1. Module 9 Motivation and Reward System Management1

2. Motivation and Reward Systems
Motivation - Three Dimensions:
Intensity
The amount of mental and physical effort put forth by the salesperson
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 2

3. Motivation and Reward Systems
Motivation - Three Dimensions
The motivation task is incomplete unless salespeople's efforts are channeled in directions consistent with the overall strategic role of the salesforce within the firm
Self-motivation is the ideal 2

4. Motivation and Reward Systems Intrinsic vs. Extrinsic Motivation
Intrinsically Motivated
When doing the job is inherently rewarding
Extrinsically Motivated
When rewards such as pay and formal recognition act as motivators 3

5. Motivation and Reward Systems Reward System Management involves the selection and utilization of organizational rewards to direct salespeople's behavior toward the attainment of organizational objectives
Organizational Rewards
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 4

6. The Optimal Salesforce Reward System
Balance of Organization, Individual, and Customer Needs 6

7. 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. 6

8. The Optimal Salesforce Reward System
From the Organization's Perspective
From Salesperson's Perspective
Expect to be treated equitably
Desire stability with incentives 6

9. 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 6

10. Types of Salesforce Rewards Six Most Popular Rewards (Exhibit 9.1)
Pay
Promotion
Sense of Accomplishment
Personal Growth Opportunities
Recognition
Job Security 7

11. Financial Compensation
Straight Salary
Advantages of Salary Plans
Easy to administer
Fixed costs facilitate the budgeting process
Enhanced customer loyalty
More control over nonselling activities
Disadvantages of Salary Plans
No incentive to improve performance
Often based on seniority, not merit
A burden of firms in declining industries 8

12. Financial Compensation
Straight Salary
Straight Commission
Commission Plan Variations
Commission Base - volume or profitability
Commission Rate - constant, progressive, or a combination
Commission Splits - between two or more salespeople or between salespeople and the employer
Commission Payout Event - when the order is confirmed, shipped, billed, paid for, or some combination of these events
Advantages of Commission Plans
Income linked to results, therefore an incentive to improve results
Costs reduced during slow sales periods
Less operation capital required
Disadvantages of Commission Plans
Less salesperson loyalty to company
Less control of nonselling activities 8

13. Financial Compensation
Straight Salary
Straight Commission
Performance Bonuses
Group or Individual
Typically for short-term objectives 8

14. Financial Compensation
Straight Salary
Straight Commission
Performance Bonuses
Combination Plans (Salary plus Incentive)
Financial-Compensation Mix
Advantages of Combination Plans
Flexibility allows frequent reward of desired behavior
May attract high-potential recruits
Disadvantages of Combination Plans
Complex to administer
May encourage crisis-oriented objectives 8

15. Nonfinancial Compensation
Opportunity for Promotion
Sense of Accomplishment
Opportunity for Personal Growth
Recognition
Job Security 9

16. Sales Expenses Controls used in the sales-expense reimbursement
process include:
A definition of which expenses are reimbursable
The establishment of expense budgets
The use of allowances for certain expenditures
Documentation of expenses to be reimbursed
Expense Account Padding 10

17. Additional Issues in Managing Salesforce Reward Systems
Sales Contests
Equal Pay
Team Compensation
Global Compensation
Changing the Reward System 11

18. Guidelines for Motivating and Rewarding Salespeople
Recruit and select salespeople whose personal motives match the requirements and rewards of the job.
Attempt to incorporate the individual needs of salespeople into motivational programs.
Provide adequate job information and assure proper skill development for the salesforce.
Use job design and redesign as motivational tools.
Concentrate on building the self-esteem of salespeople.
Take a proactive approach to seeking out motivational problems and sources of frustration in the salesforce. 12