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Definition
| The way the reward structure is implemented in a sales organization. |
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| Three basic questions that drive successful compensation plans: |
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Definition
1. Which comp method is most appropriate for motivating specific kinds of selling activities in specific selling situation?
2. How much of a salespersons total compensation should be earned through incentive programs?
3. What is the appropriate mix of financial and non-financial compensation and incentives for motivating the sales force?
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Term
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Definition
| a fixed sum of money paid at regular intervals |
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| encourage good performance |
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| a payment based on short-term results, usually a salespersons dollar or unit sales volume |
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| a payment made at the discretion of management for achieving or surpassing some set level of performance |
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| often the minimum requirement for a salesperson to earn a bonus. |
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encourage extra effort aimed at specific short-term objectives
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| designed to satisfy the salespersons basic needs for security |
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| take form of oppourtunities for promotion or various types of recognition for performance such as special awards and publications in company newsletters |
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Definition
| motivate a high level of selling effort and encourage sales success |
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Definition
| direct effort toward strategic objectives, provide additional rewards for top performers, encourage sales success |
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Term
| Straight salaries are used for |
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Definition
1. New Sales Reps
2. new sales territories
3. many required non-selling activities |
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| straight salaries-advantages |
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Definition
- maximum security
- control over reps
- easy to administer
- predictable expenses
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| straight salary-disadvatages |
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Definition
- no incentive
- requires close supervision
- selling expenses remain same during sales declines
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| straight commission useful for |
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Definition
- highly aggressive salespeople
- minimal required non-selling tasks
- when company cant closely control sales force
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| straight commission advantages |
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Definition
- maximum incentive
- managers can encourage sales of certain items
- selling expenses relate directly to selling resources
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| straight commission disadvantages |
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Definition
- little security
- little control over reps
- reps may provide inadequate service to smaller accounts
- selling costs less predictable
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| salary/commission useful for |
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Definition
- similar sales potential across territories
- when company wants to offer incentive, but maintain some control
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| salary/commission advantages |
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Definition
- some security
- some incentives
- selling expenses vary with revenue
- manager has some control over nonselling activities
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Term
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Definition
- offer a base salary plus some proportion of incentive pay
- most popular form of compensation
- well-suited for relationship selling by compensating for non selling activities while providing incentives to motivate sales
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Term
| questions for combination plans |
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Definition
- appropriate size of incentives relative to base salary?
- should ceiling be imposed on incentive earnings?
- when should the sale be credited?
- should team incentives be used? How?
- how often should incentive payments be made?
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Term
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Definition
short term incentive programs to accomplish specific objectives
winners receive prizes, recognition, sense of accomplishment
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Term
| successful contests require |
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Definition
- clearly defined objectives
- reasonable profitability of rewards for all
- attractive rewards
- promotion and follow-through
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Term
| criticisms of sales contests |
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Definition
- may not produce lasting improvements
- salespeople may borrow sales form another period to increase sales during contest periods
- poorly administered contests can hurt cohesiveness and morale
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Term
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Definition
- recognition makes peers and superiors aware of outstanding performance
- offer everyone a reasonable chance of winning
- recognize best performers across several dimensions
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Definition
- eliminate non-selling activities
- no more than three performance measures
- exclude inappropriate measures
- hold supervisors accountable
- tighten sales credit rules
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Term
| rewarding A while hoping for B |
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Definition
- straight commission may work for transactional selling
- relationship selling requires operating within a team and securing, building, longterm relationships with profitable customers
- organizations must reward these additional behaviors
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Term
| Which of the following is a basic question that needs to be addressed when developing successful sales compensation plans? |
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Definition
- Which compensation method will motivate specific selling activities?
- How much of a salesperson's compensation should be incentive based?
- what mix of financial incentives will motivate the sales force?
- What mix of non-financial incentives will motivate the sales force
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Term
| Fenton is developing a compensation plan for the salespeople in his new company. In order to have a successful compensation plan, a basic question he will need to address is? |
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Definition
| Which compensation plan is most appropriate for motivating specific kinds of selling activities? |
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Term
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Definition
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| three primary methods of compensating salespeople |
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Definition
| straight salary, straight commission, and combination plans |
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Term
| a sales manager wanting his/her salespeople to focus on customer relationships will likely use a ______ compensation plan |
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Definition
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| salespeople who are primarily engaged in ___ will likely be paid straight salary |
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Definition
| nonselling activites, customer problem analysis, product stocking, market promotion |
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| a sales compensation plan based on sales of the most profitable items is a |
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Definition
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| Olga, like most salespeople, was always was paid commissions based on sales volume but recently she started being paid commissions based on ______________. |
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Definition
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| sales contests should not |
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Definition
| be considered of a firms ongoing compensation plan |
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Term
| better automobiles and better office facilities are examples of |
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Definition
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| which of the following is a guideline for effective formal recognition programs |
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Definition
- performance-based
- balanced
- a ceremony should be involved
- program must be in good taste
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Term
| managing sales personnel expense accounts creates the conflict between _ and _ of sales people |
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Definition
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Term
| a sales quota system may not be working if |
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Definition
| nobody makes the goal, there are no overachievers, only superstars make the goal |
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Term
| one negative outcome of__ compensation and incentive programs is they lead to confusion among salespeople |
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Definition
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| one advantage of straight commission sales compensation is it |
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Definition
| causes compensation costs to vary with sales |
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Term
| yurgen's company offers their salespeople a draw against commissions to help offset their |
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Definition
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when considering incentive plans,
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Definition
| most companies pay incentive earnings monthly |
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Term
| rhonda's company uses a combination salary comp plan. The incentive portion of the plan will likely be large if |
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Definition
| selling skill in an important component to overall success |
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