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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
17-2
The Basic Sales Management Functions
17-3
The Motivation Mix: Choose Your Ingredients
Carefully
Exhibit 17.1: Sales Manager’s Motivation Mix
17-4
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
17-5
Three basic plans of financial compensation
➢ Straight salary plan
➢ Straight commission plan
➢ Combination plan
Compensation Is More Than Money
17-6
❑ 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
17-8
❑ 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
17-10
❑ 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
17-13
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.
17-14
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
https://www.youtube.com/watch?v=sd9pl8mZ5MY
https://www.youtube.com/watch?v=E8H_vbNQkNM
17-15
Exhibit 17.6: A Sales Manager Can Choose One of These
Leadership Styles Based on the Salesperson and the Situation
17-16
The Basic Sales Management Functions
Evaluating the past to
guide the future
▪Performance criteria
▪Conducting sessions
https://www.youtube.com/watch?v=KcGhX7Htk9U
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
Semester
Spring 2020
Assessment date
9 June 2020
Course
Professional Selling
Course Code
MKT 430
Section
U1
Assessment
Final Assessment
Assessment weight
20%
Faculty Name
Ms. Nermain Al-Issa
To be completed by the student
Student Name
:
Student ID
:
Grading Scheme
Question
Earned Points
Max. Points
Question
Earned Points
Max. Points
Q1
30
Q2
60
Q3
10
Q4
Q5
Total Earned Points
Total Available Points
Instructor Signature
100
2
1. What are the three levels of relationship selling? Describe the
differences between the selling levels. (5 points each)
Provide a real example for each level from your experience. (5
points each, total 30 points)
2. What are the four leadership styles? Describe each. (5 points
each)
How leaders communicate with team members and make
decisions following each style? (5 points each)
Suggest a situation for which each style suits the most. (5 points
each)
3. List and explain four criteria for salespeople evaluation. (2.5
points each)

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Motivation, Compensation, Leadership, and Evaluation of Sale.docx

  • 1. 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 17-2 The Basic Sales Management Functions 17-3 The Motivation Mix: Choose Your Ingredients Carefully Exhibit 17.1: Sales Manager’s Motivation Mix 17-4 Compensation Is More Than Money ▪ Sales performance can be rewarded in three fundamental ways:
  • 2. ✓ 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 17-5 Three basic plans of financial compensation ➢ Straight salary plan ➢ Straight commission plan ➢ Combination plan Compensation Is More Than Money 17-6 ❑ 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
  • 3. 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
  • 4. 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 17-8 ❑ Straight commission plan: “If you don’t sell anything, you don’t earn anything” Two basic elements of straight commission
  • 5. ✓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
  • 6. 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 17-10 ❑ 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
  • 7. 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
  • 8. 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 200000 0 2M 4M $60,000 + 6% over 1.5M 17-13 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. 17-14 Exhibit 17.5: Four Basic Leadership Styles a Sales Manager Can Select From to Influence Salespeople Describing the duties
  • 9. and responsibilities of an individual or group Relationship behavior https://www.youtube.com/watch?v=sd9pl8mZ5MY https://www.youtube.com/watch?v=E8H_vbNQkNM https://www.youtube.com/watch?v=sd9pl8mZ5MY https://www.youtube.com/watch?v=E8H_vbNQkNM 17-15 Exhibit 17.6: A Sales Manager Can Choose One of These Leadership Styles Based on the Salesperson and the Situation 17-16 The Basic Sales Management Functions Evaluating the past to guide the future ▪Performance criteria ▪Conducting sessions https://www.youtube.com/watch?v=KcGhX7Htk9U https://www.youtube.com/watch?v=KcGhX7Htk9U Performance Evaluations Let People Know Where
  • 10. They Stand ▪ Performance criteria : the basis for evaluating salesperson ✓ Quantitative performance criteria ✓ Qualitative performance criteria Semester Spring 2020 Assessment date 9 June 2020 Course Professional Selling Course Code MKT 430 Section U1 Assessment Final Assessment Assessment weight 20% Faculty Name Ms. Nermain Al-Issa To be completed by the student Student Name : Student ID : Grading Scheme Question
  • 11. Earned Points Max. Points Question Earned Points Max. Points Q1 30 Q2 60 Q3 10 Q4 Q5
  • 12. Total Earned Points Total Available Points Instructor Signature 100 2 1. What are the three levels of relationship selling? Describe the differences between the selling levels. (5 points each) Provide a real example for each level from your experience. (5 points each, total 30 points) 2. What are the four leadership styles? Describe each. (5 points each) How leaders communicate with team members and make decisions following each style? (5 points each) Suggest a situation for which each style suits the most. (5 points each)
  • 13. 3. List and explain four criteria for salespeople evaluation. (2.5 points each)