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Alternative Compensation

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2009 GHTA Conference Presentation

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Alternative Compensation

  1. 1. 2009 GHTA Conference PAY FOR PERFORMANCE (PHASE 2) ALTERNATIVE COMPENSATION MODELS
  2. 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. 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. 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. 5. Alternative Commission Models Examples of Alternative Models -Leanin’ Tree -History & Heraldry -Special Thoughts -Lang
  6. 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. 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. 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. 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. 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. 11. HISTORY & HERALDRY HISTORY & HERALDRY
  12. 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. 13. SPECIAL THOUGHTS
  14. 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. 15. LANG
  16. 16. LANG
  17. 17. Alternative Commission Models INCENTIVE PAYOUTS? IS IT MORE OR LESS PROFITABLE TRADITIONAL SALES CLOSEOUTS
  18. 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. 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. 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

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