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Unit 3: Motivating and Compensating the Sales Force




                                                                                                Notes
                 Example: A  firm  might  have  a  "small  orders"  problem.  It  is  possible  to  design
          compensation plans that encourage sales personnel to write larger orders. Commission rates
          can be graduated so that higher rates apply to larger orders.

          Consult the Present Sales Force

          Management should consult the present sales personnel, in as much as many grievances have
          roots in the compensation plan. Management should encourage sales personnel to articulate
          their  likes and dislikes about  the current  plan and  to suggest  changes in  it. Criticism and
          suggestions are appraised relative to the plan or plans under consideration.

          Reduce Tentative Plan to Writing and Pre-test it

          For clarification and to eliminate inconsistencies the tentative plan is put in writing. Then it is
          pre-tested. The amount of testing required depends upon how much the new plan differs from
          the  one in  use. The  greater  the  difference, the  more  thorough  is  the  testing.  Pre-tests  of
          compensation plans are almost always mathematical and  usually computerised.  If the sales
          pattern has shown considerable fluctuations, speculations are made for period's representative
          of average, good and poor business.
          Then a look is taken into the future. Utilising sales forecast data, new and old plans are applied
          to future periods. The plan is tested for the sales force as a group and for individuals faced with
          unique selling conditions. Analysis reveals whether the plan permits earnings in line with the
          desired compensation level. If deficiencies show up the plan may not be at fault; weaknesses can
          be traced to the way territorial assignments have been made or to inaccuracies in sales forecasts,
          budgets, or quotas.
          To conduct a pilot test, several territories representative of different sets of selling conditions
          are selected. The proposed plan is applied in each one long enough to detect how it works under
          current conditions.

          Revise the Plan

          The plan is then revised to eliminate trouble spots or deficiencies. If alterations are extensive,
          the revised plan goes through further pre-test and perhaps another pilot test. But if changes have
          been only minor, further testing is not necessary.

          Implement the Plan and Provide for Follow up

          At the time the new plan is implemented, it is explained to the sales personnel. Management
          should convince them of its basic fairness and logic. Details of changes from the old plan and
          their significance require explanation. All sales personnel should receive copies of the new plan,
          together with written examples of the method used for calculating earnings. If the plan is at all
          complex, special training sessions are held and aimed at teaching sales personnel how to compute
          their own earnings.
          Provisions for follow up are made. From periodic check ups need for further adjustments is
          detected. Periodic checks provide evidence of the plans' accomplishment and they uncover
          weaknesses needing correction.









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