Sales Management

Sales Force Compensation and Evaluation

Sales force Compensation

The most important motivating factor- pay structure
Objective To attract quality sales people To improve productivity level of existing sales persons Optimize sales efforts by sales persons Retaining quality manpower & reduce attrition rate Effective compensation plan Fair wages & regular flow of income Linked to efforts and performance No uniform way of designing compensation plan Organizations to take various aspects into consideration such as type of work, nature of product, sales persons age qualification and experience

Sales force Compensation

Types of compensation
Financial Straight salary, straight commission, bonus + incentive, salary + incentive, drawing acc + commission, profit sharing Non-financial Promotions, recognition, personal development, medallion, certificates, corodpathy schemes ( LIC) Fringe benefits (medical, retirements, stock option, gratuity, pension, reimbursements, Perks ( car, driver, housing) sales contests, incentive trip

Sales force Compensation

Steps in designing compensation plan
Determine compensation objective: Target, achievement, customer, call etc.)
Determine major compensation issues( industry structure, competitors etc.) Long /Short term compensation plan Clarity in communication of plan and mutual benefit without bias Appraise the compensation plan periodic reviews and relationship of compensation plan with attrition rate

Evaluation of sales force

Performance appraisal Crucial part of evaluation, helps in promotion, reward and recognition, quality and quantity of work done

Employees behavior on the job - good - bad average

Relative method: compare performance with that of others Absolute method: SM makes judgment based on sales volume, revenue etc. Trait based: Reliability, honesty, loyalty not performance

Outcome based: amount of sales, number of product sold, (unit / value), profitability
Behavior based: No.of calls/working days, sales activities