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Salespeople’s Effective Motivational Strategies Case Study

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Updated: Aug 5th, 2020

Salespeople are agents who work on behalf of their principals to promote and sell the latter’s products. There are several options for motivating the salespeople in their work. A commission-based compensation program is one of them, where the salesperson receives a percentage of the number of sales made out of his efforts as compensation. Sometimes the salespeople receive a fixed amount of salary plus the commission. In other cases, the commission is only received for the number of sales that exceed a predetermined threshold. Commission-based compensation is useful in motivating salespeople, especially in industries whose sales cycles are not characterized by uncertainty. Stock options are also incentives that motivate the salespeople by enabling them to share in the long term success of the companies. Increased levels of sales translate into increased profits, hence increasing the firm’s value. Hence, the salespeople are motivated to increase the sales levels to increase their worth in the companies.

The use of bonuses is another way of motivating salespeople, where additional compensation is given to them after hitting a predetermined target sales level. Quotas are set by the companies, and salespeople become entitled to bonuses for exceeding the quotas. Ratcheting of quotas should not happen as it demotivates the salespeople. Ratcheting is the act of raising the previous quota levels once the salespeople attain them so that they only get the additional compensation for reaching the new targets. The use of cumulative quotas motivates salespeople as they can add more effort during subsequent quota periods to attain cumulative sales targets and become entitled to bonuses. The timing of rewards is an important factor in motivating the salespeople. The shorter the payout periods, the more motivating the compensation plan is for the salespeople.

Another motivating factor for salespeople is the use of non-monetary incentives such as recognition, such as gift cards or skiing trips. A company that uses a combination of monetary and non-monetary incentives is more likely to attain motivation goals for its employees than one that uses just one form of motivation. The different employees are motivated to different extents by the various incentive programs. Hence, the more diverse the programs, the higher the possibility of achieving motivation for all the salespeople.

Works Cited

Chung, D. J. (2009). How to Really Motivate Salespeople. Harvard Business Review, 54-61.

Fu, Frank Q., et al. “Motivating salespeople to sell new products: The relative influence of attitudes, subjective norms, and self-efficacy.” Journal of Marketing 74.6 (2010): 61-76.

Krafft, Manfred, et al. “Compensation and control systems: A new application of vertical dyad linkage theory.” Journal of Personal Selling & Sales Management 32.1 (2012): 107-115.

Nasri, Wadie, and Lanouar Charfeddine. “Motivating salespeople to contribute to marketing intelligence activities: An expectancy theory approach.” International Journal of Marketing Studies 4.1 (2012): 168.

Verbeke, Willem, Bart Dietz, and Ernst Verwaal. “Drivers of sales performance: a contemporary meta-analysis. Have salespeople become knowledge brokers?.” Journal of the Academy of Marketing Science 39.3 (2011): 407-428.

Wang, Guangping, Wenyu Dou, and Nan Zhou. “The interactive effects of sales force controls on salespeople behaviors and customer outcomes.” Journal of Personal Selling & Sales Management 32.2 (2012): 225-243.

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