sales force by iipm
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SALES FORCE COMPENSATION
KAREEM DUMBA
MASUMI AMATAYA
ARVIND KUMAR
PRESENTED BY :-
1Ss 09-11
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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 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.
SALES FORCE COMPENSATION PLAN
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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 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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SALES FORCE COMPENSATION PLAN
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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SALES FORCE COMPENSATION PLAN
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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SALES FORCE COMPENSATION PLAN
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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SALES FORCE COMPENSATION PLAN
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 .
SALES FORCE COMPENSATION PLAN
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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
SALES FORCE COMPENSATION PLAN
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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 .
SALES FORCE COMPENSATION PLAN
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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.
DESIGINIGN A COMPENSATION PLAN
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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.
DESIGINIGN A COMPENSATION PLAN
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4. Developing the method of compensation
Salaries
Commissions
Bonuses
Indirect monetary i.e. vacation and insurance
Expenses
DESIGINIGN A COMPENSATION PLAN
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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.
DESIGINIGN A COMPENSATION PLAN
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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.
DESIGINIGN A COMPENSATION PLAN
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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.
DESIGINIGN A COMPENSATION PLAN
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SALES FORCE COMPENSATION
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