9

Motivation and Reward System Management

Motivation - Three Dimensions:

Intensity
The amount of mental and physical effort put forth by the salesperson

Motivation and Reward Systems

Persistence
The salesperson's choice to expend effort over a period of time

Direction
The choice by salespeople of where their efforts will be spent

Motivation and Reward Systems

Motivation - Three Dimensions The motivation task is incomplete unless the salespeoples efforts are channeled in directions consistent with the overall strategic role of the salesforce within the firm
Self-motivation is the ideal

Motivation and Reward Systems

Intrinsic vs. Extrinsic Motivation Intrinsically Motivated

When doing the job is reward in itself acts as motivators

Extrinsically Motivated
When rewards such as pay and formal recognition act as motivators

Motivation and Reward Systems

Reward System Management Organizational Rewards

involves the selection and utilization of organizational rewards to direct salespeople's behavior toward the attainment of organizational objectives

Those that are given in return for acceptable performance or effort; financial or nonfinancial

Non-Compensation Rewards
Factors related to the work situation and well-being of each salesperson

The Optimal Salesforce Reward System

Balance of Organization, Individual, and Customer Needs

The Optimal Salesforce Reward System

From the Organization's Perspective
Provide an acceptable ratio of costs and salesforce output in volume, profit, or other objectives Encourage specific activities consistent with the firm's overall, marketing, and salesforce objectives and strategies Attract and retain competent salespeople, thereby enhancing long-term customer relationships Allow the kind of adjustments that facilitate administration of the reward system.

The Optimal Salesforce Reward System

From the Organization's Perspective From Salesperson's Perspective
Expect to be treated equitably Comparable rewards Stability with incentives

The Optimal Salesforce Reward System

From the Organization's Perspective From Salesperson's Perspective From Customer's Perspective
Response to high pressure sales techniques Require increased service/quality

Types of Salesforce Rewards

Six Most Popular Rewards
(Exhibit 9.1)

Pay Promotion Sense of Accomplishment Personal Growth Opportunities Recognition Job Security

Financial Compensation
Straight Salary
Advantages of Salary Plans
Planned Earnings

Disadvantages of Salary Plans

Salary Compression

Financial Compensation
Straight Salary Straight Commission
Commission Plan Variations Commission Base - volume or profitability Commission Rate - constant, progressive, or a combination
Constant Rate Progressive Rate Regressive Rate

Commission Splits - between two or more salespeople or between salespeople and the employer Advantages of Commission Plans Disadvantages of Commission Plans

Financial Compensation
Straight Salary Straight Commission Performance Bonuses
Group Individual

Financial Compensation
Straight Salary Straight Commission Performance Bonuses Combination Plans (Salary plus Incentive)
Financial-Compensation Mix Advantages of Combination Plans Disadvantages of Combination Plans

Nonfinancial Compensation
Opportunity for Promotion Sense of Accomplishment Opportunity for Personal Growth Recognition Job Security

Sales Expenses
Controls used in the sales-expense reimbursement process include:
1. A definition of which expenses are reimbursable 2. The establishment of expense budgets 3. The use of allowances for certain expenditures 4. Documentation of expenses to be reimbursed

Expense Account Padding

Additional Issues in Managing Salesforce Reward Systems

Sales Contests Equal Pay Team Compensation Global Considerations Changing the Reward System

How to Develop Effective Sales Contents

1) 2) 3) 4) 5) 6) 7) 8) 9) Kick off the contest with a splash Keep the timeframe short Use awards other than cash Level the playing field Reward teams Base the contest on intermediate goals Dont conflict with your long-term goals Discourage sandbagging Keep them coming

Guidelines for Motivating and Rewarding Salespeople

1. Recruit and select salespeople whose personal motives match the requirements and rewards of the job. 2. Attempt to incorporate the individual needs of salespeople into motivational programs. 3. Provide adequate job information and assure proper skill development for the salesforce. 4. Use job design and redesign as motivational tools 5. Concentrate on building the self-esteem of salespeople. 6. Take a proactive approach to seeking out motivational problems and sources of frustration in the salesforce.