SALES FORCE COMPENSATION

PRESENTED BY :KAREEM DUMBA MASUMI AMATAYA

Ss 09-11

ARVIND KUMAR

1

SALES FORCE COMPENSATION
How little you know about the age you live in if you fancy that honey is sweeter than cash in the hand The division of a business that s responsible for selling products or services The method of sales force compensation is the plan by which the reps earn or reach the intended level.
2

THE STRUCTURE OF SALE FORCE COMPENSATION
y Financial compensation

(a) Direct payment of money (b) Indirect payment
y Non financial compensation

(a) Opportunity to advance in the job (b) Recognition inside and outside the firm (c) Enjoyment of the job

3

SALES FORCE COMPENSATION PLAN
Correlate efforts and results with rewards Control salespeople s activities Ensure proper treatment of customers Attract and keep competent salespeople

Motivate salespeople

Good sales compensation plan

Be economical yet competitive

Be fair

Be simple

Give salespeople both security and incentives

Be flexible yet stable

4

Contd.

SALES FORCE COMPENSATION PLAN
To motivate salespeople: 
According to survey of most companies do a relatively

a good job of using the sales compensation plan to motivate their sales people. 
Clearly designing a plan that motivates salespeople to

meet or exceed their goals is not an easy task.

5

Contd.

SALES FORCE COMPENSATION PLAN
To correlate efforts and results with rewards 
The situation can be very problematic  A person can work very hard but get few results and therefore get little rewards.  This can happen even when the minimal results are due to factors beyond the control of sales person.
6

Contd.

SALES FORCE COMPENSATION PLAN
To control salespeople activities 
A good pay plan should act as an unseen supervisor of sales by enabling the management to control and direct the sales reps activities.  The compensation plan must offer incentives flexible enough to cover such varied task as full time selling , missionary work or controlling selling expenses.
7

Contd.

SALES FORCE COMPENSATION PLAN
To ensure proper treatment of customers 
Companies will be increasingly competing on the

basic customer service 

A good compensation plan is one that motivates sales

people to treat customers properly thus providing customer satisfaction. 

many companies such as AT&T, Seibel System and

IBM are using customer satisfaction merits on one factor in compensation determination
8

Contd.

SALES FORCE COMPENSATION PLAN
To attract and keep competent salespeople 
Its should also assist in attracting high caliber reps.  A sound plan should help to keep desirable people.

9

Contd.

SALES COMPENSATION PLAN
To be economical yet competitive 
Most firms want to keep their sales force expenses in line with those of competitors .  It is not always easy to balance being economical with being competitive.

10

Contd.

SALES FORCE COMPENSATION PLAN
To be flexible yet stable 
Flexibility also is needed to adjust for differences on products  The basic pay plan should contain features that enable a company to meet changing condition without having to change basic plan.

11

Contd.

SALES FORCE COMPENSATION PLAN
A secure income an incentives income 
Every plan should provide a regular income, at least at a minimum level.  This steady income should not be so high that it lessens the desire for incentive pay  A good pay plan should furnish an incentive to elicit above minimum performance .
12

Contd.

SALES FORCE COMPENSATION PLAN
simplicity 
Simplicity and flexibility are conflicting goals that is a plan that is simple may not be sufficiently flexible and plan with adequate flexibility may achieve that goals.  The plan should be simple enough for salespeople to understand readily
13

Contd.

SALES FORCE COMPENSATION PLAN
Fairness 
One way to ensure fairness in plan is to strive to base it as much as possible on measurable factors that are controllable by sales force .

14

DESIGINIGN A COMPENSATION PLAN
STEPS IN DESIGINING A SALES COMPENSATION PLAN

REVIEW JOB DES RIPTIONS

IDENTIFY PLAN S OBJECTIVE

ESTABLISH LEVE OF COMPENSATION

DEVELOP THE METHOD OF COMPENSATION

DECIDE ON INDIRECT MONETARY COMPENSATION

PRETEST AND INTALL PLAN

15

Contd.

DESIGINIGN A COMPENSATION PLAN
1.
Review the job descriptions This should disclose the exact nature, scope and probable difficulty of each job

2. Identify specific objectives

‡ ‡ ‡ ‡

Increase profit Increase sales volume of a certain class of products Improve customer satisfaction Develop a new territory.
16

Contd.

DESIGINIGN A COMPENSATION PLAN
3. Establishing the level of compensation
‡ In many respects, the level of compensation is more important then the methods. ‡ Management is interested in the compensation level, because that is what attracts most salespeople.
17

Contd.

DESIGINIGN A COMPENSATION PLAN
4. Developing the method of compensation
‡ Salaries ‡ Commissions ‡ Bonuses ‡ Indirect monetary i.e. vacation and insurance ‡ Expenses
18

Contd.

DESIGINIGN A COMPENSATION PLAN
5. Indirect monetary compensation
‡ An indirect monetary benefits an item that has the same effect as money, though payment is less direct then a salary or commission. ‡ Indirect monetary benefits are also referred to as fringe benefits.
19

Contd.

DESIGINIGN A COMPENSATION PLAN
6. Final steps in developing of the plan
1. PRETEST THE PLAN:-

‡

This involves determining how the proposed plan would have operated if it had been effect during the previous few year Pretesting a compensation plan is a simulation exercise that can easily be done on a computer.
20

‡

Contd.

DESIGINIGN A COMPENSATION PLAN
2. INSTALL THE PLAN:‡ A compensation plan may be installed throughout the

entire sales force

‡ Sometimes a company will phase in a new plan over a

period of time-3 to 6 months or even a year

‡ The final steps is to make certain the entire plan will

be evaluated frequently to prevent it form becoming outmoded.

21

SALES FORCE COMPENSATION

22

23

Sign up to vote on this title
UsefulNot useful