Getting Aligned

This is a direct measure of income at risk...

Understanding the exhibit below is essential to seeing that their are countless options in sales compensation plans and that market share gain or loss is not related to the sales compensation plan.

Each point on the scatter diagram represents a single distributor survey respondent.  The horizontal axis represents salary as a function of total compensation and runs from zero (100% incentive) to 100% (all salary).  This is a direct measure of income at risk: 100% salary indicates there is nothing at risk; zero salary indicates that all of the compensation is at risk.

The vertical axis portrays the respondents market share gain or loss relative to industry growth provided by their trade associations.  The values run from -10% to +10%; the bold line in the middle reflects no change in market share.

To validate that the at-risk component relative to total compensation is irrelevant to market share gain or loss, simply sleet any range on the horizontal axis and take note that the there is a nearly identical number of responders below and above 0%.

ACTION POINT: If there had been any relationship between share gain and incentive structures, it would have appeared as a concentration of businesses on the market share gainer side without a corresponding concentration on the market share loser side.