MKT
Moh-993
MKT430-Chapter17.pdf
Motivation, Compensation, Leadership, and Evaluation of Salespeople
Chapter 17
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 4-1
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The Basic Sales Management Functions
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The Motivation Mix: Choose Your Ingredients Carefully
Exhibit 17.1: Sales Manager’s Motivation Mix
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Compensation Is More Than Money
▪ Sales performance can be rewarded in three fundamental ways:
✓ Direct financial rewards
✓ Career advancement
✓ Nonfinancial compensation
▪ Although a sales reward system is not the only means of motivating salespeople, it is the most important
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Three basic plans of financial compensation
➢ Straight salary plan
➢ Straight commission plan
➢ Combination plan
Compensation Is More Than Money
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❑ Straight salary plan: salesperson is paid a specific amount at regular times.
Advantages to the salesperson
✓Regular income
✓Independent of sales performance on the short run
Advantages to management
✓Simple and economical
✓Directing selling duties that may not lead to sales (routinely calling customers)
Compensation Is More Than Money
Sales
A. Straight Salary
E a
rn in
g s
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
200000
0 2M 4M
$60,000
Disadvantages to the straight salary plan ✓ Lack of direct monetary motivation ✓ Salary adjustments are not based on specific performance
When to use the straight salary plan? ✓ Routine selling ( milk, bread, beverage ) ✓Selling technical and complex products (require long presale & post sale services and negotiation) ✓ Person in training
Compensation Is More Than Money
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❑ Straight commission plan: “If you don’t sell anything, you don’t earn anything”
Two basic elements of straight commission
✓Pay is related directly to performance
✓A percentage rate of commission is attached to the unit
Compensation Is More Than Money
B. Straight Commission
E a
rn in
g s
Sales
0 20000 40000 60000 80000
100000 120000 140000 160000 180000 200000
0 1M 2M 3M 4M
7%
Advantages of the straight commission plan ✓Maximum incentive for salespeople, so they use their sales time wisely ✓Salespeople think that they are in business for themselves ✓Selling cost are kept in proportion to sales
Disadvantages of the commission plan ✓ Discourages salespeople who has never sold before ✓ Uncertainty and insecurity for salespeople ✓ Develops little loyalty to company ✓ High turnover and recruiting, selecting and training expenses
Compensation Is More Than Money
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❑ Combination plans ▪ Salary and commission ▪ Salary and bonus: individual bonus or group bonus ▪ Salary, commission, and bonus: individual bonus or group bonus
Compensation Is More Than Money
0
50000
100000
150000
200000
0 2M 4M
E a
rn in
g s
Sales
C. Salary Plus Commission on All Sales
$60,000 + 1%
Sales
D. Salary Plus Commission Over Quota
E a
rn in
g s
0 20000 40000 60000 80000
100000 120000 140000 160000 180000 200000
0 2M 4M
$60,000 + 6% over 1.5M
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Four Basic Leadership Styles a Sales Manager Can Select From to Influence Salespeople
Leadership : is the process by which the sales manager attempts to influence the activities of salespeople through guidance.
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Exhibit 17.5: Four Basic Leadership Styles a Sales Manager Can Select From to Influence Salespeople
Describing the duties and responsibilities of an individual or group
Relationship behavior
https://www.youtube.com/watch?v=sd9pl8mZ5MY
https://www.youtube.com/watch?v=E8H_vbNQkNM
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Exhibit 17.6: A Sales Manager Can Choose One of These Leadership Styles Based on the Salesperson and the Situation
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The Basic Sales Management Functions
Evaluating the past to guide the future ▪Performance criteria ▪Conducting sessions
https://www.youtube.com/watch?v=KcGhX7Htk9U
Performance Evaluations Let People Know Where They Stand
▪ Performance criteria : the basis for evaluating salesperson ✓ Quantitative performance criteria ✓ Qualitative performance criteria
