This week we will discuss the role of expenses in sales force compensation. We will describe the goals of a sales expense plan and the various issues relating to sales force expense management such as IRS rules and regulations. Finally we will provide a discussion on the importance of providing well defined policies with regard to expense reimbursement. A well-defined sales force expense policy should be used as a tool to aid sales in their efforts to develop and grow customer relationships.

This week we will focus on Expense Control. We will discuss alternative methods available to sales managers in controlling sales force expenses. We will discuss the pros and cons of each method. Next we will discuss the use of automobiles as a transportation expense used by the salesforce to travel to their customers. We will evaluate the option of providing a company car for each salesperson to use in their daily contact with customers. If the firm chooses to provide a company car, which alternative is best for the firm: lease or purchase? Finally, we will look at sales transportation costs using the salesperson’s personal vehicle and what type of reimbursement options may be used with this approach.

This week our discussion will focus on Sales Quotas. We will define what we term a “sales Quota” and discuss the purpose of sales quotas in measuring sales performance. We will discuss various options in setting sales quotas and evaluate each in terms of its potential benefits and shortcomings. Finally we will assess different approaches to setting quotas such as territory potential, through the use of historical data or a by asking for the salesperson’s own insight into quota estimation.