S 12 Motivation and Rewards
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Transcript of 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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Compensation Methods for SalespeopleCompensation Methods for Salespeople
CompensationMethod
Especially UsefulFor
Advantages Disadvantages
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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Compensation Methods for SalespeopleCompensation Methods for Salespeople
CompensationMethod
Especially UsefulFor
Advantages Disadvantages
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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