Training, Motivating, Compensating and Leading the Sales force

Managing the sales training process

1) Assess sales training needs2) Design and execute sales training programme3) Evaluation and reinforcement of sales

training programme

Methods used for accessing training needs

• Sales managers observations• Sales force survey• Customer survey• Performance testing• Job description• Sales force audit

Popular sales training needs

• Product knowledge• Customer knowledge• Competitive knowledge• Sales techniques ( selling skills)• Company knowledge

Design sales training programme

Aims/objectives of sales training• Increase sales productivity• Increased sales, profits or both• Lower salesforce turnover rate• Improved customer relations• Introduce new products, markets and promotion

programmes• Create positive attitudes and improve salesforce

morale• Prepare new salespeople for assignment to a sales

territory• Improve teamwork and cooperative efforts

Content of training programme

• Company knowledge• Product knowledge• Customer knowledge• Competitor knowledge• Selling skills or sales techniques.

Sales training methods

Organization decision for sales training

• Who will be the trainees?• Who will conduct the training?• When should the training takes place?• Where should the training be done?• What will be the budgeted expenditure for

the training?

Who will be the trainees?

• New and existing salespeople• Intermediaries• Sales manager

Who will conduct training?

• Line sales personnel• Staff trainers• Outside training specialists

When should the training take place?

• Some managers view newly hired trainees should receive formal training before placing them into field.

• Some managers want new recruits to show a desire to sell before money is spent on training them.

Where should the training be done?

• Centralized training• Decentralized training

What would be the budgeted expenditure

• Taking approval from top management

Execution of the sales training programme

• Preparation of training table, arranging internal and external trainers, making travel arrangements of participants, arranging the conference hall and teaching aids etc.

Evaluation of sales training programme

• Outcomes fall into 4 categories1)Reaction – can be measured by interviewing

them or asking them to complete a few questionnaire

2)Learning3)Behaviour4)Results

Motivating the sales force

• It has been estimated that about 10 to 15% of salespeople are self motivated, requiring little external incentives. However, majority are not adequately motivated.

Difficulty and Importance of motivation

• Changes in the marketing environment• Conflicting company objectives• Unique nature of the sales job• Separate motivational package

Relevance of Motivational theories to sales people

1) Maslow's Hierarchy of needs theory2) Hertzberg’s dual factor theory3) Vroom’s expectancy theory

Hertzberg’s dual factor theory

• Sources of satisfaction and dissatisfaction are grouped into 2 groups

• Hygiene factors – working conditions, security, supervision, interpersonal relationships, salary and company policies. Absence of hygiene factors can cause dissatisfaction, but presence of these factors would bring up motivation to a theoretical zero level, but would not result in a positive motivation.

• Motivational factors - recognition, responsibility, achievement, challenge, opportunities for growth and interest value of the work.

Guidelines for motivating salespeople

• Difference between can’t do and won’t do – sales performance depends on both ability and motivation.

• Include individual needs into motivational programme.

• Pleateaued salespeople – around 45-50 yrs of age, performed well in the past but not performing up to the expectations at present.

• Proactive approach

Compensating the sales force

• Financial compensation – includes direct payment of money such as salary, commission and bonus. Indirect payment includes – fringe benefits such as retirement plan, medical reimbursement and LTA. It also includes various insurance plans.

Objectives of compensation plan

• Company’s viewpoint- To control salespeople activities- To be competitive, yet economical- To be flexible – should be flexible to adopt to

new products, volatile markets and differing territory sales potential.

• Salesperson’s viewpoint- To have regular and incentive scheme- To have a simple plan- To have a fair payment plan

Designing an effective sales compensation plan

I) Examine job description

• Various sales positions – missionary salespeople, sales engineers and driver salespeople are called horizontal positions or jobs.

• Vertical positions – sales trainee, senior salespeople and key account executive.

II) Setup specific objective

• No. of sales call made to A and B customers, selling expenses, new customers developed.

• Sales volume

III) Decide levels of pay or compensation

• Based on the levels of pay for similar positions in the industry

• Based on levels of pay fro comparable jobs in the company

• Education, experience and skills required to do the sales job.

IV) Developing the compensation mix

• Basic types of compensation plansa) Straight salaryb) Straight commission – decide on commission base

(sales volume), commission rate (rate paid per unit), commission start (after selling the first unit or after reaching a sales quota) and commission payout (after customer is billed and payment received and not after the order is obtained).

Ex: Real estate, insurance, direct sales industry – Tupperware, Amway, Avon, wholesalers who have limited capital, manufactures representatives.

C) Combination of salary, commission and/ or bonus – salary plus commission, salary bonus, salary plus commission plus bonus, and commission plus bonus.

Statistics – 68% of all companies use a combinational plan to pay their salespeople.

- The incentive portion of combinational plans has been increasing over the past 20 years and is now around 40%.

If company’s short term objective is to increase its sales and profit substantially the incentive portion should be more.

The salary part should be large if the company wants to focus more on advertising customer service and team selling to achieve sales volume objective.

Bonus

It is a lump sum payment for an above average performance.

Bonus can be offered in the form of cash, merchandize or free travel.

Ex; Infosys paid bonus of $1000 to each employee to celebrate 1 billion sales revenue.

Ex: Cognizant gave I-pods costing Rs. 20,000 each to 18000 employees.

Ex: Speedera (now Akamai) took its 60 employees with families to Hawaii.

• Salary plus commission plan – Ex; IBM partly rewards salespeople on the basis of customer satisfaction as measured by customer surveys.

• Salary plus commission plus bonus plan – Ex; Siebel systems pays a base salary plus commission plus a quarterly bonus based on customer satisfaction surveys for each salespeople.

V) Decide indirect payment plan

• Indirect plan – also called fringe benefits or perks, range from 25 to 40 % of the total sales compensation package. There are medical reimbursement, group insurance, travel insurance, accident insurance, pension plans, PF, profit sharing, paid holidays.

VI) Pretest, administer and evaluate the compensation plan

• Ex: Pretested for duration of 6 to 12 months.• Administering – some companies like Johnson

and Johnson, HP, are outsourcing their compensation plans. Service providers are Oracle, Synergy and Trilogy.

• Evaluation – quarterly, half yearly or yearly basis

Leading the sales force

• Leadership is absolutely necessary to a sales managers effectiveness

• Sales manager not only supervise but also lead.• Supervision is a part of leadership• A manager achieves organizational goals and

objectives in an effective and efficient manner through planning, organizing, staffing, directing and controlling the organizational resources

Modern views of sales leadership1) Leader-member exchange (LMX model) – studies have found that

if the quality of exchange relationship between salesperson and sales manager is higher, then the goal commitment and performance of the salesperson are greater.

2) Transformational leadership – transformation leaders transform the basic values, beliefs, and attitudes of followers such that followers are willing to perform at levels above and beyond expectations. Behaviour of transformation leaders that are relevant to sales manager include – team building, leading by example, creating a vision, and giving an individual attention.

3) Behavioural self management (BSM) - it is a self-imposed planning, behavioural evaluation, rewards and punishment for salespeople.

Leadership styles

1) Transactional leadership – usually describes those supervisory activities that relate to the day –to-day operations and control of the sales force.

2) Situational leadership – in a crisis situation like recession, the sales manager should clearly communicate the vision, objectives and strategy to the sales force and demonstrate how to get orders in such situation – leading by example. Another situation – motivating a long experienced salesperson whose performance is below expectations.

Leadership skills1) Communication skills2) Problem solving skills3) Interpersonal skills4) Supervising salespeople – direct supervisory methods

and indirect supervisory methodsDirect supervisory methods include –

telecommunications, sales meeting, personal contacts, coaching

Indirect supervisory methods include – sales reports, compensation plan, sales analysis, expense account/reports.