In February, we wrote how the promotional impact of a sales force may not always be viewed as strongly as what can be done with advertising. We suggested that, in part, this may be because people just do not understand what salespeople do. When it comes to field salespeople (i.e., travel to customers' locations), we can extend this by suggesting that some in an organization may not fully appreciate what they do because, to some inside an organization, field salespeople are more like independent contractors, who are paid for work done outside the office. They only occasionally make a physical appearance within an organization's building and, consequently, rarely interact with office employees.
Because many salespeople perform their work without having other members of their organization around, those who manage the sales function must trust that a salesperson is performing the tasks needed to build strong customer relationships, which will ultimately result in sales. For management, there are certainly methods that can be utilized to monitor what salespeople are doing, such as requiring daily reports. While such tracking is useful, getting a person, who you see infrequently, to go out and give it their strongest effort requires other methods for motivating them to work hard. One way in which management can motivate their sales force is through something that motivates most people – money. For many salespeople, they are particularly motivated when the compensation they receive is tied to sales results, especially when generating greater sales results in more money.
As discussed in this in-depth Harvard Business Review story, traditional methods for determining sales force compensation actually may be decreasing overall sales. Evidence for this comes from research undertaken by story's author. For instance, research results suggest placing a cap on commissions or raising a sales quota based on a previous year's results can negatively impact a salesperson's motivation and, thus, their effort.
This story covers a lot of ground including reviewing previous research on how to motivate salespeople and also offers steps for designing an effective sales force compensation plan.
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