FOR SOME decades now, marketing textbooks and professors have assiduously distinguished between sales and marketing. Theodore Levitt’s 1960 definition is still the classic: “Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it.”1 Nonetheless, whatever else marketing encompasses, it certainly includes selling—the getting and keeping of customers and revenues. As the old saying goes, “In most companies, sales is the only revenue-generating function; everything else is a cost center.” Sales’ importance as a source of revenue tends to define the form and substance of companies’ marketing programs—for both good (e.g., close attention to buying processes at specific accounts) and ill (e.g., confusion between sales and marketing).
Of all sales issues, compensation is probably the most discussed. It is now the focus of a vast and varied literature with enough folk wisdom and quantitative studies to satisfy most managerial temperaments.2 But the great bulk of this literature focuses on what might be called “compensation hydraulics”: push this pay lever, is the typical claim, and get this kind of field sales behavior. Lost in this approach is a recognition that sales compensation is an area in which data... To read the complete article, login or sign-up using the form below.
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