National Beverage Company: This company is engaged in the production and distribution of beverages and related products to restaurants, hotels and other food service businesses. It had more than doubled in size through several acquisitions in two years, and had gone from being a regional to a national company. While its local distribution business was still strong and profitable, its future depended on successful relationships with national restaurant and hotel chains and national food distributors. Its selling challenges were to streamline the local distribution business and successfully penetrate and protect the national businesses.

Several steps were required to successfully implement this strategy:

1. Re-organize the company along channels of distribution.
2. Hire and/or train sales people who can manage national accounts
3. Introduce logistic systems and procedures to streamline local distribution operations.
4. Design and introduce separate sales compensation programs for each of the three channels: national accounts, national distributors, and local distribution

The new sales compensation programs has several interesting and effective features:

• Based on gross profit instead of gross revenue
• Based on target sales ranges, instead of paying on first dollar sales
• Different mix of pay for different channels, reflecting different sales process and cylces
• Elimination of redundant management layers and commission overrides, thereby lowering the compensation cost of sales and increasing margins.