Devising A Sales Compensation Plan

Whether contemplating major or minor changes or drafting a completely new sales compensation plan, the sales executive approaches the project systematically. Good compensation plans are built on solid foundations.

Define the Sales Job: The first step is to reexamine the nature of the sales job. Up-to- date written job descriptions are the logical place to start. If job descriptions are outdated, if they are not accurate, or if complete descriptions of the sales job objectives and work are not given, then a revision is in order. The effective sales executive asks: Does this description convey a realistic picture of what the salesperson is supposed to accomplish and to do? If there are no written sales job descriptions, they are prepared. Other aspects of company operations are considered in relation to their impact upon the sales job. Sales department objectives are analyzed for their effect on the salesperson’s job. Sales volume objectives, for instance, whether in dollars, units of product, or numbers of dealers and distributors, are translated into what is expected of the sales personnel, as a group and individually. The impact of sales related marketing policies is determined. Distribution policies, credit policies, price policies, and other policies affect the salesperson’s job. Current and proposed advertising and sales promotional programs assist in clarifying the nature of the salesperson’s goals, duties, and activities.