Consumer Packaged Goods (CPG)

Consumer Packaged Goods Compensation

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CPG Experience

Our experience in this area ranges from aftermarket auto parts manufacturing (wiper blades, spark plugs, etc.), to B2C power tools sales, to faucets and fixtures you might find at your local big box home improvement store, to pet products sold in every pet store and vet office across the country to one of the leading poultry manufacturers providing the chicken breasts or drumsticks you buy at your local grocery.  Many of the companies we have worked with sell through standard retail outlets that you walk into every day, to various large scale industrial suppliers such as Grainger, or any of the hundreds of mom and pop industrial supply shops in industrial parks throughout the country.  Some also sell the same products B2B to auto repair shops (for the aftermarket car parts), to construction trades for the power tools, or to hospitality designers and builders for the faucets and fixtures. 

Right Tool for The Job

Each of these types of sales takes a different type of sales rep, a different role definition and a different compensation plan. We have developed them all.  From national accounts and industrial supplier plans to individual retail outlet plans that include considerations for marketing budgets, end cap set ups and appropriate measurement of pull through (since the sales rep selling that dog collar to your local pet store doesn’t stand there and tell you the reasons why you should buy that product – they instead rely much more heavily on targeted pull through campaigns in local markets, orchestrated in conjunction with a marketing and promotions team).  In this world, the rep is the quarterback who calls the plays, but relies on the rest of the team (including the owner of the pet store chain!) to actually make the sales happen.  It’s not uncommon in this world for us to have representatives from marketing or product development/management to be included in the sales compensation design team.

Frequency Matters

In some of the companies, a highly variable plan with monthly or quarterly incentive payouts makes all the sense in the world. Meanwhile, in others (pure retail pull through) the campaigns are worked on annually and executed 1x a year. You can really only measure the results one time at year end.  In this case, it’s more sensible to rely on salary throughout the year to provide the living wage to your reps and provide an annual bonus that can reward them for the effective execution of the marketing plan. 

Economic Factors

Even still, it’s important to consider the variety of economic factors that can disrupt any of the B2C industries.  Is the product a luxury item that will ebb and flow with economic spending trends?  Is it a product that is likely to be impacted with a spike in construction sales as can happen after natural disasters (you need to consider this so you aren’t always overpaying sales reps after every hurricane).  Is it a product that is in the throws of a consumer trend (non-GMO, antibiotic free, and/or organic for nearly any and all food products these days) so that you need to consider the market demand vs economic return of these products and reward your sales reps for selling accordingly.

If you are considering redesigning your compensation plans, ask yourselves the following questions:

  1. Are your sales roles clearly defined or are they tripping over each other in the field calling on or worse, undercutting each other, with the same end customers? This is entirely possible given the number of channels that a buyer can access now to get to any number of CPG products (retail, wholesale, buying clubs, etc.).  Are your Sam’s Clubs reps destroying your market for your private label brands being sold through the grocery store?

  2. What are the top 4-5 key accountabilities for each of the sales roles in the organization?

  3. What are the performance expectations for each of those accountabilities?  How many new customers? What type?  How far from forecast is acceptable. What is the right volume vs profit trade off?

  4. What individual sales results can you measure in the system – ACCURATELY – so as to be able to use it in the incentive plan?  A good rule – if you can’t measure it, you can’t pay on it – is far too often ignored until the first sales plan checks are ready to be cut.  Reps have to believe in the plan, and for that they need data.  Good hard data.  If you can’t give it to them, at the level they need it (territory or even store) then you may need to rethink how you approach incentive compensation.

Common Project Types

Express Design Project

When your needs span several roles but you have only a few people and will not have much of an issue with change management, our Express Design Project is for you. We’ll spend time with you and your senior leaders in a one-day on-site meeting and complete the rest of the meetings virtually. We’ve successfully executed a number of engagements for small to medium-sized organizations (5 to 20 people) just like yours.

An Express Incentive Design Project includes:
• Compensation plan design for up to 5 roles (salary bands and incentives)
• Market benchmarking of pay levels for the 5 roles
• Plan documentation
• Pro-forma economic modeling (no historical testing)
• Roll-out training
• Strategy and structure review/refinement
• 6 months of post-project support
• Turnaround is approximately 4-6 weeks

1P1P Project: One plan, one role

A 1P1P Project is great for start-ups and small companies, and those with an immediate need for a compensation plan for one person in one role. The 1P1P Project is a virtually delivered program that’s a fast, affordable alternative to big consulting firm fees.

The 1P1P Project includes:
• All plan design details
• Basic market pricing
• Economic testing
• Incentive plan documentation
• Outlining of goals and expectations
• Review of business goals and impact of this role on those goals
• Role clarification
• 3 months of post-project support
• Turnaround is approximately 2-3 weeks

Full Service Sales Compensation Plan Design Project

When you need more in-depth assistance in clarifying business objectives, streamlining your organization structure, improving accountabilities and role definition, and are developing incentive plans for several interconnected roles for a large staff, we recommend a Full Service Incentive Plan Design Project. This solution features on-site meetings with our consultant and your design team, and is often selected by medium-sized to larger companies, or small companies undergoing significant transition.

Full Service Sales Compensation Plan Design Project includes:
• Business goal clarification
• Business strengths assessment
• Compensation plan design for all roles in scope (salary bands and incentives)
• Development of career levels for highly populated roles
• Employee change management
• Extensive pro-forma and historical economic modeling
• Goal-setting guidance
• Sales compensation plan documentation
• Market benchmarking of pay levels for all roles in scope
• More detailed Excel template for use by your staff for doing plan calculations (variable based on your needs)
• On-site roll-out support
• Organization redesign and role change/definition
• 12 months post-project support
• Four+ on-site days
• Turnaround time is at least 90 days, but may take longer depending on size of organization and magnitude of change