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Sales Management

Sales Management

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Sections

  • Importance of Selling
  • Modes of Selling
  • The Nature of Personal Selling
  • Selected Activities of Salespeople
  • Sales Management Responsibilities
  • Sales Force Management Challenges in
  • Century
  • The Marketing Concept
  • Evolution of
  • Marketing Management
  • Relationship Marketing: Four key issues
  • Strategic Planning
  • Strategic Trends
  • Customer Relationship Management
  • The Selling Process
  • Qualifying Leads
  • Planning : the Key
  • Need Assessment
  • The Presentation
  • The S E L L
  • Meeting Objections
  • 6) Meeting Objections
  • Using Trial Close
  • Gaining Commitment
  • Planning
  • Importance of Sales Forecast
  • Sales Forecasting Methods
  • Guiding Principles for Forecasting
  • Sales Territory
  • Benefits of Good Territory Design
  • Sales Manpower
  • Recruiting and Selection Problems
  • Workload Analysis
  • Recruiting for the Team
  • When Should Training Take Place?
  • Management of the Field force
  • Two Leadership Styles
  • Coaching Sales Reps
  • Ratio Measures

Sales Management

Vinod Puri 98206 94960; 26314644

Importance of Selling   

Only activity that generates revenue Everything else is a cost centre only Only opportunity to be in touch with the market This allows for understanding and designing the value offering. Contributes to the image of the company and building of the Brand Equity

Modes of Selling 

There can be two approaches to selling: Selling by looking at the short term gains Considering the long term business How practical is the issue of long term approach in the low value products? 

The Nature of Personal Selling Transaction Selling Get new accounts Get the order Cut the price to get the sale Manage all accounts to maximize short-term sales Sell to anyone Relationship Selling Retain existing accounts Become the preferred supplier Price for profit Manage each account for long-term profit Concentrate on highprofit-potential accounts .

and budgets. competitors¶ general market developments ‡Disseminate information to appropriate personnel within salesperson¶s company ‡Develop sales strategies and plans. point-of-purchase displays. brochures ‡Oversee product and equipment testing ‡Train wholesalers¶ and retailers¶ salespeople Territory management: ‡Gather and analyze information on customers. forecasts.Selected Activities of Salespeople Salesperson Generate sales: ‡Precall planning ‡Prospecting ‡Make sales presentations ‡Overcome objections ‡Close by asking for the orders ‡Arrange for delivery ‡Entertain ‡Arrange for credit/financing ‡Collect payments ‡Participate in trade shows Provide service to customers: ‡Provide management/technical consulting ‡Oversee installations and repairs ‡Check inventory levels ‡Stock shelves ‡Provide merchandising assistance: ‡Co-op advertising. Professional development: Participate in: ‡Sales meetings ‡Professional associations ‡Training programs Company service: ‡Train new salespeople .

travel extensively. which takes time from home and family. represent their company to customers and to society in general. represent the customer to their companies. develop innovative solutions to difficult problems.Sales jobs differ from other jobs because salespeople«    implement a firm¶s marketing strategies in the field. need more tact and social intelligence. are authorized to spend company funds. operate with little or no direct supervision and require a high degree of motivation.      .

which takes time from home and family. develop innovative solutions to difficult problems. represent their company to customers and to society in general. travel extensively.Sales jobs differ from other jobs because salespeople«    implement a firm¶s marketing strategies in the field. need more tact and social intelligence. operate with little or no direct supervision and require a high degree of motivation. represent the customer to their companies. are authorized to spend company funds.      .

Sales Management Responsibilities Strategic Planning Performanc e Evaluation Organizing the sales force (Figure 115) Communication Coordination Integration Motivation and supervision Training and developmen t Recruiting. assimilation . selection.

Executive Ladder in Personal Selling President (Figure 116) Vice president of sales National sales manager Regional/divisional sales manager District sales manager Sales supervisor Salesperson Staff assistants available for advice and support at any step along the ladder. .

Executive Ladder in Team Selling President (Figure 117) Vice president of marketing Distribution logistics specialist Client-team leader Product engineer Customer sales/service representative .

Sales Force Management Challenges in the 21st Century  Customer relationship management (CRM)  Sales force diversity  Electronic communication systems and computer-based technology  Selling teams  Complex channels of distribution  An international perspective  Ethical behavior and social responsibility .

The Marketing Concept A philosophy: Achieving organizational goals depends on the firm¶s ability to identify the needs and wants of a target market. Marketing activities in a firm should be organizationally coordinated. and then to satisfy those needs and wants better than the competition does. on three fundamental beliefs  Based Company planning and operations should be customer or market oriented. The goal of the organization should be to generate profitable sales volume over the long run. .

The buyer and seller commit to doing business over a long time.  Sales orientation orientation orientation Age of the hard-sell.  Marketing The marketing concept first emerges. .Evolution of Marketing Management  Production orientation Focus on mass-producing a limited variety of products for as little cost as possible.  Relationship A natural extension of the marketing-orientation stage.

Relationship Marketing: Four key issues Open communication employees Empowered Customers Working to be included in planning in teams .

Develop Tactics .  Tactics are the specific activities that people must perform in order to carry out the strategy.Strategic Planning  Set Objectives Objectives are the broad goals around which a strategic plan is formulated. Formulate Strategies  Strategies are the plans of action.

Company StrategyMarketing Objectives and Strategy Company Objectives Earn 20% ROI Marketing Strategy Increase marketing share 10% Objectives Increase market share 10% Strategy Increase share of customer business .

Marketing StrategySales Force Objectives. Strategy and Tactics Marketing Objectives Increase market share Sales Force Objectives Increase share of customer business Strategy Increase share of customer business Strategy Build long-term customer relations Develop sales teams Provide bonuses for greater customer share Tactics .

pollution.Strategic Trends Selling  Multiple Sales Channels  Multiple Relationship Strategies  Internet Transaction selling  In Consultative selling this era of global warming. . marketing executives must act in a socially responsible manner if they wish to succeed or even survive. and other concerns. toxic waste.

. Provide salespeople/customers access to timely and relevant information.Customer Relationship Management  CRM practices Involve software application utilizing Information technology. Only effective if salespeople embrace it willingly. Needs a different mindset at the top. Aggregate all information about customers into a single database. Allow effective management of every aspect of the buyer-seller relationship.

The Selling Process   How to proceed with the process of Selling Critical steps The right steps to be handled carefully  .

TM 3-2 THE EIGHT STEPS OF THE SALES PROCESS 8. Need Assessment 3. Follow-up 7. Prospecting . Approach 2. Meeting objections 5. Preapproach 1. Presentation 4. Gaining Commitment 6.

governmental records Networking by the Salesperson Cold canvassing .1) Prospecting: The method or system by which sales-people learn the names of people who need the product and can afford it.  Leads can be identified through« Referrals from customers Referrals from internal company sources  Sales manager. Telemarketing dept. Referrals from external agencies Published directories Industrial directories. Marketing dept.. Published data.

Qualifying Leads A qualified prospect« Has a need for the products being sold. Can afford to buy the products. . Is receptive to being called on by the salesperson.

3.´ Marketing Management.Lead Conversion Ratio: Inquiry to Decision 12 Months After Inquiring P an to buy 25% o onger in ar et 30% Purchased Purchased 45% o onger in ar et P an to buy *SOURCE: Bob Donath. o. Croc er. 1994. Ober ayer. Ja es K. ³When Your Prospect Ca s. 2. Vo . Caro yn K. Dixon. and Richard A. .

3. Obermayer. No. Crocker. Dixon. ³When Your Prospect Calls. . and Richard A. Vol. James K.´ Marketing Management. 1994.The Value of Inquiry Follow-Up Share of buyer¶s business if not followed up 40% Share of buyer¶s business if followed up 83% *SOURCE: Bob Donath. Carolyn K. 2.

Planning : the Key    Determining the Sales Objectives Developing Customer Profile Customer Benefits Developing the Sales Call Presentation .

and their overall situation. their needs. selling:  Adaptive When a salesperson alters the initial objectives or plans of the sales process because of new information gained from the customer during the actual call. .Pre approach: Planning the Sale  Includes all the information-gathering activities salespeople perform to learn relevant facts about the prospects.

 A lot can happen in the first minute. A good approach makes a favorable impression and establishes some degree of rapport between the salesperson and the buyer.  What all would you do in the first minute? .The Approach: The first minute or so of the call.

:  Expectations Firm handshake Professional attire Good eye contact. . in the U. A good approach makes a favorable impression and establishes some degree of rapport between the salesperson and the buyer.S.3) The Approach: The first minute or so of the call.

Need Assessment The stage in which the salesperson must discover. . The best way to uncover and understand needs is by asking questions. and understand the buyer¶s needs. clarify.

how much would that save you? ‡ Confirmatory questions So. who else has an influence on the decision? ‡ Problem discovery questions Have you experienced any delays in getting repair parts? In which part of the production process is quality control the most important? ‡ Problem Impact questions How do these delays in getting parts affect your production costs? What impact do the quality consistency problems have on your production costs? ‡ Solution value question If your inventories could be reduced by 20%.NEED ASSESSMENT ‡ Situational questions How often do you change the cutting oil in your drill presses? In addition to the hospital administrator. you would be interested in an inventory control system that reduced your inventories by 20%? If I can provide evidence to you that our products would lower your rejection rate to under one percent. would you be interested? . how much would that save you? If your rejection rate on final inspection was reduced to under one percent.

advantages. Adaptive selling Tips for effective presentations  Keep it simple Talk the prospects language Stress the application of the product/service to the prospects situation .  Built around a forceful product demonstration   Prepared presentation vs.The Presentation A discussion of those product and/or service features. and benefits that the customer has indicated are important.

Saves money. Benefits. Saves time. Avoid multiple units. Features.V. Don¶t get dehydrated. Advantages Features Benefits Telephoto lens Attached water bottle holder Take pictures from longer distance Can hold a water bottle. New D.D.TM 3- Product Camera Bicycle Presentation of Product. Motor Oil . engine to have have longer life. Drill Press Can play any round Convenience Multiple drill bits attached Rust inhibitor Can change bits without shutting down the machine. Advantages Able to capture image from a distance. Saves money.

The S E L L     S Show Feature E Explain Advantage L Lead into Benefits L Let the Customer Talk the F A B approach Need of the Dialogue .

Meeting Objections  Objections should be welcomed because they indicate that the prospect has some interest in the proposition. In responding to an objection« Listen to the buyer Clarify the objection Respect the buyer¶s concern Respond to the objection   Common types of objections Price or value objections Product/service objections Procastinating objections Hidden objections .

In responding to an objection« Listen to the buyer Clarify the objection Respect the buyer¶s concern Respond to the objection   Common types of objections Price or value objections Product/service objections Procastinating objections Hidden objections .6) Meeting Objections  Objections should be welcomed because they indicate that the prospect has some interest in the proposition.

Trial Close: a great way to uncover needs. Push the sale forward   It checks the attitude of the prospect Can be used at the following points After making a strong selling point After the presentation After answering an objection Immediately before closing the sale .

Using Trial Close      How does it sound to you What do you think Is this what you are looking for Is this important to you Does this answer your concern .

Gaining Commitment  Asking the buyer to commit to some action that moves the sale forward. Correct? Then I suggest that you place your first order today so we can have it to you by the end of the week.´ Special Offer Close  Summary Close  . Sales Closes  Common  The Assumptive Close ³Now what size do you want?´ ³If you buy this product today. we¶ll double the length of the warranty.´ ³You have agreed that our product is the best on the market.

Planning  Sales Forecasting  Quotas and Territories Management Information Systems  .

Importance of Sales Forecast   

Basis for all the activities for the company Help decide the levels of production The need of raw materials required Leads to the level of funds needed Level of working capital required Calls for decisions on the level of activity This helps in the manpower planning Sets the level of activities required Decision on the level of operational expenses

Sales Forecasting Methods
Methods Executive Opinion Sales force composite Advantages Quick, easy, and simple Relatively simply Usually fairly accurate Involves those people who are responsible for the results Disadvantages Subjective Lacks analytical rigor Salespeople are sometimes overly optimistic Salespeople may sandbag (estimate low) to look better Time consuming Time consuming High cost Customer may not cooperate No consideration for major product or market changes Require some statistical analysis Best Used For new products When reps are of a high caliber When each rep has a small number of customers

Survey of buyers intentions Trend projection s:
-moving average -exponential smoothing -regression analysis

Done by those who will buy the product, so accuracy should be good. Objective and inexpensive Use historical data

For new products When there are a small number of customers For established products When market factors are predictable For aggregate company forecasts

Analysis of market

Objective Fairly accurate and simple

Unforeseen changes in the market can lead to

When market factors are stable and predictable

Market Factor Forecast: Dryever Diapers
Next Year Second Year
Projected population, ages 0-18 months 4,850,000 4,800,000 Percentage using diapers 100 100 Number using diapers 4,850,000 4,800,000 Average daily diapers per child 2.55 2.55 Diapers daily, ages 0-18 months 12,367,500 12,240,000

Projected population, ages 19-30 months Percentage using diapers Number using diapers 2,560,000 Average daily diapers per child Diapers daily, ages 19-30 months 5,606,400

3,300,000 80 2,640,000 2.19 5,781,600

3,200,000 80

2.19

Projected population, ages 31-42 months Percentage using diapers Number using diapers 1,320,000 Average daily diapers per child Diapers daily, ages 31-42 months 1,452,000

3,500,000 40 1,400,000 1.10 1,540,000

3,300,000 40

1.10

Total daily diapers, all ages Percentage disposable diapers Number disposables daily

19,689,100 95 18,704,645

19,298,400 95 18,298,400

Guiding Principles for Forecasting  Fit the method to the product/market  Use more than one method  Minimize the number of market factors  Recognize the situation limits  Use the minimum/maximum technique  Understand math and statistics .

administration) Cash budget Revenues Expenses Administrative expense budgets Production department budgets Profit-andloss budget Revenues Expenses . selling costs.Fig 12-8 Flow of Information from Sales Budget to Other Budgets Sales budget Sales department expense budgets (advertising.

Key word: customers .Sales Territory Comprises TM 13-2 a number of present and potential customers. located within a given geographical area and assigned to a salesperson. branch. or intermediary (retailer or wholesaling intermediary).

TM 13-3 Benefits of Good Territory Design Enhances Reduces Provides Aids customer coverage travel time and selling costs more equitable rewards evaluation of sales force Increases sales for the sales organization morale Increases .

13-1) Select a Control Unit Determine Location and Potential of Customers Determine Basic Territories Assign Salespeople to Territories Set Up Territorial Coverage Plans Evaluate Effectiveness of Design .Procedure for Designing Sales Territories TM 13-4 (Fig.

13-3) Tentatively set territorial boundary lines by combining control units until total calls needed = total calls possible Modify territories as needed .Buildup Method of Territorial Design Management must determine: Desirable call patterns: Call frequency per account per year Total calls needed in each control group Workload capacity: Total calls possible per rep per year = number of daily calls x days selling TM 13-6 (Fig.

Territory Size and Workload Factors Workload Factor Increase/Decrease Nature of Job: Lots of presale and post-sale activity Nature of product: A frequently purchased product A limited repeat-sale Market development stage: New market--fewer accounts Established market--more accounts Market coverage Selective coverage Extensive coverage Competition: Intensive Limited TM 13-8 Territory Size Decreases Decreases Increases Increases Decreases Increases Decreases Decreases ± unless market is oversaturated Increases .

Breakdown Method of Territorial Design Management must determine TM 13-9 (Fig. 13-5) Company sales potential Sales potential in each control unit Sales volume expected from each sales person Tentatively set territorial boundary lines by combining control units total sales potential = total sales volume expected Modify territories as needed .

Routing the Sales Force  Routing TM 13-13 is the managerial activity that establishes a formal pattern for sales reps to follow as they go through their territories. Area B  Some reps resent it. . Area B: Typically the ³problem´ area. Area A  Best for routine sales x jobs with regular call frequencies.  Reduces travel expenses as it ensures a more Area C efficient territory coverage.

 Reduces travel expenses as it ensures a more Area C efficient territory coverage.Routing the Sales Force  Routing TM 13-13 is the managerial activity that establishes a formal pattern for sales reps to follow as they go through their territories. . Area B  Some reps resent it. Area B: Typically the ³problem´ area. Area A  Best for routine sales x jobs with regular call frequencies.

Sales Manpower  Recruitment Training Assimilation   .

Recruiting and Selection Problems  Lack  Lack of resources of job specification and qualifications not objectively established  Qualifications  Lack of managerial training prejudices for managerial talent  Personal  Search .

5-2 Sales Force Staffing Process: Plan for Recruiting & Selection Establish Responsibility for Recruiting. Selection and Assimilation Determine Number of People Wanted Conduct Job Analysis Prepare Job Description Determine Hiring Qualifications Recruit Applicants Select Applicants Design a System For easuring Applicants easure Applicants Against Hiring Qualifications ake Selection Decisions Hire The People Assimilate New People Into Sales Force .Fig.

000 Number of reps needed = 1250 = 112 reps 50 = 1250 .Number of reps needed = Market workload: Customer class A B Number of x accounts 400 600 Workload Analysis Calls = per year 20 10 Total workload in market Workload one rep can handle Total calls 8.000 6.000 14.000 One rep¶s workload: Calls/day x Selling days/week x Working weeks/year = Annual workload 5 x 5 x 14.

³The 10 Traits of Top Salespeople. to be alert To sell complex products and ideas To understand customer needs Source: Erika Rasmusson. 34-37. August 1999. . ³ Sales & Marketing Management.Fig. pp. 5-4 Ten traits and abilities of top salespeople Trait Ego strength Sense of urgency Ego drive Assertiveness Willingness to take risks Sociability Abstract reasoning Sense of skepticism Creativity Empathy Related Ability To handle rejection To complete the sale To persuade people To be firm in negotiations To be innovative To build relationships To sell ideas To question.

Recruiting for the Team ‡ Willingness to share ‡ Cooperative ‡ Trusting ‡ Empathetic ‡ Accepting of others ‡ Receptive to others ideas ‡ Selflessness ‡ Leadership skills .

Developing and Conducting a Sales Training Program Establish program objectives Identify who should be trained Training assessment Identify training needs and specific goals How much training is needed? Who should do the training? When should the training take place? Where should training be done? Content of training Teaching methods used in training program Determine how training will be reinforced Reinforcement Program design What outcomes will be evaluated? What measures will be used? Evaluation .

Objectives of Sales Training Programs Increased Sales Productivity Improved SelfManagemen t Lower turnover Sales training program objectives Improve customer relations Improve morale Improved communication .

and applications New products . benefits. benefits.features. and applications Industry trends Competitive products .features. benefits.features.Examples of Specific Training Objectives Company orientation and administrativ e skills: Knowledge: Understand company goals and objectives Understand company selling philosophy Understand organizational structure Understand company policies and procedures Improve call reports Improve call patterns Improve time management Existing products . and applications Specific customer applications and problems Promotional programs Improve Improve Improve Improve Improve Improve prospecting methods strategy selection presentation skills closing techniques understanding of and handling objectives customer sensitivity Selling skills: Improve pre-call planning .

When Should Training Take Place? Two basic attitudes: #1) Train immediately because« -No rep should be placed in the field until he or she is fully trained. -Cannot risk exposing customers to poorly trained reps. -weak salespeople are eliminated before company spends money on training them. . #2) Delay training because« -much easier to train people who have had some field experience.

To Insure Training Effectiveness Managers Should Ask the Following Questions Is your training aligned with your company¶s strategic goals?  Does top management support your training?  Does it reflect the needs of your customers/  Is it immediately relevant to your business?  Are the salespeople empowered to leverage what they learn?  Is the training reinforced?  Are the results of the training measurable?  .

Management of the Field force  Leadership Compensation Evaluation   .

Leadership Effectiveness Personal characteristics Leadership style (the leader behaviors) Leadership effectiveness Managerial skills SITUATION .

Leadership Characteristics and Skills  Personal Characteristics Self-Confidence Initiative Energy Creativity Maturity  Managerial Skills Problem-solving skills Interpersonal skills Communication skills Persuasive skills .

  Clarifying rules Providing verbal feedback  Transformational Leadership Transforms the basic values.Two Leadership Styles  Transactional Leadership Those supervisory activities regarding the day-to-day operation and control of the sales force.     Articulating a vision Fostering group goals Role modeling Providing individualized support . and attitudes of followers such that they are willing to perform at levels above and beyond expectations. beliefs.

Tools and Techniques of Leadership  Personal contact  Sales reports  Telecommunications Better customer and industry information Selling assistance Sales support Reporting responsibilities Communication  Printed aids  Meetings  Indirect supervisory aids Compensation plans Territories Quotas Expense accounts Sales analysis procedures .

salespeople will emulate Leading by example  Coaches them. are role models.Coaching Sales Reps  Three elements of leadership most often used to describe coaching Verbal feedback  Praising salespeople when they do well. Mutual trust and respect  Created through two-way communication .

TM 13-3 Outcomes of Effective Leadership ‡Well-Trained Salespeople ‡Trust among Salespeople ‡Better Performance ‡Sales Force Morale ‡A sense of common purpose and a belief among members that group goals can be attained. .

Problems Encountered in Leadership Poor performance Substance abuse Cheating on expense accounts Engaging in unethical behavior .

Establish basic policies 2.Procedure for Evaluating Salespeople (Fig. 16-1) 1. Select evaluation bases 3. Set performance standards 4. Compare performances standards 5. Discuss results with salespeople .

telephone.Output Factors Used as Evaluation Bases  Sales volume In dollars and in units By products and customers (or customer groups) By mail.e.. and order size  Orders  Number of orders Average size (dollar volume) of order Batting average (orders / calls) Number of canceled orders  Accounts Percentage of accounts sold Number of new accounts Number of lost accounts Number of accounts with overdue payment . customer group. market share) Gross margin by product line. and personal sales calls  Sales volume as a percentage of: Quota Market potential (i.

Quantitative Input Factors Used as Evaluation Bases  Calls per day (call rate)  Days worked  Selling time versus nonselling time  Direct selling expense In total As percentage of sales volume As percentage of quota  Nonselling activities Advertising displays set up E-mails/letters written to prospects Telephone calls made to prospects Number of meetings held with dealers and/or distributors Collections made Number of customer complaints received .

Qualitative Input Factors Used as Evaluation Bases  Personal efforts of the sales reps Management of their time Planning and preparation for calls Quality of sales presentations Ability to handle objections and to close sales Product Company and company policies Competitor¶s products and strategies Customers  Knowledge  Customer relations  Personal appearance and  Personality and attitudinal health factors Cooperativeness Resourcefulness Acceptance of responsibility Ability to analyze logically and make decisions .

Ratio Measures Sales = Days worked X Calls Days worked X Orders Calls Sales Orders X Days worked X Call rate X Batting average X Average order .

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