I need answers for questions 8-7 . he other because ls ply le? Please explain yo

Question

I need answers for questions 8-7 . he other because ls ply le? Please explain your answer. CASE A New Sales Representative An additional Supplemental Case can be found on MyManagementLab After 10 years in business, John Shurtman has determined that it is time to hire a sales representats founder and president of United Fleet Service (UFS), John has been the main driver of new business for the company. However, as UFS has grown, John has found that he must spend more time on pl and administration, leaving little time to generate new sales leads or call on potential customers. sales ns tha UFS provides maintenance, mechanical repair services, and body repair services to organizatio f large vehicles. UFS customers include mostly school districts that own bus flees and municipalities that own fleets of fire and police vehicles. While UFS has a strong hold on these publc tor organizations, John sees many opportunities for expansion through targeting other potential customes such as utility companies and commercial trucking companies. UFS has several competitors in its geographic area, but none provide as comprehensive a service a UFS. For example, several competitors provide mechanical repair services, but do not provide body repar services, on the other hand, several competitors provide body repair services, but do not p cal repair services. UFS also has a reputation for high-quality repairs and fast turnaround times With these strengths in mind, John is convinced that an effective sales representative that can take to contact and develop relationships with potential customers can help lead the organization to exp competitors provide body repair services, but do not provide mechan on the in John has experienced steady growth over the past 10 years, acquiring just two or threnew cust each year. Leads on potential new customers have come primarily through referrals from current John personally called on the leads to secure sales. Once a target was established as a cust eferrals from current customers

Explanation / Answer

In order to design the sales component plan, I will use the following information

Salary components

Fixed component: I will keep the fixed component of the compensation lower than the market standard by 10%. This will be offset by the variable component.

Variable component: This will be an achievement based component. Since our fixed salary part is lower by 10%, the variable component will exceed the market standard by 30%

This means, let’s assume that the market standard is to pay (annually) $50,000 fixed and $30,000 as variable components. UFS will offer $45,000 fixed salary and $40,000 as the variable pay.

Company objective

The variable components of the salary should be an achievable target. The goal is to set the salary components in alignment with the company’s objective. Among the three objectives listed above we will use weighted method to assign contribution towards the variable pay.

Monthly recurring revenue – weight 0.5

Annual new customer acquisition – weight 0.3

Upsell additional services – weight 0.2

Another key thing is here is to maintain the sales target at 25% higher than the company objective. For example, let’s say the company objective is to achieve 20 new customers in the coming year. The sales target should be 25 new customers. Upon achievement of 21-25 new customers the variable component of $40,000*0.3 = $12,000 will be paid to the sales representative.

Penalties

It is important that we not only acquire new customers but also retain the customers that we have. Naturally, penalty will be levied on the performance scorecard in case of loss of customer contract.

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