Studies of sales representatives indicated that basing compensation too much on commissions can result in counterproductive practices such as undercharging for services.

Question

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Studies have shown that sales representatives who receive high levels of commission-based compensation may feel pressured to undercharge for services in order to close deals quickly and maximize their own earnings. This can lead to customer dissatisfaction, reduced profit margins, and other negative outcomes. Therefore, companies should be cautious about relying too heavily on commissions and explore alternative strategies for incentivizing their sales teams.

Studies of Sales Representatives Indicated That Basing Compensation Too Much