Compensating Sales Force Essays

6666 Words Sep 9th, 2013 27 Pages
COMPENSATING SALES FORCE

Sales is one of the few jobs where you earn your money – every day.

COMPENSATION IS MORE THAN MONEY
Any type of sales organization can reward sales performance in three fundamental and interrelated ways: 1. Direct financial rewards.

2. Career advancement and personal development opportunities.
3. Nonfinancial compensation.

Why is it important?
• Sales activities are the life blood of most business • Most misunderstood aspects of running a business

• Tricky – right mix of salary and commissions
• Helps attract potential salespersons

• Sales compensation plan motivates the sales force which in turn drives the sales
• Also a determinant of status and value

Why proper sales compensation ?
…show more content…
A sales reward system is not the only means of motivating salespeople, but it is the most important.
Measuring sales performance but not properly rewarding it severely limits the achievement level for salespeople.

The Concept of Compensation-An Introduction
• Compensation can be divided into two components:
• Direct compensation and • Indirect compensation

• The direct compensation constitutes financial remuneration, usually in cash • Indirect component constitutes of PF, pension schemes, medical and Health insurance, etc.

WHAT TO KEEP IN MIND?
• AGE
– Young – Middle-aged / Old

• INDUSTRY TYPE
– Predictable products with short sales cycles – Less predictable products with longer sales cycles

• COMPANY’S STAGE OF LIFE
– Start-up firms – Settled firms

WHAT TO KEEP IN MIND?
Motivation The plan must motivate your sales force to high levels of performance

Equity The plan must be fair and create relatively equal opportunities for earning significant incomes Profit The business cannot give away too much
Ease of administration Important to avoid creating an overly complicated plan that will be difficult to administer. Easy to understand Sales people and all other employees have to be able to understand how the plan works.

WHAT TO KEEP IN MIND?
Reward The plan must reward sales personnel in a manner that is consistent with their production. Unintended windfalls Protection against paying

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