Sales Management Course Panda Sachdev 2259

Ch-1-Introduction to sales mgmt
• Sales person’s positions (Robert

N.McMurry)-
• 1)deliver a product-e. g. milk,bread,oil,gas
• 2)internal order taker -counter sales clerk
• 3)order taker- but works in the field as
pizza boy, soap seller, spice seller
Ch-15-customer-oriented logistics
management
• A distribution network usually comprise 2
complementary net-works-
• 1)The commercial net-work
• 2)the logistical net-work
management
• The commercial net-work takes care of the
resources required for the efficient and
effective operation of the logistical network
• The logistical network is involved in the
actual transportation of the goods and
services from the place of manufacture to
the place of consumption
management
• In India, the logistics costs are higher than
in the developed markets-estimated to be
around 13%of the GDP, against 9% of the
GDP in the US
• The logistical function, since it is
concerned with the physical movements of
goods, is also called the physical
distribution function
Definition-council of logistics
management
• Logistics is the process of planning,
implementing and controlling the efficient,
cost-effective flow and storage of
materials, in-process inventory, finished
goods and related information from the
point of origin to the point of consumption
for the purpose of confirming to customer
requirements
Out-bound logistics
• Consists of the delivery of finished goods and
services to the customers from the
manufacturer’s end
• Is a critical activity in any firm as it directly links
the company to its consumer and comprises a
set of activities that complement the marketing
function of the firm
• Usually absorbs significant resources of the firm
both in terms of the financial resources as well
as human resources
Out-bound logistics
• It is estimated that, in FMCG sector,
almost 40%pf the final cost that a
customer pays is absorbed by logistical
activities
Out-bound logistics
• The cost of logistics may vary from one
industry to another
• With improved coordination and efficient
planning ,it is possible for a company to
reduce the expenditure on logistics
Objectives of logistics
• The logistics function of a firm is normally
guided by a logistics strategy
• The logistics strategy sets objectives and
develops guidelines for allocating the
resources for achieving these objectives
• Broad objectives of logistics are drawn
from the distribution strategy
• These broad objectives generally consist
of the service output demands to be
delivered to the customers
• The logistics strategy is a key component
of the distribution strategy of the firm
which in turn forms part of the marketing
strategy
• Usually the logistics strategy brings
together the components of the
manufacturing and marketing strategies of
the firm
The logistics strategy
• Comprises 3 objectives-
• 1)cost-reduction
• 2)capital reduction
• 3)service improvement
Cost reduction strategy
• Is aimed at reducing the variable cost related to
the movement and storage of goods
• The service levels are usually not altered for the
sake of cost reduction
• The cost reduction is usually achieved by such
tactics like-
• altering the number and location of warehouses
• Altering the mode of transport
• Route optimization for the transport
function
• Optimizing the quantum of inventory
• Technology can also be used to reduce
the variable cost of logistics
• Several FMCG companies in India are
providing palmtops to their grass-roots
level sales people so that the order
booking can be expedited to effect a
reduction in the finished goods inventory
Ch-1-Introduction to sales mgmt
• 4)build goodwill or educate an actual
potential user-medical representative
• 5)emphasis is on technical knowledge-
selling engineering products or computers
• 6) creative selling of tangible products-
vacuum cleaners, refrigerators
• 7)creative sale of intangibles such as
insurance, advertising and education
Evolution of sales mgmt
• The roman meaning of the word sales
person is “cheater” and mercury (the god
of cunning and barter)
• As old as human civilization
• India was a great destination in the
medieval age fro spices, carpets, jewellery
etc.
• The first sales people in the US were
Yankee peddlers (pheriwallahs) carrying
clothing, spices etc.
• There were fewer than 1,000 travelling
sales people before 1860 in the US who
were basically credit investigators
• Modern sales mgmt. and selling
techniques were refined by John Henry
Patterson (father of modern sales mgmt)
who ran the national cash registry
• Thomas J Watson was trained by
Patterson who later founded IBM
Evolution of personal selling
strategies
• Personal selling strategies have evolved
in the last 150 years
• In the 19th century, persuasion was the
primary skill used by the sales people
strategies
• With growing competition ,it became
important for the sales people to
understand the needs of the customers
• In the 1970s,sales people were treating
customers not just as accounts but as
clients (similar to consultant)
Qualities for an industrial seller (as
per purchase magazine)
• 1)Willingness to go to bid for the buyer
within the supplier firm
• 2)thoroughness and follow through
• 3)knowledge of the salesperson’s product
line
• 4)market knowledge and keeping the
buyer posted
• 5)imagingation of applying his product and
services to the buyer’s needs
• 6)knowledge of the buyer’s product line
• 7)preparation for sales calls
• 8)regularity of sales calls
• 9)diplomacy in dealing with operating
departments
• 10)technical education
• 1)persuasion
• 2)negotiation
• 3)consultative selling
• 4)business management
• 5)partnership strategies
Marketing concepts
• 1)production concept
• 2)product concept
• 3)selling concept
• 4)marketing concept
• 5)societal concept
Production concept
• Has its origin in the production orientation
• Emphasis is on try to sell a higher volume
of goods at low costs and through an
intensive distribution strategy
Production concept
• Viable strategy in a developing market
where market expansion is the crucial
survival strategy
Production concept
• Companies interested in reaping scale
economies pursue this orientation
• Such companies cannot deliver quality
products and suffer from problems arising
out of their impersonal behavior with
customers
Product concept
• Assumption is that consumers favor those
products that offer high quality attributes
such as quality, performance and other
innovative features (technology push
model)
Product concept
• Sometimes the innovative products are
launched without analyzing needs of the
customers
• e. g. the golden eye technology was first
introduced by videocon which was not
accepted first, after a certain time, LG
introduced the same technology and
made it its USP
Sales concept
• Assumption is consumers need to be
persuaded to buy
• Consumers are typically inert
Sales concept
• Applicable in case of un-sought goods
such as life insurance,vaccum cleaner,
fire-fighting equipments etc
Sales concept
• Applicable to firms having over-capacity
and their goal is to sell what they produce
rather than what a customer wants
• Companies pursuing this concept often fail
in today’s marketing where buyer has a
number of options
Marketing concept
• Rests on the four key elements of-
• 1)Target market
• 2)customer need
Marketing concept
• 3)integrated marketing (including internal
marketing)
• 4)profitability
Marketing concept
• In today’s scenario ,profitability of an
enterprise through efficient marketing
activities is the key success criteria
• Profitability is now treated as a by-product
of creation of superior customer value and
better understanding of customer needs
Societal marketing concept
• Combines the best elements of marketing
to bring social change through integrated
planning and action framework with the
utilization of communication technology
and marketing techniques
• Is an extension of the marketing concept
Societal marketing concept
• Often termed as ‘cause-related marketing’
• Excessive exploitation of resources,
environmental deterioration and customer
movements in particular have
necessitated the recognition of relevance
of marketing to society
Nature and role of sales
management
• Sales management is more strategic and
of long-term consequence, as it involves
planning, organizing, directing and
controlling of all the selling activities
• The role of a sales manager in an
organization has become strategic and
formidable (an accountant, a planner, a
personnel manager and a marketer)
Nature and role of sales
management
• Primary responsibility is to augment the
sales force by augmenting the sales
closing process
Duties and responsibilities of a
sales manager
• 1)determining sales force objectives and
goals
• 2)finalizing sales force organizations. size,
territory and quota
• 3)forecasting and budgeting sales
Duties and responsibilities of a
sales manager
• 4)selecting,recruiting and training the
sales force
• 5)motivation and leading the sales force
• 6)designing compensation plan and
control systems
• 7)designing career growth plans and
building relationship strategies with key
customers
Types of personal selling
• 1)industrial
• 2)retail
• 3)services selling
Industrial selling
• Also termed as ‘business to business
selling’ (manufacturing sector selling)
• 1)selling to resellers
• 2)selling to business users
• 3)institutional selling
• 4)selling to governments
Selling to resellers
• Reseller may be a wholesaler or a retailer
or an intermediary who buys finished
goods and resells them to the end-users
Selling to resellers
• Hero-cycles-series and sunshine
chemicals sell to the reseller
• The sales person’s objective in such a
case is to gain larger shelf space and
higher point-of-purchase display so that
the products can reach the ultimate
consumers rather quickly
Selling to business users
• Here the output of one producer enters
into the production process of another
producer to manufacture a final good for
the consumption of the end-users
• The sales person of the first firm tries to
sell the goods to the second firm which, in
this case, is a business customer
Selling to business users
• IBM sells Intel Pentium processors which
are used by Compaq or HCL to make
computers
• Tata refractory produces bricks that go to
other manufacturers involved in hot metal
technology
• Producers of heavy machinery, ball
bearings, fork-lifts and electrical cables
Institutional selling
• The institutional customers use the
products in their daily operations
• Xerox in photo-copiers, Johnson and
Johnson in surgical equipments and
Reynolds in office stationeries sell directly
to institutions for institutional consumption
• Here the sales person sells to the ultimate
consumers but the product is used in
providing support to the buyer’s business
rather than in producing the buyers
products
Selling to governments
• In most countries, the government is the
leading buyer
• There are many companies such as
escort Rites that sell only to governments
or to government undertakings
Selling to governments
• A sales person’s ultimate consumers are
the employees of the government
• The procedure in government buying is
different from the procedures involved with
the other institutional buyers
Retail selling
• Retailing is defined as all the activities
directly related to the sales of goods and
services to the ultimate consumers for
personal or non-business use or
consumption
• The primary difference between retailing
sales and industrial sales is the actual
location of the sale
Retail selling
• Retail selling is effected at the level of a
retailer, a dealer, or even a wholesaler
who carries out retailing function for large
buyers
• Shopper’s stop, Big Bazaar and cross-
roads in India
• K-Mart, Wal-Mart, Tiffany
Services selling
• Services are activities or benefits provided
to consumers
• Services are-
• 1) intangible
Services selling
• 2)cannot be touched, seen, tasted, heard
or felt like physical goods
• Services are less standardized and
uniform in nature than the products
(unique experiences)
• Some services are retail services (hotel
room service, transport)
Types of selling
• 1)order takers
• 2)order creators
• 3)order getters
Order takers
• Respond to the already committed
customers
• The account executives in an advertising
agency are of this nature
Order takers
• They perform only client servicing function
and take the release orders from the
existing clients
• 1)Inside order takers, 2)delivery sales
people and 3)outside order taker
Order takers
• Inside order takers are the retail sales
assistants whose role is to complete the
transaction
• The sales people that deliver milk,
newspapers, magazines and pizzas can
be called delivery sales people
Order takers
• The outside order (eureka forbes) takers
visit the customers regularly to respond to
the customer call
• They do not deliver anything at the
customer’s place
Order creators
• Are missionary sales people who normally
do not close a sale but persuade the
customers to promote a seller’s brand
• They do not directly receive orders since
they talk to specifiers rather than
customers
Order creators
• Medical representatives are called
missionary sales people
• The objective is to educate and make the
people aware of the product rather than
closing a sale
Order getter
• Attempt to persuade customers to place
an order directly
• Are-
• 1) frontline sales people( door to door)
• 2)sales support sales people
• A) new business sales people
Order getter
• B)organizatinal sales people
• C)consumer sales people - persuade new
buyers and non-user-e .g. business
development executive in an agency
Order getter
• A) technical support sales people-support
the front line( key account management
team)
Order getter
• B )merchandisers-provide sales support in
retail and wholesale selling
situations(advice on display, execution of
sales promotion programmes, help in
displaying the point-of-purchase material,
checking the stock level, maintaining
contact with store manager (found in a
more organized retail environment)
Difference-selling/marketing
• Selling • Marketing
• Emphasis on product • Emphasis on consumer needs
• Product manufactured first, then • Needs and wants first ,then delivery of
product
sold
• Profit oriented
• Mgmt .is sales volume oriented • Long term planning in terms of
• Planning is short-term oriented for tomorrow’s product/markets
products and markets • Stresses buyer needs and wants
• Stresses needs of a seller • Views business as a consumer
• Views business as a goods satisfying process
producing process • Emphasis on superior technology,
innovation
• Emphasis on staying with existing
• All departments operate in an
technology and reducing cost integrated manner
• Watertight compartments • Consumer determine price ,price
• Cost determines price determines cost
• Views customer as the last link in • View customers as the very beginning
business of the business
Features of marketing based
companies (Bower and Garda)
• 1)they use market share, rather than
volume, as the primary measure of
marketing
• 2)they analyze and use market
segmentation principles
• 3)research the process of monitoring
customer needs, usage and trends as well
as competitive activity
• 4)evolve a structure or process of co-
coordinating all non-marketing functions
towards the achievement of marketing
goals
• 5)they have set of specific marketing goals
and targets
• 6)follow a corporate style and culture
where marketing plays a key role
• 7)follow a market based business concept
that provides a unique value to the
customers
Modern day sales activity
• Today, a salesperson spends only one-
third of his sales time on the actual selling
function
• Reporting systems are automated through
SAP platforms
• They are conducting functions such as
territory analysis, sales reserch,market
planning and sales promotion
• In a developed market, (country), a sales
person spends more time on sales
presentations where as in a developing
market, he has to do more prospecting to
generate leads and make them qualify as
prospects
The sales management process
• 1)formulation of a strategic sales

management programme
• 2)implementation of a strategic sales
management programme
• 3)evaluation and control of sales force
performance
Strategic sales management-key
decisions
• 1)how to dovetail the personal selling
efforts to the company’s environment and
integrate with other elements of marketing
strategy (firm’s personal selling strategy)
• 2)account management policies (sales
approach)-how to approach, persuade
and service customers?
decisions
• 3)design of sales organization suitable to
the market (organization of the sales
force)
decisions
• 4)decisions related to the level of
performance of each member (forecasts,
quota and budget- setting)
• 5)deployment of the firm’s sales force in
the light of the account management
policy and demand forecast (deciding and
allocation of the territories)
Evaluation and control of a
strategic sales mgmt.program
• 1)sales analysis
• 2)cost analysis
• 3)behavioral analysis
Sales analysis
• The sales figures can be broken by
territory, by product line, by customer
types and results can be compared with
quota and forecasted sales in these areas
Cost analysis
• The costs can be evaluated on the basis
of an individual sales man,territory,product
line and customer type
Cost analysis
• Combined with sales analysis, the sales
manager can find out the profitability on
segment basis and also overall customer
profitability
• Poses a challenge of distributing the
administrative costs and overheads on
sales accounts and among sales people
or product lines
Behavioral analysis
• Thomas Bonama proposed the behavioral
evaluation model for the performance
evaluation of the sales people
Behavioral analysis
• Sometimes the sales people cannot
achieve a certain level of sales due to the
level of competition and nature of
economic condition prevailing in the
country (actual behavior should be
evaluated with the sales volume)
Behavioral analysis
• Tools used are-
• 1)self-ratings
Behavioral analysis
• 2)supervisor’s evaluation
• 3)self appraisals
• 4)field observations
• 5)survey of customer satisfaction used in
behavioral analysis
emerging trends
• 1)Modern sales management is more
oriented towards mapping customer’s
needs and delivering products to satisfy
customer’s needs (service ,quality, low
cost)
emerging trends
• 2)non traditional methods are being used
like tele-marketing, key-accounts
management, part-time sales force, team
selling and web-based e-selling
techniques (Bazee. com)
emerging trends
• videocon used sales teams to make sales
presentations
emerging trends
• 3)industrial sector (software companies)
are using cross functional selling (team
comprises of sales, marketing,
finance,operations,HR
• Priceline.com in the USA uses a web-
based sales model where reverse
auctioning is practiced
Emerging trends
• Transactional selling to relationship selling
• Relationship selling examples-
• HCL appoints a full-time employee
Emerging trends
• GE has opened back-office operation to
attend customer complaints
• Customer loyalty program-Jet airways
Emerging trends
• Technology is being used in integrating
business across enterprise (vendors,
salesperson)
• Tata-Motors has integrated around 56
suppliers to its automated supply chain
management
• Maruti has a sales automation process
(dealers are linked with Gurgaon plant)
Emerging trends
• Archies and Hallmark use data derived
from bar codes scanned at the check-out
counters of retailers to supply information
to their sales people
Emerging trends
• Torrent and Pfizer use technology to
augment the job of their sales people to
manage the demands in their marketplace
Emerging trends
• Many Indian companies provide hardware
support in the form of notebooks to their
sales people for data recording,
transmission, and retrieval for faster
access to customer order information,
price data and bid specifications
Emerging trends
• More and more sales people today work
from their homes through computers,
faxes, copiers, voicemails and cellular
phones
Emerging trends
• Business organizations are going global
and the virtual organization has made
possible for even smaller firms to compete
with large firms (this global multi-cultural
work force needs radical attention to the
sales management practices
Emerging trends
• Various legislations in
ethical/social/environmental challenges
(GATT/WTO) make sales force team to
take note of these issues
• Emerging markets (china, Malaysia)
demand special attention to the structure,
approach and nature of sales force and
selling techniques
Emerging trends
• Modi-Xerox was found bribing for selling
its office equipments and photo-copiers
• More and more companies are now
moving to an ethics based corporate
philosophy
Ch-2-selling skills and strategies
• Research has identified that it costs less
to sell products to existing customers than
to new customers
• One school of thought believes that
selling comes naturally to some people
• Another school of thought is based on the
scientific management principles of skill
and value development (ordinary people
can be groomed)
• Success in selling does not depend on
some inborn quality; rather it is based on
application of certain skills and
development of commitment and
professionalism in selling
Buying styles
• Innovators buy on impulse and consider
non-functional reasons for making a
choice
Buying styles
• Laggards start buying a product when
another new product is on the door-step
• In B2B situation, many govt.organizations
always go for buying the lowest priced
commodity irrespective of quality level;
where as quality conscious organizations
may not give much importance to the price
factor in buying solutions
Blake and Mouton grid
• Concern for sale on horizontal axis
• Concern for the customer on vertical axis
• (1,1)-take it or leave it-
• Assumption is customers will buy the
product themselves if the logistics are
managed
• Suitable for FMCG products-
• Sales force has the least role to play as
they do the business of physical transfer
• Suitable where the demand exceeds
supply (no advance selling techniques
required)
Blake and Mouton Grid
• (9,1)-product oriented-push the product
• Sales people here are more product-
oriented and they always try to push the
product for sale
• They try to sell without caring for the
customer demand patterns
• They believe that it is possible to sell any
product without considering customer’s
buying intention and do the hard sell
• Sales people in (1,9) position treats
himself as a friend of the customer who try
to understand the customer and respond
to his feelings and interests to establish a
personal rapport
• Sales people in (9,9)are the problem
solvers who consult with the customer
(consultative selling)-seen in software and
consultation selling industry
• Sales person in position (5,5)is a
professional who keeps balance between
concern for the customer and concern for
the product. They use various sales
techniques to do prospecting and sales
presentation and pitch for sales by
applying professional techniques (blend of
personality and product orientation
Functions of a sales person
• 1)communication
• 2)listening
• 3)information dissemination (current and
new products)
• 4)negotiations and bargaining
• 5)problem solving (solution selling)
Forms of selling
• 1)maintenance selling
• 2)developmental selling
• 3)contacts
• 4)technical expertise
Maintenance selling
• Involves art of servicing the existing
accounts, securing promotional co-
operation, counting inventory, taking
replenishment orders and delivering the
products
• Client service executives in ad agencies
Maintenance selling
• In IT sector, these sales people are
posted at the client site
• In high-tech product categories also,
service and maintenance people are
found
Developmental selling
• Involves locating and qualifying potential
buyers, securing specifications and
approvals for the purchase, and closing
the sale by getting the actual order
• The sales person must seek for the
potential customers and obtain their order
“The good salesperson-according
to buyers
• Honest
• Loses a sale graciously
• Admits mistakes
• Possesses problem-solving capabilities
• Friendly but professional
“The good salesperson-according
to buyers
• Dependable
• Adaptable
• Knows my business
• Well-prepared
• patient
The Bad
• Does not follow up
• Walks in without appointment
• Begins call by talking sports
• Puts down competitor’s products
• Has poor listening skills
The Bad
• Makes too many phone calls
• Makes lousy presentations
• Fails to ask about needs
• Lacks product knowledge
• Wastes my time
The Ugly
• Has a smart Alec attitude
• Calls me dear or sweetheart(I am a
female)
• Gets personal
• Does not give purchasing people credit for
their intelligence
• Whines
The Ugly
• Lies
• Wines and dines me
• Plays one company against another
• Acts pushy
• Smokes in my office
Selling skills
• 1)communication skills
• 2)listening skills
• 3)conflict management and resolution
skills
• 4)negotiation skills
• 5)problem-solving skills
Communication skills
• Trust between a buyer and seller largely
depends on-
• 1)truth of words communicated by the
sales person
• 2)predictability of action
Communication skills
• 3)competency(ability/knowledge/resource
s
• 4)intent or empathy
• 5)likeability(is an emotional issue;
perception of commonality by both the
parties)
The communication process
• Is defined as a set of activities and
systems integrated for an exchange of
ideas, concepts, information, and
knowledge between a sender and receiver
through alternative channels
• Sales communication can be both
personal and non-personal
• Non-personal communication means the
use of mass media (TV, newspaper, etc)
suitable for disseminating product
information to enhance the level of product
awareness
• The message has to be encoded into a
presentable format that can be transmitted
to the customers
• The active voice should be used to
express ideas ad communicate with the
audience
• The dress code, body movements, voice
intonations and expressions of emotions
like laughter and surprise constitute part of
the communication process
• Noise is the unnecessary factor that
hinders the smooth transmission of
message (physical noise of
telephones/computer or psychological in
the form of fantasies and day-dreams or
the mental blocks of the receiver due to
cultural, religious and other reasons
• Noise may also mean factual distractions
which happens due to preoccupations with
certain factors that deter the reception of
the real message
• Semantic noise occurs when a
salesperson over responds to an
emotional statement
• Self-focus (level of pre-occupation),
defensiveness (threat due to negative
feed-back) experiential superiority (varied
experiences) and egocentrism affect the
reception of the message
• Egocentrism is a tendency to view the self
as the centre of everything
• Selective perception occurs as a result of
a high level of distortion in the process of
decoding the intended message
• Selective attention means people will pay
more attention to information which is of
value to them in the present situation
rather than which has long-term relevance
(interpretation in terms of own set of
personal factors like beliefs, opinions,
attitudes and experiences)
• Communication can occur through
personal visit, telephone, e-mail, the web,
various written forms (for a sales person to
provide product information)
• The understanding of communication for a
sales manager will be verbal and non-
verbal
• Facial expressions, gestures, spatial
relationships, and attitude towards time
and people are non verbal
• Non-verbal is less structured and more
difficult to study; it is also different from
verbal in intent and spontaneity
• Sales people prefer oral communication
channels to written ones
Managing body language
• Personal appearance-
• 1)posture
• 2)gestures
• 3)facial expressions
• 4)eye-contact
• 5)space distancing
posture
• Refers to the way one stands, sits, and
walks
• The mobility of the body and the positions
of hands, legs and other parts reveal an
individual’s personality
posture
• A good sales person stands tall with his
feet together, weight directly over the
instep keeping his chin parallel to the floor
or at a right angle to the backbone
posture
• A drooping shoulder and a protruding
stomach indicate sales person being
discouraged, tired and worn-out
• One must learn where to keep the hands
and how to shift the weight of the body on
legs while speaking
gestures
• Playing with a ring, twisting a key chain or
clasping one’s hand tightly robs
effectiveness of a presentation
• Sometimes gestures do not accompany
oral delivery and are used to communicate
short messages like-yes, no, come here,
go there, be silent etc.
gestures
• Gestures along with oral communication
enhance the impact and value of what has
been said
• Through a process of self-evaluation in
the use of gestures, sales people can
achieve greater success
Facial expressions
• A smile as a symbol of friendliness ,a
frown as a symbol of discontent, raising of
eyebrows as an expression of disbelief,
tightening of jaw muscles as a symbol of
antagonism
• Brightness in the eyes may keep the
interest sustained and may evoke
enthusiastic response
Facial expressions
• Exuding zeal or a smile while explaining
the product features makes the job of
sales person easy
• Biting the lips, raising the eye-brows at
regular intervals, blinking the eyes too
often can certainly mar the presentation
Eye-contact
• Eye is believed to be an extension of the
brain and window to the soul
• Continuous eye-contact is must
Eye-contact
• Is a means of obtaining feedback, and
enabling the sales person to alter, adjust
and re-frame his sales message
• In a majority of the instances, this process
is automatic, and the interaction through
eyes between sales person and the
customer takes place automatically
Space distancing
• For a formal presentation, a zone of 4-12
feet is maintained (social distance)
• Usually the senior most salesperson
stands and other members remain seated
Space distancing
• Occasionally there should be spells of
silence on the part of sales person to
garner new points and ideas regarding
customer reactions
Space distancing
• When sales people communicate without
proper groundwork, they lack adequate
knowledge about the organization, the
product, competitor products, and the
market situation communication break-
down is possibility
Space distancing
• When the customer is more
knowledgeable than the sales person,
break-down is possible
• Mixing up business with friendship in sales
often invites conflict of interest and bring
break-down
Space distancing
• Confusing processes with outcomes and
the related stress may bring a halt to sales
communication
• Use of inappropriate forms of
communication and wrong channels of
customer contact also adversely affects
the flow of sales communication
Listening skills
• Generally, sales people spend more time
in receiving communication and
information than in transmitting it
• A good listener welcomes new ideas, and
stays informed, up-to-date
Listening skills
• Research suggests that people are only
25%efficient in their ability to listen
Listening skills
• An average person remembers only about
half of what is being told to him after 10
minutes, and forgets half of that within48
hours
• Usually people would prefer to talk about
the products and services to listening
about them in a real selling situation
Types of listening
• 1)content listening
• 2)critical listening
• 3)empathetic listening
Content listening
• When someone listens to a sales
representative or a medical
representative, he is engaged in content
listening
• The objective is to understand and retain
the speaker’s message
Content listening
• Information flows from speaker to the
receiver
• It is just the reception of the message by
the receiver who remains mostly inactive
Critical listening
• The objective here is to understand and
evaluate the meaning of the speaker’s
message at several levels-the logical level
of the argument, strength of the evidence,
and validity of the conclusions; the
implications of the message for the
customer; the speaker’s intentions and
motives; and the omission of any relevant
data
Critical listening
• Involves interaction and evaluation of the
speaker’s orientation
Empathetic listening
• Is to understand the speaker’s feelings,
needs, and demands so that it can be
appreciated by the listener irrespective of
the fact whether he likes it or not
• By listening empathetically, the listener
allows the speaker to vent his emotions
and thus avoids a dispassionate approach
to the subject
• The sales person should avoid the
temptation to give advice, and should try
to judge the individual customer’s feelings
The process of listening
• 1)attention
• 2)interpretation
• 3)remembrance
• 4)evaluations
• 5)response action
Attention
• The customer physically responds to the
message and takes note of it.
• This reception can be blocked by noise,
inattention, psychological barriers and
impaired hearing
Interpretation stage
• Calls for assigning meaning to sounds
according to the customer’s own values,
beliefs, expectations, roles, needs and
wants and ideas about himself, products,
and the world
• The sales person needs to determine
what customer really means since their
frame of reference may be different
Stage of remembrance
• The messages are stored for future use by
the seller as well as the customer
• As the customer listens, he takes note or
draws a mental line about the product and
service offered for sale
Evaluation
• Customer applies his thinking skills to
weigh the buyer’s remarks and queries
• The sales person should separate facts
from opinions, and evaluate the quality of
the judgments
Response action stage
• One responds after evaluating the
receiver’s message
• If the sales person is communicating in a
small group or a one-to-one conversation,
the initial response is generally a verbal
feedback
Response action stage
• In large groups, it can be in the form of an
applause, laughter, or silence.
• Later on the sales person can work on
what he has heard
Levels of listening
• 1)feed-back
• 2)paraphrasing
• 3)clarifications
• 4)empathy
• 5)active listening
feedback
• Is fundamentally the reaction of the
customer to a sales call
• After listening to the customer, the sales
person says something back to him, giving
away his attitude towards or evaluation of
what the customer said
paraphrasing
• Salesperson tries to paraphrase the
question by mirroring the questioner’s
point thus creating a more receptive
listener in his customer
Clarification of the issues
• Involves working a little harder with the
customer’s words to identify his real
concerns
• The idea is to establish a level of
agreement with the questioner
Clarification of the issues
• The sales person by clarifying the
problems shows the customer that he is
trying to sort out the vital issues in their
conversation
• Is the level in which the sales person tries
to show that he understands the feelings
of the questioner (customer)
• The empathetic listener finds similar
emotions in his or her own experience and
shares them with the questioner
(customer)
Active listening
• Is the last stage in which the sales person
identifies the emotions underlying the
customer’s words
• This is potentially the most powerful
listening response, because it is usually
the emotion behind the phrases that
prompted the customer’s objections in the
first place
Barriers to listening
• Includes physical and mental barriers
• Prejudgment is the most common barrier
to listening
• Some people listen defensively assuming
every communication as a personal attack
on them or their social position
Barriers to listening
• Many listeners are also guilty of self-
centeredness
• Selective listening (out-listening)
• The reason of wandering mind is that, we
tend to think faster than we speak (sales
people can speak100-150 words per
minute; mind can analyze 800-900 words
per minute)
How sales people should improve
listening skills?
• 1)depersonalize the listening
• 2)avoid distractions by closing the doors,
and moving closer to the customer
listening skills?
• 3)listen to the customer’s idea of the
product and price, and try to distinguish
between facts and arguments by applying
their own market knowledge
• 4)they should try to stay ahead of the
customer by anticipating what he is going
to say next and by keeping a link with
what has already been said by him
listening skills?
• 5)be alert to the un-spoken messages
expressed through the customer’s body
language
• 6)review the messages delivered in
between presentations and ask
clarifications where ever possible
listening skills?
• 7)do not judge the customer’s point of
view
• 8)should not interrupt the customer
because the customer may think this to be
and injury to his social image
• 9)it is always better to evaluate the
content of the customer’s feedback than
the customer himself
Effective listening tips
• Find areas of interest
• Judge content and not delivery
• Hold your fire
• Listen for ideas
Effective listening tips
• Take selective notes when desired
• Block out competing thoughts
• Paraphrase the speaker’s idea
• Stay open-minded
• Capitalize on the fact that thought moves
faster than speech
Conflict management skills
• Conflict is a form of relating or interacting
where the sales manager finds himself
under some sort of perceived threat to his
individual or collective goals
• These goals are impersonal in nature
Conflict management skills
• The perceived threats may be either real
or imaginary
• Conflict is not only a positive force in a
group but it is absolutely necessary for a
group to perform effectively
Conflicts-classification
• 1)Functional conflicts-supports the goal of
the group and improves its performance
• 2)Dysfunctional conflicts-hinders group
performance
Conflicts-classification
• 3)Task conflicts-are the disputes over the
content and goals of the work
• 4)Relationship conflicts-is a tussle based
on inter-personal relationships
• 5)Process conflicts-is fight over how work
gets done
Models of conflict
• The Dollard and Miller model explains 3
kinds of conflicts-
• 1)approach-approach
• 2)approach-avoidance
• 3)avoidance-avoidance
Approach-approach conflict
• Arises when both options for resolving a
situation are equally attractive but mutually
exclusive
• Only one option can be executed despite
both having potential for execution
Approach-avoidance conflict
• Arises where a person wants an outcome
but must not have It for equally compelling
reasons
• Wants to have something but avoid it at
the same time
Avoidance-avoidance conflict
• Arises when the one dislikes all the
options equally but has to decide on one
out of them.
• Salesperson having several products to
sell often faces such conflict when the
customer switches between the product
alternative either for making a choice or
for avoiding it
Rummel’s model of conflict
• Differentiates between conflict structures,
conflict situations, and manifest conflicts
• In this model, conflict is seen as either
latent, with an underlying potential for
conflict, or an actual conflict
Rummel’s model of conflict
• Conflict structure means interests that
have a tendency to oppose each other
• Deutsch has divided conflict based on
underlying motives as 1)underlying and
overt 2)manifest conflict; the former is
hidden, denied or implicit whereas the
latter is expressed and open in nature
Components of conflict
• Frustration and aggression are the major
reasons of conflict
• Power, status and level of hierarchy are
the major sources of conflict in business
organizations
• 1)interests
• 2)emotions
• 3)values
interests
• Interests motivate people and are termed
as silence movers
• They are subjective as well as objective in
nature
interests
• They not only depend on a particular
individual’s desires and wishes, but also
depend on their roles and statuses in an
organization
• Interest-based conflicts also arise due to
differences in practices, rules and policies,
roles, needs and levels of resource use
emotions
• The emotional component of conflict
originates with the ever-present feeling
that accompanies human interactions
• It includes feelings such as anger,
resentment, fear, rejection, anxiety and
loss
value
• This component is often the most difficult
part to resolve because values are
intangible
• Values represent deeply rooted ideas and
feelings about right and wrong, which
guide and govern our behavior
The conflict resolution process
• The problem of conflict starts with the
perception of conflict
The conflict resolution process
• One or both the parties experience a
sense of un-ease often characterized by a
sense of feeling of frustration, anger and
anxiety
• It can also be a sense of dis-orientation
and confusion as they may feel a
discrepancy in the levels of interests,
emotions and value orientation
Methods of conflict resolution
• 1)competing-each party pursues it sown
interests, regardless of the impact on the
other party
• 2)collaborating-both parties in a conflict try
to satisfy fully the concerns of both parties
Methods of conflict resolution
• 3)avoiding-one party withdraws or
suppresses the conflict
• 4)accomdating-one party agrees to place
the opponent’s interests above its own
• 5)compromising-both the parties agree to
give up something
When avoidance?
• When the conflict is trivial, emotions are
running high, and time is needed to cool
down, or when a potential disruption from
a more assertive action outweighs the
benefits of a resolution
When competing?
• When we need a quick resolution on
important issues where un-popular actions
must be taken, or when commitment by
others to our solution is not critical
Nader and Todd(in The Disputing
Process Law in ten societies
• 8 procedures to handle conflict-
• 1)lumping
• 2)Avoidance
• 3)Coercion
Nader and Todd(in The Disputing
Process Law in ten societies
• 4)Mediation
• 5)Conciliation
• 6)Arbitration
• 7)Adjudication
• 8)Negotiation
Lumping/avoidance/coercion
• Lumping refers to the failure of one party
in a conflict to pursue their complaint
• The issue is simply ignored and
relationship with the offending party
continues
• In avoidance or exit, the relationship is
called off (the decision is usually based on
the relative powerlessness of one party, or
the social, economical and emotional
costs involved in their relation ship
• Coercion is imposition of the outcome by
one party on the other (there is a level of
threat and force involved-widespread in
business)
Mediation,arbitration,adjudication
• Mediation involves a third party who
intervenes in a dispute to help the parties
to reach at an agreement (mediator may
be appointed by the disputing parties or by
another party with adequate authority like
the government
• In arbitration, both parties consent to the
intervention of a third party whose
judgment they must agree to accept
beforehand
• In adjudication, the third party has the
authority to intervene to make a decision,
and to enforce the decision on both the
parties irrespective of the parties’ wish
(judiciary)
• Negotiation refers to the mutual
settlement of conflict by both the parties
without intervention of any third party.
Both the parties reach at a conclusion not
because it is required by law, but because
they wish to settle the dispute and work
together
Negotiation skills
• The core skills required for successful
negotiation includes the
• 1)ability to define and prioritize a range of
objectives
• 2)the ability to explore a wide range of
options
• 3)the ability to prepare well
• 4)interactive competence
Negotiation skills
• Day-to-day managerial negotiations
include arrangement of pay, terms of
payment, working conditions, defining job
roles and areas of responsibilities in sales
organizations
Negotiation skills
• Commercial negotiations include winning
a supply contract, scheduling the delivery
of goods and service, agreement on
quality and prices etc
Negotiation skills
• Wal-mart globally follows the strategy of
negotiated exchange with its suppliers
which are for a long-term period
Negotiation skills
• TATA and Maruti Udyog also follow the
same strategy in dealing with auto
ancillary and equipment manufacturer
Negotiation skills
• Traditionally, price has been the only
element, modern negotiations involve-time
of contract completion, quality levels and
norms for supply of products, volume of
goods, responsibility of financing, level
and quantity of risk involved, risk
ownership, promotion and title, ownership
of intellectual property rights, level of
safety and other norms of maintenance
Bargaining
• Usually involves the presentation of
demands or proposals by one party and
evaluation of those by the other, followed
by concessions and counter-proposals
• Bargaining theories have gained attention
in disciplines like economics, applied
mathematics, industrial relations, social
psychology and international relations
Bargaining
• According to von Neumann and
Morgenstern ,each actor in bargaining has
an objective (either to minimize loss or to
gain profits) and the outcome depends on
the opponent’s decisions
• Rubin and brown have found 4 variables
in their study of bargaining behavior-
Bargaining
• 1)structural context of bargaining
• 2)behavioral pre-disposition of bargaining
Bargaining
• 3)interdependence of bargainers
• 4)use of social influence strategies on
bargaining effectiveness
• Bargaining effectiveness Is measured in
terms of the number of co-operative and
competitive choices made throughout the
process and/the magnitude of outcomes
obtained by the bargainer
Situation and timing for
negotiations
• According to Lee and Dobler, negotiation
is appropriate for purchasing agents
when-
• 1)many variable factors bear not only on
price but also on quality and service
Situation and timing for
negotiations
• 2)business risk involved cannot be
accurately predicted
• 3)long period of time is required to
produce the items purchased
• 4)production is interrupted frequently
because of numerous change orders
The theory and strategy of
principled negotiations
• Fisher and Ury have proposed a
bargaining strategy popularly known as
‘principled negotiations’
• It involves to decide on issues on the
basis of their merits rather than through
haggling.
The theory and strategy of
principled negotiations
• It suggests that you look for mutual gains
where ever possible, and that where your
interests conflict, you should insist that the
results be based on some fair standards
independent of the will of the either side
• The method of principled negotiations is
hard on merits and soft on people
Roger Fisher and William Ury-
(Harvard Negotiations Project)
• 4 principles-
• 1)separate the people from the problem
• 2)focus on interests, not on positions
• 3)invent options for mutual gains
• 4)insist on objective criteria
Substantive issues
• Terms
• Conditions
• Prices
• Dates
• Numbers
• liabilities
Relationship issues
• Balance of emotion and reason
• Ease of communication
• Degree of trust and reliability
• Attitude of acceptance and rejection
• Emphasis on persuasion or force
• Degree of mutual understanding
Fisher and Ury’ recommends-
• Fighting hard on substantive issues
increases the pressure for an effective
solution, giving support to the human
beings on the other side tends to improve
your relation ship and to increase the
likelihood of reaching agreement. It is the
combination of support and attack which
works, either alone is likely to be
insufficient
Sources of difference between
parties
• 1)risk-large institutions are better prepared
to handle risk than small institutions; risk
averse buyers need to be handled
strategically
• 2)timing-what is impossible this month
may be possible next month; what is un-
affordable in this budget, can be managed
next year
Sources of difference between
parties
• 3)perceptions-for people whom other’s
opinion matters, public victory may be
made; for others, will satisfy their separate
more valued interests
• 4)marginal value-differences in the
marginal value of the negotiated goods,
services and terms create opportunities to
draft the final agreement
BATNA
• Is best alternative to a negotiated
agreement
• Is a standard against which the proposed
agreement should be measured
BATNA
• Is a standard of comparison that can
protect a sales person from accepting
unfavorable terms and rejecting favorable
terms
BATNA
• The more attractive BATNA is, higher is
the possibility of a salesperson making
successful negotiations
BATNA
• If the other party’s BATNA seems good
and they see no need to negotiate, then
the sales person should consider what he
or she can do to reduce the BATNA effect
in their eye
• The firmer you are at the beginning, the
more you will loose credibility by
discounting at a later point of time
Tactical considerations and
strategy
• 1)let the other party have it in your own
way
• 2)visit the balcony-for a detached view
• 3)step to their side-to disarm them
Tactical considerations and
strategy
• 4)reframing rather than rejection
• 5)let them take ownership-involving them
in drafting the agreement
• 6)educating them to senses-by using
BATNA or by warning which is respectful
and objective
Negotiation tactics
• 1)acting crazy
• 2)auctioning
• 3)the good-guy bad-guy routine-two
buyers taking stand
• 4)big pot
Negotiation tactics
• 5)budget bogey-budgets are flexible and
can be increased
• 6)get a prestigious ally-a person or a
project
• 7)escalation-
• 8)the well is dry-
• 9)limited authority-
Negotiation tactics
• 10)whipsaw/auction-let several
competitors know that he is negotiating
with all of them at the same time
• 11)divide and conquer-sell to one person
of the team who will sell it to other
members
Negotiation tactics
• 12)reunion-take a stand somewhat away
from the negotiator; then allow the other
person to convince him of the rightfulness
of his stand and then accepts his stand
• 13)deadline-
• 14)sticks and stones-verbal and other
humiliation
Negotiation tactics
• 15)get lost/stall for time-long or short
break
• 16)take it or leave it-
Negotiation tactics
• 17)wet noodle-sales manager sits at the
negotiation table like wet noodle and
keeps a poker face
• 18)veiled threat-last year we dropped a
supplier who was charging 4% more
• 19)let’s split the difference-negotiator who
suggests this first has least to loose
Negotiation tactics
• 20)play the devil’s advocate-”before I say
yes or no,let’s look at all the bad things
that may possibly happen if we did what
you want”
• 21)trial balloon-sales manager releases
his decision through a so-called reliable
source to test the opponent’s reaction
Negotiation tactics
• 22)surprises-drastic,dramatic and sudden
shift in his tactics in general (unpredictable
behavior)
• 23)what’s the rock bottom price-
• 24)adversarial negotiating tactics
Negotiation tactics
• 1)extreme initial position
• 2)emotional tactics
• 3)stingy in their concessions
• 4)ignore deadlines
Pre-conditions for adversarial
negotiating tactics
• 1)dis-continuation of relationship
• 2)no remorse afterwards
• 3)un-awareness by the victim
Difference-typical buying-selling
and negotiation
• In typical buying-selling, the prices,
promotional terms and distribution
schedule are already identified
• In negotiations, these terms are decided
upon through bargaining and negotiations
between the buyer and the seller
Problem-solving skills
• Identify the true problem and not the effect
of the problem
• The true problem is so complex that it is
linked to multiple sources
• Inculcate 7 habits of-
• 1)being pro-active
• 2)beginning with an end in mind
Problem-solving skills
• 3)putting first things first
• 4)thinking win-win
• 5)first understand and then be under-
stood
• 6)synergising
• 7)re-newal-physical,mental,spiritual,social
and emotional
Paradigm pioneers
• A paradigm is a model or pattern based on
a set of rules that defines boundaries and
specifies how to be successful at and
within these boundaries
• Paradigm shifts can occur in an
evolutionary or revolutionary process
Problem solving process
• 1)define the problem
• 2)generate alternative solutions
• 3)decide the solution
• 4)implement the solution
• 5)evaluate the solution
McMaster-5 point strategy
• 1)Define
• 2)Explore
• 3)Plan
• 4)Act
• 5)Reflect
Define-step-1
• 1)identify the unknown or stated objective
• 2)isolate the system and identify the
knowns and unknowns, such as inputs,
laws, assumptions, criteria and
constraints, stated in the problem
• 3)list the inferred constraints and the
inferred criteria
• 4)identify the stated criteria
Step-2 explore
• 1)identify tentative pertinent relationships
among inputs ,outputs and unknowns
• 2)recall past related problems or
experiences, pertinent theories and
fundamentals
Step-2 explore
• 3)hypothesize,visualize,idealize and
generalize
• 4)discover the real problem and the real
constraints
• 5)consider both short-term and long term
implications
Step-2 explore
• 6)identify meaningful criteria
• 7)choose a basis or a set of conditions for
reference
• 8)collect missing information, resources
and data
Step-2 explore
• 9)guess the answer or the result
• 10)simplify the problem to obtain an order
of magnitude result
• 11) first solve related problem or solve
part of the problem
Step-3-plan
• 1)identify the problem type and select the
heuristics
• 2)generate alternative ways to achieve the
objective
• 3)map out the solution procedure to be
used
• 4)assemble the resources needed
Step-4-act
• 1)follow the procedure developed in the
plan phase, use the resources available
• 2)evaluate and compare the alternatives
• 3)eliminate alternatives that do not meet
all the objectives
• 4)select the best alternative from the
remaining
Step-5-reflect
• 1)check that the solution is blunder free
• 2)check the reasonableness of results
• 3)check the procedure and logic of your
arguments
• 4)communicate results
Techniques of problem definition
• 1)find out origin of the problem
• 2)explore the problem
• 3)present desired state analysis
• 4)Dunker’s diagram
• 5)statement and re-statement-by Parnes
• 6)evaluate problem statement
Mental blocks
• 1)perceptual blocks
• 2)emotional blocks
• 3)cultural blocks
• 4)environmental blocks
• 5)intelletual blocks
• 6)expressive blocks
Perceptual blocks
• May happen due to the inability of the
problem-solver to clearly perceive the
information or the problem
• This may be due to the stereotyping
attitude which limits the problem
unnecessarily, or due to saturation and
information overload
Emotional blocks
• Due to the fear of taking risk by the
problem-solver, the lack of the appetite for
the chaos that the problem may create,
inclination to judge than generate ideas,
lack of potential challenges in the work
environment and inability to incubate the
problem
Cultural/environmental blocks
• Are acquired by exposure to a given set
of cultural patterns
• Environmental blocks are imposed by our
immediate social and physical
environment
Cultural/environmental blocks
• Distractions like telephone calls and
intrusions, which inhibit deep and
prolonged concentration, create blocks in
creative problem solving
• Work environment lacking in emotional,
physical and social motivation also has the
potential to create environmental blocks
Intellectual blocks
• Arise out of inflexible and inadequate use
of problem-solving techniques
• Lack of intellectual capability sometimes
inhibits the problem-solving skills
Expressive blocks
• Are the inabilities to communicate your
ideas to others in either verbal or written
form
Goman’s block-busters
• Negative attitude • Attitude adjustment
• Fear of failure • Risk-taking
• Following the rules • Breaking the rules
• Over-reliance on logic • Internal creative
• You are not creative climate
• Creative beliefs
Ch-3-the selling process
• In mature industries, salespeople have to
face more objections in the area of pricing
• In an emerging sector (IT) the majority of
customer complaints will be about the
adaptability of the technology to the
relevant work environment
• In retail selling, the demonstration efforts
are less significant where as in business-
to-business selling seller has to
demonstrate the product
• In high-tech consumer products,
demonstration and consumer education
plays a greater role
• In case of solution and service selling,
customers demand a relationship for a
longer period of time
• In impulse product category ,the seller
expects that customers will extend loyalty
as an indicator of relation ship and
satisfaction
• In cash based buying ,a sale closure leads
to payment of the worth of the product
instantly and transfer of ownership as a
post-facto experience
• In installment buying, the real sale closure
happens long after the transfer of
ownership and consumption of the product
The selling process-stages
• pre-sales preparation
• Prospecting
• Pre-approach before the interview
• Approach to the customers
The selling process-stages
• Sales presentation
• Handling customer objections
• Closing the sale
• Follow-up action
Sales person’s knowledge universe
• 1)product knowledge-
• 2)company knowledge
• 3)competitor’s knowledge
Product knowledge
• Features
• Benefits
• Styles
• Origin
• price
Company knowledge
• History
• Finance
• Management
• Size
• Policies and procedure
Competitor’s knowledge
• Industry
• Structure
• Market share
• Market behavior
• Other policies
Product information-sales person’s
check-list
• What led to the development and launch
of the product by the company?
• What is the product made of ?
• How is the product made? what processes
are followed?
• What are the unique features and styles?
Product information-sales person’s
check-list
• What is the use? how to use (standard
and other ways)
• What is the price? cheaper than
competitor? expensive? justify?
• Is after sales-service readily available?
• Recognized by outside government
agency ?quality certifications?
• Is there breadth and depth in product line?
Step-2-prospecting
• Is the process of identifying potential
buyers who have a need for the products
and services offered by the company ,the
ability to pay for it, and the adequate
authority to buy it
Step-2-prospecting
• Suspects have no potential demand for
the goods at the point of probe in the
selling process (a proper follow-up many a
time results in converting the suspects into
prospects)
Step-2-prospecting
• 3 sets of customers are identified at the
stage of prospecting-1)lead customers
2)prospect customers 3)qualified
customers
Lead customers
• Have a desire and need to purchase the
product but no or inadequate purchasing
power
Lead customers
• Sales persons needs screening skills to
identify their buying power, financial
transaction capacity, volume of transaction
possible at their end, special need
requirement for delivery and choice,
location parameters for delivery, likelihood
of generating additional sales in future
either for the same product in offer or for
any other product in the portfolio of the
firm
Prospect customers
• Have a current demand current for the
product and can get substantial benefit
through the acquisition of the product
• A sales person’s job in this case is to take
the prospects higher in the decision
process
Prospect customers
• Consumer move from a stage of being
aware about to being interested in them,
and then evaluate the alternatives before
making a purchase decision
Qualified prospects
• Have the need for the product or services
in offer and have the ability to buy them,
but need further persuasion about the
product delivering the desired level of
satisfaction
• The prospects in an advance stage of
decision making become qualified
prospects for the sales person
Process of prospecting
• 1)identify and define the prospects
• 2)search for sources of potential accounts
• 3)qualify the prospects from the suspects
Sources of prospects
• 1)primary-family,friends and relatives,
suppliers of goods and services,
employees, business associates,
shareholders and customers of the firm
Sources of prospects
• 2)secondary-surveys,replies to queries in
the past, enquiries generated through
advertising and marketing
communications, list of trade associations,
magazines and journals, social contacts,
directorate of intelligence offices at the
centre and state level
indicators
• 1)need indicators
• 2)ability indicators
• 3)authority to pay indicators
• 4)accessibility indicators
• 5)sales person fit indicators
Need indicators
• Are demographic and psychographic
indicators like age, gender, life-style, life-
style stages, means of entertainment,
dependence on family income and self
income and materialistic possessions
Ability indicators
• Profession, age, sources of income,
personal habits, social status, credit card
buying habits, bank account holding
patterns and regularity of the income of
the customer
Authority to pay indicators
• Business and official responsibilities
• Personal influence on his own life and
business
• Organizational roles and responsibilities
Accessibility indicators
• Physical and psychological distance of the
buyer
• His position in business and family
Sales person fit indicators
• Matching of the lifestyle and personality of
the sales person with that of the buyer
• Education, age, cast ,religion and political
thinking largely influence the purchase
process in a country like India
Qualified prospect testing-MAD
principle
• 1)does the prospect have money to buy?
• 2)does the prospect have the authority to
buy?
• 3)does the prospect have the desire to
buy?
Methods of prospecting
• 1)cold canvassing
• 2)orphaned
• 3)prospect pool
• 4)centre of influence
• 5)direct mail
• 6)observation
Methods of prospecting
• 7)end-less customer referral
• 8)customer sales lead clubs
• 9)non-competing sales force
• 10)trade shows/demonstration
• 11)telemarketing
• 12)networking
Cold canvassing
• involves going door-to-door in an identified area
and try to find out the prospects
• Is effective in consumer products and services
that are general in use
• Useful for B2B selling for standard items like
copiers, calculators and faxes
• Insurance agents and ready-made garment
resellers do cold calling (allocated territory)
•
Endless chain customer referral
• Each customer is requested to give a list
of names who might be interested in the
product
• Useful for insurance and securities
• Birla sun-life insurance advisor ask for 5
names of interested persons
Endless chain customer referral
• Eureka Forbes also uses this method
• Getting referral is sometimes difficult
• May be in the form of a letter, business
card or a phone call
Prospect pool
• Is a group of names gathered from various
sources like a telephone directory or
mailing list
• Sources to create prospect pool-
• 1)leads-people and organizations sales
people know nothing or very little about
Prospect pool
• 2)referrals-people or organizations sales
people know very little about other than
what they learned from the referrals
Prospect pool
• 3)orphans-customers whose sales person
has left the company (company records
are the only source of information about
these past customers)
• 4)customers-the most important prospects
for future sales
Centers of influence
• Are the people who because of their
position, responsibilities, accomplishments
or personality exercise more than ordinary
influence
• Found in spheres of-
• 1)social
• 2)business
Centers of influence
• 3)religious
• 4)political
• They are found in trade associations,
trade shows ,seminars and any business
related social event
• The principle of power lead works in this
case
Non competing sales force
• Have the information about new business
openings, names of authorities who make
decisions, changes in the purchase
department personnel
• Can strike agreements to exchange
information
Non competing sales force
• Copier sales person can provide
information about the prospects for fax
machines or computers
• By listening to and observing the sales
people in the reception area of a prospect,
a sales person can collect a large amount
of information on the prospect’s likelihood
for qualifying and criteria of buying
Observation
• EPABX sellers look for construction sites
and newly coming up office space to
prepare list of prospects
Observation
• Many sales people use their sales
associates called as “bird dogs” to make
arrangements for their presentation to the
prospect
• Service station executives also work as
“bird-dogs’ for the automobile sellers
Friends and acquaintances
• Insurance agents and mutual fund sellers
use this to build a prospect list
• For industrial sellers, FICCI,CII, and trade
associations like Indian Automobile
Manufacturers constitute a source of
prospects
• The sales people can ask the question-
whom do I know? in the sphere of school,
previous job, hobbies and sports, club
members, participants in public service
organizations, neighborhood, professional
organizations etc. to prepare list of
prospects
Lists and directories
• List of customers already entertained in
the past
• Newspapers having information about
new births, weddings and engagements,
society news, new arrivals in town, new
business ventures coming up in the city,
real estate information, community events
and participants
Lists and directories
• Trade magazines, commercial
publications, computer generated data-
bases
•
Direct mail
• Prospects are mailed a business letter
inviting reply if they are interested in
certain products and services
• Rich source although the response rate is
low
• Repetition and follow-up procedure is
used to improve the response rate
Tele-marketing
• In inbound telemarketing, the prospect
calls the company
• In out-bound telemarketing, the company
representatives call the customers
• Companies use mass media like
advertising, direct mail and other
promotional activities to stimulate calls
from prospects and customers
Tele-marketing
• By including a toll-free number, the
company motivates customers to respond
to their mass media campaign and call for
added information
• Data obtained through inbound
telemarketing are used by sales people to
make outbound calls so that prospecting
can be done for further sales
Trade-shows and demonstrations
• Large number of people who visit the
tradeshow register their names for
demonstration and subsequently sales
people can call on those interested people
to make a sale
Pre-approach information-checklist
• 1)What is the size of the business?
• 2)what product lines do they sell and what
markets do they serve?
• 3)who are the responsible executives and
key personnel in the company?
• 4)what are the buying routines and
procedures followed in the client
organization?
Pre-approach information-checklist
• 5)who is the competitor?
• 6)from whom the customers are buying
now?
• 7)what are the levels of volume possible?
• 8)where,when,why and by whom will the
products be used?
• 9)what are the prospects of developing
future sales?
Steps-pre-sales approach
(planning)
• 1)determination of call objectives-specific,
measurable and beneficial to customer
• 2)development of customer profile-
demographics or psychographics or
behavioral characteristics
Steps-pre-sales approach
(planning)
• 3)determination of customer benefits-FAB
(features, advantages,benefits)
• 4)determination of sales presentation-
analysis of FAB, marketing plan and
business proposition
Benefits of pre-approach planning
• 1)sales people build a high level of self-
confidence before meeting the customer
• 2)they are able to develop an atmosphere
of good-will and trust with the customers
Benefits of pre-approach planning
• 3)they help in creating image of
professionalism in the eyes of the
customer
• 4)this increases the scope of achieving
higher sales
step-4-approach to the customer
• 1) consumer benefit approach
• 2) referral approach-when the prospect
values the status and opinion of the
referee
• 3)introductory approach-company, self
and product (most common)
9-Commonly occurring mistakes
• 1)Disregarding the concept of first
impression
• 2)Forgetting the goal of obtaining the
order
• 3)Selling the company’s image than the
products
• 4)Lack of response to needs and
objections of customers
Commonly occurring mistakes
• 5)Overcomplicating with technical and
managerial jargons
• 6)Relying on product literature for product
information
• 7)Talking and arguing instead of listening
• 8)Brushing of questions and objections
• 9)Failing to ask for the order
What the customer wanted to ask
you but did not spell out to you-
• Why should I listen to you?
• What is important in your presentation?
• What will I get out of it?
What the customer wanted to ask
you but did not spell out to you-
• Who says that your product is the best in
the business?
• So what if you have a great product,
everybody else also has?
• Who else has done the buying of your
product ?do I know anyone of them?
Sales presentation approaches
• 1)attracting attention
• 2)creating interest
• 3)arousing desire and conviction building
Attracting customer attention
• a) mechanical factors
• b) interest factors
• Mechanical factors
• 1)showroom conditions
• 2)illuminatinon and display of products in
the show-room,
• 3)contrast of colors, decoration and
exclusiveness of product display-
Interest factors
• Customer’s choices and preferences
• Personal problems and expectations from
the buying
Creating interest
• Charles fernard has identified 3 features-
• 1)appreciation-people appreciate the
things of interest
• 2)serviceabiilty-people show interest in
things that help to solve their problems
• 3)identification-people want to keep a
separate identity of the things they like
most
Creating interest approaches
• 1)benefit approach
• 2)factual approach
• 3)curiosity approach
• 4)dramatic approach-banging the product
on the floor, throwing from balcony,
burning in fire etc.
• 5)’I-am-here-approach-personal visit
• 6)opinion approach-product is handed
over and facial expressions are observed
• 7)praise and complement approach
• 8)article feature approach-product is
handed over and asked about whether he
sees a particular feature in competitor’s
product
• 9)premium approach-premium or gifts like
calendars, desk-tops, pens, bags to create
interest
• 10)visualization approach-uses charts,
sales slogans, models and copy of
advertisement
• 11)information approach-information is
given on special discount and reduction
plans ,schemes etc.
• 12)service approach-after sales service
• 13)problem solving approach-hinting
about situation when customer had faced
problem in the past
Arousing desire and building
conviction
• Interest is converted into desire when-
• the customer agrees that he is in need of
a product
• His emotional needs will be satisfied by
buying motive
• The advantages of using the product have
influenced his mind
Conviction building- ways
• Allowing inspection and demonstration of
the product
• Giving references of people known to the
consumer who use the product
• Offering warranty
Conviction building- ways
• Giving facts and arguments
• By stating the goodwill and brand image of
the seller
• By offering consumers a right to claim
compensation in case of damages
• Invoking the image or prestige appeal
Methods of sales presentation
• 1)oral presentation
• 2)written proposals
Oral/written presentation
• Less expensive business-to-business
selling involves only oral presentation
• Oral presentations motivate people for
verbal interchange between seller and
customer
• Written proposals are used for selling high
value industrial products and selling to the
government
Sales presentations-types
• 1)Canned presentation
• 2)Organized presentation
• 3)tailored presentation
Canned presentations
• Are prepared by the company
• Little scope for modification for each
prospect
• When prepared by research and with the
help of senior experienced people of the
company, can address all the issues
• Companies prepare printed as well as
audiovisual material to support the sales
presentation
• This type helps in building the confidence
of the new sales people
• Difficult to use in multiproduct situation
• Common in direct selling situations
• Not suitable where the sales person has
to make repeated calls to the same
customer
• Discourages the prospect’s participation
and is non-enthusiastic in nature
Organized presentation
• Sales people have enough scope to word
the presentation, but on the lines of the
company policy and systems
• Brings more flexibility and encourages
participation of the prospective customers
with the overall structure as per company
guidelines
Organized presentation
• Can be developed on the basis of
information collected from field research
which is not available with individual sales
person
• Useful for both new and experienced
sales people
• Sales person tends to give stereo-typed
responses to customer calls
Tailored presentation
• Is specifically developed for the specific
customer
• Most common in business-to-business
selling
• Useful in case of selling to resellers and
whole-sellers
Tailored presentation
• Puts emphasis on buyer category and
buyer demand
• More time consuming and suitable for
experienced sales people
• Care should be taken not to exaggerate
company claims on the quality of the
products and services
Qualities a sales proposal should
convey
• 1)tangibility-should enhance and support
the sales person’s message and invite
readership
• 2)assurances-should build trust and
confidence in ability to deliver, implement
resulting in substantial benefits
Qualities a sales proposal should
convey
• 3)responsiveness-should invite purchase
proposals from the customers in a timely
manner
• 4)reliability-should identify
• 5)empathy-proposal should confirm the
sales person’s understanding of the
customer’s business and needs
Handling customer objections-
(Smith)
• 1)Start with your highest expectations
• 2)Avoiding conceding first
• 3)Be sure the customer understands the
value of a concession
• 4)Make concessions in small amounts
Handling customer objections-
(Smith)
• 5)Admit mistakes and make corrections
accordingly
• 6)Be prepared to withdraw a concession
• 7)Avoid split the difference strategy
• 8)Do not advertise willingness to concede
10 excuses customers use on sales
people
• 1)denial
• 2)blaming
• 3)minimizing
• 4)I have no choice
• 5)reframing reality
10 excuses customers use on sales
people
• 6)alibi
• 7)justification
• 8)derogation
• 9)helplessness
• 10)yes….but
denial
• I don’t need this new product
• I don’t think I should trade with my old
machine
• There is no reason for changing now
blaming
• It is not my responsibility to make a
decision
• My boss will not like products like that of
yours
• I don’t mind buying but my wife (or
husband) may not appreciate this
minimizing
• This new idea will not do much good for us
• I don’t see anything great in this
• There is little value in spending money on
this
I have no choice
• Ii tried my best but I had no choice but to
go along with the majority
• With the past experience that we had with
you, I have no alternative to canceling the
deal with you.
• Base on the offer from your competitors
and the lower price, I had no choice but to
decide on their favour
Reframing reality
• Our purchasing system is not unfair, but
we are limiting our number of suppliers
• It may seem like we have caused you
some inconvenience in canceling the
order, but we are saving you a lot of
money, as with this kind of product, the
applications we expect would have cost
you more on the services
alibi
• I don’t have the money to buy
• I don’t have the authority
Justification
• We do not have a need for the product but
currently we are busy with our internal re-
organization
• I would like to go ahead now, but the
budget is not approved
• It’s of no use, as long as the business is
not moving there is no point in spending
money
Derogation
• I have heard that this product gives night
burns
• When it comes to providing service,
nobody will be around after the deal
• You don’t enjoy a good reputation in this
area
helplessness
• It’s out of my hands,I can’t do anything
now
• If I could convince my boss
• There is no way my wife (husband will
agree with this proposal
Yes…but
• It’s a fantastic idea but it will not work here
• It looks inexpensive but we cannot afford it
• We would like to buy two, but not at this
point of time
Methods of handling customer
objections
• 1)superior feature method
• 2)yes…but method
• 3)Revese English method
• 4)indirec denial method
• 5)pass out method
Customer objections handling
methods
• 6)comparison method
• 7)direct denial method
• 8)another angle method
• 9)narrative method
• 10)testimonial method
• 11)question or why method
Superior feature method
• Sales person accepts the objections and
persuades the customer through providing
additional advantages or benefits of his
product, which may compensate the
objection raised by consumer, thus
allowing to buy the product
Yes….but method
• Sales person agrees with the objection at
the beginning and then slowly makes an
effort to remove the objections from the
customer’s mind by tactful handling of the
argument
Reverse English method
• The salesperson pitches his presentation
on the objections raised by the customer
and then solves them through offering
benefits to the customer only on those
points raised by the customer as
objections
Indirect denial method
• Sales person denies the objections
cleverly but indirectly by giving affirmative
answers to the objections
• Most of the salespersons use this method
so that the customer does not feel
offended
Pass-out method
• The salesperson does not pay any
attention to the customer objections and
expresses neutral opinion
Pass-out method
• When objections are baseless, it is
suggested to pass them off without
attending to them in detail
• the customer may feel neglected and it not
handled properly the sales person may
lose an opportunity to realize a sale
Comparison method
• Sales person demonstrates similar
products of other producers before the
customer, and tries to remove their
objections by comparing the benefits of his
product with those of others
Direct denial method
• The salesperson rejects the customer
objections outright.
• He turns down the customer objections by
calling them absolutely wrong and then
builds up his presentation
• Mostly applicable to a seller’s market
Another angle method
• The sales person advises the customers
to look from another angel, which is
positive for the product ,rather than
making looking at it from a negative angle
• The sales person tries to make a positive
impact on the customer by enumerating
the number of advantages that outnumber
the disadvantages
Narrative method
• The sales person uses a story to remove
customer objections
Narrative method
• He listens to the objections systematically
and sympathetically and then gives his
responses in the form of a story
description that would appeal to the
customer
• The customer gets the answers to his
objections from the story and develops a
positive interest in the product
Testimonial method
• The sales person presents the sales
message by referring to celebrities and
persons of importance as the users of the
product
• Most of the sales people use this
technique of celebrity endorsement to
counter customer objections
Question or why method
• Sales person asks questions again and
again without any break to the customer
against his objections and tries to get
suitable answers to those objections from
the customer themselves
Question or why method
• He occupies the customer's seat and
customer to be the sales person
• The customer finally adopts a defensive
attitude and the objections never sustain
themselves
Closing the sale (closing
techniques)
• 1)assumptive close
• 2)negative close
• 3)caution method
• 4)implied consent method
• 5)special induced method
Closing the sale (closing
techniques)
• 6)direct order method
• 7)choice narrowing method
• 8)ownership suggestion method
• 9)advantages and disadvantages
comparison method
• 10)emotional method
Assumptive close
• Assumes that the sale is made so that the
sales person proceeds to issues such as
spelling names, proper address, quantity
desired, size, and color
Assumptive close
• It may also concern the details about
installation and demonstration
• Handling the prospect a pen to sign the
order or handing over the keys is an
example of physical action denoting a sale
close
Caution method
• The sales person first makes the customer
cautious about the availability of the
product or the period of availability and
then suggests the close or requests the
customer to place the order
Implied consent method
• The salesperson believes that the
customer is satisfied with the presentation
and may place the order at the end of the
presentation
Special induced method
• The sales person reminds the customer
about the promotional schemes offered by
the seller and suggests the customer to
avail himself or herself of the benefit by
placing the order
Direct order method
• The customer will come forward to place
the orders without any further persuasion
and the sales person takes the order
Choice narrowing method
• The sales person presents a product with
its various specifications-designs, colors,
and size-so that the customer may be able
to narrow down his choice
Choice narrowing method
• the customer rejects most of the varieties
in this process and finally approves of the
same item that the sales person really
intended to sell(pheriwallas and
sariwallas)
Ownership suggestion method
• the sales person suggests the customer
that he should buy the product to impress
upon the social standing he has in the
social hierarchy
• Status related products like cars, branded
jewellery and club membership are mostly
closed down in this process
Advantages and disadvantages
comparison method
• The sales person asks the customer to
compare his own products with that of the
competitors on objective features
• If the customer is satisfied, then the sales
person asks him to place the order
Emotional method
• The sales person created emotions on
matters of social interest
• Such a break in the presentation may
change the course of negotiation and may
be able to convince customers who are
sensitive to social issues
Follow-up action
• Helps the sales person to evaluate the
competitive sales moves,
• generate additional leads from satisfied
customers
Follow-up action
• Helps the company in the idea of cross-
selling and up-selling
• Helps in maintaining goodwill and taking
corrective actions for the promises made
during the sales presentation
B2B selling
• 1)prospecting
• 2)qualifying
• 3)need identification
• 4)demonstration
• 5)overcoming objections
• 6)closing(first billing)
B2B selling
• 7)lead generation
• 8)prospecting
• 9)demonstration
• 10)objections handling
• 11)closing
• 12)follow-up and servicing
B2B-systems selling approach
• Has 4 distinct structures-
• 1)power structure
• 2)group structure
B2B-systems selling approach
• 3)role structure
• 4)status structure
• Each of these structures has life of its own
with embedded behavioral codes and
dynamics, performance standards,
vocabulary. objectives and criteria for
entry
B2B-the Dow Corning program
• The Dow Corning program uses a
negotiation worksheet that includes
elements that are subject to negotiation
like
• characteristics of the product,
• special features,
• packaging,
• inventory,
• delivery,
• price,
• technical support and safety factors
• Each of these negotiable dimension is
then analyzed according to the customer
requirement in terms of-
• Value of that dimension to the consumer
• Whether Dow Corning meets that
requirements
• Which competitor meets that requirements
• Which items are not negotiable for the
customer
• Limits beyond which the company will not
go for negotiations
• Sales people are trained for their limits of
authority and powers in the process of
negotiation
Ch-4-managing sales information
• An important use of the sales information
system in an organization is to forecast
the market demand
Ch-4-managing sales information
• A market forecast is the estimated rupee or unit
sales for a specific future time period based on
the company’s marketing plan and an assumed
marketing environment
• Total industry sales, market share of the firm,
growth rate in the category and the firm’s
product lines and individual product’s
performance in the market are considered
Market demand
• Is the sum total of all individual demand
for a product or service
• Important determinants of market demand
are consumer preferences, income levels
of the consumers and prices of other
goods
Marketing decision support system
• Is an ongoing, future-oriented info-
structure designed to collect, collate,
categorize, edit, store and retrieve
information on demand to aid decision
making in an organization’s sales and
marketing program
• It involves problem solving technology
consisting of people, knowledge soft-ware
and hardware integrated through
information technology platform into the
sales management process
• A MDSS collects data from both
transactional systems and analytical
systems and uses the data to build
meaningful patterns by application of
analytical tools embedded in the analytical
system for customer use and decision
making
MIS of ICICI
• Prospecting for its value added savings
account is done by the DCID agency
through its FOS.
MIS of ICICI
• Leads are generated by the FOS from
various sources which are fed into a lead
management system, which is assigned to
the FOS covering the particular locality for
conversion
MIS of ICICI
• The marketing decision support system at
ICICI helps the sales people to see the
entire consumption pattern of its
customers and the level of transaction and
then mine the data generated from various
customer inter-action points to find out
patterns and prospects for selling value
added products and services
Importance of sales forecasting
• Optimum inventory at each level of
production process
• Companies with seasonal business will
prefer to follow a LIFO (last in and first
out) as the costly raw material can be
consumed at peak time the the lower
priced raw material can be used at a
convenient point of time
Importance of sales forecasting
• MNC sales managers forecast customer,
sales territory, regional, divisional, national
and global sales
• Forecasting can be done for short-
range(3-6 months). medium range (6-24
months) and long range (more than 2
years)
The forecasting process
• Determination of objectives, which can be
explained in terms of rupee sales, unit
sales, or the number of sales people hired
• 1)forecast objectives
• 2)determine independent and dependent
variables
• 3)develop forecast procedure
• 4)select forecast analysis method
• 5)comprehend total forecast procedure
• 6)collect,collate,gather and analyze data
• 7)present all the assumptions about data
• 8)make and finalize the forecast
• 9)evaluate performance results against
the forecasts
Approaches to sales forecasting
• 1)break-down approach
• 2)build-up approach
Break-down approach-steps
• 1)general environment (internal and
external) forecast
• 2)industry sales forecast
• 3)company sales forecast
• 4)sales forecast for the product lines
• 5)individual product forecasts
Internal/external environment
• 1)Internal environment factors-pricing,
product changes ,distribution, promotion,
financial resources, management skills,
availability of labor, pre-valent technology,
level of the firm’s capacity utilization
Internal/external environment
• 2)condition of the general economy, level
of industrial activity, intensity, prepardness
of competitors in response to the firm’s
marketing program, changes in legal and
governmental actions
Industry sales forecast
• Is the estimated sales for all the sellers in
the entire market or industry over a
specified time period under given
conditions
• Company sales potential is the maximum
estimated or potential sale the company
may reach in a defined time period under
given conditions
Build-up approach
• Is basically reverse of the break down
method
• Individual forecasts are made by strategic
business units or unit heads, and these
are combined to make broader forecasts
for the firm
Build-up approach
• Cumbersome method for firms having
large product offerings and serving
multiple markets
• Firms needing a forecasting for product
units, for long-term and short term periods,
and for product lines use multiple methods
of forecasting for divisions, regions, sales
territories and customers
Sales forecasting methods
• 1)qualitative
• 2)quantitative
Qualitative methods
• 1)expert’s opinion
• 2)survey of buyer’s expectations
• 3)sales force composite
• 4)delphi technique
• 5)history of analogy method
Expert’s opinion method
• Is the simplest to use
• Usually used by commercial organizations
for forecasting the future demand of their
products
Expert’s opinion method
• Services of experts in that area such as
marketing professionals,
distributors/dealers, and professional
bodies like industry associations and
marketing consultants may be asked for
• The estimate may not always show a
group opinion; it may favor the more vocal
members
Expert’s opinion method-2 ways
• 1)by one seasoned individual (usually in a
small company)
• 2)by a group of individuals, sometimes
called a ‘jury of executive opinion’
• The group approach has 2 methods-
• 1)key executives submit the independent
estimates without discussion, and these
are averaged into one forecast by the
chief executive and
• 2)the group meets, each presents
separate estimates, differences are
resolved, and a consensus is reached
• Delphi technique can be used to enhance
the value of expert’s opinion
Delphi method
• Is an improvement over the executive
opinion method
• Tries to determine the forecasts on the
likely time period of occurrence of certain
future events and the probability of their
occurrence
• A group of experts and a Delphi co-
coordinator will be selected
Delphi method
• The experts give their written
opinions/forecasts individually to the co-
coordinator
• The co-coordinator processes, compiles
and refers them back to the panel
members for revision, if any
Delphi method
• This to-and-fro process continues for
several round (normally 3)
• After consensus ,the process will stop
Delphi method
• The co-coordinator will carry statistical
analysis deriving average answers,
variability, prediction intervals etc.
• The process aims at gradual reduction of
the variability in forecasts
Delphi method
• The Delphi forecasts are primarily median
forecasts
• This is the original sales forecasting
method and is still the most widely used,
regardless of company size
Sales force composite method
• The organization asks its sales personnel
to come up with their forecasts
• The individual forecasts are then
combined to get an overall demand
forecast for the organization
Sales force composite method
• Results can be affected by the staff’s
biases, lack of interest in the process,
ignorance about wider economic changes
and trends
• Normally used in industrial equipment
industry
Survey of buyer’s expectations
• The procedures that fall within this method
are survey of buying intentions and market
tests
• Involves the selection of a sample of
potential buyers and then getting
information from them on their likely
purchase of the product in future
• This information is then extrapolated to get
the total demand forecast
(build to order method)
• Some companies employ consumer
panels that are given products and asked
to supply information on the product’s
quality, price, features and whether they
would buy it
• Forecasts based on this method tend to
be overly optimistic
• Requires careful attention to wording,
sampling, and methods of selection
• Effective if the product has relatively few
buyers; if buyers make a strong
commitment, such as signing a contract or
making a partial advance payment; or if
specific customer have said yes and later
bought
• OEMs often survey the end consumers to
know the level of demand of the end
consumer
Historical analogy method
• Used for a product or service for which
there is no past demand data
• Sometimes the product may be new, but
the organization might have marketed
other products earlier with features similar
to those of the new products
• The marketing personnel may use the
historical analogy between the two
products and derive the demand for the
new product using the historical data for
the earlier product
Quantitative methods of forecasting
• 1)test marketing
• 2)naïve method
• 3)trend method
• 4)moving average
• 5)regression method
• 6)exponential smoothing
Test marketing
• Companies select a limited number of
cities with populations which are
representative of the target customers I
terms of demographic factors (age,
income, life-style and shopping behavior)
Test marketing
• A product is made available at the retail
outlets and the features are highlighted
either through in –store promotion or
through a small advertising campaign
Test marketing
• Performance of the product is tracked
through consumer research and
modifications if any are made before
taking it for a national launch
Test marketing
• In another approach, companies select 2
markets; one market is called a ‘test
market’ where the product is marketed
without any promotional campaign; a
similar market is selected and is termed as
‘control market ’where the product is sold
with a promotional campaign
Test marketing
• The difference in sales between both the
markets is a measure of the effectiveness
of the sales promotion campaign
Test marketing
• Any in-consistency with the sales variation
in both the markets is an indicator of the
gap between the customer’s perception
and the performance of the product
features
• Proper experimental design and
mathematical analyses are important to
correctly evaluate test market data
Ganga soap-test marketing
• 2 markets were selected
• North Indian market was taken as a test
market, where as the southern market
down the Godavari was used as the
control market
• The product was displayed in test market
and was promoted in control market
• The sales responses were used to
extrapolate the data to find out the
national level sales and forecasting was
done for 3 years to augment the national
launch
• Companies often change product features
and promotional themes as a result of the
data obtained in a test-market situation
because the test marketing statistics many
a time are found to be discouraging
Time series analysis
• Is a series of techniques that make
forecast based on past patterns of data
• These data are collected, observed and
recorded at regular intervals of time
• Useful when the market forces are
somehow stable and the market shows
least erratic behavior
Time series analysis
• Use chronologically ordered raw data
• The major advantage is its objectivity
• The 4 components of the past data
relevant to time-series analysis are
trend,seasonality,cyclicality and
irregularity
4 ways of time series analysis
• 1)secular movements-occurred because
of the general tendency of the data to
increase or decrease
• 2)seasonal variations-occurred during a
period of 12 months as a result of change
in climate, weather conditions and
festivals
4 ways of time series analysis
• 3)cyclical variations-changes occurred as
a result of booms and depressions
• 4)erratic variations-changes occurred as a
result of unpredictable forces as
floods,earth-quakes,famines etc
Ch-5-sales organization
• Are structured entities, which execute a
combined sales plan and are designed to
carry out mutually agreed business goals
with clear structures, roles and
responsibilities for each person, group and
department
Ch-5-sales organization
• Undertakes managerial functions like the
selection and recruitment of quality
manpower, their induction and training for
better performance, and the effective
supervision of subordinates in the field
force.
• A good sales organization always aims at
achieving the sales target at the minimum
cost and with maximum efficiency
Factors influencing structure
• Coordination among following required-
• 1)products and services-related
• 2)organization related
• 3)marketing mix related
• 4)external
Product and services related
factors
• In case of FMCG goods like soaps, oils
and toothpaste the size of the organization
is large and flat at the lower level
Product and services related
factors
• When both the product mix and the
quantity of sale targeted per category are
large, organizations will be large
• In complex service offers, organizations
are found to be complex and are
supported by a large number of sales staff
Organization-related factors
• Simple structure will serve small
enterprises who have limited number of
products and customers
• Organizations having highly specialized
products and serving niche markets have
a smaller and simpler sales organization
• Organization with limited financial
resources prefers to engage
intermediaries for the distribution of its
products and keeps the sales organization
as simple as possible
• If the financial resources of an
organization are sound, such as
organization will prefer to sell the product
directly to the customers and establish
direct contact with them which will lead to
a large and complex sales organization
• In a centralized organization (majority of
the sales-related decisions and functions
are carried out at the central office) then
the organization prefers a simple design
• Where a de-centralized policy is followed
(advertising, trade promotion, credit and
all other functions are transferred to a
regional or divisional office) the structure
of the sales organization will be large and
complex
Marketing mix-related factors
• When the organization serves a global or
transnational market, or a national market
like India, the organization’s size will be
necessarily large
• Companies with a selective distribution
strategy prefer to have their own outlets
and decide in favor of simple sales
organizations
• Organizations with intensive distribution
strategy through retail channels have
complex and large sales organizations
• In case of low-priced goods, where the
potential demand as well as the number of
customers is large, the size of the
organization will be large
• In case of high priced products (cars, TV,
refrigerators) and the size of the market is
limited to urban India only, the sales
organization will be small
• Organizations with an aggressive sales
policy follow a large and complicated sales
structure to cater to different segments of
customers at the same time
• When the organization sells the entire
production to a sole selling agent, the
sales organization will be small in size
External factors
• The customs and traditions used in the
past to cater to the market also determine
the size and structure of the organization
External factors
• Experiments of alternative channel
structures by IBM and Compaq to beat
Dell computers was not successful
because of high level of channel conflict
• In case of intense competition,
organizations decide to expand the size of
the organization to enter into new markets
or to serve the existing customers better
international association of product
development-structural changes
• Top-down command and • Horizontal and customer
control driven driven
• Information processing • Knowledge creation
• Compartmentalized • Shared knowledge
knowledge • Core process team has power
• Functions retain power • Core competencies supply
skills
• Functions own skills
• Leader represents team
• Dominant function leads • Broad process focus
• Narrow result focus (sub- (optimization)
optimization) • Rewards are based on the
• Reward are within overall performance
chimneys (functions) • Quick/empowered
• Slow/bureaucratic
Factors-structural changes
• 1)products are turning into mature markets
encouraging online selling through internet
(Bazee.com and priceline.com(US)
• 2)Markets are moving towards one-to-one
marketing rather than marketing to a
homogeneous set of customers
• 3)speed of market change-high level of
decentralization and regional market
planning
• 4)reduction in the number of vendors per
buyer (vendor development)
• 5)emphasis on closer customer
relationships –systematic selling approach
• 6)changes in the regulations and international
practices due to rapid globalization-sale function
globally accountable
• The role of a sales organization is now that of a
centre for developing selling strategies and
structures, which will serve as a competitive
advantage for the organization by adding value
to products and services
Organizational principles
• 3 principles are of significance for the
design of a sales organization
• 1)span of control
• 2)centralization and decentralization
• 3)integration and co-ordination
Fundamentals or organizational
principles
• 1)span of control-the number of people
directly reporting to the sales manager
• 2)unity of command-each person should
report to one boss only
principles
• 3)hierarchy of authority-a clear and
unbroken chain of command should link
every person in the organization with
someone at a higher level
• 4)stability and continuity-jobs should not
be assigned without due regard for the
talents and preferences of current
employees
principles
• 5)co-ordination and integration –the job of
sales people should be integrated with
customer needs, and coordinated with the
jobs of other employees and departments
in the organization
• 6)homogeneity –formal authority and
responsibility must be co-terminus and co-
equal
principles
• 7)objectivity-each division and sub-
division of the organization should be the
expression of a definite purpose and be in
harmony with the objective of the
organization
principles
• 8)specialization-the work of every
individual in the organization should be
confined as far as possible to the
performance of a single leading function
Span of control
• A narrow span of control is an appropriate
model when there are new recruits to be
handled in the field (one-to-one coaching)
Span of control
• A narrow span of control requires more
layers of supervision, which adds on to the
selling expenses and separates the
management from the end consumer
Span of control
• A wider span of control has fewer levels of
supervision which puts pressure on
organizations to recruit employees with
adequate marketing experience and
technical knowledge so that they can
handle sales independently
Centralization and de-centralization
• The extent of control and authority of the
top management versus the field sales
manager over the sales force decides the
level of centralization in an organization
Centralization and de-centralization
• In a highly centralized organization, the
selection, recruitment, training,
supervisions, fixation of quota, territory
allocations, compensation plans are
decide at the corporate level
• Centralized recruitment and training and
motivation plans help organizations to
save costs for the organization
Decentralization
• Organizations are going for
decentralization because it helps to be
competitive at the respective market level
to meet the demands of various segments
Decentralization
• A decentralized structure helps in making
the organization more responsive to the
market and accountable to the regional
demand structure
• HLL uses teleconferencing facility
between its field sales force and corporate
office to facilitate effective decision making
and better interpersonal communication
Decentralization
• Many organizations use both centralized
and de-centralized structures
Decentralization
• Titan watches, sales training is provided at
the central office, while decentralized
service centers are under the control of
field sales managers
• Modi Xerox recruits through the line
managers and conducts training at the
regional headquarters
Integration and co-ordination
• Earlier the sales department was the only
upfront link of the organization (‘butter-fly
approach)
• Today’s organization are integrated to
serve the customer (bow-tie approach)
• Flow of communication and market
intelligence are increasingly used by
various departments for solving customer
problems
• Marico industries and P&G have tied up
for an information and logistics facility
exchange to service rural markets in India
• Inputs from marketing on advertising
policy, competitive sales promotion
moves, co-operative advertising efforts
with intermediaries and responses to the
trade promotion program
• The sales department also provides
information about special financial
arrangements, credit policy, credit
collection and information on
compensation and dealer motivation plans
Organizational design
• A proper organizational design helps in
enhancing
• productivity,
• reduces conflicts
• Improves individual’s quality of work
Organizational design
• The organization of the sales department
is based on-
• the nature and size of the organization
• market coverage strategy
• complexity of product offered
• level of competition and
• external market conditions etc
Types of structures
• 1)simple line organization
• 2)special designs based on-
• A) functions
• B)geographic markets
• C)products
• D)customers
• E)combination of all above
Line organization
• In a pure line organization, the chief
executive does the decision making;
decisions flow down the line for execution
• Decisions are made faster, overhead
costs are lower and sales people need to
follow the command
Line organization
• Are called one-man show organization
• Suffer from the daily fire fighting
operations of the executives
‘Gang plank’ principle
• Today’s organization need to be customer
centric
‘Gang plank’ principle
• In ‘gang plank’ principle following
organizations, the line of authority may not
be necessarily followed
• The organization is quite a liberal, where
each employee can skip the conventional
approach of ‘chain to superiors’ and
interact directly with the top management
to express his or her views and ideas
Design by territory-advantages
• Travel times are limited; sales force
remains close to the customer
• No. of customers to be served are limited
and geographically concentrated hence
quality of customer service better
• Minimum conflict among sales persons
• For each market different marketing
strategy can be developed
Design by territory-negatives
• There is a tendency to become mere order
(for sales person) takers thus brands
turning into commodities
• The sales people spend too much time
with the customers for products that are
easy to sell; but may not be profitable
• Duplication of staffing function for the field
force
• Difficult to co-ordinate as the sales
function over the territories ,as there is a
high probability of the conflict in resource
allocation across the territories
• These problems can be solved by close
supervision, proper incentive structure,
hiring better talent and supporting them
with training
• Suitable for markets with extensive
territories-customers are spread;
substantial difference exists in each of the
segments, products are differentiated on
the basis of quality and sales turnover is
high
Design by management function
(line and staff function)
• It is the grouping of a sales task according
to their characteristics
• Line authority means that people in
management positions have formal
authority to direct and control immediate
subordinates
• Staff authority is narrower and includes
the right to advise, recommend and
counsel the staff
• Firms need special expertise for functions
like sales planning, recruitment, training
and supervision of sales personnel,
advertising, sales promotion, sales
analysis, marketing research etc
• Suitable for organizations for having
similar product lines
• Contradicts the principle that a person
should report to and take commands from
only one person
• Staff authority aids the line managers in
planning and operation function
• Helps in achieving specialization at
different levels in the organizational
hierarchy
• Less expensive compared to other
designs but attention needed on specific
product lines is affected
• Functions across departments slow down
due to their dependence on each other for
the final delivery of customer service
• Integration of the function happens at a
higher level, making the job of the higher
authority more complex and rigid in nature
Design by management function-
(negatives)
• Interdepartmental rivalry and non-
cooperation are issues that emerge in
such organizations
Design by management function-
(negatives)
• In-efficiency of one department affects the
functions of other departments
• Suitable when the size of the organization
is small, products are limited and there is
single line of operation in the
organizational production process
Design by product
• Companies in the high-tech sales market
adopt this structure (Godrej)
Design by product
• Expensive because each product line
requires separate sales staff
Design by product
• Product specialization (design) is
necessary when the products are
technical and complex, more or less
commodities, and relatively simple but
completely different from one another,
when the product lines are distributed
through the entire trade channel, and
when different products are sold to similar
markets
Design by product-positives
• Close attention to each product in the
product portfolio
• The sales person can master all the
relevant product information and gather
the required product knowledge to market
complex products
• Interference by other functions is avoided
by this design; thus assignment of
responsibility is easier enabling
comparative evaluation of sales persons
easier
• Customer service receives maximum
attention hence the customer satisfaction
level is high
• Suitable for organizations with multiple line
product portfolios where the average unit
price of the product is higher to bear as
the overhead cost and the products
involve technical complexity
Design by product-negatives
• Difficulty in co-coordinating the sales
function across product categories
• Sales people from the same organization
often makes calls to the same customer
for a sale leading to the duplication of
efforts and an increased cost in serving
customers
•
Design by product-(ELGI-
equipment)
• Established in 1960
• Has 2 plants at coimbatore
• 4 core product divisions are identified-
• 1)reciprocating compressor division (RCD)
• 2)rotary compressor division (ROCD)
• 3)automotive equipment division (AED)
• 4)diesel engine division (AED)
Design by customer
• Organizations are shifting from product
based structure to customer based
structure (vertical marketing)
• Each sales person sells the entire product
line to the same customer
Design by customer
• Advisable when the nature and type of
customers differ
• Helps in building successful customer
relationships, where trust and co-
operation are the fundamental values
Design by customer-negatives
• Expensive organizations
• There is also a duplication of efforts
Design by customer-negatives
• Help in buyer-supplier integration, and in
co-creating products and services for end-
users in business-to-business markets
• Sales managers create multiple linkages
with customers through cross-selling, up-
selling and training the customers to use
the products or services for a longer
period of time
Combined organizational design
• The combination can be made on the
basis of different levels of hierarchy in the
organization
• Large size and complex in product
offering organizations prefer this structure
Combined organizational design
• Organizations having a diversified product
range and serving extensive markets use
this structure
• Essential for the organization to get
specialization at every stage of the
marketing activity
Key account sales
• Are the accounts who give incremental
returns to the firm (national accounts)
• They purchase significant volume
• Involve multiple people in decision making
Key account sales
• Purchase at a central authority level
• Desire for a long term and co-operative
working relationship
• Expectation for specialized attention and
service
Key account building strategies
• 1) service firms follow following strategies
• constitute a separate division and engage
senior sales staff with adequate
knowledge of the customer
Key account building strategies
• 2)selected members of the current sales
staff are assigned the responsibility
• 3)in many organizations, sales manager
takes care of the key accounts and are not
left to the sales staff
Sales process automation
• Low cost but high capacity computing and
communication systems through
telemarketing, internet marketing and
online selling has allowed large corporate
to automate much of the selling process
• This has aided in automatic order
placement through electronic data
interchange including the voice over
internet protocols (VOIP) and handling of
routine information collection and
transaction through electronic expert
systems
• IT has also led to the substitution of e-mail,
computer and video conferencing as also other
means of electronic communication for
expensive plant location visits, and creation of a
mobile and virtual office instead of a home
office, which allows customers to place orders
online
• In B2B marketing, telemarketing is used for
prospecting
• The cost of office space is minimized by
the creation of virtual offices through the
internet and mobile technology
• Sales people are more closely linked to
the HQ through the internet and
computers, and their jobs are supervised
• Customers are also switching to online
buying more than ever before
Emerging organizational designs
• Most of the products are turning to
commodities
• Customers are deciding their purchase on
the basis of price and sales promotion
rather than any other intangible issue
• This has put more pressure on
organizations to reduce operating costs as
there is a high cost involved in maintaining
a direct sales force for the organization
• This situation in modern sales
organizations has given birth to the
strategy of agency selling and a shared
sales force
• 1)agency and distribution selling
• 2)shared sales force
• 3)telemarketing
• 4)total quality management
Agency and distribution selling
• Direct marketing demands a strong sales
force
• Indirect marketing uses different types of
intermediaries to reach the customer
Agency and distribution selling
• Many organizations today are switching to
the distributors and suppliers mode where
the distributors represent several suppliers
simultaneously
• There are independent private businesses
with a contractual agreement with the
selling organization for a contractual
payment called ‘commission’
advantages
• Are less accountable to the sales
manager and offer advantages like
adequate knowledge of the customer and
the territory.
• higher control over the value chain
• Long term relationship with the customer
due to their specific market and regional
presence
advantages
• Ability to respond quickly in the field to any
changes and competitor moves
• Extensive market coverage within the
territory
• Professional office set-ups with support
staff and infrastructure
• FMCG companies follow this kind of a
selling organization
Rent a rep
• Here, small firms are not capable of a full
time sales force and can rent a sales force
from an organization
• These sales staff sell common products
and impulse goods, as they keep on
changing the products they sell,
depending on the organization they
represent for the day or for that period
Rent a rep
• Companies engaged in event marketing or
a sales promotion program also hire these
sales people
Rent a rep
• A manager has to decide whether or not
the sales force will contribute a higher
gross profit than an agency or distributor,
and whether the brand equity and
company image will be bettered by having
a controlled sales force instead of a set of
selling agents
Rent a rep
• A manager also needs to decide on
whether the terminated distributors will
take away customers with them before
deciding on the alternative designs of
emerging organizations
Shared sales force
• Divides the sales force among the number
of divisions or product lines of an
organization to reduce the operating
costs, increase efficiency, achieve
synergy and to achieve economies of
scope
Shared sales force
• The decision for sharing should be
evaluated on the basis of whether or not
an addition of a sales line will put more
stress on the sale staff leading to
underperformance
Shared sales force
• As more products are added to the selling
basket of the sales person, his basic
duties to serve the current set of
customers, monitor competitor trends in
product and service offer, learn product
capabilities, and interact with other
organizational members to co-ordinate
order processing and service are affected
adversely leading to lower performance
and higher organizational benefits
telemarketing
• Helps firms in building an alternate and
low-cost business proposition
• In the US, this market constitutes a
business of US$100 billion
telemarketing
• Teleprospecting at a lower cost where
telerepresentatives cover their territory
faster than the actual field force
telemarketing
• Many business customers prefer this
model as they can take a business call
over the phone instead of a sales person
calling them and disturbing their workflow
in the client organization
• Companies provide toll-free numbers for
customer complaints and use call centers
to help customers
telemarketing
• Teleprospecting is also use for
prospecting and generating qualified leads
for the physical sales force,so that they
can make calls to real prospects
• Many companies serve the smaller
customer and sell peripheral and support
product lines to customers over phone
telemarketing
• Telemarketing is also used for advertising
and product promotion particularly in
mobile phones
telemarketing
• The real problem is the integration of
telemarketing with traditional sales force
and recruitment of a sales force
specifically for the purpose of
telemarketing and compensation planning
for the telemarketing sales force
Total quality management (TQM)
and team based selling
• TQM approach suggests that, a sales
organization be designed in such a
manner that the majority of the sales staff
is engaged in indirect customer support
and service functions, with less manpower
deployed for the staff function
• Should have a flexible design to quickly
change its structure to the market demand
• Continuous improvement in the process
of selling and attention should be given to
speed up the realization of the process of
selling
• Organizations should drive down costs
and delegate decision making to the
lowest level through the concept of team
selling
• A survey of National Institute of Sales
suggests that, customers are dissatisfied
with the information possessed by
salespeople during presentations
• To solve this problem and accelerate the
decision making process ,organizations
are in favor of a team based selling
approach
Team based selling
• Increased product sophistication and
complexity is also demanding the need for
a team based selling
• Happens when a team is created to
provide sales and service to a national or
key account
Team selling in HCL
• In HCL technologies, every 10th sales staff
is assigned a field service support
executive who handles the follow-up
actions after the sales are realized
Team selling in HCL
• In a single contract, the salesperson acts
as the customer contact who accesses
technical production, service, and the
other team members on behalf of the
customer
Team selling in HCL
• In a role-linkage arrangement, the selling
team members work with their opposite
number in the buyer’s firm
• Single contract method helps in simplifying
the working relationships, while the latter
helps in reducing the chances of a
distortion in the technical information
across the organizations
Team based selling
• Team should be led and supervised for
accountability, skills and commitments
Team based selling
• Effective teams have a common approach
to work and commitment that focuses on a
shared and meaningful purpose for the
organization
• Teams should be trained in problem-
solving, interpersonal. technical and
functional skills
Team forming-stages
• 1)forming-(gets to know each other)
• 2)storming-on contention on team roles
• 3)norming-roles are agreed; thing get
established
• 4)performing-teams start functioning
Size of the sales force
• 1)affordability method
• 2)incremental method
• 3)work-load method
Affordability method
• The size of the sales force is always
decided by bringing a balance between
the number of people required to call on
the existing customers and targeted
prospects and the affordability of the firm
for the sales force
Affordability method
• Small companies with a limited capability
normally prefer a sole selling agent or a
distributor type of selling organization to
bring more efficiency and numbers to the
company sales force as they cannot afford
to have a sales force themselves
Advantages/disadvantages-
affordability method
• Costs are in line with the current sales
levels of the firm
Advantages/disadvantages-
affordability method
• The firm does not have to depend on a
future period of time when the expenses to
the sales ratio will come down to an
acceptable level
• The major disadvantage of this method is
that it does not take into consideration
issues like market sentiments, demand
patterns or customer needs
Incremental method
• Is usually followed in established firms
where the organizational design as well as
the market is established over a period of
time
Incremental method
• Sales person should only be added when
the additional revenue from the sales staff
is higher than the cost involved in the
recruitment of a new sales person
Incremental method
• Organizations should monitor the sales
performance closely to find out the point
where the costs of the staff exceed the
gross profit from the additional sales
• This is done by observing the sales staff
performance in different sales territories
and by comparing the call reports of the
sales staff in similar territories
Incremental method
• Costs data can be analyzed to determine
how many sales people to add when the
marginal response rates are positive
• The problem in this method is the wide
variation in the response co- efficients
across markets and organizations
• This demands creating a separate model
for each firm and industry
Work-load method
• Scientifically designed and most popularly
used, the workload method decides the
size of the sales force
Work-load method
• Frequency and the number of calls a sales
person has to make needs to be decided
(call norm)
• The call norm is an explanation of the
frequency and duration of the call that a
sales person has to make to realize a sale
sin current and prospective segments
•
Work-load method-formula
• No. of sales people=no. of existing
customers plus no. of potential customers
into ideal frequency of calls into length of a
call divided by ideal selling time available
for a sales person
• One has to calculate the desired
frequency of a call for each segment to set
up the total call norm because the efforts
necessary to realize a sale is higher in a
prospect’s market than in an existing
market
• Further modifications are necessary if the
call frequency for the potential market and
the existing market is different
Ch-6-management of sales territory
• Sales territory is defined as a group of
present and potential customers assigned
to an individual sale person ,a group of
salesperson ,a branch, a dealer, a
distributor ,or a marketing organization at
a given period of time
• Territories are defined on the basis of
geographical boundaries in many
organizations
• In some cases territories are designed on the
basis of the urgency and frequency of customer
requirements rather than geographic coverage.
situations where products are highly technical
and complex in design, when organizations
prefer either a technical sales force or a system
selling approach, and where a set of people with
varied knowledge levels are grouped together to
provide solutions to customer’s problems and
queries
• Where the territory is designed based on
urgency and frequency, there is a
possibility that the same customer may get
calls from multiple salespeople from the
same organization
advantages
• 1)ensures better market coverage,
effective utilization of the sales force,
efficient distribution of workload of sales
people
advantages
• 2)enhances employee’s morale and helps
managers to better control and monitor
sales and evaluate program
• 3)helps in building accountability for each
sales person in the form of identification of
prospects, maintenance of call norms and
realization of a different level of sales at
different points of time
advantages
• 4)inculcates higher sales through up-
selling and cross-selling to the same set of
customers
• 5)helps generate better value from the
customers
• 6)helps to integrate the selling efforts with
other marketing and promotional functions
in the territory
advantages
• 7)useful in evaluating the performance of
the sales force
advantages
• 8)identification of the effective utilization of
marketing resources and the level of
competition in different areas of the
market
• 9)helps identify the exact nature of the
problem for underperformance, one can
take remedial actions for motivating the
sales force to perform better
advantages
• 10)reduced indirect expenses like turnover
and employee dissatisfaction
• 11)improves the productivity and income
of the sales force
Advantages-HP way
• Hewlett Packard equipped all its sales
people with laptop computers backed up
by a customer-prospecting and
relationship tracking system at its HQ
which resulted in a 33%growth in
sales,31%growth in sales force
productivity and a 40%drop in the attrition
rate of sales personnel
Who do not establish territories?
• Newly establish enterprises
• Organizations where sales is achieved
through personal relation
• Organizations selling highly sophisticated
and technically complex products
• Firms with customers distributed over a
vast geographic area and with a lower
density In any specific block
• Firms using telemarketing and internet
marketing as tools to reach customers
• Firms relying on customer service that
requires a co-ordination across different
geographic territories
• Small firms, particularly with a single sales
person dealing with insurance ,fixed
deposits and other investment
• Highly sophisticated and technologically
complex products like computer hardware
and software are sold through sales
team’s efforts which reduce the scope for
a territory
Size of territories
• 1)nature and demand of the product
• 2)mode of physical distribution
• 3)the selling process
• 4)transport and communication facilities in
the overall market and territory
• 5)government regulations
• 6)density of population
Size of territories
• 7)population spread within the territory
• 8)market potential and growth rates
• 9)level of competition
• 10)firm’s sales policy
• 11)ability of the sales person
• 12)overall economic conditions prevailing
in the country
Territories- basics
• Consumer durable with a longer shelf life-
larger territory
• Perishable commodities-smaller territories
• Can be established on the basis of the
product-consumer, industrial, durable,
non-durable
Territories- basics
• In case of huge demand in the market, the
companies decide on designing smaller
territories
• In case of having middlemen, larger
territory is advisable
Territories- basics
• In case of industrial buying, the size of
territory is kept small
• Organizations where a higher allotment is
made towards selling expenses go in for a
larger territories
Territories- basics
• Territories in rural markets in India are
smaller in comparison to the urban market
• In a market with high density of population
and market potential, companies decide
in favor of smaller territories
• In a highly competitive market, size of the
territory is generally small
Territories- basics
• If a company has experienced,, well
trained and competent sales people ,it
may go for a larger territorial cover
• For a firm with a limited number of
products, wanting to earn higher profits,
the size of the territory will be larger
Territories- basics
• A small size territory is suitable for a firm
during recession when prices have
stabilized and customers are not willing to
spend spontaneously
Territories- basics
• During a boom condition, firms can
increase the size of the territory so that the
sales people can cover a larger market
with a higher demand due to an upturn in
the economy
Allocation of sales territories
• Advantages to customers-
Allocation of sales territories
• Customers get prompt and efficient after-
sales-service, quick disposal of complaints
and individual satisfaction due to the
regular visits of sales people
• Customer’s risk perception is reduced due
to familiarity with the sales people of the
company and frequent advice of sales
people on consumption and purchase
Allocation-advantage to sales
person
• The freedom of choice in serving
customers
• A transparent system for their
performance evaluation and an efficient
reward system based on their
performance in the territory
Effective territorial design-basics
• Optimum size of the territory should be
allocated to every sales person with
uniform distribution coverage
• Overlapping be avoided
• There should be some flexibility on the
allocation so that a sales manager can
rotate territories among the sales people
Effective territorial design-basics
• Equal opportunity for earning average
income
• Providing maximum service at minimum
cost should be the strategy
• While deciding allocation, a new sales
person should not be given independent
responsibility of a sales territory
Designing a sales territory
• Factors to be considered are-
• Size of an organization
• Level of competition in each product
category
Designing a sales territory-factors
• Number and quality level of the products
in the portfolio
• Type and quality of the services and
customer support to be provided
• Quality of the sales person serving in the
organization
When territorial redesign?
• Is done when the market grows to such a
size that it is not possible for the same
sales force to cater to the market
• When there is a merger or a take over
• Is also needed when there is a change in
the stage of the product life cycle
• When there is a reallocation of customers
in the market
Territory design at Marico
• Sales people at Marico use Geographic
Information Systems (GIS) software to
design territories
• GIS contains detailed maps of specific
regions and allows the user to key in
additional information such as
demographic data of the market to help
mangers overcome design problems
• GIS uses sophisticated tools that analyze
satellite-based pictures to provide relevant
data on
transportation,communication,distribution
of settlements and the spread of retail
outlets in a geographic area
• 1)select a geographical control unit
• 2)criteria
• 3)starting point
• 4)territory shapes
• 5)control units adjacent to the starting
point
• 6)allocation criteria and workload analysis
• 7)new territories
Selecting geographic control unit
• These control units must be small enough
to allow flexibility
• These can be country, state, district,
division or block
Trading area
• Is a geographical control area
concentrated near a city where there are
many retailers and wholesalers that
furnish a high level of sale, despite a small
geographic concentration
Trading area
• A trading area is made up of a principal
city and the surrounding dependent area
• It is an economic unit which ignores the
political and non-economic reasons of
setting boundaries
Trading area
• Are based on economic factors, consumer
buying habits and normal trading patterns
• Trading areas facilitate sales planning and
control and reduce the probability of
dispute and duplication of efforts by 2
sales people
• Firms dividing cities as trading areas often
rely on the Postal Index Number (PIN)
Disadvantages-trading area as a
control unit
• Vary from product to product and should
be referred to in terms of specific products
only
• It is also difficult to obtain detailed
statistics for trading areas
• The boundary of two products may not
match and this can prove to be
cumbersome for a multi product company
Trade area maps by ACNielson
• Are available for various general products
classifications
• The firm published 65 major trade maps
and 250 minor area trade maps
• Major trading areas are mapped out of
metropolitan cities and state capitals
Trade area maps by ACNielson
• The minor trade areas comprise populated
towns in different states
• Various newspapers and TV channels
also publish their readership and viewer
ship data on cities
• This data is often used by pharmaceutical
and other consumer durable companies
for territorial planning
Step-2-criteria
• Involves identifying the sales potential of
each control unit with the help of top
authorities, market experts and statistical
models
Step-2-criteria
• Each territory should provide an equal
standard of living for the sales force
• The attempt at this stage is on building an
approximation of a territory for final
agreement
Indian firm’s territory design
• 1)current customers
• 2)potential customer’s size
• 3)geographic size in terms of sq.
kilometers or square miles to be covered
by the sales people
Current customer base
• Helps in identifying the basic workload for
the sales people, as existing customers
are added in each new territory
Current customer base
• The presence of existing customers
improves the morale of the sales force and
motivates them further
• Current sales in the area should not be
used as the sole allocation criterion as it
ignores the future potential
Market potential
• Largely depends on how sales people
successfully convert prospects into
customers
• If there is no computation of the potential
markets, the sales force would only
concentrate on doing business with
current customers
Starting point
• A common choice is the location point
(often the residence of the sales person)
• This is done to avoid the relocation cost of
the sales person and provides emotional
support by keeping the sales person
closer at home with his family and
relatives
Step-3 Starting point
• Another starting point is trading area
(large city or district HQ)
• Location of large account will be the
starting point so that the sales person can
provide services to customers and get
information without much travel
• Many times, a central geographic location
or a state capital becomes a starting point
Territory shapes
• 1)wedge
• 2)circle
• 3)colverleaf
• Shape of the territory affects sales
expenses and the ease of sales coverage
• It also helps a sales person to spend less
time on travel and keeps sales people
motivated to work hard
Wedge shaped territory
• Is applicable to FMCG goods and is used
by companies like Marico industries, P&G
and HLL
• These companies serve both the urban
and rural markets in India
Wedge shaped territory
• The design radiates from a densely
populated urban area to small rural areas
• The travel time between adjoining wedges
can be equalized by balancing the travel
time between the urban and rural areas
Circle shape
• Is appropriate when the companies have
their accounts distributed across equally
sized areas
Circle shape
• a sales person is based in the central part
of the area and travels uniformly to
different areas
• Companies concentrating in urban areas
like Maruti, Hyundai and park-avenue
follow this design
Cloverleaf design
• Is used when accounts are distributed
randomly throughout the territory
• Careful call planning makes each visit to
the clover a timely affair on the basis of a
weekly,daily or a periodic schedule for
salespeople
Step-4 Control units adjacent to the
starting point
• The sales manager keep on running totals
on the allocation criteria for each newly
designed territory
• The process of allocation continues until
all control units are assigned to each sales
person
• The basic units are combined so that the
sales potential can be converted into sales
Step-5-allocation criteria and
workload analysis
• Small and large territories in a particular
geographic spread may have an equal
potential on customer size
• in such cases, there is need to allocate
control units on the basis of traveling and
call norms in order to reach customers
Work-load analysis
• Consists of deciding how much of selling
effort is required to meet the sales
objectives for a given region
Work-load analysis
• The starting point of the workload
approach is the finalization of the tentative
boundary for each sales territory
• Account analysis involves estimate the
sales potential for each customer and
prospect in the territory
Talley’s workload approach
• The sales potential derived from account
analysis is then used to decide on how much
each account must be called on and for what
duration of time
• The total effort required to cover a territory can
be determined by considering the number of
accounts and calls to be made for each account,
the duration of each call, estimated time of travel
and non-selling activities
Talley’s workload approach
• The optimum call frequency is decided at
sales conferences
• Firms can be grouped into volume classes
and the call frequency for each volume
class can then be agreed upon
“call-plan”-a XEROX system
• Response function to each account is
generated from each salesperson’s inputs
• The program collects information from the
sales people by asking following questions
related to their territory-
• When no calls are made
• When one half of the present numbers of
calls are made
• When the present level of calls is
continued
• When 50% additional calls are scheduled
• When a saturation level of calls is reached
• A sales person also gives the probabilities
for each of the above options with different
cal frequencies
• Call plan then fits curves to these data
points and prints out the expected sales
for all feasible call frequencies, optimal
number of calls, length of each call to eb
made on each client, and the prospect
during an average effort period
• After the completion of the account and
workload analysis, the total workload is
divided by the total number of sales force
in the firm to reach the call allocations to
be made to each sales person in each of
the territories
New territories
• Many firms appoint new sales persons in
areas closer to their place of stay, where
as more experienced sales people are
assigned remote territories with a higher
potential for growth and sales realization
New territories
• Characteristics of each territory, needs of
the territory and the appointment of the
intermediaries are considered before
finally deciding the territory
New territories
• Boundaries of the territory are never kept
constant and evolve over a period of time,
depending on the nature and number of
customers in these areas
New territories
• Situations demanding a high level of
customer attention and deeper service
levels, many firms often allow sales
people in adjacent territories to operate
either additionally or jointly with the
existing sales people in that territory
New territories
• Unless these situations are well planned, it
may lead to confusion and demotivation
among the sales staff of an organization
Use of IT
• The computer programs are basically
used for-
• territory mapping,
• simulation,
• optimization of routine and
• call norm behavior
•
IT for territory mapping
• Are used to display territories as an
aggregate of various priori data sets
• A sales manager feeds the basic data on
the market potential, number of present
accounts, home location of salespeople,
and geographic boundary of control units
• Tentative territory boundaries are then
drawn
• The display gives the size and locale of
the territory, relevant data on current and
potential sales, and the geographic size
for coverage
• By a trial and error process ,a sales
manager can relocate his geographic
control units
• Territory maps are tied in which
spreadsheets that show the current
potentials, sales, targets and the number
of calls to be made by the sales person for
each category of customers
• Any changes in the location of the
geographical units are automatically
reflected on the computer screen and
corresponding figures undergo suitable
changes
• These programs can help in making
territories but do not have ability to find out
optimal designs
IT for simulation
• Involves establishing an objective function
and attempt to minimize it, subject to a
set of constraints
• Some computer programs use an
objective function designed to ensure
compactness
IT for simulation
• This is called the ‘moment of inertia’ which
is the sum of the squares of the distances
from the control units to the trail territory
centers weighed by the potential in each
area
IT for simulation
• The smaller the value of the moment of
inertia, the higher is the compactness of
the territories that make up the sales
territory
• Using the interactive mapping software,
simulation helps in improving the sales
territory design because the computer has
the ability to examine more combinations
IT for simulation
• Multiple runs are required to take the final
decision
• Many programs balance territories
optimally using several factors and
minimize driving time
IT for simulation
• These programs are quite complex and
are run in higher settings
IT for simulation
• The high cost of optimizing programs
make them applicable for large, multi-
product and multi-location companies with
a higher geographic spread
IT for simulation
• They don no take into consideration
problems of geographic barriers like
topographic features( hills, rivers ,forests
and mountains to crossover during sales
calls
Ch-7-management of sales quota
• It is an expected performance objective
• According to Kotler, a sales quota is the
sales goal set for a product line, company
division or sales representative
• It is a quantitative goal assigned to a
specific marketing unit such as a sales
person or a territory for a time period
• A sales forecast is an estimate of what a
firm expects to sell during a time period
using a particular marketing plan
• Sales quotas may be set equal to, or
above, or below the sales forecast
• Sales potential is the maximum share of
the market demand that a firm can obtain
under the legal environment. sales
potential help the firms for long-term and
strategic planning, but sales quota are
used for different reasons
Importance of sales quota
• 1)the sales manager use the sales quota
for motivating sales people. in a multi-
product situation, the sales people are
directed to put their efforts in specific
product categories that enable them to
know where to concentrate for achieving
the organizational goal
• 2)helps in giving direction to the sales
people’s efforts and resources for specific
ends and targets, the organization sets as
important. quotas help in providing a
means for measuring performance
through the measure of individual activity
in the organization
• 3)quotas serve as guidelines and direct
the behavior of sales people because it
also assigns authority as a formal right to
exercise control. it gives the power to
augment accountability and punish for
non-compliance
Principles of quota setting
• 1)use objectivity in approach while fixing
quotas and it should be based on facts
and figures drawn from the market
• 2)simplest method should be followed
• 3)there should be equal level playing field;
allotment should be uniform taking into
consideration factors like-
• A) conditions prevailing in the territory
• B) the level of competition
• C) experience and the ability of the sales
person
• 4)quotas should be flexible to the
prevailing and emerging market conditions
• 5)there should be level of definiteness in
the quota for a sales person (geographic
territory, or on money value, or on the
basis of units)
• 6)method of setting quota should not
change often
• 7)a participatory procedure followed jointly
by the sales manager and sales people
together serves as a tool of motivation
• 8)achievement of quotas should be linked
with additional incentives so that sales
people stay committed to the work-
process for a longer period of time
• 9)it is necessary to follow up quota
achievement procedure .this evaluation
helps in designing the compensation plan,
motivational plan and promotion of the
field staff
The concept of SMART
• Specific
• Measurable
• Attainable
• Realistic
• Time-specific
Setting quota-questions
• 1)Level one- does the quota state
accurately what the intended result are?
• 2)level two-does the quota specify when
the intended result is to be accomplished?
• 3)can the sales manager measure the
intended result?
Selling by objectives (SBO)
• Charles futrell suggests SBO involves two
basic steps-
• 1)Organization of the sales job
• 2)Defining annual objectives in important
areas
Organization of the sales job-key
areas
• 1)territory management
• 2)account management
• 3)call management
• 4)self management
Territory management
• Sales managers treat the territory as a
business unit and discuss the business
process to be followed for the year in
managing the territory
• Involves-
• the management of the revenues,
• expenses,
Territory management
• key accounts,
• development of leads and prospects,
• market share and growth potential,
• trade and dealer relations within their
territory etc
Account management
• Involves management of each customer
(size and revenue potential)
Account management
• Attempts are made to classify the clients
as per the BCG matrix
• ‘Stars’ are the accounts which need more
attention as they have a high future
growth potential; sales people have to
spend more time, effort and energy in
building this business than in current sales
Account management
• “Cash cows” are those accounts that give
higher sales to the firm and the
salesperson would like to maintain the
current business deal and build a long-
term relationship with these customers
Account management
• “problem-child” is the customer who has a
high potential but does not give adequate
return at the current period of time, which
calls for new selling strategy and problem
solving approaches
Account management
• “dogs ’are the accounts that need to be
divested because they have low sales
potential and declining sales ,and do not
show any promise of improvement
Call management by sales
manager-questions
• 1)is the sales person applying adequate
selling techniques during the customer
contact and presentation
• 2)is the salesperson making repetitive
mistakes in handling presentations and
managing customer objections?
manager-questions
• 3)is the salesperson knowledgeable
enough to respond to customers regarding
company, products, competitors, leads,
and material required before making a
sales call?
manager-questions
• 4)has the salesperson planned about the
likely customer objections and developed
adequate responses for the same before
the sales call?
manager-questions
• 5)is the sales person trained enough to
communicate adequately with customers,
meeting sales resistance, understanding
customer behavior, improving call impact,
gaining greater customer penetration and
following through the customer
adequately?
manager-questions
• 6)is the sales person knowledgeable
enough to explain the complexity of the
product ,its applications, service and
system back up, and technical knowledge
to handle the product malfunctioning?
Self management
• Issues involve dress, style, demeanor and
personal decorum of the sales persons
Self management
• Communication skills, memory, logical
speaking and writing competency are also
issues to be handled under self
management
• Knowledge of selling techniques and
selling strategies can also be shaped and
modified by training under self
management systems
Defining annual objectives
• 1)regular and recurring objectives
• 2)problem-solving objectives
• 3)creative objectives
• Objectives should be established by
personal, one-to-one discussion
Regular objectives
• Are related to the-
• sales volume
• targeted market share,
• expenses,
Regular objectives
• frequency and quantity of calls,
• prospects and lead generation,
• growth in order size,
• market coverage and reporting
procedures
Problem solving goals
• Are individual salesperson’s goals that
involve deviations from the standard and
routine objectives where things have gone
wrong and results are not as per the
desired outcome set before, where threats
and changes are bringing a blockage to
the smooth functioning of the organization
systems
Creative objectives
• Are the actions the sales person states
and commits which are new, challenging,
creative, innovative, intelligent and original
in the territory or in another area of
responsibility
• These goals mean managing
breakthroughs and quantum leaps to new
levels of performance
Creative objectives
• These goals enable the sales person to go
beyond the ordinary and achieve the
exception
• Completion of such objectives reflect in
superior performance evaluation
Procedure for setting quota
• 1)schedule planning
• 2)conferencing with each sales person
• 3)arriving at a summarized written quota
statement
Schedule planning
• Involves planning for goal setting meetings
with individual sales people and
particularly with new recruits
• These schedules are necessary to explain
systems and reasons, benefits and
incentives for each sales person and
goals for the organization
Schedule planning
• These are also called “orientation briefings
”for the organization because the authority
and status of the manger lend power and
impact to what is briefed to the sales
people
Schedule planning
• The salespeople should be allowed to ask
questions and get clarifications for their
doubts and then the sales manger
announces for a one-to-one meeting to
finalize each individual’s goals for the set
period
Schedule planning
• The sales manager asks the individual
goals from sales person for setting up the
guidelines for a combined goal setting
meeting
Conferencing with each sales
person
• Face to face discussion with the sales
person along with self-appraisal form
• key areas-1)volume per month,
• 2)expenses per month,
• 3)gross margin per month,
• 4)market share per month,
• 5)key account coverage per month
Conferencing with each sales
person
• Key areas to be discussed-(later)
• 1)the territory
• 2)the account
• 3)the call management
• 4)self management
• The meetings have to be formal,
structured and run with scheduled
discussion
Types of sales quota
• The method of selecting the quota largely
depends on-
• the business practice
• The design of the organization
• Level of competition in that industry
Types-quota
• 1)sales volume quota
• 2)sales budget quota
• 3)sales activity quota
• 4)combinatio quota
Sales volume quota
• Most traditional and commonly used
method
• Communicate what amount of sales for/in
what period
• Torrent pharmaceuticals uses rupee sales
objectives where as a company like
General Motors uses the number of cars
and commercial vehicles
Sales volume quota
• Can be set for-
• 1)geographical territories
• 2)different product lines
• 3)differernt marketing intermediaries
Break down approach
• The annual quota is set for the year and
then they are broken into specific time
periods like quarters, months and weeks
Types-sales volume quota
• 1)monetary sales volume quota
• 2)unit sales volume quota
• 3)points sales quota
Monetary sales volume quota
• 1)monetary sales volume quota-suitable
for organizations selling a broad product
line. may include international sales quota
as dollars/pounds or relevant foreign
currency –Zuari furniture uses this method
Quota setting by volumes
• Used when-
• 1)the prices of products are expected to
fluctuate considerably during the quota
period
Quota setting by volumes
• 2)when companies with a narrow product
line sell at a price that fluctuates little
during the quota period
• Volume quota setting helps the firm to
achieve the sales in volume terms as the
rupee may vary during the sales period
Setting quota in ‘points’
• Some organizations use sales volume
quota expressed in ‘points’ into which
money or unit sales or both can be
converted as desired by the sales
manager
• A multi product firm may fix a point volume
quota where sales of one unit will bring a
certain point, where as the other will bring
a higher point for the salesperson
• A multi-product firm may fix a point volume
quota where sales of one unit will bring a
certain point, where as the other will bring
a higher point for the salesperson
• If a sales person is assigned a quota of
1000 points by the organization, he is
expected to get sales orders of 1000
points as a combination of any product
mix of the firm
Sales budget quota
• 1)expense quota
• 2)profit quota
• 3)net profit quota
• 4)net margin quota
Sales budget quota
• Are set fro various units by the
organization in order to control expenses
(expenses quota), gross margins and net
profits (profit quota)
• The overall intention of setting a budget
quota is to make clear to the sales people
that cost to acquire
Expense quota
• 1)tying performance with sales expense
• 2)offering expenses control bonus for
incurring lesser expenses
• Many companies set upper limits on items
of expenses like lodging, meals and
entertainment and expect the sales people
to manage within that budget
Profit quota
• Can be set on gross margin or on net
profits
• Organizations emphasize net profits more
than sales volume
Profit quota
• The sales person is asked to generate
profitable sales rather than mere sales
• The rationale behind this type of quota is
that sales personnel operate more
efficiently to reduce expenses and
increase the sales resulting in increased
margins and profits
Net profit/net margin quota
• By subtracting the cost of goods sold and
the direct selling expenses from the sales
volume, one can determine the net profit
quota
• The problem is that the sales person does
not decide the price and has no control
over the mfg. cost therefore they cannot
be made solely responsible for the gross
margin
• In net margin quota ,the sales people
sometimes cut back costs so much that
there is negative impact on sales and
quality suffers
Sales activity quota
• In activities like retailing where the sales
person’s job providing information only,
quota can be fixed on the activity a sales
person has to perform rather than the final
outcome
• The sales person is expected to do some non-
selling activity and the quota can be set as a mix
of these activities
• Mostly seen in insurance selling where
salespeople must continuously do prospecting,
generate sales lead and develop new business
• Also common in pharmaceutical selling
• Can be set on-
• Total sales calls
• Particular classes or set of customers
• Call on prospects
• Number of new accounts
• Product demonstration etc
• Activities quota set objectives for job-
related duties ,which help the salespeople
in achieving their performance targets]
• They help the sales people to do the non-
selling activities perfectly, as they become
part of the job definition
• Not popular with sales people because
they consider non-selling activities as of
less value; so they put less time and effort
in these activities as they find them of little
significance
• Activity quota is not a basis for reward but
an effective understanding of these
activities helps the sales person to
understand why he could not achieve the
sales quota set for him on the specified
territory
Combination quota
• The most common combination is the sales
volume and activity quota
• Is used to control sales force performance on
the basis of selling and non-selling activities
• A combination sale quota can be achieving a
sales target of 1000 units along with developing
20 new key accounts, identifying 100 prospects,
and bringing back 50 lost customers
Combination quota
• Reduces the expected understanding
level of the job for a novice, and often
serves as a de-motivator
Combination quota
• Sales manager has to use this method
with continuous briefing and effective
control over the sales force
• Should be based on the most important
activities like sales volume and the
products that sell the most
Methods of setting sales quota
• 1)quotas based on sales forecasts and
potentials
• 2)quotas based on forecast
• 3)quotas based on past sales or
experience
• 4)quotas based on executive judgment
• 5)quotas based on sales people judgment
• 6)quotas based on compensation
Quotas based on sales forecasts
and potentials
• Large organizations use this method
• If the total sales estimated by a firm for a
certain territory is Rs 20 million during a
period of 12 months and 5 sales persons
are appointed to do the sales activities,
the sales quota for each would be of Rs4
million per annum
Quotas based on forecast
• Small companies set quota in relation to
their sales forecast or total market
estimate
• They establish quota on the basis of the
past performance in geographic areas
without regard to the sales potential
Quotas based on past sales or
experience
• Companies collect the sales data of the
previous years, average them out for each
geographic territory and then add an
arbitrary percentage for next year’s quota
• A few companies set quota based on
average sales of longer periods
Quotas based on past sales or
experience
• This method gives a rear view
perspective, as it dos not take into
consideration the sales potential
• If several competitors enter a territory,
then the sales potential is affected and the
trend projections may de-motivate the
salespeople
Quotas based on executive
judgment
• Used when there is little or no information
available about the market
• It may also be impractical to find out the
potential of a new product in an existing
territory or an existing product in a new
territory
Quotas based on executive
judgment
• Managers have to rely on their past
experience for making future predictions
• They try to analyze facts and figures for
the different markets and then decide the
quota for the territory, sales person and
intermediaries
Quotas based on sales people
judgment
• Many companies ask their own sales
people to set the quota for themselves
• Mostly applicable in situations where the
company is expanding the territory or
starting up its own sales force
judgment
• Provides an opportunity for the sales
person to test their abilities and it makes
them to work with higher motivation
judgment
• Many a times the salesperson set the
quota lower than his level to have comfort
on the job
• The salespeople may not have complete
or sufficient knowledge and information to
make necessary analysis for an effective
forecasting
Problems in setting quota
• 1)differences in ability, quality, experience
and position of the sales people are not
considered
• 2)sales person is not able to understand
the reason and logic behind the goals and
quota assigned to him by the sales
manager
• 3)many organizations use econometric
models and services of experts in the area
of marketing and sales research which
adds to the organization’s costs
• 4)quota setting procedures do not take
into account issues like maximizing the
shareholder’s equity, delivering a large
stake to the shareholders, maximizing
and delivering the share holder’s equity,
motivating the employee’s to contribute
more, reducing the attrition rate etc
• 5)quota setting has no relevance in
seller’s market where the demand is
higher than supply
• 6)quota setting procedure often suffer
from the bias and prejudice of the sales
managers and are used for reasons not
spelt out in literature
• 7)quotas are not accurate and are based
on estimates, which are based on certain
assumptions which may go wrong very
often due to the volatility of business
which reduces the scientific application of
the quota concept
• 8)Many times sales people do not give
proper attention to the non-selling
activities such as searching for prospects,
handling customer objections and creating
market for probable market entry of new
products which may reduces the
effectiveness of quota setting procedures
for sales organizations
Ch-8-recruitment and selection of
sales force
• 4 stages hiring-
• 1)human resources planning process
• 2)recruitment stage
• 3)selection
• 4)socialization
Challenges in sales force selection
• 1)determination of characteristics that
differentiate candidates who perform
better
• 2)measuring these characteristics
• 3)evaluation of the motivation level
• 4)who will make the ultimate selection
decision
Performance = ability X motivation
• It is observed that, the very high level of
motivation in candidates at the interview
stage declines over a period of time
because the level of motivation depends
more on contextual circumstances rather
than the ability of an individual
Performance = ability X motivation
• In IBM and Sun Micro Systems ,hiring field
staff decisions are taken by a sales
manager
Hiring by HR dept-advantages
• The HR department is well equipped to
handle the legal requirements of selection
• The department is also responsible for the
initial screening and maintaining of
contacts with applicants as well as
development of an applicant’s database
• Balance needs to be struck between
supervisors, co-workers and subordinates
Components of planning
• 1)strategic position analysis
• 2)turn-over
• 3)job analysis
• 4)job qualification and job description
Strategic position analysis-6 steps
• Is a systematic procedure that describes
the way a sales job is to be performed and
the skills and abilities needed to perform
the job
• Comprises of 6 steps-
Strategic position analysis
• 1)determination of performance measure-
e.g.. maintain a profitability of 10%over a
period
• 2)identification of critical success factor-
e.g... time to be spent on prospecting and
making sales calls be 60:40
• 3)the performance dimensions of the
position based on knowledge, skills,
performance, motivation (effective ,in-
effective and over performing)
• 4)determination of the performance
measure dimensions-
• 5)operationalization and establishment of
performance
• 6)standards and the design of assessment
tools
Expected sales persons for future
• N=S/P (1+T)
• Where,
• N=number
• S=sales forecasts
• P=present average sales
• T=the turnover rate of sales people
Turn-over
• Average %of the sales force that leaves a
sales organization in a given period of
time
• Just-in-time hiring is when a territory
becomes available
Turn-over
• Stock piling is a process of hiring people
before a territory opens on the assumption
that a territory will become available in
near future
• JK group, ICICI have re-designed their
sales territories
Job-analysis
• Is defined as the gathering and
organization of information concerning the
tasks, duties and responsibilities of
specific jobs
• Techniques-
• 1)task inventory analysis
• 2)critical incident techniques
Task inventory analysis
• Is a collection of various methods
practiced in military organizations located
in USA
• The techniques is used to determine the
knowledge, skills and the
abilities(KSAs)needed to perform the job
• 3 steps of (KSAs)-
Task inventory analysis
• 1)interview-with current people and their
managers
• 2)the survey-administration of survey
instrument with task inventories and rating
scales with current job-holders
• 3)generation of a task by the KSA matrix
Critical incident method
• Is used to develop the behavioral
description of a job
• The supervisors and workers generate the
behavioral incidents of job-performance
• E.g. in case of a retail sales person
rushing to a shelf and finding the product
for the customer after he could not find it
Job qualification and job description
• Job qualification refers to the aptitude, the
skills, the knowledge, and the personality
traits required to perform the job
successfully
Job qualification and job description
• E.g. the technical skills required at Infosys
are-skills in open system, web technology,
Microsoft technology,IBMAS/400,data
warehousing and business intelligence,
communication technologies and IBM
mainframe skills
Job description
• Is a written document that details the
characteristics, the duties and the
responsibilities of a job
• Travel requirements, posting in a foreign
location, carrying heavy samples etc.
Job description-a typical format
• 1)The title of the job
• 2)The title of the job’s immediate
supervisor
• 3)The general responsibility of the job
presented in the form of a job summary
• 4)The major job duties such as selling
activities, the obligations on customer
service, the collection of market
intelligence, and administrative
responsibilities
• 5)Minor job responsibilities such as
working on trade shows, attending product
seminars, displays in conferences, and
writing call reports
• 6)The relation of the job with other
positions in the company
• 7)The reporting relation ship and chain of
command in the organization
• 8)The minimum qualifications required for
the smooth conduct of the job
Sales force recruitment
• Recruitment is defined as the process of
generating a pool of qualified candidates
for a particular job
• Is an act of inducing qualified and
appropriate people to get interested in and
apply for a sales person’s position within
a sales organization
Sources of recruitment
• 1)internal sources-
• 2)external sources
Internal sources
• 1)lateral and upward moves
• 2)interns and co-operative students
• 3)employee referral program
Advantages/disadvantages-internal
sources
• Increases the morale and loyalty of the
sales people and puts them in better
position to evaluate their performance
Advantages/disadvantages-internal
sources
• Lower investment in training and
recruitment costs
• Discourages new recruits to the
organizations and values experience over
training, which adversely affect the jobs
that require thinking and creativity
External sources of recruitment
• 1)other industry sources-employees of
competing firms, customers, suppliers
• 2)educational institutes and campus
recruitments
• 3)employment exchanges
• 4)placement consultants
External sources of recruitment
• 5)walk-in-interviews
• 6)networking referrals
• 7)web consultants
• 8)response to direct and open
advertisements
External vs. internal recruitment
• Hiring externally adds fresh talent to the
organization
• Organizations run the risk of poor
acceptability of the new recruits within the
existing set up and workforce
• Style of new recruited individuals may
clash with the organization’s culture and
system
• Internal recruits cost the organization less
than external recruitment and is also a
signal that there are opportunities within
organization
• IBM,3M have a clear internal recruitment
program
• The disadvantage is that it reduces the
likelihood of innovations and new
perspectives
• Another drawback is the treatment that the
promoted person will give to the co-
workers within the organization and the
territory
Selection of a sales person
• Is the mechanism that determines overall
quality of the human resources in an
organization
• 1)factors related to the applicant-
candidate’s selling aptitude,
• education and training,
• basic knowledge of psychology,
• physical, mental and socialization
qualities,
• age and life-cycle stage,
• family background
• 2)factors related to the organization
(policy)-
• role of mgmt. in the selection of man-
power,
• focus on the candidate’s abilities rather
than his source of recruitment,
• following set and proven standards,
• simple and clear norms of selection ,
• giving due importance to all stages of
selection,
• selection of flexible methods of
recruitment according to the situation,
• consideration of general principles
prevailing in business, society and in the
country
Reliability and validity
• The economic value of a good selection
process is higher than what people realize
in the industry
• Reliability is the consistency in
measurement across time
• Validity is the extent to which scores on a
test or interview correspond to actual job
performance
• Content validity refers to the strategic
assessment of the degree to which the
content of the selection method is
representative of the job content
• An empirical validity strategy
demonstrates the relationship between the
selection method and job performance (is
established when the applicant receives
high scores on an interview is found to be
scoring high on the job performance
indices)
Selection procedure
• 1)inviting a blank application
• 2)personal interviews
• 3)reference checks
• 4)physical examinations
• 5)psychological tests
Selection procedure
• 6)intelligence
• 7)personality
• 8)aptitude and skills
Selection procedure
• 9)determination of terms of service
• 10)appointment
• 11)initial orientation
•
Selection methods-research
analysis
• Psychological tests have the greatest
predictive validity for evaluating a potential
employee’s future job performance
• Evaluation based on personal interview
have the least predictive validity of job
performance
analysis
• test scores have the highest correlation
with a candidate’s subsequent
performance on the job with an average
co-relation co-efficient of 0.53
analysis
• Test scores account for about 28%
variance in subsequent performance
across employers
• Ratings based on personal interviews
have an average correlation of 0.14 with
subsequent job performance and account
for 2%of variance on job performance
interviews
• To gain an insight into an applicant’s
mental abilities and personality
• Applicant’s personality
• Level of appearance and intelligence
• Communication skills
• The degree of sociability among peers
interviews
• Aggression level
• Empathy
• Ambition
• Traditional interviewing methods have low
reliability
• The effectiveness of unstructured
interviewing techniques can be enhanced
following a structured interview
Format of a structured interview
• 1)situational questions-e.g. you have
planned a holiday and suddenly you
remember that you were supposed to
meet a client at the same time. this has
somehow slipped from your mind last
night when you made the day plan. what
should you do in this case?
• 2)job knowledge-what is the correct
procedure for closing a sale for a service
and how different do you think it is from
closing a sale for a fast moving consumer
good?
• 3)sales person’s requirement-some
periods of the year are really hell due to
the seasonality of demand and a sales
person has to work over time on the job,
what do you think about working over
time?
• Structured interviews are valid predictors
of job performance
• Philip Morris,virginia gas company and
Trident corporation(USA)welspun limited
etc.follow
Un-structured interview
• Are conducted in a format when the
applicant is encouraged to speak freely
about his experience,training,career plans,
and activities that he thinks are important
to the success of the organization
Un-structured interview
• Sales managers are of the view that this is
the best probing technique to know the
candidate’s personality in depth
• Un-structured interviews are found to be
suitable for screening out unsuitable
candidates
Assessment centre
• Is a set of simulated tasks or exercises
that applicants are asked to perform
• Observers and sales managers rate the
performance on these simulations and
make inferences regarding each
candidate’s managerial skills and abilities
Assessment centre
• As assessment centre is found to be a
valid predictor of job performance
Assessment centre
• The in-basket exercise is the most
common method of selection which
includes problems, messages and reports
that might be a part of the basket of
performance for the sales people on the
job
Assessment centre
• The applicants are asked to deal with
these issues as they see fit and then are
assessed on how well they have
prioritized the issues, how creative and
responsive they are in dealing with each
one, the quality of their decisions and
other factors related to the job
Psychological tests
• Are conducted to measure the mental
ability and personality characteristics of a
sales person (verbal, qualitative and
cognitive)
Psychological tests
• A cognitive ability test measures the
applicant’s potential in a certain area such
as quantitative mathematics and is a good
predictor of job performance
Psychological tests
• General cognitive ability is measured by
the summation of the scores on tests of
verbal and quantitative abilities and is a
measure of general intelligence (a high
level of “g”value indicates that the person
can learn faster and quickly adapt to
organizational settings.peple with higher
level of “g”are found to be top performers
in organization
Tests-categories
• 1)intelligence tests-test of memory, word
fluency and inductive learning
Tests-categories
• 2)aptitude tests-to check any problem in
the person’s sensory processes and
intellectual capabilities (to check learning
skills and level of reasoning)
Tests-categories
• 3)personality tests aim at measuring non-
intellectual characteristics of the sales
people that includes motivation interests,
ability to adapt and adjust, desire for level
of interpersonal relationships (Edward’s 17
traits test)
Achievement tests
• Are also called proficiency tests
• Measure the skill or knowledge acquired
from a training programme or job
experience
• Useful in situations when
Achievement tests
• an experienced person is to be appointed
as a sales person
• When a person is to be promoted to a
higher level
• When a person is to be transferred from
one job to another (to identify the need of
a training program)
Interest tests/temperament tests
• Are inventories of likes and dislikes of
people in some occupations, hobbies and
recreational activities
• Temperament tests help to evaluate the
various factors of temperaments such as
likes and dislikes, habits and preferences
• Attitude tests are conducted to see the
attitudes of applicants towards business
conditions, organization, nature and
conditions of employment and type and
quantum of compensation related to
government bodies
graphology
• Is the study of handwriting for the purpose
of measuring the personality or other
individual traits
graphology
• Includes 300 types of assessments
including the slope of the letters, the
height at which the letter ‘t‘ is crossed, the
pressure on the writing
• Operations in American army, NASA,
Pentagon, Ogilvy use this method
The ‘big-five’of personality
psychology
• 1)extroversion-the degree to which
someone is talkative, sociable, active
aggressive and excitable
• 2)agreeableness-the degree to which
someone is trusting, amicable, generous,
tolerant, honest, co-operative and flexible
psychology
• 3)conscientiousness-the degree to which
someone is dependable and organized
and conforms and preserves on tasks
• 4)emotional stability-the degree to which
someone is secure, calm, independent
and autonomous
psychology
• 5)openness to experience-the degree to
which someone is intellectual,
philosophical, insightful, creative, artistic,
curious
Recruiter’s strategies
• 1)multiple-hurdle strategy
• 2)clinical strategy
• 3)statistical strategy
Multiple hurdle strategy
• This method requires a sales person to
clear each method before moving to the
next stage
• Is the most popular choice when large
number of applicants is involved in the
selection process
Clinical strategy
• The decision maker subjectively evaluates
all the information and arrives at a
judgment
Statistical strategy
• The various pieces of information are
combined according to some type of
formula and the job goes to the candidate
with the highest score
Socialization
• Is defined as the process of orienting a
new sales person to the sales
organization or the territory or division in
which he or she will be working
Socialization
• In many organizations, the socialization
process is very informal and casual in
nature
• Without a proper socialization program the
new sales people may misunderstand the
sales goals, the organization mission and
chain of command in the organization
Stages of socialization
• 1)anticipatory
• 2)encounter
• 3)settling in
Anticipatory stage
• New employees have different kinds of
expectations about the organization and
job based on the information available with
them through newspaper reports, peer
information, word of mouth information
public relations and other available
sources
Anticipatory stage
• Appropriate expectations can be created
through a method called “realistic job pre-
view”
RJP(realistic job preview)
• A sales manager provides a realistic
picture of the job demand, the
organization's expectations of the sales
person ,and the work environment in the
organization
RJP(realistic job preview)
• Can be made to either to the applicants or
to the final list of candidates
• RJP can be presented orally ,in a written
format,or in a videotape or on the intranet
Encounter stage
• Employee has started working on the job
and faces the reality
• The new person still need additional
information about the company
policies,procedures,reporting
relationships,rules of the job and other
details
Settling in process
• New sales people start feeling they are
part of the organization
• If this stage is successful, the worker will
feel comfortable with the job and his role
in the sales territory
Settling in process
• A program called “employee-mentoring”
performed under the supervision of an
experienced employee of the organization
helps a new employee to settle down
Settling in process
• BPO companies and IT companies like
Tata Technologies are conducting internal
branding programs by appointing human
resources ambassadors and listening
posts in the organizations
• The support of the supervisor is a
necessary conditions for the success of
the socialization program
Ch-9-training the sales force
• Sales training is a process of providing the
sales force with specific skills for
performing their tasks better and helping
them to correct deficiencies in their sales
performance in cases of
• New product introductions
• New competitor entry
• New technology
Not just training but training and
development!
• Training is undertaken so that the sales force
can contribute towards the achievement of
organizational goals
• Development stresses on the processes and
strategies by which a sales organization
provides the sales force with abilities that the
organization will need in the future
• Training focuses on the current job of a sales
person,development focusses on the future job
that the sales person is likely to hold in the
future
development!
• Training focuses on individual
performance, development stresses on
the long term goal of the organization
• Training addresses the performance
problems of the sales person, where as
development is concerned with the sales
force value and skill and adaptability to the
future organization’s goals and challenges
development!
• Training program solves immediate
problems of the organization, development
is concerned with the long-term
perspective of an employee's growth and
success in the organization
development!
• Training builds job-related meaning for the
sales person, development brings
organization related meaning
• Training leads to a better performance in
the current job, while the process of
development provides benefits in terms of
a more capable and flexible sales force in
the long run
Necessity of sales training
• Individual differences in the choice of
products
• Organizational complexities in buying
• Adoption of information technology
• Dynamic and competitive environment
When to build sales training
programs?
• Will the training program be effective in
solving a problem?
• What is the level of realism involved in the
goals for the training program?
• Will the investment in program be
justified?
• Will it produce the desired or intended
results?
Training costs
• 1)cost of the program
• 2)cost of analyzing and evaluating the
program
• Potential benefits of the training program
should also be considered while
evaluating the cost effectiveness of the
training program
Training costs
• Listening and presentation skill related
training programs work better for sales
people while motivation skills is more
suited for the supervisory level sales
people
Training costs
• Training will work only if it is related to
both the individual and the organizational
goals
• A successful training program can raise
performance, improve morale, and
increase an organization’s potential in
achieving the goals
Theories and principles of sales
training
• Awards rather than punishments tend to
be more effective for changing behavior
and increasing one’s learning in the long
run
• The development of new behavior and
norms is facilitated by practice and
repetition
Schools of learning
• 1)conditioning or connectionist
• 2)cognitive
Conditioning/connectionist theories
• `are based on the assumption that there is
a desired response to a stimulus
• This theory believes in the laws of
associations, such as assimilation,
frequency, continuity, intensity, duration
,context, acquaintances, composition
,individual differences and a cause-effect
relationship
• Is based on the assumption that, when
any action causes satisfaction, it will be
associated with a particular situation and
the same act shall be repeated when a
similar situation arises
Pavlov’s experiment
• Whenever the dog felt hungry, it salivated
• Every time food was served to the dog,
the experimenter sounded a bell in front of
the dog
• After some time, each time the bell was
sounded, the dog started salivating
• Food was the un-conditioned stimulus and
the bell was the conditioned stimulus
Skinner’s “operant conditioning”
• A pigeon in the cage is used
• Food was served to the bird outside the
cage
• The bird, upon feeling hungry tried to
reach the food
Skinner’s “operant conditioning”
• There were switches through which the
bird tried to open the cage
• After some time, the bird switched the
correct switch that led it to the food
• The bird was able to associate the switch
in the cage with the desired result of
reaching near the food
Wolfang Kohler’s ‘gestalt’school
• Believes that ,for any learning it is not
necessary to establish a previous history
of connection between the desired
response and the stimulus
• It is believed here that, people learn by
applying their own judgments and insights,
which he grouped as ‘gestalts’
Wolfang Kohler’s ‘gestalt’school
• Believes that all learning leads to a goal
and all behavior has a purpose
• Cognitists believe in latent or collateral
learning which leads to the formulation of
enduring attitudes and like and dislikes
• Training is goal oriented and must take
into consideration the goals of the trainee
6 steps for a trainer
• 1)Provide a overview of the training
program at the beginning so that the
trainee gets a holistic picture
• 2)Include a number of relevant examples
so that the trainees can relate to the
program and their job
• 3)material should be designed and
arranged in a logical manner and should
be presented in meaningful sections
rather than in one go
• 4)the material should use language
familiar to trainees and visual aids in the
training material to explain the concepts in
the material
• 5)program be designed and executed in
such a manner that each succeeding step
builds upon the previous one
Training methods
• 1)cognitive learning
• 2)affective learning
• 3)psychomotor learning
• 4)multi sensory learning
Cognitive learning
• Stresses visual and audio experiences to
gain understanding
• May involve reading. lectures, audio-visual
presentations, case problems etc.
Affective learning
• Like attitudes, values and interest
acquisition are best learned through field
trips, open discussions and role plays
Psychomotor learning
• Is acquired through practice ,drills,
behavior modifications, simulation games,
demonstrations and internships
Components of a successful
training program
• 1)cognitive
• 2)affective
• 3)sensory motor component of behavior
Knowledge universe of a sales
person
• 1)company
• 2)product
• 3)competitor
• 4)knowledge of the market
• 5)knowledge of self
• 6)his own personality
Product knowledge
• Manufacturing, physical and compositional
knowledge of the differential advantage of
the product as also the net benefit that
each feature delivers to the customer
Competitor’s knowledge
• Competitor’s marketing program
• Its sales staff
• Market coverage strategy
• Promotional strategy followed
Knowledge about the market
• Nature of competition
• Buying power of various buyers
• Their buying processes and strategy
• Past credit history and payment norms
• Responsible persons in the organization
for order placing and payments
Knowledge about self
• Understanding of one’s own self and the
abilities to handle customers
• Skill level in handling customers
• Ability to make sales calls within the
framework of company norms
• Ability and expertise to communicate and
present the unique selling proposition of
the product
• Ability to convince the customers about
the differential advantage of the product
through a (FAB) analysis-feature, benefit,
advantage
Training process-phases
• 1)training need assessment and
development
• 2)conduct of training program
• 3)evaluation of a training program
• In organizations like
ICICI,HLL,LIC.EUREKA FORBES,P&G
the sales manager works jointly with
respective human resource mangers
Training need assessment
• 3 levels
• Organizational level analysis
• Task level analysis
• Individual level analysis
Organizational level analysis
• Sales manager evaluates macro issues
like the organization’s structure, culture,
mission, business climate and long term
and short term goals
• Organizational analysis provides
information on the level of acceptance of
innovation in work processes
Task analysis
• Examines the sales job to be performed at
different levels in the sales organization
Task analysis
• Focuses on all the functions and jobs in
the sales department and to decide which
one needs the attention of the training
program
• KSAs are identified and information from
these are used to determine the type of
training required by the sales department
in the organization
Personal or individual analysis
• Helps to determine to all those sales
people who need to undergo the training
program
• This is done by assessing the
performance of the sales staff
• In case of discrepancy between a sales
person’s actual performance and the
expectations of the company, the training
program be planned
• The assessment phase should lead to the
identification of the objectives of the
training program
• Each objective should be precise,
challenging and achievable and should
have clarity so that it is understood by all
• The objective should be expressed in
behavioral terms and the criteria for
testing the training program’s
effectiveness should come directly out of
these objectives
Glen mark's training assessment
• From the study of the field sales force
behavior of doctors, retailers and peers, it
was observed that, there was a high level
of interpersonal sensitivity among the field
sales force
• The overall objective of the training
program was to improve the level of
interpersonal sensitivity
• The specific content dimension of the
training program included the
improvement of listening and feedback
skill of the sales staff
• The behavioral objectives of improving of
listening and feedback skills included the
summarization of key points of the action
plan by the supervisor, at the end of the
discussion
• The behavioral objective of feedback skills
included addressing the issues raised
during the discussion in concrete terms,
where the supervisor attacked the
problem and not the person who did the
job
• The supervisor then provided feedback on
this in a timely manner
Training need discovery-William
Berliner and William McLarney-
• 1)listing the duties,responsibilities,or tasks
of the job under consideration on the basis
of the job description guide
• 2)listing the standards of work
performance related to the job
• 3)comparing the actual performance
against standards
• 4)determining the part of the job that
creates a problematic environment for the
sales person and whether or not he is
performing the job, as per the standards
• 5)determining the kind of training needed
to overcome specific difficulties and
problems
Training need identification
• 1)identification of the specific problem-
product, organization, job-related
knowledge deficiency, skill related
problems, strategic and regulatory issues
within the organization, job related and
job-induced problems
• 2)anticipating impending and future
problem-market expansion, product
diversification, entry into new territories,
newer methods of technology, entry in to
international markets, newer segments,
restructuring etc
• 3)management requests-need to be
double checked
• 4)interviewing and observing the
personnel on the job
• 5)performance appraisal-by comparing
past performance and current level of
performance
• 6)questionnaire survey-with sales people
• 7)check-list
• 8)atttitude survey
• 9)inter-personal skill test –through case
discussion and incidents to identify
subjective beliefs about the value of the
training program as well as the systematic
identification of problems requiring a
solution
Training approaches
• 1)by location
• 2)presentation
• 3)type
Location
• On the job
• Off the job
On-the –job training (OJT)
• Normally provided after the initial break-in
period is complete
• Salesperson performs the work under the
supervision of either a sales supervisor, a
senior sales staff, or a sales trainer in the
actual work setting
• One of the popular method is Job rotation
• Job rotation allows the sales people to
gather experience in different territories of
the market to get a broader understanding
of the organization and market demand
(either with technology selling or high
technology product)
• Involves learning on saels under the
supervision of an experienced technical
sales person
• Helps a sales person to learn the duties
and functions of a sales person through
tasks generated by the job itself
• Does not involve taking employees out of
the work environment and the cost of
hiring specialist trainers are not incurred in
on the job training methods
• A trainee learns abut the rules, regulations
and the procedures by observing their
day-to-day applications
• Most appropriate when a sales person is
to be imparted the skill and knowledge in a
short time
Job instruction training(JIT)/step-by
step training
• 1)preparation of the trainee for the training
program
• 2)the trainee receives instructions
regarding postings of the sales force in the
territory and accompanying the trainer
during the sales call
Job instruction training(JIT)/step-by
step training
• 3)correction in the sales trainer’s
presentation after a few trial presentations
• 4)encourage the sales staff to ask
questions and allow the trainee to work
along with the sales trainer, who follows
up regularly on the trainee
Vestibule training (VT)-training
centre-
• Attempts to duplicate the job situations in
a class-room environment
• Is simulated to suit the market situation
and enables a sales person to learn new
skills rather than only performing the sales
job
Vestibule training (VT)-training
centre-
• Also called ‘geared job duty' where
theoretical training is given in the class
room and practical field –work is
conducted in smaller markets
•
Demonstration method
• Training is given by experienced sales
people and supervisors
• Helps the sales force to get acquainted
with peers and seniors in the organization
• A sales trainer demonstrates to the sales
force how to perform the activity of selling
by going through a step-by –step process
of explaining why and what he is doing
Off-the-job training
• Can be conducted off the job as a formal
course with simulation and role playing
exercises in a classroom setting
• Are conducted either at company owned
class rooms or at professional training
centers
• Avoids the distraction and interruptions of
on-the-job training environment
• What is learnt in the class-room cannot be
fully practiced in the actual work
environment
• Many sales people look at these programs
as a break from their work and seek to
enjoy the program instead of learning
something substantial for application in
their job
simulation
• These are devices or solutions that
replicate the sales job demands at an off
the job site
• Useful when information is complex,
equipment is expensive and the cost of
wrong decision is high
MarkStrat 3
• Is a popular training simulation product
developed by Stanford Business School
• This particular simulation model replicates
a highly competitive market and allows the
sales trainees to take the position of
competitors and then take various sales
and marketing decisions
• The sales trainees work in groups and
submit their results to the trainer
MarkStrat 3
• The trainer uses the results and evaluates
the decisions of the trainees
MarkStrat 3
• He shows the effects of the decision on
the company’s performance by
demonstrating the various measures like
profit impact, market share erosion and
the loss of profitability to the sales trainees
MarkStrat 3
• By simulating the real business situation
with no business risk, the trainees can
hone their decision-making skills and the
trainer can also change the market
conciliations by putting restrictions and
changing the market dynamics
FACT-developed by Firearms
Training Systems
• Uses a microcomputer and a 10-ft video
screen to confront sales officers posing as
policemen with the sights and sounds of a
number of situations commonly confronted
in the sales job
• In the airlines business, the service staff
and the pilots use flight simulations, which
include motions in addition to visual and
auditory realism
Training Systems
• Pizza outlets have used simulators for
training pizza boys
Training Systems
• With maturing technology, differences
between the simulator and computer
based multimedia technology is maturing
very fast, simulators are becoming
cheaper and are becoming more
affordable and accessible to a large
number of organizations
Virtual reality method
• Uses a number of technologies to
replicate the real-life work environment
rather than just aspects, as found in
simulations
• The 3 dimensional environments enable
the user to interact with and manipulate
objects in real time
Virtual reality method
• This is generally used when the tasks
have a high potential for damage to the
equipment or pose a danger to the
individual
• Tasks like sales presentations and
demonstrations are done virtually during
training program
Types of training
• 1)cross-functional
• 2)team training
• 3)creativity
• 4)literacy training
When re-training?
• A sub-set of skills training focuses on
giving the employees those skills that are
needed to keep pace with the changing
job requirements
• Adoption of a new technology like SAP
When re-training?
• Changes in the nature of job and job
responsibility
• Rise of a new management culture due to
mergers and acquisition
When re-training?
• Entry of a new product in the market
When re-training?
• Torrent Gujarat (pharma)allows the sales
staff to undergo retraining in periodic
intervals to keep pace with the changing
technology and tactics in performing the
sales job in a highly competitive
environment
When re-training?
• When sales people have been displaced
or are moving out of an organization by
taking VRS
Cross-functional training
• Is a method of job enrichment
• In the areas other than their assigned job
responsibilities
• Job-rotation is one of the methods
• In Cadila,sales people are sometimes
given corporate responsibilities
Peer training
• Departments train personnel for a certain
period so that each worker or set of
worker develops an understanding of the
functions and operations of other
departments
• Peer trainers and high performing
workers,who also play the role of internal
job trainers are effective in training
Peer training
• Should be good in skills and also be very
patient and motivated to teach trainees
• Some organizations promote peer-training
roles as an honor and offer a tangible
reward to add on to basic job
• Disney Land peer trainers are paid extra
money and wear a badge in the
amusement park
Team training
• Used in business-to-business selling and
high technology product selling
• Japanese management styles and market
operations make sales program team-
centric
Team training
• Hughes telecom,Infosys and Sat yam train
sales people by taking them outdoors and
inculcating team skills and spirit through
experiential learning
Team training
• Compaq and IBM take salespeople to
team training programs and adventure
games like white water rafting, bridge
building in high mountains and escape
exercises in backwaters as part of the
team training
Creativity training
• A popular approach is brain-storming
• Assumption is that creativity can be
learned and fostered and that sales
people can solve their problems in newer
and more creative ways
• Comprises imagination and practical
phases
Creativity training at Bajaj Auto(for
sales managers)
• Sales managers were taken to a school
where managers were asked to present
their problems to students
• The students were then invited to solve
these business problems
• It was found that students solved the
problems presented to them without any
prejudice
sales managers)
• The managers discovered this process of
‘un-winding' at the program and enjoyed
the sessions where 10 year old students
solved complex business problems
sales managers)
• In the next round logical reasoning)
managers participated in the process of
rationalization of the solutions offered by
the students
sales managers)
• One of the managers wrote that business
and job decisions are fundamental to life
and a simple decision can change the
thought process
• Documenting the bottom line of a creativity
program is difficult
sales managers)
• Dupont uses the creative techniques to
test why new product innovations work in
the laboratory and not on the shop-floor
• Creativity training at Dupont resulted in a
higher adaptability of the employees
sales managers)
• PepsiCo India with its brand of potato
chips saved huge costs by creative
training
•
Literacy training
• In the sales context, literacy means the
mastery over basic and functional skills
• Functional skills cover a person’s skill
level in a particular area of specialization
Literacy training
• Basic skills are the skills of reading, writing
and communication ,mathematics,
problem-solving etc
Literacy training
• GE,American Express,Infosys and Patni
computers sponsor candidates for
undertaking on –site learning programs
conducted by leading business schools in
the country for junior level managers with
a minimum work experience of 3 years
Evaluation phase
• Evaluation approach includes the
collection of ratings by both the trainee
and the trainer in every program
• Companies also conduct a test before and
after the training program
• The effectiveness can be measured by-
Evaluation phase
• 1)reaction-evaluate the trainee’s reaction
• 2)learning-did the trainee learn the skills
and facts that the sales manager taught?
• 3)behavior-whether the trainee’s behavior
has changed?
• 4)results-what final results have been
achieved and how he learned to work on
the field?
Which training method to choose?
• 1)training program objectives
• 2)time available
• 3)participant’s level of understanding
• 4)previous experience
• 5)financial resources available
Which training method to choose?
• 6)equipment needed
• 7)degree of interaction required
• 8)degree of participation required
• 9)size of group
• 10)facilities available
• Any training method will have a
combination of one or more of these
components
Training methods
• A) didactic-one-on-one instructions and
lectures
• B)participative-
• 3)sales conferences,
• 4) seminars,
• 5)discussions,
Training methods
• team training,
• case study,
• role play methods
• simulation,
• brainstorming,
Training methods
• fish-bowl,
• group exercises,
• Workshops
• sensitivity training
• transactional analysis,
Training methods
• training within the industry,
• TV, film and slide presentations,
• field trips
• in-tray exercises,
• transcendental meditation
Didactic method (direct teaching)
• Is delivered during sales apprenticeship
• One-way method of training, which is
applicable to skill based training program
• The trainee is passive learner and
directive instruction creates a dependency
on the trainer for learning
How to make lectures interesting?
• 1)structure the lecture
• 2)reinforce the message
• 3)aid concentration-by change in style,
pace, delivery, sessions for questions,
distribution of hand-outs
How to make lectures interesting?
• 4)material used for the lecture-support
material
• 5)make it memorable for the participants
• 6)deliver with dynamism
• 7)use questions
Visual support for lecture
• Slide presentations
• Transparencies
• Flip charts
Advantages-lectures
• Ideal for large group where one can
communicate with a larger audience more
quickly and efficiently
• Economical as the cost is distributed over
a large number of participants
• The trainer has a high control over the
material as he builds them by a logical
structure and also over the time
Disadvantages-lectures
• Is a passive method which makes it
difficult for the trainer to know whether or
not the participants are with him
Disadvantages-lectures
• It involves the audience to a minimal
degree which can be countered by a Q&A
session
• The success of a lecture depends mainly
on the ability of the speaker and the
trainer’s skills make the lecture
stimulating,thoughty provoking and
absorbing
Participative
• Active involvement of the trainees
• Overall strategy of ‘learning by doing’is the
only successful route of learning and
acquiring knowledge
Participative
• Helps in the cross fertilization of ideas
,beliefs, attitudes, knowledge and
experiences between people
• A environment of responsible adults is
created and their knowledge and
experience is cared for
conferences
• Highly structured device for conveying a
message on a large scale
• Many times conferences run on multiple
tracks and sessions of interest are
presented to the trainees
conferences
• Sales conferences are used for motivating
salespeople
• Are held at selected locations where
sessions are presented with some
entertainment
• The chairman is a key figure in the
conference as he rallies around themes by
inviting speakers for the training sessions
seminars
• `is a conference on a smaller scale
• Centered around a single theme which is
examined in some depth
seminars
• Speakers are acknowledged specialists
who make brief presentations
• Size of the seminar should be such that it
can be readily divided into small group
(too small a group limits the expertise and
views that can be drawn on and produces
frustration and a sense of inadequacy
seminars
• Minimum number of 4 and maximum of 5
or 6 persons in a group
• Syndicates of over 6 persons need to be
carefully selected so that valuable
contributions are not side-tracked
discussions
• The discussion leader (sales manager)
should be skilled in-
• Planning
• Careful preparation
• Encouraging individual involvement
discussions
• Controlling the debate
• Summarizing the results of meeting
• Ensuring suitable actions
• Minimum no. of members need to be
present and co-opted members should be
called on demand
Role Play
• The incidents selected for the role play
must be as realistic as possible for the
sales people by preparing a brief
• The brief should clarify the issues involved
and must allow a sales person to develop
the role
Role Play
• Those who are not involved are asked to
be observers and may note down the
effects and implications of the behavior
Role Play
• Video-camera may be used to record the
play which can be later used for group
feedback, de-briefing and even for
counseling of the sales people
• Suitable for interpersonal skills such as
interviewing ,negotiating and creative
selling
Case-study
• Advocated by the Harvard Business
School-USA
Case-study
• Objective is to present the sales trainees
with a real-life business situation and
provide a considerable amount of
background information from which they
are expected to analyze and compute the
outcome of a series of events or provide a
solution to a specific problems
Case-study
• Normally suitable for a small syndicated
group who study the problem in detail
• Usually the trainees are presented with a
record of a set of circumstances in a case
which might be based on an actual event
or an imaginary situation
Case-study
• 1)the trainees are asked to diagnose a
particular problem and develop
recommendations for solving it
• 2)the trainer presents the problem and the
solution and the group is asked to explain
why the action was taken and the
implications this decision might have
fishbowl
• Useful for enabling teams to study group
processes
• Is a method used to train two teams
• First team is asked to discuss a topic for 30
minutes and the team can elect a chairman or a
leader if they so desire to cover the topic in a
free discussion
• The second team is seated around the first team
and they are asked to observe the process
fishbowl
• Its members are not allowed to interrupt
the discussion but when the first group
finishes, they are allowed about 15
minutes in which to criticize and comment
on the first team’s performance
• The first team has no right to reply or even
to comment on any criticism at this stage
fishbowl
• The roles of the teams are then reversed
fishbowl
• After the role reversal, both the teams
come together in a full group session and
notes are exchanged on the processes
which were observed in the 2 parts of the
exercise
fishbowl
• The areas covered include the team’s
interpretations of the task, how its
resources were shared, the decision
making process used and the
interpersonal relationships developed in
the group
workshops
• Any form of participative off the job
training
workshops
• The objective is to obtain the contribution
from all individuals who are affected thus
to optimize the resources available to
solve the problem and agree on future
action
• Is conducted to solve a specific sales –
related problem and is therefore an
extension of a real-life situation
Sensitivity training
• Also known as T-group ,study group, grop
dynamics, and group relation training)
• Training to promote more effective
interpersonal relationships in an
organization
• Objective is to increase the awareness of
one’s behavior and to understand how it is
received and interpreted by others
• Develops sensitivity to the behavior
exhibited by others and enables the
trainee to diagnose the causes of that
behavior
• Helps improve one’s skill in handling
problems at work by understanding and
managing behavioral factors and
constraints
• The focus is on personal behavior and the
discussion focuses on one’s private
thoughts
• Atmosphere is created in which
participants are willing to be frank, open
and honest with each other
• Often criticized for its attempt to uncover
the hidden person within the sales person
but is often found suitable in exploring the
suppressions, personal issues and
problems affecting a person’s work
performance
Transaction analysis (TA)
• Developed by Eric Barne
• Popular method for studying interpersonal
relationships and has attracted more
interest
• TA overcomes many of the difficulties that
the sales managers have in interpreting
the language of psychologists when
dealing with interpersonal problems
among sales people
• TA is based on concepts related to
everyone’s experiences
• Trainers operate on the ego states of
participants and try to find out the
transactions of the sales staff by analyzing
the various ego states and transactions
among them
In-Tray exercise
• Provides the trainees with a day’s mail,
both internal and external, which has to be
processed to the out tray
In-Tray exercise
• Trainees are required to study all the
documents ,decide priorities and allocate
time
• If this is not practicable, then the recruits
simply indicate whatever action is deemed
necessary
In-Tray exercise
• To add realism, other features of normal
working, such as interruptions from
telephone calls and unexpected visitors,
including customers, are often built into
the program which puts additional stress
on the participants
• At the end of the exercise, all trainees who
completed the task are compared or
contrasted
In-Tray exercise
• Is used as a diagnostic tool for
independent candidates and at the final
stage, the group is reconvened to review
the decisions or actions taken and assess
their effectiveness
• Also used as an evaluating method to
assess how the trainee would put to use
the skills learned during training
Transcendental meditation
• It is claimed that it influences the way in
which sales staff approach life and
therefore the job
• It helps the trainees to reach a state of
complete relaxation without any deliberate
control on their part
Transcendental meditation
• It requires about 20 minutes twice a day
when the mind is allowed to settle down in
a state of complete rest
• Suitable for all people and does not
require any religious or moral commitment
• Periodic monitoring is required for
effectiveness
Designing a sales training program-
key decisions (A-C-M-E-E)
• 1)deciding on the training objective
• 2)deciding on the content of the training
program
• 3)deciding on the method of training
• 4)deciding on the arrangements made for
the execution of the training program
• 5)deciding on the procedures to evaluate
the training program
AIM
• 1)initial training-job specifications,
background of the candidate, sales and
marketing policies
• 2)re-training
content
• Broad categorization of topics can also be
done on the basis of the behavioral and
skill expectation of the salesperson
• Topics can be
content
• Socialization
• Selling techniques-lead generation,
prospecting, complaint management,
closing of a sale
• Knowledge required for the job
content
• proficiency
• Listening, communication
• Bargaining, negotiation
• Interpersonal, motivation skills
• Account management, relationship selling
• Sales ethics and how a sales person
practices them in the market
knowledge
• 1)Company knowledge
• 2)product knowledge
• 3)comeptitor’s products
knowledge
• 4)structure of the market
• 5)customer’s method of buying
• 6)customer orientation and behavior
• 7)Decision making pattern of consumers
and business markets
proficiencies
• L and T imparts training to its employees
on installation, consultative selling, cost-
probing skills and time management
• Time management
proficiencies
• Impression management revolves around
the way people manipulate and use their
tone of voice, communication, speech
craft, facial expressions and appearance
proficiencies
• Hughes imparts around 50 hours of
creative training to its software employees
every year so that they can extend their
creativity on the job
• In a global marketing company, the sales
people are Imparted cross training
(fundamental immersion into the culture of
another country)
Cross training
• One part of the program is conducted in
the home country and the other in the host
country covering issues related to living
conditions, cultural norms and taboos,
customer behavior of the host country,
nature of competition in the host country
etc.
Cross training
• Covers the value of consumption diversity
and the process of development of cultural
diversity into the organization and work
environment, the examination of issues in
the global context and how individuals
mature and develop in a multicultural
context
Location of training
• 1)centralized
• 2)de-centralized
Centralized training
• All the employees are trained at the same
location
• Infosys has its leadership training centre
at madurai
• State bank of India has its training facility
at Hyderabad
• National training centers and satellite
centers
Satellite centers
• Are smaller versions of national training
centers, normally located at the state HQ
of the organization
• A organization may have a number of
satellite centers where people from
specific zones can come and participate
De-centralized training
• Occurs at different locations and at
different points of time
• Here, the trainees are closer to their work
location
• Can be conducted at the 1)local office
2)off-site 3)customer internship program
• Local office training covers the basic
training
• The effectiveness of the training program
depends on the performance and abilities
of the local sales manager
• Are of shorter duration and much of the
training is done on the job
• Off-site training programs are conducted
at a non-company location
• Mind-tree consulting and sat yam
Computers provide training to their staff at
the client’s site by appointing an
experienced person who understands the
nature and type of customer problems and
knows how to handle them by seeing and
assisting the senior managers at the
client’s site
evaluation
• Investment made on the training yields
results by an enhancement in the
performance of the employees
(contribution to the top and bottom line)
evaluation
• Changes in the observable behavior of the
sales staff and their level of motivation
decides the effectiveness
• Measurement of effectiveness is critical
factor
Socialization
• Is a process by which an individual comes
to appreciate the organization’s value
system, the abilities of the self and others,
the expected behavior and social
knowledge required for assuming a role in
the sales organization
Socialization
• Socialization process also helps in
understanding office politics (negative
elements like manipulation, compromises,
ambitions, un-ethical business practices,
harassment
Socialization
• Competency is not the only indicator of
managerial success, one has to keep
pace with the nature of politics prevalent
Socialization
• A good sales person should have the
ability to sell his ideas at both the front end
and back end of the office after collecting
information through grapevine (informal
channel of communication which carries
rumor and gossip)
Feldman’s socialization model
• 1)anticipatory socialization
• 2)accomodation
• 3)outcomes
Anticipatory socialization
• Is concerned with a sales person’s
perceived notions about life in the new
organization which can be explained by-
• 1)realism
• 2)congruence
• Realism reflects the degree to which the
new sales person has an accurate
reflection of what is life in an organization
• Congruence is the degree to which an
organization’s resources and demands
and that of the salesperson are
compatible
• A sales person will not make any changes
to adapt itself to the newly hired
employee, it is the sales person who has
to adjust and adapt himself to the
organization’s systems and practices
• This prompts a faster process of
socialization for the new sales person
Accommodation stage
• 1)initiation to task-the degree to which the
trainee feels competent and initiation to
the task
• 2)inititation to the group-defines the
degree to which trainees feel accepted by
co-workers
Accommodation stage
• 3)role definition-defines the agreements
that articulate the tasks that trainees are to
• 4)congruence of evaluation-defines the

similarities found in the evaluations made
by the sales managers and trainees
Out-come stage
• Helps in facilitating learning,
participation,and performance of the new
sales person in the organization
Out-come stage
• The level of satisfaction among the sales
people in the organization will increase
depending on how effective the
socialization process is and this will
influence their performance outcome to
enhance work efficiency
Ch-10-sales force motivation
• Research indicates that, it is the desire or
willingness to use the selling skills and
knowledge to perform the job effectively
that affects the organization’s productivity
Ch-10-sales force motivation
• Motivation is the willingness to expend
internal energy to achieve a goal or a
reward and a process that identifies the
needs and goals of sales people that
drives them towards their achievement
• Performance=ability motivation
Motivation
• In reality, motivation is a complex
phenomenon that combines the
individual’s needs, motives, drives
tensions, comforts and expectations
Motivation
• Value system contributes to shaping the
reward expectation of the employee over
a period of time
• Sales managers also have limitations due
to internal and external constraints which
need to match the motivational plan in
relation to the evolving need of sales
people
Nature of motivation
• Positive motivation takes time to build up
and has an effect on the individual, where
as negative motivation is believed to
manifest much faster in a person’s
behavior
• Motivation has a system orientation which
means that the goal of the individual is
shaped by the forces within the individual
and its interaction with the surrounding
environment
• Reinforcement shapes the intensity of
drive and the direction of energy of an
individual
• No reinforcement dissuades the individual
from action
• Motivation is the drive to satisfy the goals
of life ,satisfaction is the experience of
contentment when one particular want is
satisfied
• Satisfaction is a consequence of rewards
and punishments associated with past
experiences
• Goal directed behavior do not always lead
to need satisfaction
• Majority of the sales people would like to
maintain an average level of sales so that
they can remain in their job
Process of motivation
• Motives are the primary energizer of
behavior and explains the reasons of
behavior
• Motives are largely subjective and
represent the mental picture of the sales
person by explaining the rationale of
human behavior
• Motives arise continuously and determine
the general direction of the sale person’s
behavior
• The sales person’s motives are directed
towards goals and very often create a
state of disequilibrium (imbalance between
physiological and psychological state)
• The behavior of attaining goals tends to
re-store the balance
How individual chooses a goal?
• Cultural norms and values
• Sales person’s inherent capabilities
• Influence of personal learning and
experiences
• Type and level of mobility in the physical
and social world of the sales person
Motives
• Are the drivers for the behavioral action of

the customers
• Primary
• General
• secondary
Primary motives
• Are more comprehensive in nature
• Are based on the physiological needs of
the sales person
• They are instinctive drives and are to be
unlearned in social systems
• Seek to reduce tension or simulation
General motives
• Are in between the primary and secondary
motives
• They are also to be un-learned and are
not purely based on physiological needs
• General needs induce the person to
increase the amount of stimulation
General motives
• Motives of curiosity, manipulation, activity
and affection are termed as general
motives
• These are unlearned drives to explore and
manipulate objects and make the
salespeople active
• Affection drive is a very complex form of
general drive
Secondary motives
• Are drawn out of the conditions of society
and the interaction of the individual with
the elements of society
• These are closely related to learning
concepts
Secondary motives
• Motives of power, achievement and
affiliation
• Status is defined as the relative standing
of the individual on a group, organization,
or society
principles
• While designing a motivational
program,certain principles should be
followed
• These principles are drawn after
analysing-
Principles for designing program
• The sales person’s expectations from the
job
• Motives behind their functioning
• Drivers of the motives through consistent
behavioral patterns
Principles to be considered-
• 1)security
• 2)achievement
• 3)approval
• 4)loyalty
• 5)advancement
• 6)leadership
• 7)human behavior
security
• Every sales person be provided with a
sense of security of basic survival and
satisfaction of physiological needs
• People stay committed for their own sake
rather than for any reward that
accompanies the sales job
security
• Glen Pharma’s sales people receive
incentives in the form of cash for achieving
quota
• Performing beyond quota level
achievement takes them to receive bonds
and equity shares of the company as part
of the incentive program
Asian paints and Berger paints
• Have popular motivational programs in
the form of golden card schemes where
sales people are eligible for different kinds
of incentives at different performance level
• At Berger Paints, with a sale of Rs.10lakh
during festive season ,a sales person
irrespective of territory is eligible for a
holiday package in Goa
Asian paints and Berger paints
• If his sales level goes to 25 lakh, he is
eligible for a program at Singapore for a
week
• When the sale touches 40 lakh,he is
eligible for a trip to the US
achievement
• People tend to work harder when there is
a personal credit involved and there is a
moderate risk of failure and can receive
feedback about their past performance
• LIC has a “crorepati”policy for its agents
for achieving the sales of Rs.1 crore
approval
• An appreciation among peers does
wonders compared to a financial reward
system(affiliation motive)
• Wine companies like EW Breweries take
successful people on a cruise to the
carribbean with the CEO as a sign of
motivation
loyalty
• Comes out of the affiliation and power
motivation
loyalty
• Loyalty is developed when the
interpersonal relationship is good between
the sales manager and the sales people
and there is a high sense of social respect
for each other
• Loyalty is rewarded by felicitating or some
other function on completion of number of
years
Advancement
• Tata motors employees were given
multiple jumps for exceptional
performance
• While designing TATA indica, people who
did path-breaking product and component
design were given advancements in their
career
leadership
• Sales manager should not only be a good
leader but also act like a light house to
tap and nurture the leadership skills
• Most IT companies and BPR firms select
brilliant workers and make them team and
project leaders
Human behavior
• Mutual respect
• The manger should respect the spiritual,
social and moral ideologies of the sales
people (social events, get together etc)
Human behavior
• Suggestions given by the sales people be
incorporated in the process of decision
making and policy formulation
Human behavior
• All can work as a team while there is
enough space for appreciating and
rewarding the performance and valuable
opinions of the individual sales person
• Opportunity be given to develop hidden
talent and manifestation of suppressed
desires of the sales people
Theories of motivation
• 1)content theories
• 2)process-theoroes
• 3)reinforcement theories
Content theories
• Explain the structure of the needs and
motives and how the individuals prioritize
these needs for achieving equilibrium
between the desired state and the
rewards expected out of the job
• 1)need-hierarchy theory of Abraham
Maslow
• 2)Hertsberg’s two factor theory
Content theories
• 3)Mcgregor’s theory X and Y
• 4)ERG theory of Alderfer
• 5)Z theory of William Ouchy
Need-hierarchy theory proposes-
• All people possess 5 sets of needs
• Physiological,safety,social,esteem and
self-actualization
• People are motivated to engage in
behavior that will result in the satisfaction
of the lowest level of needs currently not
fulfilled
• Once a need is satisfied, the next need in
the hierarchy becomes dominant higher
order need cannot become active unless
the preceding lower order need is satisfied
• A satisfied need is not a motivator and an
unsatisfied need activates goal-seeking
behavior
• Higher order needs can be satisfied in
many more ways than the lower order
needs
• People wish to move up in the hierarchy
and seek growth. no individual is content
with physiological needs
Physiological needs
• Are the basic needs and they have the
greatest strength among all the needs of
individual
• Research indicates that satisfaction of
physiological needs is always associated
with money and financial rewards which
can buy the product and services to
satisfy these needs
Safety needs
• Is related to physical and psychological
safety from external threats
• This is a need for self-preservation and is
generally concerned with future
• Includes-
• Protection from physiological danger
Safety needs
• Economic security (fringe benefits)
• Health and insurance program
Safety needs
• Desire for an orderly and predictable
environment
• Desire to know the acceptable behavior
• Safety of both the emotional world and the
physical world through protection against
danger ,deprivation and the threat of
extinction
Social and affiliation need
• Need for belonging (desire for company
and companionship of other people)
• These are triggered when the first 2 sets
of needs are fulfilled
• Person will strive for meaningful
relationships with other
Social and affiliation need
• Provide meaning to work life where
individuals are perceived as human
beings
• Are secondary as they do not threaten the
existence
• Are substantially infinite and are satisfied
by the symbolic behavior of psychic and
social contacts
Esteem needs
• Are growth needs and are related to a
sense of self-worth and self-esteem in the
society and organization
• Become evident when lower needs are
satisfied
• Satisfaction of these needs produces
feelings of self-confidence,prestige,power
and control
Esteem needs
• When these needs are dominant, an
individual may resort to disruptive or
immature behavior to satisfy the desire for
attention (may throw tantrums, restrict his
work ,go slow, make arguments, show
frustration
• These are rarely satisfied and satisfaction
is not always reached at through mature
behavior
Esteem needs
• It is also generated by an irresponsible act
• Modern organizations have little scope to
satisfy these needs
Self-actualization need
• Is the desire to grow more and more
• To become everything that one is capable
of becoming
• Need to optimize potential
• “what a man can be, he must be”
• Once activated, they can never be fully
satisfied
• The more these needs are fulfilled, the
stronger they become
• It is not necessary a creative urge but it
means creativeness in realizing to the
fullest one’s potential
• Can change over lifestyle and different
stages of life
• Are substantially infinite and does not end
with satisfaction
• Modern life gives limited opportunity for
these needs to obtain an outlet of
expression
Hertzberg’s two-factor theory
• 1)Hygiene factors
• 2)Motivators
Hygiene factors
• Are those factors which when absent in
any motivational program increase
dissatisfaction with the job and when
present help in preventing dissatisfaction
but do not increase satisfaction or
motivation
• Their effect on the sales person resembles
the physical hygiene of the body
Hygiene factors
• They provide no growth in the worker’s
output but they prevent loss in
performance caused by the work
restrictions
Hygiene factors
• They try to maintain motivation at 0 level
by preventing negative motivation from
occurring (maintenance factor)
• These are extrinsic elements of a job but
are related to the conditions in which the
sales person has to perform the job
Hygiene factors
• Corporate policy and administration
• Relationship with supervisor
• Work conditions
• Salary
• Relationship with peers
Hygiene factors
• Personal life
• Relationship with subordinates
• Status
• Security
• Supervision
Motivators-(satisfiers)
• Are the factors that involve the feeling of
achievement, personal growth and
recognition
Motivators-(satisfiers)
• Hertzberg observed that, factors related to
the job itself can have a positive effect on
job satisfaction and result in increased
performance
• Are job centers and are related to the job
content
motivators
• Achievement
• Recognition
• Work
• Responsibility
• Advancement
• growth
Alderfer’s ERG theory
• Proposed 3 levels
• Sales people are initially interested in
satisfying their existence
needs( physiological and safety factors)
like-pay, physical conditions, job security,
fringe benefits etc.
• Relatedness needs involve being
understood and accepted by people
above, below and around the sales staff at
work and away from them
• Growth needs are those involved with the
desire for self-esteem and self-
actualization
• Does not believe that people move on the
lines of Maslow
• The sales person may move up or down in
the 3 step hierarchy of needs
• Satisfaction leads to progression and
frustration leads to increased importance
of lower order needs
• A person can pursue 2 needs at one time
• If one person is continuously frustrated
with his growth need, then the relatedness
needs may emerge as primary and the
individual may redirect his efforts towards
these lower order needs
McGregor theory of X and Y
• Theory X assumes that most people prefer
to be directed, as they are not interested
in assuming responsibility and want safety
• This is based on the belief that, people are
motivated by money, fringe benefits and
threat of punishment
• Assumes that, work is inherently
distasteful to most people
• Many people are not ambitious, have little
desire for responsibility and prefer to be
directed
• Most people have less capacity for
creativity in solving sales-related
organizational problems
• Motivation occurs only at the physiological
and safety level
• Believes that people must be closely
controlled and often coerced to achieve
the sale organization’s objectives
Theory- Y
• Assumes that work is as natural as play if
the working conditions are favorable
• Self-control is often indispensable in
achieving the sales organization’s goals
Theory- Y
• Motivation occurs at the social, esteem
and self-actualization levels as well as the
physiological and security level
Theory- Y
• Many managers are giving prime
consideration to the satisfaction of
physiological and safety needs
Theory- Y
• Sales managers believe that they should
treat their people like children, providing
low-level need satisfaction rewards if the
work is done well and withholding these
benefits if the work is done poorly (carrot
and stick principle)
Theory- Y
• Assumes that integrating individual goals
with those of the sales organization to
make the job a mean through which each
salesperson can enlarge his competence,
self control and sense of accomplishment
Theory- Y
• Theory x and y are pre-dispositions
towards people; although the best
assumption for a manager to have may be
theory Y, it may not be appropriate to
behave consistently with these
assumptions all the time
Z theory of William Ouchy
• Originated from Japanese business
practices
• The average rate of productivity of the
average Japanese employee is found to
be 3 times that of American employer
• Absenteeism is low, organizational
commitment is high, turnover rate is low
• This is possible because of-
• Technology
• Culture
• Management systems
• In Z type of organizations, great stress is
laid upon the long-term employment of the
employee which contributes to enhancing
the employee morale
• Decision making style in such
organizations is participatory
• The final outcome may not be the
reflection of agreement between the sales
staff and the sales manager, but it
indicates the incorporation of decision
inputs from any individual or group which it
is likely to affect
• Punishments are more subtle and
employees are demoted to the level below
their current job
• It is the collective responsibility of all the
members to reach the goal rather than of
an individual sales manager
Process theory
• Describe the psychological processes
involved in the formation of motivation and
its direction
• 1)equity theory
• 2)expectancy theory
•
Equity theories
• Is an extension of Bernard’s concept that
sales people tend to evaluate what they
get from the organization and what they
contribute to the organization (equity built
out of this evaluation)
Equity theories
• It also includes evaluation of what others
are getting in the organization (social
comparison of inputs, money, working
conditions, recognition for themselves and
others etc)
Equity theories
• Assumes that each sales person
measures himself against a “comparison
person” or someone in a comparable sort
of situation
Mechanism to re-store perceived
in-equality
• Change the level of output (reward)-giving
additional financial incentive, allot bigger
territory or office or even personal facilities
• Reduce the level of input (efforts)-work
less and enjoy benefits
Expectancy theory
• Developed by Victor Vroom
• Motivation Is a product of-
Expectancy theory
• 1)valence(how much one wants the
reward)
• 2)expectancy(one’s estimate of the
probability that efforts will result in
successful performance
• 3)instrumentality(one’s estimate that
performance will result in receiving the
reward)
valence
• Refers to the strength of a person’s
preferences for receiving a reward
valence
• If a sales person strongly wants a
promotion, the valence for promotion is
high for that employee
valence
• Valence for a reward is unique to each
sales person and is conditioned by
experience and may vary substantially
over a period of time as needs become
satisfied and over a period of time, new
needs emerge
expectancy
• Is the strength of belief that work related
efforts will result in the completion of a
task
• Expectancies are always expressed as
probabilities and are the sales person’s
estimate of the degree to which
performance will be determined by the
amount of effort expended
expectancy
• The expectancy will be zero, if the sales
person finds that there is no chance that
his efforts will lead to desired performance
• Sales people with high level of self-
efficacy are more likely to believe that
exerting efforts will result in satisfactory
performance
‘Imposter phenomenon’
• Imposters believe that they are not really
as capable as they appear to be and
consequently fear that their incompetence
will be revealed to other
instrumentality
• Is the salesperson’s belief that a reward
will be received once the task at hand is
accomplished
instrumentality
• If the sales person sees that promotions
are based on performance data,
instrumentality will be rated higher
• Strongest motivation is produced with high
positive valence, high expectancy and
high instrumentality
Quality of work-life programs- areas
• Adequate and fair compensation
• A safe and healthy environment
• Jobs that help in developing human
capacities
• A chance for personal growth and security
• A social environment that fosters personal
identity
Quality of work-life programs- areas
for sales person
• Freedom from prejudice
• A sense of community and upward
mobility
• Constitutionalism or rights to privacy
• Dissent and due process
• A work role that minimizes infringement on
personal leisure and family needs
• Socially responsible organizational actions
Reinforcement theories
• Are based on the principles of learning by
which sales people learn to connect a
particular job performance with the reward
and then work faster towards achieving
the result again and again by reinforcing
their behavioral pattern in the desired
direction
Reinforcement theories
• 1)Hull’s drive theory
• 2)Skinner’s reinforcement theory
Hull’s drive theory
• Is based on the idea that wide variations in
human behavior can be explained by
principles of learning
Hull’s drive theory
• The activation of a drive leads to random
behavior
• The goal object is discovered in the
course of random behavior and the
reduction in drive produces reinforcement,
and drives, in turn, activate habit
Skinner’s reinforcement theory
• It is not necessary for a drive to be
reduced for learning to occur
• Different kinds of reinforcement schedules
produce different kinds of persistence
• Persistence is greater when an organism
is rewarded sometimes, rather than each
time it makes a desired response partial
reinforcement)
Factors influencing the motivation
of the sales person
• 1)personal characteristics-individual’s
satisfaction with the current job, the
demographic variables, experience in the
job, personality traits and attributions
about why performance has been good or
bad etc.
• 2)environmental conditions
• 3)organization’s policies and procedures
Sales person’s career stages
• 1)exploration
• 2)establishment
• 3)maintenance
• 4)disengagement
Exploration
• The new recruits come under this stage
• They are un-sure about whether selling is
the career that best suits their life
Exploration
• They tend to have the lowest expectancy
and instrumentality perceptions in a firm’s
sales force
• As they gain experience, their expectancy
and instrumentality change, and financial
rewards is the best method to motivate
them for the job and higher commitment
Establishment stage
• Sales people have settled in an
occupation and wish to develop that
occupation into a successful career
• Improving performance and work related
skills
Establishment stage
• As they gain confidence, their
instrumentality and expectancy also
increases
• They buy house and get married
Establishment stage
• Their valence for the financial rewards is
high but their strong desire to be
successful and move to a management
level makes their valence for promotion
higher than other reward expectations
Establishment stage
• They value recognition and other
indications that their superiors and peers
approve of their performance and consider
them worthy of promotion
Establishment stage
• This strong desire for promotion has its
negative consequences too where those
who do not get promotion may decide to
go slow and perhaps leave the
organization leading to a premature entry
into o the disengagement stage
Establishment stage
• Sales manager should control these
unrealistic expectations and speed up
future promotions among sales people
who have entered the establishment stage
Maintenance stage
• Sales person is 30-40 years of age
• Primary concern is retaining present
position, status and performance level
within the sales force, all of which are
likely to be high
Maintenance stage
• People in this stage have a high valence
for rewards that reflect a high status and
good performance (formal recognition or
respect from peers and superiors)
Maintenance stage
• His opportunity and desire for promotion
diminishes so both valence and
instrumentality fall lower than the
threshold level but their valence for pay
and financial rewards rises, due to
increased financial obligations and a
desire to gain a symbol of success
Disengagement stage
• Happens when people reach 50-60 years
• the sales people psychologically withdraw
from their job
Disengagement stage
• Often seek to maintain just an acceptable
level of performance with a minimum
amount of effort in order to spend time
developing interests in attaining higher
order rewards such as recognition and
personal development
• They have low valence for attaining more
pay or other financial incentives
Environmental factors
• Variations in territory potential
• Strength of competition
• Not much can be done by a sales
manager about the changes in
environmental factors
• However, analysis and scanning of the
external environment will help the sales
manger understand the problem
Organizational factors
• Type and nature of sales supervision
• Span of control within the organizational
hierarchy
• Leadership styles followed in
organizations
• Methods and types of communication in
vertical and horizontal dimensions
• Incentive and compensation policies
• Too close a supervision is normally not
appreciated by sales people
• Democratic leadership is welcome
• A just compensation policy and reward
system
• A sales manager needs to look at
organizational factors carefully since they
have greater effect on the sales people
than the environmental issues
Designing a motivational program
• 1)program objective
• 2)motivational tools
• 3)individual methods
• 4)group methods
• 5)communication
Program objective
• On a regular basis, the sales manager
needs to undertake motivational studies to
find out the gaps in the valence,
willingness and motivation level
• Experience of the sales person in the field
and the experience of the person in the
company are taken as parameters to
design motivational program
Motivational issues for-
• External new recruits
• Internal recruits
• Hired guns
• Old hands (successful/un-successful)
External new recruits
• New to the company and sales profession
• Strategy-
• Enculturation into company
• Socialize into sales force
• Clarify sales role responsiblities
Internal recruits
• New to the sales profession but
experienced
• Socialize into sales force
• Clarify sales role responsibilities
Hired guns
• Experienced but from new company
• Enculturation into company
• Socialize in to sales force
• Clarify sales role responsibilities
Old hands (un-successful)
• Experienced sales professionals from
experienced companies
• Review person job fit
• Supervise and coach
• Improve working environment
Old hands (successful)
• Recognize achievement
• Develop new skills
How to select motivational tools?
• Results of the previous motivational
programs
• Timing of the program
• Place of work
• Duration and timing of work
• Frequency and nature of the travel in the
job
• Alternate tools used in the past to motivate
the sales staff and their effectiveness
• Financial implications of the motivational
program and its cost-benefit trade off for
the sales organization
• Coupons, conferences, contests and
bonuses are the most popular tools in
Indian organizations
Financial motivation
• Is the most prominent method to motivate
the sales people towards achieving higher
sales
Financial motivation
• Includes financial incentives such as
enhanced salary, sales –based
commission, periodic and performance
based incentive
• Are ineffective after a certain point of time
in a sales person’s life as he looks for
more recognition and a long-term reward
Non-financial motivators
• The aim is to provide psychological
satisfaction
• Have a deeper effect on the sales people
at the later stages of establishment and
maintenance stages
• Promotions
Non-financial motivators
• Job enrichment
• Higher territorial responsibility
• Social stroking, rewards and recognition
Individual methods of motivation
• Regular correspondence with field force
• Appreciation letter
• Solution to sales person’s problem
through e-mail
• Job promotion
• Either assign adequate responsibility or
given some other important duties
Individual methods of motivation
• Educational and training programs
• Freedom in the work environment
• Opportunity to pursue creative activities
• Freedom to choose among alternatives
• Recognition and rewards in social
platforms like conferences and sales
seminars
Group methods
• Sales conferences
• Sales contests (if voluntary, more
participation)
• Patterson’s method of publication of
periodicals which serves as a ready
reckoner for the sales people in the field
• Orientation literature
Group methods
• Handbooks
• Booklets
Group methods
• Folders
• Membership in committees such as quality
circles ,advertising committee, demand
forecasting committee, committees for
consumer problems and complaints
• Sales supervisor to have lenient control,
advice ,good behavior and informal
relationship
communication
• About the motivational programs should
be on periodic basis
communication
• Should be clear in focus and content so
that the sales person can understand at
what level of commitment he is likely to
participate in the reward system of the
organization
communication
• The content of the communication should
include the benefits and conditions on
which the sales person will gain from the
program
communication
• Personal communication channels include
conferences and seminars in which new
schemes are announced
communication
• Non-personal communication channels
include the company’s newsletter, sales
circular and the internet and intranet
website of the company
communication
• The sales manager should reinforce the
commitment through a continuous
communication process and each time
novelty should be added to deliver the
desired value in the program
Auxiliary environment
• Mere communication of the motivation
program may not help the sales person to
get motivated
Auxiliary environment
• Working environment also needs to be
created by facilitating the long-term growth
and development of the sales people
• Efforts should be directed towards
maintaining the team spirit among the
sales people (as a cohesive unit)
Ch-11-sales force compensation
• In country like India, compensation plays a
great role in motivating people and
mangers are often advised to pay
according to the nature of duties of the
sales people
Ch-11-sales force compensation
• Sales people are highly committed to a
better pay structure than elements like
complements and security
• Set of motivators will vary with
demographic variables like age, position in
the organization and stages in the life
cycle
Objectives of a sales compensation
plan
• Attract quality sales people which will also
help to improve the productivity of existing
sales people
plan
• Helps in optimizing the sales effort by the
sales people and maximize the sales
,reducing the sales expenses and also the
production cost
plan
• Such companies are able to cover their
marketing costs due to higher sales
efficiency in the short run than an average
company with a poor sales compensation
plan
plan
• Helps in retaining quality manpower and
reducing the attrition rate in the
organization
plan
• Establishes a good rapport between the
sales force and the sales supervisors and
managers in the company and
salespeople try to present a better image
for the company as well as the product in
the market place
Effective compensation plan-
characteristics
• 1)Should address the short-term issues
(survival) as well as long-term issues
(growth in the company and career)
• 2)Should guarantee a fair wage
characteristics
• 3)Pattern of the remuneration should be
such that it should reflect a stream of
stable income flows for the sales person
• 4)Should have a fixed component and a
regular flow of income
characteristics
• 5)The reward system should have future
orientation (housing need ,conveyance,
DA,pension,provident fund, medical
needs)
• 6)Should be based on the principles of
equity and equality
characteristics
• 7)Easily describable and implement able
without much difficulty
• 8)Should help the sales manger to control
the sales force by controlling their work
hour commitments and call realization in
the organization
characteristics
• 9)Economical to the company-should
have a link to the paying capacity and
budgetary provisions of the sales
organization
characteristics
• 10)Sales person’s opinion be considered
while designing the sale compensation
plan participatory method)
characteristics
• 11)The rate of compensation should be
based on factors like the current industry
rate for the same job, the nature of the
sales job, the difficulty involved in realizing
the sales, abilities and experience
required for doing the job with provision to
control the costs
Factors influencing the design of a
compensation plan
• Financial ability of the firm to pay the
employees on a continuous basis at the
current and future period of time
compensation plan
• In pull strategy following organizations, the
salesperson does the job of a order giver
hence the salary given can be less
compensation plan
• In a intensively competitive market, the
sales people have to increase productivity
by winning over the competitors in which
case, they will expect higher returns
compensation plan
• In case of limited market size, in case of
launching a new product, specially
qualified sales people, government rules
like minimum wages etc.higher pay may
have to be given
compensation plan
• Nature of the product-B2B sales persons
has to put more efforts in closing the sale
hence more salary
• When unit price of the product is lower,
lower remuneration
• The more educated and experienced the
sales person is, the higher will be the
salary paid to him
Types of compensation plan
• Compensation is defined as the financial
and non-financial methods of rewards for
the sales staff
• 1)financial compensation
• 2)non-financial compensation
• Financial compensation includes current
income, promised and deferred income,
profit sharing and pension and retirement
benefits
• Current spend able income is the most
common method of compensation
• Non financial rewards include promotions,
recognition, personal development,
security, sales competitions and contests
Financial compensation
• 1)straight salary plan
• 2)Straight commission plan
• 3)bonus and incentive
• 4)salary plus incentive (combination plan)
• 5)drawing account and commission plan
• 6)Allied methods
Straight salary plan
• Suitable for people involved business-to-
business marketing (sales realization
takes longer time)
• 1)fixed salary plan-the sales people
receive fixed payments in regular intervals
• 2)salary and increment plan-sales person
receives payments on a grade at the time
of appointment and receives annual
increments
• 3)salary and allowance plan- sales person
receives traveling allownce,meals and
medical allowances besides monthly fixed
salary
Non-financial compensation
• 1)promotions
• 2)recognition programs
• 3)fringe benefits
• 4)expense accounts
• 5)perks
• 6)sales contests
• Works better when individual performance
assessment becomes difficult
(pharmaceutical industry)
• If efforts required for selling are less, then
straight salary plan is better
• When the business is seasonal, demand
fluctuates between months, and sales
people are confronted with the risk of
economic downturn, straight salary plan
will work better
• Companies following relationship selling,
straight plan works better since no
pressure will be put by the sales person
• High %of the work day is devoted to non-
selling activities for which performance
evaluation is difficult
• Routine selling jobs, extensive missionary
and educational selling job ,jobs requiring
lengthy pre-sale and post-sale service and
negotiations
• Offering companies have
• a dominant market share and
• are operating in a mature market,
• have a highly defined and stable customer
base,
• strongly centralized and managed selling
efforts,
• highly team oriented selling effort and put
emphasis on service rather than mere
selling
Straight commission plan
• Compensation of the sales person is
directly linked with his performance
• This method fails to link selling effort to
project profitability
• It is difficult to execute a commission
based plan because sales managers opt
for either progressive rates or regressive
rates by linking it to different sales levels
• Many sales people neglect the relationship
dimension due to the attractive commissions
linked to the sales performance and lose quality
customers In the end
• Preferred by companies-
• Where there is little non-selling, missionary work
• Companies which cannot afford direct selling
• Companies using independent contractors
and marketing organizations
• Limited corporate cash resources
• Has a high risk/reward sales force culture
• Has undefined market opportunity or
customer base
• Has a volume based sales strategy
• 1)popular flat rate commission-
commission is fixed irrespective of the
total sales
• Suitable when the management wants
aggressive sales operations (insurance
and investment securities, furniture and
un-branded clothing
Advantages-straight commission
• Provides optimum amount of direct
monetary incentive for the sales people to
perform up to their maximum capacity
• Helps sales manager control the sales
force with ease
Advantages-straight commission
• The magnitude of future revenue flows
and profits can be determined easily
through historical projections
• This model works where the product has
less promotion support and there are no
physical territories for the sales people
• Highly experienced sales people normally
prefer such a system
Disadvantages-straight commission
• Does not assure an assured flow of
income for the sales people
• Lacks loyalty to the organization
• Negligence by sales people in filing
reports and providing customer service
,resist reduction in the territory size
• Sales people have a tendency to
pressurize the customers for higher sales
by pressure discounting
• Concentration on the easy-to-sell products
neglecting the harder to sell products
• Administrative cost also goes higher
(calculate payrolls, estimate commission
margins, check and audit the call reports
etc)
• In case of negative turn in the industry (fall
in the financial earnings) salespeople
might look jobs with stable incomes
Bonus and incentives
• A bonus is defined as one sum
supplemental payment for above average
performance
• In Indian companies, there is a practice of
paying bonus during festival times
• Bonuses are not a part of the final
compensation design but they are paid as
supplemental measures for motivating
people
• a good incentive program costs nothing to
the organization as the sales people are
eligible to qualify for the incentive only
after the desired performance (always
tied to the sales quota)
Salary plus incentive (combination
plan)
• The strategy in a combination plan is to
combine the best aspects of salary,
commission and bonus plans
• The concept is, major component of the
compensation should come from the
salary part to provide higher control over
the sales force
Salary plus incentive (combination
plan)
• A reasonable compensation mix will be a
60%salary,30%commission and
10%bonus and other incentives
• In “flex plan’ the sales persons are given
liberty to choose a combination that suits
to their style of functioning
Drawing account and commission
plan
• Improved method over the straight
commission plan
• Organization opens a drawing account in
the name of the sales person and credits
the commission due to him every month
plan
• The sales person can draw from this
account within the permissible limit
• In case of credit balance at the end of the
month, the sales person can withdraw the
amount and in case of debit balance, it will
be written off (this amount will be deemed
to be his total remuneration for the month)
plan
• The objective is to help sales people when
they are not able to achieve reasonable
sales during a month by providing a
regular flow of income and supporting his
financial requirements
plan
• The advantage of this method is the
control which the sales person can have
on the sales force by checking the
drawing account
plan
• Establishes a direct relationship between
performance and reward
• Flexible since suitable changes can be
made depending upon the sales person’s
performance and market situations
Drawing account-disadvantages
• Increases the administrative and
monitoring expenses
• Puts pressure for increasing the
commission rates for efficient and
experienced sales people
Drawing account-disadvantages
• Sales people may not pay attention to
relation ship building and other non-selling
activities
• May also increase the fixed expenses
including additional expenses in system
and manpower control for effective sales
compensation management
Allied methods
• 1)profit sharing plan
• 2)special remuneration plan
• 3)expense allowance plan
Profit sharing plan
• Company shares part of the profit with its
sales staff
• Sometimes distributes the equity holding
of the company in the form of earned
share to increase the stake of the sales
people in the organization (supplemental
method of compensation)
Profit sharing plan
• Helps to build a democratic and
participative atmosphere in the company
• When profits start to decline, the
salespeople’s share of profits starts
declining which may de-motivate them and
they may quit the organization
Special remuneration plan
• For specific sales people who have to
discharge certain functions along with their
normal selling activities such as road
shows, displays, public relationship
program and solving customer problem
• Easy to understand, sales person knows
the reasons of additional compensation
Special remuneration plan
• No enforcement of additional responsibility
as the sales person is expected to take up
the responsibility on his own
• There is risk of demotivating other sales
people who assume that selling is a more
difficult job than just administration
Expense allowance plan
• The salespeople are provided to and fro
allowances to meet the expenses of
traveling, lodging and boarding
Non-financial compensation
• 1)promotions
• 2)recognition programs
• 3)fringe benefits
• 4)expense accounts
• 5)perks
• 6)sales contests
promotions
• There are few sales people who always
remain in the field sales force called
career sales people
• Majority of the salespeople need
recognition in the form of promotion for
their continued success and commitment
to the organization
promotions
• The promotion policy should be open and
clear so that it serves as a motivational
tool for the sales people
promotions
• Promotion does not necessarily mean
moving up the hierarchy in an organization
• Job enrichment and additional
responsibilities across the departments
also enrich a sales person’s career and
motivate him for higher goals
Recognition programs
• To recognize individual salesperson’s
contribution and recognize the excellent
performance
• In GE capital and other GE companies in
India, the sales people who excel are
awarded medallions in formal or informal
programs annual conferences, publishing
in company newsletter and website)
Formal recognition programs
• Are sponsored and are given high
coverage by the company across areas
and departments and they are designed
to award excellence among sales people
• LIC has “crore-pati”agent scheme which is
a formal reward program
• Trophies, titles and rewards including
travel packages by the company are given
Formal recognition programs
• Can be designed to recognize individual
or group performance
• It can also be a cash award, trips and
sometimes plaque]
• The value of the symbolic reward is quite
higher than the monetary value associated
with the formal recognition programs
Informal recognition program
• The success of an informal recognition
program depends on the sales manager
who recognizes quality work fo the
subordinates
Informal recognition program
• May be in the form of encouraging word, a
pat in the social gathering and recognition
and thanks giving letters
• Need minimal efforts yet the results are
extremely positive
Fringe benefits
• Are in addition to the salary and wages
• May include medical benefits, retirement
benefits, life insurance, stock options and
profit sharing ,LTC,paid vacations, sick
leve,maternity or paternity leave etc
•
Expense accounts
• Expense plans have the objective of
motivating the salespeople’s behavior in
terms of membership of the organization,
performance and attendance
• One common expense for the salespeople
is the customer entertainment which is
fading away
Expense plans-types
• 1)company pays all the expenses
• 2)salesperson bears all the expenses
• 3)company partially pays all the expenses
Company pays all the expenses
• Easy to manage and comprehend the
expenses of the sales people
• Company as a control measure can fix
expense quotas
Company pays all the expenses
• The sales people follow an system in
which the company pays for all business
related expenses
• A low level of conflict and mutually
decided expenses help in making such a
plan successful
• Metro coverage expenses will be less
compared with rural pockets coverage
Sales people pay all the expenses
• Many sales people find it difficult to
remember all the expenses which is also
made during the business activity
• Sometimes the sales people are given a
lump sum and they are expected to spend
the sum over a fixed period of time
Sales people pay all the expenses
• The maximum amount of expenses and
items on which the sales people are
reimbursed are set well in advance so
that they know on which aspects they
have to economize
• Helps to project the expense patterns for
the future period of time
perks
• Are given to employees with some special
status or expertise in the company
• Provision for a car
• Housing
• Driver
• Gardener
• Club membership
• Educational membership
Perks-types
• 1)status perks
• 2)financial perks
• 3)personal growth perks
Status perks
• Office location
• Job title
• Parking space
• Other visible contributions reflecting status
• Are based on performance and have a
higher motivational power than other
categories
Financial perks
• Company car
• Vehicle fuel,
• maintenance, insurance
Personal growth
• Paying for additional education
• Sending the sales person for training or
motivational program
• Additional education to the sales people
(infosys, Patni, Marico,BHEL)
Sales contests
• Are organized to counter the competitive
moves in the market
• To off-load the inventory in the off-season
• To gain sales force commitment for an
additional product launched
• To gain support of the sales people during
the maturity stage of a product life cycle
Sales contests
• It is a temporary incentive program and is not a
part of the regular compensation plan
• Contests have multiple purposes
• No financial compensation in isolation is also an
important motivator for the sales people
• Non-financial compensation methods are always
accompanied by financial compensation
methods
Trends in compensation methods
• 1)level of customer satisfaction-XEROX
follows a compensation plan based on
customer satisfaction defined by the
customer itself
• 2)team-based compensation
Trends in compensation methods
• 3)global compensation management
system
• 4)equitable compensation across
organization
Team based compensation
• Has a Japanese origin
• Suitable for business to business selling
• Multi points and multi location situations
• Links the pay of the sales people with the
performance of the customer service
personnel, delivery people and managers
heading and supervising the teams
Global compensation management
systems
• Today majority of customer care and sales
service jobs are outsourced to third world
countries due to availability of cheap labor
and quality of service output
• It becomes necessary to compensate the
global sales force with people from various
countries but working in the same
workplace
Global compensation management
systems
• Indian salary may not be suitable for the
European executive in India, the salary
paid to an Indian working in USA at the
Indian rate may not be adequate for him
• It is necessary to equate the salary levels
of people working in different countries or
zones
Equitable compensation
• Generally the salary structure is low at the
base level where the real sales happens
and goes higher as one moves farther
from the customer to the upper hierarchy
levels of the organization
Equitable compensation
• In many sales organizations that standard
Indian compensation is not equitable from
various points of view including gender
inequality
• Such system will help grow the
organization
Steps in designing a compensation
plan
• 1)determine sales force and
compensation objectives
• 2)determine major compensation issues
• 3)implement long-term and short-term
compensation plan
• 4)relate rewards to performance
• 5)mesurement of performance
• 6)appraise the compensation plan
Determine sales force
• Objectives can be
• 1)attainment of the annual sales volume
target and gross margins
• 2)attainment of monthly and specific
period wise sales targets
Determine sales force
• 3)market penetration and exploitation of
the territory potential at a specific rate
• 4)management of sales calls
• 5)development of new customers
• 6)gaining support of the sales people for
the new product introduction
Determine major compensation
issues
• By comparing available payment structure
with that of the industry and major
competitors
• Industry average and competitor’s
compensation plan serve as the bench-
mark
• Wage level (in relation to the competitor’s
sales force)
issues
• wage structure (pay differential inside the
organization)
issues
• the sales person’ wage (individual sales
people)
• and the salary administration procedure
(sales force evaluation and control
mechanism, mechanism for modified
compensation, pay revisions and raises
etc)
Implement long-term and short-
term plans
• Short term issues include adequate
compensation and low cost drive for the
firm
• Long term issues include reducing the
attrition rate and develop employees to
take up higher challenges including
managerial responsibilities
•
Short-term issues
• Include bonus, expense management and
sales contests
• This should be coordinated with the total
marketing efforts of the organization and
in sync with the long term plan
Relate rewards to performance
• In a scientifically designed compensation
plan and the plan related communication
strategy, the rewards are always related to
the sales performance
Relate rewards to performance
• Each stage of performance and reward
system should be linked with the
contribution of individual sales persons
towards the organization
• It also links the performance of the sales
person to the rewards through an
objective and logical method of
performance evaluation
Measurement of performance
• Method should be objective and
transparent
• Performance needs to be measured
periodically
• Criteria should include
Measurement of performance
• the new sales volume achieved in the last
period,
• level of customer satisfaction
• Level of information dissemination about
the performance of the company and its
product in the market
Appraise the compensation plan
• It is necessary to look at the redundancy
effect of the plan
• The success of the plan can be evaluated
by looking into
• the achievement of compensation
objectives
• Ability of the firm in attracting new sales
people with the current compensation plan
• Finding out the relationship of the
compensation plan with the attrition rate in
the organization
• Should be updated continuously to
respond to new sales force objectives
• There should be continuous attempt to link
the available compensation methods with
the desired performance of the sales
people
Ch-12-evaluation of the sales force
• Why performance evaluation is difficult?
• The hierarchies involved
• Nature of sales job across industries
• Rapid adoption of technology
Performance appraisal
• Is the process of evaluating the
performance and qualifications of the
sales force in terms of the requirements of
the job to ensure effective administration
including the selection for promotion,
rewards and other recognitions in the
organization
• Appraisal system should not include
characteristics like an individual’s age,
gender and stage in the life cycle as they
are irrelevant
• Should be based on the past
achievements of the sales force and have
a futuristic proposition
• The appraisal results are used for taking
decisions related to a salesperson’s
working conditions, promotions,
termination and rewards
Process of performance appraisal
• 1)deciding on the criteria for measuring
performance
• 2)deciding on the conduct of the
performance appraisal
• 3)deciding on evaluation of individuals and
teams
Process of performance appraisal
• 4)comparison of actual performance with
standards
• 5)deciding on the frequency of the
performance appraisal
• 6)the external variables and their
influences
Appraisal criteria
• Type of judgment required for evaluation-
(relative or absolute)
• Focus of measure (trait, behavior or
outcome)
Relative and absolute judgments
• In the relative judgment method, the sales
manager is asked to compare the sales
person’s performance with that of other
salespeople on the job
• Another method classifies sales people
into groups such as top three, middle
bracket, and a lower set
Relative and absolute judgments
• The problem here may be that there is no
clarity as to how big or small the
differences are between group of
employees
• Leads to indecisive attitude among sales
persons
• Assesses overall performance;may not get
insights
Absolute judgment method
• This is based on the sales performance
measured in sales volume, market share or
revenue realization
• No comparison is made between the sales staff
working in the organization
• Dimensions relevant to the sales job are listed
and all the sales people are rated according to
their performance
• Sales staff from different territories rated by
different managers may be compared and more
specific feedback can be given to the sales
person
• Reluctant supervisor may not differentiate
among sales people and may end up
giving same ratings to all
• Evaluation standards of different sales
managers may be different hence
comparison among sales people in
different territories becomes irrelevant
• Measures being objective, conflicts
between sales people is reduced
• Sales manager can also make evaluative
judgments for making comparison
Trait based
• A traditional business organization uses a
trait based evaluation system
Trait based
• Trait appraisal instruments are used by
sales managers to make judgments about
a sales person’s traits and selling
characteristics that tend to be consistent
and enduring
• Decisiveness, reliability, energy and
loyalty
Trait based
• Trait ratings are often criticized as being
ambiguous and biased
• Focus is on personal traits rather than on
sales performance
• Do not help in performance development
but are helpful in describing a sales
person and in making judgments
Out-come based
• The most common approaches used in
this method are called management by
objectives (MBO)
• Assessed items may be-
• Amount of sales
Out-come based
• Number of products sold in units or
volumes
• Profitability as net margins
• Sales expenses as a ratio of costs to
sales
• Higher level of flexibility in this method and
it eliminates subjectivity and the potential
for errors and biases
Drawback-outcome based
• “result at any cost" culture may develop
which is detrimental in the long run
• Organization will have to use documents
such as call reports, purchase orders and
routine management of financial
documents for evaluating the sales force
Drawback-outcome based
• (CPM)-computerized performance
monitoring-systems are needed
• CPM is also suitable for tele-marketing
sales staff
• 25,000 companies have used CPM
technique for the performance evaluation
of telemarketing sales persons
Behavior based
• Behavior items are listed such as-
• Product knowledge
• Presentation quality
• Closing ability
• Service performed
Behavior based
• Number of active accounts
• Relationship with customers
• Number of calls made per day
Behavior based
• Number of working days in a specific period of
time
• These ratings assess the value of behavioral
measure rather than their frequency of
occurrence
• The design and use of such instruments are time
consuming and demand specificity
• Structural changes in the organization can
invalidate these scales
Behavior based
• Many sales managers believe that,
behavioral focus is an unnatural way of
thinking about evaluating sales people
traits is a natural way)
• Measuring behavior is more difficult
Behavior based
• Sales managers run the risk of translating
trait impressions into behavioral
judgments
• The sales manager needs to make sales
trips with the sales people in order to
gather behavioral data from customers,
peers and other managers
Which approach to use?
• Should be based on appraiser’s primary
objective
• Factors like-
• Sales manger’s intelligence
Which approach to use?
• Familiarity with the job
• Ability to separate important information from
irrelevant information can influence rating
method
• The sales manage is more important than the
instrument used for analysis and evaluation
• Meaningful evaluation is possible even through
the crudest of measurement systems
Performance rating
• Instruments-
• Rating forms
• Forced choice scales
• Behavioral observation scales(BOS)
• Self-assessment questionnaire
Rating forms
• Are statements in the form of an inventory
or a list of adjectives about the sales job.
• Sample adjectives can be-(in pairs)
• Always criticizes, never praises
Rating forms
• Carries out orders by passing on the responsibility to
others
• Knows the job and performs well
• Plays no favorites
• A sales manager is forced to give a score or weight out
of the assigned weights
• Outside experts read the essays and build a set of
inventories of adjectives used in the essay as a measure
of evaluation and then assign weights to the adjective
used to describe the sales people
• Sales manager evaluates the performance fo the sales
people by selecting one of the bi-polar adjectives from
each pair
Rating forms
• The responses are given in pair
• If a sales person receives a score for the
first alternative, he gets a neutral score for
the second alternative as only one of the
alternatives is selected
• Judgmental bias is removed by not telling
the sales manager the weight assigned to
the alternative
Rating forms
• The sales manager only responds to the
alternatives without knowing what kind of
weight (positive or negative) the
alternative will receive from the
respondent
Rating forms
• After obtaining the sales manager’s
evaluation, the expert assigns the
predefined weights to the alternatives and
builds up an overall score for each sales
person
• The scores are sent back to the sales
manager to rank the sales person
Behavioral observation
scales(BOS)
• Are purely based on significant job
incidents which describe behavior that can
either enhance or reduce the level of
performance
scales(BOS)
• The sales manager is asked to identify
only that behavior which significantly
influences performance
• Creates a positive environment as the
discussion is all about the significant
aspects of work and contributes to better
performance of sales persons
scales(BOS)
• Helps in identifying certain behaviors
which are both desirable and undesirable
in the context of the job
• It is not possible to customize the BOS to
specific organizational buying situations
• Organizations with sales people working
independently find it difficult to appraise
the sales people working in the field
Call reports
• Are periodic accounts and customer
statements prepared by sales person of
how they are dividing their working time
between various aspects of job like
prospecting, demonstration and follow-up
Call reports
• Help in case of new recruits or new
territories
• Also help the management in forecasting
the sales for future years by using the
sales force composite method
Silent call monitoring scores
• Consists of a sales manager’s rating of the
sales person’s performance during actual
calls to the customers
• The rating can cover-
• Greeting
Silent call monitoring scores
• Ascertaining customer needs and
demands
• Courtesy
• Level of communication and listening skills
Activity reports
• Explain the unusual events and incidents
that occur in the field as reported by a
sales manager and sales people including
peers
• Include-
• Launch of a major price war by competitor
• Increase in the dealer push money of the
competitor
Activity reports
• Entry of a new competitor
• Changes In purchase practice of the
customers
• Change in the decision maker at the
customer’s place
• Are not prepared for every call but for
those calls that indicate a significant
change in the market environment
Customer satisfaction surveys
• By mass mailing questionnaires to
customers
• Are either random or periodic, where
customers are both randomly and
continuously tracked
• This is extensively used by airlines (Jet)
Combination methods
• Are normally combinations of ‘out-come’
and behavioral-based rating models
• Out-come based control systems following
organizations do not give much
importance to the behavioral issues
• Behavior based control system
organizations neglect the result of the
input put in by the sales people
• Parameters included are-
Combination methods
• Work experience
• Sales aptitude
• Level of knowledge related to the
company
• Knowledge of the product and competitor
Combination methods
• Competitor activity related to the number
of outcomes
• Number of calls made and sales realized
by the competitor
• Quality of selling strategy of the competitor
• Modern organizations balance is tilted
towards behavioral based measures with
input of major performance related issues
Conducting performance appraisal-
(basic guidelines)
• A sales manager can either conduct a
performance appraisal or the salespeople
can do a self-appraisal
• The primary evaluator should be the
immediate supervisor of the salesperson
(basic guidelines)
• In many companies, the evaluation of the
immediate supervisor is taken for pay
revision and promotion
(basic guidelines)
• The recommendations are passed to the
senior management for final approval
• Few companies also use the entire
region’s sales people for evaluation during
a formal performance development review
(FPDR)
Conduct of performance appraisal-
(unconscious biases)
• 1)biases
• 2)base rate information
• 3)availability heuristics
• 4)anchoring
• 5)hindsight bias
• 6)regression effects
• 7)fundamental attribution error
biases
• Is either conscious or unconscious
• Occurs when sales managers inflate or
deflate the subordinate’s performance
biases
• A conscious bias can be positive or
negative
biases
• Positive conscious bias includes the sales
manager’s with to help experienced sales
people cope with problems outside their
job
• The negative bias is an attitude of getting
rid of problematic salespeople to avoid
confrontation with an underperforming
sales person
Base rate information
• Is the actual distribution of the outcome
being assessed
• Customer satisfaction index comprising
the satisfaction levels of all the customers
of a sales person
• When a sales manager makes field visits
with a sales person and finds that the calls
are productive, he remembers this at the
time of appraisal and despite customer
complaints tends to underplay the base
score
• The sales manager ignores the base rate
information and allows his limited personal
experience to be the basis for making an
evaluation
• Frequent evaluations will reduce this bias
Availability heuristic
• Occurs when a sales manager assesses
the subordinate based on the information
that is available at hand
• A heuristic is defined as a rule of thumb
used while making a decision based on
recent information
• Frequent observations can avoid this
problem
anchoring
• Occurs when sales managers rate sales
people using a scale
• Anchor is the starting point of the scale on
which the sales person is evaluated
anchoring
• If there is a 5 point Likert scale, where the
value 3 stands as average, the sales
manager tends to evaluate every
salesperson from a score of 3 and then
rates the sales person to reflect his activity
observed during the time period of study
anchoring
• A sales person who has received a high
rating in one period is likely to be rated
higher in subsequent periods due to the
halo effect, even when his performance is
not of that order
• In case of a highly smart salesperson,
there is a possibility of being stretched
since his initial anchor itself will be higher
anchoring
• The sales manager should be trained to
recognize the circumstances under which
they need to adjust from the base rate
rather than increasing the quota due to the
anchoring effect
• By fixing the performance standards
consistently across the sales force, this
problem may be avoided
Hind-sight bias
• Occurs when a sales manager discounts
information received from a sales person
because they believe that it would have
happened any way
• In a hind-sight bias, the salesperson
brings information about market
conditions, competitor’s moves and
relevant customer behavior data`
Hind-sight bias
• Helps avoid loss of customers to
aggressive selling propositions of the
competitors
Hind-sight bias
• If the hind-sight bias occurs frequently, the
sales person tends to stop bringing market
intelligence to the sales manager
• The sales manager is trained to develop
an alternative scenario about what would
have happened if the sales person had
brought that information to the company
Regression effects
• Show the tendency of unusual
observations to be followed by
observations that are more typical of the
company norms
Regression effects
• When a new sales person joins a
organization, he uses all his contacts to
realize sales but in the second year sales
come down because by then he has
exploited all his resources
Regression effects
• This happens in insurance and real estate
business
• By using a method of the moving average
to set the sales quota, this effect can be
minimized
Fundamental attribution error
• Other factors also have a strong influence
on the sales like-
• Economic condition of the country
• Nature of competition in the industry
• Policies of the company
• Performance of the sales people
• These factors need to be considered
before assessing the performance in place
of a flat target and assessment for all
territories
• By checking the consistency level
between the self appraisal and the sales
manager’s appraisal, this confusion and
ambiguity can be reduced
individual vs. team appraisal
• Most of the performance appraisals are
done on an individual basis
• The appraisal systems are developed to
evaluate the contribution of each member
of the sales force towards organizational
objectives
• Modern organizations have brought the
concept of team based selling (to cover
technological specifications ,financing
patterns and after-sales-service)
• A sales team services a customer better
than an individual
• In case of appraising performance of such
teams, the difficulty arises in customizing
tools used for the individual appraisal for a
cross-functional team appraisal
Role result matrix –a tool for team
evaluation
• Is a specification of the roles played by
each member of the cross functional team
and indicates the expected results from
each of the team members
• It outlines the individual responsibilities for
the success of the team and the
organization
Role result matrix –a tool for team
evaluation
• The matrix plots the people, task and
results expected from each team member
• The sales manager can use the relative
weights based on the importance of each
role and activity in achieving the desired
outcome
Actual performance
• To be evaluated against actual performance
against either the industry standard or standards
set by the organization
• Many sales people try to collect actual data over
a set of territories and calculate the average
performance of all the territories and then
compare each sales person with the average of
the performance of all the sales people
• The ranking method ranks sales people
according to their success in the territory in
comparison to the other sales persons
Actual performance
• A comparison with the norm approach
evaluates each sales person on the basis
of either industry norms or the norms set
by the firms
• The sales managers fixes an evaluative
norm boundary and if the sales person
falls within the boundary, he is termed as
operating within an acceptable limit
Actual performance
• On a rating scale ,the upper boundary
level is 3 standard deviations above the
mean and the lower boundary is 3
standard deviations below the mean
• The sales manager should try to increase
the average mean score and and narrow
the control limits so that the sales people
find their job challenging
frequency
• Generally appraisal is done on annual
basis
• more and more organizations today
measure on quarterly basis
• Consumer goods companies normally lay
stress on certain products in a specific
period of the year as during festivals
• Companies can decide to have 3 or 4
performance cycles per year
frequency
• In an rapidly changing industry such as
IT,a more frequent appraisal is necessary
• If the industry is in mature stage and is
experiencing a severe downturn, a more
frequent appraisal will provide
management with the scope for controlling
and augmenting their sales plan time to
time
frequency
• Top management with tight control will ask
for frequent evaluations
• With a large number of new employees,
more frequent evaluation is needed
• The more frequent appraisals, less time
for supervision and servicing own
accounts and more paper work
Influence of external variables
• The most common influencing factors are
the legal and ethical issues involved in
evaluation
• The appraisal system leads to employee
re-orientation, training and in many cases
termination for under-performing people
• There are various wage rules that guide
the termination of employment guided by a
performance appraisal, failing which the
sales manager may take the company to
the court
• An oral appraisal should be always
avoided because it does not record
documentary evidence of the sales force
evaluation
• Though call performance monitoring is a
valid method for appraisal, the sales
manager has to be ethical in the process
of using this technique
barriers
• Rater error occur very frequently and
adversely affect the effectiveness of the
evaluation system
• A halo error,a common error is a tendency
to evaluate sales people similarly,across
all the ratings dimensions
barriers
• Causes of halo error-
barriers
• The sales manager may make an overall
judgment about the sales person and then
conform all dimensional ratings to that
judgment
barriers
• The restriction of range error is another
type of rater error, where the manager
restricts all his ratings to a small portion of
the rating scale on which all sales people
are rated similarly
barriers
• Liking has the potential to play a great role
In rating because both are person focused
• The maintenance of a performance record
on a regular basis, though time-consuming
will always be helpful
barriers
• Appraisal in most organizations can be
motivated, as political perspective
assumes that the performance of a
salesperson depends on the agenda or
goals of the sales manager

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Ch-1-Introduction to sales mgmt

• Sales person’s positions (Robert

• 1)formulation of a strategic sales

• 4)congruence of evaluation-defines the

• Are the drivers for the behavioral action of

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