The pay plan

I watched a company disappear within months after its sales pay plan changed. It happened fast. I believe the pay plan is why.

Years ago, in packaging, one of my biggest customers was a direct-sales company that sold heat-activated vinyl nail wraps. Nail wraps, of all things, and they blew up. I was with them from the early days.

Their business ran on an independent sales force. Then a private equity firm bought the company, and the new owners announced a cut to that pay plan.

I had a front-row seat, because we supplied their boxes. The product was still popular. But once the change was announced, their box orders dropped almost overnight. I couldn't see any other obvious change. Their warehouse manager told me then that the company wouldn't survive it.

Within months, it was gone. I was there when it ended.

My opinion: the pay plan is what brought it down. The product didn't change. The incentives did.

I couldn't see everything that happened inside that company, so that's my read of what I watched, not a finding. But I've never forgotten how quickly incentives can change behavior.

Every seller works inside a system with its own incentives. That includes us, so here's ours, plainly. goJILLIAN's fee is one flat percentage of what you spend through us. That means a lower price earns us a little less on that order. We take that trade on purpose: the business only works if you stay, and you'll only stay if the prices are lower. The rate is the same whichever vendor JILLIAN picks, so nothing pulls her toward one over another.