Page 529 - Foundations of Marketing

496 Part 6 | Promotion Decisions

Table 17.2 Characteristics of Sales Force Compensation Methods

Compensation When Especially Useful Advantages Disadvantages
Method

Straight salary Compensating new salespeople; Gives salespeople security; Provides no incentive;
fi rm moves into new sales territories gives sales managers control necessitates closer
that require developmental work; over salespeople; easy to supervision of salespeople;
sales requiring lengthy presale and administer; yields more during sales declines, selling
postsale services predictable selling expenses expenses remain constant
Straight Highly aggressive selling is required; Provides maximum amount Salespeople have little
commission nonselling tasks are minimized; of incentive; by increasing fi nancial security; sales
company uses contractors and commission rate, sales managers have minimum
part-timers managers can encourage control over sales force; may
salespeople to sell certain items; cause salespeople to give
selling expenses relate directly inadequate service to smaller
to sales resources accounts; selling costs less
predictable

Combination Sales territories have relatively similar Provides certain level of fi nancial Selling expenses less
sales potential; fi rm wishes to provide security; provides some incen- predictable; may be difficult
incentive but still control sales force tive; can move sales force efforts to administer
activities in profi table direction

Source: Charles Futrell, Sales Management , http://people.tamu.edu/~c-futrell/436/sm_home.html (accessed February 18, 2013).

Motivating Salespeople

Although financial compensation is an important incentive, additional programs are necessary
for motivating sales personnel. The nature of the jobs, job security, and pay are considered to
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be the most important factors for the college student going into the sales area today. A sales
manager should develop a systematic approach for motivating salespeople to be productive.
Effective sales force motivation is achieved through an organized set of activities performed
continuously by the company’s sales management.
Sales personnel, like other people, join organizations to satisfy personal needs and achieve
personal goals. Sales managers must identify those needs and goals and strive to create an
organizational climate that allows each salesperson to fulfill them. Enjoyable working condi-
tions, power and authority, job security, and opportunity to excel are effective motivators, as
are company efforts to make sales jobs more productive and efficient. At the Container Store,
for example, first-year sales personnel receive 263 hours of training about the company’s
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products. A strong positive corporate culture leads to higher levels of job satisfaction and
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organizational commitment and lower levels of job stress.
Sales contests and other incentive programs can also be effective motivators. These can
motivate salespeople to increase sales or add new accounts, promote special items, achieve
greater volume per sales call, and cover territories more thoroughly. However, companies
need to understand salespersons’ preferences when designing contests in order to make them
effective in increasing sales. Some companies find such contests powerful tools for motivating
sales personnel to achieve company goals. Managers should be careful to craft sales contests
that support a strong customer orientation as well as motivate salespeople. In smaller firms
lacking the resources for a formal incentive program, a simple but public “thank you” and the
recognition from management at a sales meeting, along with a small-denomination gift card,
can be very rewarding.
Properly designed incentive programs pay for themselves many times over, and sales
managers are relying on incentives more than ever. Recognition programs that acknowl-
edge outstanding performance with symbolic awards, such as plaques, can be very effective
when carried out in a peer setting. The most common incentive offered by companies is cash,

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