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Sales Force Management

Tenth Edition Mark W. Johnston
Crummer Graduate School of Business Rollins College

Greg W. Marshall
Crummer Graduate School of Business Rollins College

draw Hill

McGraw-Hill Irwin

Chapter One Introduction to Sales Management in the Twenty-First Century 1
Change Is the Central Theme in Sales Management Today 1 Learning Objectives 3 Sales Management in the Twenty-First Century 3 Innovation Fuels Success in Selling Today 4 Sales Effectiveness Is Enhanced through Technology 5 Leadership Is a Key Component in Sales Management Success 7 Sales Management Is a Global Endeavor 8 Ethics Underlies All Selling and Sales Management Activities 8 What Is Involved in Sales Management 9 Selling Process 10 Sales Management Process 10 Environmental Factors Impact Success in Selling 11 External Environment 12 Economic Environment 12 Legal and Political Environment 14 Technological Environment 15 Social and Cultural Environment: Ethics 16 Natural Environment 18 Summary: Impact of the External Environment 19 Internal (Organizational) Environment 20 Goals, Objectives, and Culture 20 Human Resources 21 Financial Resources 21 Production and Supply Chain Capabilities 21 Service Capabilities 22 Research and Development (R&D) and Technological Capabilities 22 Impact of the Environment: The HP Experience 22 Summary 23

PART ONE FORMULATION OF A SALES PROGRAM 28 Chapter Two The Process of Selling and Buying 30
The Case for a Focus on the Sales Process 30 Learning Objectives 31 Drivers of Change in Selling and Sales Management 32 Overview of Selling as a Career 33 Why Sales Jobs Are So Rewarding 34 Key Success Factors in Selling 39 Selling Activities 42 Types of Selling Jobs 45 Selling in Business-to-Consumer versus Business-toBusiness Markets 45 Classifying Types ofB2B Sales Jobs 46 Stages in the Selling Process 46 Prospectingfor Customers 47 Opening the Relationship 48 Qualifying the Prospect 49 Presenting the Sales Message 49 Closing the Sale 50 Servicing the Account 51 Participants in the Organizational Buying ProcessThe Buying Center 52 Selling Centers and Buying Centers 53 Organizational Buying Decision Stages 54 Stage One: Anticipation or Recognition of a Problem or Need 54 Stage Two: Determination and Description of the Characteristics and Quantity of the Needed Item(s) 56 Stage Three: Search for and Qualification of Potential Suppliers 56 Stage Four: Acquisition of Proposals or Bids 56 Stage Five: Evaluation of Offerings and Selection of Suppliers 56 Stage Six: Selection of an Order Routine 57 Stage Seven: Performance Evaluation and Feedback 58


Contents xiii

The Nature of Organizational Buying Situations 58 Summary 59

Learning Objectives 98 The Increasing Importance of Sales Organization Decisions 98 Purposes of Sales Organization 99
Division and Specialization of Labor 99 Stability and Continuity of Organizational Performance 100 Coordination and Integration 100

Chapter Three

Linking Strategies and the Sales Role in the Era of Customer Relationship Management 64
The Importance of Integrating Sales with Other Business Functions 64 Learning Objectives 66 What Is Customer Relationship Management? 66
From Mass Marketing to One-to-One Marketing CRMProcess.Cycle 70 Toward a Relationship-Based Enterprise 71 68

Horizontal Structure of the Sales Force


The Importance of Market Orientation


Deciding on a Company Sales Force or Independent Agents 101 Geographic Organization 105 Product Organization 107 Organization by Customer Types or Markets 108 Organization by Selling Function 109 The Role of Telemarketing 109

How Market Orientation Affects Performance Internal Partnering to Create a Market Orientation 74

Organizing to Service National and Key Accounts 111

Team Selling 113 Multilevel Selling 114 Co-Marketing Alliances 114 Logistical Alliances and Computerized Ordering 115

The Process of Strategy Development

Company Mission and Goals 74 SBU Strategy 76


Personal Selling's Role in Marketing Strategy

Role of the Relationship 80


Vertical Structure of the Sales Organization

Selling Responsibilities 117 Sales-Related Functions 117 The Impact of New Technologies 118 Staff Support and Outsourcing 118


Personal Selling in the Relationship Era

Stage One: Exploration 82 Stage Two: Expansion 84 Stage Three: Commitment 85


Personal Selling's Role in the Marketing Communication Mix 86

Company Resources, Goals, and Marketing Strategy 87 Characteristics of the Target Market 88 Product Characteristics 88 Distribution Practices 88 Pricing Policies 89 Computerized Ordering and Customer Alliances

Additional Sales Organizational Issues Summary 120


Chapter Five

The Strategic Role of Information in Sales Management 126


Improving Customer Satisfaction and Loyalty through Feedback 90

Major Account Teams 91



Chapter Four Organizing the Sales Effort 97

Organize the Sales Force around Customers, Not Products 97

Putting Information Technology into Perspective 126 Learning Objectives 127 Using Information in Managerial Decision Making and Planning 128 Introduction to Market Opportunity Analysis 128 Methods of Sales Forecasting 129
Subjective Methods of Forecasting 130 Objective Methods of Forecasting 133

Choosing a Forecasting Method 137 Developing Territory Estimates 137



Purposes and Characteristics of Sales Quotas 139 Purposes of Quotas 139 Characteristics of a Good Quota 139 Setting Quotas 141 Types of Quotas 141 Quota Level 142 Determining Sales Force Size 143 Breakdown Method 144 Workload Method 144 Incremental Method 147 Designing Sales Territories 148 Stages in Sales Territory Design 148 Sales Analysis for Managerial Decision Making 156 Type of Evaluation System 156 Sources of Information for Sales Analysis 157 Type of Aggregation,of Information to Be Used in Sales Analysis 159 Illustration of a Hierarchical Sales Analysis 161 Summary 165

Stage 2: Salespeople Develop Perceptions 195 Stage 3: Salespeople Convert Perceptions into Behaviors 196 The Salesperson's Role is Vulnerable 197 Boundary Position 197 Large Role Set 198 Innovative Role 198 Role Conflict and Ambiguity 200 Common Expectations and Key Areas of Conflict and Ambiguity 200 Consequences of Conflict and Ambiguity 202 Managing Conflict and Ambiguity in a Salesperson 204 Role Accuracy 204 Nature of Role Accuracy 205 Summary 207

Chapter Seven

Comprehensive Cases for Part One 173 Case 1.1

The Valley Winery 174 Case 1.2 Health Care Office Solutions, Inc. 179

Salesperson Performance: Motivating the Sales Force 214

Salesperson Motivators 214 Learning Objectives 216 The Psychological Process of Motivation 216 Major Components of the Model 217 ExpectanciesPerceived Links between Effort and Performance 217 InstrumentalitiesPerceived Links between Performance and Rewards 220 Valences for Rewards 222 Can the Motivation Model Predict Salesperson Effort and Performance? 223 The Impact of a Salesperson's Personal Characteristics on Motivation 224 Satisfaction 224 Demographic Characteristics 225 i'Job Experience 225 "" Psychological Traits 226 Performance Attributions 227 Management Implications 228 Career Stages and Salesperson Motivation 228 Career Stages 228 The Problem of the Plateaued Salesperson 232 The Impact of Environmental Conditions on Motivation 235 The Impact of Organizational Variables on Motivation 235 Supervisory Variables and Leadership 236 Incentive and Compensation Policies 237 Summary 238

Chapter Six

Salesperson Performance: Behavior, Role Perceptions, and Satisfaction 184

The Changing Role of the Sellers 184 Learning Objectives 185 Understanding Salesperson PerformanceWhy Is It Important for Sales Management? 186 The Model 187 The Role Perceptions Component 187 The Aptitude Component 188 The Skill-Level Component 188 The Motivation Component 189 The Personal, Organizational, and Environmental Variables Component 190 Rewards 193 Satisfaction 193 The Salesperson's Role Perceptions 195 Stages in Developing the Salesperson's Role 195 Stage 1: Role Partners Communicate Expectations 195



Chapter Eight

Personal Characteristics and Sales Aptitude: Criteria for Selecting Salespeople 244
The War for Talent 244 Learning Objectives 245 Are Good Salespeople Born or Made? The Determinants of Successful Sales Performance
A Review of Past Research 247 The Costs of Inappropriate Selection Standards 248

Requirements for Tests 290 Requirements for Interviews and Application Blanks 290



Chapter Ten

Sales Training: Objectives, Techniques, and Evaluation 297

Military Training and Sales Success Learning Objectives 298 Issues in Sales Training 299 Objectives of Sales Training 300
Increase Productivity 300 Improve Morale 300 Lower Turnover 300 Improve Customer Relations Improve Selling Skills 301


Characteristics of Successful Salespeople


Characteristics Sales Managers Look For 249 Research Concerning the Personal Characteristics of Successful Salespeople 250 Overview of Findings 251


Job-Specific Determinants of Good Sales Performance 259

Selling Different Types of Products and Services Different Types of Sales Jobs 260 259

The Development of Sales Training Programs 302

Creating Credibility in Sales Training 303

Implications for Sales Management Summary 261


Training New Sales Recruits 306 Training Experienced Sales Personnel Sales Training Topics 308


Chapter Nine

Sales Force Recruitment and Selection

The Real Value of Hiring Good Employees 268 Learning Objectives 269 Recruitment and Selection Issues, 269 Who Is Responsible for Recruiting and Selecting Salespeople? 272 Job Analysis and Determination of Selection Criteria 273
Who Conducts the Analysis and Prepares the Description? 273 Content of the Job Description 274 Determining Job Qualifications and Selection Criteria 276 Methods for Deciding on Selection Criteria 276


Product Knowledge 309 Market/Industry Orientation 309 Company Orientation 310 Time and Territory Management 310 Legal/Ethical Issues 311 Technology 311 Specialized Training Topics 312

Sales Training Methods


On-the-Job Training 315 Classroom Training 316 Electronic Training Methods


Measuring the Costs and Benefits of Sales Training 317

Sales Training Costs 317 Measurement Criteria 318 Measuring Broad Benefits 319 Measuring Specific Benefits 319 Recent Trends in Sales Training Evaluation

Recruiting Applicants
External Sources 281

277 283


Selection Procedures



Application Blanks 284 Personal Interviews 285 Physical Examinations 287 Tests 287 Concerns about the Use of Tests 288 Guidelines for the Appropriate Use of Tests 289

Chapter Eleven

Salesperson Compensation and Incentives 327

Characteristics of Great Sales Compensation Plans 327 Learning Objectives 329 Overview of Compensation and Incentives 329

Equal Employment Opportunity Requirements in Selecting Salespeople 289

xvi Contents Straight Salary, Straight Commission, and Combination Plans 332 Straight Salary 332 Straight Commission 333 Combination Plans 334 Sales Contests 337 Contest Objectives 338 Contest Themes 338 Probability of Winning 338 Types of Contest Rewards 338 Contest Promotion and Follow-through 339 Criticism of Sales Contests 339 Nonfmancial Rewards 340 Recognition Programs , 341 Expense Accounts 341 Direct Reimbursement Plans 342 Limited Reimbursement Plans 342 No Reimbursement Plans 343 Making Compensation and Incentive Programs Work 343 Assessing the Relationship Selling Objectives 343 Determining Which Aspects of Job Performance to Reward 345 Deciding on the Most Appropriate Mix and Level of Compensation 346 Dangers of Paying Salespeople Too Much 347 Dangers of Paying Salespeople Too Little 348 Cost Analysis Development 375 Full Cost versus Contribution Margin 375 ABC Accounting 379 Procedure 380 The Process Illustrated 384 Direct Selling 387 Advertising 387 Warehousing and Shipping 389 Order Processing 389 Transportation 389 Promise and Problems 391 Return of Assets Managed 391 Summary 394

Chapter Thirteen Evaluating Salesperson Performance 403

The Case for a Focus on Sales Force Performance Management Systems 403 Learning Objectives 404 Performance versus Effectiveness 405 Objective Measures 407 Output Measures 408 Input Measures 408 Ratio Measures 410 Summary of Objective Measures 412 Subjective Measures 413 Forms Usedfor Subjective Measurement 414 Avoiding Errors in Performance Evaluation 419 Using a BARS System 421 360-Degree Feedback in Performance Evaluation 422 Summary 424

Summary 348 Comprehensive Cases for Part Two 355 Case 2.1
California Credit Life Insurance Group 356 Case 2.2 On-Time Package Delivery 364

Comprehensive Cases for Part Three 431 Case 3.1

Wentworth Industrial Cleaning Supplies 432 Case 3.2 Hanover-Bates Chemical Corporation 444

Real Cost Analysis Leads to Real Benefits Learning Objectives 373 372

Endnotes 449 Case Index 466 Name Index 467 Subject Index 471