Earlier this month I was asked to lead a discussion on the future of distribution.  In this case, we focused in on the future of members of the Fluid Power Distributors Association (FPDA).  Since many of our readers are not FPDA members, allow me to provide a bit of background.  The members of FPDA tend to be deeply involved in providing customer solutions.  In many ways they epitomize the knowledge-based distributor.  Their products are complex, sellers understand product technology and application nuances, customers lean on the distributors to provide technical support and most offer up additional fee based services. Referring to the infographic below and the evolution of the distributor model, FPDA distributors are the poster perfect picture of the Knowledge-based distributor.  Deep product expertise, product specialists, customer centric engineering and solution selling is their mode of operation.     While the argument for Amaz...

We are gathering information and building a list of frequently asked questions.   I am often asked about commission structures within the Automation, Electrical Distribution Industry and other knowledge-based distributor operations (Power Transmission Distributors PTDA, Fluid Power Distributors FPDA and Industrial Distributors). Considering the frequency of the question (from potential salespeople, experienced seller, managers and others,) I feel it appropriate to post some thoughts on the practice. While this is not our typical kind of post, I wanted to create a forum for discussion. Commissions based on Gross Margin are one of the most commonly used incentive practices on the channel side of the business. On the manufacturing side, many people are still paid based on their gross sales numbers. Often you will hear distributors refer to this practice as paying on “tonnage” because sales professionals compensated in this matter really aren’t required to worry about whether ...