Relationship Between Sales Compensation & Pricing - Modern Distribution Management

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Relationship Between Sales Compensation & Pricing

Brent Grover: Sales compensation must be addressed for effective change to occur.

Brent Grover, who will present a free MDM Webcast on strategic pricing on Oct. 29, also recently wrote a feature article on the topic for MDM’s premium newsletter. Grover wrote about The Art of Strategic Pricing, where he talks about the roles of different departments in effective implementation.

Here’s an extra to that article, regarding changes that need to made to sales compensation practices so that pricing shifts are more likely to have the impact you are seeking:

Grover says: “We say that distributors cannot have a serious conversation about strategic pricing without including how their sales reps are compensated and managed in the same discussion.

“In many companies, incentive sales compensation has little effect on behavior, or even encourages the wrong behavior – more sales at lower margins. Compounding the margin challenge is a low-touch (or no-touch) approach to sales management, thinking that the incentive compensation plan is somehow ‘managing’ the sales force. High-performance sales pros, like great athletes, need training and coaching to reach and maintain stretch goals.”

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