Sales Structure III

Because they are "top guns," the reps are experts at making themselves indispensable at their big-dollar accounts.

Imagine that you are selling a mature product line to a declining customer base.  As sales drop, you use the opportunity to upgrade your field sales force, terminating the lowest performers and spreading their accounts over the higher performing survivors.  Over time, the territories grow--along with average commission checks--even though company revenues are declining.   Because the are "top guns," the reps are experts at making themselves indispensable at their big-dollar accounts. They grow accustomed to sailing their yachts through the seas of poverty, believing that their performance is the only thing keeping the company alive.  At some point the CFO recognizes the problem and the company decides to "re-examine" the compensation plan.

Unfortunately, considering the pay plan in isolation at this point is ineffective at best and probably downright dangerous.  Only radical compensation reductions will bring selling costs back in line.   But such big changes would drive the best reps into the arms of your grateful competitors, taking "their' best accounts along with them.  

ACTION POINT:  Reorganizing a pay plan only is ineffective and dangerous.