Sales Force Compensation
Lesson 9
Objectives
After completing Lesson 9 you should be able to:
1. To be able to describe the various financial compensation methods, and the
benefits and disadvantages of each method.
2. To be able to state how the achievement of a firms marketing objectives and
strategies are dependent upon a proper compensation plan.
Lesson Notes
Objectives of a Good Compensation Plan
a. To provide incentives that influence sales rep motivation.
b. To correlate efforts and results with rewards.
c. To control salespeople’s activities.
d. To ensure proper treatment of customers.
e. To attract and keep competent salespeople.
f. To be economic yet competitive.
g. To be flexible, yet stable.
Steps in Designing a Compensation Plan
Step 1: Review the Job Description
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Identify the tasks that are directly and indirectly related to the generation of
revenue.
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Step 2: Identify the Plan’s Objective.
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Such as:
- Increase per unit profit
- Increase market share
- Develop a new territory
- Improve customer satisfaction
- Develop a relationship with prospects
- To participate in political functions
- To collect bad debt
Step 3: Establish the Level of Compensation
•
Assess what is the appropriate level of compensation for performing the tasks
associated with the job.
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Step 4: Develop a Method of Compensation
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Primary compensation methods include:
- Salaries
- Commissions
- Bonuses
- Indirect monetary benefits
- Expenses
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Combination Plans:
1. Salary plus commission.
2. Salary plus bonus.
3. Salary plus commission and bonus.
Bonus: _______________________________________________________
Commission: _____________________________________________________
Indirect Monetary Compensation
Considerations
- paid vacation.
- healthcare benefits.
- vehicle allowance.
- expense account/entertainment account.
Step 5: Pretest Plan _______________________________________________
Step 6: Implement Plan Periodically - __________________________________
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