Deck 13: Sales-Person Compensation and Incentives

Question 1

When determining salaries of salespeople,it is usually a function of:

A)Experience.
B)Competence.
C)Sales manager's judgment.
D)All of the choices are correct.

Answer 1

D

Question 2

Julia is trying to decide which types of incentives to offer her sales force.Julia has two basic choices,__________ or _____________.

A)Benefits; costs.
B)Commissions; bonuses.
C)Benefits; bonuses.
D)Commissions; quotas.

Answer 2

B

Question 3

Career counselors often advise college graduates seeking their first sales job to seek out positions heavier in ________ component to give the salesperson time to learn how to sell.

A)Salary
B)Commissions
C)Bonus.
D)Quota

Answer 3

A

Question 4

Which of the following sales compensation plans is LEAST consistent with relationship selling?

A)Benefits and perks.
B)Straight salary.
C)Straight commissions.
D)Combination plans.

Question 5

From having been a salesperson,Marty knows salespeople have basic security needs.Now,as a sales manager,Marty will increase __________ for his sales force.

A)Benefits.
B)Bonuses.
C)Commissions.
D)Quotas.

Question 6

Sales commissions are usually based on:

A)Profits or costs.
B)Quotas or contests.
C)Dollar amount or sales volume.
D)Perks or sales volume.

Question 7

Larry is considering a contest for his sales force.Contest winners would receive:

A)Bonuses,perks,or benefits.
B)Cash,merchandise,or travel awards.
C)Benefits,bonuses,or commissions.
D)Commissions,expense accounts,or cash.

Question 8

A question that drives successful compensation plans is:

A)Which method is most appropriate for motivating specific types of selling activities?
B)How much of total compensation should be earned through incentives?
C)What is the best mix of financial and nonfinancial compensation and incentives for motivating the sales force?
D)All of the choices are correct.

Question 9

When developing a compensation plan,a sales manager's goal is create a system that:

A)Minimizes costs.
B)Pays for performance.
C)Maximizes internal customer relations.
D)All of the choices are correct.

Question 10

In recent years,the trend in sales compensation has been toward:

A)Straight bonuses.
B)Straight salary.
C)Straight commissions.
D)Combination plans.

Question 11

Ron is considering the use of straight salary for his new sales force.He thinks this is appropriate because:

A)It is difficult to measure each salesperson's impact on sales volume.
B)He wants to motivate short-term selling efforts.
C)He wants to encourage sales success.
D)It will provide additional rewards to top performers.

Question 12

__________ can be used to provide additional rewards for top performers,while _____________ can be used to match competitive offers.

A)Salary; commissions.
B)Bonuses; benefits.
C)Benefits; contests.
D)Contests; commissions.

Question 13

From a salesperson's perspective,the major limitation of straight salary compensation is:

A)Financial rewards are tied to draws.
B)Financial rewards are not tied directly to any specific aspect of job performance.
C)Financial rewards vary with commission schedules and nonfinancial incentives.
D)All of the choices are correct.

Question 14

Which of the following is NOT one of the three primary methods of compensating salespeople?

A)Straight bonuses.
B)Straight salary.
C)Straight commissions.
D)Salary and sales incentives.

Question 15

A ___________ is paid for achieving a set level of performance,while a __________ is paid for each sale.

A)Perk; bonus.
B)Bonus; commission.
C)Commission; bonus.
D)Draw; quota.

Question 16

Perry is shifting the compensation plan for his sales force from straight commissions to a salary and bonus system.Perry knows that setting the quota is important and quotas should be:

A)Easily attained by all salespeople.
B)Attainable by very few salespeople in order to provide incentives to the rest of the sales force.
C)Specific,measurable,and realistically attainable.
D)All of the choices are correct.

Question 17

Tim is re-assessing the quotas for his sales force.His basic choice in setting quotas is to base them on:

A)Sales volume.
B)Profitability of sales.
C)Account servicing.
D)All of the choices are correct.

Question 18

Ray has just reached his annual quota which will earn him a:

A)Prize.
B)Bonus.
C)Draw.
D)Salary.

Question 19

__________ can be used to motivate effort on nonselling activities,while ___________ can be used to motivate a high level of selling effort.

A)Salary; commissions.
B)Bonuses; sales contests.
C)Benefits; contests.
D)Contests; benefits.

Question 20

____________ can be used to stimulate additional targeted sales effort,while __________ can be used to satisfy salespeople's security needs.

A)Salary; commissions.
B)Bonuses; sales contests.
C)Benefits; contests.
D)Contests; benefits.

Question 21

In combination sales compensation plans,the incentive portion should be relatively large if ______________ is an important part of the job.

A)Selling skill.
B)Nonselling efforts.
C)Benefits.
D)Expense accounts.

Question 22

Gordon is developing a sales contest.He is not sure whether to have salespeople compete against each other,against an assigned quota,or as teams,but knows the contest needs to:

A)Cost almost nothing.
B)Give salespeople a reasonable chance of winning.
C)Be complex in order to challenge the sales force.
D)Make everyone a winner.

Question 23

Sales contests should be ___________ to maintain salespeople's enthusiasm.

A)Relatively short.
B)Complex.
C)Conducted over several years.
D)Offered frequently.

Question 24

Doug is working on straight commissions.His commissions could be based on:

A)Unit sales volume.
B)Dollar sales volume.
C)Profitability of sales.
D)All of the choices are correct.

Question 25

Leonard sees that the sales force he has inherited is not very motivated under the current combination plan.Leonard should increase:

A)The salary.
B)The incentive portion.
C)The size of the territories.
D)The draw.

Question 26

A draw is commonly associated with which type of salary compensation plan?

A)Salary
B)Commission
C)Bonus.
D)Quota

Question 27

Larry has just been given a new territory and more responsibilities.As part of the __________,he has also been given a new car and a larger office.

A)Quota.
B)Bonus plan.
C)Perquisites.
D)Sales contest.

Question 28

One of the benefits of awarding merchandise instead of cash to sales contest winners is:

A)It costs less.
B)Merchandise is visible and people will talk about their awards.
C)Every company has suitable merchandise in their inventory to give away.
D)Nonfinancial incentives are always more important than financial incentives.

Question 29

Arnold has designed sales territories that are of equal potential.He thinks it is fair to base sales force compensation based on:

A)Straight bonuses.
B)Straight salary.
C)Straight commissions.
D)Combination plans.

Question 30

From the perspective of motivating salespeople,recognition programs provide the benefit of:

A)Increased health insurance.
B)Making others in the organization aware of the salesperson's accomplishment.
C)Variable commission rates in order to reconfigure bonuses.
D)Reduced expense account costs.

Question 31

When developing a sales compensation plan with incentive ceilings,it is a good idea to:

A)Consult customers first.
B)Pretest the plan using sales records.
C)Allow salespeople to define the ceiling.
D)All of the choices are correct.

Question 32

Donna wants to stimulate her sales force to surpass each of their peak sales this month.She should consider using:

A)Increased salaries.
B)Nonfinancial incentives.
C)Increased benefits.
D)A contest.

Question 33

Danielle is paid different amounts depending on the types of products she sells.She is being paid based on a:

A)Fluctuating salary plan.
B)Defined salary plus bonus plan.
C)Variable commission rate.
D)Variable quota plus perks plan.

Question 34

Jordan is debating how often incentive payments for her sales force should be made.Shorter intervals increase the motivating power but decrease the ______________.

A)Cost.
B)Sales.
C)Amount received.
D)Salary.

Question 35

Most incentive plans credit the salesperson when the order is:

A)Placed.
B)Accepted by the company.
C)Shipped.
D)Delivered.

Question 36

From a management perspective,straight sales commissions have the advantage of:

A)Being easy to compute.
B)Varying directly with sales volume.
C)Conserving working capital.
D)All of the choices are correct.

Question 37

One of the problems with incentive ceilings is:

A)Salespeople may reach the earnings maximum early and not work to their maximum potential the rest of the year.
B)Top salespeople may wind up earning more than sales managers.
C)It could result in windfalls for salespeople,not related to their sales effort.
D)All of the choices are correct.

Question 38

Which of following is a potential criticism of sales contests for motivating salespeople?

A)Contests may create only long-term results without short-term improvement.
B)Salespeople may "borrow" sales from before or after the contest to increase their chances of winning.
C)Contests can increase the cohesiveness and morale of the sales force.
D)All of the choices are correct.

Question 39

Which of the following is NOT one of the three key types of expense plans?

A)Indirect reimbursement.
B)Direct reimbursement.
C)Limited reimbursement.
D)No reimbursement.

Question 40

In combination sales compensation plans,as the degree of relationship selling increases,the incentive pay portion of the plan should:

A)Be increased.
B)Remain constant.
C)Be reduced.
D)Have no impact.

Question 41

Changes in ____________________ are most likely to cause a well-designed compensation plan to no longer be effective.

A)Markets or customers.
B)Production scheduling.
C)Government regulations
D)Enterprise resource planning.

Question 42

Limited expense reimbursement plans,can have the effect of limiting:

A)The cost to the salesperson.
B)Incentives to do what needs to be done.
C)Quotas.
D)The draw/benefit ratio.

Question 43

When evaluating or creating a sales compensation plan,a first step should be to:

A)Scrap the existing plan if there is one.
B)Evaluate how salespeople are allocating their time.
C)Estimate the impact of a straight salary plan.
D)Allow salespeople to design their own compensation plans.

Question 44

Recognition is an attractive reward because it makes the salesperson's peers and superiors aware of what the salesperson accomplished.

Question 45

Sales managers are reluctant to base rewards on customer satisfaction because of the:

A)Disincentives provided to selling.
B)Difficulty in measuring changes in satisfaction.
C)Possibility it might lead to increased relationship selling rather than transactional selling.
D)Customer's reaction if they hear rewards are based on satisfying them.

Question 46

When using incentive plans,shorter intervals between performance and rewards increase the motivating power of the plan.

Question 47

The way the reward structure is implemented in a sales organization is through the compensation plan.

Question 48

When rewards are tied to numerous aspects of performance:

A)It can lead to confusion among the sales force.
B)It provides incentives for salespeople to do everything right.
C)It allows managers to target salespeople's efforts.
D)It can be used to mislead competitors.

Question 49

Paying salespeople too much can be a problem because:

A)Overpaying salespeople adds to the company's costs.
B)It can cause resentment among the firm's other employees.
C)It can lead to reduce motivation on the part of the salesperson.
D)All of the choices are correct.

Question 50

No reimbursement expense plans typically accompany straight salary compensation plans.

Question 51

Sales commissions are usually based on a salesperson's long-term results.

Question 52

When sales territories have equal potential,straight commission plans have a built-in level of fairness.

Question 53

A draw is commonly associated with combination salary compensation plans.

Question 54

Many small firms cannot afford extensive training programs.Instead,smaller firms:

A)Hire new recruits and see which ones succeed.
B)Use more promotion and less selling.
C)Offer above-average compensation to attract experienced salespeople.
D)Send their sales trainees to customer's sales training programs.

Question 55

_______________ is likely to motivate all of a firm's salespeople.

A)Money.
B)Benefits.
C)Nonfinancial incentives.
D)No single reward.

Question 56

Routine sales jobs tend to pay:

A)More than complex jobs to compensate salespeople for boredom.
B)Less than jobs requiring special qualifications.
C)The same as complex jobs to compensate salespeople for the rigor of selling.
D)None of the choices are correct.

Question 57

Adam is considering changes in the rewards system he uses with his sales staff.As a first step,Adam:

A)Tries straight commissions and studies the response.
B)Determines the sales force's current preferences.
C)Surveys other companies to see what they offer.
D)Recalls what he preferred when he was a salesperson.

Question 58

With the right compensation plan,it is not difficult to motivate salespeople to do many things at once.

Question 59

In combination sales compensation plans,the incentive portion should be relatively large if nonselling activities are an important part of the job.

Question 60

The sales compensation system least consistent with relationship selling is straight commissions.

Question 61

From a salesperson's perspective,what is the major advantage and disadvantage associated with straight salary compensation?

Question 62

From a management perspective,what are the advantages of straight sales commissions?

Question 63

For a company,what are the three benefits of incentive ceilings?

Question 64

Why can paying salespeople too much be a problem?

Question 65

From a salesperson's perspective,what is the major advantage and disadvantage associated with straight commissions?

Question 66

What are the criticisms of sales contests for motivating salespeople?

Question 67

From a salesperson's perspective,what is the major advantage and disadvantage associated with combination plans?

Question 68

List the seven building blocks of good sales standards.

Question 69

Under what conditions does it make sense to use straight salary for salespeople?

Question 70

What are the three typical ways straight commission compensation is determined?

Question 71

What are the three primary methods of compensating salespeople?

Question 72

What qualities are needed for sales quotas to be effective in motivating salespeople?

Question 73

Leonard is evaluating the combination sales compensation plan used by the previous sales manager.What questions should Leonard ask about the combination plan?

Question 74

When developing a sales contest,what does the sales manager need to do?

Question 75

What are the three basic questions that drive successful sales compensation plans?