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Sales Management Sales Quotas Topic 11. 3 Powerful Tools Quotas Compensation Company Policy.

Date post: 19-Jan-2016
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Author: angel-mitchell
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Sales Management Sales Quotas Topic 11
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  • Sales ManagementSales QuotasTopic 11

  • 3 Powerful ToolsQuotasCompensationCompany Policy

  • Effective QuotasAttainableEasy to UnderstandComplete

  • DisadvantagesTeam SellingUncontrollablesTerritory FairnessTime Consuming

  • Three Quota TypesSalesFinancialActivity

  • Sales QuotasMost PopularAdvantagesDisadvantages

  • Financial QuotasAdvantagesDisadvantages

  • Activity QuotasAdvantagesDisadvantagesUse in Training

  • Price Setting IssuesSales Commissions are Dangerous with Pricing AuthorityNot a problem with Gross Margin CommissionsArgument is Equally Valid when Incentive Pay is a Bonus

  • Price Setting ExampleBrand is priced at $100Direct Unit Costs = $60Gross Margin = $40Compare 4% sales quota versus a 10% gross margin quota.

  • 4% SC vs 10% GM CommissionInitially both have $4 earned on a $100 unit sold.But, suppose you cut the price $10 to get an order what happens?

  • 4% Sales Commission$10 price cut so new price is $90Sales Commission is .04 x $90 = $3.60But company margins are now:$90 - $60 unit cost - $3.6 commission = $26.4Versus $100 - $60 - $4 = $36

  • 10% GM CommissionSame $10 price cutCommission = ($90 - $60) x .1 = $3Company margin = $90 - $60 - $3 = $27Price cut 10%, and commission fell by 25% ($4 vs $3)Incentive to cut price is lessened.

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