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One of the most difficult tasks a sales manager faces is the motivation of a sales force. The diverse challenges of modern selling make this especially true. Salespeople may be scattered across a large geographical area; they may offer a broad product line to several diverse markets; their selling jobs are often technical and highly competitive; they may be part of a multifaceted sales team; and their expenses often represent a large portion of the company's marketing budget. Furthermore, many companies now have international sales forces whose composition adds even more complexity to the motivation challenge.
Because salespeople's needs change as they move through the various stages of their careers, sales incentives and compensation must be adapted.
In particular, sales trainees and older salespeople present special motivational challenges. It is hard to motivate trainees, who must undergo long breaking-in periods before they are productive. It is difficult to give them a feeling of accomplishment. It is especially difficult to generate enthusiasm for selling when trainees are technically trained but lack a sales orientation or in other words lack Motivation to perform a sales job.
For this reason, it may be wise to reward / compensate beginners for their efforts to learn rather than for their ability to produce.
In contrast, experienced salespeople sometimes have limits on what they can earn; and they occasionally feel that their advancement and personal growth are restricted.
Because of these and other complexities of selling business, a sales manager cannot assume that salespeople are strongly motivated day in and day out.
However, failure to identify the needs of subordinates and to provide effective motivation result in increased turnover, lower sales force productivity, and unnecessary selling expenses.
A sales manager's first challenge is to identify the individual needs of sales personnel. Then the manager has to provide the conditions for motivation opportunities for growth, achievement, participation, responsibility, and recognition. The manager must also make sure that the basic conditions for good morale are provided-adequate pay, suitable physical surroundings, social opportunities, and the like. To a large extent, these needs will be met through the various forms of sales incentives, compensation, and leadership.
In many cases, sales motivation depends on the sales incentives (including compensation). A sales incentive can be defined as anything that is used to reward sales personnel for their accomplishments.
A manager cannot motivate salespeople without understanding their needs [not to forget Maslow’s hierarchy of needs]. People are usually much more diverse in their work values and motivation patterns than their managers suspect. Although part of the supervisory task is to develop a general awareness of human behavior, this alone will not suffice. The sales manager must also identify the individual needs of sales personnel. For example, let's say Ram, who has four children and a mortgage, is concerned with security. On the other hand, Mohan, who is single, is motivated by the potential for advancement & training. Obviously, ram's and mohan's needs are different. The incentives used to motivate these two salespeople must also be different.
TYPES OF INCENTIVES
Although personal leadership is a strong motivating factor, financial and non-financial incentives are two other major means of motivating salespeople. Just as effective leadership motivates salespeople, well-chosen incentives stimulate them to use their existing energies and resources more effectively.
In designing incentives, one can choose either a special-effort approach or a continuing-format approach. A sales contest is an example of a special-effort incentive, because a contest is designed to achieve a specific, short-term goal. However, compensation and promotion are related to the achievement of continuing, or long-term, objectives. The major types of incentives are:
Non-financial Incentives
Non-financial incentives consist of a variety of incentive techniques used mainly for specific, special-effort situations. Recognition (honors and awards, special privileges, and communication), sales contests and incentive programs, sales meetings, and sales training are the major forms.
Non-financial incentives are usually designed to achieve one or two specific, short-range objectives. However, the incentives must be coordinated with the company's long-range marketing goals and overall human resources program. For example, if a company has a long-range goal of balanced sales among all of its product lines, it is unwise to introduce a sales contest that encourages salespeople to emphasize a specific product line at the expense of other product lines. Sales contests have the power to redirect sales efforts, so their use must be carefully considered.
Financial Incentives
Business organizations provide two forms of financial rewards. Financial incentives may be direct monetary payments, such as salaries and wages, or they may be indirect monetary rewards. These indirect rewards, commonly known as fringe benefits, include paid vacations, insurance plans, retirement plans, and similar employee benefits.
It is important for all sales managers to know and understand how financial incentives work because adequate and equitable compensation is essential to sales force motivation. A diagram showing the relationship between motivation, evaluation, and compensation is presented. The compensation plan is a key element in this linkage.
The model shows that motivation, which depends on the personal characteristics of salespeople and other factors, is both the starting and ending point on a continuum. The effort that salespeople expend and the results they achieve will depend on what they expect to receive as rewards (i.e., compensation). In turn, evaluation criteria, systems, and procedures measure salespersons' achievements (the results of their efforts) to determine the quantity and type of compensation.
A point to note:
Sales practitioners are also uncertain about the impact of financial incentives. At one extreme are the sales managers who feel that sales personnel are motivated strictly by financial considerations. These managers rarely recognize other needs. At the other extreme are the proponents of personal growth. They argue that a salesperson is concerned with factors related to the job, such as security, recognition, or advancement, and that financial rewards are relatively unimportant as true motivators of behavior.
An accurate view of money as a motivator lies somewhere between these two extremes. A financial incentive has several functions in motivating salespeople: it is a determinant of a salesperson's purchasing power; it is a symbol of status; and it is an indication of equitable treatment
hope you all like reading this...
Compensation Practices of a Sales Driven Organization in relation to Motivation of its sales force
One of the most difficult tasks a sales manager faces is the motivation of a sales force. The diverse challenges of modern selling make this especially true. Salespeople may be scattered across a large geographical area; they may offer a broad product line to several diverse markets; their selling jobs are often technical and highly competitive; they may be part of a multifaceted sales team; and their expenses often represent a large portion of the company's marketing budget. Furthermore, many companies now have international sales forces whose composition adds even more complexity to the motivation challenge.
Because salespeople's needs change as they move through the various stages of their careers, sales incentives and compensation must be adapted.
In particular, sales trainees and older salespeople present special motivational challenges. It is hard to motivate trainees, who must undergo long breaking-in periods before they are productive. It is difficult to give them a feeling of accomplishment. It is especially difficult to generate enthusiasm for selling when trainees are technically trained but lack a sales orientation or in other words lack Motivation to perform a sales job.
For this reason, it may be wise to reward / compensate beginners for their efforts to learn rather than for their ability to produce.
In contrast, experienced salespeople sometimes have limits on what they can earn; and they occasionally feel that their advancement and personal growth are restricted.
Because of these and other complexities of selling business, a sales manager cannot assume that salespeople are strongly motivated day in and day out.
However, failure to identify the needs of subordinates and to provide effective motivation result in increased turnover, lower sales force productivity, and unnecessary selling expenses.
A sales manager's first challenge is to identify the individual needs of sales personnel. Then the manager has to provide the conditions for motivation opportunities for growth, achievement, participation, responsibility, and recognition. The manager must also make sure that the basic conditions for good morale are provided-adequate pay, suitable physical surroundings, social opportunities, and the like. To a large extent, these needs will be met through the various forms of sales incentives, compensation, and leadership.
In many cases, sales motivation depends on the sales incentives (including compensation). A sales incentive can be defined as anything that is used to reward sales personnel for their accomplishments.
A manager cannot motivate salespeople without understanding their needs [not to forget Maslow’s hierarchy of needs]. People are usually much more diverse in their work values and motivation patterns than their managers suspect. Although part of the supervisory task is to develop a general awareness of human behavior, this alone will not suffice. The sales manager must also identify the individual needs of sales personnel. For example, let's say Ram, who has four children and a mortgage, is concerned with security. On the other hand, Mohan, who is single, is motivated by the potential for advancement & training. Obviously, ram's and mohan's needs are different. The incentives used to motivate these two salespeople must also be different.
TYPES OF INCENTIVES
Although personal leadership is a strong motivating factor, financial and non-financial incentives are two other major means of motivating salespeople. Just as effective leadership motivates salespeople, well-chosen incentives stimulate them to use their existing energies and resources more effectively.
In designing incentives, one can choose either a special-effort approach or a continuing-format approach. A sales contest is an example of a special-effort incentive, because a contest is designed to achieve a specific, short-term goal. However, compensation and promotion are related to the achievement of continuing, or long-term, objectives. The major types of incentives are:
Non-financial Incentives
Non-financial incentives consist of a variety of incentive techniques used mainly for specific, special-effort situations. Recognition (honors and awards, special privileges, and communication), sales contests and incentive programs, sales meetings, and sales training are the major forms.
Non-financial incentives are usually designed to achieve one or two specific, short-range objectives. However, the incentives must be coordinated with the company's long-range marketing goals and overall human resources program. For example, if a company has a long-range goal of balanced sales among all of its product lines, it is unwise to introduce a sales contest that encourages salespeople to emphasize a specific product line at the expense of other product lines. Sales contests have the power to redirect sales efforts, so their use must be carefully considered.
Financial Incentives
Business organizations provide two forms of financial rewards. Financial incentives may be direct monetary payments, such as salaries and wages, or they may be indirect monetary rewards. These indirect rewards, commonly known as fringe benefits, include paid vacations, insurance plans, retirement plans, and similar employee benefits.
It is important for all sales managers to know and understand how financial incentives work because adequate and equitable compensation is essential to sales force motivation. A diagram showing the relationship between motivation, evaluation, and compensation is presented. The compensation plan is a key element in this linkage.
The model shows that motivation, which depends on the personal characteristics of salespeople and other factors, is both the starting and ending point on a continuum. The effort that salespeople expend and the results they achieve will depend on what they expect to receive as rewards (i.e., compensation). In turn, evaluation criteria, systems, and procedures measure salespersons' achievements (the results of their efforts) to determine the quantity and type of compensation.
A point to note:
Sales practitioners are also uncertain about the impact of financial incentives. At one extreme are the sales managers who feel that sales personnel are motivated strictly by financial considerations. These managers rarely recognize other needs. At the other extreme are the proponents of personal growth. They argue that a salesperson is concerned with factors related to the job, such as security, recognition, or advancement, and that financial rewards are relatively unimportant as true motivators of behavior.
An accurate view of money as a motivator lies somewhere between these two extremes. A financial incentive has several functions in motivating salespeople: it is a determinant of a salesperson's purchasing power; it is a symbol of status; and it is an indication of equitable treatment