Question 1

__________ tends to help give the sales force the needed push to sell complex products or services and can be used to redirect salesperson efforts toward specific product lines; under this plan administrative costs tend to be high.

Accepted Answer

The "Salary plus commission plus bonus" plan provides multiple incentives, motivating salespeople to focus on complex products or specific lines, but it involves higher administrative costs due to its complexity.

Question 2

You have read a "want ad" in the latest edition of Marketing News. The firm is looking for a Vice President for sales and promotion. The company uses a combination of brokers and independent sales reps. What kind of a compensation program would they most likely to use for their salespeople?

Accepted Answer

Since the company uses a combination of brokers and independent sales reps, it is likely that they would use a commission-based compensation program to incentivize their salespeople. However, to further motivate and reward exceptional performance, the company may also offer bonuses on top of the commission. Therefore, the most likely compensation program for this company's salespeople would be commission plus bonus.

Question 3

Changing from a straight salary plan to a combination salary plus commission plan provides a number of benefits. Which of the following is not an advantage of the salary plus commission plan:

Accepted Answer

A combination salary plus commission plan is generally more complex and requires more administration than a straight salary plan. While the other options listed are advantages of the salary plus commission plan, the simplicity and cost-effectiveness of a straight salary plan are not advantages of the commission plan.

Question 4

You have just been promoted to the position of sales manager. One of your first tasks is to evaluate the level of compensation for your sales force. Which, if any, of the following sources available will help you in your task?

Accepted Answer

Utilizing all available sources, including reports from Conference Board, trade associations, and Dartnell Corporation, would provide a comprehensive and reliable understanding of the current pay levels in the industry. Relying solely on instinct may lead to biased or inaccurate evaluations.

Question 5

You have decided to change your commission structure to enhance market penetration. You now require the sales force to sell $35,000 worth of product each month to make a commission. Those who sell below $35,000 will not receive commissions. This $35,000 level is called:

Accepted Answer

The term "commission threshold" refers to the minimum level of sales required by a salesperson to earn a commission. In this case, the new commission structure requires the sales force to sell at least $35,000 worth of products each month to qualify for commissions. Therefore, the correct answer is A) commission threshold.

Question 6

Industrial sales reps are often paid with a compensation plan that can be tailored to the incentive needs of a particular firm but also has a fixed salary component. This type of plan is called:

Accepted Answer

The given scenario describes a compensation plan that includes both a fixed salary component and a commission component. This type of plan is commonly known as a "salary plus commission" plan. Option A, a gross margin plan, would focus purely on the profitability of specific products or services sold, and would not necessarily include a fixed salary component. Option B, a straight salary plan, would not include any commission-based incentives, which are often used to motivate sales reps to exceed their sales targets. Option D, a fringe benefit design, is unrelated to the scenario described.

Question 7

Your boss thinks you should implement a salary plus commission plan. You have a meeting with her to outline the drawback(s) of this type of plan. Among the drawback(s) you will discuss include:

Accepted Answer

All of the above are valid drawbacks of implementing a salary plus commission plan. It is more complicated to explain, as salespeople may not fully understand how the commission structure works. It is also more costly to administer, as commission payments need to be tracked and calculated separately. In addition, sales managers may lose control as salespeople may become more focused on earning commissions rather than overall sales objectives. Finally, if an incentive ceiling is put in place, it could limit the motivation of some salespeople who may feel they cannot earn more than a certain amount.

Question 8

You are leaning towards implementing a salary plus commission plan for your sales force. You recognize that this plan is popular because it provides:

Accepted Answer

A salary plus commission plan provides both fixed income security and an incentive to increase sales. The fixed salary provides stability and security for the sales force, while the commission provides motivation to increase sales and earn more income. This plan can lead to increased performance and productivity, benefiting both the sales force and the company. The other options (A, B, D, and E) are incorrect because they do not fully capture the benefits of a salary plus commission plan.

Question 9

Your customer's buying cycle is approximately 2 years and your reps need to invest significant amounts of time understanding their customers. Your ultimate goal is to control selling expense and provide extra rewards for added results. Based on this information, which salesperson compensation plan would work best?

Accepted Answer

A salary plus year-end bonus plan would work best in this scenario as it provides stability to the salesperson while also incentivizing them to achieve added results with the year-end bonus. Commission-only and bonus-only plans may not be effective in this case as the buying cycle is quite long, and it may take a while for sales to close. A straight salary or a salary plus monthly commission plan may not provide sufficient motivation for the salesperson to go above and beyond, leading to lower results.

Question 10

The compensation plan in which virtually every type of sales activity is rewarded, is a:

Accepted Answer

A salary plus commission plus bonus plan rewards not only actual sales, but also other forms of sales-related activities such as generating leads, networking, and building relationships with customers. This type of compensation plan provides multiple incentives to motivate salespeople to perform well in various aspects of their job.

Question 11

Which of the following accurately describe per diem expense plans?

Accepted Answer

Per diem expense plans involve a fixed dollar amount being paid for each day or week that an employee is in the field or on a business trip, regardless of the actual expenses incurred. A and D are incorrect because per diem plans do not use floating rates or ceiling amounts. B is incorrect because per diem expenses come from the company's budget, not from commissions.

Question 12

Which of the following plans allows the salesperson and company to share the same pool of money so that both are interested in maximizing the pool?

Accepted Answer

The answer of Which of the following plans allows the...

Question 13

As a sales manager, you liked the advantages that salary plus bonus plans offer yet you were very concerned about some of the following serious problems associated with it:

Accepted Answer

Option A highlights the concern about arbitrary setting of individual payments, while Option C highlights the issue of payments being too delayed to have a strong impact on motivation. Both these factors can reduce the effectiveness of a salary plus bonus plan, making it necessary for organizations to consider these factors before implementing such a plan. Option B is not a significant concern, as small bonus payments can still provide some motivation to salespeople, depending on the nature of the goals achieved. Therefore, options A and C together are the best choice because they represent significant and common concerns associated with salary plus bonus plans.

Question 14

If a salesperson receives a set amount of money for mileage, meals, and hotel, what type of expense plan is she receiving?

Accepted Answer

The answer of If a salesperson receives a set amount...

Question 15

Three types of expense plans that can be used include:

Accepted Answer

Unlimited, limited, and per diem are three types of expense plans that can be used, allowing for different levels of spending and reimbursement for employees or individuals.

Question 16

As a branch manager of an office products company, you notice a large disparity between your top salespeople and your mid- to low-performing salespeople. The current culture is for each salesperson to work independently of each other, but you want to change the culture to more of a team atmosphere where the top salespeople help train the lower producers. However, you don't want to lower the motivation level either. Which of the following compensation plans would you implement to help you accomplish this?

Accepted Answer

The best compensation plan to implement in this scenario would be salary plus commission plus year-end branch bonus. This plan offers a guaranteed salary to maintain motivation levels and a commission-based incentive to encourage sales performance. The year-end branch bonus will help foster a team atmosphere where top performers can train and help develop the skills of lower-performing salespeople. This compensation plan allows for teamwork while still maintaining individual motivation and performance.

Question 17

All of the following are possible benefits to salespeople except:

Accepted Answer

Providing bail money is not a legitimate benefit for salespeople and may even be illegal. The other options (automobile, food allowance, lodging, tickets to events) are common benefits offered to salespeople.

Question 18

The expense plan that is cheapest to administer is:

Accepted Answer

Per diem is the cheapest expense plan to administer because it is a fixed amount that is paid to employees for each day they are on travel status. This eliminates the need for employees to submit expense reports, which can be time-consuming and costly to process.

Question 19

When more than one individual works together to make a sale, the selling process is described as:

Accepted Answer

Team selling is the process of two or more people working together to make a sale. This could include individuals from different departments or different companies collaborating to close a deal. Networked commissions, grouped territories, and cross-functional territories all refer to different organizational structures and do not specifically relate to the process of selling.

Question 20

You are deciding on an expense reimbursement plan for your salespeople. You work at a small firm and don't have the staff to adequately monitor expense accounts. However, you also work in an industry where entertaining is routine. According to the text, which of the following plans is typically used by these companies?

Accepted Answer

The answer of You are deciding on an expense reimbursement...

Quiz 12: Compensating Salespeople