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Compensating the Sales Force, Third Edition: A Practical Guide to Designing Winning Sales Reward Programs, 3rd Edition

Book Description

Leverage the full power of your sales force with a cutting-edge compensation program

Salespeople are motivated by many things—and how they’re paid tops the list. Sales compensation is one of the best tools for motivating any sales force and thus maximizing business revenue. Do you have strategically aligned sales compensation plans or are your pay plans holding back your sales force?

Compensating the Sales Force has helped thousands of business leaders worldwide create sales compensation programs that drive sales performance, increase revenue, and trigger business growth. Now, this new edition brings you fully up to date with new approaches for a business landscape where product/solution objectives and customer needs are in constant in flux.

Sales guru David Cichelli provides everything you need to build an incentive plan that delivers real financial results. He takes you step-by-step through the process of setting target pay, selecting the right performance measures, and establishing quotas. You’ll learn everything there is to know about:

•Why job content drives sales compensation design

•Methods for calculating formulas for payout purposes

•The roles of quota allocation, sales crediting, and account assignment

•Compensating a complex sales organization and global sales teams

•Administering, monitoring, and measuring the effectiveness of the program

An indispensable resource for anyone involved in sales compensation—from CEOs and sales managers to HR personnel to IT professionals—Compensating the Sales Force provides all the tools you need to design and implement a sales compensation plan that increases profits―and drives the sales team to exceed sales targets.


Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright Page
  4. Dedication
  5. Contents
  6. Acknowledgments
  7. Preface
  8. Introduction
  9. 1. Why Sales Compensation?
    1. The Role of the Sales Force
    2. Why Sales Compensation Works
    3. The Power of Sales Compensation
    4. Job Content—The Source of Sales Compensation Design
    5. Sales Jobs and Sales Process
    6. Sales Compensation—Paying for the Point of Persuasion
    7. Sales Force Obsolescence and Sales Compensation
    8. The Impact of Customer Relationship Management
    9. What Can Go Wrong?
    10. Summary
  10. 2. Sales Compensation Fundamentals
    1. Variable Compensation Models
    2. Income Producers versus Sales Representatives
    3. About Sales Compensation Concepts
    4. Sales Compensation Design Elements for Sales Representatives
    5. Eligibility
    6. Target Total Cash Compensation
    7. Pay Mix and Leverage
    8. Performance Measures and Weights
    9. Quota Distribution
    10. Performance Range
    11. Performance and Payment Periods
    12. Summary
  11. 3. Who Owns Sales Compensation?
    1. Sales Compensation Program Ownership
    2. Program Accountabilities
    3. Assignment of Program Accountabilities—Large Sales Organizations
    4. Using Committees
    5. Sales Compensation—The Process Manager
    6. Summary
  12. 4. Why Job Content Drives Sales Compensation Design
    1. Job Content Drives Sales Compensation Design
    2. Sales Job Components
    3. Sales Job Type Inventory
    4. Job Levels
    5. Job Design Errors
    6. Sales Compensation Practices by Job Types
    7. Summary
  13. 5. Formula Types
    1. Types of Plans
    2. Illustrating Formula Payouts with Sales Compensation Formula Graphs
    3. Unit Rate Plans
    4. Target Pay Incentive Plans: Commission versus Bonus
    5. Target Incentive Plans: Commission Formula
    6. About Link Designs
    7. Bonus Formula: Providing Equal Earning Opportunities When Territories Are Dissimilar in Size
    8. Target Bonus Plans
    9. Bonus—Calculation Basis
    10. Special Designs
    11. Add-On Plans
    12. Base Salaries
    13. Summary
  14. 6. Formula Construction
    1. Fundamentals of Sales Compensation Formulas
    2. The Economics of Income Producers
    3. Advanced Thinking about Income Producer Commission Rates
    4. Constructing Sales Representative Formula
    5. Formula Construction Worksheets
    6. Summary
  15. 7. Plan Cost Modeling
    1. Modeling Objectives
    2. Successful Plan Modeling Steps
    3. Summary
  16. 8. Support Programs: Territories, Quotas, and Crediting
    1. Territory Configuration
    2. Quota Management
    3. Sales Crediting
    4. Summary
  17. 9. Employment Status and Pay Implications
    1. New Hires
    2. Lateral Transfers
    3. Promotions
    4. Involuntary Terminations
    5. Resignations
    6. Leave of Absence
    7. Vacation Treatment
    8. Temporarily Assigned Accounts
    9. Summary
  18. 10. Difficult-to-Compensate Sales Jobs
    1. Channel Sales Representative
    2. Long Sales Cycle Mega-Order Seller
    3. Business Development Specification Seller
    4. Strategic Account Manager
    5. Pursuit Team
    6. New Account Seller
    7. Account Manager
    8. Overlay Specialist
    9. New Hire
    10. Branch Manager
    11. House Account Manager
    12. Sell and Deliver Service Provider
    13. Merchandiser
    14. Summary
  19. 11. Small Companies, Big Companies—Sales Compensation Solutions
    1. Does Company Size Affect Sales Compensation?
    2. Small Business, Small Sales Force
    3. Fast-Growing Start-Up Companies
    4. Cottage-Style Growth Companies
    5. Large Companies
    6. Summary
  20. 12. Compensating the Complex Sales Organization
    1. Examples of Complex Sales Organizations
    2. Challenges for Sales Compensation
    3. Preferred Sales Compensation Outcomes
    4. Sales Compensation Rules for Complex Sales Entities
    5. Summary
  21. 13. Global Sales Compensation
    1. The Philosophy of Internationalism versus Globalism
    2. Sales Compensation—A Local Solution
    3. Global Trigger Conditions
    4. Global Sales Compensation Solutions
    5. Trends in Global Sales Compensation Practices
    6. Summary
  22. 14. Administration
    1. Administration Components
    2. How to Avoid Unnecessary Administrative Burdens
    3. Summary
  23. 15. Implementation and Communication
    1. Implementation
    2. Communication
    3. Summary
  24. 16. Program Assessment
    1. Strategic Alignment
    2. Employee Motivation
    3. Best-Practice Variance
    4. Return on Investment
    5. Program Management
    6. Summary
  25. 17. Sales Compensation Design
    1. The Sales Compensation Design Process
    2. 10 Steps to Sales Compensation Design
    3. Summary
  26. Closing Notes
  27. Appendix A: Sales Compensation Design Principles
  28. Appendix B: Sample Sales Compensation Plan
  29. Appendix C: Sales Compensation Survey Companies
  30. Appendix D: Sales Compensation Administration Software Vendors
  31. Index