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Why Job Content Drives Sales Compensation Design
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As we mentioned earlier, sales compensation is driven by sales job contentWhile industry practices, motivation theory, and company philosophy play contributing roles, the design of a sales compensation plan reflects the type of sales job it supports In this chapter, we will examine why job content drives sales compensation designWe will look at how different job components combine to form different sales job types We will then present an inventory of sales jobs Next, we will look at sales job design errors and how they have a negative impact on sales compensation plan effectiveness Finally, we will provide examples of sales jobs and their supporting sales compensation elements
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Job Content Drives Sales Compensation Design
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Sales compensation is a contributing reason why salespeople want to excel However, in our view, it is seldom the primary reason Human endeavor is a complex chemistry of intrinsic and extrinsic needs Leadership models, measurement systems, affiliation variables, and supporting programs (such as the rewards system) contribute to provide the proper direction and motivation to the sales force Our experience with hundreds of sales forces suggests that beginning with sales job content is a rational and safe starting point for effective sales compensation design We don t want to preclude alternative approaches or theories In our view, other variables can explain the existence of unique sales compensation designs but job content can best explain the construct of most sales compensation plans Perhaps a storyboard will help illustrate how sales compensation design logically flows from job content:
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Okay, Ms Smith, begins the sales manager We have an excellent sales territory for you You will be calling on small businesses in
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three zip codesYour job is to sell telecommunication services to customers already using the major carrier in the market It s not an easy sell, but we have a great product, superior customer service, and great pricing Expect a lot of Nos but don t give up! Now, let me give you an idea of how your compensation package will workYou will receive a commission on all new accountsYou will get a percentage of the revenue for the first 6 months of any new account After that, the customer will be handled by the customer service team Although your base salary is low, you have a great upside earning opportunity tied to your sales success
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As this storyboard illustrates, it is almost impossible to split the job content (new account selling) from its supporting sales compensation program (commission on all new sales) Although most people can list 10 to 15 different types of sales jobs, the list actually totals close to 50 distinct selling jobs Not all industries or companies use all 50 sales jobs In fact, it s unlikely that a sales department will use more than 15 or 20 sales jobs and will more likely need only 8 to 12 sales jobs As we will demonstrate, the foundation of sales compensation design rests with the underlying job content regardless of the industry or company
Sales Job Components
In 1, we presented Sales Process: Demand Creation, Buyer Identification, Purchase Commitment, Order Fulfillment, and Customer Service Sales organizations need to be outward facing, supporting different customer populations In this section, we add two more variables that help further define job content: Customer Segments and Customer Specialization
Customer Segments: Customer segments include the following categories: New accounts: New accounts are prospects that are not current buyers More narrowly defined segments may identify multiple unique buyers within an account, thus increasing the population of new accounts Existing accounts: Existing accounts are current buyers A company s definition of former customers will help correctly assign these returning customers to the right category: new or existing
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