Marketing Management, Millenium Edition - epiheirimatikotita.gr

Managing the Sales Force 303money. Now Amatil contacts these small accounts through a regular schedule of telemarketing,freeing up its field reps to concentrate on larger accounts. This move hasresulted in a much lower cost per order and made small accounts financially feasible.The compensation package is a critical element in attracting top-quality salesreps, starting with the level and components. The level of compensation must bearsome relation to the “going market price” for the type of sales job and required abilities.If the market price for salespeople is well defined, the individual firm has littlechoice but to pay the going rate. However, the market price for salespeople is seldomwell defined. Published data on industry sales force compensation levels are infrequentand generally lack sufficient detail.The company must next determine the four components of sales force compensation—afixed amount, a variable amount, expense allowances, and benefits.The fixed amount, a salary, is intended to satisfy the sales reps’ need for income stability.The variable amount, which might be commissions, a bonus, or profit sharing,is intended to stimulate and reward greater effort. Expense allowances enable salesreps to meet the expenses involved in travel, lodging, dining, and entertaining.Benefits, such as paid vacations, sickness or accident benefits, pensions, and life insurance,are intended to provide security and job satisfaction. Fixed compensationreceives more emphasis in jobs with a high ratio of nonselling to selling duties andin jobs in which the selling task is technically complex and involves teamwork.Variable compensation receives more emphasis in jobs in which sales are cyclical ordepend on individual initiative.Fixed and variable compensation give rise to three basic types of compensationplans—straight salary, straight commission, and combination salary and commission.Only one-fourth of all firms use either a straight-salary or straight-commission method,while three-quarters use a combination of the two, though the relative proportion ofsalary versus incentives varies widely. 8Straight-salary plans provide sales reps with a secure income, make them morewilling to perform nonselling activities, and give them less incentive to overstock customers.From the company’s perspective, they provide administrative simplicity andlower turnover. Straight-commission plans attract higher sales performers, providemore motivation, require less supervision, and control selling costs.Combination plans offer the benefits of both plans while reducing their disadvantages.Such plans allow companies to link the variable portion of a salesperson’spay to a wide variety of strategic goals. One trend is toward deemphasizing volumemeasures in favor of factors such as gross profitability, customer satisfaction, and customerretention. For example, IBM now partly rewards salespeople on the basis of customersatisfaction as measured by customer surveys. 9MANAGING THE SALES FORCEEffective management of the sales force is needed to implement the company’s chosensales force design and achieve its sales objectives. Sales force management coversthe steps in recruiting and selecting, training, supervising, motivating, and evaluatingrepresentatives (see Figure 5-16).Recruiting and Selecting Sales RepresentativesAt the heart of a successful sales force is the selection of effective representatives. Onesurvey revealed that the top 27 percent of the sales force brought in over 52 percent ofthe sales. Beyond differences in productivity is the great waste in hiring the wrong people.The average annual turnover rate for all industries is almost 20 percent. When a