Pay Plan

When I first got into this business many years ago, yes we got payed for service contracts. But no more.

We get paid another 10% of GP if we sell a service contact, but no ongong commissions.
I keep begging for it as it would keep the more experienced reps handcuffed to a good paying job.

LETS GO OUTSIDE ON THIS ONE

This is a big issue where I work. The sales force wants service to give everything away and make commission on the service they sell. They (sales) reduce our cost per copy to zero profit to get their sale. Why can’t service keep the $$$ for the on going MA? We don’t go out knocking on doors to sell equipment, we’re not allowed to. We turn in sale leads, yes we get a commission for it, and sales gets a commission for including service at the time of a sale.

It’s the service department that maintains customer satisfaction and the equipment for the next 3 or 5 years. That is what (in some cases) will determine if the customer will call the sales person back or not. So why shouldn’t the service department be able to keep the MA $$$???

I’m tired of hearing the sales staff saying “you have on idea how tuff it is out there” if it’s that bad get a different job and work 8 hours a day 5 days a week.

You may have quested by now, I’m in service, and yes, like you I would like to provide for my family as well.

Mr V-tec,

At our dealership we are not allowed to lower any service contract, cpc , or minimum without the signoff of ou president and service manager.

The number of times that I have rec'd a better than book rate is ONCE.

We protect the profit of the company period.
It is tough out there, the Wal-Mart factor has everyone wanting everything for free. I've seen front-end machine profits go "bye-bye". That's why we've had to become CDIA+ and MCSE certified so that we can add value to the boxes we sell, and for that we deserve the golden handcuffs of a service commission. Because without great salespeople a dealership would provide a service department with employment for about three years.

I think that service should get to retain some of the "after the sale" business. I also think there are great opportunities to make extra money once systems have been installed.

In the NY metro area, prices are very competitive, on going service and maintenance costs plays a big roll in the decesion making part of the business.

Dave is right, if the customer has perceived that there is value and the customer will receive some type of benefit, whether it be a monetary ROI or a increased productivity. Service pricing nevers comes into play, however when the customer perceives no real value or benefit, and they just need to buy a new copier, THEY WILL SHOP PRICE!

I was told the other day that buying a copier is considered a chore at and office and something that a business owner, or manager has to do whether they like it or not. I thought it made sense.

Good SE's must step up and be counted, they need to push the envelope and change perception in some of the old line traditional dealerships.

I for one, if I had my choice and knew I could rely on someone would be inclined to increase my costs to have an SE consuct training and conduct all of the network installation. Therefor I could conduct more time on sales.

Dealer owners need to stop giving "hunting licenses" to sales people. What I mean is that are congradulated for selling over MSRP. Dealer owners need stop focusing on GP that sales people are bringing in. The need to focus on compensating reps for increased clicks, customer satisfaction, and generate more business from thier existing base with new solutions, and new ideas.

I also agree that there are techs ans SE's who are limited as to how much they can make. Management makes the rules, rules can be broken, rules can be changed.

I was out with a tech the other day to lunch, he explained that he needs to get out of the business and that there is no money and no future in the business. I asked him a few questions and realized that some of his efforts are stymied by old rules, no creative thinking and no sense of what the employees needs are.

I for one am very fortunate to have a great staff of SE's and techs. I hope that change can come, buy change will not come easy. We have no unions, we have no employeee trade associations.

Ah, I think I've ranted enough. Maybe just maybe, would it be too much think that a group like ours could some day become an association? Maybe we can offer additional health benefits, additional retirement needs, continued education and seminars. Maybe we can.

Art

I agree, without sales, service would be unemployed in 3 to 5 years. And yes, sales profit is at a minimum. However, if all MA the profit went the sales department where would service get its revenue from? The “billable dollars” would not be enough to support the salaries of the service employs. We’re robbing Peter, to pay Paul.

Some sales people sale boxes for profit, and if the dollar amount (in the pocket) is not there, they walk away to minimize their wasted time. Sales and the company need to be more creative. Selling third party software for instance. If your competitor is not offering it, and it fits the customer’s needs, can make a substantial profit.

Sale and service needs to work together in order for a company to grow and profit. I don’t want to sound negative or drive a spike between sales and service with my opinions in this text. I view this web site every evening on my personnel time to assist other technicians and help our customers. I enjoy it, I view and read every post, and more often I’m seeing how sales can get more dollars from service.

Dave, please don’t take it personally. This happens to be how I feel about this topic tonight or maybe I feel like having a debut. Come Monday, I would probably not even give it a thought. When I saw three posts on this topic I decided to give a response from a different point of view. Usually sales would respond to a post of this nature and never hear from the service side.

We need to move forward together as a company and an industry. To think of other ways to enhance the products we sell and service, so we can excel above our competitors. When we achieve this, we’ll all be very happy.

I have to chime in here with a bipartisan stance on this issue.
There would be no service department without sales and there would be no sales without a good service department.
At my dealership, I think the service techs are overworked and underpaid. I believe they need additional training in network connectivity and support which is involed now with every sale.
Currently, I do 90% of network support for my sales and others, as well as the initial install,training and post sales support. I am who my customers call for anything and everything. Unfortunately, I am only compensated on GP based on a set revenue goal, although I do receive a salary equal to $11.00 per hour.
I get nothing for the almost 3 million clicks my customers produce monthly.

Now, my complaint is that with these additional duties, I do not have nearly as much time to devote to sales as I would like. My boss is always talking about activity and cold calling (50 per week), which was done in his day. He doesn't understand the way it is now, next to nothing margins and 7 competitors involved in any given sale means that I am wasting my time shotgunning.
I would rather spend my time researching, qualifying and developing a relationship with fewer customers who will develop into long term multiplacement clients than wasting each and every day cold calling every company in my territory.
And I would much rather have the service techs, with the right training and certifications, assisting in presales and post sale implementation, as well as compensating them on the aftermarket revenue for handling those tasks.
I really don't think we pay our guys nearly enough.

At our dealership I would like to see some program which compensates service techs for keeping the service calls at a minimum and incentives to help increase placements and clicks within an account. It should be a team effort. I want all of our people to make a healthly living, not just myself.

Most of my guys really are good and could be more valuable with the right ideas implemented.
How about paying us an ongoing click compensation based upon target total monthly volume of our accounts.
Maybe $.0005 per click after the first million and have that be graduated in steps the higher the volume goes.
If we were paid $.0005 per click on a million copies that would equal $500.00 monthly.
If we were paid $.00055 per click on two and a half million copies that would equal $1,375.00.
A fair amount considering the average cost per click of $.008 is producing between $8k and $20k per month revenue.
Sounds fair to me if I am working to increase clicks in my clients offices.
And one other item. We do not discount our service to cost. We have a set rate we are required to use unless it is an especially large deal.

Sorry for the whining thoughts here, but this is one I had to post my opinion for what it's worth.
Happy Thanksgiving

At our company the rep gets a one time "bonus" for selling service agreements. More commonly viewed as being penalized for not selling service. However, I understand why.

We don't truly believe you are our customer if you don't have a service agreement. Without service, you are more apt to be dissatisfied with your product and unless cycled regularly by your sales rep will become orphaned and be lost to the competition when you are ready to upgrade.

I believe the problem is any time we take money from one place, it leaves a void or has to be made up somewhere else. Perhaps, as v-tec stated, a better way to add income is from software solutions. Or, selling network/software support agreements for connected products which allow the customer to purchase blocks of time in case they have a connectivity issue or upgrade their computers and need to install print drivers/scan folders, etc...

I'm in sales, but I don't think it's necessary to compensate on a residual basis for service.

I believe this will remove the drive from the sales reps and they will become stagnant, getting fat off of the work they have done in the past.

We have a contact quota/goal at our company too, 100 per week. Although I don't always remain as disciplined as I should I still believe the key to success in selling is the number of contacts made. Product knowledge, presentation, attitude, etc... are crucial, but unfortunatelly, they still come second to contacts. It's humbling and I kid myself sometimes because it's a lot easier to focus on the others because there is no rejection involved.

I used to do most of our connectivity, but now we have someone else who can devote more time to this so that I can call on prospects. The knowledge I have gained from learning the connectivity has paid 10 fold in my ability to sell with confidence and create new solutions for the prospect. The clicks I have captured by adding printing and scanning have solidified my customer loyalty and positioned me more as a consultant than a copier salesman.

I think we need to always be aware of the opportunity to capture clicks, but I think tying them to a pay incentive to the rep is not necessary. I want my service team to be the most professional and highest paid guys in their field. One of our sayings is that "the salesman sells the first copier and service sells the rest".

Here's the current problem: Profits are dropping on the front end and as the pay goes so do the good reps that produce large profits per person. To keep the reps at the dealership, make the program a long term program. The idea behind commissions on the cpp is to chase the clicks. I have heard many people say they sold a MFP to replace a printer and copier. I just don't see those Hp's leaving the customers site. Sure, a few are out but not a great many. Also, have you ever seen a copier rep run when the customer says he wants to buy a printer. No money for me no printer for your company. Pay for clicks and the printer will be sold. If not, the customer buys a HP printer.

I don't see a large increase in clicks on the copiers migrating over from the printers. How do we get the reps to stay involved in migrating printer clicks to mfp clicks? Pay the rep on the clicks for the time the machine is in the field. Pay a percentage of profit and it will keep your profits up and you may find higher than you current cpp profits. This keeps the good reps, gathers the clicks from printers and both are good for the long term growth of the dealership.
Why not pay on clicks? Short term grab for cash.
As far as the service techs getting paid on clicks? Risk for reward in the USA>

As js stated, if sales reps get paid for the click they may slow down sales. Let’s face it; this would not be good for any business. Sales reps get paid t to sell, sell everything you can and you get paid.

This is going to be an on going debut. Hey, maybe service reps can sale equipment to current customers and keep the profit, eliminating lead fees!

You guys have my head spinning with all that I want to say on this subject so I'm sure I will be jumping all over the board but here it goes.

First of all, we all have to recognize that the profit from service is getting squeezed every bit as much as profits from sales. We want better trained technicians and quicker response times yet CPC's are significantly lower than they used to be. You think $2.00/gallon gasoline has adversely effected you...think what effect it has had on service profits? You start pinching pennies from service and you will start getting decreased manpower, decreased parts inventory, decreased service training, etc. which equates to slower response times and longer down times. What this means to you Mr./Ms. Salesrep is disatisfied customers and much more difficult upgrades and renewals with greater competition.

If someone can figure out an effective way to pay salereps on clicks, I would be all for it but it would be in lieu of salary...$.0005/click may not seem like much, but it may be half the profit by the time everything is said and done. Keep in mind that most companies are lucky to break even on equipment sales and the profits from service and supplies has to pay for buildings, admin staff, utilities, benefit plans, etc.

We all have to quit looking outside for our support and accept the reality that we have to figure out more ways to be of greater value to our customers. There are people out there who make a very good living as consultants without selling any hardware or software so there must be hope for us.

On a seperate and somewhat conflicting note, I convinced the powers here that it was in their best interest to give salesreps true absolute dealer cost and 100% commission on printers. I contended that printers were not going to be sold any other way and the aftermarket revenues and exposure were where the profits would come. So, if dealer cost is $1000 and the salesrep sells that printer for $1,200, they get $200 commission.

Jim:

My thoughts precisely! I believe that 100% commission on printers is a good idea, we haven't done that at our company and a lot of times it's like "you want to buy a what?", great that means 5 hours of work on cross product comparisons and figuring out how our product is going to save money in the long run, trying to explain it to the customer, fighting the IT guy, etc... and all for $50 if you're lucky.

Then, the company reaps the aftermarket revenue and as sales reps we hope that they will keep us in mind for other products.

The bottom line is still, the money has to come from somewhere else, I don't think you can take a slice out of the pie and give it to sales reps unless you somehow replace it or find a way to get a bigger pie.

It is all about the clicks. There is no question that if salesreps were paid by the click the way cell phone reps are paid for the minutes, we would be alot more solutions oriented. We can have great influence on clicks but we don't because it doesn't pay next months mortgage. Do I really care if my Ricoh MFP is set as the default printer? Do I follow-up every month to see that prints are being driven to my unit? Am I attacking the back-room legacy printing and persistantly working until I get that equipment replaced. My answer...no,no,and no because I'm not paid for the clicks and that is the only place where there is money in those activities.

It sounds like commission on the service contracts is a good idea if you can make it happen.
Thanks for the help.

Here's the idea that my bosses are choking on.

Lets say that our normal book rate for service on a color MFP is 1.2 cents B/W and 8.5 Color.

I say let the rep have anything he can get over that amount and tie it to quota.
For instance, my quota is 60K in revenue/month.
On a quarterly basis, if I sell 180K, I would get the overage of the book rate clicks that I have sold. The above example was 1.2 b/w and 8.5 color, if I sold it at 1.5 b/w and 9.5 color and made quarterly quota, I get the .3 cents for b/w and 1.0 cent that I sold the deal for.

Make sense?
This kills the fat and lazy argument and makes the rep attain quota or the money goes to the house. The rep is incented heavily to make quota and get as many clicks as possible.

Win for the rep, win for the dealer, and win for the customer. Anyone have any thoughts?

Dave:

We thought of something quite similar at one of our weekly meetings.

The thought to establish a base price for cpc was a great idea. Here are our sticking points.

A. All new sales for systems would have to be under a monthly cpc plan. This means no more year plans for new customers. As older yearly MA's become available do they change over to monthly cpc's or do they now remain a "house account"? If they do convert to a monthly cpc, how can you justify an increase?

B. How do you organize and maintain the tracking of meter reads> My thought is that if everyone is under a monthly cpc plan that this would be a "no brainer". I quess this would be ok for the smaller dealer, but how about the mid size and the mega dealer. How do you administer such a plan. Here's my question. Does OMD have a solution for this? Can a program be writen for OMD, kets say an SDK kit? If so, when the monthly cpc is billed the meter and the billing can ne exported to a monthly report. We did not have the answer for this, nor have we done a follow up.

C. How do you cost justify a cpc charge for a fax and laser printer?

D. Also once you have this in place, now the harware systems really do become just a commodity, plus have you just made the solution selling the a commodity also?? Reps are no longer paid on boxes, but just clicks.

E. One Million clicks in my territory at .008 would equal $96K per year. Can the customer save that much by paying wholesale for the box?

I would tend to think a click charge overage could be an .002, that would mean that my territory would have to produce minmimum of 4 million clicks a month.

Since some HV users are currently at .005, ,0055 and .006, how do you justify a .002 increase. Or is there a sliding scale used for HV and LV users?

Lots of questions!

The idea that you have is a good one and if we talk more about it, we may have a plan that may be good to bring to the table.

It sounds like everyone has a valid point. However, if you add to the cost per click won’t you now have over price CPC compared to your competition? Would this be a price war similar to price of the equipment that started everything? Competition is good for the consumer, and you know they will shop for this as well.

Our reps have wanted compensation on aftermarket cpc programs so we launched a program with our lease vendor, dll, for deferred maintenance programs. If the rep sold the maintenance with the lease payment and it was sold at book rate, we compensate them 1 month of the maintenance. For example, a 1060 sold with 50K at .009/copy = $450 for rep in added commission bonus. For the most part, a 1060 won't even need a service call for the first 100K and it works for us but not all of our reps like selling at book rate and they are always trying to work for lower rates. Since we cannot keep on taking money from the aftermarket department, we look at the total profit picture of the sale and if there is alot of gp in the sale, we take some of it and allocate to service and supplies. Not a perfect solution but it works and keeps competition away until the end of lease since the lease payoff to customer or competitor includes our service/supply money until the end of the term. We are comped by the lease company monthly as our customers pay their payments.

To answer the questions above:

We only sell Monthly MA's and the clicks only go to the house if we don't make quota. The click commissions don't expire unless you quit or are fired.

If my bosses would do this, I would never think of leaving and would wash their cars everyday.

Oh yeah, and we have plenty of clients that don't shop us.

The short story on commissions on the cpp program:
1)It works and it does not over price the service plan
2)The reps stay longer because they have an investment in their territory
3)You have to have "ownership" that want longer term growth
4)There is not a valid reason to not pay the reps to maintain and increase the "clicks"