Sales Management II
Sales Management - Chapters 10 and 11
Sales Management - Chapters 10 and 11
Kartei Details
| Karten | 23 |
|---|---|
| Sprache | English |
| Kategorie | Marketing |
| Stufe | Universität |
| Erstellt / Aktualisiert | 15.05.2016 / 16.05.2016 |
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10) Sales Force Compensation
Three Goals for Designing Sales Force Compensation Plans
- Compensate reps for work done
- Motivate reps to work productively
- Control(guide) reps' work efforts
10) Sales Force Compensation
"Direct" Management Control Problems
- Sales Force Sizing
- Sales Force Deployment
- Sales Force Planning
- Sales Territory Alignment
10) Sales Force Compensation
"Indirect" Management Control Problems
- Sales Force Incentive Plan Desin
- Sales Goal-setting
10) Sales Force Compensation
What is the fundamental Problem of sales force incentive design? + Why?
Reconciliation of the different objectives of the firm ("principal") and the salesperson ("agent")
For example,
- Firm's goal is to maximize profits
- Rep's goal ist to maximize income
Why? Because the allocation of the rep's effort which meets one objective may not satisfy the other.
10)
Common Goals for Sales Force Compensation Plan Design (10)
Obere Reihe:
- Effort = Success = Compensation (Prozess)
- Profit maximizing control of salesforce effort (Pfeife)
- Incentives for proper treatment of customers (Schatztruhe)
- Attract, keep and develop competent salespeople (Graduating person)
- Economical to administer (Angebot-Nachfrage-Kurve)
Untere Reihe:
- Steady income but also incentives (Graph income + incentives)
- Stable system but also flexible enoug to adapt to varied market conditions (Yoga market)
- Simplicity and easy of understanding (Glühbirne)
- Motivation for highest performance at given renumeration level (Treppe)
- Fairness to provie equal income for equal performance (gleiches Geld)
10) Sales Force Compensation
Situations Calling for Sales Compensaion Plan Design (11)
- New Sales Force Creation
- Sales Force Merger
- Sales force restructuring
- Inequity of potential
- Intensified Competition
- Management Directive
- New Product Launch
- Refocus of Sales / Business Strategy
- Change in Measurement Source
- Maturing Product Lines
- Consolidation of Customer Base
10) Sales Force Compensation
Sales Compensation Plan Components
Incentives (Variable, at-Risk) --> 4
- Bonus (fixed amount)
- Commissions (Function of output measure)
- Stock Options
- Contests
10) Sales Force Compensation
3 Advantages of Commissions
- Commissions depending on outcome can be strong motivators
- the firm can direct its sales force towards certain activities
- a firm can transfer a part of the selling risk to the salesperson
10) Sales Force Compensation
4 Disadvantages of Commissions
- may lead to short-term behavior: salespersons only sell when they are rewarded immediately
- high-paid salespersons are not motivated to enter a ledd paid management position
- if the industry is down the better salespersons with higher income usualle leave the companies first
- additional rules required for sales for which several salespeople are responsible for
10) Sales Force Compensation
Advantages of Salary (6)
- Can be implemented with lowest administrative effort
- provides financial stability
- compensates tasks that do not immediately lead to sales
- can be adjusted over time and then provide incentives, too
- motivates to be more loyal
- represents fixed costs that lead to decreasing selling costs per unit
10) Sales Force Compensation
Advantages of Bonuses (4)
- provides the company with flexibility because they can change the goals for setting bonuses as the selling conditions change
- motivate salesperson for a specific behavior, e.g. emphasizing sales of a specific product that is below the target
- serve as a repair instrument for any dyscuntionality of commissions
- can be given for the achievement of certain outcome goals (e.g. revenue with new products) or provide a certain input (e.g. a specific nmber of visits to customers)
10) Sales Force Compensation
Principal Agent Problem --> The Problem + The Solution (Farley 1964)
The problem:
- Firm's objective: Maximize contribution
- Rep's objective: Maximize total income
Problem: How do you reconcile objectives?
The Solution: (Farley 1964)
Step 1: Pay commission on achieved contribution, rather than sales
Step 2: Set equal comission rates
10) Sales Force Compensation
Pros: Delegation of Pricing Authority
Is usual in the following sitations: (8)
- Salespersons have better information on the prices acceptable to customers
- product and service offering is complex (systems selling)
- customers request immediate price offers
- customers are financially very important
- salespersons really identify themselves with the company
- products are perishable
- prices cannot be determined in advance
- customers agressively negotiate the price
10) Sales Force Compensation
Pros: Delegation of Pricing Autority
Is appropriate if (1)
Commission is based on realized profit (after all discounts)
11) Evaluation and Control of Sales Force Performance
1) Which figure usually represent the success of a salesperson? (3)
- Sales Volume
- Profit Contribution
- Quota Achievement
11) Evaluation and Control of Sales Force Performance
2) Which are examples for other factors that the success depends on? (3)
- Potential of territory
- Competition
- Business Cycle
11) Evaluation and Control of Sales Force Performance
3) If these other influencing factors could be quantifies, what would the individual performance be calculated as?
as the residual value
11) Evaluation and Control of Sales Force Performance
5) What are usual measures of the quantitavite effort of a salesperson? (4)
- Number of calls
- Number of customer complaints
- Number of activities (visits of trade shows, product demos)
- Numver of services provided
11) Evaluation and Control of Sales Force Performance
6) Which are measures of the qualitative effort of a salesperson (5)
- Attitude
- Product, customer- and company related know-how
- Selling skills
- Aptitude
- Number of trainings attended
11) Evaluation and Control of Sales Force Performance
7) What is the main problem of measuring the qualitative inputs? (2)
- interrater reliability (the degree of agreement among raters)
- a fair weighting of all factors
11) Evaluation and Control of Sales Force Performance
Sales Force Control Systems and their Impact on the Process of Motivation:
Sales force Control Philosophies: Behavior Based
- considerable monitoring
- high levels of managerial direction
- subjective and complex evaluation
11) Evaluation and Control of Sales Force Performance
Sales Force Control Systems and their Impact on the Process of Motivation:
Sales force Control Philosophies: Outcome-based
- little monitoring
- little managerial direction
- objective measures of outcomes
11) Evaluation and Control of Sales Force Performance
Sales Force Control Systems and their Impact on the Process of Motivation:
Process (4 steps) + großer Kasten darüber
großer Kasten darüber : Sales Force Control Philosohpies
Motivation --> Level of effort --> Job performance --> Rewards
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