What is the best for you: selling the cornerstone or an emerging product?
All companies have one product or solution that is the cornerstone of their business and revenue.
The cornerstone is the product that the company is known for.
As all companies need innovation, your company has also products for an emerging market.
Thus the company has two distinctive divisions:
- The cornerstone product
- The emerging market product
The cornerstone product: the pressure
In the cornerstone division the product has been on the market since long. It is sold into a matured market, with several competitors offering a similar product that puts the sales price under pressure.
Accordingly the gross margin of the business unit will be relatively low thus not much room for operational expenses or bonuses.
The budgets for:
- Marketing and advertising have been defined based upon the historic data of the existing business
- Sales costs are well know and controlled.
At the same time the lead generation and sales processes have been polished and have been distributed over several Area Sales Managers, Sales reps and sales assistants.
Your sales commissions will be at a certain level.
No more big expansion to be expected.
Additionally as a Sales Manager or Sales rep you need to achieve sales constantly, driven by the metrics of the past. Previously other Sales people have proven how “easy” it was to sell the products or solutions.
Your bonus:
Every year your new sales targets will increase compared to last year as the higher level of sales needs to compensate for the price pressure.
If you don’t reach your target there is no excuse.
This results into no bonus or even getting fired.
Emerging product: the hope for the future
The expectations are high for several reasons for emerging products are high as:
- The CEO and/or the Board of Directors decided to develop, to market and to sell this new product for strategic reasons.
- There are opportunities lurking in the market that these new products address, but not yet.
- These new products are exciting, but they just don’t sell.
- The markets have been predicted to become important one of these quarters, but it isn’t happening yet.
In any case these newly developed very promising products hardly make money or even create a loss.
However due to all the potential business that these new products hold, it is decided that more money needs to be spend in Sales and Marketing.
As there are no metrics of the past, the pressure is only to achieve sales: to get a purchase order. Your budget for expenses is less limited and the sales budget is not well defined as there is no precedent. There is less pressure for achievement.
In case it was the sole decision of the CEO for developing and starting these new products, he will need to cover up the costs involved in order to hide his mistake. Especially in case you don’t make any sales or only minimal sales.
Less pressure on you.
Your bonus:
In case you don’t close any deal, you can compare with the competition they are selling neither. Thus the market has not yet developed: not your fault.
Moreover your base salary will be relatively larger as management knows you will have problems closing sales and you have fewer chances to earn a bonus.
In case you would achieve a large sale then your bonus will become significant compared to your base salary.
So what division would you like to work?
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