Part V SALES FORCE LEADERSHIP Chapter 11: Motivating Salespeople

What is Motivation? Drive to initiate an action. The intensity of effort in an action The persistence of effort over time.

Reasons for Motivating Salespeople Frequent rejection Physical separation from company support Direct influence on quality of sales presentation Indirect influence on performance

What Goals are Most Important? Expand Visibility of Sales Increase Sales Revenue Enhance Company Credibility Build the Brand 43.9% 66.1% 31.9% 29.8%

How Successful Were You at Reaching Your Goals? 35.7% Expand Visibility of Sales Increase Sales Revenue Enhance Company Credibility Build the Brand 64.7% 27.9% 72.1% 41.9% 58.1% 31.8% 68.1% Most Successful Least Successful

Maslow’s Hierarchy of Needs Intense job challenge, full potential, full expression, creative expansion. Achievement, respect, recognition, responsibility, prestige, independence, attention, importance, appreciation. Belonging, acceptance, love, affection, family and group acceptance, friendships. Security, stability, dependency, protection, need for structure, order, law, tenure, pension, insurance. Hunger, thirst, reproduction, shelter, clothing, air, rest. Self-Actualization Self-Esteem Love-Belonging Safety-Security Physiological

An Exercise to Determine Your Motivational Needs To perform the exercise, read through the following statements…check those which are most important in motivating you to do your best work. Select the ten most important statements. 629 Job security 847 Being trusted to do my job the way I think it should be done. 333 Participating in work group conversations. 311 Having adequate shelter to protect from the elements. 836 Having a job which allows me time with my family. 151 Having an opportunity for personal growth. 937 Socializing with my friends. 743 Being considered for an advancement opportunity. 431 Working with other people. 819 Having children. 458 Doing something meaningful with my life. 757 Being in a position to contribute new ideas. 828 Having an associate that looks out for my interests. 735 Including other people in what I do. 949 Being selected for an exclusive award. 234 Being involved with work associates in social and recreational activities. 616 Being sexually satisfied. 146 Having a responsible person tell me when I’ve done a good job. 539 Having an active part in work related social activities. 341 Knowing that other people respect me and my work. 132 Acceptance as a work group member.

Your Score To Determine Results: The statements are divided into five categories intended to represent the five levels in Maslow’s Hierarchy of Needs. The second digit in each statement number indicates the category. These categories are: Physiological, Safety-Security, Love-Belonging, Self-Esteem, Self-Actualization. Count up the number you have in each category then calculate the percentages for each category. The categories with the highest percentages would be your personal motivational drivers.

Maslow’s Needs & Related Sales Force Motivators Hierarchy Of Needs Motivators SELF-ACTUALIZATION Challenging tasks calling for creativity ESTEEM Recognition programs BELONGING President’s Club $1 million SAFETY & SECURITY Job security and fringes PHYSIOLOGICAL Cash wages and bonuses

Affiliation (belonging) Chinese Culture Hierarchy of Needs Self-actualization in service to society Safety Physiological Affiliation (belonging)

U.S. SALESPEOPLE’S RESPONSES Maslow’s Hierarchy U.S. SALESPEOPLE’S RESPONSES Number Percent 847 86% 431 51% 955 80% 654 40% 341 74% 722 39% 352 66% 836 37% 256 63% 458 559 57% 853 757 54% 718 34%

Comparison of Motivators and Hygiene Factors Percentage Frequency Low Satisfaction High Satisfaction 40 30 20 10 0 10 20 30 40 Hygienes Policies Tech. Supervision Salary Interpersonal Relations Working Conditions Motivators Achievement Recognition Work Itself Responsibility Advancement

Career Stages Does everyone go through these stages? What can be done to address the concerns of salespeople at each stage?

Exploration Stage Motivational Needs Manager Role? Learning the skills required to do the job well. Manager Role?

Exploration Stage Motivational Needs Manager Role? Learning the skills required to do the job well. Manager Role? Reinforce accomplishments Spend time with salesperson Discuss long-term benefits of working for the organization

Establishment Stage Motivational Needs Manager Role? Use skills to produce results, increase job autonomy Manager Role?

Establishment Stage Motivational Needs Manager Role? Use skills to produce results, increase job autonomy Manager Role? Provide high rewards for high achievers Have salespeople recognize success has something other than promotion

Maintenance Stage Motivational Needs Manager Role? Develop a broader view of work and organization, maintain a high level of performance Manager Role?

Maintenance Stage Motivational Needs Manager Role? Develop a broader view of work and organization, maintain a high level of performance Manager Role? Challenge salespeople to use their knowledge in new ways Introduce significant rewards for mastering new challenges

Disengagement Stage Motivational Needs Manager Role? Establish a stronger self-identity outside of work, maintain performance level Manager Role?

Disengagement Stage Motivational Needs Manager Role? Establish a stronger self-identity outside of work, maintain performance level Manager Role? Maintain focus on personal goals and importance of organizational citizenship behaviors (e.g., being a role model, assist in other aspects of the organization)

Career Stage Effects on Satisfaction Select Research Findings: All stages are least satisfied with promotion and pay However, pay satisfaction is only dimension on which disengagement salespeople are more satisfied than establishment or maintenance salespeople Maintenance salespeople are less satisfied with supervision than are establishment salespeople Disengagement as well as maintenance occurs quite early for some people -- Is this a management concern?

Overlap of Ages on Career Stages Concerns Proportion of Sales Force Exploration 14% Establishment 29% Maintenance 42% Disengagement 15% Age Range 20 30 40 50 60 65

Giving Status to Salespeople Compensation - exceed first-line managers Job Title - no cost but considerable payback Company Car Upgrade - salespeople spend much time in car reminds them of their value. Car Phone – - justified on a purely business basis

Giving Status to Salespeople Field Sales Council - meet president for 1/2 day open-ended discussion on field marketing conditions - report back to field meetings the results Outside Secretarial Support - or more exclusive central. Published Success Stories - high form of recognition Task Force Assignments - e.g., review of all paperwork.

Expectancy Theory Example Suppose you had 360 points accumulated in a particular class and you needed 450 points to get an “A” for your final grade. You only have the final left to take (worth 100 points). Plus, you really didn’t put the effort into studying for the other exams for this class, but you were in the B to B+ range. Also suppose, if you get an “A” for the course, your GPA hits the 3.5 mark, which now makes you eligible to get an interview with a prestigious firm.

Expectancy Theory System EFFORT PERFORMANCE REWARD EXPECTANCY Likelihood increased effort will lead to greater performance INSTRUMENTALITY Likelihood greater Performance will lead to more rewards VALENCE Importance of receiving More of certain rewards

Expectancy Theory System A more complete theory Focuses on process of motivation Maslow & Herzberg focus on only one aspect of the process: reward importance Systematic approach with multiple reasons for a lack of greater effort Indicates where management should direct its attention to sales force as a whole or to an individual What may account for a lack of greater effort in an individual salesperson?

Role Perceptions Sales is a boundary spanning position - you must be responsive to expectations of multiple people. Company Sales Manager Customers Family SALESPERSON’S ROLE PERCEPTIONS Expectations What do others expect me to do? Ambiguity How sure am I about what others expect? Accuracy Is what I think what they really expect? Conflict Does meeting expectations of one person mean not meeting the expectations of another?

Role Perceptions Typical Sales Job Activities Where is their potential for the following: Ambiguity Lack of Accuracy Conflict

Typical Sales Job Activities Job Dimension Activities SELLING FUNCTION Plan Activities Develop leads Prospecting Identify Decision- Makers Prepare Presentations Make Presentations Overcome Objections Introduce New Products WORKING WITH ORDERS Write orders Expedite orders Handle back orders Find last orders Handle shipping problems PRODUCT SERVICING Learn about product Test equipment Supervise installation Train customers Supervise repairs Perform maintenance MANAGING INFORMATION Receive feedback Provide feedback Provide technical information SERVICING THE ACCOUNT Stock shelves Set up displays Count inventory Promote local advertising ATTENDING CONFERENCES Sales conferences Client conferences Product exhibitions Training sessions TRAINING/RECRUITING Recruit new reps Travel with trainees Train new reps ENTERTAINING Parties Drinks Dinner Lunch TRAVELING DISTRIBUTION Out-of-Town Sell through Establish relationships In-Town Train Credit

Self-Management How do these self-management techniques relate to the motivation theories -- Maslow, Expectancy, etc.? How will career stages affect this process? Devise a self-management technique for taking more complete class notes. Devise a self-management technique for making more sales presentations for a key product group- e.g., PCs What is the role of management in self-managing?

A Self-Contract Clear detailed description of behavior targeted for change. How behavior is to be observed, measured and recorded Detail of criterion for reinforcement Designates the reinforcement Stipulates the negative consequences of not fulfilling contract Sets timing for delivering reinforcement

Example of a Self-Contract Date: Goal: Increase the number of accounts by 10% in the coming year Agreement Self: I agree to call on at least three prospective customers each week throughout the year. In my call report I will note each new contract made. At the end of the week this information will be transferred to a chart posted on my office door. Consequences If the contract is kept: After calling on a new customer I will reward myself with a steak dinner and bottle of fine wine. Each week I call on three or more new customers I will reward myself by playing a round of golf on Saturday morning. For every new account I secure I will reward myself by playing an extra round of golf on Sunday. If the contract is broken: If I fail to contact at least three new customers during the week, I will spend Saturday morning in the office prospecting for new customers. Bonus clause: If I exceed the goal of increasing the number of accounts by 10% before the year is out, I will reward myself with a weekend trip to Las Vegas. Signed: Witness: Review Date

Why Use Quotas Help motivate salespeople. Direct where to put effort. Provide standards for evaluation. 1. Sales volume in dollar or point system Points allow for different weights for different important products independent of price. Points not affected by inflation. Sales quota may be developed for: Total territory sales, and/or Individual product or product group.

Various Types of Quotas 2. Profit-based quotas are rarely based on bottom line profits Difficult to account for indirect expenses Profits are usually configured as gross margins minus some load factor 3. Activity-based quotas are based on activities directly related to sales volume More directly under control of the salesperson Biggest problem is falsification of call reports Issue of quantity vs. quality of activity?

Goal Theory Postulates Difficult goals, if accepted, will lead to greater performance than moderate or easy goals Difficult and specific goals, if accepted, will lead to even higher performance than general, “do your best” or no goals.

Goal Theory Additional Factors Feedback is necessary for goals to be effective The goal must be personally embraced A person who is confident in his/her ability will outperform someone who is not confident.

Who am I? I lost my business (1831) Defeated for state legislature. (1832) Failed again in business (1833) Suffered an emotional breakdown. (1836) Lost election for: speaker elector congress vice-president (1838) (1840) (1843 and 1845) (1856) Elected President 1860

Sales Force Experiment Percent of Salespeople at or Over 100% Month Adjusted Non Adjusted January 44% 57% February 28% 45% March 46% April 55% 56% May 54% June 52% 60% July 53%

Sales Force Experiment -- Conclusions Most Universal salespeople are “quota achievers” not “dollar maximizers”. When given a more easily attainable quota, motivation declines so much they will be less likely to make lower than higher quota. Set quotas at challenging levels and attach great significance to attainment What salespeople say will likely differ from what they do.

Incentive Program Decisions What is difference from regular compensation such as commission? Key decisions Goals Rules Timing Awards Participants Publicity Theme Cost What is difference between Incentive and Recognition programs

Types of Incentive Awards Used by 168 Firms Type of Award Percentage of Firms Using Cash 59% Selected Merchandise 46% Merchandise Catalog 25% Travel 22%

Figure 13-7: Use of the Various Types of Quotas 60% Sales Volume Quota Profit-based Quota Activity Quota 55% 32% 14% 28% 14% Large firms’ Sales > $40M Small firms’ Sales < $40M

Experiential Exercise Develop an incentive program for the following company. The report of the program should include a statement of the purpose of the program, its budget, and the specifics of the program such as theme, prizes, rules, timing and publicity. ABCO Inc. is located in Dallas, Texas. Its sales last year were $25,750,000 with pre-tax profits of approximately $400,000. Growth has been steady over recent years, averaging about 10 percent a year. ABCO manufactures and markets vinyl binders, loose-leaf products, and index tabs. These products are used as manuals, price books, and advertisements by their clients. The bulk of ABCO’s sales are to industrial companies. Some of their major customers include EDS, 3M, Dr Pepper, and Xerox. Sales in the first half of the year are usually around 65% of total sales, while sales in the last quarter are usually about 15-20% of total annual sales. The margins (net sales minus cost of goods sold) on these products are approximately 40% on average. The margins are this high because the products are custom designed for the customer. Depending on the product line and customer situation, ABCO’s selling cycle will vary from two weeks to three months.

Experiential Exercise The sales force consists of six women and three men. They are all located in the Dallas/Fort Worth area with exception of one of the men, who is located in Oklahoma City. They range in age from 25 to 48 years old. Two of the men and one of the women have been with the company since its inception 15 years ago. All of the people are college graduates. The compensation plan consists of a base salary plus commission on sales over 90% quota. All salespeople are expected to make quota. Their average income is $42,000, though this ranges from a high of $68,000 to a low of $21,000. Commissions are expected to be approximately 40% of their income. ABCO has never had an incentive program in the past having relied on commissions as an incentive.

NOTE: The following slides are not discussed in the instructor’s note, but can be used to supplement the ideas presented in this chapter.

Chapter 13 Motivation Tools Why the concern for sales force What are the different theories of motivation? Motivation Tools Self- Management Quotas Incentive programs Recognition Programs

Figure 13-5: Model of Motivation Valence Importance of receiving more of certain rewards Effort Performance Rewards Expectancy Likelihood that increased effort will lead to greater performance Instrumentality Likelihood that greater performance will lead to more rewards

Figure 13-6: Self-Management Techniques METHOD TOOLS Self-monitoring Observe and record behavior. Can use diaries, counters, tally sheets, charts. Goal setting Establish behavior change objectives. Should be specific and with a short time horizon. Stimulus control Modify antecedents to behavior. May involve introducing or removing cues. Consequence management May involve reinforcement, punishment, or extinction. Rehearsal Systematic practice of desired behavior. May be overt or visualized. Self-controlling Specify the relationship between behaviors and their consequences. May involve public commitment.

Steps to Greater Motivation Define what you want. Inform a special person of your goals. Do something. Don’t let failure deter you. Break down problems into pieces. Set deadlines. Turn work into play. Associate with people who motivate you.

Figure 13-4: Career Stage Characteristics Exploration Establishment Maintenance Disengagement Career Concerns Finding an appropriate 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 the job well. Becoming a contributing member of an organization. Using skills to produce results. Adjusting to working with greater autonomy. Developing broader view of work and organization. Maintaining a high performance level. Establishing a stronger self-identity outside of work. Maintaining an acceptable performance level. 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 accomplishments. Psychological Needs Support Peer acceptance Challenging position Achievement Esteem Autonomy Competition Reduce competiveness Security Helping younger colleagues Detachment from the organization and organizational life.

Figure 13-1: Sales Forced Needs and Ways to Fill Them Company Action to Fill Needs Status Change title from “salesperson” to “area manager.” Buy salespeople more luxurious cars to drive. Control Allow salespeople to help plan sales quotas and sequences of calls. Respect Invite salespeople to gatherings of top executives. Put pictures of top salespeople in company ads and newsletters. Routine Assign each salesperson a core of loyal customers that are called on regularly. Accomplishment Stimulation Run short-term sales contests. Schedule sales meetings in exotic locations. Honesty Deliver promptly all rewards and benefits promised.

Figure 13-2: Summary of Classic Motivation Theories THEORY AUTHOR DESCRIPTION Hierarch of needs Abraham Maslow Physiological, safety, belonging, esteem, and self actualization needs are ranked in a hierarchy from lowest to highest. An individual moves up the hierarchy as a need is substantially realized. ERG theory Clayton P. Alderfer Hierarchically classifies needs as existence, relatedness, and growth needs. Like Maslow, suggests that people will focus on higher needs as lower needs are satisfied but, unlike Maslow, suggests that people will focus on lower needs if their higher needs are not satisfied. Motivation-hygiene Frederick Herzberg Argues that intrinsic job factors (e.g., challenging work, achievement) motivate, whereas extrinsic factors (e.g., pay) only placate employees. Theory of learned needs David McClelland Proposes that there are three major professional needs: achievement, affiliation, and power. A high need for achievement and affiliation has been related to higher sales force performance. A high need for power has been related to higher sales manager performance. Equity theory J. Stacy Adams Proposes that people will evaluate their treatment in comparison to that of “relevant others” and that motivation will suffer if treatment is perceived to be inequitable.

What Makes Great Salespeople? CHARACTERISTIC DESCRIPTION The Competitor This person not only wants to win, but derives satisfaction from beating specific rivals -- another company or even colleagues. They tend to verbalize what they are going to do, and then do it. The Ego-Driven They are not interested in beating specific opponents, they just want to win. They like to be considered experts, but are prone to feeling slighted, change jobs frequently, and often take things too personally. The Achiever This type of person is almost completely self-motivated. They usually set high goals and as soon as they hit one goal, they move the bar higher. They like accomplishment, regardless of who receives the credit. The Service-Oriented Their strengths lie in building and cultivating relationships. Winning is not everything to this person, but they do respond to feelings of gratitude and friendship from other people.