The document discusses alternative commission models and pay for performance incentives. It provides examples of models used by different vendors, including Leanin' Tree, History & Heraldry, Special Thoughts, and Lang. It recommends that agencies and vendors collaboratively establish goals and compensation strategies. Incentives should be designed to change behaviors and increase profits for both vendors and agency representatives.

1. 2009 GHTA Conference
PAY FOR PERFORMANCE
(PHASE 2)
ALTERNATIVE
COMPENSATION MODELS

2. 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

3. 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

4. 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

5. Alternative Commission Models
Examples of Alternative Models
-Leanin’ Tree
-History & Heraldry
-Special Thoughts
-Lang

6. 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%

7. 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

8. 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

9. 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

10. 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

11. HISTORY & HERALDRY
HISTORY & HERALDRY

12. 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%

13. SPECIAL THOUGHTS

14. 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

15. LANG

16. LANG

17. Alternative Commission Models
INCENTIVE PAYOUTS?
IS IT MORE OR LESS PROFITABLE
TRADITIONAL SALES
CLOSEOUTS

18. 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%

19. 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

20. 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