Financial incentives for salesman
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Transcript of Financial incentives for salesman
M. S. PATEL FACULTY OF MANAGEMENT STUDIES,
M. S. UNIVERSITY, BARODA
ARCHAL SHAH (Roll No. 26)
Objective & Trends Objective in most companies
Attract Retain Motivate
Major Trends Only Fixed Salary – Extinct Spices Incentive quotient – Increasing Incentive α (Sales Vol., Mktg. Obj.)
Use of Incentive
In 1967, 444 Mfg companies (across 20 ind. employing 16,263 employees) were surveyed
Variation in Industry Heavy Ads | Sales Promotion
Non-Technical => Less payment Ex Cigarette industry (USD 6500/yr)
Custom Built | WOM (Little Ads) => Highly paid
Ex Footwear mfg for retailer (USD 22,500/yr)
Avg. Salary (as per survey) USD 12,100/yr
Earning Correlation Company size α Salesman salary
Small company >> High Salary (Ex In paper industry, as per survey
Avg. Co. ($2m) >> $1000. Big ($80m) >> $ 790 Reasons 1. Less well known, less Ads, Less Repo 2. No training, so borrow from competitor at
higher wages
Age Relationship
Sales Volume
Earnings
Salesman Age
Compensation Practices
Overpayment Policy
There are examples of salesman paid equivalent or more than sales executive or even MD
Effects
1. Impossible to persuade to leave field
2. Sales manager will resent (Exec. Turnover)
3. Largest element of selling cost
Compensation Practices
Underpayment policy
Effects
1. Buyer gets the quality, he pays for
2. If good ppl, higher turnover
3. Salesman gone to competitor means info gone
4. Hidden cost of turnover
5. Customer distraction
Compensation Practices Average Approach Apt for company with large sales force
Advantages 1. Hire young men, train as per firm 2. Unspoiled men
Disadvantages 1. More aggressive supervision 2. Rules required
Compensation Practices Above Average concept Apt for company with small sales team
Advantages 1. No extra trg cost 2. Get info of competitors 3. Highly motivated environment
Disadvantages 1. Long run above avg compensation 2. Must have above avg sales
Developing a plan Salesman expectation & company obj Gross amt company wants to and afford to pay Once hw much is decide, Decide hw much fixed
and hw much variable Full fixed, Full variable & Combination
Depends on 1. Company objective 2. Characteristics of selling job 3. Sales support provided
Ultimate Objective Today salesman is not mere order getter Salesman is territorial mktg manager OBJ max. co. profits inline mktg. manager Incentive plan should consider Full line selling Missionary workSales service of accounts Feedback of imp mktg intelligenceCooperation with other co. personnel Control of selling expense Preparation of prompt & complete report & records
Fundamental aims
Motivate the salesman
1. To plan ahead & max. effectivenes
2. Do as per sales management
3. Lower direct selling cost & more profits
THANK YOU