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Sales & Retail Management, VTU,Module 4


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Sales & Retail Management, VTU,Module 4

  1. 1. Sale force motivation & Compensation<br />By Prof. Raghavendran V<br />
  2. 2. Nature of Motivation<br />The meaning of word motivate is to Move or Activate. Motivation is an internal feeling and an energy force within sales person that drives them to behave in a certain way. It can be both the forms of Positive and Negative motivation and its effect on individuals are similar in nature but different in intensity.<br />2<br />Prof. Raghavendran V<br />
  3. 3. Motivation has a system orientation, which means that goal of individual is shaped by the forces within the individual and its interaction with the surrounding environments. The individual gets the feedback from the environment which either reinforces behavior or dissuades them from pursuing certain goals.<br />Motivation and satisfaction, which is achieved through a compensation and rewards system are interrelated. While motivation is the drive to satisfy the goals of life, satisfaction is the experience of contentment when one particular is satisfied.<br />3<br />Prof. Raghavendran V<br />
  4. 4. Importance of Motivation<br />Sales organizations are made of human beings working at different levels and every organization needs people in order to function. <br />Motivation in itself is a highly complex activity & affected by large numbers of the factors in organization.<br />Employees in an organization possess a huge amount of information based on the experiences about the structures & processes of the sales organization and market. Sales organizations serve as resource pool & talent<br />4<br />Prof. Raghavendran V<br />
  5. 5. The success of a sales organization depends on the ability and the style of the functioning of the sales manager to motivate the sale staff. <br />They get demotivated due:<br />Frequent rejections by customers,<br />Lower esteem<br />Customer complaints<br />Nature of the job<br />Frequent travelling<br />Prof. Raghavendran V<br />5<br />
  6. 6. The Process of motivation<br />The sales manager need to understand the process of motivation & uses it to improve firm’s efficiency. He can use this to stimulate sales person to work efficiently.<br />This starts when a motive prompts people to action. Motives are the primary energizer of behavior. Motives are largely subjective and represent the mental picture of the salesperson. They arise continuously and determine the general direction of the salesperson’s behavior.<br />Prof. Raghavendran V<br />6<br />
  7. 7. Motivation Process<br />Prof. Raghavendran V<br />7<br />MOTIVE<br />TENSION REDUCTION<br />BEHAVIOR<br />GOAL<br />
  8. 8. Motives & Motivational Drives<br />Motives are drivers for the behavioral action of the customers. They can be classified as General, Primary and Secondary motives. <br />The primary motives are more than comprehensive in nature and based on the physiological needs. It seek to reduce tension or stimulation.<br />The general motives are curiosity, manipulation, activity & affection. These are unlearned drives to explore & manipulate objects.<br />The secondary motives are drawn out from society & interaction of individual with the elements of society.<br />Prof. Raghavendran V<br />8<br />
  9. 9. Motivational Drives<br />Principles<br />Security<br />Achievement<br />Approval<br />Loyalty<br />Advancement<br />Leadership<br />Human Behavior<br />Prof. Raghavendran V<br />9<br />
  10. 10. Theories of Motivation<br />Content theories<br />Maslow's hierarchy theory<br />Hertzberg’s two factor theory<br />Alderfer’s ERG theory<br />McGregor Theory of X and Y<br />Process theories<br />Equity theory<br />Expectancy theory<br />Reinforcement theories<br />Hull’s Drive theory<br />Skinner’s Reinforcement theory<br />Prof. Raghavendran V<br />10<br />
  11. 11. Factor’s influencing the salesperson<br />There are various factors influence the motivation level of the salesperson. They can be grouped as:<br />Personal characteristics<br />Current job<br />Career (Exploration, Establishment, Maintenance & disengagement)<br />Demographic variable<br />Experience and physiological variable<br />Environmental Conditions<br />Territory potential<br />Strength of competition<br />Organizational Regulatory norms<br />Sales Supervision<br />Span of control,<br />Leadership style<br />Type of communication<br />Compensation plan<br />Prof. Raghavendran V<br />11<br />
  12. 12. Designing a Motivational Programme<br />Sales manager can design a motivational programme to keep up the motivation & Morale of salesperson in the organization so that the willingness to contribute will be high over long sustained period of time in the organization. The following are the steps involved in designing the motivation programme:<br />Programme Objective<br />Motivational tools<br />Individual Methods<br />Group Methods<br />Communication<br />Auxiliary Environment<br />Feedback<br />Prof. Raghavendran V<br />12<br />
  13. 13. Motivational Issues & Evolving Needs<br />Prof. Raghavendran V<br />13<br />NEW<br />EXPERIENCED<br />COMPANY<br />NEW<br />SALES PROFESSION<br />EXPERIENCED<br />
  14. 14. Sales Compensation<br />Sales Organizations design compensation Plans with multiple objectives. <br />One of the key objective is attract the quality salesperson.<br />Improve the productivity level<br />Optimizing the sales effort<br />Reduces the sales expenses and production cost<br />Reducing the attrition rate in the firm.<br />Good rapport within the organization<br />Prof. Raghavendran V<br />14<br />
  15. 15. Characteristics of an effective compensation Plan<br />Based on equality & equity<br />Economical & Competitive<br />Flexible<br />Performance of the salesperson<br />Prof. Raghavendran V<br />15<br />
  16. 16. Factors Influencing the Design of a compensation Plan<br />Financial ability of the firm<br />Size of the market<br />Government rules & regulations<br />Nature of the product<br />Educational qualifications of sales person<br />Work Experience<br />Prof. Raghavendran V<br />16<br />
  17. 17. Types of Compensation Plan<br />An effective compensation and reward system management involves selection and proper utilization of firm’s reward to direct the sales staff behavior attaining Firm’s objectives.<br />Compensation is defined as Financial & Non Financial methods for the sales staff.<br />Prof. Raghavendran V<br />17<br />
  18. 18. Financial Compensation<br />Straight Salary Plan<br />Straight Commission Plan<br />Bonus & Incentive<br />Salary Plus Incentive Plan (Combination Plan)<br />Drawing account and Commission Plan<br />Allied Methods<br />Prof. Raghavendran V<br />18<br />
  19. 19. Non –Financial Compensation<br />Promotions<br />Recognition Programmes<br />Fringe Benefits<br />Expense Accounts<br />Perks <br />Sales Contests<br />Prof. Raghavendran V<br />19<br />
  20. 20. Steps in designing the Compensation Plan<br />Determine Sales force and compensation Objectives<br />Determine Major Compensation Issues<br />Implement Long term & Short term compensation Plans<br />Relate rewards to compensation<br />Measurement of Performance<br />Appraise the Compensation Plan<br />Prof. Raghavendran V<br />20<br />
  21. 21. Evaluation of the Sales Force<br />It is important to measure and manage the performance of the salesperson. It is observed that performance measurement and evaluation is done only for difficult jobs in sales organization.<br />It is crucial process of identification, measurement and management of the sales force in an organization.<br />Performance appraisal is the process of evaluating the performance & qualifications of the sales force in terms of the requirements of the job to ensure effective administration, including the selection for promotion, rewards and other recognitions on the administration.<br />Prof. Raghavendran V<br />21<br />
  22. 22. Performance Appraisal Process<br />Prof. Raghavendran V<br />22<br />Sales force performance appraisal process<br />
  23. 23. Performance Appraisal Process<br />Appraisal Criteria<br />Relative and Absolute Judgment (evaluation)<br />Trait<br />Behavior<br />Outcome <br />Performance Rating<br />Forced choice scales<br />Behavior Observation Scales<br />Call Reports<br />Silent Call Monitoring Scores<br />Activity reports<br />Combination methods<br />Prof. Raghavendran V<br />23<br />Focus of Measure<br />
  24. 24. Conduct of Performance Appraisal<br />Biases<br />Base rate information<br />Availability heuristics<br />Anchoring<br />Hindsight Bias<br />Regression Effects<br />Fundamental attribution error<br />Prof. Raghavendran V<br />24<br />
  25. 25. Performance Appraisal<br />Individual Versus Team Appraisal<br />Actual Performance<br />Frequency<br />Influence of External Variables<br />Barriers<br />Prof. Raghavendran V<br />25<br />
  26. 26. Assignment Time: to be submitted by 11th October’ 2011<br />Explain nature & importance of Sales Motivation.<br />Explain in detail all theories of motivation. (Content, Process & Reinforcement).<br />Discuss in detail of Motivational Programme<br />Discover the trends in compensation plan.<br />Why it is difficult to evaluate salespeople working in teams? <br />Design a self evaluation form by using a rating scale for a salesperson working in education industry?<br />26<br />Prof. Raghavendran V<br />
  27. 27. End of the module 4<br />By Prof. Raghavendran V<br />