McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 10 Sales Force Quotas and Expenses Our men give their talent to the company and their genius to their expense accounts. Life

10-2 Fig Purpose of Sales Quotas Sales quotas are used to… Indicate strong / weak spots in selling structure Furnish sales force goals / incentives Control sales force activities Evaluate sales force productivity Improve compensation plan effectiveness Control selling expenses Evaluate sales contest results

10-3 Fig Types of Sales Quotas Quota bases Sales volume Gross margin or net profit Expenses Activities Combination

10-4 Factors Influencing Sales Force Expenses Communication Expenses Gifts Lodging Meals Office supplies Transportation Entertainment

10-5 Characteristics of a Sound Expense Plan No net gain or loss Equitable treatment No curtailment of beneficial activities Simple and economical Avoidance of disputes Company control of expenses and elimination of padding

10-6 Salesperson Expense Options Method Reimbursement Advantages Disadvantages Salespeople pay None Simple, no costsReps may not spend Unlimited All legitimate Flexible and fair,Encourages excessive their own expenses enough on customers payment plan business expenses allows for territory spending differences LimitedSpecific amounts Limited and predictable Inflexible payment plan allowed expenses Possibility for $80/day - lodging switching expenses $45/day - food between categories $0.26/mile - transportation Sales may resent Flat allowance $700 per week Limited and predictable Inflexible expenses Sales may resent e.g.

10-7 Factors Influencing Automobile Ownership Decision: Company Owned, Company Leased, or Salesperson Owned Maintenance Special design Size of sales force Operating Control Mileage Investment Administrative problems Personal preference

10-8 Automobile Allowance Plans MethodExample Flat amount$400 /month Fixed mileage rate$.28/mile Graduate mileage rate$.25/mile, first 15,000 miles $.15/mile, second 15,000 miles Combination flat and$200/month + $.16/mile mileage rate

10-9 Other Methods of Expense Control Training and enforcement Credit cards Expense bank account Change in nature of entertainment Telemarketing Careful travel planning