- Difficult to predict sales events
- Lumpy orders (small, big)
- Customer-driven purchases (not seller-driven)
|
|
Territory Rep |
Account Manager |
Key Account Manager |
|
Bold |
Sales Progression Incentives Contract Signing Award |
Contract Signing Award/with Declining Commission (Paid out over Length of Contract) Account Outcome KSOs (Key Sales Objectives) |
Contract Signing Awards Reward with Contract Length Modifier Account Planning KSOs |
Dissimilar Revenue Types
With dissimilar revenue types (see typical list below), consider the options in the table, Cichelli suggests.
Revenue types:
- Purchase
- Rental
- Services
- Usage
- Blend of different types
|
|
Territory Rep |
Account Manager |
Key Account Manager |
|
Bold |
Stand-Alone Rates for Each Revenue Type Modifier for Preferred Revenue Outcomes |
Modifier to Reward Preferred Strategic Revenue |
Account Value Rewards Market Share Incentives Account Plan KSO Sales Outcomes |
In tomorrow’s Advisor, more of Cichelli’s tips, plus an introduction to Compensation Metrics: How to Gather and Calculate Key Data so You Can Pay Appropriately.