|
|


| 

 |
| 
| 

1. Objectives of a compensation plan.

2. Developing the compensation plans -
basic & combination.
3. Trends in compensation plan.
 |  
| 




Y firm should decide which general & specific
objectives it wants to achieve through the
compensation plan. Some of them are:
Ñ Yttracting, motivating & retaining good sales persons
(general)
Ñ Ychieving sales & gross margins (general)
Ñ Developing new customers (specific)
Ñ Introducing new products (specific)
 | 
| 


|


ÿ
 


(i) income stability;
(ii) flexibility;
(iii) simple.

ï  no incentive for extra efforts; may

lead to average performance
ÿ
 

(i) attracts high performers;
(Ii) less supervision,
(iii) selling costs controlled

ï : non ± selling activities are neglected;

focus on sales & not on profitable sales.

ÿ
ÿ
ÿ


It combines advantages & minimizes disadvantages.

|
 
| 



|

Ñ 25% companies use straight salary or straight

commission plans.
Ñ 75% firms use combination plan, though salary to
incentives ratio varies.
Ñ Fixed salary varies 60 to 80%
 
|
|

1. What is motivation ?
2. importance of motivation.
3. Behavioral concepts
4. Selection of motivational tools.
5. Challenges in sales force motivation.
 o | 



Ñ Y person has many needs. When a need is aroused to
a sufficient intensity, it becomes a motive, which drives
the person to act.

Ñ In a sales situation, motivation is the degree of efforts

the salesperson spends to complete various activities
of the sales job.
  
  


÷otivating salespeople is important & difficult

because of:
Ñ ´nique nature of sales job.
Ñ Individuality of salespersons.
Ñ Varied & conflicting sales goals.
Ñ Changing marketing environment.
  

 |

Before developing motivational mix, sales manager

must understand some of motivational theories.
Ñ ÷aslow¶s hierarchy of needs,
Ñ Hertzberg¶s dual ± factor theory,
Ñ Expectancy theory,
Ñ Role theory,
Ñ Churchill, ford, walker model
|

  


|

Before selecting motivational tools / mix,

understand :
(i) specific needs of each sales person.
(Ii) performance criteria of sales persons.
Ñ ÷

  
÷ 


The following elements / components :

(a) basic compensation plan, including salary,

commissions, and fringe benefits.

(B) special financial incentives, consisting

sales contests, bonus payments.
 (C) non ± financial rewards:
Ñ Promotion (may include fin. Reward)
Ñ Recognition
Ñ Challenging assignments.

(D) additional motivational tools:

Ñ Sales training
Ñ Sales meetings
Ñ Effective supervision & leadership
Ñ Performance evaluation
Ñ Corporate / sales culture.
|
|
 |
1 what is sales leadership?
2 sales leadership roles.
3 sales leadership skills.
4 sales leadership styles.
 o ||
|
 | 
Ñ peadership is a process in which one person
influences other people¶ s behavior for
achieving specific goals.
Ñ ÷anagement is mainly learned / learning
process, leadership is mainly emotional
process.
Ñ peadership is necessary for a sales manager¶s
effectiveness.
 |
|
 | 
|

Ñ Y sales manager has multi faceted roles like

recruiting, selecting, training, motivating,
evaluating & controlling the sales force.
Ñ Representing the firm to various outside
agencies.
Ñ Interactions with superiors, & subordinates
 |
|
 | |

|

Ñ Communication & listening.

Ñ Problem solving skills.
Ñ Interpersonal skills (good working
relationship)
Ñ Persuasive skills (not threatening )
 |
|
 | |
|
Ñ peadership style is how a manager behaves.
Ñ Broadly, 
 of leadership: transactional &
transformational
(Y) 

  
It deals with supervision in 2 ways:
(I)  ï  IN THE FOR÷ OF
REWYRDS & P´NISH÷ENT.
(Ii) ! on getting job done.
Both have short-term focus, & one way
communication on what, how, when & where to do.
ÿ

  ÷
    ï"
ï"

Ñ It transforms the basic values, beliefs, &

attitudes of followers, who perform beyond
expectations. Such leaders are called
charismatic.

Ñ They are proactive, listen & care for followers,

use 2-way communication.
 |
| 


 |   

(I) having an vision,
(Ii) Common goals are
communicated,
(Iii) pead by example / role
models,
(Iv) Give individualized support.
 | 


 |

Y good sales manager should be a

situational leader-i.e. Ybility to tailor
/adjust leadership style to the needs of
the current situation & individual
salesperson.
 
|
|| |


 |
Ñ # 
Is a part of leadership, consisting of directing / overseeing
daily activities of sales people. To be effective, a sales
manager uses many tools & techniques to interact with sales
people. These are: direct and indirect methods.
Ñ ï
÷
" ï
Telephone, e-mail, computer-based, sales meetings, visiting
with sales persons.
Ñ ï
÷
" ï
Sales reports, expense reports, compensation plans, sales
analysis reports.
 |
|


Ñ ÷orale is mental & emotional attitudes of a

person to the environment, including family,
employer, society.

Ñ Y sales manager deals with individual & group

morale.
  
 #  ÷  

(I)  $ 
ï

pack of communication, status in the company,
treatment, working condition, recognition,
compensation plan, nature of job, job-security,
promotions, territory allocation, sales quotas, reports.
(II)    
Financial problems, poor
health, domestic reasons.






 

|
|


|

1 SYpES YNYp SIS

2 ÷YRKETING COST (& PROFITYBIpIT )
YNYp SIS
3 SYpES FORCE PROD´CTIVIT
4 NYT´RE & I÷PORTYNCE OF
PERFOR÷YNCE EVYp´YTION.
5 CONTROppING THE SYpES FORCE.
|
|

||

It includes measuring and evaluating actual

sales in comparison to sales quotas (goals).
The major use for sales analysis is to detect
strengths &weaknesses in sales effort. Two
methods / tools are used for sales analysis:
(Y) SYpES ± VYRIYNCE YNYp SIS
(B) ÷ICRO SYpES YNYp SIS
 ÿ  |
|

|  


||

It measures contribution of different factors to the gap

between actual performance & sales goal.

E.G. : Y firm¶s i quarter sales goal was 1000 motors at rs.

20,000 per motor, totaling %. Yt i quarter¶s
end, only 800 motors were sold at rs. 19,000 each, for
sales revenue = Rs. &'%. The sales variance
was ± 24% of sales performance
 WYS D´E TO PRICE DECpINE YND VOp´÷E
DECpINE?
RS. %
VYRIYNCE = (20,000 ± 19,000) = 8,00,000 17
D´E TO (800)
PRICE

VYRIYNCE = (20,000) = 40,00.000 83

D´E TO (1,000-800)
VOp´÷E


&
 ÷ajor reason is failure to achieve volume target.

Further analysis of sales volume is done by micro

sales analysis.

ÿ



It analysis sales by territory, sales reps, product line, &
customer.
Taking earlier example, we analyze sales by territories



#

#  (
ï
NR 250 200 80
ER 200 190 95
WR 300 170 57
SR 250 240 96

TOTYp = 1,000 800 80

Sales manager focuses on WR & NR.
Further analysis is done by product
item, sales rep., & Customer to find
reasons & take corrective actions.
  
|
 


||
Ñ ÷arketing cost analysis analyzes sales volume &
selling expenses (or marketing costs), in order to
determine profitability of territories, products, market
segments & channels.
Ñ Purpose is to measure the relative profitability of
particular aspects of sales operations. This information
helps to decide which sales / marketing activity should
be expanded, reduced, or eliminated.
 ï# ÷  
 

 


  



&
Identify functional (activity) costs & convert
traditional (natural) expenses to functional costs.
 FOR EXY÷PpE:


  
   


 
  

 
 

 
  
   


  
    
 

        

 
    

      

    ! 


%
Yllocate functional costs to marketing entities
(like territories, products, channels).
E.G. BYSES OF YppOCYTION OF F´NCTIONYp COSTS

m

   

 
   





 



"


"



 m
 



  
  
  



 
m

m

m


 
 
  
  
 

 



   ï#


Ys selling costs are going up, firms use

following methods to improve productivity
    , 
By effective use of promotional tools like
marketing, online marketing, tradeshow
  
ï#
  ,
By hiring agents on straight commission, use
inside sales persons, outside sales persons
for critical selling activities only.
 ÷
# 

 ï#




 



 
ÿ 

ÿ

# .

Ñ WHYT IS P.E. & ITS P´RPOSE.
Ñ P.E. & DEVEpOP÷ENT.
Ñ P.E. & DIRECTION.
Ñ P.E. & DIFFIC´pTIES.
ÿ
÷ 
 


Ñ HEpPS IN INCRE÷ENTS & PRO÷OTIONS.

Ñ HEpPS IN SYpES S´PERVISION.
Ñ HEpPS IN ÷OTIVYTION.




|
|

IT HYS 4 STEPS:
(Y) Establish performance standards. (P.S.)
(B) measure actual performance.
(C) evaluate performance against standards.
(D) analyze causes & take corrective actions.
ÿ

"




# 




Sales volume quota, expense quota, calls per day,
market share, etc.
 # 


(I) )  
 ± Product knowledge, customer
relationship.
(ii)    
: Punctuality, attitude,
cooperation.
ÿ
÷ # 
#  ÷ 


Basic sources:
(i) SYpES
(ii) REPORTS.
 ÿ

| || 
 
|

|

Ñ ´se ³sales analysis´ for finding causes.

Ñ If performance is good, appreciate / reward.
Ñ If performance is unsatisfactory.

(I) counsel / train sales persons; or

(Ii) ÷odify strategies / policies; or
(Iii) power standards to realistic level.



 |

|  


  

|






(a) SOCIYp & C´pT´RYp,

TECHNOpOGICYp, & CO÷PETITIVE
ENVIRON÷ENT,
(b) ´NETHICYp SYpES FORCE
BEHYVIO´R;
(c) SOCIYp RESPONSIBIpIT ;
(d) pEGISpYTION YFFECTING SEppING &
SYpES ÷YNYGE÷ENT.


 |     

|







Ñ SOCIOC´pT´RYp FYCTORS YRE VYp´ES &
BEpIEFS OF Y SOCIET . THE VYR IN DIFFERENT
SOCIETIES.
Ñ TO YVOID ÷ISTYKES, Y SYpES PERSON ÷´ST
pEYRN YBO´T C´STO÷ERS¶ C´pT´RE, VYp´ES,
GEOGRYPH , YRTISTS, REpIGION, REG´pYTIONS,
& POpITICYp STR´CT´RE.  Y JYPYNESE
C´STO÷ER WIpp B´ Y PROD´CT ONp YFTER Y
REpYTIONSHIP IS DEVEpOPED.


 |     

 







Ñ IT INCp´DES INVENTIONS, INNOVYTIONS,
& YDVYNCES IN SCIENTIFIC
KNOWpEDGE. S´CH TECHNOpOGICYp
YDVYNCES HYVE YN I÷PYCT ON THE
JOBS OF SYpESPERSONS. . ´SE OF
INTERNET TECHNOpOG .


 |     

! 




Ñ CO÷PETITION INCp´DES ÷YRKETING

YCTIVITIES OF CO÷PETING FIR÷S (OR
OTHER S´PPpIERS). IN ÷YN CYSES,
THIS HYS YN I÷PYCT ON SYpES
ORGYNIZYTION OF Y FIR÷. .
WORKpOYD OF SYpESPERSONS ÷Y GO
´P D´E TO CO÷PETITION.


 |     
ÿ 

|
|
 
Ñ SYpES PEOPpE SHO´pD BE ETHICYp IN
DEYpING WITH THEIR
(I) OWN CO÷PYN ,
(II) COppEYG´ES,
(III) C´STO÷ERS,
(IV) CO÷PETITORS.


 |     
(I) OWN CO÷PYN . SO÷E
SYpESPERSONS HYR÷ THEIR OWN
CO÷PYNIES B ÷IS´SING CO÷PYN
YSSETS, CHEYTING IN SYpES
CONTESTS, FYpSE SYpES REPORTS.
(II) COppEYG´ES / COWORKERS.
TYKING YWY B´SINESS FRO÷ CO-
SYpESPEOPpE, ´NDERC´TTING
COppEYG´ES.
(III) C´STO÷ERS. OVER PRO÷ISING,
DISTORTING TR´TH, BRIBING.
(IV) CO÷PETITORS. SPEYKING BYD,
DY÷YGING PROD´CTS / DISPpY S.


 |     
ÿ|
| 
| 


Ñ IT ÷EYNS Y FIR÷¶S ÷YNYGE÷ENT HYS Y

RESPONSIBIpIT , (IN YDDITION TO CO÷PYN ¶S
INTEREST), TOWYRDS THE WEpFYRE & INTEREST
OF THE SOCIET .
Ñ Y FIR÷ HYS 4 RESPONSIBIpITIES TO ITS
STYKEHOpDERS : ECONO÷IC, pEGYp, ETHICYp, &
DISCRETIONYR .

Ñ   ÷ 
. TO ÷YXI÷IZE

PROFITS B PROD´CING & ÷YRKETING GOODS /
SERVICES THYT SOCIET WYNTS.


 |    ! 

Ñ pEGYp RESPONSIBIpITIES. ECONO÷IC GOYpS

TO BE YCHIEVED WITHIN pEGYp FRY÷EWORK
I÷POSED B STYTE / CENTRYp GOVTS.
Ñ ETHICYp RESPONSIBIpITIES. INCp´DE YCTING
WITH FYIRNESS & I÷PYRTIYpIT . ´NETHICYp
BEHYVIO´R OCC´RS WHEN Y CO÷PYN /
INDIVID´Yp GYIN YT THE EXPENSE OF SOCIET .
Ñ DISCRETIONYR RESPONSIBIpITIES. YRE
VOp´NTYR & G´IDED B DESIRE TO ÷YKE
SOCIYp CONTRIB´TIONS.


 ÿ
|

 
|



|     

|
|



Ñ SYpES DEPT. YCTIVITIES CYN HYVE pEGYp

I÷PpICYTIONS. SYpES ÷YNYGERS NEED TO KNOW &
CO÷÷´NICYTE WITH pEGYp OFFICERS OF THE FIR÷ /
pYWERS ON ÷YTTERS pIKE PRICING & REpYTIONS
WITH CO÷PETITORS (YS PRICE CYRTEpS YRE
IppEGYp), DISP´TES WITH C´STO÷ERS (CONS´÷ER
CO´RTS), & OTHER ISS´ES COVERED ´NDER
VYRIO´S STYTE / CENTRYp GOVT. pYWS pIKE ÷RTP,
pYW OF CONTRYCTS, ETC.
Ñ SYpES ÷YNYGERS SHO´pD YVOID COSTp
pITIGYTION & ´NFYVO´RYBpE P´BpICIT .


 |     
|

|


 ||

Ñ THERE IS NO ÷YGIC FOR÷´pY TO ÷YKE Y

SYpE. B´T IF Y SYpESPERSON FOppOWS
BEpOW ÷ENTIONED pOGICYp STEPS, IT
I÷PROVES THE POSSIBIpIT OF ÷YKING Y
SYpE. THESE SEppING (YCTIVITIES) YRE
KNOWN YS È   
 *  È   * EYCH
STEP, pIKE Y CHYIN, OVERpYPS OTHERS.
SEQ´ENCE OF STEPS CYN BE CHYNGED
DEPENDING ON SIT´YTIONS.


 |     
| 
|
| || 

1. PROSPECTING & Q´YpIF ING.

2. PREYPPROYCH.
3. YPPROYCH.
4. PRESENTYTION.
5. OVERCO÷ING OBJECTIONS.
6. TRYIp CpOSE / CpOSE.
7. FOppOW-´P.


 |
| |
 
|
O´T OF ÷YN ÷ETHODS, WE DISC´SS
THE FOppOWING:
(Y) STI÷´p´S ± RESPONSE ÷ETHOD
(CYNNED YPPROYCH)
(B) FOR÷´pY ÷ETHOD (YIDYS
YPPROYCH)
(C) NEED ± SYTISFYCTION ÷ETHOD
(FYBV/BENEFIT SEppING YPPROYCH)
(D) REpYTIONSHIP SEppING
(TRYNSYCTIONYp, VYp´E ± YDDED,
PYRTNERING YPPROYCH.)
 
|


  |  
    

THIS IS CREYTIVE FOR÷ OF SEppING.

SYpES PERSON YSKS PROBING
Q´ESTIONS TO F´pp ´NDERSTYND
PROSPECT¶S NEEDS / PROBpE÷S. HE
THEN SEpECTS & PRESENTS FEYT´RES,
YDVYNTYGES, BENEFITS, & VYp´E THYT
WIpp SYTISF PROSPECT¶S NEEDS. FOR
EXY÷PpE,


 |     

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# ï 
 

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