Research Outline

3rd Party Compensation Structures


Identify best practices or ideal structures for compensating 3rd party sellers and ensuring that they comply to the parent company's specifications for price, quantity, etc. This information should ideally come from expert articles or industry reports from management consulting firms, and will be used to help develop a sales incentive compensation program for a sales organization that sometimes makes sales using 3rd party sellers.

Early Findings

  • Lumen Learning lists in their book, Principles of Marketing, three best practices for managing and incentivizing third-party sales successfully:
    • Understand and align incentives - it is better to optimize an existing structure and understanding the roles each party plays and how they are compensated, rather than trying to create one from scratch.
    • Provide exceptional sales support - third party sellers should be able to easily become an expert in what they are selling, so that they can be informed about what they are selling and do so efficiently.
    • Create demand for your product - don't solely rely on the marketing channels to get products to customers; intead, make sure the product is something people want/need, and it will be easier to sell.
  • A risk management plan prior to working with third-party vendors can help to ensure that sellers are applying to the conditions set in place, while also providing a backup plan in case they don't later on.
  • To ensure that a product is being sold the way it was planned to sell from the start, experts recommend negotiating exclusive distribution agreements with suppliers in order to secure the supply chain. For some, this also includes making private label products.

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Prepared By
Kennedy H.
641 assignments | 5.0