0:00:00.719,0:00:06.319

All right. So as an organization

0:00:03.360,0:00:07.919

we often use personal selling when our

0:00:06.319,0:00:10.240

product requires it

0:00:07.919,0:00:12.480

or when it makes sense based on how many

0:00:10.240,0:00:14.240

customers we have,

0:00:12.480,0:00:16.080

uh there's certain instances where

0:00:14.240,0:00:17.920

personal selling is really important and

0:00:16.080,0:00:20.320

really effective.

0:00:17.920,0:00:22.320

The one drawback or one key drawback is

0:00:20.320,0:00:23.439

that it can be pretty expensive so the

0:00:22.320,0:00:25.599

question is,

0:00:23.439,0:00:27.439

how should we compensate our sales

0:00:25.599,0:00:28.240

people? Well we have some different

0:00:27.439,0:00:31.119

options,

0:00:28.240,0:00:31.920

we can pay a salary where no matter what

0:00:31.119,0:00:33.920

happens

0:00:31.920,0:00:35.280

the customer i'm sorry the sales person

0:00:33.920,0:00:38.239

knows they're going to receive

0:00:35.280,0:00:39.360

this certain amount of money and they

0:00:38.239,0:00:42.000

can rely on that

0:00:39.360,0:00:43.840

and they can behave accordingly.

0:00:42.000,0:00:44.719

Sometimes though that doesn't seem to

0:00:43.840,0:00:46.480

really motivate

0:00:44.719,0:00:48.559

salespeople to go out and make more

0:00:46.480,0:00:48.879

sales, you know and that makes sense, if

0:00:48.559,0:00:50.719

you're

0:00:48.879,0:00:52.399

a salesperson and you're selling twice

0:00:50.719,0:00:54.399

as much as another salesperson but

0:00:52.399,0:00:56.640

you're making the same amount of money

0:00:54.399,0:00:58.239

that might kind of demotivate you, well

0:00:56.640,0:01:00.399

that's where commission comes in

0:00:58.239,0:01:03.440

in other words every time a person makes

0:01:00.399,0:01:05.519

a sale they get a little bit more money

0:01:03.440,0:01:06.720

that's a pretty effective incentive or

0:01:05.519,0:01:08.400

or motivator

0:01:06.720,0:01:09.840

for sales people to get out there and

0:01:08.400,0:01:12.880

make more sales,

0:01:09.840,0:01:14.080

so commission is another option. What we

0:01:12.880,0:01:17.119

often do

0:01:14.080,0:01:19.040

is offer a combination because not every

0:01:17.119,0:01:19.439

single thing we want our sales people to

0:01:19.040,0:01:22.640

do

0:01:19.439,0:01:24.640

is going to generate a new sale

0:01:22.640,0:01:26.080

you know following up with customers is

0:01:24.640,0:01:29.600

not going to generate a new sale

0:01:26.080,0:01:31.119

right then in most cases but we do want

0:01:29.600,0:01:32.159

them to do that in order to build

0:01:31.119,0:01:34.960

relationships,

0:01:32.159,0:01:35.759

so that's where salary comes in. On the

0:01:34.960,0:01:37.360

other hand

0:01:35.759,0:01:39.200

we still want them to be motivated to

0:01:37.360,0:01:40.560

get out and make new sales

0:01:39.200,0:01:44.079

so that's why we might offer a

0:01:40.560,0:01:47.759

combination of salary and commission.

0:01:44.079,0:01:49.439

In the end the exact answer or the the

0:01:47.759,0:01:51.600

the formula that makes the most sense

0:01:49.439,0:01:53.040

for us is going to depend a lot on the

0:01:51.600,0:01:54.720

competitive environment

0:01:53.040,0:01:57.840

and where we are in the product life

0:01:54.720,0:02:00.000

cycle. If we have a mature product

0:01:57.840,0:02:02.960

that everybody knows about and we're

0:02:00.000,0:02:05.360

really relying on a lot of reorders

0:02:02.960,0:02:08.080

we probably don't need a sales person

0:02:05.360,0:02:10.160

going out and making lots of new calls.

0:02:08.080,0:02:11.599

On the other hand excuse me if we have a

0:02:10.160,0:02:13.680

brand new product

0:02:11.599,0:02:15.840

we want a sales person getting out there

0:02:13.680,0:02:18.000

and letting everybody know about it,

0:02:15.840,0:02:19.200

so that's going to suggest a different

0:02:18.000,0:02:22.160

way

0:02:19.200,0:02:22.480

excuse me of compensation. We have to

0:02:22.160,0:02:24.640

weigh

0:02:22.480,0:02:26.640

all these things out as a company to

0:02:24.640,0:02:30.800

determine the best way to compensate our

0:02:26.640,0:02:30.800

sales people.