Assuming a reseller organization has one entrepreneur and at least one sales staff, who do you think should be more responsible in earning profits for the company?
It is a common occurrence, and something which one PC company channel head said was one of the biggest hurdles to profitability and long-term sustainability of business. It is that the entrepreneur facing the risk of losing a customer often decides in favor of giving a considerable discount. It’s something that the junior sales staff may not be authorized to do, or in case of someone fresh from management training, something that he has been taught not to be doing, doing business at the cost of profits.
Even when passing on credit, it’s often the CEOs who take the call, with the onus of collections falling on members of staff who may have preferred due diligence of the customer’s worth before providing credit.
Whether the sales staff decide to toe the line of the customers or common sense, the consequences they face are far worse than what the CEO faces in the short term, considering that a percentage of their take-homes depend on the sales commissions. The entrepreneur can always get his money back on another deal.
I therefore have a case here for more incentives and sales-driven schemes specifically for the sales staff, letting the sales people keep the percentage which otherwise would have gone to the undeserving customer. Behavioral scientists say that considering native ability, experience, education and training, high productivity comes about neither naturally nor by accident. Sales people need motivation to achieve targets – that could be a better way of being profitable than passing on profits to customers.
Likewise, more vendors should begin rewarding individual sales people in partner organizations than CEOs.