CHAPTER 6

TRAINING, MOTIVATING,
COMPENSATING, AND
LEADING THE SALES FORCE

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 Learning Chapter - 6

Objectives
LO1 : Know the value and process of sales training.
LO2 : Explain motivation, its importance and theories.
Select motivational tools and outline guidelines.
LO3 : Understand compensation plan objectives and
design compensation plan, including types of
compensation plan.
LO4 : Discuss sales leadership, its characteristics,
styles, skills and effectiveness; describe sales
supervision.
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 Value of Sales Training Chapter - 6

• Value or usefulness of sales training is understood

when investment in sales training results in better
customer relations and selling effectiveness.
• In addition, it results in improved team-work, moral,
and customer satisfaction.
Sales Training Process
• Effective sales training process includes three phases :

(I) Identifying who (III) Evaluation and

(II) Designing and
should be trained reinforcement of a
executing a sales
and their training training program.
training program.
needs.

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 Chapter - 6

(I) Indentifying Who Should be Trained

• Most companies identify one of following groups for training :

Newly hired salespersons, the company’s existing salespeople,
intermediaries’ sales representatives and the company’s sales
managers.
Methods Used for Indentifying Training Needs
(i) Sales manager’s observation.
(ii) Sales force survey.
(iii) Customer survey.
(iv) Performance testing.
(v) Job description.
(vi) Sales force audit.

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 (II) Designing and Executing a Chapter - 6

Sales Training Program

• For this, sales manager takes five decisions, summed up
as:
ACMEE: Aims, Content, Methods, Execution, Evaluation.
• First three parts of ACMEE decisions relate to designing
of sales training. Last two parts represent execution and
evaluation.
• Examples of common Aims / Objectives of sales training:
• Increase sales, profits, or both.
• Increase sales productivity.
• Improve customer relations.
• Prepare new salespeople for assignments to
territories.
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 Chapter - 6
Content of Training Program
• The content of initial training for new sales trainees is broader.
It includes:
• Company knowledge.
• Product knowledge and application.
• Customer knowledge.
• Competitor knowledge.
• Selling skills / sales techniques and the selling process.
• Examples of specific content for experienced salespersons :
• Key accounts management strategies.
• New product knowledge and application.
• Introduce change in sales organization structure.
• Team selling approach.

• The content depends on the aims of a training program.

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 Chapter - 6
Sales Training Methods
• Selection of suitable methods for a training program
depends upon how well the content and audience
are combined to achieve the program objectives.
• Training methods are grouped into five categories:
(i) Class room / Conference training.
(ii) Behavioral learning / Simulations.
(iii) Online training.
(iv) Absorption training.
(v) On-the-job training.
• We shall briefly review the training methods:
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 Chapter - 6

Class-Room / Conference Training Category

• The training methods in this Category are: (i) lecture, (ii) demonstration, and
(iii) group discussion.
(i) Lecture
• Used when more information is to be given in a short time to a large
number of participants.
• May lead to boredom due to less active participation.
ii) Demonstration
• Used for giving product knowledge and use/application of the product.
(iii) Group Discussion
• Useful when participants include experienced and inexperienced
salespersons, and the trainer leads the discussion.
• A panel discussion is one form in which a small group of people discuss
a specific topic. Thereafter, the trainees ask questions.
• A case study is another form of group discussion in which trainees are
given a case on a business situation to study, analyze and find solutions
to the problems in the case.
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 Chapter - 6
Behavioral Learning / Simulation Category

• This category consists of three training methods: (i) role playing,

(ii) case-studies, and (iii) business games.
(i) Role Playing
• Useful method for teaching sales technique /selling skills.
• Typically, one trainee plays the role of a salesperson and
another trainee acts as a buyer.
(ii) Case Studies
• Beneficial for improving analytical skills understanding
sales/marketing concepts, and building problem solving abilities. A
case narrates a sales situation.
• Case teaching includes open discussion, group discussion and
presentation by trainees.
(iii) Business /Simulation Games
• Helpful in learning impact of decision making.
• Generates enthusiasm and competitive spirit.
• These are pre-programmed simulation CDs.
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 Chapter - 6
Online Training Category

• It includes (i) electronic performance support system (EPSS),

(ii) interactive multimedia training, (iii) distance learning.
• It takes 50 percent less time and costs 30-60 percent less,
and more convenient than other training methods.
• Useful for getting basic knowledge like products / services ,
the company, competition and customers.
(i) Electronic performance support system (EPSS) makes
information available immediately, in a personalized manner.
(ii) Interactive media training is used for retraining salespeople
who can repeat or skip material as desired.
(iii) Distance learning is a personal training method, which is
interactive. There are various forms - Hybrid learning, e-
learning and massive open online courses (MOOCs).

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 Chapter - 6

Absorption Training / Self- Study Category

• It includes supplying audio cassettes, podcasts, product manuals,
books, articles, and CDs to salespeople, who read (or absorb)
these materials.
• Useful for introducing basic materials or strengthening previous
training.
On-the-Job Training (OJT) Category
• Most companies use this method as it places a sales trainee in a
more practical sales situation than other methods.
• Typically, a junior salesperson is assigned to a senior salesperson
for some period of time to observe , discuss and learn.
• In mentoring, a type of OJT, a junior salesperson gets information,
advise and support from a mentor / senior sales person, since the
junior salesperson is assigned to the senior salesperson.
• Job rotation is used to groom salespeople for management
positions or to make them aware of different departments’ working.
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 Chapter - 6

Selecting Appropriate Training Methods

• Selection of appropriate methods depends on active or
passive learning, individual or group training, effective
combining of content and methods to achievement of
training objectives.
• People generally remember
• 10% of what they read,
• 20% of what they hear,
• 30% of what they see,
• 50% of what they hear and see,
• 70% of what they say, and
• 90% of what they say as they do a thing.
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 Chapter - 6

Organisational Decisions for

Sales Training
• Organizational decisions to answer execution
(i.e. first E of ACMEE of designing sale training program)
Questions are:
• Who will be the trainees?
• Who will conduct the training?
• When should the training take place and for what
duration ?
• What are the instructional material and aids required?
• Where should the training be done and the venue of
the training?
• What will be the budgeted expenditure for training?
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 Chapter - 6

Execution of Sales Training Program

• Usually sales trainer or sales training manager is
responsible for the entire process of sales training.
• Execution / implementation includes preparing
time-table, arranging internal / external trainers,
making travel arrangements of participants, arranging
conference hall and teaching aids, and preparing a list
of activities and so on.
• A good practice is to make a final check on all
activities one / two days prior to start of the training
program
• Obtain feedback from the sales trainees at the end,
and if possible before and during the training program.
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 Evaluation of Sales Training Program Chapter - 6

• It is done to improve training design and implementation of future training

programs, and to find if expenditure was worthwhile
Framework for Sales Training Evaluation:
Outcomes to What to Measure? How to Measure? When to Measure?
Measure
• Reactions • Training objectives • Questionnaires • After the training
-Perceptions / achieved ? • Interviews
reactions of • Was training
participants worthwhile?
• Learning – • Knowledge, skills, • Tests • After training – tests
knowledge, skills, attitudes • Interviews and interviews.
attitudes learnt • Before & after –tests
• Behavioral change • Trainees’ change of • Self-assessment by • After training, over a
behavior trainees period of one year
• Observation by
supervisors /
customers
• Results – • Sales, Profits • Company data • After training,
Performance; Benefits • Customer • Management Quarterly, Yearly
more than cost? satisfaction judgment
• Market survey
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 Reinforcing Sales Training Chapter - 6

• Behavior of most salespeople would not change unless

there is reinforcement in 16 weeks after the sales training.
• In many companies reinforcement or follow-up trainings are
not done, though it is important, due to various reasons.
• Training methods used for reinforcement are:
(i) Refresher training consists of continuous training to
overcome deficiencies of experienced salespeople and
retraining of salespeople whose job requirements have
changed.
(ii) Web-based or online methods to reinforce formal training
sessions.
(iii) Senior salespeople or first line sales managers coaching
new salespersons.

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 Motivating the Salespeople Chapter - 6

• Motivation is derived from Latin word “movere”,

which means “to move”
• What is Motivation ? It is the amount of efforts the
salesperson makes to complete various activities of
the sales job.
• 10-15 percent salespeople in a group are self-
motivated.
• Majority of salespeople are not adequately
motivated and hence, they need motivation.
• Importance of motivation of salespeople is
recognized, as the company’s financial performance
depends upon achievement of sales objective.
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 Motivational Theories
Chapter - 6

• Motivational theories or behavioral concepts that are relevant

to motivation of salespeople are:
• Maslow’s hierarchy of needs.
• Hertzberg’s dual-factor.
• Vroom’s expectancy.
• Churchill, Ford, and Walker model for sales force
motivation, shown hereunder:

Motivation

Efforts Performance Reward Satisfactio

n
Aptitude
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 Chapter - 6

Selecting a Mix of Motivational Tools

• Sales manager should first know each
salesperson and understand his/her specific
needs.
• For designing or selecting a mix of motivational
tools, a compromise between differing needs of
customers, salespeople, and the company
management becomes necessary.
• Motivational tools are divided into (1) financial,
and (2) non-financial. These are shown in the
next slide:
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 Chapter - 6
Motivational Tools in a Motivational Mix

Financial Tools Non-Financial Tools

• Financial compensation plan
• Salary
• Commission/Incentive
• Performance bonus
• Fringe benefits
• Combination
• Sales contests.
• Team compensation.
• Global compensation issues.
• Promotional opportunity
• Sense of accomplishment
• Personal growth opportunities
• Praise and encouragement.
• Recognition
• Job security
• Sales meetings
• Sales training programs
• Job enrichment
• Effective supervision

• Financial tools are the most widely used tools of motivation,

as salespeople prefer them.
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 Chapter - 6

Compensating the Salespeople

• A good compensation plan should consider objectives
from the company’s and salespeople’s viewpoints.
• Objectives of compensation plan from the company’s
viewpoint.
• To attract, retain, and motivate competent salespeople.
• To control salespeople’s activities.
• To be flexible to adapt to new products, new territory,
and differing territory sales potential.

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 Chapter - 6
Objectives of Compensation Plan from
Salesperson’s Viewpoint
• To have both regular and incentive income :
• Regular income by fixed salary to take care of living
expenses.
• In addition, incentive income for above average
performance.
• To have a simple plan for easy understanding :
• This may be in conflict with the objective of flexibility.
• To have a fair payment plan.
• Fair or just payment to all salespeople can be done by
selecting the factors which can be measured and
controlled by salespeople.
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 Chapter - 6

Designing an Effective Sales

Compensation Plan
• Designing a new compensation plan or revising an
existing plan consists of the following steps:
(1) Examine job descriptions.
(2) Decide specific objectives for salespeople.
(3) Establish the level of compensation.
(4) Evolve the method of compensation.
(5) Determine payment of fringe benefits.
(6) Pretest, install, and evaluate the plan.
• We shall examine these steps briefly :

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 Chapter - 6

(1) Examine Job Descriptions

• Separate job descriptions are required for different sales positions
or jobs – e.g. missionary salesperson, senior salesperson, key
account executive. Exiting job descriptions need to be revised.
• Each job description should include job responsibilities and key
performance standards, to decide how much to pay.
(2) Set up Specific Objectives for Salespeople
• These are derived from the company’s sales and marketing
objectives.
• Sales manager should include those specific objectives over
which salespeople have maximum control.- e.g. number of sales
calls made to “A” and ‘B’ class customers.
• Objectives should be measurable. e.g. increase sales volume by
20 percent, selling expenses to be less than two percent of sales
revenue.
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 Chapter - 6
(3) Establish the Level of Compensation
• It means the average pay or money earned per year (or month) by
the salespeople.
• It is important to decide levels of pay for all sales positions.
• It is decided based on the following factors:
(i) Levels of pay for similar sales positions in the industry and
community.
(ii) Levels of pay for comparable jobs in the company.
(iii) Education, experience, and skills required to do sales job.
(iv) Cost of living in different metros and cities.
• Annual average pay levels vary between industries, within the
same industry, and sometimes within the same company.
• Firms decide a range of average pay, instead of a specific pay.
• Salespeople earn pay depending on their and the company’s
performance.
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 (4) Evolve the Method of Compensation Chapter - 6

• Widely used elements of compensation are: (a) salaries,

(b) commissions, (c) performance bonuses, (d) fringe
benefits ( i.e. perquisites or indirect monetary benefits ).
• Expense allowances or reimbursements like travel,
lodging, etc. are not included in the compensation.
• Basic types of compensation plans are:
(i) Straight salary,
(ii) Straight commission, and
(iii) Combination of salary, commission, and / or bonus.
• About 68 percent companies use combination plan and
balance 32 percent firms use straight salary or straight
commission plan or method.
• We shall briefly examine above compensation plans.
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 Chapter - 6
Straight–Salary Plan
• Characteristics:
• 100 percent compensation in salary, which is a fixed sum representing total
payments received by a salesperson.
• No concern for sales performance or salesperson’s efforts.
• This plan is suitable for sales trainees, missionary salespeople, and when a
company wants to introduce a new product or enter a new territory.
• Advantages:
• Salespeople get secured income to cover living expenses.
• Salespeople are willing to perform non-selling activities like customers’
payment collection, obtaining and reporting market information .
• Simple to administer and easy to budget.
• Disadvantages:
• No financial incentive to salespeople for more efforts and better performance.
Hence, superior performance may not be achieved.
• May be a burden for new and loss-making firms.
• May lead to average, but not outstanding performance.
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 Chapter - 6

Straight–Commission (or Commission Only) Plan

• Characteristics:
• It is opposite of straight-salary plan. It offers strong financial
incentives to ensure superior performance.
• Most popular commission base is sales volume or profitability.
• Commission rate is a percentage of sales or gross profit . It is
a difficult decision to decide a suitable rate.
• This plan is generally used by real estate, insurance, and
direct-sales (or network marketing) industries.
• Advantages:
• Strong financial incentive attracts high performers, removes
ineffective salespeople and improves results.
• Controls selling costs and requires less supervision.
• Disadvantages:
• Focus is on sales rather than on customer relationship.
• Salespeople may pay less attention to non-selling activities.
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 Combination Chapter - 6

Plan
• Characteristics:
• Combines straight salary and straight commission plan, i.e. it
combines salary, commission and performance bonus.
• Three types of combination plans are used by most
companies:
(i) Salary plus commission: Suitable for getting
improved sales and superior customer service.
(ii) Salary plus bonus: A bonus or performance bonus is a
lump sum, single payment, for achieving short-term
objectives. This plan is used for rewarding team performance
and controlling selling and non-selling activities.
(iii) Salary plus commission plus bonus: Suitable for
increasing sales, controlling sales force activities, and achieving
short-term goals. Also suitable for selling seasonal products like
fans and air conditioners.
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 Combination Plan Chapter - 6

(Continued)
• Advantages:
• Management has flexibility to reward and control the desirable
activities of salespeople.
• Fixed salary gives security to salespeople towards living costs
and the plan also has incentives to earn more.
• Rewards specific sales performance through performance
bonus.
• Different plans can be developed for different sales positions .
• Disadvantages:
• Complex and difficult to administer.
• May not achieve desired objectives if not properly planned,
implemented and understood by salespeople.
• (5)Indirect payment plan, also called fringe benefits or
perquisites, help in attracting candidates, but are not motivating factors.
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 Chapter - 6
(6)Pretest, Administer, and Evaluate
Compensation Plan

• Pretesting the new / proposed compensation plan:

• Companies pretest a new (or proposed) compensation plan, before it is
adopted.
• Some companies pretest the proposed compensation plan on one or
more branch offices for 6-12 months.
• It should involve all concerned people.
• Administering the new compensation plan
• Announce the plan in advance of implementation date.
• Explain the new plan and reasons for changing the previous plan to
sales people in sales meetings.
• Outsource administration if compensation plans are complex and
changed frequently.
• Evaluating the new compensation plan.
• Find if objectives of the plan are achieved on quarterly/yearly basis.
• Some companies audit compensation plans.

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 Chapter - 6

Leading the Sales Force

• Leadership is necessary for a sales manager’s effectiveness. Leading is a part of a manager’s
function.
• Leadership is the ability to influence people towards achievement of objectives. Leaders have a
vision of future. They communicate it to others and stimulate them to realize it.
• Effectiveness of a leader depends on three factors: leadership styles, skills, and characteristics.
Leadership Styles
• Transactional leadership is considered same as supervision – relating to day-to-day
operations & control, and task-orientation.
• Transformational leadership changes values and attitudes of followers, who perform
beyond expectations. These leaders’ behavior includes team building, creating a vision,
and leading by example.
• Situational leadership uses a style that fits the situation and the individual sales person .
Leadership skills
• Leadership skills required by an effective sales manager are: communication, problem-solving, and
interpersonal.
Leadership Characteristics
• Important personal characteristics or traits of an effective leader are : visionary, honesty, energetic,
self -starter and decisive.

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 Supervising Salespeople Chapter - 6

• Supervising is directing and controlling day-to-day activities of

salespeople.
• It is a part of leadership. The objective of supervision is to
improve the performance of salespeople.
• Sales managers use a combination of methods to supervise
salespeople.
• Methods of supervision are classified into two categories –
direct and indirect.
Direct Supervisory Methods Indirect Supervisory Methods
• Telecommunications. • Sales reports.
• Sales meetings. • Compensation plan.
• Personal contacts. • Sales analysis.
• Coaching. • Expense accounts/reports.

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 Chapter - 6
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End of Notes – Chapter 6

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