S 12 Motivation and Rewards

8/8/2019 S 12 Motivation and Rewards

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Motivation and RewardsMotivation and Rewards

Module Twelve


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Motivating aSales Force

I believe I can fly,

I believe I can touch the sky!R. Kelly, Space Jam


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Sales MotivationSales Motivation

Choice of actions

Intensity(How much effort?)

Persistence(How long?)

Outcome

MOTIVATION is the desire to expend effort to fulfill a need


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Four Basic Questions in MotivationFour Basic Questions in Motivation

What arousessalespeoples behaviour? What influences the intensityof the

behavioural arousal? What directsthe persons behaviour? How is this behaviourmaintained over time?


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Importance of MotivationImportance of Motivation

Unique nature of the sales job Lonely, rejected, demanding customers

Individuality of salespeople Diversity in Company goals Changes in market environment


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Motivational ConditionsMotivational Conditions

Are the

rewards

worth theeffort?

Does more effort

lead to better

performance?

GREATER

EFFORT

The same or less effort

NO NONO

YES YESYESDoes better

performancelead to greater

rewards?


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Maslows Hierarchy of NeedsMaslows Hierarchy of Needs

Fulfilled through Food, shelter, clothing

Managerial action: Compensation packages

F: Job security, safety, income securityM:Mutually agreed performance standards

F: Affiliation, friendship, acceptance

M: team selling, sales meetings,

mentoring programs, social functions

F: Status, recognitionM: title change, promotion

F: self actualisation

M: Special projects, more

responsibility and authority


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Vrooms Expectancy TheoryVrooms Expectancy Theory

A persons motivation to exert efforts depends on his

expectations of success Expectancy A persons perception of relationship between

efforts and performance Instrumentality Relationship between performance and

reward Valence Value placed on a particular reward by a sales

person

Motivation = Expectancy x Instrumentality x Valence Higher the motivation, greater the effort leading to superior

performance


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Salespeoples Basic NeedsSalespeoples Basic Needs

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Motivation

To work

Performance

Level

Equity

Determination

Inputs vs.

Outputs

Satisfaction

Intrinsic

Extrinsic

Rewards

Intrinsic

Extrinsic

Feedback

EXPECTANCY INSTRUMENTALITY VALENCE


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Career StagesCareer Stages Exploration

Primary concern is finding a suitable occupation Underdeveloped skills and knowledge Many drop out or are terminated Low expectancy instrumentality, high valence for personal growth

Establishment Primary concern is improving skills and performance Lack of promotion may cause disengagement or quitting

New commitments make pay important High expectancy instrumentality, high valence for promotion and pay

Maintenance Primary concern is maintaining position, status, and performance Have highest sales volumes and percentage of quota and pay High valence for recognitions, respect, and pay Low valence for promotion

Disengagement Primary concern is preparing for retirement and/or developing outside interest Low valence for higher order and lower order rewards Low instrumentality


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Salesperson Motivation Cause and ImpactSalesperson Motivation Cause and Impact

PerceivedReason for

failure

POSITIVE IMPACT Negative Action

Ability Seek help; get additional training; ask formanagers assistance

Should not be attacked byincreasing effort

Effort Increase effort; work longer hours; make more calls Do not question ability orstrategy

Strategy Change strategy; adapt the presentation Ensure abilty and effortadequatei

TaskDifficulty

Change strategy; adapt the presentation; seek help Become frustrated; avoid thesituation

Luck No change in behaviour Avoid the situation

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Motivational ToolsMotivational Tools Financial

Salary Commission

Bonus Fringe benefits Combination

Non Financial

Promotion Sense of accomplishment Personal growth opportunities Recognition Job security Sales meetings and conventions

Sales training programmes Job enrichment Supervision Performance Evaluation


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Motivate the TeamMotivate the Team

1. Identify the business goal you hope to target.

2. Communicate the business needs to your

salespeople.

3. Listen to your salespeople.4. Make sure the goals are reachable.

5. Dont repeat the same programs over and over.

6. Dont try to do everything at once.

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Guidelines for Motivating SalespeopleGuidelines for Motivating Salespeople

Differentiate between cant do and wont do Segment the sales force to individualise the motivational

programmes

Communicate and be the role model Praise in public and criticise in closed rooms Handle plateaued salespeople separately


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Causes of PlateauingCauses of Plateauing

No clear career path Not managed adequately Bored Burned out

Economic needs met Discouraged with company Overlooked for promotion Lack of ability

Avoiding risk of management job Reluctance to be transferred


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MOTIVATORSMOTIVATORS

HIGH

Rewards for successes

Recognition for achievement

Job advancement

Freedom to manage oneself

Training and sales meetings

Leadership

Performance evaluation

Incentive compensationplans

LOW

Company policy and

procedures

Fringe benefits

Retirement programs

More supervision

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Sales managers would do well to

explore different aspects of incentives.Several things to consider are:

Some salespeople like material incentives

versus nonmaterial incentives.

The attraction to short-range incentivesversus long-range incentives.

Positive incentives in most instances motivatemore successfully than negative incentives.


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Motivation TechniquesMotivation Techniques

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Teach teamworkEmpower

Communicate

HearNotice

Initiate integrity

QueryUnify

Exalt

Set standards


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How Little you know about the

age you live in if you fancy thathoney is sweeter than cash in

hand.


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What a Good Sales CompensationWhat a Good Sales Compensation

Plan Should DoPlan Should Do

Efforts +

Results =

Reward

Control

activities of

sales reps

Treat

customers

properly

Attract and

keep good

people

Motivate the

salesperson

Good sales

compensation plan

Economical yet

competitive

Fair SimpleFlexible and

stable

Security and

incentive


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Review job description

Steps in designing a salesSteps in designing a salescompensation plancompensation plan

Identify plansobjectives

Develop the method ofcompensation

Decide on indirectmonetary

compensation

Pretest and install plan

Establish level ofcompensation


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Identify Specific ObjectivesIdentify Specific Objectives

Increase Profits Sales volume of a specific class

Increase volume of existing accounts Improve customer satisfaction Stimulate missionary work Develop a new territory

Should be based on factors: Controllable by sales person Measurable by Company


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Establishing the Level of CompensationEstablishing the Level of Compensation

Average amount earned over a given

period How much rather than how

Highest in financial services Lowest in retail


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Others

Profitsharing

Pension

MovingExpenses

InsuranceBonus

Commission Paid Vacation

Lodging

TravelSalary

SECURITY INCENTIVES BENEFITS EXPENSES

Building Blocks for a Sales Compensation Plan

Profit Sharing

Lodging

Company Car

Entertainment

Others

Normallyunder

Normallyunder

expenses

e

xpenses


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Basic Types of Compensation PlansBasic Types of Compensation Plans

Straight salary Straight commission Combination


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Compensation Methods for SalespeopleCompensation Methods for Salespeople

CompensationMethod

Especially UsefulFor

Advantages Disadvantages

Straight Salary New sales reps

New salesterritoriesMany requirednonsellingactivities

Maximum security

Control over repsEasy toadministerPredictableexpensesPositive impact on

consumers

No incentive

Requires closesupervisionSelling expensesremain sameduring salesdeclines


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Straight Commission PlansStraight Commission Plans

Regular payment for performance of a unit ofwork

Base units, revenue, profits Rate constant, progressive, regressive or

combination Splits between two sales people Payout Event order confirmation, billing,

shipment, paid for or combination


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CompensationMethod



StraightCommission

Highly aggressivesellingMinimal requirednonselling tasksWhen companycant closelycontrol sales force

MaximumincentiveManagers canencourage salesof certain itemsSelling expensesrelate directly to

selling resources

Little securityLittle control overrepsReps may provideinadequateservice to smalleraccounts

Selling costs lesspredictable


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CompensationMethod



Combination Similar sales

potential acrossterritoriesWhen companywants to offerincentive butmaintain some

control

Some security

Some incentiveSelling expensesvary with revenueManager hassome control overnonselling

activities

Selling expenses

are lesspredictableMay be difficult toadminister


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Design Questions for Combination PlansDesign Questions for Combination Plans

What is the appropriate size of the incentiverelative to the base salary?

Should a ceiling be imposed on incentiveearnings?

When should the salesperson be credited with asale? Should team incentives be used? If so, how

should they be allocated among team members? How often should the salesperson receive

incentive payments?


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BonusBonus

Lump sum payment for above normal

performance Normally announced in advance

Not to be confused with Bonus laws inIndia

Normally paid on achievement of different

levels against quota (target) Could be monthly, quarterly, annual or

combination


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Sales ContestsSales Contests

Short-term incentive programs designed tomotivate to accomplish specific salesobjectives

Contest winners receive prizes, recognition,

and a sense of accomplishment Successful contests require: Clearly defined, specific objectives An exciting theme Reasonable probability of rewards for all

Attractive rewards Promotion and follow-through


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Criticisms of Sales ContestsCriticisms of Sales Contests

May not produce lasting improvements Salespeople may borrow sales from

another period to increase sales during

the contest period Poorly administered contests can hurt

cohesiveness and morale


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Sales Contests:Sales Contests:

Recommended GuidelinesRecommended Guidelines

1.1. Minimize potential motivation and morale problemsMinimize potential motivation and morale problems

by allowing multiple winners. Salespeople shouldby allowing multiple winners. Salespeople should

compete against individual goals and be declaredcompete against individual goals and be declaredwinners if those goals are met.winners if those goals are met.

2.2. Recognize that contests will concentrate efforts inRecognize that contests will concentrate efforts in

specific areas, often at the temporary neglect of otherspecific areas, often at the temporary neglect of other

areas. Plan accordingly.areas. Plan accordingly.


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Sales Contests:Sales Contests:

Recommended GuidelinesRecommended Guidelines

3.3. Consider the positive effects of including non-sellingConsider the positive effects of including non-selling

personnel in sales contests.personnel in sales contests.

4.4. Use variety as a basic element of sales contests.Use variety as a basic element of sales contests.

Vary timing, duration, themes, and rewards.Vary timing, duration, themes, and rewards.

5.5. Ensure that sales contest objectives are clear,Ensure that sales contest objectives are clear,

realistically attainable, and quantifiable to allowrealistically attainable, and quantifiable to allowperformance assessment.performance assessment.


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Possible Combination CompensationPossible Combination Compensation

PlansPlans

COMMISSION

BONUSSALARY

What should the proportion be between the three?


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Identify Specific ObjectivesIdentify Specific Objectives

What combination should be

used to increase Profits Sales volume of a specific class Increase volume of existing

accounts Improve customer satisfaction Stimulate missionary work

Develop a new territory


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S 12 Motivation and Rewards

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