The document discusses various methods for compensating salespeople, including straight salary, straight commission, and combination plans involving salary plus bonuses or commissions. It provides details on the benefits and drawbacks of different compensation types and explores trends toward using incentive payments and customer satisfaction metrics in determining compensation. Sample compensation levels from industry surveys are presented for various sales roles.

2. Convergence selling Account management Leverage selling New business development New Current Customers Current New Products The Customer-Product Matrix

6. Straight Salary 17 Straight Commission 19 Combination Plans (83%) Salary Plus Bonus 24 Salary Plus Commission 20 Salary Plus Bonus Plus Commission 18 Commission Plus bonus 1 Total 100% Percentage of Companies Using Use of Compensation Plans Source: Adapted from Sales Compensation Concepts and Trends (New York: Alexander Group, 2004).

7. Comparing Salary and Commission Plans for Field Sales Representatives 0 100 200 300 400 500 10,000 20,000 30,000 40,000 Straight Salary 10% Commission Total cost per person (thousands $) Sales Per Person in Thousands 50,000 Comparing Salary and Commission Plans

10. Total Salary Incentive Compensation Position ($000) ($000) ($000) Top Sales Executive $91.0 $29.0 $120.0 National Account Manager 72.2 26.0 98.2 Regional Sales Manager 74.5 21.9 96.4 District Sales Manager 64.5 20.3 84.8 Key Account Rep 57.4 22.9 80.3 Senior Sales Rep 47.5 26.0 73.5 Intermediate Rep 36.1 15.3 51.4 Entry Level Rep 29.7 13.4 43.1 Compensation Levels for Firms using Salary Plus Incentives Sales & Marketing Management Compensation Survey, 2005

20. Percentage Size Gross Percentage Commission Order Gross Margin of Margin to Commission on Paid to Number on Each Order Order Company Gross Margin Salesperson 1 10 $1,000,000 $100,000 15 $15,000 2 20 $500,000 $100,000 15 $15,000 Comparing Gross Margin Commissions on Two Orders

21. Marketing Plan Discounted Price % Decline Selling Price $100 $92 Cost of Goods Sold 80 80 Gross Margin 20 12 GM% Commission 20% 20% $ Commission $ 4 $ 2.40 40% Contribution 16 12 Overhead Costs 10 10 Net Profit $ 6 $ 2 66% Gross Margin Commission Problems

24. Hospital costs 90% Life insurance 77 Dental plan 69 Long-term disability 56 Pension plan 55 Short-term disability 49 Profit sharing 44 Thrift savings 22 Employees stock purchase plan 21 Percentage of Firms Offering Benefit Benefits Offered by Companies