Sales Force by Iipm

8/9/2019 Sales Force by Iipm

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SALES FORCE COMPENSATION

KAREEM DUMBA

MASUMI AMATAYA

ARVIND KUMAR

PRESENTED BY :-

1Ss 09-11




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 thats responsible forselling products or services

The method of sales force compensation is the planby which the reps earn or reach the intendedlevel.

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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

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SALES FORCE COMPENSATION PLAN

Good sales compensation plan

Correlate eff ortsand results with

rewards

Controlsalespeoples

activities

Ensure proper treatment of customers

Attract and keep competent

salespeople

Motivatesalespeople

Be economical yet

competitive

Be fair Be simpleGive salespeopleboth security and

incentives

Be flexible yetstable

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To motivate salespeople:

According to survey of most companies do a relatively

a good job of using the sales compensation plan tomotivate their sales people.

Clearly designing a plan that motivates salespeople to

meet or exceed their goals is not an easy task.


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To correlate efforts and results with rewards

The situation can be very problematic

A person can work very hard but get few resultsand therefore get little rewards.

This can happen even when the minimal resultsare due to factors beyond the control of salesperson.

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To control salespeople activities

A good pay plan should act as an unseensupervisor of sales by enabling the managementto control and direct the sales reps activities.

The compensation plan must offer incentivesflexible enough to cover such varied task as fulltime selling , missionary work or controllingselling expenses.

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To ensure proper treatment of customers

Companies will be increasingly competing on thebasic customer service

A good compensation plan is one that motivates salespeople to treat customers properly thus providingcustomer satisfaction.

many companies such as AT&T, Seibel System andIBM are using customer satisfaction merits on onefactor in compensation determination

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To attract and keep competent salespeople

Its should also assist in attracting high caliberreps.

A sound plan should help to keep desirable

people.

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SALES COMPENSATION PLAN

To be economical yet competitive

Most firms want to keep their sales force expensesin line with those of competitors .

It is not always easy to balance being economical

with being competitive.

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To be flexible yet stable

Flexibility also is needed to adjust for differenceson products

The basic pay plan should contain features that

enable a company to meet changing condition without having to change basic plan.

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A secure income an incentives income

Every plan should provide a regular income, atleast at a minimum level.

This steady income should not be so high that itlessens the desire for incentive pay

A good pay plan should furnish an incentive toelicit above minimum performance .


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simplicity

Simplicity and flexibility are conflicting goals thatis 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 salespeopleto understand readily


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Fairness

One way to ensure fairness in plan is to strive tobase it as much as possible on measurable factorsthat are controllable by sales force .


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DESIGINIGN A COMPENSATION PLAN

STEPS IN DESIGINING A SALES COMPENSATION PLAN

REVIEW JOBDES RIPTIONS

IDENTIFY PLA NSOBJECTIVE

ESTA BLISH LEVE OF

COMPENS ATION

DEVELOP THE METHOD OF

COMPENS ATION

PRETEST A NDINTALL PLA N

DECIDE ON INDIRECT MONETARY

COMPENS ATION

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1. Review the job descriptions

This should disclose the exact nature, scope andprobable 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.


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3. Establishing the level of compensation

In many respects, the level of compensation ismore important then the methods.

Management is interested in thecompensation level, because that is whatattracts most salespeople.


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4. Developing the method of compensation

Salaries

Commissions

Bonuses

Indirect monetary i.e. vacation and insurance

Expenses


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5. Indirect monetary compensation

An indirect monetary benefits an item thathas the same effect as money, though paymentis less direct then a salary or commission.

Indirect monetary benefits are also referred toas fringe benefits.


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6. Final steps in developing of the plan

1. PRETEST THE PLAN:-

This involves determining how the proposedplan would have operated if it had been effect

during the previous few year

Pretesting a compensation plan is a simulationexercise that can easily be done on a computer.


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2. INSTALL THE PLAN:-

A compensation plan may be installed throughout theentire sales force

Sometimes a company will phase in a new plan over aperiod of time- 3 to 6 months or even a year

The final steps is to make certain the entire plan willbe evaluated frequently to prevent it form becomingoutmoded.


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Sales Force by Iipm