Marketing bán hàng - Chapter 6: Training, motivating, compensating, and leading the salesforce

Chapter 6Training, Motivating, Compensating, and Leading the SalesforceLearning ObjectivesTo understand sales training processTo learn importance, theories, and tools of motivationTo know objectives and designing of sales compensation planTo understand views, styles, and skills of sales leadershipTo know the methods used to supervise salespeopleSales TrainingProper training can prepare salespeople to meet with customer expectationsNew salespeople spend a few weeks to several months in trainingCompanies view sales training important for protecting their investments in their salesforceSales Training Process consists of:Assessing sales training needsDesigning and executing sales training programsEvaluating and reinforcing sales training programsAssessing Sales Training needsSales training needs are assessed both forNewly hired sales trainees, andExperienced / existing salespeopleMethods used for assessing training needs are:First level sales managers’ observationSurvey of salesforce and field sales managersCustomer surveyPerformance testing of salespersonsJob description statementsSalesforce audit (as a part of marketing audit)Designing and Executing Sales Training ProgrammeFor this, sales manager takes five decisions, called: ACMEE: Aim, Content, Methods, Execution, EvaluationFirst three words and organisational decisions relate to designing of sales trainingExamples of Aims / Objectives of sales training:Increase sales, profits, or bothIncrease sales productivityImprove customer relationsPrepare new salespeople for assignment to territoriesContent of Training ProgrammeContent for new sales trainees is broader. It includes:Company knowledgeProduct knowledgeCustomer knowledgeCompetitor knowledgeSelling skills / sales techniquesExamples of specific content for experienced salespersons are:New product knowledgeIntroduce change in sales organisationNegotiating skillsContent depends on the aims of training programmeSales Training MethodsSelection of suitable methods for a training programme depends upon the topic and audienceTraining methods are grouped into five categories:Class room / Conference trainingBehavioural learning / SimulationsOnline trainingAbsorption trainingOn-the-job trainingWe shall briefly review the training methodsClass-Room / Conference Training GroupThe training methods in this group are: (1) lecture, (2) demonstration, and (3) group discussionLectureUsed when more information is presented in a short time to a large number of participantsMay lead to boredom due to less active participationDemonstrationUsed for giving product knowledgeGroup discussionUseful when participants include experienced and inexperienced salespersonsA panel discussion consists of a small group of people who discuss a specific topicBehavioural Learning / Simulation GroupThis group consists of three training methods: (1) role playing, (2) case-studies, and (3) business gamesRole playingUseful method for teaching sales technique / processTypically, one trainee plays the role of a salesperson and another trainee acts as a buyerCase studiesBeneficial for understanding consumer behaviour, and building problem solving abilitiesCase teaching includes open discussion, group discussion and presentationBusiness gamesHelpful in learning impact of decision makingGenerates enthusiasm and competitive spiritOnline Training GroupIt includes (1) electronic performance support systems (EPSS), (2) interactive multimedia training, (3) distance learningIt takes 50 percent less time and costs 30-60 percent less, and more convenient than other training methodsUseful for getting basic knowledge like products and customersElectronic performance support system (EPSS) makes information available immediately, in a personalised mannerInteractive media training is used for retraining salespeople who can repeat or skip material as desiredDistance learning is a personal training method, which is interactiveAbsorption Training / Self Study GroupIt includes supplying audio cassettes, product manuals, books, articles, and CD-ROMs to salespeople, who read (or absorb) these materials without feedbackUseful for introducing basic materials or strengthening previous trainingOn-the-Job Training GroupMost companies use this method as it places a sales trainee in a realistic sales situationTypically, a junior salesperson is assigned to a senior salesperson for some period of timeIn mentoring, a junior / new employee gets information, advise and support from mentors / experienced personsJob rotation is used to groom salespeople for management positionsSelecting Training MethodIn addition to the topic and audience, selection of appropriate method depends on active / passive learningPeople generally remember10% of what they read20% of what they hear30% of what they see50% of what they hear and see70% of what they say, and90% of what they say as they do a thingOrganisational Decisions for Sales TrainingOrganisational 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?Execution of Sales Training ProgrammeUsually sales trainer or sales training manager is responsible for entire process of sales trainingExecution / implementation includes preparing time-table, arranging internal / external trainers, making travel arrangements of participants, arranging conference hall and teaching aids, and so onA good practice to make a final check one / two days prior to start of training programmeObtain feedback from the sales trainees at the end of the programmeEvaluation of Sales Training ProgrammeIt is done to improve training design and implementation, and to find if expenditure was worthwhileFramework for sales training evaluation:Outcomes to measureWhat to measureHow to measureWhen to measure Reactions / Perceptions of participants Training objective Was training worthwhile? Questionnairesinterviews After the training Learning – knowledge, skills, attitudes learnt Knowledge, skills, attitudes Tests Interviews After training Before & after – training Behavioural change Trainees’ change of behaviour Self-assessment by trainees Observation by supervisors / customers After training, over a period of one year Results – Performance; Benefits more than cost? Sales, Profits Customer satisfaction Company data Management judgement Market survey After training, Quarterly, YearlyReinforce Sales TrainingBehaviour of most salespeople would not change unless there is reinforcement to sales trainingIn many companies reinforcement or follow-up trainings are not doneTraining 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 changedWeb-based or online methods to reinforce formal training sessionsSenior salespeople or first line sales managers coaching new salespersonsMotivating the SalesforceMotivation is derived from Latin word “movere”, which means “to move”Motivation is the effort the salesperson makes to complete various activities of the sales job10-15 percent salespeople are self-motivatedMajority of salespeople are not adequately motivatedImportance of motivating salespeople is recognised, because financial performance of the company depends upon the achievement of sales volume objectiveMotivational TheoriesMotivational theories or behavioural concepts that are relevant to motivation of salespeople are:Maslow’s hierarchy of needsHertzberg’s dual-factorVroom’s expectancyChurchill, Ford, and Walker model of salesforce motivation, shown hereunder:MotivationEffortPerformanceRewardSatisfactionSelecting a Mix of Motivational ToolsSales manager should know each salesperson and understand his / her specific needsFor designing or selecting a mix of motivational tools, a compromise between differing needs of customers, salespeople, and the company management becomes necessaryMotivational tools are divided into (1) financial, and (2) non-financial. These are shown in the next slideMotivational Tools in a Motivational MixFinancial compensation is the most widely used tool of motivation, as salespeople give highest value to itFinancialNon Financial Financial compensation plan Salary Commission/Incentive Bonus Fringe benefits Combination Sales contests Promotion Sense of accomplishment Personal growth opportunities Recognition Job security Sales meetings Sales training programmes Job enrichment SupervisionCompensating the SalesforceA good compensation plan should consider objectives from the company’s and salespeople’s viewpointObjectives of compensation plan from the company’s viewpointTo attract, retain, and motivate competent salespeopleTo control salespeople’s activitiesTo be competitive, yet economical: It is difficult to balance these two objectivesTo be flexible to adapt to new products, changing markets, and differing territory sales potentialsObjectives of Compensation Plan from Salesperson’s ViewpointTo have both regular and incentive incomeRegular income by fixed salary to take care of living expensesIncentive income for above average performanceTo have a simple plan, for easy understandingThis is in conflict with the objective of flexibilityTo have a fair payment planFair or just payment to all salespeople is ensured by selecting measurable and controllable factorsDesigning an Effective Sales Compensation PlanDesigning a new compensation plan or revising an existing plan consists of the following steps:Examine job descriptionsSet up specific objectives for salespeopleDecide levels of pay / compensationDevelop the compensation mixDecide indirect payment plan or fringe benefitsPretest, administer, and evaluate the planWe shall examine these steps brieflyExamine Job DescriptionsSeparate job descriptions are required for different sales positions or jobs – E.G. missionary salesperson, senior salesperson, key account executiveEach job description should include responsibilities and key performance standards, to decide how much to paySet up Specific Objectives for SalespeopleThese are derived from company’s sales and marketing objectivesSalespeople should have some control on the objectives – E.G. number of sales calls madeObjectives should be measurable. E.G. sales volume, selling expensesDecide Levels of Pay / CompensationIt means the average pay or money earned per year (or month)It is important to decide levels of pay for all sales positionsIt is decided based on the following factors:Levels of pay for similar positions in the industryLevels of pay for comparable jobs in the companyEducation, experience, and skills required to do sales jobCost of living in different metros and citiesAnnual average pay levels vary between industries, within the same industry, and sometimes within the companyFirms decide a range of average pay, instead of a specific paySalespeople earn pay depending on their and company performanceDevelop 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 includedBasic types of compensation plans are:Straight salaryStraight commissionCombination of salary, commission, and / or bonus68 percent companies use combination plan and balance 32 percent firms use straight salary or straight commissionWe shall briefly examine above compensation plansStraight – Salary PlanCharacteristics:100 percent compensation is salary, which is a fixed componentNo concern for sales performance or salesperson’s effortsThis plan is suitable for sales trainees, missionary salespeople, and when a company wants to introduce a new product or enter a new territoryAdvantages:Salespeople get secured income to cover living expensesSalespeople willing to perform non-selling activities like payment collection, report writingSimple to administerDisadvantages:No financial incentive to salespeople for more efforts and better performance. Hence, superior performance may not be achievedMay be a burden for new and loss-making firmsStraight – Commission (or Commission Only) PlanCharacteristics:It is opposite of straight-salary planMost popular commission base is sales volume or profitabilityCommission rate is a percentage of sales or gross profitThis plan is generally used by real estate, insurance, and direct-sales (or network marketing) industriesAdvantages:Strong financial incentive attracts high performance, removes ineffective salespeople and improves resultsControls selling costs and requires less supervisionDisadvantages:Focus is on sales and not on customer relationshipSalespeople may pay less attention to non-selling activitiesCombination PlanCharacteristics:Combines straight salary & straight commission planFour types of combination plans used by companies:Salary plus commission: suitable for getting improved sales and customer serviceSalary plus bonus: a bonus is a lumpsum, single payment, for achieving short-term objectives. This plan is used for rewarding team performanceSalary plus commission plus bonus: suitable for increasing sales, controlling salesforce activities, and achieving short-term goals. Also suitable for selling seasonal products like fansCommission plus bonus: Not popular. Used for team selling activities for selling to major customersCombination Plan (Continued)Advantages:Flexible to reward and control salesforce activitiesSecurity for living costs and incentives for superior performance for salespeopleRewards specific sales performanceDifferent plans for different sales positions / jobsDisadvantages:Complex and difficult to administerMay not achieve objectives if not properly planned, implemented and understoodIndirect payment plan, also called fringe benefits or perquisites, help in attracting and retaining people, but have now come under government tax in IndiaPretest, Administer, and Evaluate Compensation PlanPretesting the new / proposed Compensation Plan:Companies pretest a new (or proposed) plan, before adoptionEither it is simulated on a computer, or pretested at one / more branches for 6-12 monthsIt should involve all concerned peopleAdministering the new compensation planAnnounce the plan in advanceExplain the new plan and reasons for changing the previous planOutsource administration if plans are changed frequentlyEvaluating the new compensation planFind if objectives of the plan are achievedSome companies audit compensation plansLeading the SalesforceLeadership is the ability to influence people to achievement of objectivesLeadership is necessary for a sales manager’s effectivenessLeadership StylesTransactional leadership equates to supervision – relating to day-to-day operations & control, and task-orientationTransformational leadership changes values and attitudes of followers, who perform beyond expectationsSituational leadership uses a style that fits the situationLeadership skillsLeadership skills required by an effective sales manager are: communication, problem-solving, and interpersonalSupervising SalespeopleSupervising is directing and controlling day-to-day activities of salespeopleIt is a part of leadershipSales managers use a combination of methods to supervise salespeopleMethods of supervision are classified into two categories – direct and indirectDirect Supervisory MethodsIndirect Supervisory Methods Telecommunications Sales meetings Personal contacts Coaching / Mentoring Sales reports Compensation plan Sales analysis Expense accountsKey LearningsSales training process consists of need assessment, designing, executing, evaluating, and reinforcingMethods used for need assessment include observation, survey, performance testing, job description, and audit of salesforceDesigning sales training programme require five decisions, called “ACMEE”: Aims, Content, Methods, Execution, EvaluationExecution of training programme includes preparing time-table, arranging trainers, travel booking, conference hall, teaching aids, etc.Evaluation of training is done to improve design & implementation, and find if expenditure was worthwhileMethods used for reinforcement include refresher training, web-based, and coaching salespeopleKey Learnings (Continued)Motivation is the effort salesperson makes to perform various activities of sales jobOut of the various financial and non-financial tools of motivation, financial compensation is most widely used68 percent companies use combination compensation plan, and 32 percent use straight salary / commission plansLeadership is necessary for a sales manager’s effectivenessLeadership styles are transactional, transformational, and situationalLeadership skills include communication, problem-solving, and interpersonalSupervising, a part of leadership, is directing & controlling day-to-day activities of salespeople