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CHAPTER 10: SALES COMPENSATION AND INCENTIVES - Coggle Diagram
CHAPTER 10: SALES COMPENSATION AND INCENTIVES
Characteristics of Great Sales Compensation Plans
Calibrate with firm's profit objectives
Focus on motivating salespeople for tactical and strategic goals
Directly tied to measurable criteria
Include fixed and variable elements
Keep the plan simple yet thorough
Steps to Executing Compensation Plans
Research past sales and relationships
Define objectives and goals
Develop plan with pay structure and formula
Test plan with realistic sales results
Document plan for easy understanding
Types of Compensation Plans
Short-term incentive programs with specific objectives
Winners receive prizes, recognition, sense of accomplishment
Elements for successful contests: clear objectives, exciting theme, reasonable rewards, promotion
Sales Contests
Straight salary, straight commission, combination plans
Use of bonuses as incentives
Effective sales contests and potential pitfalls
Importance of nonfinancial rewards
Issues with expense accounts
Decision-making on compensation mix and level
Additional Considerations in Sales Compensation
Rewarding long-term customer relationships
Treating salespeople as mission-critical assets
Differentiating payouts for performance levels
Avoiding direct competition among salespeople
Reducing role conflict, ambiguity, and stress
Managing plan changes effectively