ch 9

Absolute commission plans are easy for reps to understand, which often fosters more trust and drives better results. True false question.TrueFalse

True

Most sales managers report to the ______. Multiple choice question. CEO VP of sales director of sales COO

director of sales

In sales compensation plans, _______ is the source of most of the risk. Multiple choice question. variable pay salary base pay the retirement benefit plan

variable pay

From the following list, select the situations in which salary-only compensation plans can work well. There is more than one correct answer. Multiple select question. when an experienced sales force is looking to maximize its compensation when companies are trying to motivate their sales force to exceed their quotas when the selling organization has a very collaborative culture when the sales team is tightly involved in delivery and overall company performance

when the selling organization has a very collaborative culture when the sales team is tightly involved in delivery and overall company performance

A director of sales has a ______ strategic role than a sales manager does. Multiple choice question. more less

more

The base salary plus bonus pay structure can be an ideal combination of predictability and _______ for salespeople. Multiple choice question. unpredictability motivation delegation sales training

motivation

Ideally, a company should review its sales compensation plan _______. Multiple choice question. quarterly twice a year annually monthly

quarterly

A company pays its salespeople a commission of $300 each time they do a presentation to a possible new client. This commission is part of a(n) _______ commission plan. Multiple choice question. profit-sharing absolute relative positive

absolute

Usually, a bonus is paid ______ a salesperson meets or exceeds an annual sales goal. Multiple choice question. before after

after

Which type of sales manager leads teams of sales reps and account managers? Multiple choice question. VP of sales regional sales manager director of sales senior sales rep

regional sales manager

With a _-only compensation structure, organizations decide ahead of time how much they will pay their salespeople. Take-home earnings each month are set regardless of how much a rep sells.

salary

As you start a sales career, you should be honest with yourself about what level of risk tolerance and ______ you are comfortable with in your new job. Multiple choice question. unethical behavior security sexual harassment illegal practices

security

In sales compensation plans, _______ is the source of most of the risk. Multiple choice question. the retirement benefit plan base pay salary variable pay

variable pay

Sales training programs should be customized to the needs of the representative(s) and changing market conditions. True false question.TrueFalse

True

The industry you work in will determine the type of sales roles open to you. True false question.TrueFalse

True

What is the most common reason for capping sales compensation? Multiple choice question. The company believes that internal conflict can result when some salespeople achieve higher earnings than other employees. The company wants to limit its sales to particular customers. The company does not want to recognize "star" performers. The company needs to follow pay-equity laws.

The company believes that internal conflict can result when some salespeople achieve higher earnings than other employees.

Most people believe that sales jobs will decrease in the United States as the economy continues to contract. True false question.TrueFalse

False

Organizations must structure their commissions based on sales only. True false question.TrueFalse

False

From the following list, select the situations in which salary-only compensation plans can work well. There is more than one correct answer. Multiple select question. when the sales team is tightly involved in delivery and overall company performance when an experienced sales force is looking to maximize its compensation when companies are trying to motivate their sales force to exceed their quotas when the selling organization has a very collaborative culture

when the sales team is tightly involved in delivery and overall company performance when the selling organization has a very collaborative culture

Suppose a retailer of high-end audiovisual equipment offers its salespeople a 5% commission on any sale they make over $15,000. Alita, a junior sales rep, sells a home theater package for $25,000 to a newly married couple. Alita's sales commission will be _____ on this sale. Multiple choice question. $1,500 $1,250 $1,000 $500

$1,250

Most regional sales managers' jobs require at least ________ years of sales experience. Multiple choice question. 5 3 20 10

3

From the following list, select all the characteristics of good sales managers. There is more than one correct answer. Multiple select question. They help their salespeople achieve the salespeople's own personal and career goals. They are leaders who inspire their employees. They focus on managing costs by minimizing sales rep commissions and bonuses. They place their people in positions where those people can succeed. Their primary loyalty is to themselves, rather than to their company or their staff.

They help their salespeople achieve the salespeople's own personal and career goals. They are leaders who inspire their employees. They place their people in positions where those people can succeed.

Gross-margin-commission plans promote the sales of more-profitable product lines. True false question.TrueFalse

True

If guaranteed income flow is important to you, then you should probably not take a job that pays commissions only. True false question.TrueFalse

True

Salesperson compensation choice and incentive pay horizon are both ______ elements of sales compensation plans. Multiple choice question. noncore core

noncore

In the past, sales managers' mentoring of their staff took place ______. Multiple choice question. via annual performance reviews through mobile phone-based apps during telephone discussions of commissions earned on a periodic, face-to-face basis

on a periodic, face-to-face basis

A gross margin commission is based on _______ rather than sales amount. Multiple choice question. the company's stock price customer acquisition customer retention profit

profit

Typically, a base salary should be between ______ percent of a salesperson's anticipated total compensation. Multiple choice question. 10 to 20 60 to 75 25 to 50 80 to 90

25 to 50

What are the likely outcomes of capping sales compensation? There is more than one correct answer. Multiple select question. Compensation caps set the expectation that the sales team can't achieve beyond a certain point. Compensation caps create a culture in which sales teams feel unrewarded for giving their best performance. Compensation caps ensure that all members of the sales force feel adequately paid for their skills, abilities, and accomplishments. Compensation caps means that sales reps won't push themselves to keep selling beyond a certain sales level.

Compensation caps set the expectation that the sales team can't achieve beyond a certain point. Compensation caps create a culture in which sales teams feel unrewarded for giving their best performance. Compensation caps means that sales reps won't push themselves to keep selling beyond a certain sales level.

A salesperson's interpersonal identification with the sales manager has no bearing on customer satisfaction ratings or stronger sales performance for the representative. True false question.TrueFalse

False

A straight-line commission is paid instead of a salary. True false question.TrueFalse

False

As a salesperson gains more incentive pay, the ratio of salary to total compensation will rise. True false question.TrueFalse

False

Base salary refers to a salesperson's total compensation, including bonuses and benefits. True false question.TrueFalse

False

Compensation caps establish a culture in which sales teams feel rewarded for giving their best performance. True false question.TrueFalse

False

The challenges of being a sales manager are much the same as the challenges of being a sales representative. True false question.TrueFalse

False

From the following list, select all the ways that a poorly designed sales compensation plan can wreak havoc on an organization. There is more than one correct answer. Multiple select question. It can discourage poor customer outcomes. It can result in counter-productive or dysfunctional behavior. It can drain profits. It can encourage fraud. It can drive away top talent.

It can result in counter-productive or dysfunctional behavior. It can drain profits. It can encourage fraud. It can drive away top talent.

What is the key benefit of the base salary plus commission plan for salespeople? Multiple choice question. It causes them to focus entirely on selling at the expense of customer relationships. It allows them to place their own monetary needs above the company's goals and sales budgets. It gives them the security of a steady income along with the economic incentive to sell. It completely insulates them from a period of poor or declining sales.

It gives them the security of a steady income along with the economic incentive to sell.

What is a possible disadvantage of straight-commission compensation? Multiple choice question. It might keep potentially outstanding sales reps from joining the organization. It is illegal in states with a minimum wage higher than $7.25 per hour. It ensures that sales reps' compensation is directly tied to their level of effort. It does not motivate salespeople to meet and exceed their quotas.

It might keep potentially outstanding sales reps from joining the organization.

rom the following list, select the benefits of a base salary plus commission structure for the company. There is more than one correct answer. Multiple select question. The company's cost for sales labor is zero if the sales force does not make any sales. The company has no fixed base salary costs and relatively few other costs of selling. The company benefits from greater clarity into its expenses and the opportunity to hire highly motivated, competitive salespeople. Because salespeople receive a base salary, the company can ask them to fulfill some important nonselling tasks, such as sharing information they learn from customers and training new team members.

The company benefits from greater clarity into its expenses and the opportunity to hire highly motivated, competitive salespeople. Because salespeople receive a base salary, the company can ask them to fulfill some important nonselling tasks, such as sharing information they learn from customers and training new team members.

Commission-only compensation plans help companies reduce their risk, because compensation under these plans is based purely on salespeople's performance. True false question.TrueFalse

True

From the following list, select all of the drawbacks of salary-only compensation plans. There is more than one correct answer. Multiple select question. Very successful sales reps will leave a salary-paying company to seek higher compensation elsewhere. Many salespeople love the thrill of the high-stakes, competitive nature of earning a commission—which can be the reason they went into sales in the first place. Without incentive compensation, reps are usually less motivated to exceed their sales quotas. Salary-only plans make it easy for companies to calculate expenses and make sales projections.

Very successful sales reps will leave a salary-paying company to seek higher compensation elsewhere. Many salespeople love the thrill of the high-stakes, competitive nature of earning a commission—which can be the reason they went into sales in the first place. Without incentive compensation, reps are usually less motivated to exceed their sales quotas.

Match each strategy with the desired outcome.

You want a particular behavior to cease. Ignore or punish the behavior. You want a particular behavior to occur or continue. Reward the behavior.

Identify the advantages and disadvantages of commission-only compensation plans.

advantages of commission-only plans matches Choice Organizations reduce their risk. As their salespeople succeed, revenue increases; when salespeople fail, the organization loses nothing. , Choice They tend to attract the most eager and top-performing salespeople. , Choice They can improve salesperson morale and satisfaction by allowing salespeople to make their own schedules. disadvantage of commission-only plans matches Choice They tend to attract fewer candidates in the hiring process.

When sales representatives do not exert much control over customer buying decisions, _______ should make up a greater percentage of the total compensation mix. Multiple choice question. base salary commissions

base salary

In which type of compensation plan does an organization augment a base salary with a bonus when the salesperson meets preset sales targets? Multiple choice question. base salary plus commission base salary plus bonus straight-line commission bonus-only

base salary plus bonus

A sales _ is a lump sum paid out to salespeople for the achievement of their respective sales quotas.

bonus

A company _ sales compensation when it refuses to pay salespeople more than a certain amount. (Enter one word in the blank.)

caps

Which of the following are two key criteria you should consider when selecting a sales job? Multiple select question. career path the industry amount of paperwork involved your similarity to other members of the company's sales force

career path the industry

A key criterion for committing to a career path in sales is to ______. Multiple choice question. focus your job-hunting efforts on the manufacturing industry look for a job that comes with a large expense account take a sales position that requires calling on prospects in person consider if that role will still be relevant ten years from now

consider if that role will still be relevant ten years from now

From the following list, select all of the typical activities of a regional sales manager. There is more than one correct answer. Multiple select question. decide which markets the organization will expand into coordinate sales trainings forecast and develop sales quotas represent the team in executive and company-wide meetings set individual quotas and team goals lead teams of sales reps and account managers

coordinate sales trainings represent the team in executive and company-wide meetings set individual quotas and team goals lead teams of sales reps and account managers

Gross margin commissions are popular because they ______. Multiple choice question. emphasize sales rather than profit discourage discounting on price help salespeople manage extraneous costs keep salespeople focused on customer service

discourage discounting on price

The reason for paying a base salary is to ______. Multiple choice question. give salespeople a consistent income to meet their ongoing financial obligations compensate employees at a rate that is approximately twice the minimum wage motivate employees to greatly exceed their sales quotas comply with government labor laws

give salespeople a consistent income to meet their ongoing financial obligations

Capping sales compensation is likely to _______ an organization. Multiple choice question. hurt bankrupt benefit motivate

hurt

From the following list, select two non-core elements of sales compensation plans. Multiple select question. commissions incentive pay horizon base salary salesperson compensation choice

incentive pay horizon salesperson compensation choice

Match each type of sales job with the correct description.

jobs growing matches Choice account managers jobs declining matches Choice outside sales

When sales representatives have a greater level of influence over customers' buying decision, commissions should comprise a _______ portion of the total compensation mix. Multiple choice question. larger smaller

larger

A once-a-year review of a sales compensation plan may not be enough because an annual review ______. Multiple choice question. makes it difficult to proactively make changes before problems derail sales performance salary-based plans do not need to change regularly and should remain in place for a minimum of five years does not allow a company to gauge sales reps' performance in the field should not be tied to salespeople's compensation package

makes it difficult to proactively make changes before problems derail sales performance

The compensation ______ refers to the relative proportions of fixed pay and incentive pay. Multiple choice question. choice base mix horizon

mix

The main purpose of a sales compensation plan is to ______. Multiple choice question. balance the trade-off between salary and commission ensure that salespeople are the most highly compensated employees in the company attract salespeople from competing companies to work for your organization instead motivate sales professionals to achieve specific objectives that directly translate to the organization's bottom line

motivate sales professionals to achieve specific objectives that directly translate to the organization's bottom line

Ideally, a company should review its sales compensation plan _______. Multiple choice question. twice a year monthly annually quarterly

quarterly

Base _______ is a fixed amount of money paid to an employee by an employer in return for work performed. Multiple choice question. salary minimum wage ratio

salary

A straight-line commission plan disincentivizes ______. Multiple choice question. salespeople who are content with a lower salary sales reps who want to maximize their income sales managers and executives customers who prefer to buy in volume

salespeople who are content with a lower salary

Select all the choices that correctly complete the following statement: The compensation mix stands a greater chance of success when participants believe that _________. Multiple select question. commission receives a large weight in the mix the plan is competitive a bonus payout is guaranteed with a relatively low level of sales performance the plan provides appropriate levels of compensation for extra effort

the plan is competitive the plan provides appropriate levels of compensation for extra effort

In which two areas do new hires with little or no sales experience require training? Multiple select question. the sales process general sales skills accounting procedures the corporate hierarchy

the sales process general sales skills