Companies are being forced to totally rethink their business model and marketing strategy as a result of an extremely challenging economic marketplace. Stakeholders and boards are demanding increases in the bottom line. Because of the economic stagnation, companies are finding it increasingly more difficult to increase prices, and are facing market pressures to drop prices even further.
In the past, as revenue increased, sales commission plans built on revenues actually created an unintended, yet, de facto increase in commissions. This invisible increase in compensation resulted from sale of the same units with increased costs. The economic situation has put a halt to run-away sales and price increases, and actually exacerbated the pressure on margins. More importantly than before, it is critical that companies take a hard look at their sales commission plans, and determine if the company and their sales force are actually being well-served by a pay program that in all likelihood needs to be revamped.