TREX Sales Incentive Plan Design 3

Question 1

What is the main purpose of a 'draw against commission' in a sales compensation plan?

Accepted Answer

To provide reps a guaranteed income advance that is later offset by earned commissions

Answer

A draw provides cash flow stability for reps by advancing money that is reconciled against future commissions earned.

Question 2

Which metric is most appropriate as the primary measure for a sales rep in a transactional, short-cycle B2C environment?

Accepted Answer

Revenue booked in the period

Answer

In short-cycle transactional environments, revenue booked is the most direct and controllable performance measure for the rep.

Question 3

A 'matrix plan' in sales incentive design ties payout to:

Accepted Answer

Two or more performance dimensions simultaneously, such as revenue and margin

Answer

A matrix plan creates a grid where payout is determined by the intersection of two performance metrics, balancing competing objectives like growth and profitability.

Question 4

When designing a new sales incentive plan, which step should occur BEFORE finalizing payout curves?

Accepted Answer

Defining the performance measures and weighting them

Answer

Performance measures and their weights must be defined first because the payout curve is built to reward attainment of those specific measures.

Question 5

What does 'target total cash' (TTC) represent in sales compensation design?

Accepted Answer

Base salary plus target incentive assuming 100% quota attainment

Answer

TTC is the sum of base salary and the target incentive at exactly 100% quota performance, representing the plan's benchmark compensation level.

(TREX) WorldatWork Total Rewards Certification Practice Test

(TREX) WorldatWork Total Rewards Certification Practice Test

TREX Sales Incentive Plan Design 3