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 process. 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 supervision. Motivation is an individual’s willingness to exert effort to achieve the organisation’s goals while satisfying individual needs.

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.

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 promised

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

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 types. Although no one is purely one type of personality. 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-oriented Their strength lie in building & cultivating relationships.

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 characteristics.

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

Exploration Establishment Maintenance Disengagement Personal challenges Establishing a good initial professional self concept. Producing superior results on the job in order to be promoted Maintaining motivation, though possible rewards have changed facing concerns about aging. Acceptance of career accomplishment Psychological needs Support peer acceptance Challenging position Achievement Esteem Autonomy Competition Reduced competitiveness Security Helping younger colleagues Detachment from the org. & organizational life.

Exploration stage – the overall concern is finding the right job 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 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 & performance The relationship between performance & rewards The importance of receiving more of a certain reward.

Effort-Performance Relationship Valence Importance of receiving more of certain rewards valence Effort Performance Rewards Expectancy Likelihood that increased effort will lead to greater performance Instrumentality Likelihood that greater performance will lead 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 unexpected. 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.

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

Quotas 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 priority). 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 Sales volume quotas – are specific volume targets for each territory, product line, for a specific time period. - unit based quota - point based quota Profit based quotas – similar to sales quota but focus is on profits generated. 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: Number of calls per day Display racks installed Calls on new accounts Dealer sales meetings held Proposals submitted Equipment test sites Product demonstrations Point of purchase displays. (based on behaviors that are under the SP’s control)

When are Quotas Effective: Can use goal theory to answer. Goal theory examines the relationship between goal setting & subsequent performance. Theory proposes that difficult goals if accepted will lead to higher performance than easy goals. Mgt must know easy, difficult or impossible goal.

For goal setting to be effective mgt must play a much greater role 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 following: 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, ability.

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 done. 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.