Part V SALES FORCE LEADERSHIP

1. Part VSALES FORCE LEADERSHIP Chapter 11: Motivating Salespeople

2. What is Motivation? • Drive to initiate an action. • The intensity of effort in an action • The persistence of effort over time.

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

4. What Goals are Most Important? Expand Visibilityof Sales IncreaseSales Revenue Enhance CompanyCredibility Build the Brand 43.9% 66.1% 31.9% 29.8%

5. Least Successful Most Successful How Successful Were You at Reaching Your Goals? 35.7% Expand Visibilityof Sales IncreaseSales Revenue Enhance CompanyCredibility Build the Brand 64.7% 27.9% 72.1% 41.9% 58.1% 31.8% 68.1%

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

7. An Exercise to Determine Your Motivational Needs 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 security 847 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.

8. Your Score 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: • Physiological, • Safety-Security, • Love-Belonging, • Self-Esteem, • 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.

9. Maslow’s Needs & Related Sales Force Motivators

10. Chinese CultureHierarchy of Needs Self-actualization in service to society Safety Physiological Affiliation (belonging)

11. Maslow’s Hierarchy

12. Comparison of Motivators and Hygiene Factors Percentage Frequency Low Satisfaction High Satisfaction 40 30 20 10 0 10 20 30 40 Hygienes • Policies • Tech. Supervision • Salary • Interpersonal Relations • Working Conditions • Motivators • Achievement • Recognition • Work Itself • Responsibility • Advancement

13. Career Stages • Does everyone go through these stages? • What can be done to address the concerns of salespeople at each stage?

14. Exploration Stage • Motivational Needs • Learning the skills required to do the job well. • Manager Role?

15. 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

16. Establishment Stage • Motivational Needs • Use skills to produce results, increase job autonomy • Manager Role?

17. 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 somethingother than promotion

18. Maintenance Stage • Motivational Needs • Develop a broader view of work and organization, maintain a high level of performance • Manager Role?

19. 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

20. Disengagement Stage • Motivational Needs • Establish a stronger self-identity outside of work,maintain performance level • Manager Role?

21. 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)

22. 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?

23. Overlap of Ages on Career Stages AgeRange 20 30 40 50 60 65

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

25. Giving Status to Salespeople • Field Sales Council - meet president for 1/2 day open-ended discussion on field marketing conditions - report back to field meetings the results • Outside Secretarial Support- or more exclusive central. • Published Success Stories- high form of recognition • Task Force Assignments- e.g., review of all paperwork.

26. 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.

27. Expectancy Theory System EFFORT PERFORMANCE REWARD EXPECTANCY Likelihood increasedeffort will lead to greater performance INSTRUMENTALITY Likelihood greater Performance will lead to more rewards VALENCE Importance of receiving More of certain rewards

28. 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?

29. Role Perceptions • Sales is a boundary spanning position- you must be responsive to expectations of multiple people. Company Sales Manager Customers Family

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

32. 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?

33. 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

34. 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

35. Why Use Quotas • Help motivate salespeople. • Direct where to put effort. • Provide standards for evaluation. 1. Sales volumein 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.

36. Various Types of Quotas 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 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?

37. 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.

38. 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.

39. Who am I?

40. Sales Force Experiment

41. 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.

42. Incentive Program Decisions • What is difference from regular compensation such as commission? • Key decisions • Goals Rules • Timing Awards • Participants Publicity • Theme Cost • What is difference between Incentive and Recognition programs

43. Types of Incentive Awards

44. Small firms’ Sales < $40M Large firms’ Sales > $40M Figure 13-7:Use of the Various Types of Quotas 60% Sales Volume Quota Profit-based Quota Activity Quota 55% 32% 14% 28% 14%

45. Experiential Exercise 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.

46. Experiential 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.

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

48. Chapter 13 Why the concern for sales force motivation? What are the different theories of motivation? Motivation Tools Self- Management Quotas Incentive programs Recognition Programs

49. Figure 13-5:Model of Motivation Valence Importance of receiving more of certain rewards Effort Performance Rewards Expectancy Likelihood that increased effort will lead to greater performance Instrumentality Likelihood that greater performance will lead to more rewards

50. Figure 13-6:Self-Management Techniques