Think about the strategic importance of a particular product or service. Usually, there’s at least one product or service that is strategically more important to sell than others. But sometimes these products or services are outside the comfort zone of the reps, for one reason or another. We often hear: “We’ve got these new products we want people to sell. They’re really important, but the reps aren’t selling them because they’re focused on the current stuff or the core products. How do we motivate behavior there?”
A lot of times, the answer is weighting. It could be literal weighting of a commission rate, or it could be weighting through linking measures together. But it’s basically like product bundling. It’s saying: we’ve got some really good stuff here that our customers are not buying or our reps aren’t selling, but then we’ve got the stuff the reps are all going after. How do we get them to sell more of the stuff we want the company to sell?
There are two variables to examine here. You could look at the strategic importance for the company – on a scale of unimportant to very important. Then you could look at the difficulty for the rep to sell that, or the attractiveness of the rep to sell that product or that service, on a scale of not difficult to very difficult.
So very simply, the middle would be selling something of average difficulty and average strategic importance. That, call it a commission rate, represents a one. So average difficulty, average strategic importance is a commission rate of one. But then as it gets more difficult for the rep and more strategically important for the company, that’s where you really start to weight things up.
Several years ago we worked with a directory company (similar to the yellow pages advertising business). For years they sold advertising for the big book that ends up on your doorstep. Then they came up with online advertising through Yahoo or YellowPages.com. And they said, “We want to sell more online advertising.” But there were problems. It’s a different sales cycle and the advertising goes up immediately; customers didn’t have to wait for the book to publish. The company liked that better because they get immediate revenue and more immediate advertising for the customer.
The company knew strategically that’s where they were going in the future. But the reps wouldn’t sell it because all the money was in the yellow page books. So the company asked: “How do we get them to do that?”
Weighting was one answer. We looked at the strategic importance and we started to weight up the online advertising. The company made an investment in that online advertising. They were paying more dollars in incentive for online sales than they were for the published directory sales. And what happened? It pushed the company in the right direction and set the course for the future.
Weighting offers one way of sorting out those strategic priorities.
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