SalesMgmt-compensationandcontrol
-
Upload
vinitshah90 -
Category
Documents
-
view
215 -
download
0
Transcript of SalesMgmt-compensationandcontrol
-
8/7/2019 SalesMgmt-compensationandcontrol
1/35
Sales Force-CompensationBins M Mathew
-
8/7/2019 SalesMgmt-compensationandcontrol
2/35
Topics :-Sales compensation S ales&Dist Mgmt Dr. S .L
Gupta
-
8/7/2019 SalesMgmt-compensationandcontrol
3/35
Sound compensation
Motivation Performance, efficiency
Realize larger sale
Stability to sales seasonal fluctuations
Controlling performance
Recruitment, training and motivation CTC
Agrarian economy to developed economy
-
8/7/2019 SalesMgmt-compensationandcontrol
4/35
Hertzbergs Tw o factor Th eory
In India compensation is a h ygiene / motivator ?
Dissatisfiers: - (Hygiene) Extrinsic ( maintenance ) Company policy, administration, supervisions, relationshipswith supervisors, working conditions, salary , relationship withpeers, personal life, relationship with subordinates, status,security
Only aware of these when they are missing
Motivators: - Intrinsic ( Job content ) Achievement, recognition, nature of the work itself,
responsibility, opportunities for advancement and growth Things that make you want to work
-
8/7/2019 SalesMgmt-compensationandcontrol
5/35
R esearc h EvaluationR esearc h Evaluation
Pay structure
Security
Complements
Rewards in motivating the sales people
Importance of the set of motivators varies with demographic variable, position in the organisation
-
8/7/2019 SalesMgmt-compensationandcontrol
6/35
O bjectives of Sales compensation plan
To attract qlty sales force
Improve productivity level of SP
Optimizing the sales effort (Sales x expenses)
Reduces attrition
Better image projection
If you throw peanuts you get monkeys
-
8/7/2019 SalesMgmt-compensationandcontrol
7/35
Ch aracteristics of an effective compensationplan
S h ould address s h ort-term and long-term issues of SP
Fixed component and regular flo w
Compensation plan linked to performance & effort
Future orientation
Based on equity and equality
S h ould not be complex
Control
Participatory met h od
Compensation based on :- industry rate, nature of job, difficulty involved in realizing sales, ability and experience
-
8/7/2019 SalesMgmt-compensationandcontrol
8/35
Factors influencing t h e design of a compensation planF inancial ability of the firm to pay
-additional increments w.r.t higher profit marginsPull strategies
-S ales people order taker
-S ales person order giver
-Demand x S upplyNew product launches
-Pus h strategy (exp and qualified force)
Nature of the product
-B2B, B 2C
- Unit price of product, Premium products
Govt rules and regulations
-
8/7/2019 SalesMgmt-compensationandcontrol
9/35
Factors influencing Special company needs and problems
Increase marketing effectiveness-Overemphasize low margin items & neglect more profitable
products
Smaller order problem
Point-of-purchase displays
-
8/7/2019 SalesMgmt-compensationandcontrol
10/35
Compensation F inancial Reward
- Non financial Reward
Types of compensation plan
Salary
Non-financial compensation Higher order needs
Disposable income = (Salary tax)
Spendable income ( TAKE-HOME ) = (Disposable savings)
( current spending )
The level of reward, the type of reward, the method of implementation and reinforcement of the reward system are significant in attracting talent to the
organisation
-
8/7/2019 SalesMgmt-compensationandcontrol
11/35
Financial R e ward SystemFinancial compensation Plans
Straight Salary Plan
- S implest methods (17% use )
- Pay cheque weekly/monthly
- Bulk of Non selling task , Order taking
- B2B, B2C- S alary + increment plan
- S alary + allowance plan
- S uccess depends on supervision
F ixed component + Variable component + Expenses + F ringe benefits
(Basic support) (Commission)
(Profit sharing) / (Bonus)
(Reimbursement)
HPCL, BPCL, ONGC , B2B
-
8/7/2019 SalesMgmt-compensationandcontrol
12/35
Financial R e ward System
Straight Salary Plan +Situational factors
-Team involved in sales Performance ?-Pharmaceutical industry O.C, missionary
-S ales realized with sales support staff ( demo, inst, main ,supp )
- Pull strategy ?
- Fixed component inversely proportionate to selling effort
- Cash cows
- S ervice
- Economic downturns, seasonal business
M.R, (Relationship x transactional)
-
8/7/2019 SalesMgmt-compensationandcontrol
13/35
Financial R e ward System
Straight Salary Plan - factors
-lacks motivational effects
-not challenging hard working sales person
- hard burden to control
- prospecting and long term relationship building neglected
Context for straight salary ;- Routine selling jobs
Extensive missionary and educational selling jobs
Lengthy presales and post sales service and negotiations
-
8/7/2019 SalesMgmt-compensationandcontrol
14/35
Financial R e ward SystemStraight Commission Plan
-Compensation linked directly to performance
-risk compensation plan- Fixed or sliding rate (slabs for level of sales)- Weeding out- flat rate commission, Progressive / regressive rate of com. Differential- Aggressive sale operations
Progressive commission Plan
-Each quarter the progressive commission rate5% on first Rs. 20,000 = Rs. 1,0007% on next Rs. 80,000 = Rs. 5,60010% on everything over 1,00,000 = Rs. 3,000 (10% of rest)
----------------
The sales person sales of Rs. 1,30,000 = Rs. 9,600
Highly exp SP
(PRODUCTIVITY )
-
8/7/2019 SalesMgmt-compensationandcontrol
15/35
Financial R e ward System
Straight commission Plan + factors-rewards linked to ones own performance
-Control sales
Straight commission Plan - factors-no loyalty to organisation, less organised-price discounting - pressurize-easy-to-sell low-margin products- demotivated in down turns
-Administrative cost high-complex pattern
Highly exp SP
Regressive commission Plan
-Each quarter the progressive commission rate
10% on first Rs. 20,0007% on next Rs. 80,0005% on everything over 1,00,000
-
8/7/2019 SalesMgmt-compensationandcontrol
16/35
Financial R e ward SystemBonus and incentives
-S upplemental for above average performanceCustomer satisfaction
Customer retention
Adding new customers
New product
outstanding collection of overdue
-incentives tied to sales quota
Salary + incentive Plan (C ombination Plan)-S traight salary + variable proportion
-60%salary + 30% commission + 10% bonus + incentives- flex plan
+ factorsSecurity of fixed income
Control + motivation
Recession not likely to lose all income
-
8/7/2019 SalesMgmt-compensationandcontrol
17/35
Financial R e ward System
Drawing account and commission plan
-Drawing account credits the commission- Draw permissible limit Credit balance, debit balance
Allied methods- Equity holding of the company earned share
- S pecial remuneration plan-non selling activities
- Expense allowance plan
+ factors
Expenses can be checked
Assurance of regular income
Sales mans performance & market situations
- factors
Pressure for increasing comm. F or efficient and exp sale people
Concern to sell easy-tosell items
-
8/7/2019 SalesMgmt-compensationandcontrol
18/35
Financial R e ward System
Point based incentives
Upto 80% achievement of sales plan - Nil
81-90% of the achievement - 8 points
91-95% of the achievement - 12 points
96-101% of the achievement - 18 points
101-110% - 24 points
115% onwards - 30 points
Value per point Rs. 200 per point
A salesman achieving 115% of the sales plan
30 points x Rs. 200 = Rs. 6,000
-
8/7/2019 SalesMgmt-compensationandcontrol
19/35
N on-Financial Compensation
Promotions
h ig h er job responsibility Motivational tool Job enric h ment +
Recognition Programmes
medallions, C rorepati , Informal recognitionF ringe Benefits
medical benefitsretirement benefits
Life insuranceStock optionPaid vacationSick leaveML/ PL
Employment benefits
-
8/7/2019 SalesMgmt-compensationandcontrol
20/35
N on-Financial Compensation
Expenses accounts
reimburse expenses prevent padding 3 expense plans -- company pay
Expenses quota- SP pay ( SP are paid straig h t commission )
- company partially pay
Perks
Special status employeeStatus perks , Financial perks , Personal growt h perks
Office locationJob titleParking space
C ompany ve h icleDomestic h elpC lub members h ip
Training
-
8/7/2019 SalesMgmt-compensationandcontrol
21/35
Evaluation / control of Sales Force
Performance Test effectiveness of the sales programme
PE R FORMAN CE A PP RA IS AL
Th e evaluation of t h e performance of a salesperson by t h emgmt of an organisation in relation to some objectiveattribute of t h e job
-Ensure effective administration
-S election for promotion, rewards, termination. Other recognition
Development aspect :- performance, strengthening job skills, counseling,training
-
8/7/2019 SalesMgmt-compensationandcontrol
22/35
Types of Judgment for evaluating SalesPerformance
Relative method ( overall performance )1) Compare performance with other
Rank order from Best - Worst
2) Group evaluation
Top three-middle bracket- lower set
No clarity on how big or small the difference are, no information
Measured against peers
Absolute method ( specific performance )
1) Performance measured in sales volume, market share / revenue
Diff in evaluation standards between mgrs, Diff selling situation
Measures are objective , measured against performance
-
8/7/2019 SalesMgmt-compensationandcontrol
23/35
Focus of t h e measureTrait based ( personal traits )
Decisiveness, reliability, energy, loyalty ( subjective )
Describing a salesperson
Outcome based ( result of selling process )
amount of sales, no of product/units/volumes
profitability, cost/ sales
MBO
Results at any costs
Qnty affect Qlty of service
Rely on internal documentation
Call reports, PO, Financial documents
Computerised Performance Monitoring
Behaviour based ( be h aviour )
-
8/7/2019 SalesMgmt-compensationandcontrol
24/35
Focus of t h e measureBehaviour based ( be h aviour-selling Activity )
Product knowledge, presentation qlty,closing ability, service performed,number of active accounts, relationshipno. of calls/dayno of working days/period of time
-
8/7/2019 SalesMgmt-compensationandcontrol
25/35
Performance ratingR ating forms :-
Uniform and consistent parameters of evaluationToo general, Judgmental bias
Please rate t h e salespeople on t h e basis of t h e scale given belo w
1. 2. 3. 4. 5.
(strongly disagree) (Strongly agree)
a . O rganise h is call plan ( )
b . L isten w ell ( )
c . Does h is h ome w ork ( )
d . Writes reports regularly ( )
e . Keeps update customer information ( )
Rating forms
-
8/7/2019 SalesMgmt-compensationandcontrol
26/35
Performance rating
Forced c h oice scales ( Inventory of adjectives for evaluation )
Essay writing
For eac h pair of adjectives, place a tick mark in t h e most descriptive column next
to t h e adjective t h at best describes t h e sales person you are evaluating Pairs A djectives Weig h ts . M ost descriptive .
a . A lw ays criticizes, never praises - 3 ( )
Carries out orders by passing on t h e 0 ( )
responsibility to ot h ers
b . Kno w s t h e job and performs w ell 3 ( )
Plays no favorites 1 ( )
c . Understands t h e customers problem 3 ( )
Hardly cares for customers 1 ( )
-
8/7/2019 SalesMgmt-compensationandcontrol
27/35
Performance rating
Be h avioural O bservation scale (significant job incidents )
-
8/7/2019 SalesMgmt-compensationandcontrol
28/35
Call Report periodic accounts (time prospecting, demonstration & follow-up)A ssigning client to ne w recruits
Forcasting composite met h od
Performance rating
-
8/7/2019 SalesMgmt-compensationandcontrol
29/35
Performance rating
Silent Call M onitoring Scores
- Greeting
- Ascerting customer needs and demands
- Courtesy
- Communication and listening skills
-
8/7/2019 SalesMgmt-compensationandcontrol
30/35
Weekly activity Report (Unusual events and incidents )
Price wars, new competitor, push money
Changes in purchase practice, change in decision makers
Performance rating
Market environment
-
8/7/2019 SalesMgmt-compensationandcontrol
31/35
Performance rating
Customer S atisfaction S urveys :-random or periodic
mass mailing questionnaires
e.g : - Airlines
-
8/7/2019 SalesMgmt-compensationandcontrol
32/35
Performance rating
Combination plan of evaluation:-
Outcome & Behaviour based rating models
-
8/7/2019 SalesMgmt-compensationandcontrol
33/35
Performance appraisal conduction
Primary evaluator - Immediate supervisor (promotion and pay revision)
S elf appraisal
-S
ales person
Formal Performance Development Review
-
8/7/2019 SalesMgmt-compensationandcontrol
34/35
Performance appraisal conduction
Biases- inflate or deflate performance rating
- conscious
+ve or -ve- unconscious
-
8/7/2019 SalesMgmt-compensationandcontrol
35/35
Performance appraisal Individual vs Team
Multifunctional teams- ROLE RE S ULT MATRIX
Position Developing a new business Servicing existing customer
K ey Account mgr
Regional Sales Mgr
Application engg.
C ustomer service staff
Installation and Qlty engg.
Financial staff.