After a natural disaster, like the recent hurricanes that devastated the southern U.S., manufacturers often experience a period of bust and boom. Fluctuation in sales activity emerges as each impacted region begins to recover and eventually rebuild. This is the time for manufacturing sales leaders to review their sales incentive compensation programs and adjust to align with new market conditions. After monitoring and gaining insights into the market environment, sales leadership can utilize the following strategies as they reassess the sales impact following a natural disaster.
Organizations with limited insight into the extent of future sales fluctuations will benefit from the following four strategies:
Companies whose management has a complete lack of insight into quotas, will likely benefit from the following additional alternative:
5. Devise an alternate sales compensation program – Management may elect to pay sellers sales incentive compensation on an alternate program which does not rely on sales results. Measures for this plan would include Key Performance Indicators (KPIs). Sellers would still have the ability to earn sales incentive compensation without relying on sales results.
Pro: Eliminates reliance on sound quota setting in an uncertain market environment.
Con: Changes to the plan mid-year can potentially confuse sellers. The organization will have to clearly lay out a communication strategy.
Regardless of which route an organization decides to choose, it is important they don’t react without a clear understanding of what is happening in the marketplace. Evidence from previous natural disasters shows a dip in sales and then a significant uptick due to the boom in construction. Manufacturing sales organizations need to ensure that they do a full plan evaluation six months following these changes to confirm the plan is still in line with market factors.
Is your company struggling to re-evaluate sales expectations following disastrous market changes? Contact a Manufacturing Practice leader at Alexander Group.
Read more Alexander Group insights examining the manufacturing industry.