Chapter 6

Training, Motivating, Compensating, and Leading the Salesforce

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Sales Training
Proper training can prepare salespeople to meet with customer expectations New salespeople spend a few weeks to several months in training Companies view sales training important for protecting their investments in their salesforce Sales Training Process consists of: Assessing sales training needs Designing and executing sales training programs Evaluating and reinforcing sales training programs
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Assessing Sales Training needs

Sales training needs are assessed both for Newly hired sales trainees, and Experienced / existing salespeople Methods used for assessing training needs are: First level sales managers observation Survey of salesforce and field sales managers Customer survey Performance testing of salespersons Job description statements Salesforce audit (as a part of marketing audit)
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Designing and Executing Sales Training Programme

For this, sales manager takes five decisions, called: ACMEE: Aim, Content, Methods, Execution, Evaluation First three words and organisational decisions relate to designing of sales training Examples of Aims / Objectives of sales training: Increase sales, profits, or both Increase sales productivity Improve customer relations Prepare new salespeople for assignment to territories
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Content of Training Programme

Content for new sales trainees is broader. It includes: Company knowledge Product knowledge Customer knowledge Competitor knowledge Selling skills / sales techniques Examples of specific content for experienced salespersons are: New product knowledge Introduce change in sales organisation Negotiating skills Content depends on the aims of training programme e.g. Knowledge of commercial terms and conditions.
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Sales Training Methods

Selection of suitable methods for a training programme depends upon the topic and audience Training methods are grouped into five categories: Class room / Conference training Behavioural learning / Simulations

Online training
On-the-job training We shall briefly review the training methods

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Class-Room / Conference Training Group

The training methods in this group are: (1) lecture, (2) demonstration, and (3) group discussion Lecture Used when more information is presented in a short time to a large number of participants May lead to boredom due to less active participation Demonstration Used for giving product knowledge Group discussion Useful when participants include experienced and inexperienced salespersons A panel discussion consists of a small group of people who discuss a specific topic
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Behavioural Learning / Simulation Group

This group consists of three training methods: (1) role playing, (2) case-studies, and (3) business games Role playing Useful method for teaching sales technique / process Typically, one trainee plays the role of a salesperson and another trainee acts as a buyer Case studies Beneficial for understanding consumer behaviour, and building problem solving abilities Case teaching includes open discussion, group discussion and presentation Business games Helpful in learning impact of decision making Generates enthusiasm and competitive spirit
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Online Training Group

It includes (1) electronic performance support systems (EPSS), (2) interactive multimedia training, (3) distance learning It takes 50 percent less time and costs 30-60 percent less, and more convenient than other training methods Useful for getting basic knowledge like products and customers Electronic performance support system (EPSS) makes information available immediately, in a personalised manner Interactive media training is used for retraining salespeople who can repeat or skip material as desired Distance learning is a personal training method, which is interactive
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Absorption Training / Self Study Group

It includes supplying audio cassettes, product manuals, books, articles, and CD-ROMs to salespeople, who read (or absorb) these materials without feedback Useful for introducing basic materials or strengthening previous training

On-the-Job Training Group

Most companies use this method as it places a sales trainee in a realistic sales situation Typically, a junior salesperson is assigned to a senior salesperson for some period of time In mentoring, a junior / new employee gets information, advise and support from mentors / experienced persons Job rotation is used to groom salespeople for management positions
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Selecting Training Method

In addition to the topic and audience, selection of appropriate method depends on active / passive learning People generally remember 10% of what they read 20% of what they hear 30% of what they see 50% of what they hear and see 70% of what they say, and 90% of what they say as they do a thing
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Organisational Decisions for Sales Training

Organisational decisions, which are parts of designing sale training programme, are: Who will be the trainees?

Who will conduct the training?

When should the training take place? How long should the training be?

Where should the training be done?

What will be the budgeted expenditure for the training?
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Execution of Sales Training Programme

Usually sales trainer or sales training manager is responsible for entire process of sales training Execution / implementation includes preparing time-table, arranging internal / external trainers, making travel arrangements of participants, arranging conference hall and teaching aids, and so on A good practice to make a final check one / two days prior to start of training programme Obtain feedback from the sales trainees at the end of the programme
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Evaluation of Sales Training Programme

It is done to improve training design and implementation, and to find if expenditure was worthwhile Framework for sales training evaluation:
What to measure Training objective Was training worthwhile? Knowledge, skills, attitudes Trainees change of behaviour How to measure Questionnaires interviews Tests Interviews Self-assessment by trainees Observation by supervisors / customers Company data Management judgement Market survey When to measure After the training

Outcomes to measure Reactions / Perceptions of participants Learning knowledge, skills, attitudes learnt Behavioural change

After training Before & after training After training, over a period of one year

Results Sales, Profits Performance; Benefits Customer more than cost? satisfaction

After training, Quarterly, Yearly

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Reinforce Sales Training

Behaviour of most salespeople would not change unless there is reinforcement to sales training In many companies reinforcement or follow-up trainings are not done Training methods used for reinforcement are: Refresher training consists of continuous training to overcome deficiencies of experienced salespeople and retraining of salespeople whose job requirements have changed Web-based or online methods to reinforce formal training sessions Senior salespeople or first line sales managers coaching new salespersons
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Motivating the Salesforce

Motivation is derived from Latin word movere, which means to move Motivation is the effort the salesperson makes to complete various activities of the sales job 10-15 percent salespeople are self-motivated Majority of salespeople are not adequately motivated Importance of motivating salespeople is recognised, because financial performance of the company depends upon the achievement of sales volume objective
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Motivational Theories
Motivational theories or behavioural concepts that are relevant to motivation of salespeople are:
Maslows hierarchy of needs

Hertzbergs dual-factor

Motivation

Effort

Performance

Reward

Satisfaction

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Selecting a Mix of Motivational Tools

Sales manager should know each salesperson and understand his / her specific needs For designing or selecting a mix of motivational tools, a compromise between differing needs of customers, salespeople, and the company management becomes necessary

Motivational tools are divided into (1) financial, and (2) non-financial. These are shown in the next slide
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Motivational Tools in a Motivational Mix

Financial Financial compensation plan Salary Commission/Incentive Bonus Fringe benefits Combination Sales contests Non Financial Promotion Sense of accomplishment Personal growth opportunities Recognition Job security Sales meetings Sales training programmes Job enrichment Supervision Financial compensation is the most widely used tool of motivation, as salespeople give highest value to it
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Compensating the Salesforce

A good compensation plan should consider objectives from the companys and salespeoples viewpoint Objectives of compensation plan from the companys viewpoint

To attract, retain, and motivate competent salespeople

To control salespeoples activities To be competitive, yet economical: It is difficult to balance these two objectives To be flexible to adapt to new products, changing markets, and differing territory sales potentials
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Objectives of Compensation Plan from Salespersons Viewpoint

To have both regular and incentive income

Regular income by fixed salary to take care of living expenses

Incentive income for above average performance

To have a simple plan, for easy understanding

This is in conflict with the objective of flexibility To have a fair payment plan Fair or just payment to all salespeople is ensured by selecting measurable and controllable factors
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Designing an Effective Sales Compensation Plan

Designing a new compensation plan or revising an existing plan consists of the following steps:
Examine job descriptions

Set up specific objectives for salespeople

Decide levels of pay / compensation Develop the compensation mix

Decide indirect payment plan or fringe benefits

Pretest, administer, and evaluate the plan

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Examine Job Descriptions

Separate job descriptions are required for different sales positions or jobs E.G. missionary salesperson, senior salesperson, key account executive

Each job description should include responsibilities and key performance standards, to decide how much to pay

Set up Specific Objectives for Salespeople

These are derived from companys sales and marketing objectives
Salespeople should have some control on the objectives E.G. number of sales calls made Objectives should be measurable. E.G. sales volume, selling expenses
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Decide Levels of Pay / Compensation

It means the average pay or money earned per year (or month) It is important to decide levels of pay for all sales positions It is decided based on the following factors: Levels of pay for similar positions in the industry Levels of pay for comparable jobs in the company Education, experience, and skills required to do sales job Cost of living in different metros and cities Annual average pay levels vary between industries, within the same industry, and sometimes within the company Firms decide a range of average pay, instead of a specific pay Salespeople earn pay depending on their and company performance
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Develop the Compensation Mix

Widely used elements of compensation mix are: (1) salaries, (2) commissions, (3) bonuses, (4) fringe benefits (or perquisites) Expense allowances or reimbursements like travel, lodging, etc are not included Basic types of compensation plans are: Straight salary Straight commission Combination of salary, commission, and / or bonus 68 percent companies use combination plan and balance 32 percent firms use straight salary or straight commission We shall briefly examine above compensation plans
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 Characteristics:

Straight Salary Plan

100 percent compensation is salary, which is a fixed component No concern for sales performance or salespersons efforts This plan is suitable for sales trainees, missionary salespeople, and when a company wants to introduce a new product or enter a new territory Advantages: Salespeople get secured income to cover living expenses Salespeople willing to perform non-selling activities like payment collection, report writing Simple to administer Disadvantages: No financial incentive to salespeople for more efforts and better performance. Hence, superior performance may not be achieved May be a burden for new and loss-making firms
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Straight Commission (or Commission Only) Plan

Characteristics: It is opposite of straight-salary plan Most popular commission base is sales volume or profitability Commission rate is a percentage of sales or gross profit This plan is generally used by real estate, insurance, and direct-sales (or network marketing) industries Advantages: Strong financial incentive attracts high performance, removes ineffective salespeople and improves results Controls selling costs and requires less supervision Disadvantages: Focus is on sales and not on customer relationship Salespeople may pay less attention to non-selling activities
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Combination Plan
Characteristics: Combines straight salary & straight commission plan Four types of combination plans used by companies: 1) Salary plus commission: suitable for getting improved sales and customer service

2) Salary plus bonus: a bonus is a lumpsum, single payment, for achieving short-term objectives. This plan is used for rewarding team performance
3) Salary plus commission plus bonus: suitable for increasing sales, controlling salesforce activities, and achieving short-term goals. Also suitable for selling seasonal products like fans 4) Commission plus bonus: Not popular. Used for team selling activities for selling to major customers
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Combination Plan (Continued)

Advantages: Flexible to reward and control salesforce activities

Security for living costs and incentives for superior performance for salespeople
Rewards specific sales performance Different plans for different sales positions / jobs Disadvantages: Complex and difficult to administer May not achieve objectives if not properly planned, implemented and understood Indirect payment plan, also called fringe benefits or perquisites, help in attracting and retaining people, but have now come under government tax in India
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