Research-in-Progress Abstract
It has long been held that monetary rewards are the most effective way to motivate salespeople (Ford, Churchill and Walker 1981). Unfortunately, there is no general agreement concerning the level, frequency, and determinants for the distribution of this money. A majority of small business owners contacted in a recent survey report that their sales compensation plans fail to adequately motivate salespeople. A near majority report that the plans overpay poor performers (Ricklefs 1990). While most practitioners and researchers agree that a well designed plan should be good for both the company and the salesperson, the goal of defining such plans in a broad spectrum of market conditions has been rather elusive. However, poorly designed plans may not only prevent firms from reaching sales targets, but may also increase a firm’s selling costs if it overrewards, or increase turnover if it underrewards.
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References
Farley, J. U. 1964. “An Optimal Plan for Salesmen’s Compensation.” Journal of Marketing Research 1 (May): 39–43.
Ford, N. M., O. C. Walker and G. A. Churchill, Jr. 1981. “Differences in the Attractiveness of Alternative Rewards Among Salespeople : Additional Evidence.” Report #81–107. Cambridge, Ma: Marketing Science Institute.
Ricklefs, R. 1990. “Wither the Payoff On Sales Commissions?” The Wall Street Journal (March 6).
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Darmon, R.Y., Rouziès, D. (2015). The Effects of a Salesperson’s Utilities on Optimal Sales Force Compensation Structures in Uncertain Environments. In: Sirgy, M., Bahn, K., Erem, T. (eds) Proceedings of the 1993 World Marketing Congress. Developments in Marketing Science: Proceedings of the Academy of Marketing Science. Springer, Cham. https://doi.org/10.1007/978-3-319-17323-8_19
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DOI: https://doi.org/10.1007/978-3-319-17323-8_19
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