Setting Sales Force Setting Sales Force Compensation in the Compensation in the

Internet AgeInternet Age

By: Bill WeeksBy: Bill Weeks

Posted in Compensation and Posted in Compensation and Benefits Review Benefits Review

Presented by:Kelcey BuchananGerald Wright

SalesSales

What is sales?What is sales? Are there specific ways to sell? Are there specific ways to sell? Are there specific roles in sales?Are there specific roles in sales? How does compensation increase How does compensation increase

performance?performance? How do you compensate for group based How do you compensate for group based

sales?sales? How do you compensate for internet How do you compensate for internet

sales?sales?

SalesSales

Companies devise their own specific ways Companies devise their own specific ways to sell. Such as a selling process:to sell. Such as a selling process: Greet and ApproachGreet and Approach Build ValueBuild Value Offer SolutionsOffer Solutions Ask for the saleAsk for the sale EducateEducate Thank and DepartThank and Depart

SalesSales

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

Roles for Sales PersonnelRoles for Sales Personnel

Marketing ManagersMarketing Managers Expertise to create, manage and mine databases of Expertise to create, manage and mine databases of

existing or prospecting customersexisting or prospecting customers

Sales ClosersSales Closers Together with support team, create sales proposals Together with support team, create sales proposals

and present and negotiate the sales propositionand present and negotiate the sales proposition

Relationship ManagersRelationship Managers Work to maximize the sales potential of their assigned Work to maximize the sales potential of their assigned

customer base.customer base.

Cross-Selling IncentivesCross-Selling Incentives

What is it?What is it? Four primary reasons they won’t do cross Four primary reasons they won’t do cross

selling:selling: New sales focusNew sales focus Greed FactorGreed Factor Fear FactorFear Factor Customer OwnershipCustomer Ownership

Rewarding Cross-SellingRewarding Cross-Selling

Three Approaches:Three Approaches: Additional compensationAdditional compensation Reaching targetsReaching targets Base on reaching percentage of salesBase on reaching percentage of sales

Critical Functions of Compensation Critical Functions of Compensation PlansPlans

““Sales incentives in future plans must Sales incentives in future plans must encourage the sales force to focus on the encourage the sales force to focus on the customer, integrate with e-commerce, and customer, integrate with e-commerce, and support rapid change.”support rapid change.”

Capitalize on relationshipsCapitalize on relationships Raise the morale of the sales personnelRaise the morale of the sales personnel Increase performanceIncrease performance

Incentives for Relationship Incentives for Relationship ManagementManagement

Why is Relationship Management Why is Relationship Management Important?Important? Retain increase the current buying levels for a Retain increase the current buying levels for a

group of customersgroup of customers Increase income or profitability of the Increase income or profitability of the

customers rather than product mix attributable customers rather than product mix attributable to the groupto the group

Difficult to obtain supporting data to set Difficult to obtain supporting data to set performance standards and associated performance standards and associated incentivesincentives

Paying for Customer SatisfactionPaying for Customer Satisfaction

It is hard to design a fair performance It is hard to design a fair performance standards for customer satisfaction within standards for customer satisfaction within incentive compensationincentive compensation

Customer surveys are used to rate Customer surveys are used to rate satisfaction, however it can be detrimental satisfaction, however it can be detrimental if the customer is having a bad dayif the customer is having a bad day

Most companies use it as a recognition Most companies use it as a recognition program instead of a compensation planprogram instead of a compensation plan

Market-Level CompensationMarket-Level Compensation

Growing trend in large corporations for Growing trend in large corporations for non-sales positionsnon-sales positions

Can be used for sales compensation as Can be used for sales compensation as wellwell

Eliminates competition in the marketEliminates competition in the market Supports a more fixed-cost structureSupports a more fixed-cost structure Company should set definitions for model Company should set definitions for model

performance (minimum, good, performance (minimum, good, outstanding)outstanding)

Transition to New Forms of Transition to New Forms of Compensation Compensation

““Most new plans are put in place to change the Most new plans are put in place to change the behavior of those paid under the plan”behavior of those paid under the plan”

Are the desired behaviors visiable? If not some Are the desired behaviors visiable? If not some changed need to be made to improve themchanged need to be made to improve them

Comparing old versus new plan the new plan Comparing old versus new plan the new plan and the total amount of money being spent and the total amount of money being spent under the two for the same performance is a under the two for the same performance is a good estimate of overall impact.good estimate of overall impact.

SummarySummary

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