compensating plan for sales force

8/7/2019 compensating plan for sales force

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APRESENTATION ON COMPENSATION PLAN

FOR SALES FORCE

Presented By

Anil Pareek

Ankit

Ankur Soni

Amjad

Richpal

Amit kumar


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MEANING OF COMPENSATION

Compensation is the Amount Received by sales

force in exchange of work and service performed

by them as well as monetary and non-monetary

Compensation in the form of salaries or

commission enable the sales people to meet their

needs. And Compensation is a tool of motivation

to the sales People


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OBJECTIVE OF COMPENSATION PLAN BY

COMPANY VIEW POINT

To attract, retain and motivate competent

salespeople

To control sales people activities

To be competitive, yet economical

To be flexible to adapt to new products, changing

markets and differing territory sales potentials


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OBJECTIVE OF COMPENSATION PLAN BY

SALES PERSON VIEW POINT

To have both regular and incentive income

-: Regular income by fixed salary to take care

living expenses

-:Incentive income for above averageperformance

To have a simple plan, for easy understanding.

To have a fair payment plan

Scope of future raise


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TYPES OF COMPENSATION PLAN

Straight salary

method Straight Commission

method

Combination of salary

and commission

Drawing account and

commission plan

Promotions

Recognition Programs Fringe benefits

Travelling Expense

account

Perks Sales contests

Financial Compensation Non- Fin. Compensation


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STRAIGHT SALARY METHOD:-

Salesperson paid a set amount of money based uponhours or days worked and amount is fixed and does not

vary. the amount consists of basic salary ,dearness

allowance etc.

This plan is suitable for sales trainees, missionary

salespeople and when a company wants to introduce a

new products or enter a new territory.

MERITS :-

(a) Control

(b) Security for Salesman

(c ) Simple to understand & easy to Calculate

(d) Logical and justified


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DEMERITS:- (a) Lake of Incentives

(b) Too much Protection (c) Common yardstick

(d) Sales Cost

STRAIGHT COMMISSION METHOD:-

This method is based on the result, and not on the basis oftime i.e. volume of sales made by a salesman is a basis forremuneration

Per unit sales commission

As a percentage to sales

MERITS :-

(a) Performance oriented

(b) Incentive and motivation inbuilt

(c ) Not a burden on organization


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TO CONT..

(d) Freedom of operation (e) Attracts better talents

DEMERITS:-

(a) Uncertainty (b) lack of control

(c ) Fluctuation in market price

(d) Rate of attrition could go up

COMBINATION OF SALARY & COMMISSION

:- Salary plus commission on total sales

:- Salary plus commission over certain quota


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EXAMPLE:- ASALESMAN WHO IS APPOINTED ON A MONTHLY

SALARY OF RS 5000 PLUS COMMISSION, IS ENTITLED AT

(A) 1.5% COMMISSION ON ALL SALES OR

(B) 4% COMM. OVER THE SALES OF RS 50000 AND TOTAL SALES

MADE BY HIM WAS 80000

His total earning would be

(a) Salary 5000

Comm. 1.5% on

Rs 80000 1200

Total 7200

(b)

Salary 5000

Comm. 4% upto

50000 Nil

Com. Above 50000

(4% on 30000) 1200

Total 7200


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MERITS

(a) There is minimum guaranteed income (b) Salesman take more initiative to sell

(c) Control over the salesman activity

(d) Efforts and rewards are well-balance.

DEMERITS

(a) Increase in the office & administration cost

(b) Require more records have to be maintain

DRAWING A/C AND COMMISSION PLAN

Organization open a new a/c in the name of salesman

The salesman draw amount in a limit


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NON FINANCIAL COMPENSATION

(a) Promotion :-By considering abilities and experienceis a stimulation policy, the salesmen are promoted to a

higher post on a higher. There by status increases,self

respect, remuneration increases etc.

(b) Recognition Programs :- These programs are

designed to honor individual salesperson/ Team

performance contributions and recognize the excellent

performance.

In GE capital and other GE companies in india the

salespersons are awarded medallions for their

outstanding contributions

LIC has its CROREPATI AGENT scheme


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FRINGE BENEFITS

These are employment benefits in addition to thesalary and wages paid to the sales staff

These include medical benefits, retirement benefits,

life, paid vacations, sick leave, gratuity and provident

fund ,ESI etc.

TRAVELLING EXPENSE ACCOUNTS:

Fixed daily allowance

Actual Mileage covered

Fixed fuel expense


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PERKS

Perks are special category of compensation

available to employees with some special statusor expertise in the company.

(a) Status perks:- Include office location, job title,

parking space

(b) Financial perks:- Include use of the companyvehicle, drivers, gardeners and club

memberships.

(c ) Personal growth:- Include paying for

additional education or sending the salespeoplefor motivational or training programs.


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SALES CONTESTS

A sales contest is a special selling campaign offeringincentives in the form of prizes or awards beyond

those in the compensation plan

OBJECTIVES:-

(a) To sell more

(b) To sell new customers

(c ) To promote new products

(d) To promote seasonal products

CONTESTS PRIZES

:- Cash

:- Travel or Trip

:- Special honors or privileges


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A GLOBAL EXAMPLE

FedEx gives its employees perquisites like flying free

anywhere in the FedEx aircrafts.

A Bravo Zulu award is given to employees who perform

beyond their call of duty.

A Golden Falcon award for employees going our of their

way to serve customers.

Five Star Award for the best employee in-terms of

customer service and profitability.

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What income does an employee have?What income does an employee have?Wages/salary

Bonus. For example an

employee is givenextra pay because

they worked hard orthe firm is doing well.

Benefit in Kind. Forexample an employeeis given a car that canbe used for personal

use or they are given afree holiday.


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DESIGNING COMPENSATIONSTRATEGY

0% 20% 40% 60% 80% 100%

junior mgt

middle mgt

senior mgt

top mgt

Share of salary components

Fixed Salary

Other Allow ences

Benefits

compensating plan for sales force

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