November/December 2003
Best Practices: Sliding scale

Bringing sales in house and packaging booth space with magazine advertising has cut Allured’s sales compensation expense by 4 percent and nearly doubled booth sales

By Cathy Chatfield-Taylor

Two people are selling twice the volume that three people sold before, thanks to Allured Publishing Corp.’s sales compensation, motivation and retention strategy. Bringing sales in house and packaging booth space with magazine advertising has cut sales compensation expense by 4 percent and nearly doubled booth sales.

“The primary goal was to effectively service the customers,” says Theresa Lafontaine, President & CEO of the Carol Stream, IL, media company. “We had one person servicing the customer from the trade show standpoint, and another servicing them from the advertising standpoint. The customer only wanted to deal with one person.”

Allured produces five magazines and three trade shows for the cosmetic, personal-care, salon and spa, and perfume and flavor industries. In the salon market, advertisers and exhibitors are small- to mid-sized manufacturers of professional beauty products, equipment and accessories. In the past, two outside sales reps sold advertising on the coasts, and an inside salesperson sold the Midwest plus trade shows. Sales compensation expense was 12 percent of sales.

Three years ago, Allured decided to bring sales in-house and assign each customer to a sales rep who would handle all their needs. Lafontaine recruited two people internally and split the sales territory East to West at the Mississippi River.

Based on salary surveys from exhibition and magazine industry publications and advice from colleagues, Lafontaine set a competitive base salary, then set up commissions based on a sliding scale as an incentive to accelerate the dollar volume. Sales of up to $200,000 earn a 3 percent commission, between $201,000 and $400,000 earn 4 percent, and over $401,000 earn 5 percent.

The biggest change was adopting a policy of counting booth space toward the advertising frequency discount. Allured encourages customers to purchase space for shows and in magazines at the same time, thereby maximizing their discounts. The approach also ensures that the customer’s marketing needs are being met, as opposed to the salesperson’s space quota.

Awarding commissions based on dollar volume also discourages “cherry picking” accounts or cutting rates to make a sale. “For salespeople who are inclined to cut the price on one thing or another, this disincentivizes that process,” Lafontaine says. “The rate our customer gets is the one earned, the same as the customer before and the one after.”

The approach has not only decreased the cost of sales — sales compensation expense is now 8 percent of sales — but also increased the total dollar volume sold. Advertising sales have gone up 8 percent, and booth sales have increased 190 percent. (Lafontaine notes that the booth sales increase is due, in part, to the addition of a third show last year, which they sold without adding staff.)

An open-book management policy allows sales reps to see where they are and where they need to be. Contests held about every two months motivate the team and address problem areas. The contests challenge the team to bring in new customers, boost frequencies for current customers, focus on segments that are lagging, or simply keep up with paperwork. Rewards run the gamut from car washes to a Disney cruise. Other incentives include off-site training and company-wide recognition.

A solid management team and supportive environment also keeps people on track. With private offices, no call quota and flexible work hours, the salespeople assume responsibility for their own success. But, Lafontaine is quick to point out, they routinely meet or exceed their goals not only because they’re treated well, but also because they’re great salespeople. “They came in with the right attitude, the right spirit, and a desire to grow,” she says.