Part V

SALES FORCE LEADERSHIP

Part V

SALES FORCE LEADERSHIP

Chapter 11:Chapter 11:

Motivating Motivating SalespeopleSalespeople

What is Motivation?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 Reasons for Motivating SalespeopleSalespeople

What Goals are Most What Goals are Most Important?Important?

0 20 40 60 80

Expand Visibilityof Sales

IncreaseSales Revenue

Enhance CompanyCredibility

Build the Brand

43.9%

66.1%

31.9%

29.8%

How Successful Were You at How Successful Were You at Reaching Your Goals?Reaching Your Goals?

35.7%35.7%

64.7%64.7%

27.9%27.9%

72.1%72.1%

41.9%41.9%

58.1%58.1%

31.8%31.8%

68.1%68.1%

Expand Visibilityof Sales

IncreaseSales Revenue

Enhance CompanyCredibility

Build the Brand

Most Successful Least Successful

Maslow’s Hierarchy of Maslow’s Hierarchy of NeedsNeeds

Self-ActualizationSelf-Actualization

Self-EsteemSelf-Esteem

Love-BelongingLove-Belonging

Safety-SecuritySafety-Security

PhysiologicalPhysiological

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.

629 Job security847 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.

An Exercise to Determine An Exercise to Determine Your Your Motivational NeedsMotivational Needs

To Determine Results: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 ScoreYour Score

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

Maslow’sMaslow’sHierarchyHierarchyOf NeedsOf Needs MotivatorsMotivators

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

SafetySafety

PhysiologicalPhysiological

Affiliation (belonging)Affiliation (belonging)

Self-actualizationSelf-actualizationin service to in service to

societysociety

Chinese CultureChinese CultureHierarchy of NeedsHierarchy of Needs

Maslow’s HierarchyMaslow’s Hierarchy

U.S. SALESPEOPLE’S RESPONSESU.S. SALESPEOPLE’S RESPONSESNumberNumber PercentPercent NumberNumber PercentPercent

847 86% 431 51%

955 80% 654 40%

341 74% 722 39%

352 66% 836 37%

256 63% 458 37%

559 57% 853 37%

757 54% 718 34%

HygienesHygienes Policies Tech. Supervision Salary Interpersonal Relations Working Conditions

40 30 20 10 0 10 20 30 40

LowLowSatisfactionSatisfaction

MotivatorsMotivators Achievement Recognition Work Itself Responsibility Advancement

Comparison of Motivators and Hygiene Comparison of Motivators and Hygiene Factors Percentage FrequencyFactors Percentage Frequency

HighHighSatisfactionSatisfaction

Career StagesCareer Stages

Does everyone go through these stages?

What can be done to address the concerns of salespeople at each stage?

Exploration StageExploration Stage

Motivational Needs– Learning the skills required to do the job well.

Manager Role?

Exploration StageExploration 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 StageEstablishment Stage

Motivational Needs– Use skills to produce results, increase job autonomy

Manager Role?

Establishment StageEstablishment Stage

Motivational Needs– Use skills to produce results, increase job autonomy

Manager Role?– Provide high rewards for high achievers

– Have salespeople recognize success has somethingother than promotion

Maintenance StageMaintenance Stage

Motivational Needs– Develop a broader view of work and organization,

maintain a high level of performance

Manager Role?

Maintenance StageMaintenance 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 StageDisengagement Stage

Motivational Needs– Establish a stronger self-identity outside of work,

maintain performance level

Manager Role?

Disengagement StageDisengagement 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 Career Stage Effects on SatisfactionSatisfaction

Select Research Findings: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?

AgeAge RangeRange

20 30 40 50 60 65

Overlap of Ages on Career Overlap of Ages on Career StagesStagesCareerCareerConcernsConcerns

Proportion Proportion of of Sales ForceSales Force

Exploration 14%

Establishment 29%

Maintenance 42%

Disengagement 15%

Giving Status to Giving Status to SalespeopleSalespeople

1. Compensation - exceed first-line managers

2. Job Title - no cost but considerable payback

3. Company Car Upgrade - salespeople spend much time in carreminds them of their value.

4. Car Phone –- justified on a purely business basis

Giving Status to Giving Status to SalespeopleSalespeople

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 Expectancy Theory ExampleExample

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 SystemExpectancy Theory System

EXPECTANCYEXPECTANCYLikelihood increasedeffort will lead togreater performance

INSTRUMENTALITYINSTRUMENTALITYLikelihood greaterPerformance will leadto more rewards

VALENCEVALENCEImportance of receivingMore of certain rewards

REWARDREWARDPERFORMANCEPERFORMANCEEFFORTEFFORT

Expectancy Theory SystemExpectancy 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 PerceptionsRole Perceptions

SALESPERSON’S ROLE PERCEPTIONSSALESPERSON’S ROLE PERCEPTIONS

ExpectationsExpectations What do others expect me to do?What do others expect me to do?

AmbiguityAmbiguity How sure am I about what others expect?How sure am I about what others expect?

AccuracyAccuracy Is what I think what they really expect?Is what I think what they really expect?

ConflictConflict Does meeting expectations of one person mean not Does meeting expectations of one person mean not meeting the expectations of another?meeting the expectations of another?

CompanyCompany SalesSalesManagerManager CustomersCustomers FamilyFamily

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

Role PerceptionsRole Perceptions

Typical Sales Job Activities

Where is their potential for the following:

– Ambiguity

– Lack of Accuracy

– Conflict

Typical Sales Job ActivitiesTypical Sales Job ActivitiesJob DimensionJob Dimension ActivitiesActivities ActivitiesActivitiesSELLING FUNCTION Plan Activities

Develop leads Prospecting Identify Decision- Makers

Prepare Presentations Make Presentations Overcome ObjectionsIntroduce New Products

WORKING WITH ORDERS Write ordersExpedite ordersHandle back orders

Find last ordersHandle shipping problems

PRODUCT SERVICING Learn about product Test equipmentSupervise installation

Train customers Supervise repairsPerform maintenance

MANAGING INFORMATION Receive feedbackProvide feedback

Provide technical information

SERVICING THE ACCOUNT Stock shelvesSet up displays

Count inventoryPromote local advertising

ATTENDING CONFERENCES Sales conferencesClient conferences

Product exhibitionsTraining sessions

TRAINING/RECRUITING Recruit new repsTravel with trainees

Train new reps

ENTERTAINING PartiesDrinks

DinnerLunch

TRAVELING DISTRIBUTION Out-of-TownSell throughEstablish relationships

In-Town TrainCredit

Self-ManagementSelf-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-ContractA 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-ContractExample of a Self-ContractDate:Goal: Increase the number of accounts by 10% in the coming year

AgreementSelf: 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.

ConsequencesIf 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 QuotasWhy Use Quotas

1. Help motivate salespeople.2. Direct where to put effort.3. Provide standards for evaluation.

1. Sales volume1. 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 QuotasVarious 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?

Goal Theory PostulatesGoal 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 Goal Theory Additional FactorsFactors

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? 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: speakerelectorcongressvice-president

(1838)(1840)(1843 and

1845)(1856)

Elected PresidentElected President 18601860

Sales Force ExperimentSales Force Experiment

Percent of Salespeople at or Over Percent of Salespeople at or Over 100%100%

MonthMonth AdjustedAdjusted Non AdjustedNon Adjusted

January 44% 57%

February 28% 45%

March 46% 57%

April 55% 56%

May 54% 57%

June 52% 60%

July 53% 60%

Sales Force Experiment -- Sales Force Experiment -- ConclusionsConclusions

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 Incentive Program DecisionsDecisions

What is difference from regular compensation such as commission?

Key decisions Goals Rules

Timing Awards

Participants Publicity

Theme Cost

What is difference between

Incentive Incentive and Recognition Recognition programs

Types of Incentive AwardsTypes of Incentive Awards

Used by 168 FirmsUsed by 168 Firms

Type of AwardType of AwardPercentage ofPercentage of

Firms UsingFirms Using

Cash 59%

Selected Merchandise 46%

Merchandise Catalog 25%

Travel 22%

Figure 13-7:Figure 13-7:

Use of the Various Types of Use of the Various Types of QuotasQuotas

60%60%

55%55%

32%32%

14%14%

14%14%

28%28%

Sales Volume Quota

Profit-based Quota

Activity Quota

Large firms’ Sales > $40M Small firms’ Sales < $40M

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 ExerciseExperiential 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.

Experiential ExerciseExperiential Exercise

NOTE:NOTE:

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

Motivation ToolsMotivation Tools

Self-Management

Chapter 13Chapter 13

QuotasIncentiveprograms

RecognitionPrograms

What areWhat arethe differentthe differenttheories oftheories ofmotivation?motivation?

Why the Why the concernconcernfor sales for sales forceforcemotivation?motivation?

Figure 13-5:Figure 13-5:

Model of MotivationModel of Motivation

EffortEffort PerformancePerformance RewardsRewards

InstrumentalityInstrumentalityLikelihood that greaterLikelihood that greaterperformance will leadperformance will leadto more rewardsto more rewards

ExpectancyExpectancyLikelihood that increasedLikelihood that increasedeffort will lead toeffort will lead togreater performancegreater performance

ValenceValenceImportance of receivingImportance of receivingmore of certain rewardsmore of certain rewards

Figure 13-6:Figure 13-6:

Self-Management TechniquesSelf-Management TechniquesTECHNIQUTECHNIQUEE METHODMETHOD TOOLSTOOLSSelf-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

Modify antecedents to behavior.

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 Steps to Greater MotivationMotivation

1. Define what you want.

2. Inform a special person of your goals.

3. Do something.

4. Don’t let failure deter you.

5. Break down problems into pieces.

6. Set deadlines.

7. Turn work into play.

8. Associate with people who motivate you.

Figure 13-4:Figure 13-4: Career Stage Career Stage CharacteristicsCharacteristics

ExplorationExploration EstablishmentEstablishment MaintenanceMaintenance DisengagementDisengagement

Career Career ConcernsConcerns

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.

Completingone’s career.

Motivational Motivational Needs Job Needs Job RelatedRelated

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 Personal ChallengesChallenges

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.

PsychologicPsychological Needsal 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:Figure 13-1:

Sales Forced Needs and Ways to Fill Sales Forced Needs and Ways to Fill ThemThemSales ForceSales Force

NeedsNeeds Company Action to Fill NeedsCompany 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:Figure 13-2:

Summary of Classic Motivation Summary of Classic Motivation TheoriesTheoriesTHEORYTHEORY AUTHORAUTHOR DESCRIPTIONDESCRIPTIONHierarch 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 What Makes Great Salespeople?Salespeople?CHARACTERISTICHARACTERISTICC DESCRIPTIONDESCRIPTION

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.