Abstract
Sales force compensation represents the fix and / or variable payment by the company. To compensate agents based on the results, the company set a goal which is brought to their attention through the compensation plan. Applying the model of moral hazard, where the agent behavior cannot be verified, it cannot be specified in the contract what is the expected behavior of the agent. In order to make an offer to contract principal should know the effort that the agent will submit it to define the payment and the contract is determined optimally in trade between the two conflicting objectives of the two participants in the contract. Although agent behavior cannot be verified, the result of this behavior should be measurable at the end of the contract so that the employer may make the contract contingent on effort commission agent for sale of which is measured by the amount of earnings to the company.
Highlights
Sales force compensation represents the fix and / or variable payment by the company
The planning for sales force compensation depends on the segmentation of sales agents according to the products and services offered by the company or the account list of each agents, and other criteria
In order to compensate agents based on the results, the employer establishes an annual goal, most often expressed in the form of revenue that the company expects to receive from the contracts that the sales agent closes, objective to be achieved in accordance to eligibility restrictions imposed by the company which result from the segmentation
Summary
Sales force compensation represents the payment of fix and / or variable salary by the company. Agents may receive a small bonus if they sell other products and packages from other lines of business, but it depends from company to company Another important criterion is the list of customers or accounts to which sales agents can sell. If the sales representative sells to an account that does not have designated by the company to him or her, but neither is assigned to another sales agent, he or she may ask to be added to its list of accounts and he or she will be compensated This may mean a whole process that may require several levels of approvals. The products the sales agents sell and list of accounts that are assigned to them represent the two most important criteria for eligibility of sales agents to be compensated, but some companies may choose to use other criteria for compensation eligibility such as period activity
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