Page 530 - Foundations of Marketing

Personal Selling and Sales Promotion | Chapter 17 497

Motivating Salespeople
Trips or vacation packages are
rewards that a high-performing
salesperson might receive for
surpassing his or her sales
goals.

© Maugli/Shutterstock.com

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followed by gift cards and travel. Travel reward programs can confer a high-profile honor,
provide a unique experience that makes recipients feel special, and build camaraderie among
award-winning salespeople. However, some recipients of travel awards may feel they already
travel too much on the job. Cash rewards are easy to administer, are always appreciated by
recipients, and appeal to all demographic groups. However, cash has no visible “trophy” value
and provides few “bragging rights.” The benefits of awarding merchandise are that the items
have visible trophy value. In addition, recipients who are allowed to select the merchandise
experience a sense of control, and merchandise awards can help build momentum for the sales
force. The disadvantages of using merchandise are that employees may have lower perceived
value of the merchandise and the company may experience greater administrative problems.
Some companies outsource their incentive programs to companies that specialize in the cre-
ation and management of such programs.
Managing Sales Territories

The effectiveness of a sales force that must travel to customers is somewhat influenced by
management’s decisions regarding sales territories. When deciding on territories, sales man-
agers must consider size, geographic shape, routing, and scheduling.
Several factors enter into the design of a sales territory’s size and geographic shape. First,
sales managers must construct territories that allow sales potential to be measured. Sales terri-
tories often consist of several geographic units, such as census tracts, cities, counties, or states,
for which market data are obtainable. Sales managers usually try to create territories with
similar sales potential, or requiring about the same amount of work. If territories have equal
sales potential, they will almost always be unequal in geographic size. Salespeople with larger
territories have to work longer and harder to generate a certain sales volume. Conversely, if
sales territories requiring equal amounts of work are created, sales potential for those ter-
ritories will often vary. Think about the effort required to sell in New York and Connecticut
versus the sales effort required in a larger, less populated area like Montana and Wyoming.
If sales personnel are partially or fully compensated through commissions, they will have
unequal income potential. Many sales managers try to balance territorial workloads and earn-
ing potential by using differential commission rates. At times, sales managers use commercial
programs to help them balance sales territories. Although a sales manager seeks equity when
developing and maintaining sales territories, some inequities always prevail. A territory’s size

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