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Question
3.   (a) Discuss the factors influencing design  of compensation schemes of sales force in the
    following situations.

a)   Pharma Sales Personnel – Missionary Selling
b)   OTC Products Sales Men
c)   Technical Sales & Services Personnel

  (b) Discuss the importance of communication in Sales function.

Answer
The array of possible elements of sales force compensation is limited only by the imagination
of managers setting sales compensation plans. However, most compensation
plans include salary (a fixed payment) and one or more elements of incentive pay, such
as commission or bonus. Salary is a fixed payment to the salesperson, independent of
his or her productivity (though adjustments in salary from year to year are very likely
to be related to the salesperson’s previous year’s productivity). Commission is typically
awarded as a percentage of some outcome measure; commonly, as a percentage of sales
revenue or of profit or gross margin generated by the salesperson. Bonus pay is typically
awarded as a lump sum and is contingent on reaching a goal set by management over
some time horizon (e.g. monthly, quarterly, yearly), such as selling more than a prespecified
quota amount or reaching sales goals for a particular product.
Beyond these core compensation elements, other elements of sales compensation
include spiffs, sales contest awards, team sales compensation and cross-territory
compensation.
Compensation may be awarded on the basis of performance across varying
time horizons or varying metrics; compensation (both total payouts and degree of reliance
on incentive pay) also typically varies across different levels of the sales hierarchy
within a firm. Table 26.1 defines each of these compensation components and their incentive
effects and horizons.
We next discuss research insights on the first two elements in Exhibit 26.1 (salary
and commission on sales) in light of the connected questions of how much compensation
to offer in total and what the optimal mix is between salary and incentive pay. We then
turn to discussions of the research insights on quota–bonus plans, sales contests, spiffs
and group selling compensation, and whether and when direct sales force monitoring
Compensation components: definitions, incentives, horizons
============================

A] Pharma Sales Personnel – Missionary Selling

Compensation components: definitions, incentives, horizons
Compensation
A.Component-B Definition-C Incentive Effect  D Horizon?

FACTOR--- 1
A..Salary
B Fixed payment
independent of current
performance

C.Risk avoidance in short run;
future salary adjustments
depend on current
performance

D.Adjusted yearly
---------------------------------
FACTOR---- 2

A.Bonus: Paid
from Fixed Pool

B.Lump sums awarded from
a pool of fixed total size,
when a salesperson hits
quota target

C.Achieve quota sales volume;
capped incentive due to
fixed size of total bonus
pool (especially if likelihood
of making quota is high for
other salespeople)

D.Monthly,
quarterly,
yearly
-------------------------------
---------------------------------------

FACTOR----- 3

A.Sales Contest

B.Lump-sum monetary
or in-kind payments for
performance relative to
other individuals

C.Increased short-term effort;
competitive in nature

D.Short-term (1–3
months)
---------------------------------------
FACTOR--- 4

A.Team Selling Award

B.Commission or bonus
based on sales by a team
of multiple salespeople

C.Increase team effort; may
lead to free-riding by some
team members

D.Monthly,
quarterly, or on
closing the sale,
however long it
takes

---------------------------------------
FACTOR---- 5

A.Cross-Territory
Commission

B.Per cent commission paid
on the basis of group sales
achievement, without team
selling, to all salespeople in
the group

C.Increased effort due to
diversification of risk

D.Monthly,
quarterly
@@@@@@@@@@@@@@@@@@@@@@@

  B] OTC Products Sales Men





Compensation components: definitions, incentives, horizons
Compensation
A.Component-B Definition-C Incentive Effect  D Horizon?

FACTOR--- 1
A..Salary
B Fixed payment
independent of current
performance

C.Risk avoidance in short run;
future salary adjustments
depend on current
performance

D.Adjusted yearly
---------------------------------
FACTOR----2

A.Commission:
Paid on Sales

B.Payment of X per cent
of sales revenue (can be
product specific or paid on
total sales)

C.Work to sell highestcommission
product and/or
sell to easiest-to-close sales

D.Monthly
(typically)
--------------------------------
FACTOR--- 3

A.Commission:
Paid on Gross Margin

B.Payment of X per cent
of gross margin (can be
product specific or paid on
total gross margin)

C.Work to sell highest-margin
product; requires divulging
gross margins to sales force

D.Monthly
(typically)

-----------------------------------
FACTOR---  4


A.Bonus: Paid
Individually for
Performance
over Quota

B.Lump-sum payment for
sales over minimum quota
amount

C.Hit quota volume this
period; may cause
salesperson to ‘sandbag’
sales to meet quota next
period

D.Monthly,
quarterly,
yearly
----------------------------------
FACTOR---- 5

A.Bonus: Paid
from Fixed Pool

B.Lump sums awarded from
a pool of fixed total size,
when a salesperson hits
quota target

C.Achieve quota sales volume;
capped incentive due to
fixed size of total bonus
pool (especially if likelihood
of making quota is high for
other salespeople)

D.Monthly,
quarterly,
yearly
-------------------------------
FACTOR---6

A.Spiff

B.Commission on sales paid
by manufacturer directly
to salespeople of the
independent distributor
or rep firm, not to the
distributor or rep firm
itself

C.Allocate increased effort to
spiffed product

D.Short-term
(1–3 months)
(e.g., offered on
new products,
products to be
discontinued)
---------------------------------------

FACTOR----- 7

A.Sales Contest

B.Lump-sum monetary
or in-kind payments for
performance relative to
other individuals

C.Increased short-term effort;
competitive in nature

D.Short-term (1–3
months)
---------------------------------------
FACTOR--- 8

A.Team Selling Award

B.Commission or bonus
based on sales by a team
of multiple salespeople

C.Increase team effort; may
lead to free-riding by some
team members

D.Monthly,
quarterly, or on
closing the sale,
however long it
takes

---------------------------------------
FACTOR---- 9

A.Cross-Territory
Commission

B.Per cent commission paid
on the basis of group sales
achievement, without team
selling, to all salespeople in
the group

C.Increased effort due to
diversification of risk

D.Monthly,
quarterly
@@@@@@@@@@@@@@@@@@@@@@@

   C] Technical Sales & Services Personnel

Compensation components: definitions, incentives, horizons
Compensation
A.Component-B Definition-C Incentive Effect  D Horizon?

FACTOR--- 1
A..Salary
B Fixed payment
independent of current
performance

C.Risk avoidance in short run;
future salary adjustments
depend on current
performance

D.Adjusted yearly
---------------------------------
---------------------------------------

FACTOR----- 2

A.Sales Contest

B.Lump-sum monetary
or in-kind payments for
performance relative to
other individuals

C.Increased short-term effort;
competitive in nature

D.Short-term (1–3
months)
---------------------------------------
FACTOR--- 3

A.Team Selling Award

B.Commission or bonus
based on sales by a team
of multiple salespeople

C.Increase team effort; may
lead to free-riding by some
team members

D.Monthly,
quarterly, or on
closing the sale,
however long it
takes

---------------------------------------
FACTOR---- 4

A.Cross-Territory
Commission

B.Per cent commission paid
on the basis of group sales
achievement, without team
selling, to all salespeople in
the group

C.Increased effort due to
diversification of risk

D.Monthly,
quarterly
@@@@@@@@@@@@@@@@@@@@@@@








#############################   
(b) Discuss the importance of communication in Sales function.  
Communication in sales serves two major functions. One function is the actual business at hand, negotiation or sales transaction. The second more important function is how the communication is meeting the emotional needs of your customer or prospect.
The Facts
The actual negotiation or sales transaction, and how it is being handled are the issues on the table. Most sales people do well in this area, as long as they continue to focus on listening and understanding the other side's point of view. Ask for clarification and make use of intelligent probing questions. Make sure all the parties agree on the data and terms of the discussion.
Emotional Needs
By far more important is how the communication is meeting the emotional needs of the parties involved in the sale. This is because people buy based on emotional needs and benefits. These needs include power, self-esteem, control, fear, and other emotions. The focus needs to be on the buyer and seller to create an efficient, effective outcome. Avoid power struggles and ego based conflicts and nurture teamwork and shared commitment. This may mean putting your emotional needs aside to better meet the needs of your customer. Remember, we pull our own emotional strings. Nothing can impact a person, unless they let it impact them. This is a powerful step to becoming a sales master. It results in communication without judgment or criticism. This draws people to you and makes the communication process easier.
The Customer's Mind
The professional sales person understands the customer does not share their thoughts and feelings about the product or service being sold. In order to bridge this gap, you must communicate in the words and thoughts of the customer. The sales process evolves out of what is in the customer's mind. Use this to work together towards a mutually beneficial agreement.
Become a Spokesperson
Sales people can communicate the message that effectively meets customer needs and adds value better than any other marketing tool available to organizations. This is done through building relationships with customers and understanding customer needs on a personal level. Proper communication skills are critical to making this happen.
Listening Builds Trust
If you have been reading my articles you know how important listening is to building trust. Trust, in turn, is critical to success in sales. It is perhaps the most important thing you can do during your sales process. Listen to understand your prospects and customers. This is like giving them emotional air. We all want to be heard and valued by others. Being your customers' best listener should be your goal. As sales professionals we are often overwhelmed with information about selling and other aspects of our work and life. When you cut through it all there is one thing every sales person should remember: be an excellent listener!
Sales and Marketing Management magazine recently conducted a survey of purchasing managers, who dealt with sales people almost their entire workday. The survey reported the one thing these managers disliked most about the average salesperson, is they talk too much and do not take time to understand their business.
Communication is most effective when it meets the emotional needs of your customers and prospects. Understanding this helps you exceed your sales goals and reach high levels of success.

Sales Management refers to the art of achieving the sales targets within the stipulated time frame through effective budgeting and meticulous planning. Sales management enables the sales representatives to close sales deals in favour of the organization and eventually earn revenues for the same.

Communication plays an important role in sales management. Sales professionals need to be good communicators for the desired impact. In simpler words, communication is the backbone of sales management. It is absolutely not possible to close a sales deal without effective communication.
There must be healthy communication between the sales professionals and the customers as well as amongst the sales representatives.
Communication between sales professionals and external clients
Keep your sales pitch simple and precise. Complicated sales terminologies and jargons confuse the customers. It is important for the customers to understand your products for them to believe in them and eventually purchase the same. The sales professionals must be well aware of the benefits of the products.
Sales professionals must be very careful about their tone of voice. Never be too loud or too soft. Be polite. Make sure you are audible to the customers. Don’t ever be rude to them.
While addressing a group of customers make sure even the individuals sitting on the last bench can hear you properly. Don’t just speak for the front benchers.
One should never interfere when the second party is speaking. Wait for your turn to speak.
Don’t play with words. Convey exactly what your product offers. Fake promises and wrong commitments lead to problems and confusions later on. Transparency is essential for a long term relationship with the customers. Avoid telling lies to them.
Make sure your sales presentation is interesting.
While speaking to the customers over the phone, make sure you are not chewing or eating something. Don’t put the customers on long holds. Never avoid customer’s calls unless and until there is an emergency.
Understand the needs and expectations of the customers and suggest them the best solution.
The customer can ask you any question under the sun and it is your duty to clarify his doubts. Make sure you are well prepared. One should never lose his temper while interacting with the customers.
Include warm greetings in your conversation for a personal touch.

Communication amongst the sales team
The sales manager must communicate with his sales team on an open platform for everyone to participate and give their valuable inputs and suggestions.
Transparency must be maintained at all levels for healthy relationship amongst the sales professionals. The sales representatives should be aware of their targets and incentives from the very beginning to avoid confusions later on. Make sure the targets are realistic and achievable.
All important information should be circulated through emails. The related members should be kept in loop for everyone to get the same information. Do not communicate with individuals separately in closed cabins. It gives a wrong message
Each one should have the liberty to express his/her views and participate in decision making process of the organization
The roles and responsibilities of sales representatives must be communicated to them well in advance. They must know what is expected out of them.
Effective communication is instrumental in closing sales deals and maintaining healthy relationship with the existing as well as potential clients.
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management consulting process, management consulting career, management development, human resource planning and development, strategic planning in human resources, marketing, careers in management, product management etc

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18 years working managerial experience covering business planning, strategic planning, corporate planning, management service, organization development, marketing, sales management etc

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