Four Integral Parts of a Dynamic Sales Compensation Plan

Perfect Flap Envelope Company, a $100 million division of a large, diversified paper products company, manufactures and markets standard and customized envelopes. It is a real client company, but we have changed the name, the industry, and certain identifying details. Perfect Flap sells to both direct accounts—banks, insurance companies, utilities, direct mail services—and distributors. Until 1997, the division achieved relatively steady sales growth in the range of 5 to 6 percent a year. Top management believes and marketing research supports the opinion that the division could achieve annual sales growth in the 10 to 12 percent range.

As a first step to that growth, management hired a ...

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