Setting Sales Force Compensation in the Internet Age By: Bill Weeks Posted in Compensation and Benefits Review Presented by: Kelcey Buchanan Gerald Wright

Sales  What is sales?  Are there specific ways to sell?  Are there specific roles in sales?  How does compensation increase performance?  How do you compensate for group based sales?  How do you compensate for internet sales?

Sales  Companies devise their own specific ways to sell. Such as a selling process: Greet and Approach Greet and Approach Build Value Build Value Offer Solutions Offer Solutions Ask for the sale Ask for the sale Educate Educate Thank and Depart Thank and Depart

Sales  Dictionary.com defines as: The act of selling The act of selling Transfer of property for money or credit Transfer of property for money or credit

Roles for Sales Personnel  Marketing Managers Expertise to create, manage and mine databases of existing or prospecting customers Expertise to create, manage and mine databases of existing or prospecting customers  Sales Closers Together with support team, create sales proposals and present and negotiate the sales proposition Together with support team, create sales proposals and present and negotiate the sales proposition  Relationship Managers Work to maximize the sales potential of their assigned customer base. Work to maximize the sales potential of their assigned customer base.

Cross-Selling Incentives  What is it?  Four primary reasons they won’t do cross selling: New sales focus New sales focus Greed Factor Greed Factor Fear Factor Fear Factor Customer Ownership Customer Ownership

Rewarding Cross-Selling  Three Approaches: Additional compensation Additional compensation Reaching targets Reaching targets Base on reaching percentage of sales Base on reaching percentage of sales

Critical Functions of Compensation Plans  “Sales incentives in future plans must encourage the sales force to focus on the customer, integrate with e-commerce, and support rapid change.”  Capitalize on relationships  Raise the morale of the sales personnel  Increase performance

Incentives for Relationship Management  Why is Relationship Management Important? Retain increase the current buying levels for a group of customers Retain increase the current buying levels for a group of customers Increase income or profitability of the customers rather than product mix attributable to the group Increase income or profitability of the customers rather than product mix attributable to the group Difficult to obtain supporting data to set performance standards and associated incentives Difficult to obtain supporting data to set performance standards and associated incentives

Paying for Customer Satisfaction  It is hard to design a fair performance standards for customer satisfaction within incentive compensation  Customer surveys are used to rate satisfaction, however it can be detrimental if the customer is having a bad day  Most companies use it as a recognition program instead of a compensation plan

Market-Level Compensation  Growing trend in large corporations for non-sales positions  Can be used for sales compensation as well  Eliminates competition in the market  Supports a more fixed-cost structure  Company should set definitions for model performance (minimum, good, outstanding)

Transition to New Forms of Compensation  “Most new plans are put in place to change the behavior of those paid under the plan”  Are the desired behaviors visiable? If not some changed need to be made to improve them  Comparing old versus new plan the new plan and the total amount of money being spent under the two for the same performance is a good estimate of overall impact.

Summary  Face to face sales compensation is becoming too expensive for companies to continue to pay, so be looking to see those incentives to go out the door and for e- commerce sales incentives to be increasing.