Understanding Sales Compensation Assignment The goal of this assignment is to help you understand the varied ways that salespeople are paid. Below is an overview, followed by a specific example of a real-world pay structure for a 1st year salesperson. The pay structure is based on Mutual of Omaha's business to consumer (B2C) pay and is nearly a direct copy. You will answer some questions about what your pay would be if you worked under this pay structure to help you understand both the complexity of pay for performance models. Commission: many companies pay on "commission." This means if you sell something to a customer for $100, you earn a percentage of that $100. For example, if you sold a $1200 annual premium life insurance policy, based on the "commission rate" below, you would earn $600 at the time of sale. After the first year, if the customer renews the policy (continues to pay the premiums) you continue to get "residual" commission payments. These are lower than the initial 50% rate, but they reward salespeople who do a good job of understanding customers and getting them the right product such that the customers keep the policy for many years. The point of commissions is to motivate salespeople to do their best. The more you do and better you are at your role, the more you make. There is no limit to the commission you can earn at many companies, including in this example. Life Insurance: Long Term Care: Disability: Critical Illness: Medicare Supp: Annuities: 50% 50% 50% 50% 18% 2-4% Training Pay: many companies have incentive pay for training early in a sales career. Firms do this to help ensure you are a good salesperson who understands the products/services being sold, the customers' needs, and that you follow the companies' rules for ethical behavior. For example, for this company, for each "IS&M Training Phase" you complete during your 1s year of employment, you are given the coordinating "Payment Amount." If you complete all of the trainings below, you would have earned $6,000 for training. IS&M Phase Activity Requirements Payment Amount Signing Bonus $65 L&H passed, contracted and U4 approved Exam Passed and MOIS Registration $500 $2,000 Pre-Launch Advisor Launch CSD Prerequisites, Prospecting, etc. $1,000 Successfully complete class, 20+ Appts. Set $1,000 Career Start Date $1,500