Alternative Compensation

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2009 GHTA Conference Presentation

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<ul><li> 1. 2009 GHTA Conference PAY FOR PERFORMANCE (PHASE 2)ALTERNATIVE COMPENSATION MODELS </li></ul> <p> 2. Alternative Commission Models Pay for Performance Phase 2 2008 Summary/RecommendationsExamples of Alternative Models -Leanin Tree -History &amp; Heraldry -Special Thoughts -LangRep Commission Incentive PayoutCloseout Commission Payout 3. Alternative Commission Models2008 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 Models2008 Summary/Recommendations Recommendations Agencies &amp; Vendors CollaborateJointly establish goals/objectivesDefine ExclusivityCreate a mutual compensation strategyShowsBe selectiveBe effective 5. Alternative Commission Models Examples of Alternative Models -Leanin Tree -History &amp; Heraldry -Special Thoughts -Lang 6. Alternative Commission ModelsLeanin Tree COMMISSION STRUCTURE*25% Initial Order*20% Field Reorders*90 Day telemarketing windowINCENTIVE TO AGENCY*10% growth 2%*16% growth 3%*22% growth 4% 7. Alternative Commission ModelsLeanin 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 &amp; HERALDRY BUSINESS FOCUS----RACK SALESCOMMISSION*15% Initial Order*20% All ReordersFEES *H &amp; H accepts NO agency or show fees 10. Alternative Commission Models HISTORY &amp; HERALDRY COMMISSION EARNINGS-- $200,000 SALES30%/70%Comm $ 9,000 + $28,000 = $37,00020%/80%Comm $ 6,000 + $32,000 = $38,00015% straight Comm $30,000 + agency fees 11. HISTORY &amp; HERALDRY HISTORY &amp; HERALDRY 12. Alternative Commission ModelsSPECIAL THOUGHTS ALWAYS CHANGING1. 6 Months15% base $ 5k +4% $ 6k +5% $10k +9%2. 6 WeeksDisplay Obj15% base 3 displays +$ 50 6 displays +$100 9 displays +$500 3. 3 month---order size15% baseAny order &gt;$100 +10% 13. SPECIAL THOUGHTS 14. Alternative Commission Models LANG REGIONAL SALES MODEL &amp; 60% Calendars 47%= Ivystone, Raymond Bates, Ned Stack 7 telemarketing Assessed 8 models.goal is to broaden appealOld ModelCollaborate w/Agency @ acctsAgree which accts covered best (rep vs tele)Periodically assess the coverage &amp; adjust 15. LANG 16. LANG 17. Alternative Commission ModelsINCENTIVE PAYOUTS?IS IT MORE OR LESS PROFITABLETRADITIONAL SALES CLOSEOUTS 18. Alternative Commission Models INCENTIVE ON REGULAR SALES COMMISSION INCENTIVECRITICAL to ESTABLISH GOALS UPFRONT Sales Profit@40% Comm. Net Gain $10,000$4,000 15% / $1,500 $2,500 / 25%$11,000 $4,40016% / $1,760 $2,640 / 24% $12,000 $4,88017% / $2,040 $2,760 / 23% $13,000 $5,20018% / $2,340 $2,860 / 22% $15,000 $6,00020% / $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 cogIF @ 20% COMMISSION &amp; 25% DISCOUNT$75,000 60,000 = $15,000 $15,000 comm--$0 breakeven 20. Alternative Commission Models PAY for PERFORMANCEPART 2Recommendations:*#1 CRITICAL STEP---Collaborate on goals---*Vendors &amp; 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 </p>

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