Leading the sales force involves motivating them to achieve and even surpass their sales quotas. Motivation is intrinsic, i.e. it comes from within the person. Yet, it is the task of the sales manager to motivate his/her sales team. This involves creating a climate in which everyone gives his/her best performance.
While one aspect of creating a congenial climate is creating territories with sufficient challenge, the other aspect is even the leadership style and the compensation package. Sales managers have to be people who are also task oriented. They have to be team builders and team leaders. They have to be good listeners and exhibit empathy while demanding the performance.
Sales force compensation is an important tool to motivate the team. This compensation has two parts:
But it’s the power of money, or what one can do with money that makes it a powerful tool in motivation. Money helps an individual acquire status in the society besides enabling him/her feel more secure. Money ceases to have this value and that’s where other non-monetary incentives come in.
The Monetary compensations plans are
The most common form of salary is home fixed monthly salary. And hence he/she can plan living accordingly. The firm knows its financial commitment and that even the non-selling jobs like information gathering and customer service get adequate attention. The salesperson will not necessarily put all his/her efforts in selling fast moving items.
This form of compensation is useful in capital goods, industrial consumables and spares and project marketing, where either the sale is a one time (as in project) or is one which takes a long time to close, but once the customer has bought and adopted it, the salesperson has to only follow payments and collect repeat orders (as in case of consumables like chemicals or packaging material, etc). Servicing customers and ensuring higher levels of customer satisfaction becomes the subsequent call objectives.
The limitation of this method is that it can breed complacency in the sales team. It can create piggy back riders and salesperson may not necessarily complete the sales call norm nor may work for market development. Hence, straight salary plans have serious limitations in sales force motivation. This is also explained by the fact that both high achievers and non-performers take home the same income every month and thus, this plan may fail to create a motivational climate in the sales team.
The reward should be commensurate to one’s efforts. Hence, another approach is to compensate sales people with commissions only. This method ensures high that high performers are rewarded adequately and that selling cost is linked to the sales revenue. In commissions basis sometimes the salesperson takes a fat income home and sometimes nothing. For, the ultimate sale is a function of a host of variables, most of which are beyond the salesperson’s control. Further, this method will foster a trend of pushing fast moving items to only a select customer group, who may have a positive feeling towards the salesperson. Further, the salesperson may not put in the effort for higher price, realization, even though an opportunity may exist. The some firms now link the commissions not only to sales but also to the price realized. Higher the price realized the commission.
The above two methods of compensation are sought to be overcome through combination plans. In these plans, basic salary is given and they plan the monthly living. The firm may even add another part to it, viz. fringe benefits like motorcycle or a car or a paid holiday, club holiday etc. for high achievers. The plan responds to market conditions and a salesperson’s abilities. It ensures that non-selling jobs, prospecting, market penetration and slow moving items get the salesperson’s adequate attention. It also satisfies the salesperson’s desire for some stable monthly income. However, these plans fail to motivate seniors within the team. They may find that youngsters earn the same money as they do. It may also generate a “contract labor�? attitude among sales force and this can come in the way of creating winning teams. The salesperson may not feel a part of the organization. Flight to other greener pastures is not rare, particularly if achievers do not perceive a career growth in the organization. To adequately reward and challenge individual’s potential, the sales manager also uses non-monetary incentives like contests, sales meetings and conventions at holiday resorts and training. Sending Sales executives abroad for international trade fairs and exhibitions also act as a good non monetary incentive. Larsen & Toubro is one such company which not only participates in such exhibitions abroad but regularly sends members of the sales team beyond certain level of seniority to such international exhibitions.