Motivating Salespeople by 061gz5Ab


									Motivating Salespeople

        Topic 11

       SALES MGT

AIM: Motivation & Sales Managers’
    Concerns with Motivation.
11.1Understand how and why individual needs
  may differ.
11.2 Define motivation and explain sales
  managers’ concerns with motivation.
11.3 Describe a basic model of the motivation
11.4 Discuss the different types of quotas and the
  administrative issues involved in using quotas.
11.5 Describe how to design incentive and
  recognition programs and their limitations.
             What is Motivation
   If the product is right, sales force selection,
    organization & training is right, then motivation
    becomes the critical determinant of success.
   M is critical because SP operate in very
    demanding environment.
   2nd reason is that most SP are not under direct
   Motivation is an individual’s willingness to exert
    effort to achieve the organisation’s goals while
    satisfying individual needs.
1.   Effort
       when describing someone as motivated,
     sales mgrs talk about 3 characteristics:
     - the drive to initiate action on a task (SP to call
     on prospects)
     - the quality of effort on a task (not only to call
     on prospect but be motivated to prepare well)
     - the persistence to expend effort over a period
     of time sufficient to meet or exceed obj’s.
    All 3 originate within the person, a good sales
     mgr can help SP to motivate themselves.

2.   Individual Needs
    In sales, the future of the business
     depends on mgrs ability to understand
     the psychology of their SP.
    A good mgr knows what SP want, what
     drives them
    If need for status, control, respect &
     routine are most important actions can
     be taken to motivate SP.
    Refer to next table: Sales Force Needs &
     Ways to Fill Them.
Sales Force Needs:   Company Actions to Fill Them:
Status               Change title from ‘SP’ to ‘area mgr’ buy
                     luxurious cars to drive.
Control              Allow SP to help plan sales quota &
                     sequence of calls
Respect              Invite SP to gatherings of top
                     executives. Put pictures of top SP in
                     co’s ads & newsletters.
Routine              Assign each SP a core of loyal
                     customers that are called on regularly
Accomplishment       Set reasonable goals for calls & sales

Stimulation          Run short term sales contest, meetings
                     in exotic locations
Honesty              Deliver promptly all rewards & benefits

Theory                    Description

Hierarchy of needs        Physiological, safety,
(Abraham Maslow)          belonging, esteem & self
                          actualization needs.
ERG theory                Needs as existence,
(Clayton P. Alderfer)     relatedness & growth needs.
Motivation – hygiene      Intrinsic job factors
(Frederick Herzberg)      (recognition) motivate whereas
                          extrinsic (pay will avoid
Theory of learned needs   3 major professional needs:
(David McClelland)        achievement, affiliation, power
Equity theory             People evaluate their treatment
(J. Stacy Adams)          in comparison to others.
                          Motivation will suffer if   7

 Theories have been developed to
  understand individual needs.
 Each individual is unique.
 Research has revealed that high performers
  tend to exhibit one of the four personality
 Although no one is purely one type of
 Next slide displays 4 personality types each
  with a different drive.

The Competitor   They not only want to win but derive
                 satisfaction from beating specific rivals.
                 Verbalize what they want to do & do it.

The Ego-driven   They are not interested in beating rivals,
                 they just want to win. Like to be
                 considered experts, change jobs
                 frequently, take things personally.
The Achiever     This type is almost completely self
                 motivated, usually set high goals, finish
                 one goal & move to next bar higher, like
                 accomplishment, regardless who
                 receives credit.
The Service-     Their strength lie in building & cultivating
oriented         relationships.
3.   Career Stages
    Experienced sales mgrs know that
     motivation varies according to age &
     experience of SP.
    Research suggested during SP career
     SP goes through 4 stages.
    Next slide portray career stage

           Exploration       Establishment Maintenance Disengagement

Career     Finding an        Successfully      Holding on     Completing
           app.              establishing a    to what has    one’s career
           Occupational      career in a       been
           field             certain           achieved,
                             occupation        reassessing
                                               career, with
Motivati   Learning the      Using skills to   Developing     Establishing a
onal       skills required   produce           broader view   stronger self
needs      to do job well.   results.          of work &      identity outside
job        Becoming a        Adjusting to      org.           or work.
related    contributing      working with      maintaining    Maintaining an
           member of an      greater           a high         acceptable
           org.              autonomy.         performance    performance
                                               level          level.
           Exploration    Establishment Maintenance         Disengagement

Personal Establishing a   Producing         Maintaining     Acceptance of
challenge good initial    superior          motivation,     career
s         professional    results on the    though          accomplishmen
          self concept.   job in order to   possible        t
                          be promoted       rewards have
                                            about aging.
Psycholo   Support        Achievement       Reduced         Detachment
gical      peer           Esteem            competitivene   from the org. &
needs      acceptance     Autonomy          ss              organizational
           Challenging                      Security        life.
           position                         Helping
 Exploration stage – the overall concern is
  finding the right job. Mgt challenge is to
  help people successfully address this.
  Mgrs provide JDs, feedback.
 Establishment stage – people change their
  focus from looking for best job to
  committing to getting ahead in current
  jobs. Mgt concern highest performer likely
  to leave. Need to develop career paths.
  Need to retain senior SP.

   Maintenance stage – people reflect on past &
    reassess career choices. Here people no longer
    value promotion. are the backbone of sales
    force. Need to encourage & motivate.
   Disengagement stage – everyone finally
    withdraws from his job. Involves giving priority to
    issues other than work & career. Those facing
    retirement, or who have been on the job for
    some time. Difficult to motivate them. They
    usually do min necessary to keep mgt off their
    backs. Mgt should try to stop people adopting
    this stage.

       A Model of Motivation
  Studies show that the amount of effort a
  person puts into an activity depends on
  the interplay of 3 factors:
 The relationship between effort &
 The relationship between performance &
 The importance of receiving more of a
  certain reward.
Effort-Performance Relationship
                                            Importance of receiving
                                            more of certain rewards
 Effort                  Performance                   Rewards

 Expectancy                       Instrumentality
 Likelihood that                  Likelihood that greater
 increased effort will            performance will lead
 lead to greater                  to more rewards
 Expectancy – SP’s belief that greater effort
  will lead to greater performance.
 Attribution theory – people are motivated
  to generate reasons for why an event
  occurred especially when outcome is
 A SP may attribute failure to the sales
  strategy that was used or factors external
  to them.

Performance-Reward Relationship
 2nd element of motivation process is the
  belief that a higher level of performance
  will lead to greater personal rewards. This
  is referred to as instrumentality.
 When people are certain that their
  performance will be personally rewarding,
  their motivation will be higher.
 Hence, commission system is popular.

      Importance of Rewards
 Reward valence – SP’s desire for reward
  will influence their motivation to perform.
 People don’t only look at their reward but
  make comparisons with others rewards.
 Relative equity – people compare their
  inputs (effort, experience) with outcomes
  in relation to other people.
 E.g. ‘Bob puts in less effort but makes
  more money’ one reaction will be to
  reduce inputs.                                19
          Self Management
 Firms that are encouraging self mgt with
  sales mgrs in supporting roles is attractive.
 One approach to self mgt is behavioral –
  consists of monitoring, goal setting,
  rehearsal, rewards, self contracting.
 Sales mgr can help in BSM in setting
  goals, that are challenging & achievable.
 Important step is self set goals.
 Next slide provides self mgt techniques.
Technique         Method                  Tools

Self monitoring   Observe & record        Diaries, counters,
                  behaviour               tally sheets, charts
Goal setting      Establish behaviour     specific & with a
                  change objectives       short time span
Stimulus control Modify antecedents to    may involve adding
                 behaviour                or removing cues
Consequence       Modify antecedents to   Reinforcement,
mgt               behaviour               punishment or
Rehearsal         Conduct systematic      May be overt or
                  practice of desired     visualized
Self contracting Specific relnship bet.   May involve public
                 Behaviours & their       commitment     21

 Are quantitative goals assigned to
  individual SP for a certain period of time.
 Most widely used tool in sales mgt.
 Quotas may be set equal to, above or
  below sales forecast.
 3 reasons for establishing sales quotas:
  - to help mgt motivate SP (achievement
  oriented people want specific &
  challenging goals, with regular feedback).
-   To direct SP where to put their efforts
    (indicates which products should be given
-   To provide standards for performance
    evaluation (time can be spent with poor
    performers, also with high performers to
    see what is lacking in poor performers)

              Types of Quotas
1.   Sales volume quotas – are specific volume
     targets for each territory, product line, for a
     specific time period.
     - unit based quota
     - point based quota
2.   Profit based quotas – similar to sales quota but
     focus is on profits generated.
3.   Activity quotas – set targets on specific activities
     that will help meet a firm’s sales & profit
     objectives. SP must perform certain activities
     that can lead to significant sales.
Activity quotas:
a. Number of calls per day
b. Display racks installed
c.  Calls on new accounts
d. Dealer sales meetings held
e. Proposals submitted
f.  Equipment test sites
g. Product demonstrations
h. Point of purchase displays.
(based on behaviors that are under the SP’s
    When are Quotas Effective:
 Can use goal theory to answer.
 Goal theory examines the relationship
  between goal setting & subsequent
 Theory proposes that difficult goals if
  accepted will lead to higher performance
  than easy goals.
 Mgt must know easy, difficult or impossible
For goal setting to be effective mgt must play a
  much greater role. SP to accept goals as their
  own mgt must also be concerned with the
 Providing feedback
 Gaining goal commitment
 Building self confidence.

   It takes more than setting quotas to achieve max
    motivation & performance. Motivation is
    dependent on total mgt system.

       Administering Quotas
 Quotas are usually based on: past,
  forecasted, potential sales & individual &
  SP’s territory.
 Basing quotas strictly on sales potential
  may not always be workable.
 Must consider environmental factors as
  competition, size of customers &
  organizational factors as advertising
  support, & SP factors as experience,
     When Not to Use Quotas
 When a significant portion of sales
  depends on cooperation between SP in
  diff. territories.
 When sales are infrequent wit a long
  selling cycle but high dollar value.
 In this case no sales may be recorded in a
  period followed by extremely high sales
  volume in another period.
            Incentive Programs
   Are short term promotional events intended to
    inspire SP to a greater than usual performance
    level & provide them rewards.
   Goals & timings – obj may include more than
    just producing overall increases in sales volume.
    Goals as finding new customers, boosting sales
    of special items, counteracting seasonal slumps.
    Can enhance team building by basing rewards
    on dept, or teams.

 Prizes – success or failure often depends
  on attractiveness of the awards offered to
  the participants. Most awards are cash.
  Travel prizes are also offered. These can
  be more appealing.
 Administration issues – incentive
  programs can be very powerful motivators,
  they must be properly planned &
  executed. Need a theme for the contest.
  Should encourage an average SP to put in
  extra effort. Should be highly promoted.
         Recognition Programs
   Recognition & prizes push people closer to their
    potential than envelopes stuffed with money.
    This is why all sales mgrs have some sort of
    recognition program.
   Differ from incentive programs, they are longer,
    annually & focus on overall performance rather
    than sales target.
   To be successful, recognition programs must
    become part of company culture.

          Ethical Situations
 Ethical problems may arise with quota,
  contests & rewards to motivate people on
  the job.
 At times mgrs can manipulate people into
  doing what they otherwise would not have
 Can lead to unethical behaviors from sales
  people, e.g. withhold orders prior to the
  contest in order to have greater volume
  during the contest.

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