“Setting the Sales Force Compensation in the Internet Age” By: Bill Weeks Compensation & Benefits Review: March-April 2000

Summary When selling products on the internet you need to still be able to help customers just like in a face-to-face interaction This will help make a website more profitable and successful.

Future Roles for Sales Personnel Internet shopping is great when you know what you want When you are dealing with critical issues its hard to decide through all the information out there Successful sales teams – will be those that help decision makers dig through the information overload – Help guide the consumer through the decision making process

Successful Sales Teams Will be those that help decision makers dig through the information overload Help guide the consumer through the decision making process

Three Separate Roles within the Sales Process Those people filling these roles will be members of a team, which will proactively manage the entire sales process All channels will have marketing managers and sales closers Relationship managers will by prevalent mostly in sales channels selling high-costs, high-value-added products

Three Primary Sales Roles Marketing Managers – Individuals who have the expertise to create, manage, and mine databases of existing or prospective customers Sales Closers – Those who, together with a support team, create sales proposals and present and negotiate the sales proposition Relationship Managers – Members of the sales team who work to maximize the sales potential of their assigned customer base

Critical Functions of a Compensation Plan The compensation plans try to achieve the target results and activities that will result in high levels of profitability The compensation plan must also drive the employee to focus on the customer, integrate with e-commerce, and support rapid change

Types of Compensation Plans Cross Selling Incentive Plans Relationship Management Target Market Pay Paying for Customer Satisfaction Team Based Compensation Compensation for Functional Roles Market Level Compensation

Cross Selling Incentive Plans This type of incentive plan is compensation for making multiple sales of products from different product lines to the same customer This type supports the principle that more needs satisfied per customer, the greater the stability, retention, and profitability of that customer

Cross-Selling 4 primary reasons for Cross-Selling 1.New Sales focus 2.“Greed factor” 3.“Fear factor” 4.Customer ownership

Rewarding Cross Selling Three logical approaches for rewarding cross selling: – Additional compensation above the normal level for an additional sale to the customer – More compensation for reaching cross selling targets such as percentage of customers who but from multiple product lines – Base incentives off of the percentage of sales from each product line

Incentives for Relationship Management This form of compensation should reward the maintenance and growth of profits from the existing group of customers The company should give pay for reaching a target level of revenue per customer based on assets, revenues, ect.

Target Market Pay In this form of compensation the highest rates are paid to employees that make sales to the most preferred customers The table of rates for this form of compensation more resembles a bell curve

Paying for Customer Satisfaction This form of compensation can be based on different standards Can be based on: No unresolved customer complaints, or no market conduct issues, ect. This type of compensation plan can be hard to implement and keep fair for all employees

Market Level Compensation This form of compensation is usually used for non sales positions It moves the focus of pay from individual tension to a personal issue, it moves the company from a defensive position to a neutral position It promotes the move to a more fixed cost structure

Performance Scoreboard Plans Performance scoreboard plans can accommodate rapid change, especially when market-based compensation is being used This plan incorporates salary with incentives based on results compared to targets or objectives Each target is assigned a weight which is a share of 100%

Implementing New Forms of Compensation If your plan to implement the form that you chose takes more than a year, the plan probably has performance standards that are to aggressive It is better for you to lower performance expectations than to have a longer implementation phase

Questions?