Built compensation plans aligned to revenue/profit
CLIENT: A leading Canadian manufacturer of aftermarket automotive parts.
IMPACT: The sales funnel was increased by 20%, resulting in a 5% revenue growth within the first six months.
ISSUE: The client was operating under a fixed compensation plan that failed to motivate their sales team to either expand their existing customer relationships or attract new clients. Additionally, there were no metrics linked to project profitability, leading the sales team to negotiate deals often below the required minimum margins.
APPROACH: We first performed market research to identify successful compensation models that aligned with strategic growth objectives aimed at both increasing the existing customer base (share of wallet) and acquiring new customers, while also ensuring that minimum margin standards were met for each project. We then created a variable-based compensation plan tailored to each sales function. Business development teams were incentivized based on sales activities and funnel metrics, as well as targets for new customer revenues. Key account managers received rewards for meeting targets related to account growth. All members of the sales team were evaluated against gross margin objectives. Additionally, we crafted a clear and actionable variable payout plan for the organization.
OUTCOME: We revamped the old fixed salary compensation plan into a measurable, variable-based model that effectively encouraged desirable sales behaviors. The sales team gained clarity on how their efforts translated into financial rewards, leading to a significant increase in productivity and results within the first six months.