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Answers to Breakout Questions
1. Generally, a compensation plan that motivates members of a selling team should be a
combination of straight salary, plus incentive pay in the form of commissions and/or bonuses.
However, for a relationship selling/team selling scenario the heavier emphasis should be on
straight salary because (1) the management wants to motivate salespeople to achieve long-term
2. The effects of the straight commission compensation plan for Ruppert are common. Sales
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3. The problems for Office Solutions are common for firms that use a straight commission
compensation plan. On a pure commission system it is difficult to motivate salespeople to
engage in relationship-building activities that do not lead directly to short-term sales, or to sell
4. Here are the recommended compensation plans for each situation:
a. In order to achieve its high revenue growth objective in a dynamic, and loosely
competitive sales environment, the company should design a compensation plan based on
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nonselling, relationship-building activities, and therefore will better allow for long-term
growth. In order to preserve the excellent sales force, the company should pay a salary
5. The company should address the objections as follows:
Objection 1: Although some sales from before or after the contest period may shift into the
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contest can be set up for salespeople to compete with themselves by trying to attain individual
quotas, which will account for territory differences.
6. This statement is incorrect. Sales contests are not guaranteed to increase business and
have several potential problems:
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• They may hurt the cohesiveness and morale of the sales force, especially when
7. Straight commission plans make earnings unstable and hard to predict, and firms often
have to provide a draw that advances money to salespeople in months when commissions are too
low to ensure a specified minimum pay. The amount of each salesperson’s draw in poor months
8. This answer will vary by respondent. However, for most salespeople taking a job in
relationship selling right out of college, the ideal compensation mix would be one heavier in the
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10. Veteran salespeople can pose unique challenges in terms of compensation because they
have different needs and desires from new recruits. Also, veteran salespeople may have differing
needs from one to another because they are in different family or personal situations. Clearly,
one size does not fit all when it comes to compensation and incentives for veteran salespeople.
For example, some may prefer a higher commission component because they are more
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1. The CSRs have a point. They receive no rewards for generating 50 percent of the sales
for many customers. At the same time, outside salespeople are compensated for sales they did
2. The compensation system represents not only the direct sales generated but also the value
and importance of maintaining a successful customer relationship. While the CSR provides
service to the customer and the company by suggesting additional products and service, it is the
Chapter 11 – Salesperson Compensation and Incentives
3. The CSRs and ISP’s make a strong case for some additional reward compensation based
on the new sales generated from their working with customers. In looking at alternative the
assumptions are that: 1) the company does not want to simply adjust their compensation so that a
Role-Play: Cannonball Express
This role-play has high potential for students to develop very creative solutions! First, students
must familiarize themselves with the various options for compensation and incentives as
discussed in Chapter 11. Second, they need put some thought into the situation Cannonball
Express finds itself in, and in particular take into account the two stated goals of their new
compensation plan to take into account:
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(1) The changing preferences for incentives of an older sales force
(2) The need for rejuvenating the annual growth rate percentage.
“Big Jim” Cooley, VP of Sales, will be meeting with his three regional managers to go over each
of the four participants’ recommendations for the new compensation and incentive plan for
Cannonball Express. Each of the four players will need to prepare in advance a complete
compensation and incentive proposal for the company, and bring it to the meeting for discussion.
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This case provides a comprehensive illustration of the compensation mix. How much should be
based on salary? How much on commission? Francesco goes to extremes by beginning with a
question 3 students will get an opportunity to put all of their knowledge from the chapter
together to recommend a new compensation plan to Francesco.
Answers to Minicase Questions
1. Francesco and Luca did the absolute right thing by beginning their assessment by
establishing Francesco’s primary business objectives. They also did the right thing by examining
2. Evaluation of straight salary and straight commission plans:
Straight salary plan:
Advantages:
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• Yields more predictable selling expenses.
Disadvantages:
• Provides no incentive for greater sales performance.
3. Everyone is different at this company—different demographics, different financial needs.
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short-term sales goals are important (favors incentives), but also customer service and building
relationships with customers is also important to Francesco (favors salary). Student answers will
vary, but a recommended mix is as follows:
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