Managing Sales Compensation

Abstract

A company and the configuration of its sales force have to evolve as the company goes through the stages of its life cycle. Sales force configuration involves decisions that reflect sales strategy, sales force structure and sales force size. Specifically, it focuses on how the sales personnel apportion their efforts among different products, customers, geography and selling activities (sales strategy); the differing roles that internal sales force and external selling partners should play (sales force structure) and the sales force capacity to effectively serve the customers (sales force size). Sales force configuration management is critical because it determines how quickly a company can adjust its sales forces in response to market opportunities, while balancing compensation costs and profitability. This article discusses how sales force configuration variables change across the life cycle and identifies best-case scenario for optimal performance.