When Rich Fairfield was hired as the first new publisher in 35 years at Trevose, Pennsylvania-based Advertising Specialty Institute
(ASI), a media company serving the promotional products industry, the sales group had been missing their budgets for several years. “They had years where they didn’t get commissions,” he says. “It was a little demotivating.”
Fairfield’s comment is an understatement. Budgets were being missed by up to 15 percent and so consistently at the $60 million company that reps became defeatist. “If they were behind they had no incentive,” he says. “If they didn’t think they could make it for the month or year, they knew that if they sold any more their numbers would still go up for next year. Their plan was set up so they didn’t get a commission unless they beat their budget.”
Fairfield, who started in January 2004, met with each of his sales people and, with their input, developed a new compensation plan based on a simple formula;a striking contrast to the original, more convoluted commission structure. “It’s a 2-1-2 plan. You get two percent for everything you sell, one percent if you hit the budget in the month, and another two percent if you hit the budget for the year.”
The moment he received applause during the sales meeting where the plan was rolled out, Fairfield knew he was headed in the right direction. Moral took off along with revenues. Despite taking effect in second half 2004, ad revenues were up 21 percent over 2003 by the end of the year, and were up another 19 percent for the first half of this year for ASI’s four magazines. “It drove them to work harder because they are self motivated. [The new plan] wasn’t threatening.”
One of the reps was behind $200,000 at the time the new plan went into effect. With the more motivating commission structure he beat his budget, eventually selling $1.8 million. “And this is b-to-b,” says Fairfield, “so everything is $2,000 and $3,000. And that’s a lot of $2,000 and $3,000 pages.”
Sales staff turnover quickly became a non-issue as well. Prior to the new commission plan, the sales office was a revolving door with a 20 percent turnover rate. According to Fairfield, there’s been no voluntary turnover since he started the new plan.