Challenges for sales compensation: The management of complex sales entities require careful sales strategy planning.

Complex sales entities provide Numerous challenges to effective sales compensation programs without proper management, complex sales entities can exhibit some of the following negative conditions; Role confusion: complex sales entities have many sales and service roles. A poorly designed sales compensation program could inadvertently cause role confusion among these various jobs. Sales management must map all compensation components to align with well-conceived sales and service accountabilities. Channel Conflict: This occurs when two or more sellers assume accountability for the same buyer or the customer. Poorly defined account ownership rules can quickly escalate to distracting internal conflicts. Worse, these conflicts can negatively affect customers buying preferences by manipulative sellers. Excessive sales crediting: Without fully specified sales crediting practices, Sales compensation plans are prone to excessive cost as numerous incumbents claim and earn sales credit for sales events they may or may not have influenced. Excessive double crediting is a common problem for complex sales organizations. Costly administration: Complex sales organizations have a tendency to create complex Sales compensation with more than three measures and elaborate channel conflict rules and extensive sales crediting practices. As a result, The administrative burden to manage the sales compensation program can increase dramatically in term of head count, IT support and overall cost. Unintentional Staffing shifts: un-coordinated target pay levels and varied incentive opportunities among jobs can cause premature or unintentional staffing shifts. Unless carefully managed, Sales personnel, if allowed, will migrate to better pay opportunities through internal transfers.

The process of designing a compensation plan. Evaluate the job description Establishing specific objectives Important to reinforce behavior that will help the

company and the salespeople achieve their objectives or needs Increased profitability Improved cash flow Lower selling costs Increased gross sales More displays

Determine levels of compensation Create job ranking and levels of compensation for each job Sales trainee Salesperson Senior salesperson Should salespeople be able to make more then their sales mangers?

Develop the compensation mix What proportion of each salesperson's total income should be earned through incentives? Should the incentive schedule be regressive or progressive

Progressive- used as a means of increasing the salesperson's income Series of progressively larger commissions or bonuses as sales increase 5% commission for sales up to 110% of the quota 6% commission for sales up to 120% of the quota 7% commission for sales over 120% of the quota

Regressive- used as a means of limiting the salesperson's income

Series of progressively smaller commissions or bonuses as sales increase 5% commission for sales up to 110% of the quota 4% commission for sales up to 120% of the quota 3% commission for sales over 120% of the quota

Pretest the plan Administer the plan Evaluate the plan