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Designing compensation plans

  1. •Define the Sales job : The 1st step is to reexamine the nature of sales job. Up-to-date written job descriptions are the logical place to start. •Consider Company’s General Compensation Structure : Most large companies, and many smaller ones, use job evaluation system to determine the relative value of individual jobs. The methods are I. Simple Ranking II. Grading III. Point system IV. Factor comparison method V. Job evaluation & sales position
  2. Designing Compensation Plans  Consider Compensation Patterns in Community & Industry: Because compensation levels for sales personal are related external supply & demand factors, it is important to consider prevailing compensation patterns in the community & industry.  Determine Compensation Level : Management should determine the amount of compensation a salesperson receive on average.  Provide for Various Compensation Elements : Basically, 4 elements are there 1. Fixed Element 2. Variable Element
  3. Designing Compensation Plans 3. Fringe benefits 4. Reimbursement of expense  Special Company Needs and Problems: It is often used to increase marketing effectiveness.  Consult the present sales force: Management should encourage sales personnel about their grievances in compensation plans.  Reduce tentative plan to writing & pretest it: For clarification & to eliminate inconsistencies the tentative plan is put in writing.
  4. Designing Compensation Plans  Revise the plan: The plan is then revised to eliminate trouble spots or deficiencies.  Implement the plan and provide for follow up: At the time the new plan is implemented, it is explained to sales personnel and feedback is taken from them.
  5. Types of Compensation Plans  Straight Salary Plan  Straight Commission Plan  Combination Salary and Incentive Plan  Use of Bonuses  Fringe Benefits
  6. Supervision of Sales Personnel Management controls sales person through supervision. Regardless of who does the supervising, the objective is to improve the job performances of sales personnel. There are some conditions under which supervision is needed. These conditions are: 1. Sales personnel turnover rate excessive in a branch. 2. High turnover of accounts. 3. Increased complaints from customers. 4. Low ratio of order to sales call. 5. Increase ratio of selling expenses to sales in an organizational unit
  7. Supervision of Sales Personnel Key aspects of Supervision are:-  Effective communication with salespeople  Clear office policies and procedures  Regular review of the transactions and associated documents.  Training requirements  Regular performance review
  8. Supervision of Sales Personnel  Qualification:- Sales supervisors are selected among the sales force, but besides having the qualifications they must recognize training needs, know how to train, be patient with those who have less skill, and be tactful in pointing out ways of doing things.  Who should supervise? Depending upon the company and its organization, sales personnel may be supervised by home office personnel, branch or district managers. In other words, sales supervision may be either through executives as one of their job responsibilities, or through specialists whose jobs are mainly supervising
  9. Motivating Sales Personal Motivation is the amount of effort for the salesperson desires to expand on the activities associated with the sales job, such as calling on potential accounts, planning sales presentations, and filling out reports.
  10. Factors affecting motivational level of sales personal  Inherent nature of sales job:- Every sales job is a succession of ups and downs, a series of experiences resulting in alternating feeling of excitement and depression.  Salesperson’s boundary position and role conflicts:- The salesperson satisfy the expectations of the people within the company and with customers as well. Types of Role Conflicts:- 1. Conflict of Identification 2. Advocacy Conflict
  11. Factors affecting motivational level of sales personal  Tendency toward apathy:- Those who year after year, cover the same territory and virtually the same customers, lose interest and enthusiasm.  Maintaining a feeling to Group Identity:- The salesperson, working alone, finds it difficult to develop and maintain a feeling of group identity with other company salespeople
  12. Motivating Sales Personal  Need Gratification and motivation:-Behavioral research studies shows that all human activity – including the salesperson’s job behavior- is directed towards satisfying certain needs. 1. Maslow’s Hierarchy of Needs 2. Herzberg’s Two Factor Theory 3. Achievement- Motivation Theory 4. Expectancy Model
  13. Motivating Sales Personal  Interdependence and Motivation  Motivation and Leadership  Motivation and Communication 1. Interpersonal Contact 2. Written Communication