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Block: Basics of Sales Management

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Sales Management Strategy

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Sales Management Strategy

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Sales Management Strategy

Introduction
Sales management is defined as the planning, direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force. Definition Committee of the American Marketing Association. Sales force is responsible for the sale of products of a company and to add profit to the business operations and fulfill social obligations. Sales force should be hardworking, result oriented, well educated and competent to handle changing

situations. Technical developments which are taking place at a rapid speed have
made the task of sales force more challenging.
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Nature and Importance of Sales Management


Sales management helps to achieve the organizational objectives. The main objectives of sales management is that products should be sold at that price which realizes profits. Buyers and sellers both have same types of business relationships. This

relationship is based on exchange of goods, services and money.


Sales person develops a positive relationship with the customers. The role of sales team is interdependent and success of one team member depends on the other.

The sales team continuously monitor the customer preference, competitors situation, government policy and other regulatory bodies.
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Relationship-based selling Relationship-based selling works because people would rather buy what they

need to buy anyway from those they have come to relationship.


Relationship-based selling means doing business in such a way that company is worthy of the customer's trust. Relationship selling is mainly personal not institutional, and buying is heavily personal as well. It is not selling centric. It's buyer-based. The objective of relationship selling is to help the buyer do the right thing for the buyer.
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Managing the Sales Force


Successful sales force management means: The right organisation and aggregation against product lines and geographies. The right strength and qualification. The right compensation and incentive system.

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Steps in Designing and Managing a Sales Force


1. 2. Objective Setting Training for Sales Policies

3.
4. 5.

Designing Sales Force: Structure and Size


Deciding Sales Force Compensation Recruiting and Selecting Sales Force

6.
7.

Guiding and Motivating Sales Force


Performance Rating of Sales Force

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Sales Managers Duties and Responsibilities


The sales manager is the most important person in a sales organisation. All activities are based on his functions and responsibilities. The following are some

of the principal duties of a sales manager:


1. 2. Organising sales research, product research, etc. Getting the best output from the sales force under him.

3.

Setting and controlling the targets, territories, sales experiences, distribution


expenses, etc.

4. 5.

Advising the company on various media, sales promotion schemes, etc. Monitoring the companys sales policies.
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In the table that follows, Al Reid gives the steps necessary for getting success in selling:
Territory Sales Managers Job Responsibilities

To yourself
Increase basic selling skills. Develop management abilities. Keep pace with changes, trends and developments in your territory.

To your company
Be proud of your association with your company. Maintain the company standing and standards with all customers. Inform the headquarters and your supervisors, through established channels, about changes and developments in your territory. Be prompt in handling records, reports, correspondence, etc.

To your customers
Work closely with decisiontakers and influencers in each account. Point out the advantages of an association with your company. Keep accounts current and upto-date on all company advertising and promotional activities. Suggest ideas, methods, techniques and tips that can stimulate sales.
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Study the latest products, promotion policies and procedures.


Be alert to new sales and merchandising ideas.

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Grow, so that you can assume greater responsibilities as opportunities permit. Maintain the appearance and goodwill expected of a territory sales manager. Analyse your weak and strong points and then think about them.

Cut selling costs by economical routing, good use of time, planning and greater awareness of opportunity. Check demand and movement of products in the territory. Report activities of the competitors. Strive to reach the best goals. Ask for help, when you need it. Cooperate with other departments of the company.

Inform the customers about the trends in their areas. Handle complaints effectively and to the complete satisfaction of the complainants. Suggest the best technique for selling your products to the customers. Organise presentations to inform and save time. Make the customers aware of the changes in the companys policies or procedures. Stimulate and maintain enthusiasm for your products. Build and maintain goodwill.
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Problems of Sales Management


1. Designing and Managing Sales Force Actual supervision of, and guidance to, individual salesmen is also a sine qua non of a sound sales manager. 2. Sales Force Authority sales force requires delegation of authority with respect to the following:
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Changing or fixing prices Credit facilities to old and existing customers Assurance regarding quality and after-sale service Payment terms and settlement of claims.
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3.

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Target-setting Sales targets are fixed on the basis of past experience, time period and

brand positioning in the market. The targets should be fixed in such a


manner that they are achievable. 4. Sales Forecasting Sales forecasts must change as conditions change. Accuracy depends on meticulous planning and dynamic strategies.

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Sales Management Formulation of Sales Strategy


The following are key decision areas in sales management which are particularly relevant to strategy formulation:
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Determining the size of the sales force Decision regarding type and quality of sales force required Designing the sales organisation Territory designing Recruitment and training procedures Task allocation Compensation of sales force Performance appraisal and control system Feedback mechanism to be adopted Managing channel relationships Coordination with marketing departments.
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Different Sales Strategies


Relationship Strategy In this strategy, a major key to success in selling is the ability to establish working relationships with customers in which mutual support, trust and goals are nurtured over time. The sales force that builds effective relationships with the customer and provides valuable service are usually high performers and top achievers.

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A Selling Partner P Prepares strategically for a long-term, high-quality relationship that

solves customers problems.


A R T Asks questions to get on the customers agenda. Restates customer needs with confirmation questions. Teams with support people to provide the customer with solutions.

N
E R

Negotiates double-win solutions with joint decision making.


Exceeds customer expectations whenever possible. Re-examines the ongoing quality of the relationship frequently.

In this model, a customer is treated as a partner. Therefore, maintaining a good relationship with the customer is important.
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The Double-Win Strategy

In this strategy, both the customer and the salesperson come out of the sale
with a sense of satisfaction. The salesperson not only obtains the order but sets the stage for a long-term relationship, repeat business and future referrals.

They both come out of the sale feeling satisfied, knowing that neither has taken advantage of the other and that both have profited, personally and professionally, from the transaction.

However, some salespeople have still not accepted the merits of the win-win
approach. They have adopted a win-lose approach which means that the salesperson wins at the buyers expense.
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Win Lose approach vs. Win Win attitude The starting point to the development of a double-win philosophy is to compare the behaviour of persons who have adopted the win-lose approach with that of persons who have adopted the win-win approach (Figure).
Double-Win Strategy Win - Lose People See a problem Fix the blame Let life happen to them Live in the past Make promises they never keep Win - Win People Help others solve their problem Fix what caused the problem Make life a joyous happening for others and themselves Learn from the past, live in the and set goals for the future present

Make commitments to themselves and to others and keep both of them

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Instant Service

Sales Management Strategy

It is in this context of providing almost instant service to the customer that the concept of supply chain management has caught the imagination of managements the world over.

No matter how efficiently and effectively goods/services are produced, if they cannot be delivered to the customer in the quickest possible time, all efforts made earlier are in vain, particularly in the context of very short product life cycle counted in months rather than years. As depicted in Figure below, a combination of effective process plus supply chain management is what is required to cope with the challenges of the international market-place.
One cannot survive in a highly competitive market without conforming to the so called Q-C-D triangle Highest Quality, Lowest Cost and Least Delivery times. Cont
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Simplified Model for Ensuring Customer Delight

After sales service Unique selling propositioning/brand equity

SUPPLY CHAIN management

Customer Delight

Exceeding customer expectations

On time delivery
Competitive price Reliability of product or service Novelty/uniqueness of product/service

PROCESS management

leading to customer loyalty and lasting relationship

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Hard Sell Versus Soft Sell Strategy


Strategies for Identifying Customers

Hard Sell Concern for self Canned presentation Talking Pushing product Presenting features Advocating without acknowledging

Soft Sell Concern for customer Questions for discussion Listening Providing buying opportunities Presenting benefits Acknowledging needs

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Product-centered Selling and Client-centered Selling


Product-centred Selling 1. 2. 3. Seller puts in efforts for research and development of product. Product centred selling emphasises knowledge of product. Selling strategies and tactics tend to be most influenced by past performances of products and competition and present situations. Representative seeks to be accepted as a reliable, credible source of information and service. 1. 2. 3. Client-centred Selling Seller puts in efforts on research and development of relationship with clients. Client centred selling emphasises knowledge of client. Strategies and tactics tend to be directed more to considerations of future growth and developments in the clients world. Representative strives to raise clients expectations of personal excellence.

4.

4.

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Selling Process
The selling process is defined as a process by which a salesperson identifies and locates the prospects, separates the prospects from the suspects approaches them and makes a sales presentation, handles their objections. He also follows up the existing customers to identify further sales leads and measures the success and customer satisfaction level of the current products and service offerings. Selling concept refers to the exchange of goods or services for an amount of money or its equivalent in kind. Selling helps an organization achieve its organizational goals. Thus, managing sales in an organization is a critical activity. A sales manager needs to ensure that the salesman are motivated to give their best performance. The sales team continuously look out the changes taking place in the external environment regarding competitors, customers, government policy and other regulatory agencies, advances in technology, and industry trends. This provides the sales personnel a vital information regarding trends in product sales, product development, and budgets. Copyright 2010, S L Gupta Cont
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The economic slowdown is receding and budgets of companies are increasingly receptive to alternative direct marketing tools to sell their products. Telemarketing (TM), that is marketing products and services on the telephone, a direct marketing tool, which has touched a high in the last three years. Apart from professional TM service outfits, many companies, including MNCs, have set up their in-house TM cells.

A TM outfit works through a well networked team of trained telemarketers who make calls to potential clients and customers and establish direct contact with them. The key lies in convincing the customer about the value of the product or service and fixing up an appointment. Direct customer marketing system allows customers complete flexibility to purchase our products. Orders can be placed via the Internet, over the phone, by mail, through our catalogue or through the company personnel.
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Mail Order Sales Mail order houses are retail trading organisations engaged in the mail order business. This is also known as carrying on business through post or mail. In this method, customers do not visit the sellers business premises, nor do they make a personal examination of the goods before they are purchased. In this system, orders are received from customers by post and the goods are dispatched usually by VPP (Value Payable Parcel) or registered post.

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In case of the mail order business, the selling function is performed without the intervention of the personal salesman.

The goods should be known for their utility so that there is no need of
convincing prospective buyers about their usefulness.

They must fetch a sufficient price to have a wide profit margin. They must command wide demand. They must not be easily perishable. They should be available in large quantities throughout the year.

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Sales through Large Scale Fixed Shop Retailers Concentration of population in urban areas, increasing flow of manufactured goods and improved methods of organising business have led to the expansion of retail business. This expansion was effected in different ways, giving rise to different types of retail establishments, which operate on a large scale. More prominent among them are the following: Departmental stores Chain stores


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Mail order houses


Hire purchase shops Super markets Fixed price shops Cooperative stores
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Sales through Wholesalers and Retailers Wholesalers perform a number of functions in the marketing of goods as

listed below
Assembling and buying Storing or warehousing

Transporting
Financing Risk-bearing

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Grading, packing and packaging


Providing market information.
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In the process of acting as a link between the wholesaler and the consumer, a retailer performs many functions. The more important of them are given below: Buying and assembling Warehousing or storing Selling Grading and packing Financing Supply of market information Advertising.
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Direct Selling

Sales Management Strategy

Direct selling identifies the unfulfilled needs of ordinary customers.

Direct marketing companies have an advantage over conventional marketers


in that the relationship between the company and the customer starts building even before a sale is made.

Lessons From Direct Selling THE STRATEGY: Eureka Forbes structures its demos according to the time at the customers disposal. The Lesson: Keep the process flexible enough to accommodate individual needs.
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How to Add Value Through Direct Selling


Create direct selling process Choose suitable time for demo and pitch

Identify the customer

Make appointment with customer

Ensure product Performance at demo

Close deal quickly

Follow up sale with prompt service Ensure increase in customer value

Is the process clearly structured? Yes Yes No

Is salesman empowered to be flexible?

Yes
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THE STRATEGY: Modi Telstra uses a clearly structured sales call process to market its cell phone services.

THE LESSON: Simplify the process of negotiation to save the customers time.

THE STRATEGY: Oriflame uses multilevel marketing to enlist direct sales agents from its customer base.

THE LESSON: Use your customer to sell your product to other customers.
THE STRATEGY: INDAL empowers its sales force to take pricing decisions on the spot when closing sales.

THE LESSON: Ensure that your direct seller can conclude a deal immediately.
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National Sales Manager


In carrying out these responsibilities, sales mangers do the following things: 1. Prepare sales plans and budgets

2.
3. 4. 5.

Set sales force goals and objectives


Estimate demand and forecast sales Determine the size and structure of the sales force organization Recruit, select and train sales people

6.
7. 8. 9.

Design sales territories, set sales quotas and define performance standards
Compensate, motivate and lead the sales force Conduct sales volume, cost and profit analysis Evaluate sales force performance
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10. Monitor the ethical and social conduct of the sales force.
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Sales Manager

Regional Manager (North)

Regional Manager (South)

Regional Manager Regional Manager Regional Manager (East) (West) (Staff)

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

BM BM

Field Staff

Field Staff

Field Staff

Field Staff

Field Staff

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Stand Points of Sales Representative


The stand points of sales representatives and the managers are as follows: 1. To protect drastic fluctuations in income so that regular monthly expenses for home mortgage, food and utilities can be paid/balanced without hardship. 2. 3. Expenses in direct relations to the amount of effort Earnings to be equitable in terms of experience, ability, cost of living.

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Organization uses two types of compensations: 1. Financial

2.

Non-Financial

Financial includes compensation, salary, incentives and fringe benefits. Non-financial includes motivation and its implications to sales management.

But monetary compensation is one of the most direct and least ambiguous ways
of communicating to sales people about their performance.

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Reasons for Providing Financial Compensation


The compensation plan is undoubtedly to reward the salesman for his
performance. The plan includes. 1. The plan should provide a regular income at least at minimum level. In

addition to this regular income, it should provide adequate incentive to


induce minimum performance from the salesman. 2. 3. 4. The plan should be simple and easy to understand for the salesman. It should be economical and should induce competition amongst salesman. It should be fair to both the sales force and management.

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Methods of Remuneration
The sales force can be remunerated in the following ways: 1. A straight salary

2.
3. 4.

A straight commission on sales


Salary and commission on sales Salary and commission on sales above a certain amount

5.

Salary and different rate of commission on varying totals or for different types
of goods

6.

Salary and share in the profits


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Expenses Accounts
The major sales expenses accounts are categorized as follows: 1. 2. 3. 4. Salary accounts Commission accounts Bonuses Meals and entertainment

5.
6. 7. 8. 9.

Air travel
Automobiles rentals Lodging Travel accounts Tour expenses accounts (Advance accounts)
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10. Communication and services expenses accounts.


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Sales Management Strategy

Fringe Benefits
Types of fringe benefits are: 1. 2. 3. Company Car Supplemental life insurance and medical insurance Tax-return preparation

4.
5. 6. 7. 8. 9.

Personal tax and financial planning


Low or no interest loans Deferred compensation Supplemental retirement benefits Air travel and First class A.C. for Train Travel Relocation allowance
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10. Stationary facilities


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11. 12.

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Sales Management Strategy

Laundry benefits, while on the tour Special perquisites for outstanding performance by getting travel prizes

recognition for outstanding performance


13. 14. 15. Medical expenses Special business associations membership Exclusive developmental programs by IIM, Ahmedabad, by Shiv Khera, etc.

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