Alternative Compensation
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Alternative Compensation

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2009 GHTA Conference Presentation

2009 GHTA Conference Presentation

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Alternative Compensation Alternative Compensation Presentation Transcript

  • 2009 GHTA Conference PAY FOR PERFORMANCE (PHASE 2) ALTERNATIVE COMPENSATION MODELS
  • Alternative Commission Models Pay for Performance Phase 2 2008 Summary/Recommendations Examples of Alternative Models -Leanin’ Tree -History & Heraldry -Special Thoughts -Lang Rep Commission Incentive Payout Closeout Commission Payout
  • Alternative Commission Models 2008 Summary/Recommendations Issues Gift Venues down 25%+ Vendors cannot accept (-25%) Agency reps need to earn more Trade Shows Impact of Discounts Incentive Programs
  • Alternative Commission Models 2008 Summary/Recommendations Recommendations Agencies & Vendors Collaborate Jointly establish goals/objectives Define Exclusivity Create a mutual compensation strategy Shows Be selective Be effective
  • Alternative Commission Models Examples of Alternative Models -Leanin’ Tree -History & Heraldry -Special Thoughts -Lang
  • Alternative Commission Models Leanin’ Tree COMMISSION STRUCTURE *25% Initial Order *20% Field Reorders *90 Day telemarketing window INCENTIVE TO AGENCY *10% growth 2% *16% growth 3% *22% growth 4%
  • Alternative Commission Models Leanin’ Tree INCENTIVE/MARGIN $100,000 BASE @40%GM (this % is fictional) INCENTIVE TO AGENCY *10% growth 2%---$110k---$2,200/$4,000 *16% growth 3%---$116k---$3,480/$6,400 *22% growth 4%---$122K---$4,880/$8,800
  • Alternative Commission Models Leanin’ Tree INCENTIVE/MARGIN $100,000 BASE @40%GM (this % is fictional) INCENTIVE TO AGENCY *10% growth 2%---$110k--- $2,200/$4,000 *16% growth 3%---$116k--- $3,480/$6,400 *22% growth 4%---$122K--- $4,880/$8,800
  • Alternative Commission Models HISTORY & HERALDRY BUSINESS FOCUS----RACK SALES COMMISSION *15% Initial Order *20% All Reorders FEES *H & H accepts NO agency or show fees
  • Alternative Commission Models HISTORY & HERALDRY COMMISSION EARNINGS-- $200,000 SALES… 30%/70% Comm $ 9,000 + $28,000 = $37,000 20%/80% Comm $ 6,000 + $32,000 = $38,000 15% straight Comm $30,000 + agency fees
  • HISTORY & HERALDRY HISTORY & HERALDRY
  • Alternative Commission Models SPECIAL THOUGHTS ALWAYS CHANGING 1. 6 Months—15% base $ 5k +4% $ 6k +5% $10k +9% 2. 6 Weeks—Display Obj—15% base 3 displays +$ 50 6 displays +$100 9 displays +$500 3. 3 month---order size—15% base Any order >$100 +10%
  • SPECIAL THOUGHTS
  • Alternative Commission Models LANG REGIONAL SALES MODEL & 60% Calendars 47%= Ivystone, Raymond Bates, Ned Stack 7 telemarketing Assessed 8 models….goal is to broaden appeal Old Model Collaborate w/Agency @ accts Agree which accts covered best (rep vs tele) Periodically assess the coverage & adjust
  • LANG
  • LANG
  • Alternative Commission Models INCENTIVE PAYOUTS? IS IT MORE OR LESS PROFITABLE TRADITIONAL SALES CLOSEOUTS
  • Alternative Commission Models INCENTIVE ON REGULAR SALES COMMISSION INCENTIVE CRITICAL to ESTABLISH GOALS UPFRONT Sales Profit@40% Comm. Net Gain $10,000 $4,000 15% / $1,500 $2,500 / 25% $11,000 $4,400 16% / $1,760 $2,640 / 24% $12,000 $4,880 17% / $2,040 $2,760 / 23% $13,000 $5,200 18% / $2,340 $2,860 / 22% $15,000 $6,000 20% / $3,000 $3,000 / 20%
  • Alternative Commission Models INCENTIVE CLOSEOUTS COMMISSION INCENTIVE $100,000 IN CLOSEOUT MERCHANDISE (ASSUMES A 40% GROSS MARGIN / $60,000 COST) IF @50% OFF PRICE = ($10,000 loss) $50,000 sales less $60,000 cog IF @ 20% COMMISSION & 25% DISCOUNT $75,000 – 60,000 = $15,000 $15,000 comm --$0– breakeven
  • Alternative Commission Models PAY for PERFORMANCE—PART 2 Recommendations: *#1 CRITICAL STEP ---Collaborate on goals--- *Vendors & Agencies -Go through the math -Be sure the incentive is one that will CHANGE BEHAVIOR Increase vendor profits Increase agency rep commission -Be realistic …. Share goals with reps