Sales Force Management 2017 Course Outline (4/10) Krzysztof Cybulski Ph.D. Marketing Chair Faculty of Management Warsaw University
Program of Sales Force Management Course 1. The Role of Sales Force in Today s Changing World 2. Recruiting, Selecting & Hiring The Salespeople 3. Sales Training & Coaching Programs 4. Motivating the Sales Force 5. Salespeople Compensation Plan 6. Organizing the Sales Force. Functions of Sales Manager 7. Elements of Sales Planning and Sales Department Budgeting 8. Monitoring, Control and Evaluation of the Sales Force 9. Sales Organization Diagnosis 10. Special Sales Force Management Problems and Key Trends Final Test
Agenda Motivating Sales Force Good sales manager competences What motivation is all about? Importance of Motivation What Motivates Top Sales Performers? Main theories of motivation Art of Demotivation
Motivating Sales Force
Good sales manager competences Understanding what motivation is all about Developing a high-performance sales culture Knowing salespeople s basic needs Realizing that salespeople want to know what is in it for them Getting know the personal side of salespersons Always remembering that motivational coaching is needed for high performance Being realistic about motivating salespeople!
What motivation is all about? Money is not enough!
What motivation is all about? Motivation is a term originally derived from the Latin word movere which means to move but has been expanded to include the various factors by which human behavior is activated.
Motivation Four questions need to be considered 1. What arouses salespeople s behavior? 2. What influences the intensity of the behavioral arousal? 3. What directs the person s behavior? 4. How is this behavior maintained over time?
What motivation is all about? Motivation refers to the arousal, direction and persistence of effort directed toward job tasks over a period of time. Thus, the sales manager seeks to influence salespeople to do certain activities, to work hard to reach activity goals, and to do so over the long haul, not just occasionally. What can sales managers use in their motivational program that will influence salespeople s behavior?
Importance of Motivation A motive is a stimulated need that an individual seeks to satisfy. Hunger, a need for security, or a desire for prestige are examples of motives. Once a need is aroused (or stimulated) in a person, then the person s goal is to satisfy that aroused need. The force that activates this goal-oriented behavior is what we call motivation.
Importance of Motivation Gaining & hiring the best candidates Keeping the good employees with company Stimulating existing salespersons to work effectively & efficiently Growing company s value
What Motivates Top Sales Performers? 1.Need for status: Recognition is a key motivating factor for top salespeople. This group seeks power, authority, image and reputation. 2.Need for control: While top salespeople like being with other people, they also like to be in control and enjoy influencing others. 3.Need for respect: Top sales achievers like to be seen as experts who are willing to help and advise others. 4.Need for routine: It is misconception that successful sellers thrive on freedom. Most like to follow a routine strictly and are upset when it is interrupted.
What Motivates Top Sales Performers? 5.Need for accomplishment: Money is only one of the many things that motivate the top sales performers. In addition into a big house, fancy cars, and nice clothes, they constantly go after new challenges in their jobs to maintain enthusiasm. 6.Need for stimulation: Most outstanding salespeople have an abundance of physical energy and thrive on challenges. Therefore, they welcome outside stimulation as a way of channeling their energy. 7.Need for honesty: Top sales achievers have a strong believe in the product that they are selling. If they have doubts about the company or a new product lone, they are apt to switch jobs. 8.Need for commitment (from upper management).
What Motivates Top Sales Performers? Top Sales Performers Needs Status Control Respect Routine Accomplishment Stimulation Honesty Company Actions to Fill Needs Change title from salesperson to area manager. Buy salespeople more luxurious cars to drive. Allow salespeople to help plan sales quotas and sequences of calls. Invite salespeople to gatherings of top executives. Put pictures of top salespeople in company ads and newsletters. Assign each salesperson a core of loyal customers that are called on regularly. Set reasonable goals for the number of calls and sales. Run short-term contests. Schedule sales meetings in exotic locations. Deliver promptly all rewards and benefits promised.
Motivating Sales Force Motivational Theories Maslow s Need Theory Motivator- Hygiene Theory Theory of learned needs Equity Theory Attribution Theory of Motivation Expectancy Theory
Maslow s Hierarchy of Needs and Possible Sales Managers Actions Fulfilled through: Self-development, challenge. Managerial actions: Provide/offer advanced training, assignments to special projects, more responsibility and authority. Fulfilled through: Status, recognition. Managerial actions: Recognize sales rep achievements personally and publicly through title changes, commendation letters, promotions. Fulfilled through: Affiliation, friendship, acceptance. Managerial actions: Use team selling, hold social functions, distribute employee newsletters, hold sales meetings, mentoring. Fulfilled through: Job security, safety, income security. Managerial actions: Provide safe work environment, set mutually agreed-upon performance standards, communicate job performance expectations and consequences of failure to perform. Fulfilled through: Food, shelter, clothing, health care. Managerial actions: Provide/offer adequate income and good benefits package.
Maslow s Hierarchy of Needs Physiological, safety, belonging, esteem and selfactualization needs are ranked in a hierarchy from lowest to highest. An individual moves up the hierarchy as a need is substantially realized. People remain at one level until all their needs at that level are not satisfied. The greater deprivation of given need, the greater its importance and strength. The new needs emerge in a new, higher level this means that gratification of needs at one level in the hierarchy activates needs at the next-higher level.
Maslow s Need Theory some doubts about theory arise Actually a normal person is most likely work to be working toward need satisfaction on several levels at the same time and rarely are all needs on a given level ever fully satisfied. There is no consideration of multiple motives for the same behavior e.g. salesperson may strive to exceed sales quota for several reasons to make more money, to improve chance for getting a promotion, or to get recognition from top management. Identical behavior by several people may result from quit different motives, and quite different behavior may result from identical motives. Executives should develop a motivational package to satisfy those different needs and motives.
Hertzberg s Motivation Hygiene Theory According to Herzberg s theories, to improve productivity, sales managers have to maintain hygiene factors e.g. good salaries, pleasant work environment and so on) while providing motivators (e.g. job enrichment, recognition and so on). The theory is sometimes called the "Motivator- Hygiene Theory" and/or "The Dual Structure Theory."
Herzberg s Motivation-Hygiene Theory Intrinsic (extrinsic) motivation, concludes that certain factors in the workplace result in job satisfaction, but if absent, lead to dissatisfaction. The factors that motivate people can change over their lifetime, but "respect for me as a person" is one of the top motivating factors at any stage of life.
Hertzberg s Motivation Hygiene Theory The name hygiene factors is used because, like hygiene, the presence will not make you healthier, but absence can cause health deterioration. Sources of dissatisfaction are called hygiene factors because they are necessary to keep employee performance from dropping or becoming unhealthy. They comprise the environment, salary, companies policies & administration, supervision & working conditions.
Hertzberg s Motivation Hygiene Theory Sources of satisfaction are called motivators because they are necessary to stimulate individuals to superior efforts. They relate to the nature or content of the job itself and include responsibility, achievement, recognition, and the opportunities for growth and advancement.
Ways of job enrichment are as follows give salespeople a complete natural unit of work responsibility and accountability (e.g., specific customer category assignments in a designed area) grant greater authority and job freedom to the salespeople in accomplishing assignments (e.g. let salespeople schedule their time in their own unique way as long as organizational goals are met). introduce salespeople to new and more difficult tasks and to challenges not previously handled (e.g., opening new accounts, selling new product on the Internet, or being assigned a large national account) assign salespeople specific or specialized tasks enabling them to become experts (e.g., training new salespeople on how to close a sale ) send periodic e-mail and communications directly to the salesperson instead of forwarding everything via the sales supervision.
Theory of learned needs achievement theory David McClelland proposed that there are three major professional needs: Achievement Affiliation 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.
Theory of learned needs In his acquired-needs theory, David McClelland proposed that an individual's specific needs are acquired over time and are shaped by one's life experiences. Most of these needs can be classed as either achievement, affiliation, or power. A person's motivation and effectiveness in certain job functions are influenced by these three needs. McClelland's theory sometimes is referred to as the three need theory or as the learned needs theory.
Theory of learned needs Achievement People with a high need for achievement seek to excel and thus tend to avoid both low-risk and high-risk situations. Achievers avoid low-risk situations because the easily attained success is not a genuine achievement. In high-risk projects, achievers see the outcome as one of chance rather than one's own effort. High individuals prefer work that has a moderate probability of success, ideally a 50% chance. Achievers need regular feedback in order to monitor the progress of their achievements. They prefer either to work alone or with other high achievers.
Theory of learned needs Affiliation Those with a high need for affiliation need harmonious relationships with other people and need to feel accepted by other people. They tend to conform to the norms of their work group. High individuals prefer work that provides significant personal interaction. They perform well in customer service and client interaction situations. Theory allows for the shaping of a person's needs; training programs can be used to modify one's need profile.
Theory of learned needs Power A person's need for power can be one of two types - personal and institutional. Those who need personal power want to direct others, and this need often is perceived as undesirable. Persons who need institutional power (also known as social power) want to organize the efforts of others to further the goals of the organization. Managers with a high need for institutional power tend to be more effective than those with a high need for personal power.
Theory of learned needs Implications for Management People with different needs are motivated differently. High need for achievement - High achievers should be given challenging projects with reachable goals. They should be provided frequent feedback. While money is not an important motivator, it is an effective form of feedback. High need for affiliation - Employees with a high affiliation need perform best in a cooperative environment. High need for power - Management should provide power seekers the opportunity to manage others.
Equity Theory J. Stacy Adams proposed that people will evaluate their treatment in comparison to that of relevant others and the motivation will suffer if treatment is perceived to be inequitable.
Equity Theory Once the salesperson has been rewarded for performance, he or she raises the following question: Are the Rewards Fair? The salesperson compare: My own Outcomes/Inputs vs. Others Outcomes/Inputs Inequity exists when the individual perceives that the ratio is comparatively inferior. Equity theory contends that salesperson would leave the job if he or she could not achieve an equitable relationship.
How to Facilitate Equity? Salesperson work hard but one of the following situations did appear: 1. Sales performance did not increase 2. No important rewards were given for meeting quotas 3. The rewards given for meeting quota were not worth the extra work 4. Treatment are not fair because one person s rewards were the same as another s who worked harder.
Expectancy Theory Another component of motivational mix is reward pay, incentive, and nonfinancial rewards. Managers must realize that people want to know what is in the job for themselves. A major theory used to explain salespeople s work behavior is expectancy theory. It is a process theory (i.e. seeks to explain why people choose a particular behavior), derived from the works of Tolman, Levin, Vroom, McClelland and Atkinson.
Expectancy Theory Is based on the assumption that salespeople have expectancies about what they should receive from their employer as a result of their work efforts. This theory views people as intelligent, rational individuals who make conscious decisions about their present and future behavior. People are not seen as inherently motivated or unmotivated. Rather, people s motivational levels are viewed as a function of work environment: As long as the work environment is consistent with their goals and needs, they are motivated!
Expectancy Theory The following formula expresses expectancy theory: M = E x I x V M- motivation E- expectancy I-instrumentality V-valence
Expectancy Theory What is probability of success? Expectancy, then, is the salesperson s estimate of the probability that expending a given amount of effort on a task will to improved level of performance on some dimension. If I work hard I succeed?. How company could increase E component of motivation formula? Ability to sell Good training & coaching Former experiences Skills development
Expectancy Theory Will I be Rewarded for Success? In expectancy theory, the salesperson s estimate probability that achieving an improved level of performance dimension will lead to increase attainment of particular reward or outcome may be defined as instrumentality. Will I be rewarded if my performance increases? Compensation system (straight salary vs. commission payment) Fair play rules in relations company and salespeople
Expectancy Theory Valence Valence for rewards refers to the value the salesperson place on the reward. For example the salesperson might ask If I work 12 hours a day instead 8 and win this sales contest, would it be beneficial to me? Are the Rewards Worth it? Absolute value of different rewards Relative value of different rewards Importance of rewards to the salespeople
Managerial Implications of Expectancy Theory 1. All three motivational components must be high for high motivational level to exist. 2. Managers should increase expectancies by providing a work environment that facilitate the best performance, and set realistic attainable performance goal, by providing training, support, and encouragement so salespeople are confident they can perform at the level expected of them. Charismatic leaders excel at boosting their follower s confidence.
Managerial Implications of Expectancy Theory 3. Managers should make performance instrumental toward positive outcomes by making sure good performance is followed by personal recognition and praise, favorable performance reviews, pay increase, and other positive results. Finally managers should ensure that poor performance has fewer positive and more negative outcomes thann good performance.
Managerial Implications of Expectancy Theory 4. Managers should identify positively valent outcomes by understanding what salespeople really want to get out of their work. Managers should also consider how people may different in the valences they assign to outcomes. Knowing the need theory of motivation and implications for identifying important outcomes is necessity.
The 7 Components of The Sales Motivational Mix 1. Sales Culture 2. Basic Compensation 3. Special Financial Incentives 4. No financial Rewards 5. Sales Training 6. Leadership 7. Performance Evaluation
Sales Culture Shared Values: Reward for performance Customer service at any cost Employees are part of family Attain sales targets Shared Beliefs: Customer orientation We like this company We are the team The company cares about us Quality work life We are professionals Shared Ceremonies: Annual awards for meritorious customer service Monthly meetings to acknowledge people who attain 100% sales targets Shared Stories: Sales managers who makes salespeople successful; help with personal problems Heroic efforts to please customer by legendary salespeople Shared Symbols and Slogans: Build bridges to be in touch with customers We don t stand on rank (equality of family) Open offices for easy communication Special plaques for customer service and sales leaders
Sales Culture Elasticity and Freedom Inner Integration Clan Adhocracy Hierarchy Market Stability and Control Outside Orientation
Art of Demotivation
Job (dis)satisfaction components 1. Work itself (e.g. stress level) 2. Salaries, wages, commission etc. (level/structure) 3. Relations with managers 4. Organizational Climate 5. Fair Treatment (e.g. fair salary) 6. Organizational Equity 7. Company Policy (e.g. quotas, promotion, carrier path)
Job (dis) satisfaction outcomes 1. Performance Level 2. Productivity 3. Organizational Commitment 4. Loyalty toward Organization 5. Frauds Level 6. Intention to Leave 7. Turnover
Lack of Motivation when No clear career path Not managed adequately Bored or burned out Economic needs not met Discouraged with company Overlooked for promotion Lack of ability to develop skills Avoiding risk of management job Reluctance to be transferred
Demotivation when Unrealistic job previews Overselling company and job Threat of decreasing salary (commission) Threat of dismissal Reducing salary (commission) Changing sales territory
Key Words Job (dis) Satisfaction Components and Outcomes Components of Sales Motivational Mix Maslow s Needs Theory Motivator-Hygiene Theory Theory of Learned Needs Inequity Theory Attribution Theory of Motivation Expectancy Theory Demotivation
References Darmon, R.Y.(2007). Leading the Sales Force, Cambridge University Press. Zoltners, A.A., Sinha, P., Lorimer, S.E. (2009), Building a Winning Sales Strategy, Amacom. Zoltners, A.A., Sinha, P., Lorimer, S.E. (2004).Sales Force Design for Strategic Advantage, poalgrave macmillan. Zoltners, A.A., Sinha, P., Lorimer, S.E. (2001).The Complete Guide to accelerating sales force performance. Amacom.