SM

SALES MOTIVATION
Module – 4
 Sales Force Motivation & Compensation :
Nature of Motivation, Importance, Process
and factors in the motivation
 Compensation : Meaning, Types,
Compensation plans, and evaluation of sales
force by performance and appraisal process.
 Sales Management Job : Standard Sales
Management process, international Sales
Management, international market selection,
Market survey approach or strategy.
 Motivation is the force within us that directs
our behavior.
 Motivation is that element of the salesperson
that stimulates him to increase the efficiency
of his work and thus achieve higher goals.
 It implies any emotion or desire that
energizes, activates, moves, directs or
channels behavior towards a goal.
 Performance (P) = Ability (A) * Motivation (M)
 All the conscious behavior of individuals are
either motivated or inspired.
 It is a psychological phenomena which generates
within an individual. It develops the mental power
of an individual and motivates him to perform
better.
 It is an ongoing and continuous process. Human
wants are unlimited. As soon as one particular
want is satisfied another one takes its place. Also
all wants cannot be satisfied at the same time.
 The entire system of the individual reacts to the
motivation. Each individual is a self contained unit
and his needs are inter related.
 Goals form a part of the motivation process. Goal
achievement results in the satisfaction of want.
Thus goal achievement ends the motivation
process.
 Motivation can be either positive or negative.
Positive motivation is based on reward.
Negative motivation is based on force or fear.
 Motivation involves arousal, direction and
maintenance of behavior towards a goal.
 Goal directed leads to certain rewards, the
individual likely to repeat the behavior again
and again.
 Achieved through compensation and reward
system.
 Satisfaction as a differentiating factor for
degree of motivation is also difficult to
measure.
 An organization’s effectiveness is a function of the
managerial ability to motivate the sales employee for
achieving sales goals.
 Nature of job itself if strong source of
demotivation(prospecting, presentation and
demonstration - monotonous)
 Frequent travelling – Salesperson face domestic problems.
 Sales organizations serve as a resource pool and nurture
the talent of employees. If motivation issues are not
properly taken care of, the organization may miss the
talent pool.
 A sales manager has to find the sources of motivation and
designs systems and procedures to motivate employees to
remain committed by identifying the sources of
demotivation and developing a reward system.
 Motivational programme by sales manager
can discover and utilize the hidden talents of
the sales personnel and help in doing their
jobs better.
 Positive motivators are introduced to
stimulate the salespeople so that they can
commit more than what they can at any point
of time. The salesperson will get job
satisfaction and the sales organization will be
benefitted by a higher goal achievement. This
kind of mutual benefit will create a win-win
situation for both the organization and the
sales people.
MOTIVATION EFFORT PERFORMANCE REWARDS SATISFAC
TION

 This model says that the higher the

salesperson’s motivation, the greater is his or
her effort. Greater effort will lead to greater
performance and greater performance will lead
to greater rewards and this will lead to greater
satisfaction which will reinforce motivation.
 The process of motivation starts when a motive
prompts people to action. Motives are the primary
energizer of behavior and explain the reasons of
behavior.
 Motives arise continuously and determine the
general direction of the salesperson’s behavior.
◦ Primary –Physiological
◦ General – to increase stimulation (curiosity, manipulation and
affection(interpersonal, intra-individual and rational ))
◦ Secondary – elements society.
Motive

Motivation Process
Behavior Tension
reduction

Goal
 The behavior of the salesperson comprises a
series of activities that the person does by
being motivated to achieve individual and
organizational goals. The salesperson’s
motives are directed towards goals and very
often create a state of disequilibrium.

 These stages of disequilibrium may arise due

to the imbalances between the physiological
and psychological states of the salesperson.
The behavior of attaining goals tends to
restore the balance.
Motives are the drivers for the behavioral action of the
customers.
 Principles: Designing motivational programme.
Example: The sales manager should follow certain
principles while designing a Berger Paints, with a sale
of Rs. 1000,000 during the festive season, a
salesperson irrespective of territory is eligible for a
holiday package in Goa.
 Security : Every motivational programme should aim at
providing a sense of security to the salesperson so that
the apprehensions about future will come down and he
will be able to contribute without looking at issues
related to his basic survival and satisfaction of
physiological needs. Tata AIG, for eg., has a
motivational programme in which a majority of the
salespeople receive incentives in the form of cash for
achieving the quota level.
 Achievement : The salesperson must know in
advance the achievement that he will have from
the motivational programme so that he will put
more effort into achieving the desired goal.
 For eg., LIC has a motivational programme for its
agents called the ‘crorepati agent scheme’, which
involves an appreciation and citation to the sales
agents for achieving the sales of Rs. 1 crore.

 Approval : Salespeople also look for social

approval and they expect that the good work by
them should be praised, approved and rewarded
by the sales manager.
 For eg., Companies as a motivational tool take
successful people on a cruise with the CEO and
the top brass of the company, which is a
motivator for employees to spend time with the
top management.
 Loyalty : On completion of a number of years in the
company, salespeople are felicitated and functions
are held to appreciate and recognize the loyalty of
the employees.

 Advancement : Develop and grow career by taking

higher job responsibilities. While designing the
TATA Indica brand of car, people who did
pathbreaking product and component design were
given advancements (expansion/development) in
their career.

 Leadership : Most information technology

companies and business process outsourcing firms
select brilliant workers and make them team and
project leaders, so that they get motivated to
contribute more to the organization.
 Personal characteristics including the
individual’s satisfaction with the current job,
the demographic variables, experience in the
job, and psychological variables including the
personality traits.
 Environmental conditions including the
variations in territory potential and the
strength of competition.
 Organizational factors are the type and nature
of sales supervision, span of control within the
organizational hierarchy, leadership styles
followed in organizations, methods and types
of communication in vertical and horizontal
dimensions and the incentives and
compensation policies.
 There are four stages through which salespeople
progresses during their career, namely
exploration, establishment, maintenance and
disengagement.
 The new recruits are in the stage of exploration
and they tend to have the lowest expectancy in a
firm’s sales force.
 In the establishment stage, salespeople have
settled in an occupation and wish to develop that
occupation into a successful career and believe
that their success will be rewarded.
 In the maintenance stage, the salesperson is 30-
40 years of age and his primary concern is
retaining the present position, status and
performance level.
 In disengagement stage, the salesperson is of 50-
60 years of age and spend time in attaining
higher order rewards such as recognition and
personal development.
JOB CHARACTERISTIC
COMPONENTS
Challenging Job, Fulfilling oneself by
creativity and maximum use of
achievement in work; skills and abilities;
Self-
Job title, responsibility, Actualization Achievement,
recognition and adequacy and
promotion;
Self-Esteem competence;
Needs
Amount of liking and Love, affection and
belongingness;
response from others; Social Needs
Job Security and fringe Security, stability
and protection;
benefits; Safety and Security Needs
Financial Food, drink and
Compensation, Heat, other primary
air conditioning,
Physiological Needs needs.
cafeteria.
Maslow identified basic five level needs:
 Physiological needs : Basic needs which relate to
the maintenance of human life like shelter/food,
clothes, etc.
 Safety needs : These include safety as well as
security, i.e, the assurance of maintaining a given
economic level through job security/provident
fund/ insurance etc.
 Social needs : These correspond to affection and
affiliation. Organisation can influence these needs
through supervision, communication, work group
etc.
 Self-esteem needs : Need for power,
achievement, status, independence, competence
etc.
 Self-actualization needs : It involves realizing
one’s potential for continued self development
and for being creative.
 Urge to fulfill needs is a prime factor in
motivation.
 Human needs are complex, multiple and
inter-related.
 Human needs can be arranged in a hierarchy.
 Needs will be fulfilled in successive order
from lower to higher.
 As soon as one need is fulfilled, another need
emerges.
 A satisfied need does not help in motivation.
Rather, unsatisfied needs are motivational
stimulators.
 Herzberg concluded that job satisfiers are
related to job contents (inside/stuffing) which
act as ‘motivators’ and are thus called as
‘Motivational Factors’.
 On the other hand, job dissatisfiers are related
to job contexts(environment/ circumstance/
surroundings). Their presence provides no
motivation but their absence causes
dissatisfaction. Therefore, they are called
‘Dissatisfiers or Hygiene Factors’.
DISSATISFIERS/HYGIENE MOTIVATIONAL FACTORS
FACTORS(extrinsic) (intrinsic)

1. Company policy and

administration 1. Achievement

2. Technical supervision 2. Recognition

3. Interpersonal relation with 3. Advancement

a) Supervisors b) Peers c)
Subordinates 4. Work itself

4. Salary, Job security 5. Possibility of growth

5. Personal life, Status 6. Responsibility

6. Working conditions
 Feelings of unhappiness or dissatisfaction were
due to the environment or job context whereas
feelings of happiness were due to job contents.
 It is necessary to maintain hygienic factors at a
specific level because their absence leads to
dissatisfaction.
 While the absence of motivational factors does
not affect performance, their presence
definitely leads to improvement in the
performance.
 The above stated factors are unidimensional
i.e.they flow only in one direction.
 The key to job satisfaction and high
performance lies in job enrichment.
Alderfer formulated a need category model with
three main core groups :
 Existence Need (E) : Concerned with survival,
i.e., physiological and biological needs, and
safety needs.

 Relatedness Need (R) : Importance of

interpersonal and social relationships.

 Growth Need (G) : These are concerned with

the individual’s desire of self esteem and self
actualization.
 It is an extended but brief model of Maslow’s
hierarchy.
 Consider the overlapping between various
need levels, i.e., no need is separated by the
other with clear demarcation (separation)
 ERG needs do not have strict lines of
demarcation.
 He distinguished between chronic needs
which persist over a period of time and
episode needs which are situational and can
change.
He developed a model of motivation which is
based on the three types of needs:
1. Need for Achievement : A drive to excel,
advance and grow.
2. Need for Power : A drive to influence others
and situations.
3. Need for Affiliation : A drive for friendly and
close interrelationships.
On the basis of these needs he defined three
types of motivation :
 Achievement Motivation : Desire to do
something better or more efficiently than it
has been done before is the drive behind the
achievement need.
 Power Motivation : This motivation supports
the need for power which aims at making an
impact, to be influenced and to control others.
 Affiliation Motivation : This motivation is due
to the need for affiliation which is being liked
and accepted by others. It is a drive to relate
to people on a social basis.
Process theories:
 Equity theories:

 Expectancy theories:

Reinforcement theories:
 Hull’s drive theory

 Skinner’s Reinforcement theory

 A sound compensation plan will motivate
salespeople to enhance their performance and
achieve higher targets for the organization.
 The compensation plan should encourage realizing
larger sales, bringing stability to sales, and
controlling the performance of the salesperson.
 A good compensation plan is also vital for the
organization, society and nation.
 It contributes to the growth and success of the
organization and brings cash to the organization.
 The society is benefitted in the process of creating
more job opportunities and delivering higher
standards of living.
 To attract quality salespeople
 Also help to improve the productivity level of the
existing salespeople in the organization.
 Also helps in optimizing the sales effort by the
salespeople and maximizes the sales, reducing the
sales expenses and also the production cost.
 A good compensation plan helps in retaining
quality manpower and reducing the attrition rate in
the organization.
 A good compensation plan also establishes a good
rapport between the sales force and the sales
supervisors and managers in the company and the
salespeople try to present a better image for the
company.
 .
 The reward system should address the short-term
as well as the long term issues of the salesperson.
While survival is a short term issue for the
salesperson, recognition and growth in the
company and career are the long term issues for a
salesperson.
 The sales compensation plan should address the
fair wage to the salesperson.
 The salary should have a fixed component and a
regular flow of income so that the salesperson can
maintain an average standard of living.
 A sound remuneration plan should be based on
the principles of equity and equality.
 Economical for the organization.
 Flexible- environmental undergoing changes and
competitors are changing in response to change.
 Financial Compensation : The financial compensation
plan includes a fixed component, a variable
component linked to the salesperson’s productivity,
expenses and fringe benefits. The variable component
in the form of commission, profit sharing or bonus
helps the sales manager in stimulating higher
productivity from the salespeople.
1. Straight Salary Plan : It can be a fixed salary plan in
which the salespeople receive fixed payments in
regular intervals (weekly, monthly or fortnightly) for
their services. It can also take the form of salary and
increment plan in which the salesperson receives
payments on a grade at the time of appointment and
receives annual increments. In salary and allowances
plan, the salesperson receives travelling allowance,
meals and medical allowance in addition to his
monthly fixed salary.
2. Straight Commission Plan : This is the method
of compensation in which the compensation of
the salesperson is linked directly with his
performance. Under this method, the salesperson
is paid some fixed or sliding rate (slabs for levels
of sales performance) according to their sales or
profits volume.
3. Bonus and Incentive : A bonus is defined as one
sum supplemental payment for above average
performance. Though it can be paid at any point
of time, many companies pay them at the end of
the financial year. Incentives are also
supplemental compensation that allows the
salespeople to perform the desired activity to
earn additional income. They are always tied to
the sales quota.
4. Salary plus Incentive Plan (Combination Plan) :
Many companies follow a combination plan
where a part of the income is given as straight
salary and a variable proportion is given in the
form of incentive. It helps the sales manager to
obtain some control, and provides for a lot of
incentives for the sales force and enough
flexibility to motivate and reward performance.
5. Allied Methods : In the ‘profit sharing’ method,
the company shares a part of the profit with its
sales staff and sometimes distributes the equity
holding of the company in the form of earned
share to increase the stake of the salespeople in
the organization. This method helps to establish
a sense of ownership and cordial relationship
with the salespeople.
 Promotions : Majority of the salespeople need
recognition in the form of promotion for their
continued success and commitment to the
organization. Job enrichment and additional
responsibilities across the departments also
enrich a salesperson’s career and motivate
him for higher goals.
 Recognition Programmes : These are
programmes designed to honour individual
salesperson’s contributions and recognize the
excellent performance. In GE capital and other
GE companies in India, the salespeople who
excel are awarded medallions for their
outstanding contributions.
 Fringe Benefits : Fringe Benefits are
employment benefits in addition to the salary
and wages paid to the sales staff. These
include medical benefits, retirement benefits,
life insurance and other forms of employee
motivation tools like stock options and profit
sharing. The other fringe benefits include the
leave travel concessions (LTC), paid vacations,
sick leave, and maternity or paternity leave.
 Expense Accounts : Expense accounts are
compensation plans that are designed to
compensate sales personnel for the expenses
they incur on the job like travel expenses,
lodging expenses, food expenses, telecom
expenses etc.
 Perks : Perks are a special category of
compensation available to employees with some
special status or expertise in the company. Perks
are classified as status perks (office location, job
title, parking space etc.), Financial perks (use of
the company vehicle, expenses of their support
staff such as drivers and gardeners and club
memberships) and personal growth perks (paying
for additional education or sending the
salespeople for motivational or training programs).
 Sales Contests :Sales organizations organize sales
contests for the salespeople to stimulate sales.
These programmes are organized to counter the
competitive moves in the market, to offload the
inventory in the off-season and to gain sales force
commitment for an additional product launched.
1. Determine sales force and compensation
objectives
2. Determine Major compensation issues

3. Implement long term and short term

compensation plans
4. Relate rewards to Performance

5. Measurement of Performance

6. Appraise the compensation plan

 Performance appraisal is the process of evaluating
the performance and qualifications of the sales
force in terms of the requirements of the job to
ensure effective administration, including the
selection for promotion, rewards and other
recognitions in the organization.
 The appraisal system should not include
characteristics like an individual’s age, gender,
and stage in the life cycle as these parameters are
irrelevant.
 The developmental aspects of the appraisal
system is based on the proposition of improving
their sales performance, strengthening job skills,
counselling and undertaking training programmes
for them.
 Deciding on the criteria for
measuring performance

Deciding on the conduct of the

performance appraisal

Deciding on evaluation of
individuals and teams

Comparison of actual
performance with standards

Deciding on the frequency of the

performance appraisal

The external variables and their

influences
 Relative and Absolute Judgements : In the
relative judgement method, the sales manager
is asked to compare the salesperson’s
performance with that of other salespeople on
the job. Another method classifies salespeople
into groups such as top three, middle bracket
and a lower set.
 Trait-based : Trait appraisal instruments are
used by sales managers to make judgements
about a salesperson’s traits and selling
characteristics that tend to be consistent and
enduring. The most commonly used traits for
this purpose are decisiveness, reliability,
energy and loyalty.
 Outcome-based : Performance criteria based
on outcomes measure the results of the selling
process. Some of the outcome instruments that
allow managers to assess the results achieved
by the sales force are the amount of sales,
number of products sold in units or volumes,
profitability as net margins, and sales expenses
as a ratio of cost to sales.
 Behavior-based : These ratings assess the value
of the behavioral measures such as product
knowledge, presentation quality, closing ability,
service performed, the number of active
accounts and relationships with customers.
 Call Reports : Call reports are also used to
evaluate the salespeople. Call reports are
periodic accounts and customer statements
prepared by salespersons of how they are
dividing their working time between various
aspects of the job like prospecting,
demonstration and follow-up. These reports
help the sales management in recording the
status of the customer dealing and sales
realization and in finding out the process
involved in serving a customer.
 Silent Call Monitoring Scores : Silent call
monitoring scores consist of a sales manager’s
rating of the salesperson’s performance during
actual calls to the customers. The rating can cover
a wide range of issues like greeting, ascertaining
customer needs and demands, courtesy and the
level of communication and listening skills.
 Activity Reports : Activity reports explain the
unusual events and incidents that occur in the
field as reported by a sales manager and
salespeople, including peers. This includes events
like the launch of a major price war by the
competitor, increase in the dealer push money of
the competitor, entry of a new competitor,
changes in the purchase practice of the
customers, a change in the decision-makers at
the customers place resulting from a transfer,
promotion or movement of the purchase
manager.
  Combinational Methods : In a combination
plan, a sales manager evaluates the overall
performance of the salesforce on the basis of a
combination of outcome and behavior-based
rating models. These include the work
experience, sales aptitude, and level of
knowledge related to the company.
S.N Name Total calls Total Average Total Customer
o. made sales sales Satisfaction
per Index
contact
1. John

2. Deep

3. Subrat
 Conduct of Performance Appraisal : A sales
manager can either conduct a performance
appraisal or the salespeople can do a self-
appraisal. The primary evaluator should be the
immediate supervisor of the salesperson in the
organization since the immediate supervisor has
the knowledge of the salespeople, his territory, and
work experience as a salesperson himself.
 Individual versus Team Appraisal : Most of the
performance appraisals are done on an individual
basis. The appraisal systems are developed to
evaluate the contribution of each member of the
sales force towards organizational objectives. Many
organizations have built up a culture of team-
based selling, where team appraisal is done.
 Frequency : Performance appraisal of
salespeople is undertaken on an annual basis.
However, more and more organization’s now
measure the performance of salespeople on a
quarterly basis.
 Influence of External Variables : The most
common influencing factors are the legal and
ethical issues involved in evaluation.
 Examine Job Descriptions

Set up specific objectives

Decide levels of pay /

compensation

Develop the compensation

mix

Decide indirect payment plan

Pretest, administer and

evaluate the plan
Step 1 •Training Need
Assessment

Step 2 •Design and conduct of a

training program

Step 3 •Evaluation of a training

program
 Personal Selling:  Sales
 The face-to-face Management:
interaction  Provides leadership
between a seller and supervision of
and a buyer for an organization’s
the purpose of personal selling
satisfying buyer function.
needs to the
benefit of both
 Market analysis and sales forcasting
 Personal Selling
 Selling on Internet
 Closing a sale
 Organising and managing the sales force
 Motivation and compensation and training
 Guiding salesperson
 Formulation of strategy -
 External environmental and internal competencies and
resource analysis
 Implementation of strategy
 Evaluation and control
 International marketing is the process of
planning and conducting transactions across
national borders to create exchanges that
satisfy the objectives of individuals and
organizations" (Czinkota and Ronkainen)

International Marketing Decisions

 Deciding whether to go abroad
 Deciding which markets to enter
 Deciding how to enter the market
 Deciding on the marketing program
 Deciding on the marketing organization
 Technology
 Culture
 Market Needs
 Costs
 Free Markets
 Economic Integration
 Peace
 Strategic Intent
 Management Vision, Strategy and Action
Basic level functions:
 Training

 Evaluating

 Planning

 Compensation

Advanced level functions:

 Strategic account management – systematic analysis of
the factor associated with customer
 Conducting negotiations
 Arranging agreements with distributors
 Developing relations and network locally
Economic environment
Tariff barriers Legal environment
 Specific,
 Partnership laws
 Anti-Corruption laws
 ad - valorem,
 Intellectual property
 compound rights

Non-tariff barriers Cultural environment

 Regulatory,  Language
 industry,  Religion
 cultural  Education
 Social attitudes &
behavior
Other economic factors
 Exchange rate fluctuations
 Restrictions on profit repatriation
 Credit control etc.
1. Firm related factors
 Ethnocentric: everything is centred on the
domestic market.
 Polycentric: several important foreign markets
exist.
 Regiocentric: the market is composed of
several large economic regions.
 Geocentric: the world is one large global
market.
2. Market related factors Other Factors
 Political restrictions
 Special requirements
General factors
 Product specification
 Economic factors
 Distant location
 Business regulations  Market accessibility
 Political factors  Business community

Specific factors
 Trends in domestic market
 Trends in export and import
 Nature of competition
 Supply conditions of raw
materials
Market Selection Process

 International marketing objectives

 Commercial Parameters for production
selection
 Preliminary Test marketing screening
 Evaluation and Short listing of selection
markets
Personal selling process
Preliminary selling
 Identify prospects

 Approach

Advanced selling
 Sales interview

 Flexible presentation

 Product demonstrations

 Handling objections

 Close

 After sales techniques

Time and territory management

 Proper routing & scheduling
STRUCTURES FOR INTERNATIONAL SALES
ORGANISATIONS

Long distance selling

 Common in highly specialized industries like
Aircrafts, defence…

Manufacturer’s Representatives
 High level of control
 Prerequisites for selection
 Legalities related to selection and termination
 Training aspects and support programs
Continued…
Piggybacking
 Low cost entry
 It involves a rider(more established brand) and
a carrier(new entrant)
 Whirlpool and Sony, AT&T and Toshiba in
Japan
 Sometimes it can be a reciprocal

Intermediaries
 Merchants
 Independent agents
 Facilitating intermediaries
 Transporting and warehousing
 Market research/advertising
Continued…
Establishing direct sales force abroad
 Useful when greater commitment and control is
needed
 Sales force structure (standard or customized)
 Size of sales force
 Market similarities

 Company operations
 SELECTION OF SALES PERSONNEL'S
Education
 In Germany PHD holders are selected to sell
chemical equipments
 Pfizer selects MBBS candidates to promote
their specialty product in India.
Religion
 Muslims- Buddhist in Malaysia, Indonesia,
Hindu Muslim in India and Pakistan, Sunni
and Shia in middle east.
Social satisfaction
 USA health based, India caste based, sonority
in japan.
 Different criterions and different products
and industries.

Social economic development

 Education, religion , nepotism, talent,
references psychological test plays different
roles in different countries.
 Strict codes of ethics for sales people.

 Sales managers must take responsibility for

the proper behavior of their salespeople,
and they must lead by example.

 Salespeople should be honest in their

dealings with customers and be informed
of relevant laws governing their business
situation.
 Exaggerating features and benefits
 Lies about availability
 Lies about competition
 Sells something people don’t need
 Giving false answers to questions
 Falsifying product testimonials
 Passing blame for their own mistakes
 Pose as market researcher when doing phone sales
 Misrepresent warranties & guarantees
 Make nonbinding oral promises
 Bending company rules
 Selling dangerous or hazardous products
Immoral Management
◦ Intentional and consistent management activity
conflicting with what is moral (ethical).
◦ Exploits opportunities for corporate gain. Cut corners
when it appears useful.
◦ Seeks profitability and organizational success at any
price.
◦ Selfish. Management cares only about its or the
company’s gain.
Amoral Management
 Management activity that is neither consistently
moral or immoral . . . Decisions lie outside the
sphere to which moral judgments apply.
 Give managers free rein. Personal ethics may apply
but only if managers choose. Respond to legal
mandates if caught and required to do so.
 Seeks profitability. Other goals are not considered.
 Well-Intentioned but selfish in the sense that impact
on others is not considered.
Moral Management
 Management activity conforms to a standard of
ethical or moral behavior.
 Live by sound ethical standards. Assume leadership
position when ethical dilemmas arise. Enlightened
self-interest.
 Seeks profitability within the confines of legal
obedience and ethical standards
 Management wants to succeed but only within the
confines of sound ethical precepts.