The Advantages And Drawbacks Of Incentive Schemes To Motivate Salespeople And The Influence On Sales

In different fields of business a system of financial incentives is offered as a way to encourage staff

. The monetary incentive system is especially utilized in sales to encourage sales people. However, it can be argued that such monetary bonus schemes may lead to an erosion of sales management. In this management training posting we have a look at the positive aspects and drawbacks to the sales manager of employing incentive schemes to motivate their sales team.

Incentive and bonus systems were basically setup for realistic, understandable purposes, which included:

Salespeoples' salary should be linked to objective issues pertaining to good results - which is more good results equals more salary.

Failure or lack of passion will be automatically punished by the salesperson getting much less income.

The sales people are mindful of both alternatives and will select for themselves or encourage themselves to go for the 1 they've selected.

A side effect of this strategy for the sales manager is the fact that the approach functions automatically, without any personal intervention and with out the need for the manager to take a position on the issue or to develop themselves with management training.

This can be exactly where criticism of such incentives from a good management point of view commences. Any boss who allows a sales team to be led by automatism, is no manager. They are really simply administering their sales people and their budget.

Any supervisor introducing a system of rewards in order to encourage the selling staff is eroding her own authority. The following drawbacks can be observed:

The measurement for incentive schemes is frequently a figure for example turnover per time unit or cost per turnover unit. Attaining this threshold has nothing to do with whether or not the sales man is helping to achieve the company desired goals. The indicators, as an example, supply no indication of whether the sales professional is asserting their company identity when they go on customer visits.

The premise - only rewarding those sales men who've exceeded a certain level - is demonstrative of the fact that the sales manager is additionally entertaining the possibility that a number of their salespeople will fail. That is the manager doubts their ability and their will to be successful and meet the goals they've set themselves.

Automatism which has been installed for reasons of wanting to reimburse sales people fairly for what they have achieved can never replace personal appreciation of individual overall performance and individual failure.

It's the sales manager's task to fix targets with the sales people and agree on the work that will be carried out by both sides. The end result of this ought to be that the sales professional who succeeds in reaching the objective that was set out for them must receive personal praise and the sales person who doesn't make the mark really should be personally reprimanded.

Any automatism which gets in the way with this causes alienation and has the opposite effect to the motivation it's supposed to drive. Rewarding salespeople in a purely monetary manner is bribery rather than a sign that the sales professional is being motivated.

A properly thought out bonus system might help to convert measurable variations in outcomes between sales people into measurable differences in salary.

It really is much better not only to use hard statistics in your calculations of success - but to include in these qualitative values, like client satisfaction or even the image of the company the sales person conveyed to your client. Be sure that the criteria for success which you use truly reflect the objectives which have been set.

You will need to guard against complacency and resting on your laurels. When you think that every thing is settled and in order, you might as well declare yourself bankrupt. The outward functioning of a bonus system says very little about the inner motivation of the salespeople.

In summary, the managing of salespeople is a job that only you personally can fulfill. The job of encouraging your sales people has to take on board their individual personalities and never be left to impersonal methods. Many sales managers find being on a sales management training course particularly beneficial in improving their managerial knowledge.

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