In this example, nine points are allocated to general work. This covers punctuality, grooming, accuracy of records, etc. The percentage of target achieved, up to a maximum of 100 per cent, but not beyond, will qualify for that percentage of points allocated to the product group target; i.e. 75 per cent achievement of product range A target above qualifies for 75 per cent of twenty points, equal to fifteen points. In the case of general work, points received will be based on the recommendation of senior management.
At the end of the period, the points achieved per product range are added up and a total arrived at. A bonus is then paid according to a previous scale laid down, e.g. (for twelve months) it may be as given in Table
| $ | |
| 95 points and above earns 85 – 94 points earns 75 – 84 points earns 74 and below earns | 1500 750 375 nil |
It should not be necessary to point out that a sales executive does not qualify for a bonus unless all the product ranges are sold, not just a few. The executive should be kept informed of progress by the regular issue of progress information. This scheme combines flexibility with a fixed basic method and level of bonus payment. It can cope with changes in territory or in targets. Product range F may be more important than product range B, even though the target is lower; the profitability may be higher or it may be a new product. Therefore, the former may carry more points than the latter.
Note that:
- Sales should be equal to invoice sales less credits.
- All sales targets must be achievable, for the system to work, so management must plan ahead with due care.
- The scheme can be operated by the company over any time period, viz., twelve, six, three or even one month.
- The scheme is not difficult to operate and makes use of paperwork, such as invoices, which should already be produced by the company.
- Sales costs could be significant (total costs against net sales turnover). The cost depends on marketing objectives and other factors which should be considered before costing.
Finally, while remuneration is the most important motivational factor for sales executippves, job satisfaction, security, etc., also count. Remember your salesperson’s role:
To maintain personal contact with customers and buyers for the purpose of obtaining sales
