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.

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

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% 64.7% 27.9% 72.1% 41.9% 58.1% 31.8% 68.1% Expand Visibility of Sales Increase Sales Revenue Enhance Company Credibility Build the Brand Most Successful Least Successful

Maslow’s Hierarchy of Needs Self-Actualization Self-Esteem Love-Belonging Safety-Security Physiological  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.

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

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: 1.Physiological, 2.Safety-Security, 3.Love-Belonging, 4.Self-Esteem, 5.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. Your Score

Maslow’s Needs & Related Sales Force Motivators Maslow’sHierarchy 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

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

Maslow’s Hierarchy U.S. SALESPEOPLE’S RESPONSES NumberPercentNumberPercent 84786%43151% 95580%65440% 34174%72239% 35266%83637% 25663%45837% 55957%85337% 75754%71834%

Hygienes  Policies  Tech. Supervision  Salary  Interpersonal Relations  Working Conditions LowSatisfaction Motivators  Achievement  Recognition  Work Itself  Responsibility  Advancement Comparison of Motivators and Hygiene Factors Percentage Frequency HighSatisfaction

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 –Learning the skills required to do the job well. Manager Role?

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

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

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

Disengagement Stage Motivational Needs –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?

Age Range Overlap of Ages on Career Stages CareerConcerns Proportion of Sales Force Exploration 14% Establishment 29% Maintenance 42% Disengagement 15%

Giving Status to Salespeople 1.Compensation - exceed first-line managers 2.Job Title - no cost but considerable payback 3.Company Car Upgrade - salespeople spend much time in car reminds them of their value. 4.Car Phone – - justified on a purely business basis

Giving Status to Salespeople 5.Field Sales Council - meet president for 1/2 day open-ended discussion on field marketing conditions - report back to field meetings the results 6.Outside Secretarial Support - or more exclusive central. 7.Published Success Stories - high form of recognition 8.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 EXPECTANCY Likelihood increased effort will lead to greater performanceINSTRUMENTALITY Likelihood greater Performance will lead to more rewardsVALENCE Importance of receiving More of certain rewards REWARDPERFORMANCEEFFORT

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 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? CompanySalesManagerCustomersFamily Sales is a boundary spanning position - you must be responsive to expectations of multiple people.

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

Typical Sales Job Activities Job Dimension ActivitiesActivities SELLING FUNCTIONPlan Activities Develop leads Prospecting Identify Decision- Makers Prepare Presentations Make Presentations Overcome Objections Introduce New Products WORKING WITH ORDERSWrite orders Expedite orders Handle back orders Find last orders Handle shipping problems PRODUCT SERVICINGLearn about product Test equipment Supervise installation Train customers Supervise repairs Perform maintenance MANAGING INFORMATIONReceive feedback Provide feedback Provide technical information SERVICING THE ACCOUNTStock shelves Set up displays Count inventory Promote local advertising ATTENDING CONFERENCESSales conferences Client conferences Product exhibitions Training sessions TRAINING/RECRUITINGRecruit new reps Travel with trainees Train new reps ENTERTAININGParties Drinks Dinner Lunch TRAVELING DISTRIBUTIONOut-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 1.Help motivate salespeople. 2.Direct where to put effort. 3.Provide standards for evaluation. 1. Sales volume 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 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 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?

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

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% MonthAdjusted Non Adjusted January44%57% February28%45% March46%57% April55%56% May54%57% June52%60% July53%60%

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  GoalsRules  TimingAwards  ParticipantsPublicity  ThemeCost  What is difference between Incentive Recognition Incentive and Recognition programs

Types of Incentive Awards Used by 168 Firms Type of Award Percentage of Firms Using Cash59% Selected Merchandise46% Merchandise Catalog25% Travel22%