Motivating Customers for Increased Sales: Understanding Valence and Motivation

1. 4.02 Understand sales processes and techniques to enhance customer relationships and to increase the likelihood of making sales.

2. Define the terms motivation and valence • Motivation • The drive to do, accomplish or buy something (like a getting an “A” or buying a car) • Internal and external motivators • Valence • the degree of importance or value attached to a reward • Each individual ranks potential rewards according to the valence (importance) to them and estimates the likelihood (possibility) of a variety of possible actions delivering those payoffs http://www.scribd.com/doc/38207103/Chapter-04

3. What is valence? Why must valence be considered in addition to the rewards them selves? • Valence is the degree of importance or value attached to a reward. • An individual may be interested in a variety of rewards: • BUT , they are unlikely to be equally important to him/her. • Obviously, those rewards of greatest importance should receive more emphasis. http://www.scribd.com/doc/38207103/Chapter-04

4. Define the term perceived probability Perceived probability • the perception a person has about the likelihood or unlikelihood of an event given knowledge of some but not all of the factors that will determine the outcome What is perceived probability? • Perceived probability is the perception that effort on a particular set of tasks will lead to accomplishment of performance outcomes that will, in turn, lead to desired rewards.

5. Explain reward-measurement (RM) theory (i.e., motivation equals the benefits of buying). The motivation is the benefit the buyer gets • Buyers are motivated by both intrinsic rewards & extrinsic rewards; • Probability multiplied by the valence determines the individual level of motivation • Intrinsic rewards: buyers give themselves (e.g., feeling of satisfaction) • Extrinsic rewards: bestowed by one’s organization (e.g., salary, promotion)

6. Describe types of internal and external rewards that motivate buyers. • Internal • What’s in it for me? • What will I gain for myself if I buy this product vs. the other one? • Improve my image with friends or associates • External • Will this make my boss, spouse, children happy? • Save time or money

7. Explain why the two dimensions of valence (the importance or value) of the reward and perceived probability need to be considered in reward-measurement theory. • The Reward-Measure (RM) model says that probability times valence determine the individual level of motivation. That means a person will be more highly motivated to take actions and/or seek outcomes that they perceive as attainable.

8. Describe how salespeople can apply the reward-measurement theory to motivate customers. • Help the customer see the benefits of making the purchase • Demonstrate the product in a way that shows a high probability of success • Reduce the customer’s fears of failure • Help the customer do the math of “valence X probability”

9. Discuss behavior choice theory (i.e., the motivation is the situation). Buyers go through a choice process to arrive at decisions of how they will buy, as opposed to the choice process of what will be bought (modeled as part of the buy-grid model). 1. Identify situation • Self-orientation • Company orientation 2. Evaluate personal relevance 3. Assesses action alternatives & requirements 4. Choose behavior strategy • Offensive strategies • Defensive strategies

10. Identify Situation • Self-orientation - the degree to which the individual works to achieve personal benefits • Company orientation - the degree to which the individual works to achieve benefit for the company How can an organization motivate self-oriented individuals to engage in company-oriented behavior? • The key is to demonstrate a strong linkage between behaviors that benefit the firm and the achievement of personal benefits

11. Evaluate Personal Relevance In this stage, the buyer examines the reward structures (including formal reward system and informal and social reward system), associated with the purchase situation. • For example, a buyer might evaluate if it is an opportunity to show off decision-making skills, how about the opportunity to get promotions and/or management recognition. • What’s in it for me?

12. Assess Action Alternatives & Requirements In this stage, the buyer look at: • The amount of control over the task • Urgency of purchase • How well does it meet the requirements? • Are there any choices in what the buyer can and can’t do? • Company policies and procedures that may limit the choice of buying activities

13. Choose Behavior Strategy There are two types of strategies –Defensive or offensive The difference between offensive & defensive strategies Offensive strategies designed to maximize gain; Defensive strategies designed to minimize loss Which is most likely to be favored by the organization? Purchasing agent? the individual? Organizations typically favor “maximizing” profit; Purchasing agents tend to favor more conservative, less risky, and more likely to be achieved strategies that “minimize losses” to the firm & themselves; Employees choose alternatives that will be “acceptable” for the firm & which carry an “acceptable” level of risk for themselves. Most people are risk-averse and will try to minimize losses as a means of ensuring their continued employment. This may lead to less risky (& less profitable) choices unless the firm empowers greater risk-taking. Dwyer, F. Robert & Tanner, John F. Jr. (2009) Business Marketing, 4rd ed., McGraw-Hill

14. Describe role theory (i.e., the motivation is the norms or expectations). People behave within a set of norms or expectations of others due to the role in which they have been placed • On your own • Part of a group • CEO of a corporation

15. Explain buying determinant theory (i.e., variety of factors motivate customers). Factors that motivate • Environmental • Business, social, government • Market • Competition and customers • Organizational • Individual

16. Organizational • Extrinsic reward systems • Role expectations • Corporate culture andintrinsic rewards • Cross-functional purchasing teams

17. Individual • Valence of reward • Probability perceptions http://www.scribd.com/doc/38207103/Chapter-04

18. Discuss how Maslow’s hierarchy of needs can be used to understand customer motivation when buying • 5 Steps in the hierarchy • Where is your customer in the hierarchy? • What will this product do for them and will it solidify a level or move them up?

19. Maslow’s hierarchy of needs Self-Actualization Esteem Needs Social Needs Safety Needs Physiological Needs

20. Maslow’s Heirarchy of Needs