Marketing Communications

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Marketing Communications
Personified Promotion

COMPENSATION PLAN

The components of a sales force compensation plan are:

1. FINANCIAL COMPENSATION: this is subdivided into two such as:
   • DIRECT: payment of money
   • INDIRECT: paid vacations or company financed insurance programmes and others


2. NON-FINANCIAL COMPENSATION: this type consists of the following:
   • Opportunity to advance on the job
   • Recognition inside and outside the firm
   • Self-respect

A compensation plan should be based on four principles:

1. Pay a meaningful incentive in a timely manner.


2. Base the incentive payment on performance.


3. Be certain that the performance is based on activities that can be controlled by the
   representative.


4. Use the performance criteria that are observable and measurable.

STEPS IN DEVELOPING A COMPENSATION PLAN

The steps in developing a compensation plan are:

1. Define the sales job.


2. Consider the company’s general compensation structure.


3. Consider compensation patterns in community and industry.


4. Determine compensation level.


5. Provide for the various compensation elements.


6. Special company needs and problems should be considered.


7. Consult the present sales force.


8. Reduce tentative plan to writing and pretest it.


9. Revise the plan.


10. Implement the plan and provide follow-up.