Compensation plans by romanchal

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Compensation plans by romanchal

  1. 1. COMPENSATING LEADING AND <br />CONTROLING SALES FORCE <br />
  2. 2. Compensation Plans<br />Compensation plans for the sales force are designed to achieve several objectives. Some of these are:<br /> To assist the company in meeting its sales projections, <br /> To bring the earnings of the sales force to desired levels,<br /> To reward individual salespersons in direct proportion to their efforts and performance.<br />
  3. 3. Sales people look for…<br />1. Adequate income for adequate performance.<br />2. Incentives for special achievement.<br />3. A base of fixed-income for security purposes.<br />4.Opportunity for advancement, promotion.<br />5.Equitable treatment to all sales people; pay based on performance — no favoritism or exploitation<br />
  4. 4. 6.A sense of security because of the feeling that he is respected and regarded as a human being who is important to the company<br />7.Simplicity — easy to understand.<br />
  5. 5. Three Types of Compensation Plans<br />Straight salary plan<br />Sales person compensation method in which only a fixed salary (but no commission) is paid. The amount received by a salesperson is a function of time worked and not of performance as reflected in sales volume. This method is used where (1) the firm is aiming at long term presence in the market instead short term sales volume, (2)the performance of each salesperson is difficult to measure.<br />
  6. 6. Straight Commission<br />Adopted by performance-oriented firms that pay salesperson for their achievements<br />Each person is paid a percentage of their total sales<br />
  7. 7. Combination Pay Plan<br /><ul><li>The combination plan is the most popular Employed by more than 80% of US firms
  8. 8. May appear in many forms:</li></ul>Salary, commission, individual and group bonuses<br /><ul><li>Combination plans more time consuming for sales managers to oversee</li></li></ul><li>How to Control a Sales Force<br />The sales manager is responsible for controlling, inspiring, and guiding the sales force. This can be done through management, incentives and ongoing training.<br /> Make sure you can afford the incentives you offer. Keep your promises when it comes to incentive programs. This is why planning in advance is so important.<br />
  9. 9. Summary<br />Compensation plan helps attract and maintain quality sales force<br />Compensation is culturally influenced<br />Sales contests can provide short term motivation<br />Must be properly planned and managed<br />Expense plans important<br />Cover legitimate expenses, but always remember that Sales – Expenses = Profits<br />Rules for sales force compensation, contests, and expenses must be simple and unambiguous<br />

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