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Every module consists of three to five units. Structure of a unit is as under:1) 2) 3) 4) 5) 6) 7) Introduction & objectives 2-5 sections Short answer questions(SAQ) Summary Keywords References Suggested readings
Module I- Sales Process and its Management 1) Introduction to sales management 2) Sales Process 3) Personal selling 4) Computer applications in sales management Module II- Selling Skills 5) Communication skills 6) Sales Presentation 7) Negotiation Skills 8) Retail communication Module III-People Issues in Sales management 9) Job analysis, recruitment & selection 10) Training the sales force 11) Compensation and motivation of sales force 12) Monitoring and performance evaluation 141 - 159 160 - 174 175 - 187 188 - 204 64 - 80 81 - 109 110 - 123 124 - 140 1 - 17 18 - 32 33 - 47 48 - 63
Module IV- Sales Organization and Planning 13) Sales Planning 14) Sales Organization 15) Sales forecasting and sales quotas 16) Sales Budgeting and control 205 - 218 219 - 235 236 - 249 250 - 261
UNIT 1 INTRODUCTION TO SALES MANAGEMENT
Structure 1.1 Introduction
1.2 Marketing Approaches
1.2.1 Production Concept 1.2.2 Product concept 1.2.3 Selling Concept 1.2.4 Marketing Concept
1.3 Marketing and Sales
1.3.1 Good Selling Process 1.3.2 Sales approaches
184.108.40.206 Direct Sales 220.127.116.11 In-direct sales
1.3.3 Types of personal sales
1.4 Evolution of sales department 1.5 Components of the Marketing Mix
1.5.1 Personal Selling and Other Promotional Tools
1.6 Functions of the sales manager 1.7 Sales Management Model
1.8 Summary 1.9 Glossary/ Keywords 1.10 References 1.11 Suggested Readings 1.1 Introduction
“Sales management” as the term implies means management of sales. Often it is considered synonymous with the management of personal sales. It involves an understanding of the effort that goes into the management of the sales force and the various processes of sales. Sales management initially was meant to be the direction of sales force personnel. Later the term took on a broader significance apart from personal selling and the term “sales management” included managing of all the sales related activities including below the line advertising, sales promotion, physical distribution, pricing and product
merchandising. The Definitions Committee of the American marketing association defined sales management as “ the planning , direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force”. However, we shall also include indirect sales through channels within the ambit of sales management. Objectives After studying this chapter you will be able to:1) Identify clearly the differences between the functions of marketing and sales 2) Describe various marketing and sales approaches 3) Describe the marketing mix and the sales management model
4) Identify the various functions of a sales manager and his/her objectives
1.2 Marketing Approaches
Marketing is defined by the American Marketing Association [AMA] as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." Marketing deals with the company orientation towards the market place. It deals with mainly four concept’s namely the production concept', product concept, marketing concept and the selling concept.
1.2.1 Production concept
The production concept founded on the belief that the customers favor those products that are highly available and affordable to them. So the concept assumes that the cheap products are sold well and relies on the improved production and distribution activities. Companies try to attain profits by exploiting economies of scale. Improved production and distribution are emphasized rather than the quality or features of the product/service. This concept is also known as the manufacturing concept. This type of strategy for a business works well in the developing countries where the demand is more than the supply. Important questions the firm has to address in this process are:1) Can the product be produced?
However it was found later that some products did not sell adequately irrespective of all the measures taken by the production concept. As more and more companies joined this business and the foreign brands came in the local players had to adopt the product concept.2. Production concept works perfectly fine for some companies especially in the fast moving consumer goods (FMCG) sector. can it be done in required quantities? China has oft practiced the production concept in making the goods/services available at all times at very low prices and increased efforts to compete in international markets.2 Product concept Product concept relies on the assumption that the customers buy those products that offer the most quality. Attributes of quality may differ from customer to customer. This concept suggests that the quality of the product is an important factor in the customer buying process and customers would always prefer to buy products of superior quality. Sometimes technological or innovational products fail when they . Timing of the product in the market also plays a vital part in the success of a product. Quality however needs to be defined. Computer industry is a good example where the production concept worked earlier but later on product concept took over. This concept works well when the demand for the product is high and the customer preference doesn’t change for a long period of time. This concept is perfectly suitable when the company distributes the products/services for the masses and not to a specific target group. So companies must take enough care in designing a product which would be in accordance with the quality parameters of the target group. Customers required more and more features and quality while choosing a computer/ laptop. To some customers quality means faster processing technologies and to some it may be some other features in the product.2) If the product can be produced. Then this situation demanded another concept known as the product concept. 1. and innovative features. performance.
and various other household items etc. vacuum cleaners.are introduced in the markets and the customers are unaware of the benefits. Important questions the firm has to address in this process are:1) Can the product be sold? 2) How much can we charge for the product or what can be the maximum discount that can be given and still have a decent profit? This concept would work well for the first time sale to a customer who might take the product/service when persuaded by the sales representative. when the customers understood about that technology. This concept believes that customer is usually inert and would not buy the product/service if the choice is left to them. water purifiers. Hence the “Selling Concept” was adopted by some companies. This kind of approach worked well with products/ services like insurance. After some time. so the customer will buy the product only if the company aggressively promotes/sells their products/ services. Hence a strong network of sales force is created for this purpose and they convince the customers to buy the products/services through advertising and personal selling. For instance the Golden Eye technology in televisions was introduced by Videocon but the customers were clueless about what benefit it provides. So the company would push its products/services towards the customers and push them to buy. In such cases product concept might fail to make the customer buy the product.2. it was introduced by LG and it became a marketing success for its products. After buying the . 1.3 Selling Concept This concept relies on the assumption that “We need to compel the customer to buy the product”. In some industries the customer would not be able to understand the product benefits or may be lacking a little motivation to buy the product even if they know it’s nece ssary. So educating the customers before introducing a product is important.
3 Marketing Vs sales Sales as a process implies exchanging the products or services in exchange for money in such a manner that what you get from it is more than what you put into it. 1. Hence the marketing concept has come into the picture. In other . It was later realized that most of the customers will buy the products which they need and want. SAQ 1 1) Identify any two products for which you would prefer to follow the production concept? 2) Explain which concept would work well in selling a cell phone to a CEO of the company and to a small farmer? 3) Identify which model does Dell follow in selling the computer products and explain how it has benefited them? 1.4 Marketing concept The marketing concept underlines the following principles:1) Identify the needs and wants of the customer 2) Design the products and services to fulfill the same 3) Use various promotion techniques to communicate the benefits of the product 4) Realizing the profit by satisfying customer needs over a long term The marketing concept then is the management belief that customers will long those products that they need and what and that the key task of the management is to identify customer needs and wants and design products accordingly.product/service if the customer is not satisfied then he/she might not be interested in entertaining the sales person for the next time.2.
Sales are all the activities required to close the deal. The task of marketing is to enhance the value proposition in the minds of the customer and increase the perceived value.3.words. However the customers may not do so because of several reasons such as:1) He/ She doesn’t know that the product is available 2) May not know where the product is available 3) And have no idea of whom to contact . It would be ideal if the customers came and demanded the product/ service. it is the exchange of good and services. Clearly customers will buy those products which they need and also where the perceived value of the product is greater than the selling price of the product. the sales process needs to be handled carefully. Marketing on the other hand includes understanding the value proposition in the minds of the customer and designing the products and services accordingly. even when the marketing process is good.1 Good Selling Process Good Marketing makes sales easy. However. It may be said that marketing is all the activities conducted to prepare for sales. Good selling implies:1) Identifying the right customer 2) Communicating the product benefits to the customers and 3) Exchange of goods/ services for money Sales are the culmination of all the marketing efforts and in a nut shell. 1. the difference between the realized sales price and the cost of manufacturing is the profit for the organization from sales. for money.
2) Make the product available at place which is easily approachable by the customer. This is referred to as personal sales.1 Direct sales approach may be:1) Selling to offices. Office Automation Products) . Sales management then begins with identifying the process of sales.3.(for examples. 1.4) Have no clear idea of the value proposition and the benefits 5) May not be clear of the utility of the product in solving his / her problem The sales force then plays an important role such as:1) To reach out to the customer and inform him/ her about the product benefits 2) Make the product easily available to the customer The product can be made easily available by the following methods:1) Meeting the customer on a one-one basis and delivering the product at the door step.3. The sales strategy determines the route the sales would take. This is refereed to Indirect or channel sales.2. needs and a affordability of the customer one of the above approaches would be followed by sales personnel 1.2 Sales Approaches Two possible approaches by which the sales would take place can be classified as follows:Direct sales Approach Sales Approaches In-Direct sales Approach Depending upon the product and the approachability.
quality seeds etc. The issues of channel management/ indirect sales approaches are also covered in the course work of “Distribution& Logistics” and “Supply Chain Management”.2) Selling to Industries. SAQ 2 1) If you were a sales person for agricultural products like fertilizers.3 Types of Personal Sales Personal sales can be classified into broad areas like:1) Office sales 2) Industrial/ Institutional sales (In some countries like India there is significant difference in the approaches to be followed for Industrial/ Institutional sales and the government sales) 3) Door-to-door sales The kind of sales strategy to be adopted is the function of the product / service.(business to business –B2B) 3) Door-to-door selling 1.. 1. and the competition. the market.2 In-Direct sales approach 1) Company to retailer to customer 2) Company to wholesaler and then to retailer to customer 3) Company to wholesaler to distributor and then to retailer to customer An attempt is made to introduce these various sales approaches. but the following text is primarily focused on personal selling.3.2.3. buying process. which sales approach would best fit in and why? .
4 Evolution of the sales department As described by Richard (2001). in United States.2) In the above question. In many firms a small team used to supervise all the business activities. The orders were in hand before the actual manufacturing process of those orders had started. the companies had started to focus on the expansion of their territory by finding new market places. There was no need of seperate teams for different functions like selling. With the Industrial revolution. The production process had become simple and now the main problem was what to do with excess surplus after meeting the domestic demand in nearby markets. It was an ideal situation for most of the firms not to bother about the marketing and selling activities until the Industrial revolution began. by a couple of individuals. With increasing presence in many countries. marketing and manufacturing. This process encouraged in establishment of various . what steps would you follow if the customer has no knowledge about the benefits of your product? 1. countries & continents. The size and volume of business had increased to such an extent that it became necessary to delegate the authority to others. before the Industrial revolution the small scale industries were the leaders of the market and selling the products / services was not much of a problem. Most of the time was spend on manufacturing. it became difficult to manage all the departments by a single individual as was the case before the industrial revolution. More emphasis was given on manufacturing activities. Factories were producing huge quantities of goods with the improved technology and machinery. The situation demanded for the expansion of their presence in new markets. Meeting the demand was a major problem. which began in 1760 in England and shortly after the American Revolution. All the tasks were performed by the team or sometimes. crossing the boundaries of the cities.
marketing etc. finance.functional units like manufacturing. The creation of the marketing department has solved the problem of understanding the market place & helped in performing all activities to improve the market dominance of the products. 1. Marketing Mix Product Price Promotion Place Advertising Public Relations Personal Selling (Sales management) Sales Promotion Internet Based promotions . However a major issue of how to communicate with customer has to be perfected.5 Components of the Marketing Mix As you have already studied in marketing. With increasing markets and customers various sales divisions were setup. This is where the roles of marketing mix and personal selling as a function came into the picture. Let us understand what marketing mix is and the importance of its various components. Each and every department was to function independently and be supervised by a separate authority. marketing mix involves several components which can be understood by the following diagram.
such as the rural areas where the television or internet is not available. The benefits for a sale personnel would be in terms of financial reward for closing the sale successfully & the customer would be benefitted by the product/ service received. Often the objective of personal selling may not be to close a sale. Personal selling can be understood as the one to one oral communication between the sales personnel and the target group in such a way that both the parties benefit from each other. Secondly in the cases where the target group might be a CEO of a company or a head of the institution. public relations. the various promotion mechanisms to be used and the type of distribution network followed (place) should be decided. a telephone conversation or by using latest trends in technology such video conferencing. . Most of the time. 1.5. The oral communication could be a personal meeting. According to the market needs the type of product. public relations. Personal selling is preferred in cases where the customer cannot be reached or communicated easily about the company product / services by other means. such customers cannot be communicated easily with other tools as compared to personal selling. sales promotion and internet based promotion. objective may be to pass on the information about the products/ services to the target group.The marketing mix consisting of various components plays an important role in establishing the market place/ dominance of a product.1 Personal selling Vs Other Promotional tools Let us now understand how the personal communication differs from other tools such as advertising. Various tools of promoting a product include advertising. personal selling. the pricing of product. Maintaining a good relationship with the customer is often treated as one of the important objectives of the sales team. We shall also understand the situations in which the personal selling would be preferred over other promotion tools and finally we shall discuss the disadvantages of the personal selling. sales promotion and Internet based promotions.
Educating sales personnel according to company objectives 4) 5) Leading:. The sales manager is responsible for generating sales. training. One manager. Charles Futrell(1998) describes the functions of the sales manager as follows:1) 2) 3) Planning :. 1. John Rozurat of W.W. budgeting.Evaluating the past to guide the future The outcome of these several functions would be the attainment of objectives such as:1) 2) 3) 4) 5) Achieving defined goals Product sales and profits Better Customer satisfaction levels Efficiency and Effectiveness Sales management has several functions like planning. compensation.7 Sales Management Model The 1st step “describing the personal selling function” deals with understanding the job activities and the sales process involved in personal selling . recruiting and selection.Building a profitable customer oriented team Staffing:. What does every sales manager have in common? They accomplish the tasks through their people and organizations. designing territories & evaluating performance. motivating.Grainger.Hiring the right people to sell and lead Training:.1. described management as “the art of getting things done through people”.6 Functions of the sales manager Any organization that has the sales people demands a sales manager. profits & meeting the customer satisfaction levels as per the company objectives.Guiding average people to perform at above average levels Controlling:.
Describing the personal selling function Defining the strategic role of the sales function Designing the sales organization Developing the sales force Directing the sales force Determining sales force effectiveness and performance Source: Thomas N. The 4th step “Developing the sales force” highlights the importance of right recruitment and selection methods and the need for proper training of the sales force personnel The 5th step “Directing the sales force” presents that hiring the best people for sales is one thing and directing their efforts to meet the sales organization goals and objectives is another. .The 2nd step “Defining the strategic role of sales function” will deal with the corporate. business and marketing level strategic decisions which typically provide guidelines within which the sales manager and salespeople must operate. Ingram (1989) The 3rd step “Designing the sales organization” deals with the importance of designing an effective sales organization which is necessary to implement the strategies successfully. Sales managers spend a great deal of time in motivating. supervising and leading members of the sales force.
leading. staffing.9 Glossary/ Keywords 1) Sales Promotion Activities. 3) FMCG Fast moving Consumer Goods are the products used by individuals or households which are used or replaced very fast by the . A good selling process is essential in making the sales easier by identifying the customer. 2) AMA American Marketing Association is a professional association for marketers. selling concept and finally the marketing concept and their role in sales generation. product concept. Finally in this unit we understood the sales management model which helps in managing the sales. For the sales process to be effective the sales force plays an important role in identifying the right approach to reach out to customers and make the sale. 1. Developing forecasts. Later in this chapter we have studied the importance of the components of the marketing mix in establishing the market place and the critical role of personal selling played for the same. assigning quotas and budgets provides necessary information for the performance evaluation. We highlighted various marketing approaches starting with the production concept. 1.The 6th step “Determining sales force effectiveness and performance” deals with monitoring the progress of sales force to determine the effectiveness and performance. This unit also helped in understanding the role of the sales manager in planning. training and controlling the sales force personnel.8 Summary In this unit we understood the definition of sales management and the differences between marketing and sales. communicating the benefits and exchanging the goods/services for money. techniques and incentives that are directed towards customers with an intention to create consumer demand.
Raymond W. “Sales Management”. Thomas E. . Govoni (1998). New Jersey. Atlantic Publishers and Distributors. 1. 2. “Sales Management”. Cron. The Dryden Press. months of within a year. Arun kumar (2004). “Sales and Sales Management”. Tyagi C. USA. P. strategies. Still. Jackson. toiletries etc. The Dryden Press. “Sales management: analysis and decision making”. Thomas N.L. Edward W. “Sales management: decisions. and cases (5th Ed. (1998). Some examples would be soft drinks. 3. “Sales Management: Teamwork. and Technology (6th Ed. Norman A. New Jersey. 2. Charles Futrell. Leadership. USA. Ralph W. Richard R. New Delhi. William L.10 References 1. Robert D. 4. Hisrich (1996). (2004). Prentice Hall.)” Prentice-Hall International. DeCarlo.)”. New Jersey. Ingram. USA. Douglas J. USA. LaForge (1989)..customers over a period of weeks. New York. Florida. 1. Dalrymple. Cundiff.11 Suggested Readings 1. John Wiley & Sons. India. USA.
6 References 2.1 Segmentation and Target Marketing 2.2 Pre-purchase activities 18.104.22.168.3.3.UNIT 2 SALES PROCESS Structure 2.4 Summary 2.1 Introduction Objectives 2.4 Post-purchase activities 2.2 Essential activities of Sales Process 2.1 Typical Purchasing Process 2.3 Sales Approach 2.3 Purchase activities 2.2 Marketing Strategy 2.2 Determining Potential buyer and buyer group 2.3.1 Interest creation activities 2.5 Keywords 22.214.171.124.3.7 Suggested Readings .2.3.
Objectives After studying this unit you will be able to:1) Define segmentation. The sales personnel help in creating customer value and competitive advantage to the product/service.2 Marketing Strategy Marketing strategy can be thought of as all the activities performed to use the company‟s limited resources to achieve the objectives marketing and sales and attain competitive advantage. . It highlighted the functions of marketing and sales. described various sales approaches and presented functions of the sales manager.2. We will discuss the essential activities of the sales personnel in general and later on find out in depth how the sales process changes for different types of sales like direct and indirect sales. Irrespective of the nature of sale and the type of customer. We will begin the unit by understanding various steps in marketing strategy and then deal with the sales personnel skills set and the various steps in the sales process. potential buyer and buyer group for the product/ service 2) Understand the typical purchasing process of the customer 3) Identify essential activities involved in a sales process 4) Explain the critical role played by the sales person in handling the sales process 2. We shall discuss some essential activities which need to be performed by the sales personnel in the sales process. the sales personnel should follow certain basic activities for successful closing of a sale. In this unit we will discuss about the sales process activities.1 Introduction The previous unit dealt with the introduction to “Sales management”.
. If we take the population of a country say In dia. This is where we begin to identify the customer for the product/service. The need for segmentation is that the marketer is clear about where to compete and place the product/ service. They are:a) Attractiveness of a market segment and b) The strategic fit between the segment and the firm‟s objectives.The first step includes identifying the product/ service. we can divide the entire population into two categories. the market is huge. There are different bases for segmentation. You can learn more about this in the module on marketing management. resources. For a consumer product let‟s say the tooth paste. After identifying the product/ service. So we need to convert this heterogeneous group into homogeneous sub groups. However. namely:a) Customer-based Segmentation b) Product-based segmentation and c) Competition based segmentation Generally there are two important factors before selecting the target segment. Market Research will play an important role in finding the answers to the above two factors. Let us say.1 Segmentation and Target Marketing Market segmentation is defined as “the process of dividing the heterogeneous market into homogeneous sub-units”.2. the next step is analyzing the market. with one category preferring ayurvedic/herbal toothpaste and the other category preferring nonayurvedic toothpaste. This categorization will give an idea of the market segment which prefers your toothpaste. and capabilities. it would be around 113 crores. the entire population would not be looking for the same type of features in the toothpaste. The product/ service is developed as per the company goals and the market needs. 2.
For example.A given model of laptop will be priced same for all segments. b) Differentiation: . The pricing would be different in this case. e. E. But the buyers are different for high end mobiles and low end mobiles within the segment.In this strategy the firm differentiates the product to cater the needs of different segment.2 Determining Potential Buyer and Buyer group Determining potential buyer is more a marketing task than the function of a sales process.This is the combination of the above two strategies.:. .:. but if the segment needs an up-gradation of features it would be done at an added cost.g. Every office is a potential buyer of a photocopier but when it comes to brand the offices might go for a cheaper brand an expensive brand. Sleeper and general coaches depending upon the various segment needs. 3-tier. The buyer group may be different for the product category and a brand.:. we can define the strategy using one or a combination of the following approaches:a) Standardization: . the firm maintains the same product.Cold drinks will be priced same to either the rich people or the poor people. 2. The potential buyers for a product/service can be arrived by market segmentation. we market the product/ service. E.Once the segmentation has been carried out for the product/service. if we take the cell phone. So using the above approaches.g.2.The Indian Railways differentiates its service into several categories like AC 2-tier. c) Focus: . Another example can be thought of as a photo copier.g.In this strategy. In this the basic product remains the same with additional features for various segments to be added at an extra cost. same price and same communication medium to all the segments. Every person in the segment is a potential buyer of the cell phone.
authority and Need respectively. authority and need. MAN stands for Money. a process which we generally refer as “Suspect to Prospect through MAN approach”. Marketing identifies the target segment or potential buyers of the product/ service but at the level of individual potential buyers it the task of sales person to identify the needs and wants of the individual potential buyer. Marketing would do this job at a macro level and sales would do this job at the micro level. needs to be analyzed to arrive at a conclusion whether the potential customer has the money to buy the product. So. Sales team needs to know how to assess whether the potential buyer has the money. When the sales team takes their responsibilities the first task is to find the customer. occupation. They ought to give certain marketing inputs in the form of promotions. The firm also has to provide the support material to the sales people in terms of brochures. It is written in this order because it is easier to identify whether the person is having the money followed by whether he has the authority to buy and finally whether he has the need to buy. literature etc This is where the sales team begins its activities. family status etc. Similarly. All these activities are a part of marketing policies and approaches of the firm. the salesperson has to assess whether the potential buyer has the authority to buy the product/ service and does he/she have the need for the same. . The marketing group or the brand management should identify the potential buyers. it. authority and the need.This is where the sales team comes into the picture in determining who the potential buyers for the brand are and the products associated with it. One cannot just ask the potential buyer whether he/she has the money. The potential buyer cannot purchase the product if he doesn‟t have the money. It helps in creating the awareness of the supplier and the brand to the potential buyer before the sales person contacts the buyer. some parameters such as education. Every potential buyer may not be an actual buyer of the product.
The first step in the sales process is the pre-approach. if you install the machine you would end up saving „Y‟ amount per annum”.3 Sales Approach Once the sales team identifies the prospect. fixing an appointment and deciding what to do in the appointment like opening remarks etc.SAQ 1 1) If you are the sales manager in your city for a firm selling laptops. The objective of the pre-approach is the often data collection. it‟s time to decide on the sales approach. Pre-approach would include the attire. Recognition of needs Evaluation of options Purchase decision Implementation and evaluation . If you are selling the photocopier it would be advisable to talk about the customer benefits.1 Typical Purchasing process Every purchase has a process which can be understood by the following diagram. the team involved in buying the product. This is referred to as term “FABing” which means converting features to attributes and attributes to benefits. You may start your discussion by saying “Last year the expense on photocopy is „X‟ amount. 2. what method would you follow in identifying the segments for your product and why? 2) Explain the importance of MAN approach in identifying the actual buyer for selling a high priced product like a luxury car. The sales team will always be able to sell better if they talk customer needs and not the features of the product/ service. Now let us understand the typical purchasing process. 2. knowing more about your prospect. presentation material. the customer history and so on.3.
Most of the customers associate quality with the brand. There might be a different criteria used by different customers. best designs. If the customer evaluation is positive it would lead to another sale in the future. This is seen more often in developing countries and less in developed countries. For the customer. more features. The problem is that the customer often does not know what he/she needs. Discounts play a major role in the successful closing of sale.Here the customer would be preferring the best quality product and does not mind paying a little more. In the second step “Evaluation of options” the customer would look for various competitive products or solutions for his problem. In the third step the purchasing decision will be taken by the customer. Customers might go for a cheaper product rather than a costly one.Most of the customers do not buy a product unless there is a need for it. b) Quality: . . The choice would depend on the customer mindset. But the sales person should have a clear idea of what could be the maximum discount allowed by the company for the product/service. and so on. Some of them might be:a) Price: . Quality might be different for different customers. And the final step “Implementation and Evaluation” deals with the installation of the product and evaluating the value. It is the role of the sales person to know what the customer means by a quality product and carry on with the sales process.Many customers use price as the differentiation criteria. Quality may be associated with long life of the product. Some customers go on with the higher price products or some may buy the medium priced products. In this the sales person may be actively negotiating for a better price or give some discounts. So in the first step of purchasing process one has to identify what the problem or need is. better after sales service. The role of a sales person is to make the purchasing process hassle free and convenient.
purchase activities and post activities. It is very important to know the kinds of activities involved in each of the steps for different types of sales.3. To convert the suspect to a prospect. Let us understand those activities with the help of the following chart.These are the four steps in a typical purchasing process for every sale. 2. Every sale has some essential activities to be performed by the sales team. by Andris A. Greggor A. Zoltner . page no: 41 . Prabhakant Sinha. For instance more activities might be involved in the first step (recognition of needs) for an industrial sale while compared to door-to-door sale. The level of activities involved in each step differs for different types of sales like direct and indirect sales. Zoltners. The process is called sales process cycle. Interest creation activities. These activities aim at serving customer better. each and every activity is important and needs to be performed successfully.2 Essential Activities of Sales Process The sales process can be categorized into four main activities. Interest Creation Activities Post Purchase Activities Pre-Purchase Activities Purchase Activities Source: Sales Management. pre –purchase activities.
During this time the customer can evaluate the product and then buy it. Some of the ways in which companies create interest in the product/service would be: Giving full access to the software features and capabilities for a limited time period like 1 month. the aim of the sales person should be in explaining the benefits of the product to the customer and not its technical features. it is time for moving on to the next activity by the sales person. Offering free test drive option to the customer. brochures and or presentations. The sales person needs to understand the customer in this phase and identify his/her problem and provide the necessary information documents which the customer may request.3. In this process we assume that the customer is actively considering various product offerings and comparing them.2. Here.2.3. Distributing fee trial packs are along with other products. This is usually prevalent in firms selling software products. Various promotional techniques can be used for interest creation. This is the case with firms selling products like soaps. “Why should boys have all the fun” (Hero Honda‟s “Pleasure”) implies that girls are entitled to same freedom as men and driving the scooter is symbol of freedom and liberty. 2. creating awareness about the brand or product should be the main aim than pushing for sales. In this activity. he/she needs to be educated about the product/service you are offering.2. toothpaste etc. Much emphasis is laid on demonstrating the capabilities of the company and or the product.1 Interest Creation Activities The first activity is interest creation. It is the job of the sales person to be prepared with the necessary literature. Coining motivational quotes. If the product is a technical in nature. shampoo.2 Pre-purchase Activities Having created interest in the brand/ product in the first activity. This activity aims at describing the product or service features to the extent possible. the sales . Once a potential customer is identified. so he/she can purchase only if they are satisfied in case of high – value product like automobiles.
negotiates and finalizes the payment. the IBM sales person would handover the lead to a reseller business partner to complete the purchase and post-purchase activities and technical support may be provided by IBM team when required. Sales person‟s role lies in negotiating. The customer evaluates various proposals. an IBM sales representative is involved in interest creation and pre-purchase activities like explaining the features. Here a lot of activities happen both. capabilities and benefits of the product and how the product would be an advantage to the customer in solving his problems. Interest Creation Pre-purchase Purchase Post-purchase Business IBM IBM direct Business (reseller) partner does Partner delivery and installation IBM may provide technical support sales person Source: The complete guide to accelerating sales force performance. Most of the companies who adopt the outsourced model that have several advantages and disadvantages. Companies may also decide to handle all the activities from interest creation to postpurchase. finalizing the terms and condition of the sale. In the later stages like purchase activity.3 Purchase Activities Having presented a solution to the customer problems. bidding. page no: 31 This table explains how the different stages in sales process are handled by the company sales force and the selling partner.3. Prabhakant Sinha. Zoltners. by Andris A. To sell an IBM product. . Zoltner . it is time for the sales person to push for closing. 2. It is not necessarily required that the same person or company who initiated the pre-purchase activities would be involved in purchase activities.person takes on an active role in assessing the customer needs and helping them in problem solving. Some of the processes may be outsourced to other agents. Greggor A.2. from the sales person‟s end and the customer‟s end.
the chance of closing a sale is high. reseller & distributor) Conflicts: Conflicts can arise when deciding which customers to be served and which territories should be assigned. reseller & distributor) Customer relationships: If the reseller or partner has good communication and negotiating skills. 2. the financial and selling risk of the firm is reduced. company can‟t increase the sales force to sell the products and fire them when demand decreases. providing more . So. Companies may not be able to keep track of the reseller performance in selling the goods/services. The chance of your product sale is higher when the customer comes for purchasing a computer/laptop and buys your key board as an accessory.4 Post-purchase Activities The post purchase activity begins after successful closure of the sale. Product variety: A distributor can acts as a one-stop solution for all customer requirements.3. Control: Outsourced selling cannot be controlled like personal sales team of the company. Reseller may be interested in his own profit and may encourage the customer to buy other products as he/she may receives more share/profit/commission by selling other products. This phase includes delivery of the product/ service.Advantages of Outsourced selling (Partner. The company may not be able to force the reseller to follow its sales strategies. then you can take the help of the distributor who would be dealing with the computer products. in peak demand season the distributors can help in selling your products/service to the customers. installation (if required). Variable capacities: If demand of a product/service increase.2. If your company is good in manufacturing microphones/headsets only. Disadvantages of Outsourced selling (Partner. Financial Costs: If the partner charges a percentage of sales made.
Usage “I found another for use…” Product disposal “Can I trade this in?” Repurchase Positive Evaluation “It works well” Source: Small business management: an entrepreneurial emphasis By Justin Gooderl Longenecker. Moore. Carlos W.” No Purchase Purchase “This is the one I want” . some functions in this stage like providing information. The primary objective of this phase is to win customer loyalty so that he/she would be a regular customer of the brand/product. Leslie E. In B2B deals. William Petty. delivery of product and installation can be done by the company itself or with the help of a reseller. J. postpurchase activities can include installing the product or service and then providing training for the uses of the product/service of the company until they understand the new product/service. As discussed earlier. Understanding the post-purchase behaviour by the sales team is an important task if the company looks for repeated business for a long term relationship with customer. page no: 298 This model explains that activities like post purchase dissonance is a type of cognitive dissonance which would arise after the purchase decision is made and customer has . Palich. After sales service plays an important role in creating the customer loyalty.information about the features and finally collecting the payment. Post-purchase Dissonance “Did I buy the right one?” Negative Evaluation “It doesn’t work well” Consumer Complaints “I’m calling the store. This phase can also include after-sales service. It can be as simple as addressing the customer problem on the telephone line or may be a personally visiting the customer premises to resolve an issue.
4 Summary In the previous unit. Finally. In this unit we have understood the importance of segmenting and targeting in identifying the customers. evaluating options. So. identify the typical purchasing process you would follow.thoughts of other products as an alternative. making the purchase decision and finally implementation and evaluation of the product after it is delivered by the sales representative. collecting the payment as per the terms and providing after sales service. We studied the essential activities of the sales person in handling the customer and making a deal. It is the job of the sales person to help the customer in handling the purchasing process of the customer. we discussed various marketing and sale approaches followed by the companies. sales people should try to find ways of maintaining this cognitive dissonance among customers. This can create a negative effect on the evaluation and satisfaction level with the product/ service. SAQ 2 1) If you are in need of an anti-virus product. we discussed that for repeated business with customers. Finally the post purchase activities would include delivering the product/service. We have understood how the customer would purchase the product/service starting with the recognition of needs. After the interest is created it is time for the sales representative to handle the pre-purchase activities like giving sufficient information about the product/service and describing the benefits. We understood how interest can be created in the product/service in various ways. . what sort of interest creation activities would you employ if the customer is not interested? 2. it has become extremely important to handle the post-purchase behaviour of the customer as more and more alternative products/services are available for customer. 2) If you are a sales representative for kitchen chimney products. The next stage would be purchase activities where the sales representative would be aiming at closing the deal successfully by negotiating and finalizing the payment terms.
J. New Jersey. Andris A. but may not necessarily buy it. 2) Potential Buyer Buyer who is interested in buying your product/service. Hisrich (1996). South Western. New Delhi. Moore. Cron. William Petty. “Sales and Sales Management”. Thomas E. India. Leslie E.)”. USA.2. . Carlos W. Robert D. 2. Justin Gooderl Longenecker. Prabhakant Sinha. New York.7 Suggested Readings 1.6 References 1. Zoltners.)”. “The complete guide to accelerating sales force performance”. “Small business management: an entrepreneurial emphasis (13th Ed.5 Keywords 1) Reseller Company or an individual who purchases the products/ service with an intention of selling them to other customers on behalf of the company. Ralph W. William L. USA. Prentice Hall. New Delhi. 2. “Marketing Management (3th Ed.)”. India. John wiley & Sons. 4. 2. Jackson. Zoltners (2001). Rajan saxena (2006). “Dalrymple’s Sales Management (9th Ed. USA. Greggor A. 3. Palich (2006). Tata Mcgraw-Hill. Decarlo (2006). Amacon.
2 Approach activities 3.5 Closing the sale 126.96.36.199 Introduction Objectives 3.5 Keywords 3.UNIT 3 PERSONAL SELLING Structure 3.6 Follow up activities 3.4 Objection Handling 3.3.3 Personal selling activities 3.4 Summary 3.6 References 3.1 Personal selling and other communication tools 3.3 Presentation activities 188.8.131.52.3.1 Pre-approach activities 3.7 Suggested Readings .2 Personal selling as a marketing communication tool 3.2 Advantages and Disadvantages of personal selling 3.3.
Personal selling is one of the oldest communication techniques practiced by companies. In this unit we will study about the steps involved in handling the personal sales. . Not every marketing communication tool is the best at all times. Objectives After studying this unit you will be able to:1) Define personal selling and how it differs from other marketing communication tools 2) Explain the advantages and disadvantages of personal selling 3) Understand various activities involved in handling personal sales. We first define personal selling and understand how it is differs from the other marketing communication activities like advertising. Personal selling would achieve success easily when it is supported by other marketing tools like advertising or Public Relations. in obtaining future sales opportunities. 4) Understand the importance of customer relationship management. In this unit we shall understand the advantages and disadvantages of personal selling. sales promotions and direct marketing. public relations. Personal communication involves a person-to-person communication and is considered to be one of the best marketing tools due to the involvement of human element which helps to build up a long-term relationship with the customer understand the various activities involved and understand the importance of customer relationship management for future sales potential. we examined a typical purchasing process of the customer and the essential activities of a sales process.3.1 Introduction In the previous unit.
Each and every tool like personal selling.2. Advertising aims at a group and is non personal where the communication primarily relies on the media. 3.3.2 Personal Selling as a marketing communication tool Definition: Personal selling can be viewed as a marketing communication tool that involves a one-to-one communication. Unlike advertising. Advantages of Personal Selling a) Flexibility in delivering the message If the customer doesn’t understand the message conveyed by the sales representative. The major difference between sales promotion and personal selling is that the latter is a non-personal way of communicating with the customer. some communication tools work better than others for the business. through video conferencing or by an email. sales promotions etc have their advantages and disadvantages. limited time to increase consumer demand. over the telephone line. Advertising is a communication tool which targets many consumers simultaneously. sales promotions etc.2 Advantages and disadvantages of personal selling Every communication tool serves the purpose of the company’s objective to increase its sales. which can happen in the form of face-to-face communication. AMA defines sales promotion as “Media and non-media marketing communication employed for a pre-determined.2. then the message can be modifies and conveyed to the customer again. stimulate market demand or improves product availability”. Since a sales representative interacts with one potential customer at a . However. in doing so. 3. personal selling is targeted at an individual prospect and develops the relationship. other communication tools Personal selling is different from other marketing tools such as advertising.1 Personal selling vs. advertising.
In B2B markets. In such cases personal selling would help to reach out to the customer and inform about the product/ service. would not guarantee that the customers have understood the communicated message. e) Complex information delivery . This flexibility is not available in advertising which happens through the television. For instance if the company deals with B2B markets or with the CEO of a company. personal selling certainly has an added advantage over other communication tools in building long lasting relationships of customer.time the messages can be tailored and delivered as per the customer needs. The feedback would be immediate by the customer in personal selling. personal selling would be a better communication tool than advertising or sales promotion. b) Efficient way of communication Personal sales is a two way communication process which allows for the efficient dialogue between the customer and the sales representative. magazines. In other promotional tools like advertising which rely on one way communication. d) Better access to various target segments Not all the target groups can be reached with advertising. It would be easy to know whether the customer has really understood the communicated message about the product/ service. and public relations. c) Building long term relationships Being a two-way & one-to-one communication. window displays etc. newspapers. sales promotions. which would helps the sales representative to know whether the sales approach is working or not change the approach accordingly. the sales process involves a lot of communication time and hence a high level of two way interaction is required making the personal sales a practical communication tool.
. high value kitchen appliances like dish washers. credit card sales. These customers might have experienced the aggressive behaviour of sales people in the past and may be determined not to buy any product from them. Customer might lose trust on the sales people due to this aggressive behaviour. greater amount of complex information like technical features of the product can be conveyed easily in comparison to other communication tools. personal banking products. . chimneys etc. loan products.In personal selling. b) Misunderstanding by the customer Many people prefer to buy the product/service from a store rather than buying it from a sales representative who visits home. SAQ 1 1) Explain the benefits of using personal selling as a communication tool for selling loan products. water purifiers. Since numerous meetings can happen between the customer and the sales representative. there is ample time available to explaining all the features of the product. in which the benefits from the customer to the company are more than the costs that are incurred for the sale to happen. Hence. Low value products can not be dependent on personal selling unless it is a repeat purchase by the customer and long-term profit is justified for the cost incurred. Disadvantages of Personal Selling a) High costs per sale Personal selling can’t be applied to all the products even though it might be efficient in building the long lasting relationship with the customer. Personal selling would be applied if the cost per sale is justified like Insurance products. it is the responsibility of the sales people to focus in making the customer happy rather than pushing aggressively for the sale. Cost per sale plays an important role in deciding the personal selling as a communication tool by the companies.
Various stages are involved in conducting a prospect to a buyer of the product/ service. employment. family background. credit history etc Knowing the right place and time to meet the customer Knowing the right approach in getting an appointment with the prospect . 3. which one would you prefer among personal selling or advertising to increase the sales? Explain the reason for your preference. which help in dealing better with the customer. 3. Let’s understand these in detail.3 Personal Selling process activities Sales representatives of a company would have to follow a sales method.1 Pre-approach activities This includes all the activities a sales representative would perform before actually meeting the prospect. Personal selling generally involves six steps as described below:a) Pre-approach activities b) Approach activities c) Presentation d) Objection handling e) Closing the deal f) Follow up The above mentioned steps are just a general way of understanding and the number of steps may vary from company to company. These activities may include the following: Knowing the details about the product/ service which is to be sold Knowing about the company which the product/ service represents Knowing the details of the prospect like name.2) If you are the sales manager for a FMCG product like tooth paste. income status.3.
We already studied in the previous unit that the actual closing of the sale may not be necessarily handled by company’s sales representative. if you are the sales representative selling a workstation to the IT firm. The aim of the sales representative should be in gaining attention of the customer and stimulate his interest in the product/ service. It is the job of the sales representative to clearly know the benefits or details of the product and also the about the company which they work for. Often people encounter sales representatives who come to sell the product/ services without even knowing the complete benefits or technical details. Later on. In B2B markets. Identifying which products/ services are to be presented to the prospect and keeping sufficient manuals/ technical documents The level of activity depends upon the type of customer or market. It is said that the first impression would last longer and is critical for any future meetings. a single meeting wouldn’t be enough in getting to the presentation stage. so repeated calling would be required. repeated calling etc.3. then sales representative needs to have all the necessary documents which clearly explain all the technical details or benefits about the product/ service. Interest can be created by citing product benefits. it is time to interact. they proceed with the product/ service which the sales representative have in to offer. In such cases the reseller must have a clear idea about the company for which he/she is selling the product/ service. If the sales are for the high value products like loan products. then knowing the credit history of the prospect is an important task.2 Approach activities After identifying the prospect and gathering necessary information. giving referrals. The sales process may be outsourced where the reseller will sell you the product/ service. If the sales are for the B2B market. It is the aim of the sales . 3. Knowing the right time. Sales representative start introducing his/her name and the company which they represent. Opening remarks would play a major role interest creation. place and approach will be important if he/she is selling to top-level corporate like CEO of a company.
then there are some general guidelines which you have to follow in making the slides. If you are dealing with PowerPoint slides. We need to set the environment in the first few minutes of the presentation and get a positive impression. the prospect might not be interested in listening to the presentation. the important activities that you as a sales representative would perform in the presentation stage are as follows: Introduce yourself and the company by giving a business card Create an atmosphere for gaining the attention of the prospect Deal ethically with a positive attitude and never give any negative comments like those who didn’t buy this product/ service are suffering and so on . It is important to deal with a positive attitude while making the presentations. So this is a critical stage and if the presentation is not done effectively. In brief the task of a sales representative in this stage can be summed up as following: Gaining prospect attention Interest creation in the product/ service Gathering more information about the prospect Successful transition to the presentation stage 3. so it’s very important to get his attention in the first few minutes. to sum up.representative to create enough interest to transit to the presentation stage. Finally. Often when we walk into an office for presentation. We shall discuss more about this stage in subsequent units. the prospect would be busy in middle of some work. Attire and grooming of the sales representative like clothing and grooming are very important.3 Presentation activities This is the stage where the sales representative will work to his level best to convert the prospect to a customer. Just as people often judge the book by its cover.3. in the same way looking at the sales representative people decide sometimes whether to entertain the presentation or not. The desire for the product/ service needs to be created by handling the presentation carefully.
3. For instance. If you require more information about the prospect company then state the reason for the same. Ask some interesting questions in between just to check whether the prospect is really listening to what you say in the presentation In most of the cases.4 Objection Handling Handling sales objections is as important as making a good presentation for the prospect. before discussions lead to the above mentioned objections by the prospect. So in the next stage we understand about the objection handling. “Prevention is better than cure”. . Objection handling is about handling the objections of the prospect when he/she says no the product/ service stating a reason. it makes sense in this context as it is better to handle the presentation well. presentation stage would is not said to be successfully completed if the objections that arise from the prospect side are not handled properly. It is also important that the companies provide the checklist and train its sales persons in handling situations when the objections arise. then provide a reason for the same. So it is important that the sales representative have a check-list of the possible objections which can arise during the presentation. due to some of the following reasons: The product/ service which is offered is more expensive than other similar products in the industry Prospect may not interested in particular feature of the product/ service Prospect may not have fully understood the benefits Prospect might not be interested in making a decision in buying a product in the first meeting itself Prospect might be willing to test you or need more information on the product/ service to be satisfied It is the job of the sales representative to know the exact reason for the objection and handle it carefully. if you want to know the number of staff or the type of customers handled by the prospect. 3. The prospect may say no.
After the objections are handled properly there should a smooth transition into the next stage “closing the deal” 3. an objection may arise from the prospect. The better you present. Sales representative must know the right time for closing the deal during the presentation. Darryl Davis in his book “How to be a power agent in real estate” describe s Ten Commandments of handling objections. So objections should be thought of as an opportunity in gaining more attention of the prospect and should be handled carefully. because you only learn from your failures” Take your time when handling objections and do not rush into giving an answer for the objection.3. Various closing techniques can be employed by the sales representative in requesting an order for the product/ service. Some of them are as follows: Objections shouldn’t be taken personally Objections should be looked as an opportunity to increase your skill set in handling them.5 Closing the deal After successful presentation and effective objection handling it is time for the sales representative to close the deal by obtaining a purchase commitment from the customer. So it is very important to know the ways in which the objections can be handled. Sales representative can know the right time by observing the prospect carefully and looking for some buying signals from prospect such as: Positive statements about the product/ service Enquiry about other customers who are using the product/ service Willingness to test the product/ service .Sometimes even a well trained sales person might go wrong in handling the objections as he/she might lose temper or may be for some other reason. “ success is a terrible teacher. As Warren Buffet who is the greatest investor and one of the richest persons in this world says in his autobiography. the less number of objections arise in the later stage of your presentation. If closing technique is used at an appropriate time during the presentation.
price. Enquiry about any loan facility is available with the product The list can include many more items and it is the job of the sales representative to know the right time for closing the deal. If a positive response is received then he can go for closing the deal. we can apply some of the closing techniques as described by Ralph W Jackson and Robert D Hisrich in their book “sales and sales management". the sales representative should attempt a trial close and see if a positive response is received from the prospect. If the prospect says any one of them. Assumption close: In this the sales representative assumes that the decision to buy is already made by the customer and proceeds to close the deal. mode of payment and any installments provided. you can proceed with the actual closing and discussing the terms and payment methods of the product. Discussion with finance team about the product Enquiry about the warrant period. Some of them are as follows: Trial close: This technique can be used at any stage during the presentation. . For example he can say “Having found the product/ service to be beneficial. If he is selling a car to the customer. After identifying the right time. after sale service etc Playing with the company order form and a pen Enquiry about the discount rates Enquiry about the terms. Once some buying signals are identified. installation time. the trial close can be “Would you be interested in buying a Maruti Alto or Zen”. Asking for an order: This includes directly or indirectly requesting the prospect to make the purchase. T-account close: This includes describing the advantages and disadvantages of the product/ service by putting them side by side in a T-table format. when would you like it to be delivered?” Summary-of-benefits close: Here the sales representative summarize the benefits of the product/ service and then go for the sale. This form can help the prospect easily understand about the product/ service.
Special deal close: Here the prospect would be given a one-time special offer on the product/ service such as “We would like to offer a 15 percent discount if you place an order for the product/ service today”. your duty doesn’t finish once the deal is closed and the order is received by the customer. We face such problems a lot when we deal with technical products. If you are interested in various other closing techniques. Another problematic situation would be a “No” from the customer after using a closing technique. resulting in low customer satisfaction levels. Most of the sales wouldn’t happen in the first closing. As a result. such as the sales representative having no idea of how many times does he/she have to attempt a closing technique. then try to use another trial close. you may refer to the books listed in references and suggested readings. it has to be resolved by identifying it and referring to the right team in the company. if you find the prospect is not giving enough response or says no. the next activity in the personal sale would be follow-up after the sale. some of the features wouldn’t be made as per the customer requirement. This wouldn’t offend the prospect if it is done professionally. After using a trial close. It is your job to ensure that the customer is fully satisfied with the product/ service. It is very important to understand that customer satisfaction is very important. 3. There isn’t any fixed number but another two to three times can be reasonable after the first trail close.6 Follow-up activities If you are a sales representative.3. because it has direct effect on . maintaining a calm and positive attitude would work for the sales representative in closing the deal. especially if it is for B2B markets. After closing the deal. Various problems might arise during closing. It is your duty as a sales representative to ensure that these problems are resolved and make sure the customer is satisfied. You might have promised certain features of the products and those features might be interpreted differently by the technical team in the company. If there are any problems faced by the customer. So.
In most of the businesses. then what type of closing techniques would you use as a sales representative? . some of the important follow-up activities that can be associated after closing the sale. various follow up activities may include as follows: Checking the date of delivery and ensuring the product is delivered. then as a sales representative what type of closing techniques would you use? 3) If customer appreciates the product and has some problem with the high price of the product. you can describe the new products/ services launched by your company and try to get a sales opportunity. if the price is decreased. Low customer satisfaction levels may make it difficult for you to have future sales possibilities and repeated business. Companies do know the value of a customer when he/she is lost.loyalty and trust. Ensuring that the product is installed properly in the required number of systems Making a call to find out how comfortable are the employees with the product Identifying if any training is required for the employees in handling the product Providing necessary information on who to contact if any technical problems arise in future Repeated calling after some period as per the company guidelines. Repeated calling to know how the products/ services have benefited the customer would work in keeping up the relationship. to know for any problems and try to describe about any new products/ services launched SAQ 2 1) Explain various pre-approach activities you would perform. Let’s understand with an example. in selling a post paid mobile connection to a corporate employer. making a sale to a new customer is a costly affair when compared to making the sale for an existing customer. 2) If a customer says that he/she would consider buying the product/ service. During these calls. So the follow up techniques plays an important role in maintaining the relationship between the customer and the company. If you are selling a software product to the telecom company. like a billing management software which would help in managing the bills of the subscribers.
Hence. We have finally understood the importance of existing customer to the company. we have understood the importance of personal selling as a communication tool for the company.5 Keywords 1) Prospect A prospective buyer in short a prospect. We have understood how advantageous it would be in improving the customer relationships with personal selling. we have looked into various disadvantages of the personal selling. It is essential that every sales person would follow certain steps in making a sale. Getting an order doesn’t end the job as follow up is very important to gain the customer trust and loyalty which would help a repeat business. 3.4 Summary In this unit. We have discussed various objecting handling techniques and then discussed about closing techniques which help in closing the deal. During the presentation. We studied how pre-approach and approach activities would help in getting an appointment for presentation. the various activities that involve in a personal selling. As every communication tool has certain disadvantages. so as to create standardization in the sales method. it is important to grab the attention of the prospect in the first few minutes and handle objections carefully.4) Having successfully closed the deal for a washing machine with the customer. we have understood step by step. as it would be difficult and costly to sell the product to the new customer rather than selling to an existing customer. is an individual or a company who has the potential . what type of follow-up activities would you perform? 3.
DeCarlo (2004). customers and general public. Cron. Tata McGraw-Hill. Douglas J. Ralph W. William L. 2. 3. “Dalrymple’s Sales Management (9th Ed. Robert D. John wiley & Sons. Cron. Prentice Hall. Hisrich (1996). “Sales Management”. 3. New Jersey.)”. Decarlo (2006).to become your potential customer if handled properly by the sales representative. 2) Public Relations (PR) Activities that are performed by the company to maintain relationship with its employees. USA.6 References 1. New Delhi. investors. Darryl Davis (2003). . “Sales and Sales Management”. India. New Jersey. “How to be a power agent in real estate”. William L. 2. Jackson. Dalrymple. USA. Thomas E. John Wiley & Sons. USA.7 Suggested Readings 1. Thomas E.
1 Microsoft Dynamics CRM 4.1 Introduction In the previous unit.7 Suggested Readings 4.3 Sales Force Automation 184.108.40.206 Introduction Objectives 4. We also discussed about the .3 Customer Relationship Management 4.2 Customer Information Management 4.2 Open Source CRM Applications 4.4 Summary 4. We understood the importance of knowing the customer before approaching him for a presentation.UNIT 4 COMPUTER APPLICATIONS IN SALES MANAGEMENT Structure 4.5 Keywords 4.6 References 4.2 Contact management softwares 4. we understood the advantages of personal selling and its various activities involved in making a sale.2.1 Traditional ways of maintaining information 4.3.2.
With increasing size of business and the competitors. It is identified in many companies that sales representatives spend only 20-30 percent of their time in selling activities. to make the processes effective and also to help in increasing the efficiency of sales representatives in generating leads. Various technologies have been discussed in this chapter to give you an idea of what are the current practices followed up in using technology as an important tool in sales process. an activity which used to be performed with pen and paper. We shall discuss how computer applications can help in resolving of the problems which arise when a sales representative leaves the company. We shall also discuss what type of computer applications are used by the sales representatives in the field. it is very important to keep track of customers.various steps which can ensure a successful closing of a sale. so that more leads can be generated to the company. This is where computer technology comes in. travelling. Most of the time ends up in performing administrative functions like coordinating the day to day meetings. checking the status of product that needs to be delivered. So it is very important for the companies to use the computer applications in reducing wastage of the resources in non productive functions. while interacting with the customers and types of applications that are used by the sales managers in monitoring their sales team and measuring the goals. it is advantageous to speed up the activities in the sales process. In this unit we examine how computer applications can improve the effectiveness of the sales method and generate more leads to the business. training etc. Finally we shall identify if there are any disadvantages associated in with use of these computer applications that to help sales activities. Objectives After studying this unit you will be able to:1) Identify the importance in maintaining the updated database of the customer . Due to continuously expanding nature of business. Another major problem which companies face in today’s world is attrition.
3) Explain the role of SFA in managing sales activities 4) Explain the benefits of the CRM software with the help of Microsoft Dynamics and Sugar CRM. 4.2) Understand the role played by contact management software in improving customer relationships. website address etc Last date of meeting Minutes of meeting Future meeting schedules or follow up activities Products/ services used Products interested in future Preferred time of calling Any problems faced in the past Customer rating about your company products/ services if provided The list can be much more depending upon the customer.2 Customer Information Management Maintaining customer information is an important task to every business. e-mail. so maintaining such list is an important task of the sales representatives. Let us understand some of the . Customer information may include some of the details like: Name of the customer Address of the customer Mobile/ landline/ fax numbers.
So maintaining proper minutes of meeting can resolve such problems. These mistakes can be very serious which can make you lose the customer permanently. The traditional way of maintaining customer information is by noting it down on a paper. so if mobile numbers is changed then we can use landline as an alternative in contacting the customer. email: This information helps us in giving choice to the customer for contacting him the customer. Minutes of meeting: Improper entry or no entry about the minutes of meeting can create many problems such as frequently asking the same questions for customers which you have already discussed in previous meetings or you may try to sell the same product/ service which the customer refused earlier. So he should try to get both the residential and office addresses. It is your job to maintain such information to avoid any contact during their inconvenient times and places. Mobile/ landline/ fax numbers. But today as the business grows with both customers and competitors increased in the market. having few customers and few competitors.disadvantages and preventive measures to be taken in the case of improper management of customer information. This way of recording the information worked well when the business were small. Some of the customers prefer only emails.1 Traditional ways of maintaining information The way how customer information is maintained may vary from business to business. the sales representative might find difficult in locating the customer when needed to send some promotional offers or information about the new products/ services launched by the company. companies can’t just rely on the . 4.2. Some of them include: Address of the customer: If the address is not properly updated time to time. The sales representative should try to get as many contact details as possible. Preferred mode and time of contact: Nowadays customers are too busy and prefer to interact in a particular time on a particular number.
traditional way of maintaining information. Some of the problems which can arise by this method are: If you are having the data of customers, it would take lot of time in converting that data into information such as who is my potential buyer? By the time you identify them, customers might be using your competitor’s products/ services. There is every chance of misplacing the papers containing customer information and to add for this problem, if your sales representative quits, then the contact information would be difficult to retrieve More and more sales force would be required to maintain the database as the customers increase. Hence it’s important to find an alternative way to for maintain the data. Customers expect faster processing of their requirements. So, it would be better to use the computer applications that are available to speed up the sales process and maintain the customer information effectively. 4.2.2 Contact Management Software To decrease the workload in maintaining customer information, various contact management softwares are available in the market. These softwares help the sales representatives in getting a complete picture about the customer with a single touch. You get access to all the critical data of the sale such as customer contact information, minutes of meeting, relevant technical documents if any, partners associated with the sale, future meeting schedules, important deadlines etc. in a single screen. These softwares provide easy updating and avoid any discrepancies in data such as multiple entries. These softwares can help in minimizing the mistakes that can happen during the customer interaction and help in building stronger, long-lasting relationships. If you are interacting with customer on the phone, you may use simple contact management software in your computer, such as the address book provided by windows. Sometimes it wouldn’t be practical to carry your computer especially when
you are at customer premises. Keeping this in mind, many software vendors providing software applications which can be used in your mobile or PDA. Contact management software can be used by the off-site sales representatives who are in the company and also who are on-site at the customer premises. Most of the times companies buy contact management software which would suit for their requirements. Some features which you must check while buying such software products are: User friendly screens Faster access to customer information Easy-to-understand the functions by sales representatives i.e. less training requirement for adoption Having multiple views of the data, such as the total customer list, elite or platinum customers, prospect list, recent customers list etc. In today’s world every customer is having an email facility, so it is important that the software would support email, fax, and call facility as per the scheduled time with customer, group mailing when new products/ services launched etc. Required information access in a single touch The picture below helps us in understanding how a contact management application looks like. This is Microsoft outlook new contact entry screen when you can enter customer information like name, phone numbers, mailing address and much more. You can see the call facility provided where you can call the customer, business card and pictures can also be updated, you can add up reminders and schedules with the customer in the follow up tab, you can locate the customer address suing the “map” button and so on. This interface provides you a clear picture how contact management software looks like. There are also many custom made contact management softwares where you can approach the software vendors and create one for you.
4.2.3 Sales Force Automation In today’s competitive world, managing the sales representatives is as difficult as managing the customers. Contact management softwares can be very useful if the customer is handled by the same sales representatives all the time. In reality this is not the case, as companies face high attrition rate due to more opportunities for sales representatives in the industry. Some companies have 100% attrition within a year. What would happen with the customer if the sales representative leaves the company and the customer is handled by other sales representatives? The problem can be severe if the sales representative leaves the company without notifying and company has no idea with the latest customer information the sales representative was handling. Many problems may arise when the customer faces a new sales team. Customers would have to state all the requirements, budgets, features, payment details to the new
sales team, a process which can be time consuming and creates dissatisfaction among customers. This scenario demands a computer application which will not just maintain the customer information in the sales representative computer, but can also report the latest information to the sales manager in the company. This is where the implementation of sales force automation (SFA) software is required. SFA connects all the sales representatives contact management software with a central database for reporting. Various advantages of SFA include: Centralized data base for retrieval and updating customer information Information sharing is the biggest advantage Company has access to all the latest information about the customers Sales team can be more responsible in entering right data, as company can track when the data was updated and by whom Data can be accessed anywhere irrespective of the location either using wired networks like LAN, WAN or wireless networks like Wi-Fi. Sales team can work from home whenever required as data can be accessed anywhere Since all the customers data stored at one place, it would be easy to know the efficiency of the sales teams, status of the targets and less duplication of the data Due to centralized data, many departments can access the customer data so multiple sales to the same customer by different teams can be avoided thereby using the time more efficiently. Matching the new products/ services to the entire customers can be done easily as the data is centralized
Having discussed with many of the advantages, let’s look at some disadvantages mentioned below: Complex screen may not be user-friendly for all the sales representatives and they may find it difficult to work Require continuous management and back-up facilities if the data crashes. SFA applications may be costly for the company where the investments need to be justified implementing one. May be difficult to integrate with other legacy systems in the company SFA applications are integrated and became a part of another system namely customer relation management system which aims to be the ultimate solution to manage the entire sales process. SAQ 1 1) Explain the benefits of using contact management software over traditional ways of maintaining information. 2) Explain how SFA car help your company if attrition rate is high
4.3 Customer Relationship Management (CRM)
SFA can be thought as a subset of CRM. SFA deals with data of the customer during sale interaction where as CRM deals with automating all the customer related data related to the sales, marketing, customer care, technical, finance, human resource departments. CRM systems highlight the importance of integrating sales with other business functions. “Sales force management” written by Johnston and Marshall (2009) provides more insights into the use of CRM systems for an organization. In their book CRM is defined as “ any application or initiative designed to help your company optimize interactions with customers, suppliers, or prospects via one or more touchpoints such as call
In a client meeting you see not only the sales representative but also may see members from marketing. yet marketing blames sales for not performing duties effectively. A system is required to be in place where all these business operations need to be aligned.wikipedia.3.center. branch office. it is time to stop this blame game and work collectively to deliver growth by focusing on the customers. distributor. Let’s now look at some of the CRM applications which are used by the companies. 4. in turn sales blames marketing for their poor strategies and lack of knowledge about the situations in real world or it may blame HR department for not providing sufficient man power. technical departments participating. finance. Sales and marketing have goals in common. retaining. or cross-selling”. So.gif . sales person.org/wiki/File:Microsoft_Dynamics_CRM.1 Microsoft Dynamics CRM Source: http://en. This is where the CRM applications come into picture. web or e-mail for the purpose of acquiring. store. CRM aims at putting the customer at the center of the business process.
Microsoft Dynamics CRM provides applications which focuses on sales. Let’s understand the benefits of these applications in brief as stated in their website http://crm.dynamics. customer service and marketing departments.com:a) Sales Department: The CRM application for sales department is the SFA which provides the following benefits: Improved sales planning and management Automating the lead system Managing sales opportunities effectively Streamlining account management Boosting sales productivity Enhancing sales pipeline management Simplifying workflow processes Mobility in accessing customer data in real-time Analytics for improved decision making b) Customer care: The CRM benefits provided for customer service include the following: Improved account handling Managing or resolving customer cases efficiently Simplifying contract management Knowledge management to store the staff experiences as a repository Streamlining the schedules Automating workflows .
let’s now look at some open source softwares which are there in the market. Mobility features for data Analytics for customer service c) Marketing Department: Some of the CRM benefits provided for marketing department include the following: Streamlining campaign planning Managing events efficiently Improved response management Automating workflows Analytics for marketing Pinpointing the marketing efforts by instantly segmenting customers or prospects Managing data effectively User .friendly Require continuous management and back-up facilities if the data crashes. Disadvantages of CRM would be in similar with SFA systems as SFA is the heart for CRM of sales. Some disadvantages include: CRM applications may be too costly for an organization to implement It might take time to implement the system Difficult to integrate with legacy systems Since cost can be a major factor for most companies in implementing CRM. . We have discussed this Microsoft Dynamics CRM to give you a clear idea of benefits of the CRM in general. For more information you may refer the website.
The following diagram is a snap shot of how the contact information such as name of the employee. Top 10 CRM applications designed in opensource platform are as follows:i) Sugar CRM Inc ii) SplendidCRM software Inc iii) CentricCRM iv) Hipergate v) Compiere Inc vi) Vtiger CRM vii) CentraView Inc viii)XRMS CRM ix) Cream CRM x) Tustena CRM More details about these products can be refereed from their respective websites.2 Open Source CRM applications Open source is defined by Cambridge dictionary as “software that is free to use. and the original program can be changed by anyone”. Let us now understand about various uses of Sugar CRM for the organizations:a) Sales Force Automation Sugar CRM applications helps the sales manager in handling various functions such as contact management. his/her designation or title. Many opensource applications flooded the market promising better CRM applications than the proprietary softwares.4. managing accounts etc.3. According to David Hakala (2008). forecasting the revenues. . the account name handled and the contact information about the account.
com/crm/products/capabilities/sales/contacts. The information can be viewed by the region or area wise which would display the list of customers according to the region and so on. The following picture would help us in understanding how the leads are managed. email marketing. purchases from existing . b) Marketing Automation Sugar CRM provides several functions to handle the various marketing activities like campaign management.html This is just one of the view in which the data is represented and there would be multiple views such as arranging the list by the account name which displays the list of employees who are handling the account. marketing analytics etc. In the figure we can see that the entire leads the organization generated is categorized into different categories by the lead source like cold calling.sugarcrm. lead management.Source: http://www.
This sort of representation would gives us an idea of which lead source is more profitable and identify the lead source which is generating lowest revenue and plan according to improve the operations at that lead source. Such a view will help us in understanding the performance of the lead source better. proposal stage.customer. public relations. closed or won stage. For more information you may refer to the Sugar CRM website. platform and collaboration capabilities. negotiation stage etc. Opportunities by lead source by outcome would help the manager in understanding what part of the revenue is in qualification stage. reporting. . Source: http://www. direct mail etc.jpg Apart from sales and marketing automation sugar CRM also helps in providing and developing the customer support.sugarcrm.com/crm/images/content_images/screens/marketing.
SAQ 2 1) Explain the importance of CRM in creating a customer centric organization. With growing customer base. we find employees not only from sales teams but also from technical. customer care. This increases accountability as any wrong entry of data can be traced. and marketing whenever necessary. As the job opportunities improved. Customer has become the center for all the business operations and we see today that in a sales meeting with customer. companies started using sales force automation applications which as contact management software at its heart. . This way of recording worked perfectly fine when there were few customers and the business is small. companies looked for computer application which can manage the customer information and present it back in a single touch. attrition became the major problem with some companies having 100 percent attrition rate within a year. We have finally understood clearly the benefits a Microsoft Dynamics CRM and opensource software Sugar CRM for the organizations. customer care and technical separately. In SFA the customer information is maintained at a central database rather than just in the computer of the sales representatives.4 Summary In this chapter we have understood the traditional ways of maintaining customer data. 2) Which one would you prefer among proprietary or opensource if you have a small organization and explain the reasons for the preference 4. the need for integrating all the business operations started with the use of CRM applications. which transformed the way how we used to see various departments like sales. In order to maintain customer information more effectively. marketing. finance. human resource. finance. We have discussed several advantages of SFA over just using contact management applications. Later on.
2) Legacy systems It is old or traditional methods.5 Keywords 1) Analytics It is the science of analyzing the data to arrive at meaningful decisions with the existing data.html . Canada 3.sugarcrm.). http://en.dynamics. Alain Pinsonneault.cambridge. Haag. “The top 10 Open-Source CRM Solutions”.insidecrm.com 4. McGraw-Hill Ryerson. 4. proprietary softwares are those made by the company and are sold under the legal rights of the owner.gif 6.com/crm/products/capabilities/sales/contacts. McCubbrey. Donald J.6 References 1.com/features/top-open-source-solutions-121307/ 7.wikipedia.com/features/top-open-source-solutions-121307/ 2. http://www. technology or computer softwares continued to be in use and are outdated as per today’s standards. Richard Donovan (2006). http://crm. http://www. So. “ Management Information Systems for the Information Age (3rd Ed.org/wiki/File:Microsoft_Dynamics_CRM. Maeve Cummings. Stephen. or relating to or like an owner.4. David Hakala (2008). 3) Proprietary Software According to Cambridge dictionary proprietary means “relating to ownership.org/dictionary/british/open-source 5. http://www. http://dictionary.insidecrm.
“Essentials of CRM: a guide to customer relationship management”. Berg(2002).sugarcrm. 4. Douglas J. Tata McGraw-Hill. William L. USA 2. USA.com/crm/images/content_images/screens/marketing.8. New Jersey.7 Suggested Readings 1. Cron. John Wiley & Sons Inc. http://www. Dalrymple. (2004). “Sales Management”. John Wiley & Sons. Bryan P. New Delhi.jpg 9. Mark W Johnston.)”. New York. DeCarlo. “Sales force management (9th Ed. India. Greg W Marshall (2009). . Thomas E.
2 Identifying the receiver 5.5 Transaction communication model 5.4.5 Summary 220.127.116.11.3.2.UNIT 5 COMMUNICATION SKILLS Structure 5.7 References .1 Aristotle communication model 5.3.4 Effective Communication Process 5.2 Lasswell’s Communication model 5.1 Identifying the sender 18.104.22.168 Shannon and Weaver communication model 5.6 Keywords 5.4 Identifying the right channels 5.3 Identifying the right messages 5.2 Communication Defined 5.3.1 Introduction Objectives 5.3.4 Schramm’s Interactive communication model 5.2 Forms of Communication 5.1 Definitions of Communication 5.3 Communication Process Models 5.
In this unit. comparison between various types of sales and the computer applications which assist the sales person in handling sales effectively. activities that are performed by a sales person in handling the sale.5. for the sales manager it is advisable to know the good communication skills that are required by the sales people for selling the product/services and provide necessary training. We shall do a study on advantages and disadvantages of using various forms of communications. Hence. A lot of excellent products/services end up with not many customers when the sales people lack the required communication skills.1 Introduction In the previous four units. Objectives After studying this unit you will be able to:1) Understand the definition of communication . We shall also discuss various communication models described by various scholars. An important factor which can improve the efficiency of the sales team and increase the chances of successful closing of the sale is the “Communication Skills” of the sales person. We ourselves end up many-atimes buying the products/services when felt satisfied with the communication of the sales people without even looking for all the advantages and disadvantages about the products/services. we shall identify different forms of communication that are used in today’s world by the sales representatives. We shall examine what constitutes an effective communication process.8 Suggested Readings 5. Good communication also helps in faster relationship building with the customers. communication skills of the sales people will play a major role for success in the market place. we have understood functions of the sales manager. However small or big the product/service is. We all know how important communication plays in making the customer knowledgeable about the products/services. in terms of cost or features.
1 Definitions of Communication 1) Communication as explained by “Oxford dictionary” is the imparting or exchanging of information by speaking. Let’s see some of the definitions of communication from oxford dictionary and by various scholars as mentioned by Sri Jin Kushal (2009). “ Communication is the process of passing information and understanding from one person to another…. 5.It is the process of imparting ideas and making oneself understood by others” .2) Understand the advantages and disadvantages of verbal and nonverbal forms of communication. It involves a systematic and continuous process of telling. 2) According to Louis A. listening and understanding.2 Communication Process Communication is the process in which the sender tries to convey a message to the receiver. “ Communication is an exchange of facts.2. “Communication is the sum of all the things which a person does when he wants to create understanding in the mind of another. opinions or emotions by two or more persons” 4) According to Theo Haimann. 3) Explain various communication models 4) Identify various issues in selecting the right sender and receiver 5) Identify various issues while creating the right message for the receiver/customer 6) Explain the importance of selecting the right channel during the communication process 5. or using some other medium. ideas.” 3) According to Newman and Summer. Allen. writing.
seminars etc.2. On the other hand written communication deals with sending letters. In sales call we mostly make use of meetings and conferences. lecturers. telephone talks. namely Verbal communication and the non-verbal communication. 5. grapevine. face-to-face conversation. interviews. meeting and conferences. emails. Each form of verbal communication has its advantages and disadvantages and so it is advisable to use the right mix of both oral and written communication during the communication process for the sale. In sales the communication would be between the sales representative and the customer. radio and television. Basic forms of communication Non-Verbal Communication Verbal Communication Oral Written a) Oral Communication & written communication There can be many forms of oral communication as mentioned by the author.What we understand by the above definitions is that the communication is a process of exchange of the information between sender and the receiver. sms on phone etc. seminars. faxes. namely:face-to-face conversation.2 Forms of Communication Sri Jin Kushal (2009) explains that there are two main basic forms of communication. social and cultural affairs. . telephone.
b) Advantages and disadvantages of verbal communications (Oral and Written) Some of the advantages of verbal communications include: The ideas can be conveyed easily with oral and written communication The ideas can be expressed without any misunderstanding between the sender and receiver using oral and written communication Lengthy messages can be stated out accurately with the help of written communication The feedback can be very quick while compared with non-verbal communications It works well for technical presentations which involve lot of communication between the sender and the receiver c) Disadvantages of verbal communications (Oral and written) Some of the disadvantages include: Oral communication will not be suitable for lengthy messages. in such cases we have to make use of written communication Oral communication may take long period of time Oral communication may involve a lot of expenses Oral communication cannot be performed when the sender and receiver are not available personally Written communication cannot be deemed fit for visually challenged people and uneducated people Feedback would take a lot of time in written communication .
d) Types of Non Verbal Communication As mentioned in the book by Sadhana Gupta (2008). dramatics. Some of the advantages include: This form of communication works well with the hearing disabled people The communication process can be done in brief and in shorter time This form of communication will be useful if there are any language barriers During this communication process. sense of smell and body motions Aesthetic includes conveying message through creative art like painting. dance movements. sculpture Signs include the sign language which is used for disabled people. music. we can easily judge the personality of the?? This communication process helps to convey emotions easily by facial expressions . sense of touch. Symbolic implies making use of religious or status symbols e) Advantages of Non verbal communication There are various advantages and disadvantages of using the non verbal form of communication. G.W. voice tone.Porter divides non-verbal communication into four broad categories as shown below:Non-Verbal Communication Physical Aesthetic Signs Symbolic Physical category includes facial expressions.
there is a high chance of building a long-lasting relationship with customer f) Disadvantages of Non verbal communication Now let us look at some of the disadvantages of this non-verbal form of communication: If the sale is a technical product or service which involves lot of explanation.3 Communication Process Models Various models have been designed to understand the communication process and to identify any areas of improvement by reducing the errors that occur in the process. 5. you may not do it just with the non-verbal communication process The customer may misinterpret your communication process in non-verbal communication This type of communication cannot be used everywhere Customers might not be interested to communicate with you in the non-verbal communication process It would be difficult to follow when there are cultural differences between the sender and the receiver This form of communication can only be done when both the sender and receiver are engaged in personal communication. Let us understand some of the models:- . It would be possible on the phone or mail For more information on forms of communication you can refer to the books mentioned in reference section at the end of this unit. If performed well using this communication process.
5. This model is same as Aristotle which is delivered to the multiple audiences.3.5. Another new term is added “Effect” which acts like a feedback mechanism in which the receiver reacts to the message sent by the sender.3 Shannon and Weaver communication model This communication model helps us to study the communication scientifically.3. 5.2 Lasswell’s Communication model Lasswell introduce two concepts namely channel and effect into the model when compared with Aristotle model. This communication model has five major components as shown below:Who Says What In what channel To whom With what effect In the model Lasswell included other channels apart from speech as the communication channel.1 Aristotle Communication model This can be considered as the basic and simplest communication model which has only three components as show below:Speaker Message Audience This model mainly considers communication as a one way process from the speaker who tries to convey the message to the target audience. It has five components as shown below:Information Source Transmitter Signal Received Signal Receiver Destination Noise source .3.
This model aims at knowing the source of such distortions and tries to minimize them for effective communication. It also explains that the level of communication varies over time when participants face new experiences and changing relationships during the communication process. T Wood (2010) Even though this model is an improvement over linear models.4 Schramm’s Interactive communication model In this model the communication process is described as an interactive process where the feedback from the receiver helps in altering the message accordingly by the sender and this process is endless.3.5 Transaction communication model This model states that both the participants during communication process can be the sender and the receiver. It can be understood further with the following diagram:- . This model defines communication process as a circular process. This model explains that during the process of sending the message from the sender to the receiver some distortions may takes place in the message. 5. 5. it still assumes that the sender and the receiver are different persons from each other. Source: Julia.3.This is a one way transmission and reception of messages. which is referred to as Noise.
SAQ 1 1) Define Communication 2) Write short notes on non verbal communication explaining its advantages and disadvantages. 3) Explain what are the advantages of verbal communications over non verbal communications 4) Explain Lasswell’s Communication model and its drawbacks . Let’s now understand the various components of the communication process in detail.Source: Julia T. Wood (2010) For more information on various other communication models you may refer to the books mentioned in the further reading section.
Channel Message Message feedback 5. group or the company who want to convey some message to the receiver.4.1 Identifying the Sender In business scenarios. In a communication process.5. sender can be an individual. the first step would be to identify the sender. Let’s now understand them in detail with the help of following communication process diagram:Sender Message Receiver Sender receives Message feedback Becomes Sender Fig: Communication model incorporating feedback Source: Chris Rose (2005) Here we must understand that the message and the feedback message are sent by some appropriate channel. It appears that a sender will be sales representatives for the .4 Effective Communication Process We have already studied various communication models and understood various components described in those models.
Hence it is understood that the sender can be a single person or a team depending upon the complexity and value of the sale. Customers or target audience are identified from the preferred segment and are involved in the communication process. the state or country or continent in which the company wants to do business. then the sender can be a single or team of sales representatives. but identifying the right sales persons for the customer is a difficult task.4. then the company may appoint individual sales representatives as the sender in the communication process. laptops.e. LCD TV’s etc.sales process. If the sale is for high priced products like washing machines. .. cooking items etc. the sender will vary as follows: If the sale is for an individual customer and low priced product like FMCG good like shampoos. then the sender will be mostly a team of members from various departments like technical. identifying the right audience is a complex task. Several steps will be followed by the company in identifying the receiver for the communication process. In sales management. finance. The first step is to identify the market place i. then the sender will be a highly qualified person or team who can handle all sorts of objection handling during the communication process If the sale involves an IT product for the company which may run into millions of rupees.2 Identifying the receiver The receiver in business is audience which the company would be targeting to make the sales. After identifying the market. the next step would be to segment them into various categories appropriate to the product/service. 5. Depending upon the nature of sale. If the sale is for a high net worth individual like CEO of the company. marketing. sales. HR etc.
if the customer problem is increasing printing costs in the company due to inkjet printer in use. Various issues have to be addressed in creating the right message. appropriate number of slides in presentation. it is time to fabricate the idea into messages. you need to create appropriate presentations or any documents proving that it is the right solution for the problem of the company. Message is what you communicate to the customer which will be explained during the communication process. So identifying the right customer will be a challenging task. After the idea generation.4. sales calls to the wrong target audience/receiver in the communication process and end up with poor sales results. Now in some models you identify encoding as a part of message sent by the sender. Once the right customer is identified he/she can be involved in the communication process for successful closing of the sale. We shall learn more about this in the next unit “Presentation Skills”. The right message should be able to address the needs and wants of the customer. . For example. Here encoding involves identifying the right amount of slides and text for the presentations. In the above example. 5. avoiding any words which can create misunderstanding due to any language and cultural gaps etc. once you have identified installing LaserJet as an idea. Some of the issues include: Identifying the needs of the customer/receiver Planning for the ideas which can resolve the customer/receiver issues. companies end up giving promotional offers.3 Identifying the right Message Message is the information which will deliver your idea to the receiver/customer. advertising. then the idea would be why not upgrade the printer to a LaserJet which save time and cost per page. using the right amount words in the slides. This would be the message creation part of the communication process.Often.
try to find out whether the customer/receiver has the necessary facilities to use that channel. The right channel selection should depend upon the type of message you want to convey. if you come to know that customer is looking more into the reliability and multi-functional capability in the printer like scan. they use their own style of decoding the message. Try to design the message in such a way that you will make use of both the verbal and nonverbal communications. postal service. Some of the issues that need to be addressed include: Before selecting the channel. While creating the message. if you plan to send a letter by email. The medium and channel in the communication process refers to the method and means by which the message will be communicated between the sender and the receiver. PowerPoint presentation. For example. telephone etc.4. It will be better to anticipate and know the thinking process of customer and move according while creating the message. it is important to understand the decoding part at the receiver end. For example. then the letter becomes the medium and the fax or postal service becomes the channel. check out whether the customer is having internet facility in his/her premises. In general channels can be fax. For example. 5. automatic dual printing etc.4 Identifying the right channel You will come across two terms namely medium and channel in some communication models. then when you create the presentation or documents on the capabilities of your LaserJet printer it would be better to incorporate such details which the customer is interested and will be looking for. For example. Identifying the right channel is very important as improper selection might lead to the complete failure of the communication process. When you convey the message to the receiver. if you want to convey a very detailed technical document . email. if the message is to be conveyed by a written document.
which runs for more than hundred pages then the PowerPoint presentations would be a very bad choice. . If this channel is appropriate for the message then make sure that you use not only the verbal codes but also the visual and vocal codes. 2) Explain various issues which need to be addressed while creating the message for effective communication process. Verbal code means the right text in the slide and vocal code means the right language you use while speaking and visual code includes any diagrams. 3) Explain various issues which need to be addressed while selecting the channel for effective communication process. So in such cases it is advisable to use the written documents and send them through appropriate channels like email or postal service Nowadays. while interpreting the message the receiver/customer will rely more heavily on visual and vocal codes rather than the verbal code as illustrated in the below diagram:- Source: Cheryl Hamilton (2008) SAQ2 1) Explain various issues which need to be addressed while selecting the sender for effective communication process. animations or videos in the slides. many sales representatives rely heavily on PowerPoint presentations during the communication process. According to Cheryl Hamilton( 2000) .
We have also studied the advantages and disadvantages of these forms of communication.5. Hence it is advisable to use the right mix of appropriate verbal and nonverbal forms during the communication process.5 Summary In this unit. 2) Grapevine Grapevine means “Gossip”. . Finally in this unit we have identified how an improper channel can make the entire communication process a failure and identified various factors that need to be taken into account while selecting the communication channel. We identified various basic forms of communication namely verbal and nonverbal communications. We also understood that the comfort level of the receiver/customer should be kept in mind while designing the message. We understood the role the message creation plays in the communication process and various issues that need to be addressed in his stage. 5. We have understood the critical nature in selecting the right sender to take part in the communication process. Later we have studied how the communication process models have evolved from a linear way into an interactive process to take care of the changing level of relationships and communications over time. It is an informal way of communication which exists in every organization in almost all the departments. We also studied how the right receiver/customer will be identified by the company. Later in this unit we have examined how an effective communication process can be implemented. we understood the various definitions of the communication as stated by different scholars.6 Keywords 1) Channel It is the means by which the message will be transmitted from the sender to the receiver and vice-versa.
“Communication skills and functional grammar”.oxforddictionaries. Noise distracts the actual meaning of the messages during the communication process 5. http://www. Thomson Wadsworth. 6. New Delhi. India. “Basic business communication: Skills for empowering the internet generation (10th Ed. USA.3) Noise Noise in communication is any wrong interpretation of the words and phrases used during the communication process by the receiver or sender. “Communicating for results: A guide for business and the professions”. 2. Chris Rose (2005). USA.com/definition/communication 5. Julia T. Tata McGraw-Hill. . Cheryl Hamilton (2008). New York. Sri Jin Kushal. Atlantic publishers. 2. Lesikar. University Science Press. Enterprises. USA. Uma Narula (2006). 5. Sunitti Ahuja (2009). Wadsworth.7 References 1. USA. V. India. Wood (2010). Flatley (2005).)”. Sadhana Gupta (2008). New Delhi. “Communication models”. 3. India.)”.K. “Interpersonal Communication: everyday encounters (6th Ed. Earthscan. “How to win campaigns: 100 steps to success”.8 Suggested Readings 1. 4. “Business Communication”. New Delhi.
3 Presentation design Guidelines 6.4.1 Introduction Objectives 6.2.5 Summary 6.2.2 Knowing about your customer 6.2.1 Guidelines for preparing your PowerPoint presentation or paper slides 6.3 Knowing your competitors 6.UNIT 6 SALES PRESENTATION Structure 6.6 Keywords 6.2 Objection handling and closing the sale 6.3.5 Other essentials activities for presentation 22.214.171.124 Knowing about your company 6.4 The sales presentation process 6.1 Sales presentation methods 6.4 Defining the presentation objectives 6.2.2 Pre-presentation activities 6.2.7 References 6.2 Guidelines for preparing a word document 6.8 Suggested Readings .
1 Introduction In the previous unit we have understood various definitions of communication and the communication models. Finally in this unit. some background work needs to be done in deciding what goes into the presentation to make it look better than the competitors. One has to keep in mind that his/her presentation should be better that the competitors and therefore. Presentation should be motivating enough to the prospects to make them participate in the process. We have also analyzed the issues that need to be addressed for effective communication. This unit also highlights the basic concepts on how to make a better looking presentation in terms of presentation of content. Once the sales representative and the prospects understand the right problem.6. We saw that presentation skills are one of the important factors which determine the success of the sale. company and competitors . In this unit we shall understand about what are the issues that need to be addressed in making a successful sales presentation which helps in building a long lasting relationship with the customer. In this unit we shall understand that before going for the presentation there are some pre-presentation activities that one must follow. we shall understand that knowing your company should be the first task before knowing your customers. In this unit. Objectives After studying this unit you will be able to:1) Importance of Knowing your customer. We shall also look at about some of the objection handling techniques where you can handle the objections effectively. we shall understand that the presentation wouldn’t be complete if the objections aren’t handled well. it would be easy to concentrate on the solution part of the presentation. Many-a-times prospect may not know what the problem is and so identifying the problem is the first task for the sales representative. The quality of presentation is an important factor which will determine how well the prospect will understand your product/service.
2) Various functions of sales team and pre-sales team in preparing an effective and efficient presentation 3) Define the presentation objectives 4) Enumerate various guidelines for preparing slides and documents 5) Explain various presentation methods and scenarios where they can be applied. 6) Address various objections and use appropriate objection handling techniques
6.2 Pre-presentation activities
Pre-presentation activities include all the activities that are performed to ensure a successful presentation design. The list of pre-presentation activities would generally include the following:-
Knowing about your company Knowing about your customer Pre-presentation activities Knowing your competitors Defining the presentation objectives Other essentials activities
Several issues have to be addressed such as the objective of the presentation, content that goes into presentation, gathering information about the customer, your company and the competitors and so on. 6.2.1 Knowing about your company Knowing about your company is vital because during the presentation customer may ask you anytime about your company and the products/services. Anytime if the customer is interested to know about your company, you should be able to explain about your company in not more than 30 sec to 1 min during the presentation. So it is important for you to write a brief summary about your company which includes the following: Company’s objective mission and vision statement List of product/services Areas of expertise Previous and present customers of your company Number of employees working Company turnover and growth Your seniors and heads in your department Knowing your company’s employees or various domains of expertise would be very important when you are responding to the customer requirement. In situations like when the customer sends the problem and request you for the solution, you should be able to know whether your company will be able to handle that problem. For example, if the customer is in a telecom company and the problem is low network connection speed, then the solution would be to upgrade the entire network to a faster platform which requires huge amount of investment. As a part of your sales team it’s important for you to know the following before making the presentation for such customer:-
whether your company has such expertise in handling big projects If yes, are there any customers in the past where such projects have been implemented What should be the profit margin in such projects What could be the time-limit for project completion How many number of employees would be required to work in such projects What are the other resources required by your employees (travel tickets, internet bandwidth, laptops, living expenses in other countries etc). In many companies, there would be a sales team and a pre-sales team to handle huge volumes of customers. The main function of the sales team would be to meet the customer, take the requirements of the customer and make the necessary sales presentation. Most of the times, the sales team will be on-site i.e. at the customer place. The pre-sales team will be mainly at the company’s office which may not necessarily be at customer premises. The pre-sales team would be responsible to address all the questions which we have discussed earlier and make the presentation. It is the job of pre-sales team to correctly optimize the profit margins and the number of employees required to implement the solution for customer. If you are a part of the presales team it is very important to know that the customer solution may not be handled by a single technical team. For example, if there is a telecom problem of low network speed, the solution team may involve the networks/hardware team, software team, testing team etc. It is important to know that every team will try to put as many employees as possible in the projects so that their employees will have maximum work and profits. As a part of pre-sales team it is your job to keep optimizing the number of employees such that not too many or too less employees are involved. Coming to the cost part, it is always advisable to check the number of days employees need to stay at on-site with the customer and try to optimize these days so as to reduce some of the living expenses in other countries.
The important objective apart from developing a long-lasting relationship with customer is to have a decent profit margin in the project. It is the job of the sales team to get a clear picture of the profit margin and then decide to go on with the presentation or not. You cannot make the presentation for the solution which brings loss instead of profit for the company. Most of the time sales team may have to get approval from the finance team who monitors the financial status of the company before going ahead with the presentation with the customer. Even in door-to-door sales, most of the times the sales representatives will be instructed by the sales manager about the maximum discount he/she can give to the customer in order to close the deal effectively. Now let’s look at the information that is necessary to known about the customer before the presentation process. 6.2.2 Knowing about your Customer Customer is the key to any business, hence knowing the customer will be an important task for any business. Your customer may be a multi-national company or a government institution or even a single customer in door-to-door sales. A due diligence would be required to know your customer well. If it’s a door-to-door sale, some of the parameters you should be willing to look are: Income level of the family or head of the family Gender and age of the family members Educational level of the family members Occupation of the family members Most of the parameter can be known easily except the income level. One can never ask the customer what his income is esp. when selling some door-to-door products like chimneys, water purifiers and some other household items. If it is a loan product or insurance products you may ask the customer directly to fill the income in the required column in the application. Age can be known approximately when you look at the
customer. The important thing to know is who is the decision making authority in the home, is it the male head or the female head or the children. If the customer is the Government or Institutional organization some of the parameter you should be looking at include: When was the organization established How many employees or departments there in the organization Who is the decision making authority or individual in the organization What are the areas which the organization serve How good is the organization in clearing the payments in time What can be the future sales opportunities with the organization In Government and institutional sales the important task for sales people would be to get timely payments. Since the organization deals with many other responsibilities your payments may get late, so knowing the credibility of the organization for timely payments is important task. One way of finding this is by looking at the previous customers and any problems they have faced. You cannot go and ask directly your competitors about the organization but what you can do is to take a look at the growth of the organization over time. Finally if your customer is a big multinational, then the list of parameters you must have a look are: Time of establishment Number of employees and departments Turnover and the profit margin of the company Year-on-year growth of the company Rank of the company in the market place
However. No matter how well the presentation is prepared. So it’s very important to look at the financial health of the customer and then proceed for sales presentation. if there is more than one company which is able to serve the customer according to his needs and expectations. This leads to the competition between the companies to prove themselves that they are the best according to the customer criteria. If necessary funds are not released in time then the time period will increase and so do the costs. then the customer will choose the best one according to his/her criteria. Your presentation may fail if the analysis of your competitors is not done well. You must understand that in today’s competitive world there is a pressure on profit margins and growth of every company and so your customers too. For example. Hence it is an important task for any company or you as the sales representative to correctly analyze the competitor movements towards the customer. your solution may not be preferred by the customer. 6.2. it won’t close the deal unless the sales teams have a clear idea about their competitors.3 Knowing your Competitors Customer prefers the company who serves them according to his needs. But if you have quoted the price much higher than your competitors. . We have already discussed that there exists two functions in sales namely sales and pre-sales in the company. let’s assume that you have prepared a wonderful presentation which clearly highlights the benefits of your products/services to the customer. Previous experiences with the company if any The biggest problem with big multinationals is to know whether the customer will be able to fund the project successfully in time. The competitor analysis is primary function for sales rather than pre-sales. It is the duty of the sales team who is on-site to know who the competitors are and what are their strength and weakness? Once the information is known it can be passed on to the presales team who will prepare the presentation accordingly to reflect that they are much better than the competitors.
customer and the competitor. 6. This cannot be known easily as every company maintains the bid amount secretly and will be given strict instructions to the employees not to disclose it. it’s time for us to look at some of the other pre-presentation activities in subsequent sections. the product/services Amount quoted for the solution in the bidding process for the customer Competitors advantage areas over your company’s products/services Having discussed much about knowing your company. We see lot of presentations where the customer doesn’t take part much or remains to be a silent participant. So as a sales representative it is very important to know approximately how much cost the competitors would quote for the solution.e. Initiating a dialogue to involve the customer in the presentation and help in decision making should be the first objective. So. So the important parameters which you should be looking in knowing the competitors include the following: Domain of expertise and the number of employees Years of expertise i. It is always better to have the list of objectives that you want to achieve by the sales presentation.4 Defining the presentation objectives Many sales presentation ends up without any results due to improper planning of the presentation and no measurable results.You customers always look for the company which provides best or reasonably good solution at the least cost for the solution. one should plan the presentation such that necessary dialogues would happen between the customer and the sales representative which will help in building .e. is the competitor a new entrant or an established player in the market place Type of solution offered to the customer i.2. One must remember that the objective of the first sales presentation with the customer shouldn’t always be the successful closing of the sale. But you should be able to get an approximate idea by looking into their past project costs.
the rapport. Some of the general objectives one would look for the presentation would be as follows: Developing a good rapport with the customers Explaining about your company expertise Building trust in the customer Creating enough interest to make the customer participate in the presentation process Identifying problems of the customer Identifying the right products/services for the customer Successfully handling objections Setting the stage for next meetings Maintaining the time allotted for the presentation Closing the deal effectively whenever it’s appropriate Most of the sales presentation starts with the introduction of the company. You should be able to clearly highlight the strengths of your company like a strong workforce, various domains of expertise, level of employees i.e. the educational and experience levels of the employees and so on. Once you have created a positive image about your company, the next objective would be to develop a good rapport where the presentation process would become a two way communication between the customer and the sales representative rather than a one way communication with only sales representative involvement. A two way communication process will always helps in quickly identifying the problem and then identifying the right solution for the problem. Following the time limit is very important as the customers will be busy with their daily work and may not show enough interest if presentation takes too long. The final objective before ending the presentation should be to set the stage for the next presentation. You should be
able to get another appointment where you can carry on with your further presentation activities which can help in closing the deal effectively. It is very important to have a check-list of the objectives such that they will be followed by all the sales representatives during presentation. It is important to measure the objectives in terms of their level of achievement and should plan better in future presentations. For e.g. if the objective of maintaining the time limit is not achieved as the time for presentation overshoots, then it’s important for you to ensure that at least from now onwards in next meetings you will take care of that objective with utmost importance. 6.2.5 Other essential activities for presentation Till now we have discussed about a lot of pre-presentation activities like maintaining an objective check-list for every presentation and important parameters in knowing your company, customer and the competitors. Now let’s look at some other issues which must be addressed before going for the presentation. Some of them include as follows: Having sufficient number of hard copies of your presentation, preferably with the name of the customer on it. Dress appropriately Have your own tools for presentation Ensure your tools are working perfectly fine Choose appropriate team for presentation Ensure every team member is present for the presentation Have the necessary check-lists You may never know how many people from the customer side will participate in the presentation. So an important requirement in any sale, it door-to-door or institutional or industrial sale, it is advisable to have adequate number of hard copies of your presentation and any other supplements like company brochures, previous customer list
etc. It is always better to have individual copies in decent folders with the names of the customers. The next issue is about the dressing for the presentation. It is better to have a formal dressing in any sales presentation with or without a tie depending upon the circumstances. Make sure you have a tie with you if you see everybody wearing a tie in the presentation. For door-to-door sales tie may not be an important requirement. Dressing should be in such a way that you are not over dressed or neither underdressed. In absence of any clue a plain blue shirt and black trousers are recommended for use. The next issue would be having tools for your presentation. Make sure that you have necessary tools which make the presentation process easier without any interruption. If it is a PowerPoint presentation, the tools may be your own laptop with the necessary software to run the presentation, your own project and your own audio system. You will never know whether the customer premises will be having all these facilities. So it is better to carry one yourself. Nowadays you get projectors with audio system embedded in them. The next task is about choosing the appropriate team for presentation. If it’s a door-todoor sale of some FMCG products or consumer care products, then there would be no team as it will be handled by one sales representative most of the times. But in case of institutional or industrial sales, generally a group of sales team goes for the presentation. In such cases it is important for you to choose the appropriate team which has the technical, financial, HR and sales persons whoever is required for the presentation. Most of the times, the presentation may happen over the videoconferencing or over the phone where the sales person will be with the customer and rest of the team members on the call. So it’s an important task to ensure that every team member is committed and be present in the required time, keeping their regular daily duties of their departments aside. In companies lot of time it happens that one of the team members will be busy in his/her department activities and may not be able to participate in the presentation. So, it is very important for you as the part of the sales team to keep reminding the other team members about the sales presentation. Again in
many companies this work of engaging all the team members in right time is the duty of the pre-sales team in the organization. The final task is to have necessary check-lists for every activity that leads to a successful presentation in time. For example, preparing the presentation itself is a biggest task that needs regular monitoring and feedbacks. For example, we have discussed the problem faced by the customer in Telecom Company due to low network connection speed, and then the solution team involves various departments like the networks/hardware team, software team, testing team etc. So getting the appropriate solution slides from these teams and checking for the compatibility between these solutions is a time taking process. The solution given by the software team may not be compatible according to the networks or hardware team. Hence such complications have to be resolved and the presentation should be prepared with involvement of all the team members. So maintain the check-list and monitoring the progress is important for presentation preparation. Any other required check-lists must be in place before the presentation process. SAQ 1 1) Explain various issues you have address to know your competitors better in an industrial sale 2) Explain the important objectives you will layout for your sales presentation 3) If you are in door-to-door sales selling a vacuum cleaner, then what information you would like to gather from the customer
6.3 Presentation Design Guidelines
In the earlier times, sales representatives had presented their products/services on a paper slides which were either printed or hand written. But now with advances in computer technology and print media, many of the companies prefer the PowerPoint presentations in industrial and institutional sales and printed slides in case of door-to-
door sales. PowerPoint slide are considered as an excellent way of communication since you can easily incorporate the graphics, pictures, videos in it and make the presentation interesting enough. But there are some limitations to it in terms of content. A lot of content in terms of text make the presentation cumbersome, hence any text matter it is advisable to give the customers in a printed word document format, so that they can refer to it whenever needed. We often wonder what makes the presentation to be presentable to the audience, (i.e. customers). Are there any steps which we can follow so that the presentation would be appealing enough to draw the attention of the audience? Even in case of word document the audience should be willing to read it rather than preserving it for later use or just misplacing it. So in this section, we shall understand some basic guidelines which will help you in preparing effective presentations and word documents which are presentable enough to the audience. Remember these are general guidelines which can not only be used to the sales presentation but most of the guidelines can also be used for your project presentations in your class. Let’s look at the guidelines proposed by Krieger (2007) and some other guidelines as well for the PowerPoint or paper slides and as well as word document.
6.3.1 Guidelines for preparing your PowerPoint presentation or paper slides The main objective in preparing a PowerPoint slides or paper slides presentation is to grab the viewer’s attention. The challenging task is to decide the appropriate number of slides you will be presenting in the given time limit by the customers. The presentation should be in such as way that it doesn’t complete too early or too late that the prescribed time by the customers. We often find that presentations may be prolonged up to 50 percent of the time limit of even finish when 50 percent of the time is still left. So how to decide how many slides to present in the given time? A simple rule can be that “the number of slides <= the number of minutes”. If you have been given the 30 min time to present in the class or the company, then the ideal number of slides will be 30 or less. This rule can be applied to PowerPoint or paper slides. Having discussed about
So let’s take a look at some of the guidelines as stated below:a) Select or create your own theme Themes refer to the design template of your slide. Master slide is the starting slide where you enter the presentation topic and the name of the presenters. .the number. Again you must ensure that the number of slides doesn’t overshoot than the required number. on Wipro Logo you will find “Applying Thought” and on Infosys you will find “Powered By Intellect Driven By Values” Make use of slide layouts to save time in formatting b) Use video and audio to convey your message more effectively Using video and audio will be possible in a PowerPoint slide and not in a paper slide. Themes in PowerPoint mainly consist of a master slide and lay out slides. The layout slides follow the master slide where you design the material to be presented. For example. it’s time for us to decide how that number of slides will be designed. Remember the guidelines apply to both the PowerPoint slide and the paper slides as well. but you can show some images and messages from the video and audio in the paper slides to convey the message. It includes the background colour and the design of each slide. Some guidelines you should follow are: Use video and audio only when required Use video and audio when you want to convey a very important message such as company values or the statements of the previous satisfied customers etc. Some of the guidelines here include: Select carefully the theme which has the appropriate background which suits to your topic Always try to follow the theme which your company recommends Show the company logo on each slide On each slide with the company logo it is better to include the catch phrase of the company.
Some of the guidelines are: Use images instead of text when you want to convey a lot of information The expertise in your company and the list of employees who works and their hierarchy can be shown in the form of a flow chart rather than text Better to use bullet point wherever necessary Keep changing the graphics every three to four slide so that the presentation doesn’t look monotonous Be cautious to use appropriate graphics and don’t over burden the presentation. don’t keep on showing images or flow charts or tables on every slide. tables. Don’t use more than a couple of video and audio in the presentation Excessive use of video and audio might dilute the presentation effect and also eat up much of your presentation time Play a video when you feel that the audience shows signs of losing attentiveness towards the presentation The best time for video would be in the middle or at the end of your presentation c) Use graphics to emphasize key points Graphics here refers to using images. Some of the guidelines to be followed are: Use animations only when required. Unfortunately you may not be able to show them in paper slides. textboxes. d) Use animations and transitions wisely There are lot custom animations and transition of slide you can learn in PowerPoint slides. Use them wisely whenever required. and flow charts in your presentation. For e.g. .
Some guidelines to be followed include: Make sure that the presentation design and the text looks good both on computer screen and on a printed paper Better to have two different designs of your presentation so that one suits for your computer screen and one for the print Make the necessary adjustments in the theme and make sure that print looks fine by taking the actual printout. This makes the printed slide difficult to read.e. The backgrounds or the themes may be printed dark when compared to the actual text in the slide. Avoid using multiple transitions Remember the animations and transitions are used only to grab the viewer’s attention. the animations i n any given slide should be uniform. such as budget presentations or some high level technical presentations avoid using many animations as it would distract the attention and the audience might feel uncomfortable. then the following text or pictures or any graphics should use the same animation. so make sure that the presentation is designed to look good in gray scale prints too f) Other general guidelines Some of the other general guideline which we haven’t covered earlier include:- . If the animation for the first text in the presentation is “Blinds”. e) Consider difference between print and on-screen presentations The presentations that appear excellent on screen may not necessarily look good on the printed slides. In serious topics. For e.g. Most of the times sales representative might be give black and white copies. Don’t use multiple animations in one slide i. Use them only if they are required. Try to use the same slide transition thought out your presentation.
important points can be the cost of the project. Always make sure that you don’t deviate from the topic of your presentation or the objective of your presentation in any slide Avoid using colours which are too dull or too bright Always choose the colours so that they are visible from a appropriate distance say from the member in the last row of your room Don’t keep changing the font on every slide. For example. tables etc are readable from the appropriate distance Try to use the same theme for all the presentations you present in the meeting Make sure the company logo is visible in all the slide clearly enough Make sure that the important points are highlighted in the presentation so that the audience can easily see them. Make sure that the text in the pictures. Make sure you follow the same font on every slide. but make changes appropriately. Be careful that you don’t over highlight ever y other text which is not very important At the end make sure you give appropriate references and a thank you note . Make sure that the picture or the text doesn’t over shoot the boundaries of the slide. Size of the font may vary from text to text. This may result in breaking of the picture or text during the presentation. Don’t use more than 5-8 lines of text in any slide Make use of any note pages in the slide so it can be used as a reference in case you forget some concepts during the presentation Make sure you have a printed copy of the slides with you during the presentation. number of employees. You may have handouts which have 4 or 6 slides per page. flow charts. domain expertise etc.
6. Documents would be big and run into a lot number of pages. we may not be able to convey detailed information about the product/ services. In such case all the information related to the product/ service including the Service level agreements (SLA’s) will be provided to the customer for review.Let’s now look at some of the guidelines that have to be follow in a word document preparation for the customers.3. You may highlight some of the problems the customer is facing in the first couple of pages. Due to the time factor or the limitations of a slide presentation. there is every chance that the viewer will get lost while reading it. So let’s take a look at common guidelines which should be followed while creating a word document. hence we need to follow some guidelines so as to make them more appealing. Documents should be created in such a way that it grabs the viewer’s attention. In order to make the document easy to understand it is very important that you choose only that content which is very important. a) Choose your content carefully Since the documents has a lot of information per page and may run into 20-25 lines per page. So what is the solution for this . Like you may say most of the companies are facing the problem of low network speeds and are not able to carry out daily transactions effectively with increasing number of customers day-to-day. Some of the guidelines are: Choose the content carefully Try to put a concise summary point in the first page such that it gives necessary impetus for the viewers to read the entire document.2 Guidelines for preparing your word document file Most of the times we see that presentation wouldn’t be complete without giving the word document containing detailed information of various topics or issues discussed in the presentation.
You may use font size 16 for main headings. Give a suitable heading such that it reflects your objective of the word document Try to use a picture or table or a chart every couple of pages so that the document will be interesting enough to read b) Select or create a document theme A document theme will describe how the background of every page in the document looks like. header text and footer text in the document. colours and graphics C) Maintain uniformity in the text In the document if you have used the font size 16 and bold for the heading in the 1st page.problem? Then you can keep on continuing with your company solutions in the subsequent pages. 14 for sub headings. and 12 for the text in the sections and so on. Then in any other pages if you want to keep a heading use the same font as used earlier in 1st page. Some of the guidelines here include: Make sure the all the main headings. Always give some information about your company and its key strengths in the first page. sub headings. Some of the guidelines includes: Choose the theme which suits your company You may have the same theme which you used for your PowerPoint slides so that the uniformity is maintained in terms of font selection. Make sure the font used in the text of all the tables are same Make sure that font in all the flow charts are same . Many a times the company will be having its own theme with its logo water marked at the center or top of every page. It also deals with the style of border. inner sections maintain the uniform font style and size within them as explained earlier.
always use clear images in the documents If you are taking the picture from some other source. Make use of a footer and header in the document Make sure the header will include the company name and logo and footer includes the page number. clearly give the reference below it The text in the picture should be readable enough Avoid using bright colours in the chart. especially in a pie-chart .d) Use graphics to illustrate key points Graphics are a great way of creating interest while reading the document. always try to keep them in a single page unless they are very lengthy .it would make the text difficult to read Make sure the size and the colour formats looks similar for most of the charts in the document e) Other general guidelines Some of the other general guideline which we would follow for creating a document include: Make use of an appendix if you have any supporting information to your content which can be put at the end of the document. When the document is ready make sure that you see the print preview to get to how it look when printed Avoid breaking of tables and flow charts into multiple pages. Some of the guidelines include: Avoid using blurred images.
Let’s us now look at some of the presentation methods as suggested by Koekemoer (2004) in the following section. charts and any other graphics are readable The list of guidelines is not exhaustive and you may follow some others which may help you in creating an effective and efficient documents and PowerPoint or paper slides.4 The sales presentation process Having prepared your presentation slides and documents. try “past special” instead of paste in the document. . SAQ 2 1) Explain various presentation design issues while using animations and transitions in the slides. This comman d will preserve the text style and font while coping. Give the document for review to you team members and your manager and get their approval Get a copy printed and make sure the colours in the pictures. 2) Explain the guidelines which you will follow while selecting the content for your word document 3) Explain the uses of video and audio in your presentation 6. Finally when the document is ready make sure that you run the spelling check and clear all the language and spelling errors. If you are copying some text or table or a chart from other document and the font is changing. it’s time for you to understand how to carry on with the presentation process.
. The sales representative may offer discounts or lowest price in the market or extra add on benefits as a stimulus and then in response they will make the customer to close the deal. the presentation will be as brief as possible and the sales representative will try to close the deal. Normally in industrial and institutional sales when the product/service value is much higher such type of presentation method may not work well. The sales person in this method makes some statements that will act as a stimulus to the customer and in response.4.6. Most of the times in this method. This type of method will be useful for new sales representative who are inexperienced to handle longer periods in presentation. This method would be appropriate and work well in case of door-to-door sales or sales which include small revenue per product such as FMCG goods. the customer will like to make a purchase. We know that the ultimate objective of all the presentations is to develop a long-lasting relationship with the customer and to close the deal successfully.1 Presentation methods There are many ways in making a presentation which can be understood by the following:- Presentation Methods Stimulusresponse approach The formula selling presentation The need satisfaction presentation The problem solution approach a) Stimulus-response approach Stimulus refers to any statement which will create a response from the customer.
A less customized presentation will be used so that it can be applied to all the customers. So the sales representative asks a series of questions to identify the customer needs Need-awareness phase: In this phase. it’s time to confirm it by explaining the needs to the customer and check whether the customer is satisfied or not. desire and action). This method is approached in three different phases namely need development phase. then you provide some documents backing up your solution to retain the interest. then you ask few question to know the desire level of the customer and finally you attempt few closing techniques to close the deal. During this discussion the customer may discover other needs which he/she may not have thought of earlier. once the need is established by the sales representative. This method will give reasonably time for presentation and will provide more flexibility in handling the presentation according to customer feedback. need awareness phase and need fulfillment phase. Initially you try to get the attention by stating the problem of the customer and about your company’s capabilities. Many a times the customer may not know what does he require for solving his problem.b) The formula selling presentation This method can be used for similar customers and situations where you have a single presentation for all the customers. the customer need will be identified. c) The need-satisfaction presentation This method varies from other two which we discussed earlier which focuses mainly on the sales representative presentation point of view. Need-development phase: In this phase. interest. This method will be useful in consumer goods where the sales representative will be handling many customers per day. . This method follows AIDA approach (attention. In this method we assume that the sale will happen only when the need of the customer is satisfied. This method focuses on sales interaction from the customer point of view. next you provide the solution to create interest.
sample booklets. Having discussed enough on the presentation methods. Most of .4. This process also involves handling the written proposal for the presentation in getting the permission to do the sales presentation. d) The problem-solution approach This method will be used for high value products/service which can bring a significant change in the company’s working environment. So whenever the sale includes a lot of activities. If there are many objections you may inform that they will be taken after the presentation. So it is very important know how to handle objections you may prefer to address as and when an objection is raised. For the sales presentation the sales team may require not only the presentation but also the catalogues. it’s time to look at some of the objection handling techniques during the sales presentation. This method is especially suited for industrial and technical sales.2 Objection Handling and closing the sale When the entire presentation goes well and it’s time for closing and the sales representative uses the closing technique. 6. The sales process may into weeks or even months before finalizing a solution. Sales representative may not be able to do this big task all by himself. then the customers may respond positively or negatively by raising objections. implementing a CRM system can be approached by this method. so he will be requiring a team to identify various problem areas and give the appropriate solutions. To implement a CRM system the sales representative have to understand the organization fully so that to estimate what changes will be made in the organization processes and system. various order forms etc. brochures. testimonials. it is appropriate to follow the problem-solution approach. For example. You may require multiple approvals from various departments in the organization to effectively implement the CRM system across the organization.Need fulfillment: In this phase the sales representative will identify the right products/services for the customer needs and present necessary presentations explaining the features and benefits and tries to close the deal.
and then you may respond by saying “Do you want us to start the project in a quarter or a couple of quarters later?” c) Clarify the benefits: If the objection is because the customers haven’t understood the benefits clearly then try explaining them again.the times customer raises objections to show his/her intelligence or to test the behaviour of the sales representative or to get more benefits from the product.5% but its 15%”. . It ’s your responsibility as a sales representative to handle the objections without any negative effects on the sale. For e. If customer pinpoints any wrong statement by you. We have discussed some of the ways how to handle objection in unit 3 “Personal Selling”. If the customer says “I don’t find any extra value creation to the company by your product/service” then you may start explaining again how your product will create extra value for the organization. this slide needs to be updated”. For e. then you may ask an open question like “How come do you feel the budget is too much?” b) Ask a closed question: Closed questions can be answered with just a yes or no. then if it’s true then admit that “You are correct. For e.g. and if it true then simply admit your mistake. In this section let’s find out some of the objection handling techniques as described by Claudyne (1994):a) Ask an open question: When you are not sure how to handle an objection it is better to ask an open question so that you can get some views from the customer which will help you in handling the objection. e) End eye contact: Whenever you feel like one of the viewers is giving many objections try to avoid eye contact during the presentation so that the viewer will be discouraged to raise another objection. d) Admit when you are wrong: Customer will be more intelligent than you many of the times. If the customer says the budget for the project is too much.g. If the customer objects that the funds cannot be cleared in such a short period of time. if customer says that “Industry growth for VOIP service is not 12.g.
if the customer says “Can you explain the various functions or code used in the software for your product”. We shall learn about the negotiation skills in the next unit. then if you happen to be a non technical sales representative and have no idea of the code you may inform the customer that “a technical manager will be able to contact the next day and explain the functions”. if the customer says “your company has posted less revenues when compared to last year and losing out some of the previous customers” then the better will be not to explain why the company has lost the customers and the revenue and simply answer that “It is the job of the higher authorities and they are working on that issue”. SAQ 3 1) Which presentation method you will use in selling a chimney product for the customers in door-to-door sales? Explain the reason for the same.g.f) Ask for help: Whenever you feel that you are not the right person to take an objection. We have already understood some of the closing techniques in Unit 3 “Personal Selling”. g) Discourage the objection: This is like a last step for rescue when you don’t have any choice of using any other technique. but the price factor seems to be a little heavy for our pockets” . it will be better to suggest the customer that his/her objection will be addressed by other person in next meeting. For e. The next process after handling the objections successfully would be using some closing techniques to close the sale. The sale wouldn’t be completed unless some negotiations happen between the customer and the sales representatives. 3) Explain the way you handle the objection when customers say “Your product features are good and will be very useful for our company. 2) Explain how will handle the objection when the customers says “ Your company is performance is deteriorating day-to-day in the market place”. For e.g.
We have recognized the importance of objection handling in closing the deal.5 Summary In this unit we have discussed the importance of knowing about you company. 2) Check-list A list of things which are required us to do to ensure the process is completed. customer and the competition for any sale. Finally. In this unit it is used in a sense to know the financial.6 Keywords 1) Due diligence Due diligence involves investing or auditing. Later we have understood various guidelines we have to follow to create a good presentation that is appealing enough to the customers. we have learnt various closing techniques with situations where it can be applied. We have understood various presentation methods and the scenarios where they are applicable. 6. it would be difficult for you to impress the customer and get the deal and the various objectives of the presentation. We have understood that the presentation may require multiple teams or departments in the organization and so coordinating them to ensure the presentation is prepared on time is a critical task for the pre-sales team. legal. . We have also discussed the role of sales and pre-sales team in making the presentation. environment and market situation of the company. We have identified separately the guidelines for PowerPoint or paper slides and the documents. Without knowing your competitor well and his strategies used.6. Having a check-list reduces the number of errors that may occur in future due to a neglected issue in the process.
aspx 6. USA. Darryl Davis (2003). Juta and co. . 2. “Marketing Communications”. John Wiley & Sons. “Sales Management”. Dalrymple. Stephanie Krieger (2007). “The presentations kit: 10 steps for selling your ideas”. “12 tips for creating better documents”. Cron. Douglas J. New York. “How to be a power agent in real estate”. South Africa. USA.8 Suggested Readings 1. 2.7 References 1. William L. USA. Ltd. New Jersey. http://www. Ludi Koekemoer (2004).com/atwork/skills/documents. (2004).microsoft.6. Claudyne wilder (1994). Thomas E. John Wiley & Sons. Tata McGraw-Hill. 3. DeCarlo.
2 Principles of Negotiation 7.3 Effective Negotiation Process 7.1 Definitions of Negotiation 7.5 Summary 7.7 References 7.1 Pre-negotiation process 7.3.4 Closing techniques 7.8 Suggested Readings .2 Post-negotiation Process 7.2 Negotiation Process 7.3.1 Introduction Objectives 7.3.2 Negotiation Defined 126.96.36.199 Keywords 7.UNIT 7 NEGOTIATION PROCESS Structure 7.
Having achieved the objective of presentation and successfully handling the objections. Once the customers are satisfied they would like to negotiate the price and other features like warranty period.7. So. Objectives After studying this unit you will be able to:1) Define negotiation and its objectives 2) Identify the underlying principles of negotiation 3) Explain the pre-negotiation. let us now understand the negotiation skills a sales representative must possess to successfully handle the deal. So. it is time for the sales representative to negotiate and close the deal effectively. During the negotiation process the customer will like to have the best price for the product/ service. The customers are always intelligent enough to know that the price quoted by the sales representative can always be negotiable. sales representative will use closing techniques to close the deal and make an agreement of the sale. various guidelines for making presentation and the process of effective presentation. It is the skill of the sales representative to successfully negotiate the deal such that a profitable relationship can be built both for the company and the customer. negotiations are the part and parcel of the sales process before getting an order. discount on add-on products and so on. After negotiations. Negotiations will happen until both the customer and the sales representative negotiations comes to an equilibrium point. We have discussed the pre-presentation activities. after sales services. negotiation and the post-negotiation processes in handling the deal effectively 4) Understand the objective of closing techniques .1 Introduction In the previous unit we have understood activities that are performed to ensure a successful presentation. It is always important to understand that the customer will try to negotiate the price to such an extent that there would be no profit left for the product/service sold.
but who initially have different objectives. a contract. Fowler (1996) describes negotiation as “a process of interaction by which two or more parties who consider they need to be jointly involved in an outcome.5) Use appropriate closing techniques according to various situations in the sales process 7.2 Principles of negotiation Flower (1996) describes that there are seven principles to any fo rm of negotiation. Negotiation can be thought of as “a process between two or more parties to arrive at a mutual ly beneficial agreement or relationship”.2.2. such as a commercial transaction. Let‟s look at them in detail:a) Negotiation is the process which will require both the parties to reach to a desired outcome. Both the parties show some common interests in either the subject matter or in the negotiation context. For e.1 Definitions of negotiation Let‟s start this section by identifying by defining the term “Negotiation”.g. If . seek by the use of argument and persuasion to resolve their differences in order to achieve a mutually acceptable solution”. or a deal of any sort”.2 Negotiation defined After the sales representative knows that the customer is willing to make the purchase but has some concern related to price or features then he/she will enter into a negotiation process. 7. Various other definitions given by some of the scholars include as follows: Steven Cohen (2002) describes negotiation as “the process of two or more parties working together to arrive at a mutually acceptable resolution of one or more issues. which shall hold them in the negotiation process. 7.
if the sales person feels that the customer is not going to place the order at 15 percent discount at any cost. then there can still be some hope left that the customer will buy the product at 15 percent if the benefits of the product are explained once again to the customer. For example. both the parties initially look for the negotiations. Here both the customer and the sales representative objective are to get best value from the deal. e) The next principle states “both the parties feels that there is still some hope left even if there ideal outcomes are unattainable”. in the previous example. . when the sales representative says the maximum discount he can give is 15 percent and the customer is expecting a 30 percent. This holds them in the negotiation process. then your objective might be to sell as many copies as possible with a reasonable profit margin and the customer objective might be to get the copies at the least cost possible. both the parties will opt for negotiation as a satisfactory way of resolving the differences rather than forcing to them to abide by the agreements. As stated in the previous principle. c) At least initially.you are selling a technical software such as anti-virus to the company. Then both the parties will proceed to negotiate further rather than the sales representatives forcing themselves to give the 30 percent discount or the customer buying the product for a 15 percent discount. d) There is a belief in negotiation that each party can persuade the other to change his/her stand on the original position. But the sales representative might say the maximum discount he will consider giving is 15 percent. For example. the customer will believe that he can get more discount than 15 percent from the sales representative and the sales representation will proceed with a belief that he can persuade the customer to buy the product at reasonable profit margin to the company. So. b) The discussion in negotiation process will normally start off with different objectives which will initially prevent the achievement of the outcome. the customer who is buying the anti-virus product might say he will be interested to take 50 copies if the discount is 30 percent. here both the parties started off with different objectives which don‟t allow them to come to a conclusion easily. As per this principle. For example.
1 profitable customer in the past for your company. This is where the negotiation skills come into play a lot. For example. In this process various issues are to be handled well. It would be better to increase your discount rate may be to 20-25 percent and proceed the negotiations. SAQ 1 1) Define negotiation in your own words 2) Explain the principles of negotiation 7. then you shall have the power or influence during the negotiation process. Hence. if your antivirus product is the No. On the other way. you can just stick to your 15 percent or may just give a little consideration and increase the discount to 17 or 18 percent. if the customer whom you are selling the antivirus product is your elite or No. In this case.f) The next principle states that there is no point to participate in the negotiation process if one party is having influence or power which is real or assumed over the other party which is completely powerless. then there is no point in arguing much and sticking to your 15 percent. the negotiation is strongly influenced by the emotions and attitudes rather than the facts in the each party‟s arguments. The sales representative must understand that he can still win a better deal even if the customer is adamant by using his/her negotiation skills. Negotiation process can be thought of as a three step process as shown below:- . g) The final principle states that the negation process is carried mostly by human element with verbal interactions.3 Negotiation process Negotiation is all about give and take with the aim of both the parties getting satisfied.1 in the market and is the only antivirus which can cater to the needs of the customer.
The sales representative . Hence some of the steps which you need to follow in the pre-negotiation process involve the following: Identify the customer group Collection as much customer data as possible Identify whom to involve in negotiation process Make a check-list of possible scenarios that may arise during the negotiation process Prepare for the scenarios and alternate ways to handle Make sure you and your team members are fully aware of the objectives of the negotiation process Depending upon the type of sale. 7. the team for the sales negotiation can be a single sales representative or many. Normally. he/she must be fully aware about the customer details and preferences.1 Pre-negotiation process Before entering into the negotiation it is always advisable to be prepared for the negotiation. You should remember that if the negotiations are not handled properly you may lose the customer and also his referrals. only a single sales representative is involved.3.Pre-negotiation Process Steps in negotiation Negotiation Process Post-negotiation Process Let‟s now discuss then in detail. In such case. in door-to-door sales like FMCG and consumer care products.
Every team member is associated in the creation of the CRM product. knowing details from some referrals. hardware. Once the presentation process is completed and the customer is willing to give an order but express is some concerns and want a negotiation to be done. The sales representative team can involve not only the people from the sales team but may also include members from other departments like technical. finance and HR. Other ways of knowing more about the customer interests include looking at the financial status. For example. One must understand that the customer may ask discount on some features of the CRM products like the cost for testing services. then the team for negotiations may include the technical. . you may look into the existing past data of the customer and judge his buying behaviour and interests. The team depends mainly on the type of product/service being sold in the negotiation process. testing and the sales team. With the help of such information you can know whether the customer would be adamant about the price or choose the best features and cost is a secondary importance. finance. This process can be very tedious in big industrial or institutional dea ls. then it is important that the testing team member approval has to be taken to give such a discount. Company expects that nothing wrong would happen during the negotiation process in such big deals with the industrial or institutional sales. Knowing about your customer is very important before entering the negotiation process. it‟s time for the sales team to be prepared for the negotiation process. So. browsing the past and present business activities of the customer etc. If it‟s the previous customer. Hence his/her approval may be required when giving the discounts. In Institutional and Industrial sales. the first important step is to choose a team that is capable of handling the negotiation process effectively. there will be a team of members who will participate in the negotiation process. if the sale is about a multi-million dollar CRM product is being sold. testing.should be prepared for scenarios where the customer might ask for a more discount or any add on benefits along with the product/service.
During the negotiation process. e) After analyzing all the possible alternatives. So it is always better to know about the possible situations that may arise in the negotiation process by looking at the previous experiences with the same or other customers in the similar deals. the proposal will be treated as final and then an agreement will be made. decrease the cost.2 Negotiation process Let us understand in this how the negotiation process will proceed in general. formal proposals are made which will be discussed and modified f) After several modifications. Expert advises can be taken who may be the industry leaders for knowing the possible scenarios. Here both the parties will define their initial positions. it will be always better to prepare for all the situations that may arise during the negotiation process. Let us now look at the negotiation process. and decrease the cost of extra warranty periods and so on. c) Then there would be the discussion in order to test the initial positions of both the parties. d) During this discussion both the parties try to explore all other possible outcomes. free add on products/services. Flower (1996) described the pattern which is followed by most of the effective negotiations. before going to the negotiation process. various scenarios may arise from the customer side such as the customer requesting to increase the warranty periods. 7.3. b) After the issues are set out then one of the party will set the claim which will be responded by the other party. Let‟s understand the pattern in detail:a) Both the parties lay down their issues and decide what they are willing to negotiate in the process. Finally. If the deal is new deal. This agreement phase can be thought of as the postnegotiation process . your objectives must be clear about the offer or agreement you do in the negotiation process.
3 Post-Negotiation process After the negotiation process the sales representative will use the closing technique to close the deal and prepare the agreement between the parties. etc. This printed document is also known as service-level-agreements (SLA‟s). Cross check the details in the agreement with all the members before signing the contract SAQ 2 1) Describe various objectives of the negotiation process. type of resources used. Those issues or concerns include: Be clear on what is going to be written in an agreement Take approval from both the parties Cross check that any higher authority hasn‟t been missed out for informing about the agreement Ensure that the method of implementation and the level of service are clearly stated in the agreement i. ETA (Estimated time of arrival).3. number of employees working on the project.7. 2) Explain the need of a well documented SLA after the negotiation process 3) Explain the need for understanding the customer group before starting the negotiation process 4) Explain the pattern which is generally followed during the negotiation process . It is always better to have the final proposal which is agreed by both the parties to be presented in a written format.e. Some of the issues have to be taken care of so that the agreement may not lead to an implementation failure.
A sales representative may use a single or multiple closing techniques to effectively close the deal. We have already learnt about some of the closing techniques in the 3 rd unit „Personal Selling”.7. let‟s now look at some more closing techniques which are given in the website changingminds. this might not be the only technique used. For larger sales where the discussions run over weeks. reliable and has a plenty of features than the competitors”. This closing technique is ideal when:- . So here you will ask the customer to take his/her own time in making the decision and you will adjourn the meeting to follow up on some other day. It is the skill set of the sales representative to know when and what closing techniques are to be used. For example “This pr oduct is hassle-free. Most of the times customer might show some resistance to make the decisions fast enough. The main objective of the closing technique is to successfully close effectively and get an agreement signed between the parties.org:a) 1-2-3 close: In this closing technique the sales representative will try to summarize the benefits of the product in a sentence with three items.4 Closing Techniques A close refers to end the process and in sale it means to end the selling process after the negotiations are completed. There are many closing techniques which can be applied depending upon the situation in the presentation process. faster and efficient in removing viruses from your computer” or “this service is the cheaper. This type of closing technique is used widely in the sale of low value products where the sales process may take place within a day. In this closing technique the main aim is to give a great impetus to the customer to feel that the product/service is the best in the market. b) Adjournment close: This type of closing technique assumes that the customer will not be able to make the decision right away and will require some time. hence closing technique serve the purpose of helping or assisting the customer to make the decision quickly and close the sale.
paying rent for every month or quarter while using. Try to make the customer feel that the price is affordable for long term usage d) Alternative close: This type of closing technique is used when you have a feeling that the customer is willing to make the purchase and then you may present some alternatives which the customer can choose according to his preference. For example. The deal involves a lot of issues and value where the customer has to discuss with his/her higher authorities When the deal is done during the budgetary period or when the funds are low You have a feeling that customer will definitely come back and make more purchase. if you are selling the laptops then you may ask the customer “would you like the laptop to have a 2 GB Ram or 3GB RAM?” or “Would you like to have the Intel i3 processo r or i5 . Always try to find out the best installments or loan facility which doesn‟t make the customer to go in debt and will not be able to make the timely payments. This is a wide trend which is used now a days and the concept is known as software-as-a-service. Some of the situations in which you may use this technique are: When you feel that the customer doesn‟t have budget to buy the software or hardware. This type of closing technique is used very common in both the door-to-door sale and the institutional or industrial sale. If the customer feels that your product cost is very high. you may inform him that the price is justified because the maintenance cost is very low. then you may help the customer in making the payment through some loans or in easy-monthlyinstallments. If you are selling the car or a house to the customer. During the time given to customer he/she may do an analysis of other competitor‟s product/services and will return to you You are the market leader and provide the best service c) Affordable close: This type of closing technique is used when you know that the price of the product is way too high for the customer pocket and you need to do something to reduce the price or offer some other alternatives. then you may give an option to the customer that the software need not be purchased fully but can be taken as a service.
For example. SAQ 3 1) Explain any two scenarios where you would use assumptive close 2) If the customer says that they are having tight budgets in this quarter. Some of the statements used in this technique are: We have this stock only in this festival season This is the first time the product/service is sold at 20 percent concession This is a limited offer where you get extra one year free onsite service Having the summer approaching it would be the best time to have an AC Having got recently married.processor?” and so on. e) Assumptive close: In this closing technique the sales representative will assume that the customer has already made the decision and the next step is to take the order. the customer may be asked “Where do you want the product to be delivered to the head office or at your branch office?” or “Will one year license be enough for your product?” and so on. This technique is closely related to the alternative close and often used along with it during the sale. For more closing techniques you may look at the website address given in the reference section. it is the best time to think about having your own apartment These are some of the closing techniques which might help you in different situations in the sales process. If the closing technique is not working then the sales representative might negotiate the price or other features and will try again for closing the sale using an appropriate technique. f) Best time close: In this closing technique the sales representative will explain the customer how this is the best time to make the purchase. This can make the customer to make the decision faster and close the deal. then which type of closing technique would you apply? Justify your answer. Many-a-times negotiations and closing techniques go hand in hand to close the deal effectively. .
5 Summary In this unit we have understood the various closing techniques which can be applied to know the willingness of the customer to close the deal. negotiation process and the post-negotiation process. “Negotiation skills for managers”.7 References 1. 7. We have understood the six key steps which are followed in most of the effective negotiation processes. then which closing technique would you find appropriate to use? 7. USA.3) If the customer is not sure which laptop model to select. 2) ETA Estimated time of arrival is the time at which the product/service will be available for delivery 7.6 Keywords 1) SLA Service Level Agreement is a document which states the terms and conditions that define the level of service being provided by the product/service to the customer. Steven Cohen (2002). Finally in this unit we have learnt the important issues that need to be taken care of so that the negotiation agreement of the sale may not lead to an implementation failure in future. Tata McGraw-Hill. We have also understood that most of the sales process wouldn‟t be completed without the negotiation phase. We have defined negotiation and understood the several principles of negotiation. Before any negotiation process it‟s important to be prepared and so we have under stood the various activities that need to be done to ensure an effective negotiation process. . We have identified the entire negotiation process would be completed in three process namely pre-negotiation process.
. 2. USA. Kogan Page Limited. Chris Newby (2004).org/disciplines/sales/closing/closing_techniques.8 Suggested Readings 1. “Sales strategies: negotiating and winning corporate deals”. 3.2. India. “Negotiation skills training”. http://changingminds. “Negotiation skills and strategies”. Lisa J Downs (2008). ASTD Press. Universities Press Limited.htm 7. Alan Flower (1996). UK.
3 Internet Retailing or E-retailing format 8.1 Introduction Objectives 8.4.6 Keywords 8.3.1 Modern retail formats 188.8.131.52 Communicating with the retailer 8.7 References 8.2.2 Role of merchandising 8.UNIT 8 RETAIL COMMUNICATION Structure 8.4.5 Summary 8.1 Necessity of retailing 8.3 Communication Skills in Retailing 8.2 Advantages and disadvantages of retailing 8.4 Retailing in Modern times 8.2 Selecting a retailer 8.3.8 Suggested Readings .2.2 Importance of Retailing 8.1 Understanding the retailer 8.
In this unit. in retail mode of selling the customer will visit the retail outlet to make the purchase.8. We shall examine the necessity of retailing for the company to survive in the market place. we shall look at the retailing mode of selling and the various issues that need to be addressed to build a strong relationship between the company and the retailer. So. Objectives After studying this unit you will be able to:1) Define retailing 2) Understand the necessity of retailing for the company in the market place . So there is a necessity to build a profitable relationship between these two entities. We look at the modern retail formats like shopping malls and super markets and discuss the reasons for changing customer preference some kirana store to these modern retail formats. Unlike personal selling. Relationship between these two entities is crucial for the successful selling and make profits of the business. We shall also understand about the information that the sales representative and the retailer needs to communicate with each other. Later. in this unit we shall understand the communication mechanisms between the retailer and the sales representatives which help to improve and build a profitable relationship.1 Introduction In the previous unit we have understood negotiation process and the closing techniques in the sales process. Retailing has two major entities who work for the benefit of the customer. One is the retailer and other is the sales representative of the product. Finally. The retailer will be benefited from the sales representative by timely supply of goods whenever there is a need and the sales representative will benefit from the retailer in reaching out to the customers who visit the retail outlet. we shall understand the role of merchandising in increasing the sales of the product in retail outlets. where the sales representative will visit the customer. we shall understand the benefits of E-retailing and various issues faced by the customer that need to be addressed by the sales representative.
culture.2 Importance of Retailing Let‟s start the unit by defining retailing. For example: Children will be the customers for toy products . Retail is defined by oxford dictionar y as “the sale of goods to the public in relatively small quantities for the use or consumption rather than for resale”. The customers may depend upon several factors like the economy. The origin of this word is from the French word “retaillier” meaning “a piece cut off”. location etc. 8. selecting and communicating with the retailer 5) Examine various modern retail formats like shopping malls. There are three main challenges for the company in making the sale: Locate the customer group Reaching the customer group Selling the products/services effectively The first challenge is to locate the customer group. supermarkets and Eretailing 6) Understand the critical role played by merchandising to increase the sales in retail outlets 8. age. sex. After creating the product and service it‟s time to find the customers for it.3) Explain the advantages and disadvantages of retailing 4) Identify various issues that need to be addressed in understanding.1 Necessity of retailing The objective of any business is to reach out to the customer and sell the goods or services effectively.2.
2. One method would be personal selling where the sales representative will contact the customer on a one-one basis. 8. So other channels like retailing should be used in complement to personal selling. the company needs to select a method to reach them. Let‟s look at them in following section. After identifying the channel for reaching out to the customer. Some of advantages of retailing to the company include: Better reach to customers Decreased costs to acquire the customer Easy implementation of promotional schemes Easy branding of new products/services Ensuring the availability of products for customers at all the times Reduced costs for warehousing . companies have to monitor the selling process so that the sales would be done effectively. Rural people would be the customers for Agricultural products like pesticides and fertilizers The people who have the desktops or laptops would be the ideal customers for software products Customers for a medicinal product would be everywhere such as in rural and urban areas After locating the customer. Companies can‟t just rely on personal selling for the product which requires repeated purchasing. But this wouldn‟t be ideal when there is a larger custom er group.2 Advantages and disadvantages of retailing Retailing has many advantages when compared to other sales methods. Each and every method like personal selling or retailing has their own advantages and disadvantages.
Retail formats in India can be many and includes the mobile store on vehicles. departmental store.3 Communication skills in Retailing In India. For the company to sell its products/services it‟s important to understand the behaviour of both these sectors. super markets. Kirana store. grocery shop. Relationship building with retailer involves three major steps as shown below:- .e. Most of retail outlets in India are unorganized i. Understanding various needs of the different retailers is very important to develop a good relationship. both the organized and unorganized retailing plays a very important role. Companies have to analyze the factors that a retailer looks at in running his business. shopping malls etc. Some of them include: No control over the selling process in the retail outlet Customers may be misinformed about the product benefits Low quality sales force in retail outlets with poor communication skills A lot of competing products exist in the retail outlet Customer will be having lot of choices when deciding to buy your product Difficulty in keeping constant touch with the retailers on a day-to-day basis SAQ 1 1) Define Retailing 2) Explain the need of retailing for the company 3) Explain the advantages and disadvantages of retailing 8. which do not have the license and who don‟t pay the taxes.Retailing also has some disadvantages.
If the retail outlet is in a village. .Retailer may prefer those products which offer him/her the best commission for a sale. you may not expect to get high value products. Retailer may prefer to keep those products which the community prefers. For example. It is important to understand the influential factors that prompt the retailer to select the products for keeping in the outlet.1 Understanding the Retailer You will generally find many products of the same category with the retailer. b) Community: . For example if company „X‟ offers a 5% commission and company „Y‟ offers a 7% commission then retailer might prefer to have more products of company „Y‟ in outlet than company „X‟ products.Community refers to the group of people who may be categorized on the basis of their preferences.3.Location refers to the place where the retail outlet is situated. people at a place may prefer sunflower or groundnut oil and may not prefer olive oil. Sachets are preferred over big tubes or bottles and the retailer would not keep a stock of high value items. c) Commission: . hence the retailer may not prefer to have olive oil in his outlet.Understanding the Retailer Relationship building with retailer Selecting the Retailer Communicating with the Retailer Let us now understand these steps in detail. 8. Four main factors are observed to be influential viz:- a) Location: .
2 Selecting a Retailer Having understood the factors that favour the retailer in choosing a particular product for his outlet. For example. Some of the basics things you should be looking at are: Time of establishment of the retail outlet Average number of customers visiting the outlet .d) Relationship: . it‟s time to examine their profiles and analyze the benefits. Every city has such markets which are exclusive for selling technical products.Retailer might prefer those products from the company which has understood the retailer needs well and has helped the retailer in the past for instance like extending the credit time in difficult situations. if the product is software related then the retailer would include mainly the shopping malls or markets where the technical items. the first step is to understand the universe of retailer for the company products. if the product of your company is a tobacco related one like cigarettes then the retail outlet would be a pan shop which can run into thousands in number for any city in India. 8. So. On the other hand. ensuring the timely availability of stock whenever needed and so on. So it is very important for the sales representative to choose those retailers for the company who do not create loss and difficulties in handing the sales process. Sales representatives have to look at certain issues before selecting the retailer such as: Understanding the universe of retailer Examining the retailer profile Analyzing the benefit of the retailer to the company At the end of the retailing. the relationship between the company and the retailer should be a profitable one. it‟s important to understand whether the retailer will be useful for the company or not.3. laptops and computers are sold. After understanding the universe of retailers and having the list.
Size of the retail outlet Number of employees in the retail outlet Type of products being sold in the outlet Type of strategies used by the retailer These factors can help you in deciding to shortlist the retailers and then examine for the benefits of building the relationship with them.1 Retail Landscape . This diagram states that the strategy played by the retailers is based upon the relative price and the relative offerings. Depending upon the type of strategy used by the retailer. Manfred (2010) described various retailing techniques used by the retailer as shown by the diagram below. It is very important for the company or the sales representatives to know the strategy used by the retailer and analyze it. Fig 8.
then the sales representative may communicate with the distributor or wholesaler. Here. if the relative price and offerings are low then the retailer will offer only those products which are very cheap and will not keep many varieties of the product in the outlet.In the above figure. where the sales representative or the distributor will deliver the product in the day and collect the product . Hence depending upon the strategy used by the retailer it is advisable to select those retailers who will fit to your company‟s objectives. So it is better to avoid such retailers.3 Communicating with the Retailer Most of the retailers in India belong to the unorganized sector where modern ways of communication like email and fax wouldn‟t work. Finally if the retailer is using high relative price with low relative offerings then the sales representative should understand that in near future it would be time for the retailer to exit the business. fax. Some of the objectives of communication would be to monitor the sales process on the retailer end. Depending upon the retailer sales representative may use many communication channels like email. In such cases. checking for the leftover stock etc. 8. the retailer will use the selling skills to sell the high value products to the customer. The sales representative may communicate daily or once in a month or once in a quarter. If the retailers are larger in number. For most of the times sales representative end up using telephone and personal communication channels when other channels are not effective in communication. If the relative price and offering are neither too low or nor too high it means that the retailer keeps a variety of products which are preferred by the middle class customer group and has with a lot of varieties for a product category. then the retailer will keep all the high value products with many varieties for a product category. The frequency of communication depends upon the product and the number of retailers. If the relative price and offerings are high. direct mail and personal communication. For some products like tobacco and ice creams which are sold by the retailers on vehicles or small outlets.3. communication would be on a daily basis. telephone. So it‟s very important to understand the right way of communication with the retailer. collecting timely payments. Wal-Mart will fall into this category. who in turn communicates with the retailer.
It is important to know that most of the retailer do not follow stringent accounting procedures and the accounting period would be mostly on daily basis. There can be many problems in getting the money later if the sales representative doesn‟t go an d collect the payment on time. This may happen due to several factors such as lack of warehouse to keep the stock. month or year depending upon the payment terms agreed earlier. For small businesses. One of the important objectives in communicating with the retailer is to ensure that the retailer communicates positively about your product to the customer. Some of the reasons include: No funds to pay Personal problems like retailer unavailability for a week Disputes in payments i.in the night or the retailer will come in the day time to collect the product and return them in the night time at the distributor location. Various things that have to be discussed with the retailer to ensure that the sales process will be effective are: Availability of products Visibility of products Adequacy of stocks Payment terms and commissions Product benefits and USP‟s Importance of appropriate behaviour with customers Feedback processes . risk of pilferage in the night etc. disagreement on the amount to be paid So it is always better to go in time and collect the payments.e. payments are collected on a daily basis or weekly basis in most cases. It is important for the sales representatives to ensure that the money is collected on the same day.
This would remove the discrepancies which may arise in future on the amount to be paid and time period of payments. Customer might prefer other products if the product is not available on time. 4) Explain the role of feedback process in developing the relationship between the retailer and the sales representative. Visibility of stock also places an important role in increasing the sales and so the sales representative should see that the products are kept in the right place where the customer can easily view them.Sales representative has to ensure the timely availability of the products for the retailer. A proper feedback should be taken from the retailer to know that the retailer is promoting your product and showing interest in improving the relationship with the company. So it is very important to ensure that the sales representative delivers the products on time and the retailer has adequate stock of it. Importance of appropriate behaviour has to be explained when selling your products to the customers. This leads to a creation of positive image about the brand and increase the sales. SAQ 2 1) Explain various factors in understanding a retailer 2) Examine the universe of retailer if the product you are required to sell is a “pen drive”. Sales representative has to clearly communicate the payment terms and commissions on the products and if possible should make the agreement copy and get signed. 3) Explain the importance of timely availability of product for the customer in the retail outlet. There can be several problems both for the retailer and the sales representative if the product is not available on time such as the retailer might lose the business and the sales representative loses the sale. . The sales people in the retail outlet should be well informed about the product benefits and the USPs. This might lead to losing the customer permanently.
Customers in the urban and rural areas prefer to buy from the modern retail outlets due to many reasons such as: Best prices in the market place Good shopping experience Easy payment methods apart from cash like credit and debit cards Parcel and delivery services to the door step Large variety of products to choose These retail formats depends upon some rules such as: Self service Absence of owner in the retail outlet Fixed prices and no negotiations Even though the prices are fixed and cannot be decreased.4. It can be thought of as a practice which leads to the sale of products to the retail customer. shopping malls which are facing tough competition with the unorganized sector of retailing.4 Retailing in modern times Let us understand various retail formats present in the 21st century. These modern retail formats include supermarkets.2 Role of Merchandising Merchandising is any activity that leads to the sale for the retail customer. With the entry of international players like Wal-Mart and many other Indian retail chains the modern retail formats are on the rise.4. . 8.1 Modern Retail formats We have understood that in India most of the retail outlets are unorganized and survive on a strong relationship with the customer. the customers prefer to visit them due to the discounts offered on bulk purchase or due to the availability of various range of products.8. 8.
Nowadays we make use of video displays and interactive media too. getting the place for your posters where the customers are going to spend more amount of time. Sufficient posters and point of purchase material are available so that they can be distributed when customers visit the counters Ensure that the retailer works for the display along with you in creating a positive image for the brand Retailer commitment is necessary for ensuring that the sign boards are clean and well-lighten up.Hiebing (2004) defines merchandising as “the method used to communicate product information. if free samples are given with the product. shelf takers etc. ensure that they are given for free and are not sold separately. sell sheets. product displays. hence try to win that level of commitment from the retailer Ensure that the sales promotions are received to the customer. Some of the issues which need to be addressed while using the display as a way of merchandizing includes: Differentiating clearly between paid and unpaid displays in terms of the space and number of displays allowed being setup in the outlet. video presentations. Most of the purchase decisions are made on point of purchase (POP) and hence merchandising plays a very important role in increasing the sales. and special events and to reinforce advertising messages through a non-media communication vehicle like brochures. Sales representative must work with the retailer to ensure that proper care is taken in setting up the display in the outlet. The most common way of merchandising is in shopping malls or super markets are by the displays. posters. . One of the best places would be at the purchase counter or at the entrance where the customer would definitely notice the display.e. For example. banners. Acquiring the right place for displays i. promotions.
This can be measured with the help of feedback forms making available at the retail outlets. 8.4. With the rise in e-commerce activities and increase security levels of online transactions many customers prefer to shop on the net.3 Internet Retailing or E-Retailing format Modern retail format would be incomplete without a discussion on the internet retailing format which is on the rise in the 21st century. Companies are using this as an opportunity and reaching out to internet retailers who provide shopping services on the net. at least need not have to walk across the store and find the product 24/7 shopping experience Better discount rates than retail outlets since companies save cost on the employees as E-retailing doesn‟t require many sales representatives to handle the customers . Some of the reasons for the internet retailing on the rise include: Various payment methods with credit and debit cards Convenient payment methods like EMI facilities The database of products are large so that customer can compare various products. Internet retailing is also known as Eretailing. look at the reviews and make purchases More secure payment technologies with increase level of protection from 64 to 128 bit Secure SSL technologies Easy and convenient way to shop.The end result of merchandising is to create a favourable response image in the customer mind and the customer should be willing to recommend the product to his friends and family members.
Understanding the retailer and his business is crucial for the sales representative to establish a profitable relationship with the retailer. Hence.e. profile and benefits of the retailer before selecting for the company. hence the sales representative should make sure that the retailer also provides the option of debit cards or making the purchase on the phone using IVR system SAQ 3 1) Explain why the customers prefer to shop in modern retail outlets like shopping malls rather than in kirana stores. Some of them include: The shipping period of the product/service i. We have seen the importance of discussing the payment terms and . phone numbers etc. customers should be provided with necessary contact information like email. Hence it‟s the responsibility of the sales person to address such issues.e. about the retailer or the supplier in case of any queries Payment over the net using credit cards is not preferred by many customers. 2) Examine the role of merchandising in increasing the sales of the product 3) Identify various issues which the customer face in E-retailing 4) Explain the benefits of E-retailing over retail outlets 8. We have also examined various advantages and disadvantages of retailing for the company.5 Summary In this unit we have defined retailing and understood its necessity for the company‟s survival in the market place.There are various concerns which the customers face when shopping on internet. the time period mentioned during purchase should be followed Offline help whenever needed i. we have examined various factors that determine the retailer to choose the products for his outlet. We have understood various issues that need to be looked into such as universe.
3) POP Point of purchase is the place where the sales are made. In the final section of this unit. We have examined the reasons for the customer changing preferences towards modern retail formats. 8.6 Keywords 1) USP Unique Selling Proposition can be a statement about the product which highlights the benefit of the product or the unique proposition created for the customer.commissions and the consequences for not collecting the payment on time. . we have looked into the modern retailing formats such as super markets and shopping malls. Finally we have discussed about the various issues that need to be taken care of while using the display as a way of merchandising for the products/services. We have learnt about E-retailing and the increasing acceptance by the customers and the companies. In retailing it will be retail outlet where the customer makes the purchase. USP is considered to make an impact to a lot of new customers 2) IVR Interactive Voice Technology is a technology which allows automating the interaction over the telephone with several keypad inputs on the phone. We have looked at merchandising as a practice which will increase the sales in the modern retail outlets. We later examined the various things that need to be communicated with the retailer on a daily or weekly or monthly basis to ensure a profitable relationship persists between the retailer and the company.
New York.8 Suggested Readings 1. Roman G. Cooper (2004). Hiebing Jr. USA. Scott w. USA. Elsevier Ltd. marketing and sales”. Infobase Publishing.8. Mantrala (2010). Christopher Moore. 8. “International retail marketing: a case study approach”. Paul Stinson (2008). “Retail.. Margaret Bruce. 2. USA 2. . New York.7 References 1. Manfred Krafft. Springer. “Retailing in the 21st century: Current and future trends”. Grete Birtwistle (2004). “The successful marketing plan: A discipline and comprehensive approach”. Tata McGraw-Hill. UK. Murali K.
8 References 9.2 Identifying the skill set for a sales job 9.3.1 The Recruitment process 9.2 The Selection process 9.UNIT 9 JOB ANALYSIS AND DESIGN.1 Introduction Objectives 9.3 Job Analysis Activities 9. RECRUITMENT AND SELECTION Structure 9.3.1 Understanding the nature of a sales job 9.5.6 Summary 9.5 Recruitment and Selection Process 9.4.2 Job designing techniques 9.4 Job Design Activities 9.7 Keywords 184.108.40.206 Steps for job design 9.2 Job Characteristic Model 9.9 Suggested Readings .
If this is not done properly and the wrong candidate is chosen. Recruitment process should be efficient and effective in ensuring that a wrong candidate is not selected. Knowing various issues related to the job and the type and level of skill set required will be the first task before starting a recruitment process. Companies would have to test the communication skills and the comfortable level of the candidate in the sales job. Identifying the skill set a candidate requires for doing the job is a part of job design. it would then lead to attrition in future. After performing the job design activity the organization would determine the way in which recruitment process will be held. The recruitment process should be able to test clearly the mental ability and strength which the candidates possess. . The number of stages in which the candidate will be tested differs from company to company. However big or small the organization would be. communication skills are an important trait of an effective sales person and having representatives with better communication skills would ensure success for an organization. We shall then understand the steps in job design and the techniques that can be employed for job design in creating the jobs which would benefit both the company and the employees. Hence selecting the right candidates for the job is an important task. it’s performance and survival depends upon the employees skill set. In this unit we shall understand the characteristics of the job with the help of a job characteristic model and then understand the nature of the sales job. In this unit we shall understand about various parameters or qualities that the recruitment process should be able to evaluate. we have understood that selling skills are essential for the sales representative to effectively close the sale.9.1 Introduction In the previous module. The nature of sales job can make the sales representative uncomfortable most of the times and hence he/she would require the ability to withstand the pressure mentally both from the customer side and also from the company side in meeting the targets. The method of testing the candidate also differs from company to company and the nature of job.
office space. It might not always be essential to use different skill set in every job. Employees are critical for an organization survival. softwares etc. Resources may include not only capital. Let us now discuss them in detail:a) Skill variety Skill variety refers to the usage of different skills which the job requires.Objectives After studying this unit you will be able to:1) Explain the job characteristic model 2) Explain the nature of the sales job 3) Identify the skill set required for the sales job 4) Understand the role of Job analysis and design in creating the jobs which benefit both the company and the sales representatives 5) Narrate the significance of a well executed recruitment and selection process on the organization 9. Taking care of employees is an important task for any company. For example. The job of the employee must be promising for his/her career growth and if it is not the employee might leave the company. if your job .2 Job Characteristic Model The aim of any company is to optimize its resources and get the maximum out of them. but it also includes the employees of the organization. Let us now look at the Job Characteristic Model and then define Job analysis and design. Stephan (1999) describes in his book about the Hackman and Oldham’s Job Characteristic model which explains five important job factors which would explain about the job. computers.. This model aims at describing any job in terms of different dimensions which measure the nature and requirements of the job.
if you are the sales representative handling the personal sales. you would keep doing the same type of fitting all the day and this job doesn’t require a variety of skills. Identification of greater variety of skill set is usually associated with the complete understanding about the nature of job.involves fixing an automobile part in the assembly line. Understanding task significance can immensely motivate the employees to perform their duties effectively and efficiently. if you are involved in a software project which automates the working of government hospitals and helps the patients to know about the bed availability. In many ways. it is advisable for the companies to prepare jobs which demand greater variety of skill set. you would like to take part and work from the start to finish. For instance. b) Task identity Task identity refers to the completion of a whole and identifiable piece of work. medicines and doctor availability and if the employees working on the project . So the first step in defining or understanding the job would be identifying the variety of skill set required for the job. It might not be always possible for the companies to assign the entire project from start to finish to the employees but companies have to design and create jobs with significant task identity and visible outcome for the employee and organization. Therefore. Even when you are handling any project in the company. You wouldn’t like to just describe the product benefits and then handover the selling process to other representative. you would like to complete the entire sales process until the deal has been done. In contrast. a sales representative job demands the use of different skills based upon the nature of the sale. task identity is an important factor for job satisfaction of the employees and decreased attrition rate. Employees in a job would love to improve their skill set. The only way to improve the skill set practically is by performing the entire piece of work assigned to him/her. For example. c) Task Significance Task significance is about understanding the impact of an employee work on the lives or work of other employees or the organization. blood stock.
Hence. Some of the disadvantages of increased autonomy are little control over the employees work and monitoring their performance. It is the decision of the company about the degree of autonomy that should be provided to the employees. It is the degree to which the employee can schedule his tasks and procedures to perform according to his/her convenience. This is common practice nowadays among employees in managerial positions and the trend of working from home is seen more among sales representatives in the company. The sales representatives must understand that the organization will survive and be able to provide employment only if they perform their duties well and get more leads to the company. . If you have to interact with the clients in other countries like UK and USA. It is believed that jobs with higher autonomy would create a greater responsibility and job satisfaction for employees. although it might not be true in all the cases. In Industrial sales if the client availability to discuss about the sale is after the office hours then the sales representative would like to arrange the call from the home and even the organizations are providing with all the facilities to do a teleconferencing from the home. This gives a benefit for the company as the employee will be able to work from home whenever it is required. then the timings to do a teleconferencing or a video chat would be in the night. It also depends upon the nature and level of job assigned. d) Autonomy Autonomy in this unit refers to the freedom which an employee can have at the work place. it would definitely motivate them to work on the project more sincerely and on time. Greater job autonomy might encourage the employees to bring the work to their home and just not restrict it to work place. The work timings for a sales representative would not be fixed many a times and especially in industrial sales where the meetings would be held according to the client’s availability.were informed about the task significance of the project and their work. the sales representative should be informed about their task significance which can motivate them to work with dedication. The sales representatives should be motivated enough to before his task with dedication in odd timings.
In personal sales. A system for giving the feedback must be developed and be well informed to the employee about the time and procedure to receive the feedback. Companies take every care while giving the feedback so that it doesn’t become a de-motivating factor for the employees and their satisfaction levels. Every employee knows that the feedback and the suggestion will be given how to rectify the problems. If required the employees will be given some training before allowing them to work. Feedback may come directly from the job assigned to them or verbally by his/her manager. SAQ1 1) Explain the advantages and disadvantages of providing autonomy in work place 2) Explain the importance of providing feedback to the employees of the organization 3) Explain the role of task identity in improving the skill set of the employees in the organization. Let us now look at the job analysis of the sales representative and the nature of work he performs. Hence the companies have to find out the right time for feedback may be once in a month or quarter. But. For example. in industrial sales where the sales process can run into months for a single sale. .e) Feedback Feedback is the information that is conveyed to the employee about his/her performance in the job. It might lower their satisfaction level when given at times the employees are not expecting. All the employees will be assembled at a place where the previous day’s work will be reviewed and the level of error rates will be discussed. Feedback shouldn’t come as a surprise to the employees. it wouldn’t be possible to provide feedback daily. in many call centers the feedback will be given at the start of the day. It is always advisable not to judge the employee in the feedback but only give the recommendations on his/her work. feedback might be possible on a day-to-day business. The employees will be informed about their error rates and the ways to decrease it.
duties and responsibilities a job requires to be performed. The information collected would include the necessary skill set. Flippo “Job analysis is the procedure by which the facts with respect to each job are systematically discovered and noted” .Scott clothier and Spriegal “Job analysis is the process of studying and collecting information relating to the operations and responsibilities of a specific job”. Let us look at the nature of sales job as described below:9. duties and responsibilities of the job”.3.3 Job Analysis Activities Job analysis deals with collection of detailed information about the job. Some of them include: “Job analysis is the process of critically evaluating the operations. Ram Nath (2004) in his book described various definitions of job analysis as stated by numerous scholars. You as the sales representative will be alone with the customers most of the times explaining them about the products/ services. In personal selling the sales representative has to visit the customers alone whereas a couple of team members may accompany him if it were an industrial and institutional sale.1 Understanding the nature of the sales job There are many characteristics which determine the nature of the sales job. Some of them are:a) Sales is a lonely job You would not have a very big team in most of the sales. Edwin B.9. It should be understood that high level of rejection doesn’t mean . b) High level of rejection Rejection is a part of the sales job most of the times whenever a sales representative tries to make a sale.Dale Yeder Job analysis activities include understanding the nature of the sales job and making the list of skill set required.
In industrial sales as discussed earlier in the unit. So one shouldn’t take the rejections too personally and get de-motivated. But in general there are some necessary skills which would be useful for most of the sales representatives in making a sale.e. Companies try to . c) Sales job require physical fitness The sales representative is expected to be personally fit to perform the sales job. 9. Some of the skills he/she requires are:a) Self-motivation: Sales representative should be self motivated.2 Identifying the skill set for a sales job The degree and variety of skill set varies from one sales representative to another depending upon the nature of the sales job and the type of product/service handled. Let us now discuss some of such skills which the sales representative has to posses to perform the sales job effectively and efficiently. In many companies especially in personal sales a success rate of 5-10 percent is termed as good job done i. there will be instances where you need to take the sales call in the odd timing after office hours. sales representatives should be willing to work at all the times and not restrict themselves to working hours and weekdays only. Hence most of the personal sales will take place during weekends.3. It is necessary that the motivation levels are kept high to overcome any sort of discouragement occurs when the sales get rejected. d) Willingness to work anytime and any day Most of the times. 90 calls in 100 have been rejected by the customers. It is a fact that employees lose their interest in the sales job if sufficient amount of leads are not generated. Most of the times you will be required to travel to many places and especially in personal sales you will be meeting a lot of customers in a day and have to travel greater distances. Hence. Hence.that you are an incompetent for a sales job. the nature of the sales job requires that the representatives are personally fit for the job. the sales representative would work on weekends when the customers would be free and available at their residence.
Improper listening might end up in wrong product delivery which the customer does not expect. d) Positive attitude and behaviour: It is said that attitude is one such skill set which unfortunately cannot be inculcated in the employees through training. Writing skills are also important which helps the sales representative to write down the customer requirements accurately and as fast as possible. c) Good communication skills: A sales representative should have a decent level of communication skills as required by the company. Verbal skills include ability to speak out clearly with proper voice modulation and convey what is supposed to. It is important that sales representative doesn’t lose his/her positive attitude and cool during the presentation. There might be many instances during the sales presentation that the customer would frustrate the sales representative by asking a lot of questions. In a sales job the nature of tasks handled may keep varying according to the type of sale and the customer. Communication skills involves not only speaking ability but also includes writing skills and listening skills. Sales job requires the employees to have a positive attitude and behaviour towards the customers. You may not behave in a funny manner with a serious customer and hence you need to alternate your presentation style accordingly. . Customer time is precious and so in the available time the sales representatives may have to use acronyms. It is always considered better to speak in a neutral language which doesn’t have the influence of your mother tongue. Listening skills are very important as the sales representative listen to the customer problem. Hence one has to develop positive attitude all by overself. Also the sales representative should be able to quickly grasp and remember the details of the new products/ services.motive their employees by both the intrinsic and extrinsic motivation methods whenever required. b) Fast learner: A sales representative should have the ability to grasp and understand the new concepts quickly. eliminate repetitions and record accurate information in writing.
knowing about various products/ services launched by the company and searching for more number of sales opportunities. But employees look forward for multi-tasking which makes their work a little vibrant rather than monotonous.4 Job Design Activities Job design activity serves the purpose of creating a set of tasks or processes which the employee has to perform and also deals with aligning the right work to the employees to achieve the desired level of productivity from them. knowledge. They are:1) The specification of individual tasks . SAQ2 1) Explain the nature of sales job 2) Explain the importance of having high motivation levels in a sales job 9. Aswathappa (2005) defines job design as “the effort to integrate the work content (tasks. Some of the companies believe that to achieve maximum results from a sales representative the level of multi-tasking should be decreased so that hence they can concentrate just on selling. functions. abilities) for each job in a way that meets the needs of employees and the organizations”. Having discussed about the skill set.e) Multi-tasking: sales job involves not only just selling but also involves being in touch with the customers regularly. relationships). let us now look at the job design activities. Performing all these tasks in a single day throughout your career requires some level of multi-tasking capabilities. Hence this is an important skill set in present day in most of the sales job. the rewards (extrinsic and intrinsic).4. 9. and the qualifications required (skills.1 Steps for job design Aswathappa (2005) defined three steps that involves in job design.
For personal sales you will be already having companies printed material or slides or PowerPoint slides. preparing presentations for the customer and so on. For example in many firms which handle industrial sales. So the combination of tasks like preparing presentations. The former falls under the “Sales Manager” and the latter falls under the “Pre -sales Manager” job titles. The second step “specification of methods of performing each task” involves describing how the individual tasks are to be performed. The third step. “combination of tasks into specific jobs to be assigned to individuals” deals with describing job title and the nature of work to be handled. integrating the objectives of the internal team members of the company and the customer would be the work of pre-sales team. the method of preparing presentation varies depending upon the sale. identifying solutions within the budgets. For example. if we take the task of preparing presentation.e. a set of activities are combined to create the job titles for the employees. gathering necessary material like presentations. it’s important that some of the sales representatives concentrate only on the development of good relationship with the customers while others help in assisting the sales representative in preparing the presentation.2) The specification of method(s) of performing each task 3) The combination of tasks into specific jobs to be assigned to individuals Let us understand the performance of these steps for a sales representative job design. Some of the individual tasks for a sales representative can be preparing the customer list. technical departments and their financial heads for the approval of the cost parameter mentioned in the presentation. In case of a technical product like software. In this manner. The first step “specification of individual tasks” refers to individual tasks the sales representative will perform. you have to work accordingly to the method provided in the job design and complete the presentation task. solution for customer and arranging the technical meetings with customer. brochures and other material. . Here. the job design may recommend you to take approval of various other stakeholders’ i. In an industrial sale you need to prepare the presentation according to the customer requirement.
For example. 9.4. Each task is assigned to employees to master it and gain experience in that task.Let us now look at various methods in which the jobs can be designed that are best suited for both the company and the employees in meeting their objectives and needs. This method aims at increasing the productivity for the company by decreasing the level of mental and physical effort and executing the tasks appropriately. Hence each task acts as a specialization for the employees. Job simplification has its own advantages and disadvantages. in telesales the sales representative will get the list of the customers most of the times and hence his/her task is reduced in identifying new customers. The only task will be to just dial the customer and try to make the sale. Some of the advantages include: increased productivity minimal training requirements .2 Job designing techniques Jobs which aim at meeting the expectations of both the company and the employee can be designed in mainly four ways as shown below:Job Designing Techniques Job Simplification Job Rotation Job Enlargement Job Enrichment a) Job Simplification Job simplification aims at decreasing the complexity nature of job by breaking down it into various tasks.
b) Job Rotation Job rotation aims at shifting the jobs for an employee in required intervals in order to remove the boredom and create enough motivational levels to work for the organization. less qualified workforce can be used as the job is simplified decreased salary costs for the organization Job simplification may not always work for the company as it has some disadvantages which include: Employees might get bored of repetitive work Low satisfaction and motivational levels in the long run Increased attrition rates In order to overcome these advantages and create enough motivational level another job design technique “Job Rotation” is being employed. a sales representative who is in telesales might be shifted into personal sales to improve his skill set and learn the job. The employee might be put into an altogether new job in case he needs to improve his skill set. Job rotation also aims at helping the employees in gaining more insight about the company processes. Some of the advantages of job rotation include: Decreasing the level of boredom or monotony in the job Increasing the motivational levels Improving the skill set of the employees Helping the employees in their career growth and hence more satisfaction levels Decreased attrition rates Job rotation provides more number of benefits but it is not void of some of the disadvantages such as:- . For example.
Any part of activity which enriches the work place and the job is thought as job enrichment process. It is found that job enlargement would increase the power of an employee which motivates him/her to take up challenging tasks in the organization. d) Job Enrichment Job enrichment is different from enlargement. Job rotation might leave the employee many challenges in performing and sometimes may de-motivate them if not performed well Training costs go up as new training is required for the new job c) Job Enlargement Job enlargement is the reverse of Job simplification which aims at decreasing the complexity of a job. the sales representative who is in presales would be given the duty of sales manager for a certain period of time providing him/her to meet the customer personally by travelling to the customer site which would usually be in other countries. informing the employees about the contributions he/she made to the organization. the sales representative who is handling the personal sales of only technical products might be given the consumer care products too. Another disadvantage which is seen in job enlargement is increased workload for the employee in future which he/she might not be able to handle. Here the emphasis is on the quality of work rather than the quantity. providing better working conditions with recreation facilities etc. Another example would be the sales representative who is handling the pre-sales of software projects might be given the pre-sales of hardware products too. where as job enrichment deals with improving the quality of job by assigning new responsibilities and increasing the autonomy. Job enlargement deals with assigning additional tasks and responsibilities for the employee and expects them to work better. For example. allowing the employees to carry out the work the way they want to. In Job enlargement additional duties are assigned which enables different natures of job to be performed. Often Job enlargement is done to downsize the work force. For example. The advantages and disadvantage of job enlargement are similar to that of the job rotation. Another example includes giving the employees the flexibility to work from home. Advantages includes:- .
Increased satisfaction and motivation levels Increased autonomy to decide about the execution of work Increased confidence levels Some of the disadvantages include: Increased cost in training for new jobs Difficulty in monitoring the performance regularly After the job design activity. it is time to start the recruitment and selection process.5. In broad the sources are referred to:- . There are many ways in performing the recruitment process depending upon the nature of job description. SAQ3 1) Explain three steps of the job design process with suitable illustrations 2) Explain the advantages of job enlargement over job simplification 3) Explain the significance of job enrichment in improving the motivation levels of the employees 9. In this section we shall understand about the key parameters the recruiter should be looking at in the recruitment and selection process.5 Recruitment and Selection The objective of recruitment and selection process is to select the right candidate for the required job description. 9. The list of candidates can come from many sources.1 The recruitment process One of the activities of recruitment process is to select the candidates and short list them for the interview.
2 The Selection process Kujnish (2006) describes a typical selection process which is explained by the following diagram:- Preliminary Interview Application form Testing Interview Employment offer Physical examination Reference checks . 9. job portals. A successful recruitment process enables the highly talented list of candidates who could be employees of the organization. b) External Sources: Here the candidates will be selected from outside the company i. who are not currently working with the organization. All these factors play important role in judging the candidate for the suitability for the job. Most of the times companies go to well known reputed educational institutes to get the list of candidates who are eligible for the section process. Selection process should be done in such a way that the candidates skill set is matching with the required skill set as mentioned by the job description activity. Companies might advertise in newspapers. hobbies and interests.a) Internal Sources: Identifying employees within the company who can take care of job.5. employment history. Here the employees from various departments may shift into the department where the vacancies are available or a promotion will be given within the same department and fill the vacancy. There can be various parameters which the recruitment process would look at before short-listing the candidates such as the family background. Recruitment process should be done carefully in short-listing the candidates for the selection process. magazines etc to attract the talent available. educational qualifications.e.
. Finally after all the selection process and the candidate qualifies for it he/she will be given the employment offer which describes the nature of work. Two basic ways in which the interview can take place are:a) In a comfortable mode.The preliminary interview is done as a process to filter out the candidates who do not fit the job description. Application form should be designed in such a way that it captures the necessary information which is required to evaluate the candidate across the skill set required by the job description. Doing an interview in these two ways is important in order to judge the candidate for sales job as the sales representative would have to encounter both the serene and pressure environment while making the sale. hence the testing phase should be prepared so that it captures these skills. SAQ 4 1) Describe the ways in which the candidates can be obtained during the recruitment process for selection. where the recruiter would bring the atmosphere to the comfort level of the candidate and then start observing the behaviour of the candidate. The testing phase can be just an interview or can have a written test and a group discussion. salary. 2) Explain the important characteristics you would like to test the candidates in the interview for a sales representative job. Previous work experiences and references should be cross checked before selecting the candidate for the job. attitude. the candidates will be short-listed according to their performance for an interview round. After the test has been completed. For sales representatives. Physical examination is important to ensure the candidate is in good state of health as he/she requires traveling during the sales job. where the recruiter would put the candidate under a lot of stress by asking a lot of questions and then observe the candidates reactions. communication skills and analytical skills are very important. During the interview much emphasis should be given in the attitude of the candidate rather than the skills. b) In a stressed mode. any contract period etc. job title.
we have examined the critical nature of the recruitment process in identifying the right candidates for the selection process. recognition etc 2) Intrinsic motivation It is the motivation that is driven by the nature of the task assigned in the work place.7 Keywords 1) Extrinsic motivation It is the motivation that is driven by external factors apart from the nature of work like the money. enlargement and enrichment in creating the job which are beneficial for both the company and the sales representative economically and in career growth. awards. 9. We have understood the basic model of selection process and looked into various ways in which the selection process will be handled for a sales representative job.3) Explain the importance of reference checks and physical examination in the selection process. We have also examined the skill set that needs to be evaluated in the interview phase of the selection process. fast learning capabilities. We understood that sales job is a challenging work and requires good communication skills. positive attitude and behaviour. 9.6 Summary In this unit we have understood the job characteristic model which describes any job in terms of different dimensions which measure the nature and requirements of the job.8 References . We have later discussed about the steps that involve in creating a job design and understood these steps in the context for sales representatives. In the last section of the unit. multi-tasking abilities and the ability to self motivate. 9. rotation. Later we have studied various job design techniques such as job simplification. We have also understood the job analysis by describing the nature of the sales job and the identifying the skills required.
Atlantic Publishers and Distributors. “Organizational behaviour: concepts. HRD Press. LaForge (1989). USA. K. 2. “Sales management: analysis and decision making”. 4.1. “Guidance and counselling in India”. Raymond W. New York. Aswathappa (2005). USA. India. Ingram. India. 2. Darin E. The Dryden Press. Stephan P. 3. Rachana Sharma (2004). “Human resource and personal management: text and cases”. Hartley (1999). India. Atlantic Publishers and Distributers. Prentice Hall. “A practical approach to sales management ”. India. Ram Nath Sharma. controversies and applications”. 9. . Robbins (1999). Thomas N. Kujnish Vashisht (2006). “Job analysis at the speed of reality”.9 Suggested Readings 1. Tata Mc-Graw Hill.
6 Developing the product/ service knowledge 10.4 Summary 10.1 Imparting attitude skills 10.2.1 Sales Training Process 10.3.2.4 Understanding the goals and objectives 10.6 References .220.127.116.11.1 Introduction Objectives 10.2 Notifying organization policies 10.UNIT 10 TRAINING THE SALES FORCE Structure 10.3.5 Keywords 10.2.2.2 Program Design 10.2.2.3 Training process and analysis 10.4 Feedback and Follow up 10.2 Training program objectives 10.2 Training process and objectives 10.3 Bestowing organization culture and values 10.2.5 Developing the team working skills 10.2.3.2.3 Action Planning 10.2.1 Source and type of training program 10.2.
We have understood the significance of carrying out a well defined job analysis and design in creating the jobs that best suits the profile of the candidates.1 Introduction In the previous module we have understood about the characteristics and the skill set required for a sales job. In this unit candidate means the employee who is undergoing the training program. Hence. the next step is about action planning i.e. skills and attitude and make employees more productive to the organization.10. there might be a considerable difference of what is being taught in the training and what is being done in the market place. action planning has to deal with such problems using various teaching methodologies. it is very important to understand the objective of it. Feedback process should not end with just taking the trainees comments but has to include the follow up . the actual implementation of the training program. In this unit we shall understand the importance of training program in shaping up the employees to perform their job effectively. In this unit. We shall understand also understand the program design for the sales representatives in terms of contents. logistics and the feedback process. Identifying the sources for training is an important task which decides the quality and impact of the training program.7 Suggested Readings 10. The main objective of the training program is to inculcate the required knowledge. technical tools etc and impart training program that is closely related to the market place. we shall understand the objectives of the training program and the benefit it provides to the sales representatives and the company. Before the initiation of training program. We have also understood the importance of recruitment and selection process in identifying and selecting the right candidates for the job. No training program would end without a feedback process. Once the training source and the needs are analyzed. For a sales representative training.
2 Training Process and objectives After the successful recruitment process you will have the best talent your organization requires.2. In this unit we shall understand about the importance of the follow-up activity for a sales representative training program. It is now the duty of the organization to conduct the necessary training program and make use of the talent in increasing the revenue for the organization. 10.1 Sales Training Process Let us understand the typical sales training process as explained by Ingram (2009):Asses Sales Training Needs Set Training Objectives Evaluate Training Alternatives Design Sales Training Program Perform Sales Training Conduct Follow up and Evaluation Fig: Sales Training Process .process as well. Objectives After studying this unit you will be able to:1) Understand the steps in sales training process 2) Define the objectives of sales training program 3) Identify the importance of attitude skills for the sales representative 4) Identify the type of training program required 5) Explain the design of the training program 6) Understand the importance proper action planning 7) Highlight the need of feedback and follow up 10.
follow-up and evaluation dealing with analyzing the quality of training program held and the benefit received by the candidates and the organization need to be conducted.2. perceptions and behaviours of the sales representatives. there will be a necessity to impart professional behaviour skills as well.2. Sales representatives may notice other employees advance in their career by shortcuts. So having the set of objectives in place for any training program is an important task. 10. logistics arrangements etc.The 1st step sales training need assessment deals with identifying the necessary skills. The 4th step deals with the design part of the training program which involves identifying the training program period and modules and the necessary skills to be imparted. the necessary measurable outcome of the training program. Apart from positive attitude. Sales job is a challenging one which requires positive attitude and continuous self motivation. The 3rd step deals with identifying various alternatives to conduct the training. Let us now look at some of the common objectives which most of the training programs would try to achieve:10. Hence. attitudes. We shall learn more about the individual steps in the training process in subsequent sections in this unit. imparting attitude skills is a significant task. The 2nd step deals with setting up the training objectives i. For a candidate who has passed out from college.e. Training might be required whenever a new designation is given in the appraisal system.2.1 Imparting Attitude Skills We have already studied in the earlier units about the importance of positive attitude for a sales representative. The 5th step performing the sales training is the actual implementation of the sales training program which deals with the way how the training is conducted and the methodologies adopted by the trainer in imparting the necessary skill set. Once the entire training process is completed. It is therefore very important that the training program highlights the importance of hard work. in brief some of the objectives in imparting the right attitude skills would include:- .2 Training Program Objectives Training is a continuous process in the employer’s career.
This is done as an attempt to increase the loyalty towards the organization. 10. Rules and regulations as per the government laws for proper behaviour with employees. faxes etc. Imparting positive behavioural attitude Encourage the candidates to depend on hard work rather than shortcuts Inculcate the willingness to work even in difficult times Recognizing the importance of self motivation Understand the importance of value system Improving the leadership qualities i. The main objective in doing so is to create a sense of feeling that the company is for the employees and the employees are an important .2. In brief.e. Salary structure.2. employment type i. designation. Every training program should make it clear about the organization policies to the employees. During the training programs a lot of importance is given in this activity. telephone connections.2 Notifying organization policies Clear understanding about the organization policies will decimate any future misunderstandings between the employees and the organization.3 Bestowing organization culture and values It is important that the employees/ candidates who have joined the organization are imparted with the organization culture and values.2.e. regular or contract and other benefits like Insurance.2. LTA etc. Organization policies may include the following: Dress code of the employees Work schedules and facilities when working overtime Logistics provided like internet. smoking regulations etc. ability to take challenges 10.
he/she must be explained about the expected objectives from the work and the goals to be achieved. So. 10.asset for the company. Hence.2. For example.5 Developing the team working skills . For the newly joined candidates. The previous company might be the competitor of the present organization and he/she might have to compete with their friends to make the sale. In any training program the goals and objectives should be clearly stated so that the employees can be mentally prepared to face the challenges in the work.2. if you are the pre-sales representative and if you have been promoted as the sales representative for the Asia Pacific Region. Objective might be to gain some customers in the countries of Asia Pacific region where the presence of company is null. The goal may be to increase the revenue or sales by at least 15% of what it is in the previous quarter. The candidate unless is a fresher. imparting the organization culture and values is very important for the sales representatives. might have worked with several companies and will have a mixed feeling of self belonging with the present organization.4 Understanding the goals and objectives Before getting into any work it’s is important to understand the goals and objectives of the work.2. Hence the employees must be given realistic goals and objectives for each training program. for a sales representative it is very important that he/she shows a lot of dedication towards the work in the present organization and would overcome any personal relationships in making the sale. Another important reason for inculcating the organization culture and beliefs is to convey that: Employees are working in a positive organization which cares for the employees all the time The group in which the employee work will be a positive group 10. then you should clearly know the objectives of the work and the goal that is to be achieved every quarter.2.
In personal selling. For example industrial sale can be selling a network platform to the telecommunication company or installing the technical product like servers in the customer company. The training program must take care that the entire description and features of the product/ service is conveyed to candidates. In such cases. technical team.6 Developing the product/ service knowledge The basic requirement to sell a product/ service is to know completely about them. team work plays a significant role.2.The nature of work will vary upon the type of sale you make. 10. the sales representative will be alone most of the times. But when you come to the industrial/ institutional sales.2. finance team. the selling process may involve the sales team. The basic thing which the sales representative must know before going for a sale includes: About the company of the product/ service The list of competitors and their similar products/ services . Some of the team working skills include: Identifying the coordinator for the team Caring for the opinions of the entire team members Effectively managing the time available among team members Monitoring the performance of the team members and checking for any lag in the action plan Clearly assigning the duties among team members Ensuring a proper and timely feedback mechanism among the team members It is very important that the coordinator for the team has the leadership qualities to ensure proper functioning of the team in making the sale. testing team and many more depending upon the sale. hence there would be the needs of a team work. presales team. Hence the sales representative should know how to perform in the team and perform and effective sales process.
3. Selecting the best trainer is a challenging task. The type of . It depends upon the availability of the right trainer for the program. The success of many training programs depends upon the trainer i.1 Source and type of training The sources for training can be internal and also the external to the firm. The complete set of features of the product/ service The benefits the product/ service provides to the customer The key competitive advantages of the product/ service over the competitors The price and the maximum allowable discount for the product/ service The installation time and after sales service available with the product/ service In this section we have understood the training objectives and the necessary skill set required by the sales representatives. Let us now examine the various sources available to train the candidates.e. but the outcome mainly depends upon the way the training process is implemented. the source for training. 10.3 Training program implementation and analysis The training objective might be excellent. The following diagram helps in understanding SAQ 1 1) Explain the sales training process with a neat diagram 2) Narrate the importance of notifying the organization policies to the employees 3) Explain the need of developing organization culture and values in the training program 4) Identify the necessary product/ service knowledge required by the sales representative before going for a sale 10. then the HR department may consult an external company who specializes in the training programs. If there is no availability of the well qualified internal trainer within the organization.
Let us look at some of the advantages as stated below: Economical Way: On the job training may not require external training classes and may not incur the expenses for a good trainer and the logistics. then the best way to train is by “on the job training”. This might be very helpful for the supervisor to known the candidates key strengths and weakness and will be able to provide proper feedback for improvement .training program for the newly joined candidates depends upon the recruitment process as stated below: If the recruitment process selected already well qualified candidates with work experience relevant to the job description. candidate will be presented with the job to do under the guidance of a supervisor who may be his/her higher authority at the work place Better test environment: This training process gives the opportunity to test the candidate’s performance in the real test environment throughout the training program. then a detailed training program would be required explaining about the job the candidate needs to perform If the recruitment process selected the candidate within the company as a part of the appraisal system. Right from the day1. then only an induction program which is common to all the applicants would be enough If the recruitment process selected the fresher who doesn’t have an y experience about the job. then the induction program may not be required and the training has to take care of the additional duties that have been assigned to the candidate Most of the times if the candidates have no time for training or the nature of job demands gaining expertise in the field rather than like a classroom setting. On the job training has many advantages and disadvantages too. On the job training involves training the candidate by assigning the actual work in the workplace with the real resources he/she would be using in the job.
Proper Feedback: Since the trainer is the real candidate who has experienced the nature of work and faced challenges in the past. It is important to know that the supervisor view point in handling a challenging situation may not be true all the time. logistics and feedback mechanisms. Some of the guidelines while designing the training program includes: Training program must be designed according to the time available . you as the candidate would get the right feedback that might help you to face the challenging tasks Some of the disadvantages of the on the job training program includes: Time consuming: Unlike in the regular training programs where the trainer will be available all the time. Fortunately or unfortunately in most of the training programs the trainees are not involved in the design process. A separate training program would be best in such a scenario 10. hence the candidates have to use their own cognitive abilities to judge the problem and arrive at a solution Suited for a small group: This type of training might not suitable if the candidates are in larger numbers. Lack of theoretical knowledge: A regular training program will provide the necessary theoretical knowledge which might be helpful for the candidate in his/her job when faced with unexpected challenges which he has not experienced in the past Monotonous way of cognitive development: The candidate may start thinking like the supervisor all the time when facing with the challenges in the job.2 Program Design Program design deals with designing the program with necessary content.3. in on the job training program you may have little time spent per day with the supervisor as he/she may not be available all the day to train you since they have to perform their regular daily work.
exercises.e. whichever is necessary to enhance the training program The training program shouldn’t be monotonous Make use of anthropological approach in handling the training program i. simulations.3.e.3 Action Planning Action planning the training program deals with the actual implementation process. cases. sales and post sales activities for the sales process Design should be done in such a way that the candidate is not over burdened Training program should have a mechanism for obtaining the feedback from the candidates after their field work 10.. Feedback of previous participants must be taken into account to improve the current training program Desist the desire to pack in everything in a single program i. not more than a couple of skill set must be imparted in a training program Have multiple training programs at regular intervals to add on the required skill set. role plays/ mock sessions etc. for example have the separate training programs for presales. Action plan should deal with the program design in a manner to make it interesting and encouraging the participant to learn more from the training program. Some of the guidelines include the following: Training program should be a combination of lecturers. they have the necessary level of training requirements and only a proper direction in implementation is required .e. understanding the training needs of the candidates from the candidates perspective rather than your own judgments Treat the candidates as adults i.
Don’t wish away the candidates objections in the training program i. bring in the mode of the candidates and then start the topic again. as in good organizations the sales employees take the target as compared to weak organizations where the targets are given Necessary training technologies should be used for example. if you are in a training program for a personal sale then you and the experienced employee can go together and make a sale . make use of a circular setting which favours group discussions Make use of outdoor training whenever required i.e. provide the best trainer even if it cost a little high for the company Identify a trainer who can go off the topic have discussions. if the sales representative uses CRM softwares then training program must use the actual application and handling techniques Avoid the classroom setting i. Provide decent logistics to the candidates as studies reveal that candidates learn faster in a better environment Training program should aim at developing the candidates to take responsibility and challenges. This is very useful in long training programs which may run into weeks or months.e. making the teams with the experienced employees and going on for actual sale process i.e. the objections of the candidates are mostly real as they are from the field and have faced it in the past Training process should encourage a two way learning process between both the trainee and the trainer Don’t be penny bound while conducting the training progr am i.e.e.
Sales needs should be identified and the candidates for training are selected.4 Feedback and Follow up Training program should have a proper feedback process to know about how informative the training process is? The feedback mechanism also provides about the necessary changes that are required to be done in order to enhance the training programs in the future.3. Follow up activities are very important in the training process because of the following reasons: Training programs might be effective only for a limited period Employees might fall back to their own work style Employees might face new problems in the field and a follow up is required to remove such problems SAQ 2 1) Explain various types of training provided to the employee in an organization 2) List the advantages and disadvantages of on the job training method 3) Illustrate various guidelines to be followed while designing a training program 4) Identify various issues to be dealt with during the action planning stage 5) Explain the importance of feedback and follow up in an effective sales training program 10. culture and values. Feedback process may also include the feedback given to the candidates by the trainee. .10. leadership qualities and many more which are essential for the sale representative to keep mentally fit in the challenging sales career. Once the candidates are selected the training objectives should be set. We learned that it is important for the candidate to know about the organization policies.5 Summary In this unit we have learned the various steps in performing the sales training process. self motivation capability. We have understood various objectives of the training program like imparting positive attitude.
We have observed the importance of selecting the best trainer and the facilitation of two way learning process on the candidates performance. product/ service knowledge etc. We have understood the merits and de-merits of on the job training for the candidates. we have want about the source and type of training required for candidates. performing the field situation in a training hall in a suitable manner . We have also examined various guidelines in the program design and the action plan to ensure an effective and efficient sales training program. Hence the sales training has to acknowledge all these and make the candidate aware of his duties and responsibilities.goals and objectives. 10. We have seen that every objection from the candidates have to be acknowledged and cleared in the training program. we have understood the importance of the feedback and follow up to ensure that the candidates are applying the knowledge gained in the training period in their field. In the latter half of the unit. We have examined that the industrial sales need a lot of team work and hence sales training have to take care of imparting the team working capabilities among the candidates.e.6 Keywords 1) Anthropological Approach Understanding the training needs of the candidates from the candidates perspective rather than your own judgments 2) Simulations The act of stimulating the behaviour of a situation or a process in a suitable way i. Finally. before working in the job.
8 Suggested Readings 1. Avila. Ramon A.)”. 2. Schwepker Jr. . 10. Tata McGraw Hill. Michael R. New Jersey.7 References 1. Greg W Marshall (2009). Sharpe Inc. Prentice Hall. M. “Sales and Sales Management”. USA. New Delhi. Thomas N. LaForge.. “Sales management: analysis and decision making”. Mark W Johnston. Ingram. Jackson. Ralph W. Charles H.E. Williams (2009). Robert D. New York. USA.10.. “Sales Force Management (9th Ed. Raymond W. India. Hisrich (1996).
3 Motivational factors 11.1 Introduction Objectives 11.4 De-motivational factors 11.8 Suggested Readings 11.6 Keywords 11. We have understood that the performance of the candidate is a result of the type of training program employed.5 Summary 11. Once the training is finished.7 References 11.1 Compensation scheme/ package 11. the candidate will be assigned the duties and responsibilities in the company.2 Role of the sales manager 11.UNIT 11 COMPENSATION AND MOTIVATION OF THE SALES FORCE Structure 11. We have learnt already that the sales job .3 Non-monetary reward systems 11.1 Introduction In the previous unit we have understood the importance of a well planned training program in incurring the benefits both for the sales representatives and the company.18.104.22.168 Role of Incentive systems 11.
In this unit we shall understand the relationship of motivation and various factors which facilitate the candidate to be motivated all the time. the role of a sales manager includes identifying such de-motivating factors and eradicating them. In this unit we shall learn about various de-motivating factors and means to eradicate them from the work place.is a challenging one and requires constant self motivation. commissions. profit or gain sharing etc. Hence. In this unit we shall understand the role of a sales manager in keeping his/her representatives motivated all the time. In this unit we shall discuss various monetary rewards like bonuses. In the unit we shall understand that the sales representatives who newly join in the organization have enough motivational levels. but during their course of work various de-motivating factors results in low enthusiastic levels to work. Various systems can be used such as monetary and non-monetary to develop the enthusiasm to work better. recognition and awards. We shall understand that compensation is only one of the factors which motivate the sales representatives to work. better working facilities. Motivation is mostly seen as the direct outcome of the relationships between the sales manager and the representatives. and various non monetary rewards such as stock options. Motivation can depend on several factors. Objectives After studying this unit you will be able to:1) Understand the role of a sales manager in developing the motivation levels of the employees in the organization 2) Understand the guidelines to be followed in developing a better compensation package 3) Examine the role of incentive systems for keeping up the motivational levels in the employees .
A good sales manager should be able to understand the problems which the employees are facing and help in solving them. He should be a boss in office. testing etc. Sales monthly involve field work i. and a mentor/ philosopher outside office.e. To keep up the team spirit within the company. Sales manager should also help in facilitating a proper feedback mechanism among employees and keep updating about the situation in their department. coordinate various sales activities and controlling the staff to perform as expected by the company. achievement target in time. Most of the sales people run into problems like family or health. Yet another important duty or responsibility of the sales manager is to take care of his employees at all times. Sales manager has to find any training requirements required for the team and help to be provided with the same. a sales manager is required to monitor the growth of sales. . Hence. going to the market place or to the customers and making the sale.2 Role of a sales manager The sales for a product or service are carried out by different sales representatives. it’s important that the sales manager interacts with all the employees socially after the office hours at regular intervals. Sales job involves less work at the office and more work in the field. In most of the good organizations the sales manager would behave like one of the team members and help in leading the team to reach the targets and demonstrate leadership skills whenever required. Hence the level of interaction between various employees is quite less while compare to other job like software.4) Explain the benefits of non-monetary reward system in sustaining the motivation levels in the employees 5) Identifying the de-motivational factors and steps to eradicate them from the work place 11.
due to various de-motivating factors they lose out their enthusiasm to work irrespective of the decent salary structure and incentives. it requires a lot of self motivation to sustain. identifying the de-motivating factors and eradicating them from the work place is an important task of the sales manager. In next section we shall learn about various motivational factors such as incentives. in brief the role of a sales manager would include the following: Leading the team from the front on every challenge faced by the sales representatives Facilitating proper communication channels either in the work place or off the work place to ensure that at least minimum level of interaction taken place between the sales representatives Understanding the problems and needs of the employees and help in resolving them Keep up the motivational levels of sales representative all the time . Hence.The challenging task for the sales manager is to keep up the motivation levels of his employees. recognitions. Another important task of the sales manager apart from finding out the right motivational factor for the representatives is to find out the various de-motivating factors which are prevailing at the work place. As we have already understood sales job is mostly a lonely and challenging job. awards etc. recognition etc. and the way they alleviate the motivational levels of sales representatives. awards. In the subsequent sections we shall understand various de-motivating factors which can lower the enthusiastic levels of the sales representatives. The ultimate objective of the using the motivational factor like incentives. Sales manager has to indentify the motivational factors for the employees. It is observed that the employees are having enough motivation levels when they join the organization and as the time progresses. Hence. Since these factors can be different for different employees identifying the right factor is an important task. is to ensure that the sales representatives work with enthusiasm all the times.
in this section let us analyze various motivational factors which are used by the organizations to sustain enough enthusiastic levels among their sales representatives. Employees are not treated as just another component in conducting business.1 Compensation scheme/ package One of the most attractive and encouraging factor for motivation among most of the sales representatives would be the compensation scheme or package there are entitled to receive at the start of the job. 11. but are considered as the prime resource for every business activity and as an important asset of the organization. Various studies have been done on the fact that success of organization depends upon the satisfaction levels of the employees. So. Hence enough care has to be taken in designing the compensation package for the sales representatives. Organizations tend to pull in the best talent by offering effective compensation packages. sales representatives may vary across the spectrum of which satisfy them to keep up the motivational levels. Jackson (1996) described a five step approach in designing a sales compensation package as mentioned below:a) Prepare job descriptions . But it was later recognized that companies who retained talented employees have a greater survival rate in the industry and the market place.3.3 Motivational factors There was a time when employees were not given enough consideration and more emphasis was laid down in the production process. Indentifying the de-motivating factors Identifying training needs and areas of improvement for the sales representatives 11. The sales manager has to understand that often compensation is seen as a level of loftiness among the representative within the same hierarchy level. In an organization.
In fact other objectives like the number of new customers increased the difficulty levels in the sale. Some of the sales representatives may actively involved in selling like the onsite sales manager in the industrial sale and some of the sales representative involve more in a support role like the presales function. the efficiency parameters like the conversion rates etc have to be taken into account. experience. The 4th step “develop and pretest the compensation plan” highlights the importance of developing the structure of the compensation package and pretesting it before actual implementation in the organization.b) Establishing sales and other objectives c) Determine appropriate general categories of compensation d) Develop and pretest the compensation plan e) Implement and evaluate the plan The 1st step “preparing job descriptions” states that an elaborate job description should be prepared to take care of all the job responsibilities that the sales representative will perform. After preparing the job descriptions they to be analyzed in terms of difficulty level and the compensations should be planned accordingly. The 3rd step “determine appropriate general categories of compensation” states that the compensation packages have to be categorically prepared depending upon several factors like education. This step highlights the fact that not only the volume but also the effort that has been put in generating the leads have to be taken into account while awarding the compensation package. Developing the compensation package should take . This process will help to align the people of similar abilities or skill set receive the same compensation packages thereby eliminating certain level of bias. nature of work etc. This step clearly states that compensation package should not be prepared based on only the volume of sales made. skill set required. The 2nd step “establishing sales and other objectives” highlights the importance of measuring the sales targets achieved and also other objective in determining the compensation package.
The sales manager has to understand certain issues when dealing with bonuses such as:- . stock options etc. The 5th step “implement and evaluate the compensation package” deals with the actual implementation of the compensation package for the sales representative and monitoring the effect of the compensation package in maintaining the required motivation level and attracting the talented pool to the organization 11. Developing the compensation plan has to take care of the commissions too. Let us examine them in detail:a) Bonuses: These are one time payments provided as a reward for the level of work done or objective achieved. at neither too high or too low percentage of the entire compensation. Bernardin (2008) explains various incentive pay for performance level of the employees.3. This type of incentive system is often used to encourage the sales representative to work much better and harder in future.2 Role of Incentives Incentives play an important role in keeping up the motivation levels of the employees. The same can be depicted by the following diagram:- Fig: Effects of sales incentive plan Hence planning a right incentive system is an important task for the sales manager. Zoltners (2006) describes that the sales force incentive plans effective the sales people and in turn on the sales force activities followed by customer results and finally the company results.e. commission rates based on the individual sales figures and commission rates based on the group or team sales figures. Incentives may include yearly bonuses.care of the basic package which meets the living expenses of the sales representatives and the variable component should be reasonable enough i.
Often sales representative participate to push the products/ service for sale which offers them more commission rates. during the festival season b) Commission plans: Commission is the percentage of total sales amount given to the sales representative for successfully making the sale. The type of impact created by the bonuses is considered to be positive most of the times The impact depends upon the bonus amount Normally it is considered that one month salary pay to be the ideal bonus amount The timing of giving the bonus amount also matters a lot Usually the bonus should be given when the sales representative is in need i.e. Some of the issues which the sales manager or the organization has to understand before deciding on the commission plans are: Commission rates should neither be too high or too low when compared with the other similar products Commission pay entirely depends upon the sales volume and in turn may be seasonal for most of the sales Sales representatives depend a lot on the commission rates for their living expenses During off season sales manager or the organization has to take care of the employees need by providing them with increased commission rates which can later be cut out during the sales season If the commission is dependent upon the team. then the sales manager has to take care that every member in the team works with similar efficiency and effectiveness Make sure that the group incentive pay is not too high in the salary component as employees tend to think that why they are penalized for other mistakes .
Depending upon the basic pay of the employee the gains can be distributed. better training facilities etc c) Recognition and awards: Recognition and awards help the sales representatives to gain respect and help in creating a unique identity in the work place. free telephone and internet services at home to a certain limit of usage.3. A lot of employee would like to have the stocks instead of the cash rewards like bonuses. Some of the advantages include getting a feel of his/her own company once the stock options are given.c) Profit or gain share: Companies may share their increased profits or gains for the year or quarter among the employees of the organization. This type of reward works effective for the managerial level employees who don’t depend upon the monetary rewards for survival. This system also highlights the mile stones achieved by an individual in his/her career and also encourage fellow employees to achieve it and hence they work much enthusiastically. non-monetary reward system may achieve success in sustaining motivation and dedication of the employees towards the work place. Such incentive gives a sense of feeling that the employee is working in a growing organization and he/she has a bright future in the organization. .3 Non-monetary reward systems Whenever a monetary reward fails. Employees tend to work better to generate more sales and in turn increase the value of their company and the stocks. 11. Other examples of better working conditions include providing the necessary logistics like better variety of food. Let us understand some of the non monetary rewards as stated below:a) Stock options: The employee stock option is usually a call option which is given as a non cash reward or incentive system. increased cabin space. There are a lot of advantages in giving the stock options to the employees. b) Better working conditions: The sales representatives who work well and achieve the targets might be given options to work from home and visit the workplace once or twice in a week to report. free insurance policy. Care should be taken such that all the deserving employees in the group should be given the choice of choosing the cash reward or the stock options.
No matter whatever your education background and skill set are. Some of the demotivating factors include:a) Assigning two employees the same role and tasks when their pay scale vary enormously This is one of the main reasons for reduced productivity of the employees. demotivating factors can cause damage to the employee motivation. List out the type of reward systems you would employ to motivate the employees. Whenever your performance improves your salary would be increased and you might be assigned various other tasks. It is good practice to place the employees with same salary structure under the same job description.4 De-motivating factors After learning about the various motivating factors. it is necessary to identify various demotivating factors at the workplace too.SAQ 1 1) Explain the role of the sales manager in maintaining the motivation level of the employees 2) List out the advantages of bonuses in maintain the motivation level of the employees 3) If you are the CEO of the organization and have to select a reward system for the state level heads of the organization. This can increase the time of completion or produce unsatisfactory results and also leads to extension of deadlines. This trend is highly followed in the call centers. However good the motivating factors be. you will be always placed within the group of same salary structure for a particular job. . 4) Explain the advantages of stock options over monetary reward systems in improving the motivation level of the employees 5) Explain in brief the five step process of creating a well planned compensation package 11. The employees with less salary might do less work leaving the rest of the task to the one drawing higher salary.
The appraisal systems shouldn’t be affected just to make the balance sheets to look better. c) Improper or poor facilities Whenever the working conditions are not good the employee may not be motivated enough to work. lack of air conditioning. For example. this should not be reflected in the appraisal system by decreasing the salary hikes unless there is a situation that company won’t be able to survive if the hike percentage is not decreased.e. no proper power backup facilities. lack of hygiene conditions etc Lack of better supervisors who can take care of their employees needs at the work place Poor planning and facilities for working at odd timings i. desks. if you work for an extra time you are supposed to get the transport facilitates.This trend is seen quite less when it comes to IT companies who try to get the best talent by awarding varying salary according to the skill set or the educational background. 11. then the appraisal system has to stick to the policies. If the company profits are decreased due to low demand in the market. if the company policies states that a minimum of 10% per year. it leads to the lower satisfaction levels. Working conditions may include the following: Poor infrastructure at workplace like old computers. If there is no transport facilities available after the regular working hours this might discourage the employee to work overtime and complete the work before deadlines.5 Summary . b) Appraisal system failures Whenever the appraisal system fails to perform as per the employee expectations.
6 Keywords 1) Call Option The stock options where the buyer has the right to buy the option but not an obligation to buy at a expiry date of the option at a certain price as stated in the agreement 11.In this unit we have understood that the sales manager hast to take care of the sales representative needs and lead them in facing the challenges effectively. Prentice Hall. identifying categories of compensation. We have understood the benefits of non-monetary benefits in improving the motivation levels. Sales manager has to understand various motivational and de-motivational factors of the sales representatives. In the later part of the unit. . commissions and profit sharing to keep up the motivation levels and give a sense of feeling that company would always take care of their employees. 11. Robert D. We have also discussed various guidelines to be followed while given monetary or non-monetary benefits among the sales representatives. Jackson. developing and pre-testing the compensation plan and finally implementing and evaluating the compensation plan. New Jersey. USA. Ralph W. “Sales and Sales Management”.7 References 1. Hisrich (1996). establishing sales and their objectives. we have discussed various incentive plans which include the monetary benefits like bonuses. We have understood that a good compensation package can be designed in a five step process which takes care of preparing job descriptions. We have learnt that it the duty of the sales manager to keep up the motivation level of their employees by identifying the right compensation packages. Finally in this unit we have looked into various de-motivating factors and steps to avoid or eradicate them from the work place.
“Sales management: a global perspective”. Tata McGraw Hill. Lorimer (2006).2. 11.8 Suggested Readings 1. 3. Simintiras (2003). Andris A. USA . Ford. Terence Jackson (1989). Routledge. “The complete guide to sales force incentive compensation”. New York. USA. New York. Earl D. Kogan Page Ltd. “Evaluation: relating training to business performance”. John H. John B. Zoltners. Sally E. New York. USA. Bernardin (2008). Honeycutt. Amacom. “Human Resource management”. Antonis C. Prabhakant Sinha. London 2.
1 Advantages of team work 12.2 Quantitative and qualitative factors of monitoring 12.2 Role of a job description in objective settings 12.1 Sales force monitoring guidelines and objectives 12.4.1 Direct sales force 12.5 Summary 12.7 References 12.UNIT 12 MONITORING AND PERFROMANCE EVALUATION Structure 22.214.171.124 Indirect sales force 126.96.36.199 Keywords 12.8 Suggested Readings .1 Introduction Objectives 12.2 Ten step process in building better team working skills 12.4 Building better team working skills 12.2.3 Role of sales manager in monitoring and performance evaluation 12.
Once the areas of improvement are identified they have to be inculcated into the sales force through the proper training methodologies. We shall also understand the advantages and disadvantages of measuring only quantitative factors. . It is ideal that the sales force is well informed about the monitoring factors and the time periods of evaluation well in advance.12. In this unit we shall understand the job description of the sales force and the ways of improving the job performance activities. We shall discuss about various advantages for the organization by helping the sales force to work in teams. The ideal question which comes to every sales manager while monitoring and performance evaluation is “what factors need to be measured to identify the true potential of his/her sales force?” In this unit we shall identify the two ways of measuring the sales force efforts in terms of quantitative and qualitative factors. Finally in this unit we shall understand about the importance of a good team work. We shall understand the relationship between the efforts and the sales target achieved in this unit. We shall also understand various steps that help in facilitating a better team work in the organization. It would be much better if they are mentioned in the job description so that the employees would perform well to meet the performance parameters.1 Introduction In the previous unit we have understood the importance of motivation in performing the sales job and the role of a sales manager in identifying the motivating and de-motivating factors of the sales representatives. Ultimately at the end of the day it is the sales target which matters to most of the sales managers. In this unit we shall understand about the importance of monitoring and performance evaluation of the sales force performance in both the direct and indirect sales. The main objective of monitoring the sales force is not about finding faults in the performance of the sales team but the process of monitoring and evaluation should be used as a mechanism to identify the problems and areas of improvement.
Objectives After studying this unit you will be able to :1) Identify the role of job description in objective settings 2) List the factors that affect the performance of sales force in direct sales 3) List the factors that affect the performance of sales force in indirect sales 4) Explain the importance of identifying the true performance of sales force for the organization 5) Explain the procedure for evaluating the sales force 6) Understand the objectives and guidelines in sales force monitoring process 7) Explain the list of Qualitative and quantitative factors in monitoring and performance evaluation 8) List the advantages of good team working skills and explain the steps in creating better team working skills 12. In some of the job descriptions you may find the working conditions also such as extensive travelling.2 Role of job description in objective settings Job description as discussed earlier units informs the employees about their duties and responsibilities at the work place. Company makes a practice that monitoring and . In most of the job descriptions the nature of work and various accountability factors will be mentioned. taking continuous phone calls etc. working on the net all the time. One must identify the set of tasks he/she needs to perform according to the job description. Objectives have to be set and employees have to work towards achieving them. In this section let us understand about the job description which helps in setting the objectives for the employees.
Some of the internal and external factors that can be responsible are: Poor performance by the marketing department Change in market dynamics Change in the customer preferences Inefficiency of the MIS division . Several tasks need to be performed in order to effectively handle the sales such as:a) Contacting the prospect b) Communicating with the prospect c) Ensuring logistics during the sales process d) Performing after sales service activities e) Building rapport and keep in touch It can be observed that no where the objectives indicated to generate revenues to the organization. Hence the main objective of evaluation process should be to identify the efforts rather than the revenues. Less revenue generated need not be exactly due to the inefficiency of the sales force. Let us now look at the direct and indirect sales force job description or activities they need to perform. it leads to the maximum revenue generation. various factors needs to be analyzed. It is intrinsically implied that when all the objectives are performed well. The main objective is to create demand for the products/ services by performing all the tasks in an efficient and effective way possible. Various internal and external factors might be responsible for the low revenue generation. 12.1 Direct sales force Direct sales force involves mainly a one to one selling scenario.performance evaluation would be on the objectives set according to the job description.2. Whenever the sales force doesn’t perform well.
if you are the sales representative who sells an ozone purifier and if the customer prefers the “RO+ UV+ ozone” purifier. then you may not have much to do to convince the customer rather than getting the similar product from your company. then it can be a difficult time for the sales force in generating leads for the product/ service. When effective MIS systems are not in place then due to insufficient information generated by such systems might lead to the improper strategy implementations and finally in lesser lead generation by the sales force. it may result in good sales revenue. place and promotion strategies for the target segment.Marketing division plays with the tools of marketing mix in creating a demand for the product by identifying the right product. MIS helps in formulation of marketing strategies. The next factor is change in market dynamics. place.com states that it is “interaction between forces of demand and supply and the pricing signals they generate. This can happen both in direct and indirect sales. Whenever a product/ service are launched for the first time by your company. In most free or open markets any significant part of market dynamics is beyond the control of any firm or group”. For example. Market dynamics as discussed by businessdictionary. . Hence marketing department can influence the sales figure considerably. The third factor “changes in customer preferences” might affect sales revenue. MIS stands for Management Information System which helps the company employees in taking strategic decisions before the start of any product/ service. Hence it should be understood that the change in market dynamics such as the supply-demand changes may sometimes lead to a decreased sales revenue and the sales force couldn’t have fore-fended it by any means. The final factor is about the “Inefficiency of MIS division” within the company. But in today’s world the competitors copy your strategy and introduce similar products/ service leading to the presence of many alternatives. This factor should be analyzed before determining the performance of a sales force. If the marketing department couldn’t perform well in identifying and executing the right strategies. The reason might be due to the presence of many alternatives to the customer. Another reason might be that the customer is offered prefers much better services.
retailers etc.2. Indirect sales force In direct sales. Most of the times. Nothing can be done by the sales force if the manufacturing department doesn’t supply with necessary product stock. to whom your company sales force sells the p roduct. the sales force wouldn’t be having any control on the way the retailer places your products. Some of the factors are: Availability of stock Visibility of stock Stock piling in the pipeline The first factor to be analyzed is the availability of stock. Indirect sales force can be resellers. whole sellers. The second factor visibility of stock refers to the efforts made the sales force in shelves making the product/ service visible to the customer. Hence such scenarios have to be identified and the sales force must negotiate with the retailer to get better placement of the product in the retail store. In retailing the products end up in shelf’s where the customer will be looking for them. There can be many situations where the demand for the product is high and the availability of the product is less. Let’s us now understand some of the factors which needs to be analyzed in making up the conclusion on performance evolution of the sales force who sell the products/ services to the indirect sales force. 12. it may result in decreased sales figure. If the product is placed in such a way that it is not at all visible to the customer. Now let us look at some of the factors that need our attention in indirect sales force monitoring and evaluation process. the sales force are not directly employed by your organization but are entitled by a contract to sell your product/ services. In such cases the competitor may gain the customer. . Hence comparing your sales figures with the competitor doesn’t help in correct evaluation of the performance of the sales force.2.Hence we have understood that the sales revenue shouldn’t be the only factor for evaluating the sales force performance and external factors have to be analyzed too in order to know the true performance of the sales force.
In such cases the sales figures are determined by the number of products sold to the distributor. Sometimes the good might get piled up at the retailer in his/her store due to low sales. When the products are sold to the distributor they might get piled up at that level and may not move to the retailer due to various reasons. Let us look at a typical scenario how the goods move in the indirect sales before reaching the final customer by the help of following diagram:- Company Primary Distributor Secondary Retailer Tertiary Customer Fig 1: Indirect sales force pipeline In the above diagram it can be understood that in indirect sales the company produced goods will reach the distributor through the company sales force.Hence this factor should also be analyzed before analyzing the performance evaluation of the sales force. The distributor is known as the primary customer. This increase might be due to the efficient work done by the sales force and can be used to determine the performance of the sales force. In the start the sales might be less but as time progress the sales figure might improve drastically showing almost double or triple figures in sales volume. the retailer as the secondary customer and finally the customer who consumes the product/ service is known as the tertiary customer. The distributor distributes the goods among various retailers who in turn sell the goods to the final customer. But sometimes the increase in sales might be just due to the piling of the stock. Sales . Hence it is important to analyze these situations before arriving at a conclusion about the sales force performance. The third factor stock piling in the pipeline is an important factor which the sales manager has to take into account for proper evaluation of the sales force.
they need to be monitored and evaluated to identify the true performance of the sales representatives. Once the jobs are assigned. the sales figure should be arrived by looking at the sales done to the final customer who consumes the product/ services. Once the recruitment process is finished it is the role of the sales manager to duties to various sales representatives within the team.manager has to look at how many products/ services have be sold to the tertiary consumer rather than just looking at the sales to the primary consumer. Irrespective of the number of intermediaries in the sales process. 12. 2) Explain various factors that affect the performance of indirect sales force. you might also have the whole-seller within the pipeline. Identifying the true performance of the sales force is an important task because of the following factors: Identifying the performance helps in identifying the areas of strengths and weakness in the sales force Proper training can be provided to improve the performance of the sales force When performance evaluation identifies the true potential of the sales force. In some other models of the indirect sales. SAQ 1 1) Explain various factors that affect the performance of direct sales force.3 Role of a sales manager in monitoring and performance evaluation One of the main objectives of the recruitment process is to hire a sales team which performs well as per the organization expectations. it would be easy to identify the ideal goal setting Unrealistic goal setting can be avoided and the motivation levels can be kept high .
Identifying the objectives and guidelines play an important role in the procedure for evaluating the sales people. Once the standards are set then compare the results in the evaluation process with the standards and then discuss them with the sales people. Let’s us now understand certain guidelines and objectives the sales manager should be looking at in the monitoring and performance evaluation process. The attrition rate of the organization can also be decreased if realistic goals are set and the sales force could achieve them with their efforts Hence it is clearly understood that the sales force performance evaluation plays a key role in the organization. Let us look at some of them in the following:- . The next step is to select an evaluation bases and then set the performance standards. but all the monitoring processes have some common guidelines and objectives. 12. Sales force monitoring guidelines and objectives Sales manager has to be clear about the objectives he/she wants to achieve through the monitoring process.1. Monitoring process may vary from company to company.3. It is the role of the sales manager to identify the performance of the team in a correct way. Spiro (2003) explains a procedure for evaluating the sales people which is depicted by the following diagram:- Establish basic Policies Select Evaluation bases Set performance standards Compare performance to standards Discuss results with sales people Figure 2: Procedure for evaluating sales people The procedure states that establishing basic policies will help in identifying the people who will monitor the entire process.
Quarterly reviews would be done and performance sheets will be prepared for every department. Whereas. . the sales force for insurance product will be given mostly monthly target such as 20-30 customers per month for each sales representative.a) Don’t monitor too closely and frequently Monitoring would be done at regular time intervals by the sales manager. Any representative who misses the target by small margin shouldn’t be treated as a low performer. Sometimes the sales manager would monitor two times in a day. The time interval depends upon the product/ service. weekly or daily reviews. Most of the companies make a habit of reviewing the performance at least once in every quarter. The sales manager might adopt one of the intervals for monitoring and performance evaluation. It would be ideal to monitor the sales daily. The guideline for the sales manager here includes not monitoring too closely and frequently. the frequency of sales and organization policies. many companies adopt even monthly. Frequently may be everyday or every week or every month depending upon the business. For example. if the sales representative who sells the mobile connections may be involved with higher targets and hence more sales figures. Such cases of decreased motivation levels are seen frequent in telephone sales at the call center. In such cases daily monitoring is considered as frequent. Apart from quarterly reviews. Too close monitoring might result in a decreased motivation levels when the target are not achieved by the sales representatives. once in the afternoon and verify the sales figure and might push for better performance by evening if the sales are low. In many companies the quarterly linked pay performance is determined and given once in every quarter. Mostly the sales representatives at the call center will be monitored at the end of the day and their performance chart will be prepared and reviewed in the morning next day. We have discussed in earlier units the salary component includes a variable component whose amount is determined by the individual/ team/ department performance. Hence too close monitoring should be mostly avoided and the sales manager has to work with the sales force for improvement in the sales process.
then the sales manager has to remove him/her from the work force and put into a training program and evaluate his/her performance in the training process. hence it has to be worked out and develop a neutral accent which is acceptable by the company need to be developed. then the sales manager has to work on it and provide proper training. Every region will be assigned a sales . Once the trainer is satisfied about his/her improvement then the sales manager might induct him back into the workforce. the next is to identify the real problem for low performance. If the reason for low performance is lack of attitude and behavioural skills. c) Identifying other problems at the work place like poor working conditions. One of the important factors for low performance in direct or indirect sales is “trade conflicts”. The entire region such as city of a country would be divided into different regions for easy monitoring. The sales manager should have to work in identifying such factors and try to remove them. the sales force in a call center would be evaluated daily for their performance. If the sales representative cannot perform well and the reason for his low performance is poor communication skills. Converting the process to mentoring or training should be the primary objective in such cases. In such cases a proper training process should be identified to improve the individual skill set. The reason for low performance might be due to several de-motivating factors as discussed in the earlier unit. Hence. Many a times the communication skills are poor due to the influence of one’s mother tongue. For example. This is a major problem in many companies and the sales manager has to clearly identify them and resolve. One of the main reasons could be lack of skill set required to perform well.b) Identifying the gap in skill set After identifying the low performers in the sales force by monitoring and performance evaluation. trade conflicts etc. identifying the gaps in skill sets is a very important objective of the monitoring and performance evaluation process.
a) Qualitative factors Some of the quantitative factors monitoring and performance evaluation include the following:- . Whenever such cases arise where the sales representative of one region entering into another region and sells.force for selling in that region.2 Quantitative and qualitative factors of monitoring To determine the performance of the sales force.3. sales managers make use both the qualitative and quantitative factors. It should be understood that the evaluation process shouldn’t just rely on the quantitative factors and we also need to analyze certain qualitative factors as well in determining the true performance of the sales force. The sales manager should identify the points of sale and look for any violation in following the terrestrial jurisdiction by the sales force. most of the times the sales force are not allowed to get into another region and promote sales activities. 12. it might lead to the higher sales figure for that representative and also the conflicts between the sales representatives who are authorized to sell in that region. There are many reasons why the sales manager prefers the numbers. Most of the time quantitative factors play a major role in deciding the performance of the sales force. One of the reasons is that the quantitative factors lead to an unbiased way of performance evaluation process. As per the company policies. This result in the following problems such as: Improper performance evaluation of the sales force Unethical practices Trade conflicts Hence the sales manager has to identify such reasons in the monitoring process and try to resolve them to identify the true performance of the sales force of different regions.
It is observed that the team management skills and better team work would have a direct affect on the performance of the sales force. Number of sales Revenue generated Expenses incurred Percentage growth in sales compared to last week. Net profit generated b) Qualitative factors Some of the qualitative factors monitoring and performance evaluation include the following: Improved customer satisfaction levels Improved team management skills like taking responsibilities. quarter. improved success rate in gaining the customer Improved time management skills It is important that both the qualitative and quantitative factors must be analyzed before making a conclusion about the performance of the sales force. Improved behavioural skills within the team Decreased conversion rate i. SAQ 2 1) Explain the procedure for evaluation sales people. .e. month. Hence. year etc. let us understand in the final section of the unit about the steps in developing a better team work in the organization. being accountable etc.
In brief.2 Building better team working skills One of the main success factors in sales is the ability to work in teams. This is a very important skill set especially in industrial and institutional sales. let us understand some of the benefits of team work. 12.4.2) Explain the importance of identifying true performance of sales force for the organization 3) List various quantitative and qualitative factors and explain their significance in understanding true performance of sales force 12.1 Advantages of team work Following are the list of some advantages of a team work for the organization: Improvement in the speed of operations due to collective efforts Decrease in the error rates due to collective decision making Improvement in the problem solving capabilities in the sales process Better way to learn the process for the fresher Development of team managing capabilities Generating enough enthusiasm in the work place Leads to an increase in motivation levels Ability to handle bigger sales in terms of revenue since the workload would be distributed . The team working capability posses a lot of advantages which help in improving the performance of the sales force.
2) List the ten step process in creating a better team working skill set .12.2 Ten step process in building better team working skills Now let us take a look at the steps which will ensure better team working skills among the sales force.4. They are:a) Clear goals and objectives within the team b) Meaningful appropriate leadership for the team c) Motivation and empowerment d) Facilitating effective communication process within the team e) Monitoring the team performance on a regular basis f) Taking care of individual development within the team g) Developing the support and trust among team members h) Giving fair rewards and incentives to individuals within the team i) Establishing a sense of belonging and pride of association among the team members j) Regularly identifying problems within the team and resolving them in time This ten step process will help in improving the team working skills and every sales manager should help in developing excellent teams within the organization. SAQ 3 1) Explain the advantages of working in a team for the individual and the organization.
It helps to provide information to respective departments for strategic decision making. Tata Mc-Graw Hill. New York. Spiro Stanton Rich (2003). USA . We have learnt that identifying the gaps in skill set and other problems like trade conflict and resolving them is very important to improve the performance.12. We also looked at various qualitative and quantitative factors in determining the true performance of the sales force. We understood the role of the sales manager in handling the performance evaluation process and discussed a standard procedure for evaluating sales people. “Management of a sales force”. We analyzed various internal and external factors that affect the performance of the sales force. Later we have looked at various guidelines and objectives of the sales force monitoring and evaluation process. We finally agreed that the better team working capabilities will facilitate in better performance and examined various advantages of working in a team.6 Keywords 1) MIS MIS stand for “Management Information Systems” which provide the information which is needed to run the business effectively.7 References 1. 12.5 Summary In this unit we have understood the importance of job description in objective setting of the sales force. 12. Finally in this unit we looked at the ten step process in building better team working skill set.
. Mark W Johnston. Greg W Marshall (2009). USA. New York. Tata McGraw Hill. India. Andris A. “The complete guide to sales force incentive compensation”. 2. Prabhakant Sinha. Amacom. Lorimer (2006).)”. Zoltners. “Sales Force Management (9th Ed. New Delhi. Sally E.12.8 Suggested Readings 1.
6 References 13.2. accurate and profitable manner for the organization.2 Sales planning process 13.2 B2C markets 13.1 Introduction In the previous unit.1 B2B markets 13.2 Types of sales planning 13.3.4 Summary 13. we have understood about the sales force monitoring and performance evaluation. Sales planning should ensure that the resources are used to the maximum .3 Role of sales plan for B2B and B2C markets 13.7 Suggested Readings 13.UNIT 13 SALES PLANNING Structure 13. We have also looked at the advantages of team work and steps in creating better team working skills. In this unit we shall understand about planning the sales and the sales team. The objective of planning the sales and the team is to carry out the sales process in an easy.5 Keywords 13.2.1 Elements of sales planning 13.1 Introduction Objectives 13.3.
Handling distribution channels. for the benefit of the organization. rules and procedure in the sales planning process. Sales planning process varies for B2B and B2C markets and hence in this unit we shall understand various activities that the sales plan has to perform to manage the sales in these markets. CRM systems like office automation tools. Sales planning activity should be able to take care of all the present customers needs and also work for generating leads from them in future. customers. IVR. We shall discuss about various issues that needs to be planned and executed properly and monitored at regular intervals in B2B and B2C markets. Sales policies. Forecasting plays an important role in laying down the objectives for the sales team that are attainable within the given time period. analytics etc. programme. products and time period. We shall also learn about the various types of sales plans depending upon market. selling functions. Sales programme provides the necessary training needs to develop the required skill set to make the sales. procedure and rules help the sales representatives to handle day to day situations in sales. warehouse. . retail stores and price changes are very important to ensure sales in a profitable manner. In this unit we shall understand about various elements of sales planning. Sales plan starts with sales objectives which are to be attained at the end of sales planning process. Objectives After studying this unit you will be able to :1) Explain the objectives of the sales planning process 2) Understand the importance of forecasting in objective setting in the sales planning process 3) Explain the role of policies.capacity such as the sales representatives.
finance. 5) Explain the importance of sales strategy in winning the market place in all times 6) Explain the various types of sales plans 13. 13. distribution channels. inventories and purchases. and price changes to make sales in a profitable manner. Let us now understand the various elements and types of sales planning as described by Mukesh (2006) in the following section.2. manpower. Sales planning document is the single most important document which ensures a proper direction on how to handle the sales functions. It is the duty of the sales manager to create a plan that is well documented and which ensures proper management of logistics. retail.1 Elements of sales planning The main elements of sales planning include the following:Selling Objectives Sales Policies Sales Programme Elements of Sales Planning Sales Procedures Sales Rules Sales Forecast Sales Budget Sales Strategy .2 Sales planning Sales planning process includes a set of activities that needs to be performed to achieve the goals or objectives of the sales force.4) Identify the role of a sales plan for B2B and B2C markets and explain the need for handling warehouse.
it is very important to contact the customer and take his/her feedback or problems on a regular basis. The objectives should be realistic and attainable. The sales policies also help in clearly identifying the right pricing for the customer depending upon the relationship the customer shares with the company.a) Selling objectives This includes the list of objectives that need to be attained after the completion of the sales planning process. Another important objective is to maintain a contact with all the key customers on a weekly or monthly or quarterly basis. so that the customer will be handled with care rather than getting into an argument. Once the objectives are created it‟s time to look at the overall sales policy. Short term objection include those that have to be achieved in a quarter or a year and long term may include several years. Since we have already discussed that attaining a new customer would be costlier than trying to retain the existing customer. Long-term objectives may be to establish the company presence in new countries or continents in the next 2-3 years. if the sales representative is selling insurance products to the customer. For example. b) Sales Policies Sales policies provide the guidelines to the sales staff to help them in performing the sales activities. when a sale gets returned by the customer. then it might not be achievable most of the times by many sales representatives. Hence the objectives must be achievable and be completed in time. Some examples of short term objectives include improve the sales figure by 15% as compared to the previous year. For example. the refund policy will guide the sales representatives how to deal with the situation effectively. The time period of contact may vary from company to company and from sale to sale. a target of 20 to 30 insurance product sales per month is mostly an achievable or realistic target. The objectives may be short term or long term in nature. For example. Policies help the sales representatives in achieving their targets. If the sales planning document sets the objective as 100 insurance products. if the customer is loyal to the .
company and is doing sales from several years, the policy would inform the sales representative about the maximum discounts that can be given to such customers. We encounter may such cases where the sales representative look at the previous transaction and gives discount to make customers stay loyal to the company in future. For instance, when you renew the existing software like educational software or antivirus for another year, then the sales representative would give you a discounted price most of the times. Hence the policies would help in achieving the targets easily and help the sales representative in handling the day to day sales tasks effectively. After the sales policies let‟s now look at the next element namely sales programme. c) Sales Programme Sales programme are essential to ensure the sales representative can handle any sales situation which they are entitle to perform. Sales planning should clearly mention the required skill set in handling the sales and the programme appropriate to incur those skills in the sales representative. Sales programme may be necessary whenever the a new product/ service is introduced by the company. Sales programme is also necessary when the sales representatives handle sales from new territories which they haven‟t sold any product/ service in the past. Cross-cultural training would be given most of the times, when the sales include the customers other than the native country. Sales programmes help to develop the necessary skill set in achieving the sales objectives effectively and in given time period. Let us now look at the next element of sales planning namely “sales procedures”. d) Sales Procedures Sales procedure is the sequence of various activities that need to be performed for different sales functions. The sales procedures vary from sales to sale and from market to market. Sales procedure for a business to consumer sales varies greatly from
business to business sales. The sales procedure may include meeting the customer, explaining the product / service through slides, use closing techniques, take the order and following up. The procedure for B2B sales may indicate to take a complete team from various departments who are the stakeholders in the project to carry out the explanation of the product/ service. The procedure for the B2C sales may indicate that a single representative is enough to handle the task. Even the time intervals for follow-up activities are mentioned which vary for B2B and B2C sales. Let us now look at the next element “sales rules”. e) Sales Rules Sales rules indicate the set of actions that need to be performed and not performed depending upon the situation. For example, in credit card payments, if the customer is asking for the refund of the late payment fee, then the rule says clearly not to refund if the amount is received after the due date. Hence, the sales staff is not permitted to refund the amount no matter how loyal the customer is with the company. In some cases, refund could be done. For example, when there is some genuine reason for the late payment, such as the due date is on a non-working day for the bank due to festival, curfews or any other natural disasters etc. In such cases the sales staff would refund the amount if the rule mentions to refund the amount. Even in personal sales, the sales representative would be given rules that the maximum discount to be given on the product and the maximum amount of credit that the sales staff can give to the customer to pay the dues. Hence, it‟s the duty of the sales staff to contact the customer within the stipulated timeframe and collect the dues. Let us now look at the next element “Sales Forecast”. f) Sales Forecast Sales forecast lays the foundation of sales planning and objective setting. Based on the sales forecast the sales manager would know the sales that could be attainable for the coming period (next quarter or year). Various time series analysis tools such as trend estimation, moving average, weighted moving average, exponential smoothing etc may
be used to forecast. Forecast can be also done based on the predictions done by the industry experts. Methods can be many but the aim of forecasting is to identify clearly the demand and plan the sales activities to generate more leads to the business. Sales forecast also help in identifying the strategies to gain the market share. If the forecast turns out to be negative i.e. the industry sales are going to dip, then the company may execute their operations effectively to retain the existing customers and attract the new customers. Hence, forecast is a very important element in sales
planning and we shall discuss more about this in the coming units. Now, let us look at the next element “Sales Budget”. g) Sales Budget Sales budget identifies the necessary expenditure that is occurred in making the sales. The sales budget estimates the revenue based on sales that would be generated and identifies the profit for the organization after subtracting the operation costs of the sales staff. The sales budget would clearly set the standards for the sales team in terms of the expenditure that is permitted to incur upon the sale. For example, when the sales staff goes for selling the product, the maximum expenses that can be incurred would be mentioned and the sales representative has to maintain his travel expenditure and other costs within that limit. Maintaining the operations within the budget becomes a complex task in B2B sales where the sales team had to travel to the customer site many times before the sale happens. Hence the sales manager has to see that the operation costs are under control and provide some mechanisms like video conferencing to reduce the travelling costs. Once the operational costs are under control, attaining the profitable level in sales would be a little easier to achieve. Let‟s us now discuss the next element “sales strategy”.
h) Sales Strategy Sales strategy involves how the company is going to act in the market place with the products/ services. The market is dynamic and competitive in nature which makes the companies alert all the times with their pricing and position strategies. Positioning the product is very important since in the past many excellent products have failed due to improper positioning. The product/ service which need to be sold have to be properly priced when compared to the competitors. The strategies have to be in place to justify the price if it‟s higher than the other similar products in the market. The sales staffs have to be given proper training before employing any strategy in the market place. If the product/ service price is not changed even when the rivals have dropped their prices, then the sales staff have to make sure that they can explain to the customer clearly about the reason for high price stating any competitive advantages of the product/ service over the rivals. Acting smart and ensuring that the sale is generated is the part of the sales strategy. The company, who can handle the sales strategies in the market place, is likely to be the winner. Hence the sales planning process contains the above discussed elements and helps in attaining the sales objectives in the required time period. Let us now discuss the various types of sales plans that can be created to ensure the sales staff works effectively for the organization at all times. 13.2.2 Types of sales planning Let us look at various types of sales plans in an organization:a) Sales plan on the basis of market area Whenever the sales are done in the entire country, then the entire region would be divided into several areas depending upon certain characteristics. A simple segregation would be dividing the entire country sales into different states and assigning a head for each state. For example, the in the telecommunication business, the telecom plans
varies from state to state and within the state it remains the same. There are some services which are applicable for the entire country too. Even the promotional offers vary from state to state depending upon the nature of the business in these states. Some products in FMCG sector are very strong in south and have a little presence in North and hence the companies may introduce special promotional campaigns which are available only to the northern states to improve leads. Hence the sales plan would vary from region to region. b) Sales plan on the basis of selling functions Sales team performs several functions such as promotions, follow up activities, presales and sales activities etc. Hence the company lays out various sales plans for each activity if necessary. c) Sales plan based on type of customers Most of the companies believe that 80 percent of the business comes from 20 percent of the key customers. Although each and every customer is important to the company, the survival of the company depends on those 20 percent in difficult times. Hence following the same sales plan for all the customers wouldn‟t be practical since the key customer have to be handled more effectively. Hence the companies may have different sales plan for the key customers. Also the company may have different sales plan for customer depending upon the markets like B2B or B2C. d) Sales plan based on the type of products Every product/ service may not have the same selling activities. Hence having different sales plan is essential to handle the sales effectively. For example, if the company produces technical products, services, FMCG goods etc. it needs to have separate sales plan for the FMCG goods and the technical products and services. e) Sales plan based on the time period There are different sales plan for long term and short term objectives of the company. For example, increasing the sales in the already existing territory and getting sales in
SAQ 1 1) Explain the importance of setting the objectives in the sales planning process 2) Illustrate the importance of sales policies.3 Role of sales plan for B2B and B2C markets Sales planning process would be different for B2B and B2C markets most of the times.3. maintaining the progress in sales is very important.new territories can‟t have the same sales plan. 13. The sales staff has to stick with the timings given by the customer and ensure that all the team members are present at the right time. . For the both. the B2B sale plan has to deal with a flexible plan and plan the resources accordingly. Acquiring the new territory would be a long term objective where as increasing the sales in existing territory would be a short term objective which would be a 1 year time period. Since the sales process takes place for months. Hence let us understand the essential activities that need to be performed and monitored in these markets to make the sales profitable to the company. The sales plan would deal with customers and plan the activities. There is no standardization of activities which can be applied to several customers. 13. Hence having a separate sales plan would be good for both the short term and the long term objectives. program and rules in the sales planning process 3) Identify the problems with wrong forecasting in the sales planning process 4) Explain the various types of sales planning.1 B2B markets B2B markets deals with the business to business deals where the time management is a critical factor for the customer satisfaction. strategies would be different and the operation costs would be different. Since the requirements differ from customer to customer.
For example. The customer health in financial terms is very important and hence the customer business trend is observed time to time. In case of over production. 13. and if the customer business in future sees a down trend for the product „X‟ then it clearly indicates that the leads in future will take a downturn. Monitoring the forecast of the customer business will give a clear picture of the company future sales.Forecasting plays a very important role in preparing a sales plan for B2B customers. Hence the sales plan has to ensure that the correct information is being supplied to the manufacturing department which meets the demand and supply effectively for the organization. Let us now look at B2C markets and some of the sales planning activities. Problems may occur when the goods are produced more or less than the required quantities by the market.2 B2C markets B2C markets deals with business to the customer who uses the product/ service for his/ her own benefit. In case of low production. Sales plan in B2C market has to deal with several issues related to the warehousing. distribution channels and retail. Most of the times the sales are on credit basis with timely payments in regular intervals. In such case the company has to use appropriate sales strategies to sustain in the market place.3. companies may lose the customer to their competitors if the goods are not available. Let us look at each one of them in detail:a) Handling warehouse effectively The sales plan has to take care that the stock of goods are ensured at all the times to handle the demand. goods lie in inventories there by adding up the inventory costs. . if the company is selling product „X‟ to the customer who in turn sells it to the customers as a n accessory in his product. Hence the sales plan deals with the right forecasting of the demand and give it to the manufacturing department at regular intervals so that they have the clear picture of how much and when to product the products.
vegetables etc. More credit in retail may lead to untimely payments and bad relationships.e. excessive stock means the company might enter into credit situation with the retailer as he/she will not be able to pay. Products that are lying for more time means that more costs have to be incurred for the shelf space. Hence knowing the taxation structure is very important to plan the warehouse accordingly. Having the knowledge about the no tax zones also helps in decreasing the costs. in India if the product in a state is not selling well and the stock has been lying idle in the warehouse. It is the task of the sales plan to ensure that proper checks are done to remove excessive stock of perishable goods from the distribution channel and store them appropriately in inventories and sell them when the demand rises. then taking the idle stock and selling in adjacent states may incur the tax of that state. Excessive distribution of good may damage the relationship between the distributors and the company. the shelf space comes at a cost and in case of unorganized retail. Hence double taxation may take place and the profit on the product may go down to such a level where it incur loses to the company. . If they lie more time in the distribution channels then the chance of them getting sold to the end customer gets decreased. c) Handling retail stores The sales plan has to ensure that the sales staff visits retail outlet on monthly basis and check for the stock of goods.Another important activity which the sales plan has to take care is to plan the warehouse according to the tax structure. In organized retail. b) Handling distribution channels The sales plan has to ensure that the regular checks are done so that the products may not end up lying in the distribution channel i. with the distributors due to less demand. Sales plan has to take care that the goods are distributed in necessary quantities only and are not pushed excessively into the market when the demand is less. For example. This process is very critical in case of perishable goods like fruits.
Hence necessary sales activities have to be performed to deal with the price changes in the market place. We have also understood the importance of sales strategy to win the . We saw that the sales planning process consists of several elements. the cost of the product needs to be increased to meet the operating costs and profit margins of the company.4 Summary In this unit we understood that the sales planning process helps in achieving the sales in a profitable manner. distribution channel and the retailer to make sales in profitable manner. Retailer interests have to be taken care of and ensuring required supply will improve the relationships. As on date the government allows 1015 days time to sell the old stock above the MRP. Sales plan also has to ensure that the stocks are made available all the times incase when the demand rises. SAQ 2 1) Explain the role of sales plan in B2B markets 2) Explain the role of sales plan in handling the warehouse. We learned that forecasting plays a very important role in predicting the future sales and setting the realistic objectives. rules and policies provide guidelines to the sales representative in handling the sales task effectively. d) Handling the price changes Since the tax rate may go up in developing countries in small time periods and also issue of inflation. We have understood that sales plan includes the programme which ensures that the necessary skill set is inculcated to the sales staff to handle the sales. We understood that the sales procedures.Hence the sales plan has to deal with such situations and ensure that the stock is sold properly and any excessive stock has to be removed from the retailer place. The selling objective deals with setting realistic and attainable objectives which the sales team would work for. 13. Hence the sales plan has to handle any such situations where the price needs to be increased.
customers. selling functions. “Advertising and sales management”. Mukesh Trehan. New York.market place in all times. USA.7 Suggested Readings 1. price changes and retailer in making the sales in a profitable manner to the company. products and time period. . “Fundamental of sales management for the newly appointed sales manager”. is a technology that allows computer technology to interact with humans 2) Logistics Management of the supplies and transport required for an operation 13.6 References 1. Enterprises. New Delhi. Amacom. Matthew Schwartz (2006). Finally in this unit we have discussed the role of sales plan in managing the sales in B2B and B2C market. Later in this unit we learnt about the various types of sales plan depending upon the market. distribution channels. 13. We have also understood that the sales plan has to effectively manage the warehouse.5 Keywords 1) IVR Interactive Voice Response.K. V. Ranju Trehan (2006). India 13.
4 Summary 14.UNIT 14 SALES ORGANIZATION Structure 14.3 Sales organization structures 14.3.2 Introduction to Sales organization 188.8.131.52 Suggested Readings .1 Need for sales organizations 14.5 Keywords 14.2 Principles of a sales organization 14.1 Different sales organization structures 14.6 References 14.1 Introduction Objectives 14.3.2 Sales organizations challenges 14.
1 Introduction In the previous unit we have understood the role of sales planning process. We shall understand the role of sales organization structure in improving the motivational levels of the employees and making them more productive for the organization. Sales organization defines the span of control within the organization. We have seen a sales plan for B2B and B2C markets and looked at various sales plan. we shall understand about the sales organization and its structure. Hence it is important to understand some of the challenges which the sales organization structure would have to deal with in this unit. Every sales organization structure lies on certain principles which results the structure to be more profitable to the organization. The monitoring process would be done by the sales manager who has the span of control over the sales representatives.14. Sales function is a job that requires to be monitored at regular intervals. Sales organization is important for the organization to ensure that the sales plan is executed in a profitable manner within the organization. We shall understand the need for a sales organization structure within the organization to improve the productivity of the sales department. We shall understand that a sales organization is a function of product and selling method. It also defines the hierarchy levels among the employees and decision making system within the organization. Every sales organization has some challenges to face internal and external to the organization that it needs to face. We shall understand about these and examine the advantages and disadvantages. Depending upon these two factors the sales organization structure would be different for the organizations. In this unit. Sales job requires continuous motivation as discussed in earlier units. We shall look finally at some of the principles of sales organizations. Objectives . There are mainly two different types of sales organization structures namely flat and tall sales organizations.
2 Need for sales organization Execution of the sales plan largely depends upon the nature of the sales organization.After studying this unit you will be able to:1) Explain the needs of a sales organization structure 2) Explain various sales organization challenges 3) Explain different sales organization structures 4) Explain the various principles of sales organization 14. High value customer may be handled by a separate team of sales representatives or the country would be divided into north. east and west territories and handled separately by separate sales managers. Sales organization provides a framework to carry out the sales plan in an effective manner. Hence there is a need for determining the span . Some of them include the following:a) Determining span of control From day to day the organization size grows with respect to growing market size and demand. Segments can be formed on the basis of area. hence the sales would be divided based on some segments. south. The development of a sales organization is a continuous process which depends upon changing market environment and also on the company’s interests.2. But when an organization grows it would be practical for a single sales manager to monitor the entire sales and the representative. product or even customers profile. 14. In a small organization there could be a single sales manager who takes care of the entire organization sales and the representatives.1 Need for sales organization Sales organization is essential for many reasons. A sales organization is essential to plan sales functions.
This type of centralized decision making organization works well when the size of the company is less. coordinating the team or . For an example.of control for the employees in the organization and define which employee is under the control of which manager. the right to make decision lies with the manager of the individual branch and the manager may or may not take the advice of the top management before making the decision. but most of the decisions which need to be taken on a regular basis will solely taken by the manager itself. For an entry level. the right to make a decision lies with the top management of the organization. For example. In a decentralized decision making organization. They are centralized decision making and de-centralized decision making. in sales organization the pre-sales executive is responsible for RFP handling. but any decision related to the sales and customer accounts in these twenty branches will be taken by the top executives who sit in the head office. However any important decision such as setting up a new sales territory will be informed to the executives in the head office. A set of activities will be put under a role which the sales representative is expected to specialize. b) Defining the decision making process Sales organization also helps in identifying who can take the decisions related to the sales and the customer accounts. In a centralized decision making organization. c) Assigning specialties Sales organization structure determines the tasks and roles for the sales people. for an organization that has twenty branches in the country. Another importance of having a well laid out span of control is to build strong relationships within the organization and establishing proper communication channels. The top management may or may not consult the respective sales team and the managers before taking the decision. middle level and the top level the set of activities and specialties are defined by the sales organization. There are two main ways of assigning the power to make decisions regarding the sales and the customer accounts.
Hence the set of activities is known to the employees who join the organization as they will be assigned some specialty. e) Motivating the employees Since the career path is well known to all the employees. . Also in the decentralized organization. monitoring the time. d) Making a career path After the employee or the sales executive is assigned with a set of tasks under the specialization. The role of the sales team will be defined by set of activities such as travelling to the client side.stakeholders within the company. Once the employee has excelled in the given specialization. in the country where the company is established will be promoted to a sales role where the employee would get the chance to travel to the client location if the client is in another country. he/she is expected to master the execution of duties in an effective and efficient manner. All the expenses would be taken care by the organization. interacting with client face-to-face. knowing any issues with the proposal. in many companies when the employee has performed well in the presales role which is mostly done in off-site i.e. arranging video/ audio session between the client and organization employees to better understand the client’s requirement and finally managing to get the lead for the organization. they try to work hard and with dedication to reach higher levels according to the organization structure. submitting the RFP. checking for the deadlines for submission of proposal and establishing proper communication channels among several team members to carry out the RFP handling process effectively and efficiently. he/she will be promoted to the next level according to the sales organization structure. For example. due to the increased authority the employees would be motivated enough to work harder and generate leads that match up to company expectations. getting the RFP.
14. Let us discuss some of the challenges in detail.2. Hence. Hence identifying the right sales organization structure which is effective for the type of product and selling method is a challenging task. there are some challenges for the organization which have to be taken care before selecting a sales organization structure which aims at improving the productivity of the organization. . each and every sales organization structure may not be appropriate to the organization and may also result in lower productivity in the organization. a) Selecting the appropriate sales organization structure In an organization.2 Sales organization challenges Sales organization aims at improving the sales operations by defining the span of control and assigning duties and tasks to the employees of the organization. the sales organization is a function of mainly two attributes namely:- i) Product ii) Selling method : Direct or In-direct selling Same sales organization structure may not be effective for each product or selling method. However.
For example. The same reporting structure may not be applicable for the direct sales and the indirect sales all the time. hence the sales organization structure needs to be different for direct and indirect sales. Sales organization also deals with the reporting structure between the employees of the organization. Nowadays. it would be appropriate to have a decentralized system of decision making where the highly qualified and experienced employees make the decision. As discussed in previous units. Here also some level of decentralized organization structure is required. if you are going to increase the cost for the software. then the permission would be required from the higher authorities or executives at the head office to implement your decision. the sales of the organization initially focused on the product rather than the customer. For consumer sales.For example. Hence the organization structure may require a decentralized system. the decisions for sales have to be taken quickly and most of the time the sales representatives or manager at the small division level would take the decisions and then inform to the higher authorities. b) Accommodating the sales management trends The way how the sales are done differ from time to time. Here the clients would be companies who will invest heavily in acquiring the proprietary softwares and hence any decision regarding the client account would require higher authority permission. if the product involves an indirect sales method. let us say through retail outlets. Some organization like IT companies that create services for their clients follow mostly a centralized decision making process. Product is . Since these sales fall under industrial sales. as discussed earlier a decentralized decision making process would be beneficial as the real problems would be faced by the lower level employees at the branch offices and giving the decision making authority to those managers would solve the problems effectively. the customer has become more important than the product itself. having a centralized decision making process may not work effectively in making day to day decisions in sales. Also for the non-durable goods which are also called as soft goods.
In industrial sales. In such a case. Another important issue which the sales organization structure has to address is the span of control. For example. Hence the sales organization structure has to clearly mention the span of control in such situations. marketing etc. the productivity for most of the industrial and to some extent in consumer sales depends on more than one sales representative. Thomas (2009) mentions some of the sales management trends that have occurred in the changing world of sales management. Lack of leadership may result in many fights between several teams who . the sales organization structure should be flexible enough to accommodate that change in its structure. finance. the decisions would be appropriate if the entire team advice is not taken into account. Since the team members are from different departments. Hence there is a team which is responsible to handle the sales function. In such a team the sales manager who is looking after the sale cannot force the technical team or the finance team to do their work within given time frame as he may not have the authority.seen just a single factor in making the sales effectively. centralized decision making process exists most of the time. Another important issue is to identity the team manager who can clearly take the entire responsibility. Some of the sales management trends include:i) Individuals Teams: In the changing world of sales management. their reporting would be to their respective managers in their departments. Hence. Most of the sales functions involve in managing the customer relationships with the organization. but the decision making executive has to take the feedback of the team who are involved in the sales function. This factor becomes very important and may lead to problems when the team members are from different departments. You can refer to the CRM module to recognize the importance of customer relationships for an organization. testing. an industrial sale may involve the team members from different departments like sales. technical. Let us discuss few of them and the way the sales organization structure have to accommodate those trends in the organization.
A better sales organization structure would be to divide the products or services and appoint a sales manager responsible to take of only a particular product or service rather than all the products. let us assume that a company manufactures consumer goods both durable and non-durable. Since the company is selling the products or services for the first time in global market. the sales manager of the Southern India is responsible for the sales figure for all the products and services of the company. Such a company may follow an organization structure where the local market may be divided into regions and for each region a sales manager would be appointed. it is appropriate to have the sales managers depending upon the product rather than the regions. It also deals with the industrial and Institutional sales with several products and services in its kitty to offer. such situations have to be avoided by creating a proper sales organization structure. SAQ 1 1) Explain the needs of sales organization structure for motivating employees in an organization . This sales manager might be given the responsibility to handle all the products that the company offers to the customers i. Now the company plans to move into markets other than the local country where it might be the strong player. For example. This leads to the changes in the sales organization structure.don’t want to take the responsibility when the sale fails. During globalization the company may not introduce all the products in the global market and might only introduce only few products/ services which have been a huge success in the local market and hence the organization structure may not be the same. let us say. ii) Local Global: The same sales organization structure may not work effectively when the company moves from being a local player to a global player.e. The sales team may bla me the technical team for giving a solution which the client was not impressed and the technical team may blame the finance team for being the project costs too high and so on. Hence.
4) Describe some of the management trends that the sales organization structure has to accommodate. the market situation also results in changing the sales organization structure. 14. 14.2) Explain span of control and various decision making systems 3) Identify the outcomes of selecting an inappropriate sales organization structure to the organization.3 Sales organization structures Depending upon the type of product and selling method the company may adopt the sales organization structure. Let us understand some of the sales organization structures in the following section. Thomas (2009) defined two types of sales organization structures as shown below:Sales Organization Structures Flat sales Organization Tall sales Organization Let us understand them in detail:- .3. Many a times.1 Different sales organization structures Sales organization structure differs depending upon the span of control and the number of management levels.
this leads to a better and faster way of communicating the information in the organization Decreased costs: Since the number of levels is reduced. The organization structure is explained by the following diagram:- Fig 14. There are several advantages and disadvantages of this sales organizational structure.a) Flat sales organization In a flat sales organization structure the number of management levels tend to be less while compared to the tall sales organization structure. Better communication channels: Since the number of levels between the top management and the middle management are less. the reporting structure is also less complicated. the number of employees to manage the organization also decreases. Some of the advantages include: Increased speed of operations: since most of the decisions can be taken at the branch level and doesn’t require the higher authority permissio n.1: Flat sales organization In such a structure the span of control is large for each sales manager thereby creating a de-centralized system. the day to day activities can be done efficiently. This leads to the lower . Lot of companies try to have a flat sales organization structure where they can decentralize the system and give more authority to the employees at the lowest level to take most of the decisions without the influence of the higher authorities at the head office. Since the management levels are less.
This might become a de-motivating factor for the employees at work place. would be required.2 Tall sales organization . the employees at the bottom level have to work hard to earn a promotion.wages to be paid and fewer resources like office space. The organization structure is explained by the following diagram:- Fig 14. computers etc. the number of management levels tends to be more while compared to the flat sales organization structure. b) Tall sales organization In a tall sales organization structure. lesser control would be there on the decision making process which may affect the entire organization. Several employees work hard and stay in their current positions are there are no vacancies in the higher posts. Some of the disadvantages include: Lesser control over employees: Due to decentralization. Lesser promotion levels: Due to the decreased number of levels.
Let us look them in detail:a) Principle of unity of objectives: This principle states that within an organization there needs to be a unity of objectives. Some of the advantages of the tall sales organization are: More promotion levels: Due to more management levels the employees can have a clear idea of to which level they will be promoted next.2 Principles of a sales organization Mukesh (2006) defines several principles of a sales organization. the operation might take place slowly when compared to the flat organizational structures More supervision for employees: This might be a good from the organization point of view to improve the productivity. Increased responsibility and control: Due to lower span of control each employee knows clearly their managers and the manager knows clearly which employees or sales representatives they have to take care of and control. Some of the disadvantages include: Increased costs: Due to the more management levels. 14. Decreased speed of operations: since the decisions have to approved by the higher authority due to centralized decision making process. The tasks are defined clearly to the employees who will be responsible for the outcomes. more employees need to be hired and hence more costs would be incurred to the organization. An organization may have several sales suborganizations depending upon the product and the selling method. but from the employee point of view more supervision may become a de-motivating factor. This leads to greater satisfaction levels and motivates the employees to work effectively and efficiently.A tall sales organization.3. levels it has a centralized control of decision making and carrying out daily operations due to more hierarchy. Every sales sub- .
organization has a set of objectives that it wants to achieve for the organization. b) Principle of Specialization: This principle aims at matching the employees skill set to the right set of tasks and in turn the right specialization. then all the objectives of different sales sub-organization has to work to attain the main objective. he/she must be given the required level of authority to perform those tasks. the sales organization structure should provide a framework where it can easily integrate itself to various other departments within the organization. If the main objective of the organization is to grow at least by 15% every year. resources and staff to train the employees to develop the skill set. Organization may have to spend more money. then the technical product may not reach the customer within the required time period. The principle states that all the objectives of the sales sub-organization must have the objectives linked to the main objective of the organization. Hence there should be some sort of integration between the sales department and the technical department so that the problem can be identified and the technical team may be reminded to speed up the operations. This results in more productivity and employee satisfaction. Hence there would be several sales objectives within an organization. c) Principle of coordination: In an organization. This can ensure that the products/ services are reached in time to the customer. After the sale. if a pre-sales executive is asked to prepare the company competitive advantages presentation for the client to present in the sales meetings. if the technical team were not able to process the customer requirement. d) Principle of parity of authority and responsibility: This principle states that if an employee is given a set of tasks to perform. In order to avoid such problems it is the duty of the sales manager and HR to clearly identify the skill set of the employees and assign those tasks which match the skill set. and then he/she should be given the access to the knowledge . For example. If the employees in the organization are given different set of tasks or specialization in which they have no skill set to perform the duties may result in low productivity for the organization. CRM systems can be implemented within the organization to seamlessly integrate the entire department within the organization and ensure the timely information between various departments.
We have also looked at various challenges of the sales organization structure. e) Principle of flexibility: This principle states that there can be many external and internal factors which might affect the organization operations.management system of the company.4 Summary In this unit we understood about the need of sales organization in improving the productivity of the organization. We have looked at how the sales organization makes a career path for the employees and motivate them to improve the productivity levels for the organization. Hence the authority has to be given that is required for the task to complete. Every company has the KM systems which acts like a repository of the information about the previous projects executed successfully by the company. Hence the sales organization structure should be flexible enough to accommodate any required changes in future. The sales organization would also define whether the organization would follow the decentralized or centralized system of decision making process. SAQ 2 1) Explain various sales organization structures 2) Explain the principle of coordination and identify the problem due to lack of coordination to the sales department 14. We have understood that sales organization is a function of product and the selling method. We have understood that the sales organization helps in assigning the specialties to the employees so that they can master the set of tasks given under the specialty. Once the employee excels in the given job he/she will be promoted to the next level. you may refer to the book mentioned in the reference section. We have recognized the importance of sales . We learnt that determining span of control is an important task which the sales organization structure would determine. For more principles.
Darlene M. Del Gaizo. Tata McGraw Hill. Sharp Inc. India 2. Kathleen A. Thomas N. New Delhi.6 References 1. Ingram. Sandra L. Mukesh Trehan.organization to be flexible to accommodate any required management trends. V. New York.E. “High performance sales organizations: creating competitive advantage in the global market place”. Avila (2009). 14. Edwards (2000). Coker. Edward R. .7 Suggested Readings 1. Raymond W. Enterprises.K. LaForge. 14. Later in this unit we have understood the various types of sales organization structure namely the flat and the tall sales organizations and looked at various advantages and disadvantages of the same. Finally in this unit we have looked at various principles a sales organization must possess to ensure better productivity levels for the organization. “Sales management: analysis and decision making”. Ranju Trehan (2006). M. USA.5 Keywords 1) RFP A document which invites the vendor to submit the bid for the projects including the solution documents 2) CRM Customer relationship management system is an information system which integrates the various sales departments the with other for departments within organization information sharing about the customer. 14. USA. “Advertising and sales management”. Ramon A. Murray..
3 Sales forecasting methods 15.5 Summary 15.1 Importance of sales forecast 15.1 Introduction In the previous unit we understood about the sales organization structure its challenges.2 Introduction to Sales forecast 15.4 Planning the sales quotas 15.6 Keywords 15.1 Introduction Objectives 15.3. In this unit we shall discuss about the sales forecast and quotas.2 Preparing for a sales forecasting process 15.3.UNIT 15 SALES FORECAST AND SALES QUOTAS Structure 15. Sales forecast is often .2.4.1 Non-qualitative forecasting methods 15.8 Suggested Readings 15.7 References 15.1 Factors in setting sales quotas 15.2 Quantitative forecasting methods 15.2.
We shall discuss the importance of sales forecast for the organization and the benefits it provides. organization objectives. We shall also look at various quantitative methods like time series. Objectives After studying this unit you will be able to:1) Identify the importance of sales forecast 2) Explain various issues that have to be analysed in the sales forecasting process 3) Understand various non-quantitative/ qualitative methods of forecasting 4) Understand various qualitative methods of forecasting . Planning the sales quotas is an important function of the sales manager which determines the level of achievement of the organization objectives. Based on the quality and quantity of the data and the method of forecasting employed.seen as an important function in an organization which provides valuable information about the market potential in future. the data sources have to be determined and the right forecasting techniques are to be used. regression and correlation methods. Delphi and scenario methods of forecasting. Planning the sales forecasting process is very important as the outcome of the entire forecast depends upon how well the planning has undergone. We shall several qualitative methods like jury of executive opinion. the accurate information about the market potential and various other management trends would be determined. We shall understand that market size. skills of the sales people and several other factors play a very important role in planning the right sales quota by the sales manager. During the planning stage. Several factors govern the way the sales manager assigns quotas to the employees. competition levels. There are mainly two broad categories of forecasting namely non-quantitative/ qualitative methods and quantitative methods.
Hence there was not much need of a sales forecast in the organizations. Due to the decreased costs of operations more and more players have entered into the market to serve the customer needs and wants. Let us look at the need of sales forecasting and the benefits it provides to the organization. due to the industrial revolution the companies were able to manufacture the goods in an economic way for the customers.2 Introduction to sales forecasting Sales forecasting plays a very important role in setting the objectives of the sales department. planning the operations of the company and identifying the right sales and marketing strategies have become an important task for the managers in the organization. creating better opportunities for the industry to expand. Sales forecast would help in better planning for the organizations in future.1 Importance of sales forecast In the earlier times the demand was more and the supply was less. Hence. Sales forecast provides the organization the information about the future sales which can help to plan the marketing mix and generate required leads. 15. The accuracy in forecasting becomes the backbone for planning the company operations and business plans. More and more companies are increasing their territories through expanding their business operations and business acquisitions.2. During the present times the number of players for almost every business is more and the customers are increasing day by day. As the time progressed. The following are some of the advantages of a sales forecast for an organization: Sales forecast helps in getting information about sales figures for the organization in future . 15.5) Discuss the importance of a sales quota planning for the organization 6) Explains various factors to be analysed in setting the sales quotas.
This provides the information that most of the customers are going to prefer the DVD player over the CD player and based on this. then the organization can plan to train more sales representatives to sell the net books rather than the desktops. then the organization can plan to hire more staff to serve the demand in future. The increase in sales for the CRM systems would clearly help the CRM software vendors to understand the trend and plan their operation accordingly. companies can align their manufacturing department to produce more DVD and less CD players. Sales forecast helps us in understanding the customer preferences. If the sales forecast informs that the industry is going to witness a high growth rate in next year. Sales forecast helps in hiring the right number of employees in the organization. then the organizations may plan to manage the expenses and the balance sheets. If the sales forecast shows that the market for the net books are increasing and the market for the desktops are decreasing. . If the sales forecast predicts bad times for the organizations. the DVD and CD player sales are increasing but the forecast provides the information that percentage increase in DVD player market is much more than the CD player. For example. For example the Health service industry is increasing adopting the CRM system and many hospitals and medical institutions are planning to adopt in future to service the customers in a better way. Sales forecast help in understanding the business trends from time to time. Sales forecast helps in planning the manpower in the organizations. Sales forecast helps us to know the health of the industry as a whole. The percentage increase in sales clearly provides whether the industry is going to maintain their balance sheets in a profitable manner and according to the company objectives.
Some of the issues are:a) Identifying the data sources: Identifying the data that would be used in forecasting techniques is a challenging task. Let us look at the necessary preparation required to start a better sales forecast and the way to utilize the information provided by it. stock prices. Hence the organization has to decide the time period of forecasting and planning accordingly based on the information of the forecast. If the market is having a constant increase for many years.2 Preparing for a sales forecasting process Sales forecast helps the organization in many ways as discussed earlier. In this section we shall understand several issues that have to be analyzed before. b) Deciding the frequency of forecasting: It is good to have the right market potential in future. it may invest the right amount for advertising and creating more brand awareness. Sales forecast helps in planning budgets. secondary data can be the data other than the organization sources.2. If the market dynamics and the customer base changes very fast then having the quarterly forecast would sound good. then a yearly forecast would be better. . 15. unemployment rates. On the other hand. Hence we have understood that sales forecast helps the organization in many ways. The data sources can be primary and secondary. An ideal time to forecast would be every quarter or half-yearly or yearly. Once the organization identifies the promising businesses in future. growth rate of other related industries who produces supplement products etc can be used as a secondary data for forecasting. A right sales forecast is very important and the sales forecasting errors may prove fatal for the organization. Hence so forecasting every month wouldn’t be practical for many organizations due to high costs that are incurred and the manpower spent. Economic indicators of the region like population figures. Primary data can be collected through the market surveys and the focus groups. GDP growth rates. This might involve more expenditure as the data collection process is started from scratch. The sales history within the organization is often considered as the important data source which is used for forecasting. during and after the sales forecasting process.
You will be able to know your strengths and weaknesses and will plan to improve the way the business is conducted. whether the organization wants to know the customer preferences or the sales trends or the market competition and so on. Choosing forecasting techniques by an organization depends upon the variables of interest that they would like to monitor in the forecast i. d) Planning your efforts after forecasting: After the forecasting process you would get the information about the regions where the market potential is increasing and decreasing. The employees have to match the forecast to the regions of profitability and objectives of the organization.c) Choosing the forecasting technique: This is a serious question which every organization would debate before adopting one. 2) Explain various data sources that are utilized for a sales forecast . The company may check whether the forecasting technique served the purpose in the past or else take the recommendations of an industry expert before selecting one. John (2005) describes that there are too many forecasting techniques available and there are more than 70 different types of time series techniques for forecasting.e. All the regions in the country may not be equally profitable for the organization. The regions which you pick up to invest the efforts of the employees would depend upon the following factors: Highly profitable regions Easier to gain the competitive advantage Ability to monitor the regions easily Optimal transportation and management costs SAQ 1 1) Explain the need of sales forecast for an organization in improving the productivity levels. However before selecting a forecasting technique the organization has to look at the advantages and purpose of the technique.
Hence let us see at some of the commonly used forecasting techniques described by Jackson (2000) who categorized under nonqualitative and qualitative forecasting methods. 15. After getting the figures from several senior executive the average of those .1 Non quantitative forecasting methods Non-quantitative or qualitative methods of forecast are used when the organizations doesn’t have sufficient amount of primary or secondary data t o measure to conduct the forecast of the variables in interest.3.3 Sales forecasting methods As discussed earlier there are a huge number of forecasting methods and so discussing all of them wouldn’t be possible. Some of the non-quantitative forecasting methods include:Qualitative Forecasting Methods Jury of Executive Opinion Let us discuss these methods in detail. a) Jury of executive opinion Delphi Method Scenario Method In this method the organization would ask the senior executive to forecast the sales figures. 15.3) Discuss various factors which help the organization in planning the efforts after forecasting.
improved screen resolutions and graphics etc. The average figure is considered as the forecast information and the strategies are adopted accordingly. Again the moderator collects those comments and analyzes them and prepares a document with necessary changes and circulates back to the group members for comments. The behaviour of those indicators or factors in the past is analysed. It should be noted that the output may not have a single forecast figure but can have a set of figures which most of the members agree upon. . b) Delphi method This method has been extensively used by companies for forecasting in the past and is still used in the present. For this the possible future scenarios are predicted such as increase in the speed of the tablet PC making them at par to the laptops or net books. The effect of these indicators upon the sales is understood and the future sales are predicted under each scenario.figures are determined. This document is circulated to all the group members and they are requested for comments. From such a group the forecast is requested from each member of the group. better technologies to provide all the features which a laptop posses. decreased cost of the products. for the computer industry the sales of newly launched tablet PC’s are to be forecasted. In this method a group of knowledgeable people is formed where each group member doesn’t have any contact or know the other group member. For example. For each possible scenario the indicators or factors are selected. This process repeats until the moderator feels that the majority of the group has reached some consensus. c) Scenario method In this method the assumptions are made for the possible scenarios that would prevail in the industry in future. Based upon the analysis the future business environment is predicted and sales are estimated. The moderator of the group is responsible to collect the entire replies and collaborate to form a single document mentioning the group estimations of the forecast and the management trends. This will remove any errors to an extent. increasing number of players in this business.
If a behavior which a repeating every year is observed in the historic data. a) Time series analysis method Regression and correlation analysis Time series analysis involves examining the organization’s past or historic data and making the forecast about the future sales. moving average and curve fitting. deals with the changes in sales figures during a particular season in the past. Some of the methods include:Quantitative Methods of Forecasting Time series analysis Let us discuss them in detail. Finally the erratic . if the same season runs in future the expected sales figures can be calculated.15. The credibility of the forecast depends upon the quality and quantity of data that is being provided to the method. The pattern may be divided among four basic components such as trend. There are basically three methods to do trend analysis namely percentage change. which deal with any changes in the sales figures other than the seasonal variation. cyclical effects and erratic changes. such changes can be observed in future too.3.2 Quantitative forecasting methods Let us now discuss some of the quantitative forecasting methods. It is assumed that the trend would continue in future. The next component is cyclical effects. For example. These forecasting methods make use of the data and perform certain mathematic calculations and provide the sales forecast. Trend analysis aims at observing the past trend in sales figures and predicting the future sales figure. The next component. seasonal variation. Hence. the sale of Air conditioners is high in summer as compared to winter season. seasonal variation.
the improvement in literacy rate indicates that the demand for computer product also increases. The changes may occur due to market situation like inflation or less raw materials or poor staff etc. If we know the list of independent factors then using a correlation analysis we can identify the nature of relationship and using a suitable regression technique we can identify the sales potential in future. 2) Explain Delphi method of forecasting 3) Discuss the various components of the time series analysis method . increase in price lower the sales figure. In sales forecasting. the sales forecast can depend upon several variables and regression analysis aims at finding out the degree to which the sales depends upon the other variables. For more information about various forecasting techniques you may refer to the books mentioned in the reference and suggested reading sections. sales potential is the dependent variable and the other variables are the independent variables. the price would show a negative correlation with the sales i. The simplest regression technique is the “Linear Regression Analysis”. For example. For many products or services. The range of correlation co-efficient ranges from -1 to +1 where -1 denotes negative relationship and +1 denotes a positive relationship. SAQ 2 1) Explain the differences between the qualitative and qualitative method of forecasting and identify situations when you would use them.e. we would do a correlation analysis to find out the nature of relationship between the dependent and the independent variables. Hence the literacy rate which is an independent factor is having a positive correlation with the dependent factor sales potential. During the regression techniques.changes are those which are observed in the sales figure without any pattern or regular time intervals in the historic data. In this context. b) Regression and correlation analysis Regression analysis is used to find the value of one variable with respect to the changes in another variable.
Some of the factors include:a) Market size and potential For each territory or region the market size and potential must be analysed.1 Factors in setting sales quotas Planning the sales quotas involves identifying the right quota depending upon several factors and assigning them to the sales representatives. Let us understand such factors in detail. We know that sales representatives of each region or territory may not be assigned the same sales quota. then you cannot assign quotas to grab that 1 million. quotas have to be planned accordingly so that the market potential is fully utilized to achieve the maximum productivity levels. the sales quotas may not be high due to the level of competition. Hence planning the quotas and assigning them involves several factors. The Once the existing market size is determined. Quotas must be realistic in nature taking the account of competition. Setting the right quota motivates the employees to achieve them and have the bonuses.4. setting the quotas that are too small or too large to achieve may de-motivate the sales representatives. For example. The quotas would not only depend upon the size and potential because various other factors have to analysed which will be discussed in this section. It must be remembered most of the times that the sales quotas would be proportional to the size and potential of the market. if the potential for the mobile connections in a particular region is 1 million.4 Planning the sales quota Setting the sales quotas to the sales representatives is an importance task for the sales manager. If there are 5-6 mobile operators then assigning the quotas to generate 30 – 40 percent of the potential . The market potential can be known by the forecasting techniques which were discussed earlier. b) Level of competition Even if the market size and potential is huge. Let us understand the list of factors which help in setting the sales quotas to sales representatives. 15.15. On the other hand.
setting same quotas for all the employees may not be achievable and may become a de-motivating factor. If the quotas are not achievable. gaining a 30-35 percent market potential is a practical task if the organization is one of the top players in that region. The sales manager has to plan the quotas according to the skill of the sales manager and may increase it in future. Hence the sales quotas have to be planned accordingly based upon the current position of the organization. But if the organization is a low level player or an entrant. If required necessary training should also be provided. Hence sales quotas have to be planned accordingly with the objectives. The new employee may need to have a different sales quota while compared to the already existing employee. it needs to. the sales quotas may not be necessary to increase from year to year as the objective of the organization is to generate the same sales each year. d) Skills of the sales person All the employees within the organization may not be able to generate huge number of leads. some time should be given by the sales manager to improve the selling skills and help in achieving the sales quota by the sales representative. When it enters a new territory. then getting 10 percent of the potential also would be a huge task. Hence. the organization objectives have to be kept in mind by the sales manager before planning the sales quotas to the representatives. If the organization objective is to hold in the market in difficult times. c) Current position of the organization In the previous example.is practical. Hence. the organization objective may be to test the market or to become a leading player. . e) Organization/ market objectives When an organization expands to new territories or launches new products. Again the quotas depend upon another factor current position of the organization in that region. plan the sales quotas very carefully.
15. In the final section we understood the need of planning the sales quotas.SAQ 3 1) Explain the role of quotas in managing the sales force 2) How would you plan the sales quotas based on the market size and potential? 3) Discuss the planning of sales quotas based on competitive level and skills of the sales representative. In the qualitative methods we learned about the time series. We discussed about importance of planning the efforts in a right manner after the forecast. skills of the sales person and organization/ market objectives in planning the sales quota in an effective manner for the organization and the sales force.5 Summary In this unit we understood the importance of sales forecast for the organization in improving the productivity. current position of the organization in the market place. We observed that sales forecast determines the organization strategies to win the market place and manage the internal resources like man power. Sales forecasts also help in identifying the customer buying behaviour and the health of the industry. . Delphi method and scenario method of forecasting. We studied various factors such as market size and potential. budgets etc effectively. We also discussed several qualitative methods like jury of executive opinion. Later in this unit we have discussed the sales forecasting methods. level of competition. We also examined the four components of time series analysis. regression and correlation analysis methods of forecasting. We later identified that various factors such as selecting the data source and right forecasting techniques play an important role to forecast correctly about the market potential.
Jackson. Robert D. New Delhi. 15. Tata McGraw Hill. Ralph W. Spiro. Prentice Hall. USA. Rich (2003). California. “Sales forecasting management: a demand management approach”. Hisrich (1996). “Management of a sales force”. 15. India. John T. New Jersey. Mark A.7 References 1. Stanton. Sage Publications.15. .8 Suggested Readings 1. Moon (2005). Mentzer. 2. “Sales and Sales Management”. USA. usually 1 year.6 Keywords 1) GDP It is the indicator of the economy of the country and is equal to the amount of goods or services produced by a country over a period of time.
UNIT 16 SALES BUDGETING AND CONTROL Structure 16.1 Introduction Objectives 16.2 The need of variance analysis and control in sales budgets 16.6 References 16.4 Summary 184.108.40.206.2.1 Need for a sales budgeting control system 16.3 Monitoring and controlling the sales budgeting 16.5 Keywords 16.2 Sales Budgeting Concepts 16.2 Issues in sales budgeting 16.1 Financial concepts in budgeting 16.7 Suggested Readings .
the budgets would be increased or controlled respectively in all departments. Sales budgeting have to deal with several issues like identifying the right budget allocation according to region wise. dealing with NPA accounts. We shall just look at the basic financial concepts and indepth understanding is outside the preview of this unit. After the successful sales forecast by the organization we arrive at the sales figures for the next time interval. In the next half of the unit we shall understand about controlling the budget by setting up the control systems. . creating new revised budgets etc. identifying and analyzing the variances. Control system should be able to monitor the customer preferences and help in providing valuable information for the sales department. Similarly the budget allocation for the sales department also depends upon the sales forecast. All the expenses within the sales department and other departments should be taken into account to arrive at the net profit. developing new territories. In this unit. In this unit we shall understand about sales budgeting and control.1 Introduction In the previous unit. These systems not only take care that the expenses doesn’t over shoot the budget allocations but also help in analyzing the competitor’s activities and budget allocation mechanisms. Depending upon the increase of decrease in net profits. Once the sales figures are known. budgets are created for various departments within the organization. This gives a fair idea of the growth rate of the organization for the next year. we have understood sales forecast and sales quotas. Depending upon the sales figure. The marketing department would get more budgets for advertising and sales promotions if the sales forecast predicts higher sales in the next year. We shall understand that expenses are of two types direct and indirect expenses.16. Hence understanding these issues is an important task and the analysis should be done at regular intervals. the expected revenue and net profit are estimated. we shall look at various financial concepts of budgeting and the manner in which net profit is generated.
2 Sales budgeting concepts Sales budgeting would be an important task after the sales forecast.Objectives After studying this unit you will be able to:1) Explain various financial concepts in budgeting 2) Identify various issues in sales budgeting 3) Recognize the importance of a control system for the sales budgeting 4) Explain the need of various control in sales budgeting for the sales department 16. Once the sales figure for the next time period are known.2.1 Financial concepts in budgeting Various expenses would be taken into account before arriving at the operating profit and the net profit for the next time period. Expenses for an organization would be of two types :- Type of Expenses Direct Expenses Indirect Expenses Direct expenses would include those expenses which are directly involved in the creation of the product or service. 16. Some of the direct expenses would include the . the revenue for the organization would be calculated.
travelling costs of the direct labour etc. There can be many other issues which the sales budgeting process has to look at. fall under the indirect expenses.material required for the product or resources used by the service. office rents and bills for electricity. indirect expenses include those expenses which are not directly related to the production of goods or services. wages of sales representatives etc. The revenue can be identified by multiplying the number of units with its cost.2.2 Issues in sales budgeting There are several issues in budgeting and allocation which needs to be analysed. For most of the organizations the objective for net profit margin would be at least 10-20 percent. labour involved in creating the product or service. phone lines etc. The exact need of budget should be established by taking into account for all the expenses such as travel expenses.e. After identifying the expenses and revenue and removing the taxes we get the net profit for the organization. sales activities. 16. at the branch level and the expenses in incurring the sales would be best known by the sales managers at a branch level. On the other hand. b) Having multiple views of the sales budget The sales budget created should clearly identify the sales from multiple views such as:- . For example. The real activities of the sales process happens at the micro level i. Some of them are:a) Establishing the need for budget The budget would be established for different regions depending upon the need. Sales budgeting are mainly done at the macro level but the actions takes place at the micro level. wages of the direct labour i. The top management allocates the budgets and may take the feedback from the local sales managers which again depend upon whether the organization follows a centralized or decentralized decision making process. Hence the sales manager should be able to establish the need for budgets.e. The budgets should be allocated at the local level by taking the feedback from the sales managers. One of the primary objectives of sales budgeting is to see that the net profit doesn’t go below the organization objectives. marketing activities.
Hence sales manager can identify such representative and give necessary training to improve their productive levels. In sales we refer Non-performing assets as NPT which stand for Non-performing territories. e) Time interval for monitoring sales budgets . the overall sales figure for the city is increasing but due to multiple views the sales manager can easily see that one of the territories in his region is showing a down trend in sales figures. Sales by the region/ territory Sales by the product or service Sales by the sales representative Having multiple views will help in answering some of the questions about why the sales budgeting is not as per the expectations of the sales forecast. Hence necessary action can be taken to improve the sales figure. It is understood in business world that a market leader will work to develop new territories and may leave the territories which are under performing whereas a market follower would safe guard existing underperforming territories and strive for development. For example. c) Identifying NPA’s and planning the events Having created the sales budgeting from multiples views enables the sales manager to identify the NPAs in his region/ territory. The NPA can be the sales representative too if they are not able to attain their sales quotas. Sales manager may use the variance analysis technique like ANOVA to check the variance. d) Monitoring the forecasted figures to the actual sales Most of the companies divide the yearly forecast figures into monthly sales which could be attained by the sales representatives if they achieve their assigned quotas. But there would be chances that the forecast may go wrong and the quotas set were not realistic. In such cases it is always important to monitor the actual sales figures with the forecasted sales figures at regular intervals.
Whereas too loose monitoring with large time gaps means not taking sufficient care in reviewing the sales budget. SAQ 1 1) Explain the direct and indirect expenses for an organization 2) Explain the advantages of having multiple views of the sales budgets 3) Identify the importance of timely monitoring of a sales budget 16. In fact. Too frequent monitoring implies wasting time and money on trivial or uncontrollable factors. This may also lead to poor performance by the sales representatives. On the other hand. However one must understand that too frequent monitoring may result in wastage of time and money on trivial or uncontrollable factors. . Let us now understand the need of a control system for monitoring and controlling the sales budget.The time interval to check for variance and sales budgeting depends upon the sales manager and may be done daily or weekly or monthly or quarterly or half yearly or yearly. Recognizing the work of the sales representatives by monitoring their performance will also help in framing the appraisal system.3 Monitoring and controlling the sales budgeting Monitoring and controlling the sales budget is an important task to maintain a healthy balance sheets in an organization and meeting the organization objectives. no one likes a job which is not monitored as everyone expects some sort of appreciation after their job done. too loose monitoring process may result in lower performance levels as it’s the human nature to adopt slackness when the control system is weak Let us now discuss about the control system and its functionality for the sales budgeting process. Having an appropriate timeframe for monitoring is very important for the organization.
16. Control system should identify weaknesses in the organization and develop the system where the resources are put to maximum use. Hence. The biggest question is what to monitor? Is it the sales figures or efforts or expenses or direction and so on? In many times the organization would go by the sales figures and revenue generated. Efforts and direction would be left out but to get a holistic picture of the performance of a sales representative every factor must be taken into account. c) Identifying areas of weakness Control system should be aiming at identifying goals of the organization and improving the organization performance to achieve them. b) Identifying areas of improvement for sales representatives Control system should identifying the areas of improvement by monitoring the performance of the sales representatives. control system should be able to get a holistic picture of the performance evaluation for the sales representatives. The control system should be able to monitor in regular intervals as it is the natural tendency for humans to adopt slackness. Once the performance is monitored the control system should be able to find out the necessary skills to be improved and then proper training should be provided to improve those skills set.1 The need for a sales budgeting control system Sales budget control system is required by the organization for many reasons. Control system should be able to identify the cost in generating the required sales figures.3. In doing so. If the cost of operations is high then the net profit would be low even if the sales figures are decent. many functions within an organization have to be integrated. Let us now understand them in detail:a) To monitor the performance Monitoring sales budgets implies monitoring the sales figures generated by the employees and checking whether the sales quotas have been achieved. For example. if the control system finds out the reason for increased costs for generating a lead is due to the improper communication channels between the .
The reasons for such deviation should be analysed. The branch office may start with nice figures over 10000 for the first two months but later on from the third month the sales figures take a dip and fall below 10000. In this competitive world. For example. . e) Analyzing deviations Many times there would be deviations from the sales objectives. Hence it is necessary to have a system to monitor the competitor movements closely and then identify the necessary changes that needs to be done in the strategies of various departments to sustain the competition and achieve required sales. Such reasons have to be identified. Therefore. then making use of CRM in the organization would be the solution to the problem. decreased sales especially if the sales are seasonal. Monitoring and analyzing the deviations would be an important task. the preference of the customer changes too frequently and the competitors would be ready to grab the opportunities. d) Identifying trends and monitoring competitor activities Control system is required by the organization to identify the market trends. There can be many reasons such as: the increased market competition. for example the sales for air conditioners and refrigerators are high in summer when compared to winter season Changing customer preferences or consumption pattern High attrition rate i. the organization may put the sales objective for the branch office 10000 units/ month. due to the high attrition rate the required number of sales representatives are not available to generate the expected sales figures.e. a control system may be required by the organization.marketing and sales department.
but low sales due to high costs over the competitors then necessary marketing activities have to be planned to justify the price and the benefits or else the prices have to be reduced to boost the sales. The deviations or irregularities in the operating profits can be analysed by the variance analysis and control systems. control system is necessary to identify the growth in the industry and adjust the sales quotas accordingly so that the organization can maintain its position in the market place. g) Identifying the losing market share The forecast would be done at the start of the year or required time interval and targets or quotas would be set. The sales variance is of two types namely: Operating profit due to sales volume: This deals with the variance in the operating profit which may be more or less than the forecasted operating profit. its strategies can be set. Whenever the market is growing too fast. 16. the sales figures should also be increasing.f) Input for organization strategies Control system helps in provide valuable information in setting the strategies in the right direction to achieve the organization objectives. The objective of the organization may be to serve the maximum number of customers at all times and be the industry leader.3. if the control system identifies that the organization has good products. Hence. It is the difference between the budgeted operating profit and the margin between the actual sales and the standard cost of those sales. Control system is necessary to monitor the situations not only where the organization has improved its sales but also lost market share too. Just performing by the sales quotas would be helpful in being the leader in the market place. For example. By identifying the right strengths and weaknesses of the organization. Variance analysis acts as a cost controlling mechanism for the organizations. Achieving the required quotas may not necessarily mean achieving the organization objectives at all the times. .2 The need of variance analysis and control in sales budgets The sales variance according to Ghosh (2005) is the operating profit variance due to sales.
The selling price would be lowered whenever the demand is less or the competitors lower their prices. Even though the sales quotas are achieved. Operating profit variance due to selling price: This deals with the variance in operating profit due to the decrease or increase in selling price. The operating profit would be less when the sales figures are less than the forecasted figures and vice-versa. This type of variance is known as mixed variance. then organization have to revise their strategies to make sure that the sales figures are improved and thereby creating a lesser variance Identifying the right selling price: In an attempt to grab the sales opportunity the organizations or the sales departments tend to decrease their selling price. the variance should be analysed and the affect on the overall balance sheets and profit figures should be estimated. the sales department may not be able to generate the required operating profit due to the changes done in the selling price when the actual sales have taken place.The reason may be due to the changes in the volume of sales generated by the sales department. the price of the unit is kept constant for the forecasted sales and the actual sales. Here. The decrease in selling price should justify the increase in sales figures so that the overall operating profit doesn’t decrease for the organization. It is not always practical for the organization to stick to a constant selling price. Usually in many situations the variance would be due to both the reasons mentioned above. Hence identifying the right selling price is a challenging task for the organizations. The price keeps on changing due to the changing environment at the market place. Before any such attempt. . The variance analysis and control would involve the following points: Improving the sales figures to decrease the variance : Whenever the sales variance is increasing due to the low sales. The sales budgets have to be controlled in such a manner that the organization objective is achieved with the right variances in place. It should be noted that for each penny decrease in selling price the operating profits would be decreased.
4 Summary In this unit we understood about the sales budgeting concepts. The only way this can be achieved is by decreasing the cost of operations in various departments like marketing. right strategies help the organization to achieve more sales and lesser variances. We have understood the differences between the direct and indirect expenses for an organization. We finally examined the need of variance . product/ service and by the sales representative. SAQ 2 1) Explain the need for sales budget and control system 2) Explain the two types of sales variance 3) Identify the measure for controlling variance for an organization 16. IT. We examined the need for the sales budget for an organization and identified the importance of having multiple views of the sales budget by region/ territory. identifying areas of weakness. identifying areas of improvement. the operating costs can be reduced thereby decreasing the variance in the operating profits. sales etc. Variance control with proper strategies: As discussed earlier in this unit. We saw that sales budget control system is required by the organization for many reasons such as to monitor the performance of the sales staff. We have analyzed the importance of budget control system as an input for organization strategy planning. Variance control by improving the organization efficiency: By improving the organization efficiency by making use of CRM products and the right organization structure. analyzing deviations and the reasons for losing the market share. identifying trends and competitor activities. We also saw the issue in sales budgeting. This is very important at present times where the prices are kept low due to the competition and the operating profits are to be maintained unaffected. We learned the importance of timely monitoring of the forecasted and the actual sales and identifying the NPA and plan for their improvement.
N Ghosh (2005). Prentice-Hall. India. Tata McGraw-Hill. Robert N Anthony. Vijay Govindarajan (2008). “Management control systems”. We understood the reason for variance in sales budgets due to the volume of sales of the selling price. 16. 16.7 Suggested Readings 1. New Delhi. India 16.analysis and control for the sales budgets.5 Keywords 1) Operating profit Profit figure attained after subtracting the direct and indirect costs from the revenue generated.6 References 1. we looked at the variance control by proper strategies and improving the organization efficiency. We also understood how to control the variance by improving the sales and identifying the right selling price which can improve the sales figures and decrease the variance. Finally. New Delhi. . 3) NPT Non-performing territories are those territories which are not able to achieve their sales quotas assigned by the organization. “Management control system”. 2) Net profit Profit figure attained after subtracting the organization total expenses including the tax from the total revenue generated.