Facing numerous challenges such as the constantly changing business environment, swift entrance of competitors, rapid advancement of technology and the ever changing mindset of trends, fragmentation of traditional customer bases; organisations today need to realise the crucial need to develop proper sales management techniques in order to remain profitable and sustainable. Sales management techniques do not plainly include selling products to customers but also consist of adequate leadership and supervision, well-organised recruitment and selection practices, superior sales training programs for employees, motivation for the sales force as well as evaluating their effectiveness. These techniques are interlinked and would affect the effectiveness of the entire organization's sales processes.
Selling is one of the most vital aspects in the organisation because it generates revenue and profits which in turn enable it to remain competitive in the market and encourages growth. Therefore, the selling team of the organisation must be placed in high importance and be constantly motivated in order to drive their efficiency and effectiveness. A successful organisation must also realise the significance of goal setting in terms of long and short term sales objectives which must align with their strategic goals. It will then be clear to the sales team that incentives and recognition would be attained when they achieved their targets/goals. This is known as motivation for the sales force, which may seem straightforward but in fact takes much effort from the managers to comprehend. This report will therefore elaborate on the motivation and rewards techniques in order to accomplish a successful sales environment for the organisation and its employees.
Sales Force and its importance
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Sales force or personal selling is defined as personal communication with an audience through paid personnel of an organisation or its agent in such a way that the audience perceives the communicator's organisation as being the source of the message. It is known to be one of the most vital aspects of marketing communications for most business firms. According to Ingram, LaForge, Avila, Schwepker Jr. & Williams, the main contribution of sales force includes sustaining the overall economy, the diffusion of innovative products and services to members of the society, churning revenue for the organisation, feeding organisations with market research and feedback from their job as well as building trust and establishing long term relationship with customers. (Ingram, LaForge, Avila, Schwepker Jr., Williams, 2008).
Personal selling was traditionally known to be applied in higher involvement products because of the further knowledge required from customers. It is especially true for business to business (B2B) transactions due to the bulk purchases and complex products involved. However, due to the evolution in business environment, consumers are demanding for more personalized services and specialized knowledge on products; hence personal selling has gained importance in business to consumer (B2C) segments as well. (Ingram, et al., 2006)
As mentioned above, a strong and efficient sales force is a crucial asset to every organisation, whereby it aids in the smooth realization of sales target and ensure continuous sales productivity. (Spiro, Stanton & Rich, 2007) An incompetent sales force hinders with the progress and profits that an organization can make, thus eventually losing competitive edge in the long run.
Tasso (2009)suggested that salespeople need to understand the customer and his requirement, forming certain kind of interaction or bond before pushing the product. In other words, a sales force is the representative of the organisation to inform consumers of the availability or existance of the products and services, whereby a capable salesperson will deem to fit the needs and objective of the customer instead of selling blindly. Once the fit has been made to customer, it is also important for the sales force to create positive relationship in order to boost the organisation's profit and remain sustainble in the long run.
Today, many businesses have started to follow the trend of technology, publishing advertisements on their websites instead of trade papers, or concentrating on digital formats for sales leads. This leads to a question of was it too impersonal and technical has been raised. Bill Kupper, ex president of BusinessWeek Group stresses that nothing replaces the face to face sales call, which is important to meet the top client decisionmaker face to face in the office and being able to gain knowledge on his likings just by looking around there. (Crain, 2009)
Always on Time
Marked to Standard
Hence, even in this modern age of technology ruled business world, a capable sales force is still essential to an organisation which technology cannot fulfil in terms of personal touch and face to face interaction; which further accentuates the value of personal selling.
Motivation is a fundamental phase of sales management because it pushes people to achieve high levels of performance via reward processes and practices which enhance commitment, job engagement and positive discretionary behaviour can be developed. (Armstrong & Stephens, 2005)
Motivation is a complex subject which is not easy to define, classify and measure due to individuals are motivated differently as a result of particular ancestry, background and experience. (Shapiro & Doyle, 1991) Through 60 years of research, Ritchie & Martin (1999) derived at the definition "Motivation is the drive behind the satisfaction of basic human needs and that such drives are specific to the individual."
Figure 1: The process of motivation
From the process of motivation diagram above, it can be said that a well motivated sales force are those with clearly defined goals who take action that they expect in order to attain thier goals.
Armstrong & Stephens (2005, as cited in Herzberg, 1957) suggests there are two types of motivation, desribed by Herzberg as intrinsic and extrinsic motivation. The figure below states the differences:
Type of motivation
'Motivation through the work itself'
Sales force feels that work they do is:
Autonomy or freedom to act
Belief that the work is significant
Able to develop skills and abilities
Opportunities for advancement and growth
Done to or for sales force to motivate them
Rewards such as increased pay, recognition, praise or promotion
Also can be punishments such as disciplinary action, withholding pay or criticism
Figure 2: Types of motivation
Armstrong & Stephens (2005) further implied that extrinsic motivators can have an immediate and powerful effect which will not necessarily last long whereas intrinsic motivators are more likely to have a deeper and longer-term effect because they are inherent in individuals and not imposed externally. Both motivators play crucial roles in the motivation process in sales force. In addition, Shapiro & Doyle (1980) stressed the crucial aspect of motivation is to have sales task clearly defined to the sales force to help them understand where they stand and get reinforcement from news of their performance; which aids in the instrinsic motivation.
Rewards V Incentives
In order to provide any forms of motivation for the sales force, there should be rewards and incentives provided. Silverstein (2007)states the differences between the two terms whereby rewards provide recognition to people for their achievements and contribution. Therefore in other words, if a salesperson consider rewards are worth having and attainable, and the method to attain them, they would all act as motivators. Rewards can also be either finanancial or non financial. Incentives are designed to encourage salespeople to achieve objectives, intending to provide direct motivation through generally financial rewards though non-financial rewards such as promotion, interesting assignment/task or job security.
4.2 Cultural differences in motivation
Tanner, Honeycutt & Erffmeyer (2009)suggests that managers must take note that sales force in different countries has diverse motivation drives based on a study conducted in 2003. For example, the sales force in Singapore, U.K. and U.S. wanted "to earn a lot of money" while in Australia, Canada and Norway, the sales people preferred being able to "use (my) special abilities" as their number one motivator. Researchers thus noted that the individual country differences needed to be considered by managers.
4.3 Types of rewards
4.3.1 Financial compensation
Financial incentives and rewards can motivate because a large portion of the sales force would need the money and therefore want the money as the basic need for survival and security, as well as satisfying self esteem needs and status. According to Armstrong & Stephens (2005), salary or pay is usually the dominating factor in the choice of employer and important consideration when sales people are deciding whether or not to stay with the organisation. However, it may not be the only motivator. Wallance & Szilagyi (1982) suggested that money can serve the following reward functions:
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Act as a goal that people generally strive for, although to different degrees
Act as an instrument which provides valued outcomes
A symbol which indicates the recipient's value to the organisation
Acts as a reinforcer because of its association with value rewards so often that it takes on reward value itself
On the other hand, Herzberg (1957) was doubtful on the effectiveness of money as a motivator because it does not result in lasting satisfaction. A sales person may feel good when they get an increase which is an effective way to make people feel valued but eventually the feeling of euphoria may die away. In addition, different individuals have diverse needs and some will be more motivated than the others; hence it is important that managers cannot assume that money motivates everyone in the same way and to the same extent.
Pfeffer (1998) further supports the rational that financial incentives does not motivate sales force, claiming that people do work for money- but they work even more for meanings in their lives; and in fact they work to have fun. He believes that pay cannot subsitute for a working environment 'high on trust, fun and meaningful work'. An increase in pay arising from a contingent ay scheme may motivate people who get it, for a limited period; and will almost certainly de-motivate those who does not or feels they are not getting enough in comparison with others.
Types of financial compensation; their advantages and disadvantages
Easy plan with annual adjustments
Efficient budgeting and recruitment process of sales force
Allow control over non-selling activities
Assurance on income stability (salary)
Reduced pressure on competitive workplace
Reduced performance due to minimal financial incentives
Inequity perception because of different salary level among qualified sales force
Organisation has to pay fixed salary even during declining sales
Strong financial incentive provides improved sales performance
Reduces organisation's expenditure during sluggish periods
Requires not as much capital investment
Little or no company loyalty which leads to low commitment of sales force
Salespeople may earn more than their sales managers if there is no earnings cap; causing unhappiness and resentment
Straight emphasize to the part that is vital to sales division
Constructive when binding rewards to meet objectives
Complex to calculate the bonus if the objective is in subjective terms such as account servicing
Sales force may not be keen to accomplish the goal if they do not support the objectives
Attracts new high-potential fresh graduates
Flexible compensation owing to frequent rewards and time efficient
Apt for diverse skilled level's of the sales force
Increased complexity in managing in comparison to other plans
Might generate too many sales objectives in long term basis and may be overlapped among objectives
Figure 3: Types of financial compensation; their advantages and disadvantages
4.3.2 Non financial compensation
Ingram, et al. (2006) listed the various non financial rewards which includes career advancement through promotion, job accomplishment, personal growth, recognition and job security. However, non financial rewards can be coupled with financial rewards such as promotion into sales management with pay increase.
Non financial compensation
Opportunity for Promotion
Valuable reward among salespeople although some industries limit employees promotion
Opportunity of promotion is a long term basis and tough to achieve
Important to analyse jobs by looking into the company and business industry beforehand
Opportunity for Personal Growth
Offered regularly in the most organisations and not just well-known ones
Provides training programs as on opportunity for employee growth
New education experiences such as coursework or summer training experience or even completion of a graduate program
New area of development- 'corporate athlete' whereby salespeople are encouraged to learn to combine and balance their busy schedules with healthy living practices and exercise in order to succeed
Recognition (Maslow Hierarchy of Needs: Self Esteem)
Encouraging sales representative to mentor or coach less experienced colleagues can be powerful because it recognizes them for their skills and expertise thus offering measure of prestige
Often used to reinforce the short term behaviour of sales force
Most widely used form of recognition is done through local, regional or organisation-wide sales contests with a time period given
Recognition can be divided into formal and informal:
Formal recognition is rewarded by being the member of premium club or group rewards. The competition is based on group or individual representing to improve each outcome. Formal recognition usually combine cash, goods or travel rewards
Informal recognition will be when sales manager praises the sales people such as "excellent job". It is costless and effortless to reward the behaviour right away after the satisfactory performance
Valued by nearly-retiring salespeople although it is the least valued reward among all
Well performing sales force may feel that they are preferred by the organization and experience the sense of job security
Sense of Accomplishment
An internal feeling of satisfaction from doing well performance
Often brings about some other rewards such as promotion and paywhereby thefeeling of accomplishment can motivate employees
Guest speakers will also be able to motivate employees to improve sales performance. The presentation might alter employees' behaviour and aids in personal growth.
Important to gain the support of their superiors
Negative criticism from superiors will not relieve the situation. Therefore, positive attitude and work environment is vital to motivate the sales force
Figure 4: Non financial compensation
Job design and role development
Opportunities to achieve and develop
Quality of working life
Pay and other benefits
Figure 5: Reward framework
Hence it is imperative that organisations recognise the various compensations (financial and nonfinancial) in order to motivate its employees with different means and methods based on the circumstances and situation involved. They must understand that it is not just the aspect of money that can motivate salespeople; but also the psychological aspect of their employees based on rewards framework of Figure 4 above, which includes the intrinsic and extrinsic rewards which may better suit the individual employees' needs and objectives.
Issues in motivation:
5.1 Common mistakes that organisations get motivation wrong
Although it was mentioned above that motivation may be a positive mode of reward scheme encouraging sales force to strive for desired results, some managers seem to get the motivation process incorrect; which in turn causes negative impacts on the employees and organisations.
Focusing too much on drive to acquire, such as the pay plan (i.e incentive plan, bonus)
Some organisations focus too much on extrinsic financial aspects of the employees instead of the nonfinancial aspects such as teamwork, work environment, work/life balance, growth opportunities, commitment to ideas, corporate identity and also broader purpose for employees.
By not giving front line managers enough discretion
It is vital that the front line managers receive enough discretion and empowerment because they typically have the greatest impact on individual employees' perception with regards to the organisation. Therefore, it will not be feasible to limit these managers on how they can motivate or distrusting them as it might decrease their motivational effectiveness.
By not equipping front line managers enough tools
Organisations should provide their sales managers with motivational training, discretionary reward program, comprehensible reports, and 'on-the-spot' awards. When they are equipped with such tools, they may feel more motivated and valued to continue putting effort into motivating their sales team thus enhancing their sales performance.
Making incentives too complex
Some organisations may attempt to heighten the level incentive plans which may be more difficult to achieve in order to ensure fairness and meet certain budget considerations. When the sales people do not understand their incentive plans, they would hardly be motivated to strive. Therefore, organisations need to understand that the more complex and difficult the incentive plans are to comprehend, the less effective they are at driving behavioural change in the sales force.
Rewarding the wrong behaviours or measures
Too often, companies' good intentions to reward the salespeople can lead to the rewarding of the wrong behaviour or results that does not fit their long term strategies. Some of the most general mistakes are rewarding things because of their easiness to measure (such as plainly revenue) or rewards which have become entitlements and perceived as "unchangeable".
Lack of communication
Highly motivated companies over communicate to their employees with regards to their pay plans, total rewards strategy, reward culture and company mission. It is crucial to boast two-way communication between the organisation and its sale force because opinions and feedbacks must be exchanged in order to further understand both parties' objectives and needs. Transparency is vital in organisations and will lead to appreciation and regarded with high value from the sales force. Organisations which lack communication with its sales force will risk to have unmotivated employees and inferior sales performance because of the unclear objectives and goals.
Focusing on the 'cost' of the motivational programs but not on the results
By focusing purely on the 'cost' of the program will deem short sighted by profit driven organisations, because the real focus should be placed on the motivation aspects that the programs instil in its salespeople, as well as the results of the program has on performances. By signing up its sales people for such courses will only deem effective if the organisation is genuinely supportive and concerned to develop the hidden skills in its employees. Therefore, it is not that cheapest programs are always the best. Post program evaluations should be conducted to ensure the programs are effective in driving their behaviours in line with the company strategy, measuring the appropriate results and leveraging other incentives or pay plans in the behaviours they are rewarding on.
Figure 6: Common mistakes that organisations get wrong in motivation
Motivating sales force
Motivating and rewarding its sales force is a significant aspect to all organisations worldwide, including multinational or small organisations. Below will illustrate the successful business cases of two reputable organisations and their admirable methods of motivating the sales force.
6.1 Business case of Singapore Airlines (SIA)
Great emphasis on sales force's motivation
SIA seems to put a relatively higher emphasis on the training of its front-line staff. Also, SIA's recent focus is on equipping the front-line staff with skills to deal with the stress and demands that arise from the high expectations of its customers.
Communication and motivation
In order to encourage good service, SIA believes in communication. Corporate-wide business meetings and briefings are held regularly to keep staff informed of the latest developments. Corporate newsletters and circulars help promote information sharing. Interaction between staff and management is encouraged through regular staff meetings.
It emphasizes highly on communication. For example, if a new service is added at check-in, SIA will speak to the people involved before, during and after. Discussion of the importance and value of communication will make sure everyone is aware their doings and the reasons. It helps give staff a pride in what they do. The company also uses non-financial rewards to encourage good service. The newsletters are used to share and recognize good service. SIA attempts to recognize members of staff who go the extra mile. In addition, there is the Deputy Chairman's Award annually to show recognition to outstanding employees and a sign to show appreciation to the sales force. Recognition is vital in SIA's culture such as a good pat on the back, a mini ceremony, photographs or write-ups in the newsletters. There is also a special badge awarded to those individuals who have received numerous passenger compliments.
SIA's top management is fully aware that they cannot afford to be complacent. Every opportunity is taken to develop their staff and systems and re-invent the service by anticipating the potential needs of customers. This is made possible because of the way they value their staff and customers. SIA's management makes it a point to listen to feedback from all quarters and to take appropriate remedial action. The firm belief that training allows for continuous improvement has spurred SIA to invest millions of dollars to train and equip every single staff member to provide excellent service continuously. All staff are rewarded and recognized for their contribution, according to the profitability of the company. What we learned from SIA, and what is consistent with the services literature, is that service excellence requires a total approach, i.e. excellent customer service is the result of all of the components being in place, from the right strategic focus and service culture, to a clear understanding of the service, to good training and people, to good systems and processes. SIA's culture of service excellence at a profit is in line with the service profit chain (Heskett, Sasser & Schlesinger, 1997) and the cycle of success (Schlesinger & Heskett, 1991).
6.2 Business case of British Airways (BA)
Total reward program at British Airways
Based on Armstrong & Stephens (2005), the total reward strategy at BA comprises four strands, with total pay and positive workplace viewed as the 'foundation' elements.
The four elements are:
Individual growth - Sales individuals need to grow, learn and become more valuable/employable
Compelling future - Employees would expect a vision of the future for the organization because it links to their own future vision; which in turn has an opportunity to create 'stakeholders' in the workforce
Total pay - Total pay solutions need to be positive, attractive and performance-related
Effective workplace - positive people need effective leadership that gives direction and creates opportunities for delivering meaningful, challenging and interesting work; underpinned by open communications, trust and commitment
The total reward model makes a clear link between total pay and the other three key areas of employee rewards. These are the reasons that employees stay loyal and committed to BA but there is still balance to be achieved from the key areas listed above.
The figure below will illustrate the transition of a reward strategy in British Airways:
Internal equity focus
Fixed and variable
Base pay/fixed cost
Figure 7: Reward strategy development
BA has evolved from a traditional and unmotivated organisation which was facing numerous issues to a successful multinational airline with efficient and motivated employees, including its sales force. By developing a total rewards strategy, BA altered its way of managing and rewarding its employees which was deemed beneficial to both parties.
Motivation is an imperative element for most organisations to reward and incentive their sales force to meet or exceed organization objectives. There are many numerous alternatives to reward employees- compensation and noncompensation rewards. Organisations need to understand that financial rewards are not the most effective rewards as assumed. Sales managers are required to comprehend which rewards will generate the most optimal influences on their sales team and then implement them because individuals have different objectives and needs required to be motivated. More significantly, the rewards must be distributed equally by calculated various aspects step by step such as intensity of competition.
In conclusion, the business cases demonstrated on the successful implementation of the incentive program of Singapore Airlines and British Airways which was not a success from the start, but only after adjustments, the organisations had progress and prospered exceedingly well. Therefore, it can be concluded, in today's business world, motivation and reward systems are indispensable to any organisations regardless of the company's size because motivation can generate organizations' sales volume and profit in a long term aspect in a comfortable and rewarding work environment for the employees.
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