Test Your Compensation IQ

See how much you know about sales force compensation – take the following 10-question quiz. Answers are given at the end, with a link to a page with explanations.

1. The only information you need to design a good sales force compensation plan is what your competition is paying.
A. True
B. False

2. If a company similar to yours is getting spectacular results from a new commission plan it makes sense for you to try it too.
A. True
B. False

3. It is better to set up compensation plans so sales associates are paid when they make the sale, as opposed to paying them when the company receives payment.
A. True
B. False

4. The biggest concern managers have about changing compensation plans is that sales representatives will leave.
A. True
B. False

5. The main reason sales people quit is that they find a better-paying job.
A. True
B. False

6. Most sales people would prefer to have a choice of compensation plans.
A. True
B. False

7. The benefits of offering sales people a choice of compensation plans include a lowering of the company's breakeven point and an increase in the number of people who will be interested in working for the company.
A. True
B. False

8. When managers are paid a bonus based on revenue, the best revenue figure to use is total revenue.
A. True
B. False

9. Firms that have invested heavily in technology to make their sales force more productive often see an increase in revenue in the first year and a decrease in profitability in the second year. This problem can be fixed by revising the company's sales force compensation plans.
A. True
B. False

10. It is possible to design compensation plans that treat each member of the sales force as a separate profit center.
A. True
B. False

Answers: 1-B; 2-B; 3-B; 4-A; 5-B; 6-A; 7-A; 8-B; 9-A; 10-A
 

Please click here for an explanation of each answer