Worksheet: Pay account managers on net sales or margin

If the bonus pays on volume or gross sales, every dollar of trade spend that moves a case makes sense to the account manager. This sheet puts net sales or margin into the plan with real weight. It adds a cap and one behaviour the account managers can influence. It builds the Competent step of the check:

Net sales or margin carry real weight, commissions are capped, and behaviour (forecast accuracy, execution) is scored.

Step 1. Read the plan you have

Component	Weight today (%)	Measure	Can an account manager hit it by giving more trade spend?
e.g. Gross sales against budget	80%	Invoiced sales	Yes

Step 2. The new plan

Measure	Weight (%)	Target	Data source	Paid when
Net sales or gross margin, after all trade spend
Trade-spend rate against the account target
Behaviour: forecast accuracy
Behaviour: promotions executed as agreed
Other

Pick at least one behaviour. It should be something the account manager controls and someone can check.

Step 3. Set the cap

Payout at 100% of target ($)	Maximum payout ($)	Cap reached at (% of target)

Then check whether effort fell once people hit the cap.

Account manager	Month the cap was reached	Average monthly sales before ($)	Average monthly sales after ($)

Step 4. Test it on last year

Run each account manager's actual results through both plans.

Account manager	Trade-spend rate (%)	Payout under the old plan ($)	Payout under the new plan ($)	Change

The account managers who bought volume with trade spend should earn less under the new plan. If they do not, raise the weight on net sales or margin.

Done when: the next plan pays on net sales or margin with real weight, has a cap, and scores at least one behaviour such as forecast accuracy.

Adapted from our own sales commissions review (Deloitte, 2015).