The Art of Motivation

As the sanitary supply industry attempts to rebound from the poor economy of 2002 — and hopes for a brighter 2003 — distributors are revisiting how they manage and motivate their sales forces. A recent survey by Sanitary Maintenance magazine found that 63 percent of jan/san distributors believe that the use of various incentives has improved sales performance. However, follow-up interviews revealed that most distributors are still struggling to match the right “carrot” with individual members of increasingly diverse sales teams.

When queried about the status of their sales manpower, sales managers complain of high turnover, for example. They tell us that traditional problems — lost accounts and salespeople who aren’t willing to build relationships with customers — still exist.

What’s the solution?

Unfortunately, finding the right combination of monetary compensation and specialized incentives is not an exact science. Motivation is more of an art. Distributors, for example, are experimenting with the right mix of commission and salary. Some managers offer cash bonuses for selling certain product lines during certain times of the year, or even for making impromptu midnight deliveries.

The question of how salespeople view monetary rewards today is being addressed across the country. A healthy paycheck has always been a key motivational factor for anyone in sales. But even that has changed in the past 10 years, according to Rich Schomaker, president of Pitt Chemical Sanitary Supply in Pittsburgh, a 30-year veteran in the jan/san industry.

“Today’s salespeople want more than a paycheck, and that’s the challenge that the sales manager faces,” he says.

Show Me More Than Money
Survey results also showed that 81 percent of distributors offer special incentives or rewards in addition to base pay. Incentives can vary greatly depending on the characteristics of the sales force and the leadership style of the sales manager. The modern sales force is not necessarily motivated by the same things as previous generations. In fact, there are distinct differences in how Generation X employees are motivated compared to Baby Boomers, says David Kahle, president of The DaCo Corp., a sales consulting firm in Grand Rapids, Mich.

“This generation of salespeople who are coming into the business — people in the 20s and early 30s — are less likely to simply be motivated by money and more likely to be motivated by non-traditional benefits,” says Kahle. “For example, a lot of employees want the ability to have input in their company’s direction. For a lot of salespeople, that is very rewarding.”

In addition to dollars and cents, today’s salespeople also seek loyalty and recognition from their managers more intentionally than did their predecessors. They want to know that they are more than a cog in the company machine and that their contribution isn’t being taken for granted.

Jerry Fritz, program director of sales and sales management for the University of Wisconsin-Madison’s executive education branch, agrees. “A lot of research has shown that the No. 1 factor in sales motivation is appreciation,” he says. “It’s a really simple thing, but a hand-written note is a great motivator. People keep those notes in a file folder until the paper turns yellow. It’s personal and it shows that the employee is being appreciated.”

There are a number of devices currently being used to motivate salespeople in the sanitary supply industry. Distributors host contests, give out trophies, provide vacations and even allow salespeople to sit in on board meetings. Only a few managers, however, seem to really be seeing their creativity pay off.

Ron Mirenda, president of San-A-Care, a jan/san distributor in Waukesha, Wis., says that the best way to motivate a salesperson is to understand what makes them tick. “Salesmen want recognition as much as they want compensation,” he says. “They are usually very ego-driven, and so they love to be recognized. We have dinners and contests to recognize them, but we don’t stop there. We also do weekend escapes and retreats as a kind of reward and to show them that they’re an important part of the company.”

Planning weekend retreats is not every distributor’s forte, but those who take a few risks — even financially — for the sake of boosting morale will see it pay off in the end, says Fritz. “I know one company in Iowa that rewards salespeople who exceed their annual sales goals by 20 percent with a four-day vacation cruise. It gives them time away with their family, and think about how it improves morale around the office.”

Despite the evolution of sales motivation, the cash bonus continues to be the most popular incentive. While some distributors said that they gave out bonuses for new accounts, others place the emphasis on keeping valuable customers happy. Still others, like Schomaker, give out award bonuses when it seems that salespeople need to pay more attention to a particular product line.

SM found that 66 percent of distributors use cash bonuses to motivate their salespeople. When business is scarce, the way that managers use the cash bonus becomes even more critical.

“The challenge we’re facing right now during these rough economic times is the large amount of competition right here on Long Island. We reward the salespeople who are able to introduce certain product lines,” says Ed Zeitlin, president of Edmer Sanitary in New York. If salespeople sell enough products with the specialized cash bonuses attached, they can double their usual base pay, he adds.

Contests proved to be the next most popular incentive that SM readers had tried (46 percent). Distributors have varied takes on the benefits of competitive contests, or contests that rely on competition between salespeople within the same sales force. “If you have a contest among 10 salespeople and there’s a first-place winner and a second-place winner, then you’re going to end up with eight losers,” says Schomaker. “That’s not going to make them want to sell more product.”

It’s common for one or two salespeople to shoot ahead of the pack quickly in a competitive sales contest, leaving the rest of the sales force discouraged and diminishing the spirit of competition.

“I would rather that the company arrange a system where the salespeople compete against their own past performance, rather than other salespeople,” says Kahle. “They should have goals for their individual performance so that everyone can win. Then there is a more universal motivation.”

Commission vs. Salary
Even though today’s sales forces are motivated by more than just a paycheck, that doesn’t mean compensation is unimportant. Commissions will always be the No.1 factor in getting salespeople to perform, says Fritz. “That’s still the reason that people get into sales. They’re good at selling, and they know that the more they sell, the more they’ll make.”

Traditionally, distributors start inexperienced salespeople, or sales “rookies,” on a salary and slowly wean them onto commission. SM’s survey showed that that’s still the case: 31 percent of distributors pay entry-level salespeople a straight salary (no commission), while an even greater number (41 percent) use a pay scale that combines salary and commission compensation. Only 11 percent start inexperienced salespeople out on full commission.

Although the trend is for salespeople to earn more commission as their sales increase, every business owner has to find his or her own method of compensation.

“There’s not a general plan that works for everyone,” says Kahle. “While it’s true that it takes time for new employees to understand product lines and grow into their customer relationships, sales managers need to find the plan that best fits the individual needs of their company.”

Survey results showed that 54 percent of distributors pay their veteran salespeople on full commission. However, 29 percent pay salary plus commission. Only 6 percent said they paid a straight salary to sales veterans.

Schomaker paid his employees on full commission for years and sees many benefits to structuring compensation that way for salespeople. He believes that it forces them to go out and look for new accounts. “We have always decreased the salary of our rookie salespeople each month, usually by about $150 per month, until they are making very little salary and they have to sell products in order to make a living.”

Other distributors agree that it’s harder to motivate salaried salespeople. “I’ve paid salespeople on salary, and it’s difficult to get them to go out on sales calls,” says Clarence LeMasters, owner of LeMasters’ Janitor Supply, Pueblo, Colo. “They’d rather sit on their fanny.”

A potential problem with full commission, however, is that salespeople often just want to sell the items that will garner a large commission — rider scrubbers or walk-behind floor machines, for example. Sales managers need to motivate their sales forces to have a balanced focus on all product lines, says Tony Higdon, vice president of sales for Paper Products Inc., Clarksville, Ind.

“A combination of salary and commission provides more flexibility for us as managers,” he says. “We can better motivate our salespeople to sell the products that we feel deserve focus at a particular time. Other items may be more lucrative to sell, and therefore more attractive to the sales force, but we have volume incentives that we need to meet for manufacturers of some products that could be commodities.”

Survey results showed that for sanitary supply distributors who do pay on commission, 74 percent pay a percentage of the gross profit for each item. The other 26 percent said that they pay a percentage of the gross revenue.

Of those who said they pay a percentage of gross profit, most distributors (60 percent) pay a commission of between 16 percent and 35 percent on each item sold.

Many Hats for Managers
Extra incentives like vacations and bonuses can go a long way in motivating sales forces, but the burden of providing an environment that promotes enthusiasm for selling rests squarely on sales managers. Sales managers are required to do more now than they did 10 years ago. Some spend time compiling and evaluating results from extensive personality tests, so that they can know how to best motivate them.

“I’m of the school that says you don’t really motivate people, you discover the motivation that is already there,” says Kahle. Knowing how to motivate each individual on the sales force takes time as managers get to know the employee’s interests and personality.

“You don’t manage a group, you manage individuals within a group,” says Fritz. “If you have a sales team, it’s important that you understand the life, the background and even the soul of the employee.”

“A sales manager has to wear different hats and know how to relate to each salesperson,” says Brian Noone, president of ABC Paper and Chemical Co. in West Chester, Pa. “I talk with some of my guys about the Phillies and the Eagles, but I walk into another salesman’s office, and he wants to talk about the opera. I may not be big on opera, but I learn a little bit so that I can talk to him.”

At Paper Products Inc., Higdon uses personality profiling — a written personality test — to better understand his salespeople and motivate them down the road. “So many employers do personality tests for the purpose of hiring, but then they discard those results or just never look at them again. As a sales manager, it’s important for me to continue to use that information so that I know how to get the most out of my sales staff.”

Without a good relationship between the sales manager and the sale force, extra incentives and a competitive base pay will probably not be enough to keep good salespeople around for long, he adds. “All these things that you give — money, a cruise, a bonus — they don’t mean much if there isn’t an overall motivating environment. They might enjoy the trip or the money, but they’re also dreading coming back to work. The American Management Association (AMA) says that 80 percent of all discussion between managers and employees is negative. Maybe that’s a reason so many companies have high turnover.”

Motivation Foundation
New salespeople need time to get comfortable with the variety of product lines and develop their own selling techniques, says Kahle. “The first question I have when someone talks about motivating salespeople is this: ‘What makes people think that it’s a motivation problem?’ You have to find out if it’s a can do or a will do. And most importantly, you have to find out if they are equipped to sell.”

Distributors who allow their salespeople to get a good grasp of the industry early on, seem to have better results. “We don’t expect our salesmen to become productive people for at least two years,” says Mirenda. “We make sure that they have the proper tools in place to succeed, and we try to bring them along slowly. It’s an investment, and we invest in our people with the expectation that it will pay off down the road.”

Sales managers bear the burden of making sure their salespeople are capable sellers. If enough salespeople remain unsuccessful, it may be a problem with the system rather than the individual.

Finding the right way to motivate each salesperson takes hard work and creativity. It’s not as easy as just handing out a decent paycheck.