Question 1

Incentive payments are always awarded to the salesperson when the company receives the sales order.

Accepted Answer

Incentive payments may be awarded at various stages of the sales process, such as when a certain sales target is reached or when a new client is acquired. They may also be awarded at the time of order placement or delivery, not necessarily when the company receives the sales order.

Question 2

Incentive programs should never have ceilings.

Accepted Answer

Incentive programs can have ceilings as the organization may want to limit the amount of incentives they give out. However, it is important to set the ceilings at a reasonable and achievable level to motivate employees to continue striving for better performance.

Question 3

Sales contests provide salespeople with an opportunity to earn both extrinsic and intrinsic rewards.

Accepted Answer

Sales contests often offer both monetary prizes and recognition or achievement, providing both external (extrinsic) and internal (intrinsic) motivation for salespeople to work harder and perform better.

Question 4

Natalie wants to motivate her salespeople toward meeting the quarterly sales volume and profit quotas. She will likely use __________ to motivate her salespeople.

Accepted Answer

The answer of Natalie wants to motivate her salespeople toward...

Question 5

Studies of sales force compensation indicate:

Accepted Answer

Studies have found that a combination of salary, commission, and various nonfinancial factors such as recognition and opportunities for advancement are all important motivators for salespeople. A well-designed sales compensation plan should consider all of these factors.

Question 6

How does a bonus differ from a commission?

Accepted Answer

Bonuses and commissions are both forms of incentive compensation, but they differ in their structure and purpose. Commissions are typically part of the basic compensation plan and are paid as a percentage of sales made by the salesperson. Bonuses, on the other hand, are additional incentives that are paid when a salesperson achieves a specific goal or milestone, such as reaching a certain level of sales or exceeding a sales target. Bonuses are used to reward outstanding performance, while commissions are a regular part of the compensation plan that helps to motivate salespeople to make more sales. Therefore, the best choice is B.

Question 7

In most sales organizations, the total compensation comprises several components that:

Accepted Answer

The components of total compensation are designed to achieve different objectives. For example, a base salary is given to provide financial stability, while commissions are meant to motivate and reward salespeople for closing deals. Bonuses may be tied to achieving specific goals or hitting certain targets. Each component serves a different purpose and works together to create a compensation package that incentivizes salespeople to perform their best.

Question 8

Bonuses are almost always tied to:

Accepted Answer

Bonuses are typically tied to quotas, as they are often used as incentives for employees to meet or exceed specific performance targets or sales goals.

Question 9

To be effective, quotas need to be:

Accepted Answer

Quotas need to be specific, measurable, and realistically attainable in order to be effective. Being specific means that the quota clearly outlines what needs to be accomplished. Being measurable means that progress can be quantified and tracked. Being realistically attainable means that the quota is neither too easy nor too difficult to achieve, and that it is achievable within the given time period. Therefore, all of the above options are necessary for quotas to be effective.

Question 10

Candice is developing a compensation plan for the salespeople in her new company. In order to have a successful compensation plan, a basic question she will need to address is:

Accepted Answer

The question refers to developing a successful compensation plan for salespeople, which involves determining the mix of financial and nonfinancial compensation and incentives to motivate the sales force. It does not directly relate to the number of salespeople to hire, involving clerical staff, how often to change the plan, or international bonus/quota ratios. These may be considerations in the overall process, but the most fundamental question for developing a successful compensation plan is determining the right balance between financial and nonfinancial incentives.

Question 11

One of the disadvantages of a combination compensation plan is that with this system, selling expenses are not as predictable as with the other two forms of compensation plans.

Accepted Answer

With a combination compensation plan, the salesperson's pay is dependent on both a base salary and commission, which can fluctuate based on sales performance. Therefore, selling expenses may not be as predictable as they would be with a straight salary or straight commission plan.

Question 12

The foundation of most compensation plans is a package of benefits that is designed to satisfy the individual salesperson's need for security.

Accepted Answer

Compensation plans often include benefits such as health insurance, retirement plans, and other security-focused elements to ensure the salesperson's financial and personal well-being.

Question 13

When deciding which form of expense reimbursement to use, sales managers must make trade-offs between tight control aimed at holding down total expenses and the financial well-being of salespeople.

Accepted Answer

Sales managers have to balance the need for controlling expenses with the need to ensure that their salespeople are financially motivated to perform well. Tight control can result in demotivating sales staff, while generous reimbursement policies can drive up expenses.

Question 14

One of the problems in team selling is effective rewards for salesperson effort.

Accepted Answer

In team selling, it can be difficult to determine how to fairly reward individual salespeople for their contributions to the team effort. This can create a challenge in motivating salespeople to put forth their best efforts and may lead to feelings of frustration and unfairness within the team.

Question 15

Which of the following sales activities would NOT be enhanced through the implementation of a straight salary compensation plan by a company that sells customized retail stock display units?

Accepted Answer

A straight salary compensation plan does not provide direct financial incentives for sales, which may not enhance the motivation to sell the inventory system.

Question 16

Drawing accounts are provided to salespeople on a straight commission plan as added incentive pay.

Accepted Answer

The answer of Drawing accounts are provided to salespeople on...

Question 17

Most sales managers consider opportunities for promotion and advancement second only to financial incentives as an effective sales force motivator.

Accepted Answer

Opportunities for promotions and advancement are considered very important motivators for salespeople by most sales managers, second only to financial incentives.

Question 18

One of the advantages of sales contests is the way they always create employee cohesiveness and improve employee morale.

Accepted Answer

Sales contests can sometimes create competition among employees, which may not always lead to cohesiveness or improved morale.

Question 19

The core of a salary compensation plan is:

Accepted Answer

The answer of The core of a salary compensation plan...

Question 20

Shorter time intervals between performance and the receipt of rewards increase the motivational power of a compensation plan.

Accepted Answer

This is because receiving rewards closer to the time of performance reinforces the behavior and creates a stronger association between the two, leading to higher motivation. Waiting too long between performance and reward can weaken this association and decrease motivation.

Quiz 11: Salesperson Compensation and Incentives Comprehensive Cases for Part Two