Sales Management - Sales People Motivation

What Motivates the Sales People?

Sales Management

Rebecca Licacristi Budianto - 15359111 Curtin University

2011

Introduction to Salesperson Motivation

Salesperson is the key to market share. Salesperson can be said more important than the price and quality of the product. Salesperson is an essential tool to communicate the products to the consumers. Motivation can be viewed as the amount of effort the salesperson wish to spend on each activity that related to the job. Salesperson’s expectancy, instrumentality and valence of perceptions can affect the person’s willingness to expend effort on specific task (Johston and Marshall, 2011).

Motivation is important to be build and maintained in salesperson’s self to increase their job performance. One effective way to increase salesperson’s motivation is by giving them rewards such as compensation. Compensation is more than money, as the return for good efforts and performance (Futrell, 2008). This report will discuss about the implications of salesperson characteristics that makes statement about giving money to salesperson in order to motivate them and how it increase their performance. It also discuss about how the other factors will also affect the salesperson’s motivation, because anything alone will not enough.

Methods of Compensation Plans 

Compensation is a type of rewards that could be adjusted according to the business needs. Morale and job satisfaction of salespersons are affected by compensation (Johston and Marshall, 2011).  Company use compensation with aim to motivate and control salesperson. Salesperson needs compensation for secure income and getting incentive for their needs and wants. Mostly used types of compensation are straight salaries, commissions and combination plans. Straight salary, pay is independent. Mostly, salary will be given once a month, but other companies might give salary per days or weeks, according to company’s need. The negative side of giving high straight salary will results in an increase in sales expenses rather than selling effort (Futrell, 2008). Because of this, straight salary is best for non-selling activities.  

To give the commissions, company must set target for salesperson. If the salesperson could achieve the target and perform good performance, high commission will be given. The thing is, if the salespersons do not sell anything, they will not earn anything (Futrel, 2008). The salesperson has the opportunity to make as much money as they possibly can. By that, the salesperson will be more motivated to work. Combinations plans commonly use as part of the compensation package that given to group of salesperson. With combination plans salesperson might have control to manage their benefits. The salespersons are possible to expand cash value in the insurance over time. The cash amount collects with deferred tax background (World Academy Online 2011).

There are some advantages and disadvantages for the types of compensation,

Types Of Compensation	Advantages	Disadvantages
Straight Salary	·   It is secure and stable ·   Salesperson become loyal and satisfied ·   It has low turnover ·   Salesperson has consideration to customer’s interest	·   There would be no direct incentive ·   The incentive would be incompetent ·   Has a fixed cost
Commissions	·   It has endless income opportunity ·   It would be a strong motivation factor ·   Effective work performance by the salesperson	·   Disrespect company’s interest ·   Salesperson will be more focus on items that easy to sell ·   Salesperson has to be responsible for their charge backs, eg. Taxes.
Combination Plans	· Provide certain level of financial security · Provide some incentive	·   Unpredictable sales expenses ·   Difficult to administer

Extrinsic and Intrinsic Motivation

Extrinsic motivation comes from outside an individual, controlled by others and cash bonus given. Extrinsic motivation drives salesperson to do their work for the rewards without fun of it. Intrinsic motivation comes from inside an individual, self-motivation. Intrinsic motivation drives salesperson to do things for their satisfaction which lead to longer-term effect (Manning and Reece, 2007). They feel and believe that it was a good thing to do. Each of them might be a powerful motivator depend on the personality of the individual.

Extrinsic Rewards	Intrinsic Rewards
Incentive payments	Achievement
Fringe benefits	Feelings of completion
Formal acceptance	Informal acceptance
Work environment	Job satisfaction
Promotion	Personal growth
Social relationship	Status

Extrinsic rewards are rewards that expected by salesperson but do not attend their personal satisfaction. Intrinsic rewards are an outcome that allows single private pleasure such as a feeling that creates by a well result performance. The table below will compare the extrinsic and the intrinsic rewards,

Implications to Salesperson Motivation                                    

Money is the motivator for the salesperson, but certainly, it is not the only one factor. As a human, needs can never be satisfied, how much money is never enough. Money is not a strong motivation, but it is important. Expectancy, instrumentality and valence of rewards are the factors of salesperson individual’s motivation to expend efforts on any particular activities.

Expectancy is a belief that efforts will result in better performance, link effort and performance. Instrumentality is a belief when salesperson perform well they will get value result for sure, link performance and reward. Valence of rewards is the perceptions of the benefit of obtaining improved performance on some range. The implications, company is responsible to increase salesperson performance and salesperson that performs well must be rewarded for their performance. The company should arrange interesting and challenging jobs and the salesperson motivations level must be frequently pump-up through various ways such as questionnaires and more (Jensen, McMullen and Stark, 2007).

Maslow’s Hierarchy of Needs

Regarding to the theory, lower-level needs are current source of motivation for salesperson. People unlikely to move through the needs hierarchy before their current needs are fulfilled. Self-Actualization needs are about self-development and realization. Esteem needs is about self-esteem, recognition and status. Belonging is about sense of belonging and love. Safety is about feel secured and protection. Physiological needs are about hunger, thirst and sex (Goetsch and Davis, 2010).

As a human, salesperson is motivated by unsatisfied needs and how the commitment to fulfill the unfilled needs is the thing that drives human beings into actions. Salesperson is motivated by their physiological needs, for example, need to eat, feel warm, clothes, which all require amounts. Because they need money to live comfortably, the salesperson will be motivated to work and performs a good job to get money. When they reach esteem level, the need is different and so the motivation. To increase their status or being well known, they will be more productive in their activities which also lead to greater amount of money they earn and so on.

Herzberg’s Theory

Motivation factors include achievement, recognition, responsibility and more. This factor deal with job content and lead to job satisfaction. In job content, when the factors are not present, salesperson tends to be dissatisfied. When salesperson dissatisfied, they tend to reduce productivity with not put any extra efforts to perform well. The salesperson who is satisfied will put more efforts and increase performance.

Hygiene factors include supervision, working conditions, job security and more. Deal with job context and lead to job dissatisfaction. When salesperson think that the factors are acceptable, salesperson tend to be not dissatisfied, productivity will stay at normal level. But when salesperson dissatisfied, they tend to reduce performance (Dahiya, 2011). The implications, there should have sufficient challenge to utilize full potential of the salesperson. Salesperson that succeeds to increase levels of performance should be given higher responsibility.

Other Influencing Factors

Personal Characteristics

People with certain characteristics are easy to understand the job and companies’ policies very well. This type of salesperson will be easy to train so they motivated to expend more effort on their job. The other personal characteristics are related to rewards salespersons’ value. The sales-manager has to know well the characteristics of their salesperson so that can determine their related valences to various rewards when arranging compensation and incentive programs. For example, when demographic of salesperson change, manager should be ready that salesperson’s satisfaction might also change in future.

Job Satisfaction

It is the key to all successful company with great salesperson performances. The five tools that affect salesperson motivations and emotions are: support for making progress in the work, recognition for good work, incentives, interpersonal support and clear goals. The most important factor in motivating salesperson among these five is, recognition for good work, make the salesperson happy (Amabile and Kramer, 2011). By developing SMART company’s goals, make the salesperson work more meaningful.

Summary and Conclusion

Money is important to motivate the salesperson, but money alone is not enough. Money that motivate one salesperson may not motivate the other. Similarly, salesperson’s self-motivation alone also not enough. The perfect combination of self-motivation and money, is the best way to motivate salesperson mentally and physically. Moreover, using different tangible and intangible rewards to provide an attractive entire package for current and future salesperson, will expresses the company value capacity to its salesperson.

The main aim of giving money is, rewarding the right people the right amounts, for doing the right things. By this, salesperson will be motivated to perform a better job in positive way. Because they know it will lead them to be able fulfilling their needs and wants for their life.

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