Chapter 16 Personal Selling and Sales Promotion

Bayer also wanted to increase rep engagement through

This preview shows page 12 - 13 out of 34 pages.

objections-handling situations. Bayer also wanted to increase rep engagement through interactive learning and feedback through real-time results. Bayer reps liked Rep Race from the start. Accord- ing to Bayer, when the game was first launched, reps played it as many as 30 times. In addition to its educational and motivational value, Rep Race allowed Bayer to measure sales reps’ individual and collective performance. In the end, Bayer cal- culated that the Rep Race simulation helped im- prove the Betaseron sales team’s effectiveness by 20 percent. E-training can make sales training more efficient—and more fun. Bayer HealthCare Pharmaceuticals’ role-playing video game—Rep Race—helped improve sales rep effectiveness by 20 percent.
Image of page 12

Subscribe to view the full document.

474 Part Three | Designing a Customer-Driven Strategy and Mix Compensating Salespeople To attract good salespeople, a company must have an appealing compensation plan. Com- pensation consists of four elements: a fixed amount, a variable amount, expenses, and fringe benefits. The fixed amount, usually a salary, gives the salesperson some stable income. The variable amount, which might be commissions or bonuses based on sales performance, re- wards the salesperson for greater effort and success. Management must determine what m i x of these compensation elements makes the most sense for each sales job. Different combinations of fixed and variable compensation give rise to four basic types of compensation plans: straight salary, straight commission, salary plus bonus, and salary plus commission. According to one study of sales force com- pensation, 18 percent of companies pay straight salary, 19 percent pay straight commission, and 63 percent pay a combination of salary plus incentives. A study showed that the aver- age salesperson’s pay consists of about 67 percent salary and 33 percent incentive pay. 14 A sales force compensation plan can both motivate salespeople and direct their activi- ties. Compensation should direct salespeople toward activities that are consistent with over- all sales force and marketing objectives. For example, if the strategy is to acquire new business, grow rapidly, and gain market share, the compensation plan might include a larger commission component, coupled with a new-account bonus to encourage high sales performance and new account development. In contrast, if the goal is to maximize current account profitability, the compensation plan might contain a larger base-salary component with additional incentives for current account sales or customer satisfaction. In fact, more and more companies are moving away from high commission plans that may drive salespeople to make short-term grabs for business. They worry that a salesper- son who is pushing too hard to close a deal may ruin the customer relationship. Instead, companies are designing compensation plans that reward salespeople for building cus- tomer relationships and growing the long-run value of each customer.
Image of page 13
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern