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Friday, November 02, 2012

FUSE Talks Wholesaler Pay

News summary by MFWire's editors

Neil Bathon’s research firm latest report is connected to an issue all wholesalers should be interested in: how they get paid.

According to a FUSE Research Network report published this week, around 41 percent of surveyed firms have a net sales commission component as part of their compensation structure for wholesalers.

The survey also found that almost every surveyed firm as the traditional base salary and gross sales commission as part of the formula for paying wholesalers.

“Aligning wholesaler compensation with the overall business goals has been a key [challenge] facing heads of distribution,” stated Bathon, the founder of FUSE Research Network.

For more details, read the press release below.

Company Press Release

Wholesaler Compensation is Critical Fund Firm Adaptation

Higher Velocity & Lower Margins Cause 41% of Firms to Add Net Sales Component

Wholesaler compensation is one of the most challenging components of sales management. Nearly 41% of surveyed firms have implemented a net sales commission component to their wholesaler compensation structure, according to recently concluded research by FUSE Research Network in its BenchMark series piece titled “Costs of Distribution 2012.”

“Aligning wholesaler compensation with the overall business goals has been a key challenging facing heads of distribution,” noted T. Neil Bathon, Founder of FUSE Research Network. “We believe it is one of the most important responsibilities of sales management, as issues like the increased velocity of assets is pressuring organizations to better manage their distribution costs.”

Nearly every firm in the survey audience implements a traditional base and gross sales commission structure as a part of its wholesaler compensation. But increasingly firms are looking to other metrics to measure the success of their external sales force, and net sales is one of the top choices of our survey audience.

“Compensation accounts for a disproportionate part of a distribution budget. The median wholesaler earns $300,000, and nearly two-thirds of that comes via commissions. For the average Tier 1 firm with 75 field sales people, commissions account for $15 million or nearly 40% of total salary and benefit distribution budget dollars,” said Mike Evans, Partner at FUSE. Mike added, “In today’s competitive environment, properly synching overall business goals with the right behaviors of the salesforce requires that most firms update their compensation structure by utilizing non-traditional metrics.”

Sales management has seen the dramatic change over the last 3-5 years as new analytical tools and enhanced data have empowered managers to refine segmentation and targeting so as to increase productivity and lower costs. Compensation is just one of many topics covered in the research. It also includes comparative items such as budgeting levels, headcount, resource management, hiring trends, among other relevant topics topics.

FUSE partnered with Lisa Cohen, CEO of Momentum Partners, to complete the research.  

Edited by: Ben Geier

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