Defining Key Performance Measures for Sales Compensation PPT

This PPT slide, part of the 24-slide Sales Compensation Plan Design PowerPoint presentation, outlines critical performance measures that should inform the design of a sales compensation plan. It emphasizes that these metrics must align with the organization's strategic objectives, moving beyond just overall sales figures.

Five specific performance measures are highlighted. First, the Product Mix is crucial for organizations selling various items, as it helps assess how well different products meet customer needs. Next, Pricing is noted as a vital metric, especially in scenarios where negotiation plays a significant role. This allows sales personnel some flexibility in managing customer expectations and pricing exceptions.

The third measure, Bad Debt-Returned Goods, addresses the financial implications of sales, particularly in terms of profitability. This metric is essential for understanding the costs associated with unsold or returned products. The Type of Sale is the fourth measure, which can influence cash flow and revenue streams. It distinguishes between different sales models, such as ownership versus rental, which can significantly affect the business's financial health.

Finally, Training is identified as a key performance measure. It can contribute to gross profits and represents an ongoing investment in the sales team's capabilities. The slide concludes with a cautionary note about the selection of these metrics, stressing the importance of realistic expectations regarding data availability and reliability from IT systems. This is crucial for ensuring that the metrics used are not only relevant, but also actionable in driving performance.

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