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Yes, Sales Compensation IS a Pricing Priority

In the pursuit of pricing excellence, where does re-engineering your company’s sales compensation scheme appear on your list of pricing priorities and initiatives? Is it in the Top 5? Is it in the Top 10?

Is “aligning sales compensation” even on your list?

Of course, some will say that the sales comp plan is “outside the scope” of pricing. They’ll claim that it’s an issue for sales management, or even human resources. And, they’ll likely advise pricing leaders to just stay in their box and deal with the numbers in front of them.

Boy…I’d pay money to see someone try to make that case to Bob Vezeau 🙂

Bob Vezeau is the Vice President of Strategic Pricing for the $5B corrugated packaging division of WestRock. He’s someone who takes the “strategic” part his title very seriously and actually practices a lot of what we preach here at PricingBrew. And to Bob, the firm’s revenue-based sales comp plan was an anchor on their pricing efforts:

“One of the things we identified early on was that the commission plans for most of the reps were based on gross sales. In other words, they were being paid to sell volume. And that was a major drag on all of our pricing excellence efforts.”

So, Bob and his team worked to redesign the company’s sales compensation platform to better align with pricing excellence. And in an Expert Interview for the PricingBrew Journal, Bob talks at-length about the approaches they took, the obstacles they ran into, and the hard lessons they learned along the way.

It certainly wasn’t easy. And it wasn’t always pretty. In fact, it took more than one attempt to actually make it happen. Nevertheless, Bob and his team persevered—iterating their approach and working through the issues to implement a sales compensation scheme that was no longer working against their pricing efforts and objectives.

And to my mind, this is the epitome of strategic pricing.

As we’ve said many times before, to a strategic pricing professional, anything and everything that affects pricing outcomes, positively or negatively, is considered to be “in scope”. And there are few things that can have as much negative influence on pricing outcomes as a sales compensation plan built around top-line revenue alone.

If you haven’t done it before, tackling sales compensation can seem pretty daunting. But when you can learn from people who’ve already “been there” and “done that”—people like Bob Vezeau—it becomes a lot easier to put “aligning sales compensation” in its proper place on your list of pricing priorities.

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