Motivating sales reps – what’s the role of money?

Motivating sales reps - the role of money

All sales managers face the challenge of motivating their sales teams. It’s one of the keys to sales success. Yet, talk with 10 sales managers and you’ll hear at least 10 different ideas on tackling the motivation challenge. Some are based on motivational theory; others come from lessons learned from the sale manager’s favorite motivational speaker. Some sales managers use the motivators they experienced with their sales managers during their careers. And, some sales managers use the same motivators with their sales teams that motivate them.

Why so many differences?  Answer – there are a lot of different opinions because motivating a sales team is not only an important challenge; it is also one that is extremely complex.  The best answer for what works is – “it all depends.”  It depends on factors such as: business environment, type of sale, and the sales person being motivated.

With that in mind let’s take a look at one question that sales managers ask time and time again – What is the role of money in motivating better sales performance? Three considerations deserve highlighting.

1. Money isn’t the only motivator. While money is a motivator for some sales reps some of the time, sales managers should leverage the motivational impact of nonfinancial incentives such as the recognition and appreciation of work performed and feedback from the manager.  A salesforcework.com study recently reported:

  • 50% fewer sales people are motivated by money than 5 years ago
  • 39% of sales people do not feel appreciated at work
  • 70% of sales reps leave because of poor relationships with their managers

It is well to remember that front-line sales managers typically have limited control over the parameters of the sales compensation system.  So they are somewhat limited in using money as a motivator.  On the hand, they have almost total control over using recognition and appreciation ideas and managing the feedback to their sales team.

It is also important to remember that nonfinancial rewards can and should be used by the manager for motivating higher performance for the entire team.  On the other hand, money as a motivator is often available just for a few top performers.

2. Money doesn’t make you smarter. Several years ago Neil Rackham and I wrote Managing Major Sales. The foundation for the chapter on motivation was the fundamental idea that transactional and major account sales are very different – for example improved results in transactional sales can come from working harder but success in major account sales requires working smarter.

The motivational impact of money under the right conditions can help people to work harder but money cannot help you to work smarter. There is, therefore, a much stronger link between money and higher performance in sales where effort can change the game versus where working smarter is the key factor.

3. Lack of money can demotivate. Frederick Herzberg was one of the most prolific of our motivational theorists.  The most interesting aspect of Herzberg’s work was the notion that one set of incentives contributes to job satisfaction and another set leads to dissatisfaction.

What that means for the topic at hand is that while additional money may not be a powerful motivator for improving performance in major sales; the lack of money can be a significant de-motivator that creates dissatisfaction – even in major sales.  The most practical negative consequence of demotivation is the sales rep just leaves the organization.

Final Note. When it comes to developing a better understanding of sales motivation, a good first step is to be cautious of universal truths – there aren’t very many.  Secondly, it takes a lot of work to grasp the relationship between motivation and behavior – performance.  On the other hand it is a journey worth taking.

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©2013 Sales Horizons, LLC

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About Richard Ruff

For more than 30 years Dr. Richard Ruff and Dr. Janet Spirer - the founders of Sales Horizons - have worked with the Fortune 1000 - such as UPS, Canon USA, Smith & Nephew, Boston Scientific, Owens & Minor, Textron - to design and develop sales training programs. During his career Dick has authored numerous articles related to sales effectiveness and co-authored "Managing Major Sales", a book about sales management, "Parlez-Vous Business" which helps sales people integrate the language of business into the sales process, and "Getting Partnering Right" – a research based work on the best practices for forming strategic selling alliances. Dr. Ruff received his Ph.D. in Organizational Psychology from the University of Tennessee and a B.S. from Rennsselaer Polytechnic Institute.
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