When I was a little boy, I remember happily going to the grocery store with my dad and bringing home ice cream. I was partial to strawberry. He liked butter pecan. So sometimes we bought two half gallons. Those were the best days.
Fast forward more than a few years, when unbeknownst to children and even some adults – including me – something happened. Seemingly overnight, the half-gallon ice cream carton turned into 1.5 quarts. The price really didn’t change and the ice cream still basically tasted the same, there was just less of it – about two servings less. What a sad day.
Ice cream executives blamed the loss on a bad economy, as well as increasing production and delivery costs. Whatever or whoever is to blame, the whole thing just seems rotten, doesn’t it?
Speaking of desserts – which as you might’ve guessed I really do enjoy – let’s next talk about a pie. But, at least for this narrative, our treat isn’t something we can eat. Think of our pie as all the money that U.S. companies make in a year. Corporations keep a decent amount of the pie – and call them profits – while another piece gets cut out and given to Americans as wages.
Now consider: how is your sliver of the pie looking lately? If you’re like most people, it’s about the same size as it was last year, and even several years before that. According to the Labor Department, wage growth in the U.S. has hovered around 2% since about 2008. Meanwhile, the cost of living in the U.S. – though it varies greatly by location – is generally increasing by more than 2%, according to key price gauges. This is not kind math for your wallet.
Until just recently, salespeople in the ad specialty industry were gloriously bucking the trend, earning far more than the average American and enjoying moderate to very good salary boosts each year. But for 2015, the Advantages Compensation Study shows the average income of ad specialty salespeople decreased by about 1%. How and why did this happen?
One of the big reasons for the salary dip is the changing profit split. The standard used to be 50/50 – giving salespeople a nice chunk of change after an order is delivered. But increasingly, distributors are moving to a different arrangement, giving salespeople 30% or even less of the split.
Some company execs justify the change by saying expenses are higher and money has to come from somewhere. Others, more reasonably, say they’re reinvesting a piece of their profits in technology and support structures, hopefully giving their salespeople more tools to use to win deals. In either case, in this moment in the long timeline of ad specialty history, salespeople are taking home less money, as industry sales continue to increase (by about 3% in 2015). Unlike the great disappearing ice cream caper, your slice of the pie hasn’t shriveled so quickly, but it probably doesn’t look as tasty as it used to.
It’s time to wake up, people. If our industry is going to grow, it needs to take care of its salespeople. A 20/80 or 30/70 split structure will sap longtime salespeople of motivation and drive younger, talented sellers to other industries. The combination of an archaic commission-only compensation model and a dwindling profit split will take our industry down a dangerous path. Distributors need to pay their salespeople handsomely, as cash is king for employees just like it is for business operations.
Aside from pay, perks need to improve, too. Amazingly, yet again this year, the number-one salesperson perk reported in the Compensation Study was sample and promo gifts. Now listen, everybody loves a great pen, but come on. Salespeople representing firms like SAP, Microsoft and GE aren’t listing free T-shirts as their top perk. Many ad specialty industry companies should be doing much better.
With that said, salespeople shouldn’t just expect their companies to change their approach. You’re not going to wake up tomorrow and receive a just-because bonus or retroactive pay. Your paid vacation time isn’t about to double and your distributor isn’t building an on-site spa for you to lounge in. So what can you do to increase your pay?
In the upcoming June issue of Advantages, we offer seven specific steps you can take to boost your sales and, in turn, your income. I’ll add an eighth step: try getting a slice from a different part of the pie. Focus your efforts on a new, growing niche (I’d suggest wellness, home health care, live events, even marijuana dispensaries) or a different type of program (look to incentives).
The bottom line: If you take no action and naively think your salary will just naturally increase in 2016, you’ll be like a kid in the ice cream aisle waiting for the half-gallon carton to come back. Those days are over. It’s time to move on.