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

Ch-15-customer-oriented logistics 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

Ch-15-customer-oriented logistics 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

Objectives of logistics
• These broad objectives generally consist of the service output demands to be delivered to the customers

Objectives of logistics
• 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 objectives1)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

Cost reduction strategy
• Route optimization for the transport function • Optimizing the quantum of inventory

Cost reduction strategy
• 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 knowledgeselling engineering products or computers • 6) creative selling of tangible productsvacuum 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.

Evolution of sales mgmt
• 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

Evolution of sales mgmt
• 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

Evolution of personal selling 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

Qualities for an industrial seller (as per purchase magazine)
• 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

Qualities for an industrial seller (as per purchase magazine)
• • • • 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

Evolution of personal selling
• • • • • 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

Institutional selling
• Xerox in photo-copiers, Johnson and Johnson in surgical equipments and Reynolds in office stationeries sell directly to institutions for institutional consumption

Institutional selling
• 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 crossroads 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 Emphasis on product Product manufactured first, then sold Mgmt .is sales volume oriented Planning is short-term oriented for products and markets Stresses needs of a seller Views business as a goods producing process Emphasis on staying with existing technology and reducing cost Watertight compartments Cost determines price Views customer as the last link in business
• • • • • • • • • • • Marketing Emphasis on consumer needs Needs and wants first ,then delivery of product Profit oriented Long term planning in terms of tomorrow’s product/markets Stresses buyer needs and wants Views business as a consumer satisfying process Emphasis on superior technology, innovation All departments operate in an integrated manner Consumer determine price ,price determines cost View customers as the very beginning 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

Features of marketing based companies (Bower and Garda)
• 4)evolve a structure or process of cocoordinating all non-marketing functions towards the achievement of marketing goals • 5)they have set of specific marketing goals and targets

Features of marketing based companies (Bower and Garda)
• 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 onethird of his sales time on the actual selling function • Reporting systems are automated through SAP platforms

Modern day sales activity
• They are conducting functions such as territory analysis, sales reserch,market planning and sales promotion

Modern day sales activity
• 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?

Strategic sales management-key decisions
• 3)design of sales organization suitable to the market (organization of the sales force)

Strategic sales management-key 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 webbased 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

Ch-2-selling skills and strategies
• Another school of thought is based on the scientific management principles of skill and value development (ordinary people can be groomed)

Ch-2-selling skills and strategies
• 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-

Blake and Mouton grid
• Assumption is customers will buy the product themselves if the logistics are managed • Suitable for FMCG products-

Blake and Mouton grid
• 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 productoriented and they always try to push the product for sale

Blake and Mouton Grid
• 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

Blake and Mouton Grid
• 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

Blake and Mouton Grid
• Sales people in (9,9)are the problem solvers who consult with the customer (consultative selling)-seen in software and consultation selling industry

Blake and Mouton Grid
• 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 cooperation, 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

The communication process
• 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 communication process
• 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 communication process
• The dress code, body movements, voice intonations and expressions of emotions like laughter and surprise constitute part of the communication process

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

The communication process
• 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

The communication process
• 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

The communication process
• Selective perception occurs as a result of a high level of distortion in the process of decoding the intended message

The communication process
• 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)

The communication process
• Communication can occur through personal visit, telephone, e-mail, the web, various written forms (for a sales person to provide product information)

The communication process
• The understanding of communication for a sales manager will be verbal and nonverbal

The communication process
• 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 appearance1)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 breakdown 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

Empathetic listening
• 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

Empathetic listening
• 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 selfcenteredness • 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

How sales people should improve 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

How sales people should improve 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

How sales people should improve 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 conflict1)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

Lumping/avoidance/coercion
• 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

Lumping/avoidance/coercion
• 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

Mediation,arbitration,adjudication
• In arbitration, both parties consent to the intervention of a third party whose judgment they must agree to accept beforehand

Mediation,arbitration,adjudication
• 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)

Mediation,arbitration,adjudication
• 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 principles1)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 unaffordable 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 understood • 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 Fear of failure Following the rules Over-reliance on logic You are not creative • • • • Attitude adjustment Risk-taking Breaking the rules Internal 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

Ch-3-the selling process
• In retail selling, the demonstration efforts are less significant where as in businessto-business selling seller has to demonstrate the product • In high-tech consumer products, demonstration and consumer education plays a greater role

Ch-3-the selling process
• 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

Ch-3-the selling process
• 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, lifestyle 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

Friends and acquaintances
• For industrial sellers, FICCI,CII, and trade associations like Indian Automobile Manufacturers constitute a source of prospects

Friends and acquaintances
• The sales people can ask the questionwhom 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 databases •

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 profiledemographics or psychographics or behavioral characteristics

Steps-pre-sales approach (planning)
• 3)determination of customer benefits-FAB (features, advantages,benefits) • 4)determination of sales presentationanalysis of FAB, marketing plan and business proposition

Benefits of pre-approach planning
• 1)sales people build a high level of selfconfidence 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

Creating interest approaches
• 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

Creating interest approaches
• 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

Creating interest approaches
• 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.

Creating interest approaches
• 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

Canned presentations
• 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

Canned presentations
• 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 reorganization • 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 crossselling 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,

B2B-the Dow Corning program
• • • • • inventory, delivery, price, technical support and safety factors Each of these negotiable dimension is then analyzed according to the customer requirement in terms of-

B2B-the Dow Corning program
• Value of that dimension to the consumer • Whether Dow Corning meets that requirements • Which competitor meets that requirements

B2B-the Dow Corning program
• 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 infostructure designed to collect, collate, categorize, edit, store and retrieve information on demand to aid decision making in an organization’s sales and marketing program

Marketing decision support system
• It involves problem solving technology consisting of people, knowledge soft-ware and hardware integrated through information technology platform into the sales management process

Marketing decision support system
• 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 shortrange(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

The forecasting process
• 1)forecast objectives • 2)determine independent and dependent variables • 3)develop forecast procedure • 4)select forecast analysis method

The forecasting process
• • • • • 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-

Expert’s opinion method-2 ways
• 1)key executives submit the independent estimates without discussion, and these are averaged into one forecast by the chief executive and

Expert’s opinion method-2 ways
• 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 cocoordinator will be selected

Delphi method
• The experts give their written opinions/forecasts individually to the cocoordinator • 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

Survey of buyer’s expectations
• 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

Survey of buyer’s expectations (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

Survey of buyer’s expectations (build to order method)
• Forecasts based on this method tend to be overly optimistic • Requires careful attention to wording, sampling, and methods of selection

Survey of buyer’s expectations (build to order method)
• 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

Survey of buyer’s expectations (build to order method)
• 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

Historical analogy method
• Sometimes the product may be new, but the organization might have marketed other products earlier with features similar to those of the new products

Historical analogy method
• 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

Ganga soap-test marketing
• The product was displayed in test market and was promoted in control market

Ganga soap-test marketing
• 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

Ganga soap-test marketing
• 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 required1)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-related factors
• Organization with limited financial resources prefers to engage intermediaries for the distribution of its products and keeps the sales organization as simple as possible

Organization-related factors
• 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

Organization-related factors
• 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

Organization-related factors
• 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

Marketing mix-related factors
• Organizations with intensive distribution strategy through retail channels have complex and large sales organizations

Marketing mix-related factors
• 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

Marketing mix-related factors
• 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 control driven • Information processing • Compartmentalized knowledge • Functions retain power • Functions own skills • Dominant function leads • Narrow result focus (suboptimization) • Reward are within chimneys (functions) • Slow/bureaucratic
• • • • • • • • • Horizontal and customer driven Knowledge creation Shared knowledge Core process team has power Core competencies supply skills Leader represents team Broad process focus (optimization) Rewards are based on the overall performance Quick/empowered

Factors-structural changes
• 1)products are turning into mature markets encouraging online selling through internet (Bazee.com and priceline.com(US)

Factors-structural changes
• 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

Factors-structural changes
• 4)reduction in the number of vendors per buyer (vendor development) • 5)emphasis on closer customer relationships –systematic selling approach

Factors-structural changes
• 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

Fundamentals or organizational 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

Fundamentals or organizational 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 coequal

Fundamentals or organizational principles
• 7)objectivity-each division and subdivision of the organization should be the expression of a definite purpose and be in harmony with the objective of the organization

Fundamentals or organizational 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)

Integration and co-ordination
• 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

Integration and co-ordination
• Marico industries and P&G have tied up for an information and logistics facility exchange to service rural markets in India

Integration and co-ordination
• Inputs from marketing on advertising policy, competitive sales promotion moves, co-operative advertising efforts with intermediaries and responses to the trade promotion program

Integration and co-ordination
• 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 onA) 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

Design by territory-negatives
• 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

Design by territory-negatives
• These problems can be solved by close supervision, proper incentive structure, hiring better talent and supporting them with training

Design by territory-negatives
• 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

Design by management function (line and staff function)
• Line authority means that people in management positions have formal authority to direct and control immediate subordinates

Design by management function (line and staff function)
• 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

Design by management function (line and staff function)
• 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

Design by management function (line and staff 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

Design by management function (line and staff function)
• 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 noncooperation 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

Design by product-positives
• The sales person can master all the relevant product information and gather the required product knowledge to market complex products

Design by product-positives
• Interference by other functions is avoided by this design; thus assignment of responsibility is easier enabling comparative evaluation of sales persons easier

Design by product-positives
• 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-(ELGIequipment)
• • • • • • • Established in 1960 Has 2 plants at coimbatore 4 core product divisions are identified1)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 cooperation 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 endusers in business-to-business markets • Sales managers create multiple linkages with customers through cross-selling, upselling 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

Sales process automation
• 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

Sales process automation
• 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

Sales process automation
• 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

Emerging organizational designs
• 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

Emerging organizational designs
• • • • 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

Total quality management (TQM) and team based selling
• 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

Total quality management (TQM) and team based selling
• Organizations should drive down costs and delegate decision making to the lowest level through the concept of team selling

Total quality management (TQM) and team based 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 problemsolving, 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/disadvantagesaffordability method
• Costs are in line with the current sales levels of the firm

Advantages/disadvantagesaffordability 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

Work-load method-formula
• 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

Work-load method-formula
• 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

Ch-6-management of sales territory
• Territories are defined on the basis of geographical boundaries in many organizations

Ch-6-management of sales territory

Ch-6-management of sales territory

Ch-6-management of sales territory
• 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

Ch-6-management of sales territory
• 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 upselling 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

Who do not establish territories?
• 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

Who do not establish 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 lifelarger 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 aftersales-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

Territory design at Marico
• 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

Territory design at Marico
• 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

Designing a sales territory
• 1)select a geographical control unit • 2)criteria • 3)starting point

Designing a sales territory
• 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

“call-plan”-a XEROX system
• 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

“call-plan”-a XEROX system
• 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”-a XEROX system
• 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

“call-plan”-a XEROX system
• 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

IT for territory mapping
• 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

IT for territory mapping
• 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

IT for territory mapping
• 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, multiproduct 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

Ch-7-management of sales quota
• A sales forecast is an estimate of what a firm expects to sell during a time period using a particular marketing plan

Ch-7-management of sales quota
• 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 multiproduct 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

Importance of sales quota
• 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

Importance of sales quota
• 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-

Principles of quota setting
• 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

Principles of quota setting
• 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

Principles of quota setting
• 7)a participatory procedure followed jointly by the sales manager and sales people together serves as a tool of motivation

Principles of quota setting
• 8)achievement of quotas should be linked with additional incentives so that sales people stay committed to the workprocess for a longer period of time

Principles of quota setting
• 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 longterm 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?

Call management by sales 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?

Call management by sales manager-questions
• 4)has the salesperson planned about the likely customer objections and developed adequate responses for the same before the sales call?

Call management by sales 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?

Call management by sales 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 thesales 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 for1)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

Setting quota in ‘points’
• 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

Setting quota in ‘points’
• 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

Setting quota in ‘points’
• 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

Net profit/net margin 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

Net profit/net margin quota
• 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

Sales activity quota
• The sales person is expected to do some nonselling 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

Sales activity quota
• Particular classes or set of customers • Call on prospects • Number of new accounts

Sales activity quota
• Product demonstration etc • Activities quota set objectives for jobrelated duties ,which help the salespeople in achieving their performance targets]

Sales activity quota
• They help the sales people to do the nonselling activities perfectly, as they become part of the job definition

Sales activity quota
• 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

Sales activity quota
• 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

Quotas based on sales people judgment
• Provides an opportunity for the sales person to test their abilities and it makes them to work with higher motivation

Quotas based on sales people 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

Problems in setting quota
• 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

Problems in setting quota
• 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

Problems in setting quota
• 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

Problems in setting quota
• 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

Problems in setting quota
• 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 hiring1)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 measuree.g.. maintain a profitability of 10%over a period • 2)identification of critical success factore.g... time to be spent on prospecting and making sales calls be 60:40

Strategic position analysis
• 3)the performance dimensions of the position based on knowledge, skills, performance, motivation (effective ,ineffective and over performing) • 4)determination of the performance measure dimensions-

Strategic position analysis
• 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

Job description-a typical format
• 4)The major job duties such as selling activities, the obligations on customer service, the collection of market intelligence, and administrative responsibilities

Job description-a typical format
• 5)Minor job responsibilities such as working on trade shows, attending product seminars, displays in conferences, and writing call reports

Job description-a typical format
• 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

External vs. internal recruitment
• 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

External vs. internal recruitment
• 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 coworkers 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

Selection of a sales person
• 1)factors related to the applicantcandidate’s selling aptitude, • education and training, • basic knowledge of psychology, • physical, mental and socialization qualities, • age and life-cycle stage, • family background

Selection of a sales person
• 2)factors related to the organization (policy)• role of mgmt. in the selection of manpower, • focus on the candidate’s abilities rather than his source of recruitment, • following set and proven standards,

Selection of a sales person
• 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

Reliability and validity
• Validity is the extent to which scores on a test or interview correspond to actual job performance

Reliability and validity
• Content validity refers to the strategic assessment of the degree to which the content of the selection method is representative of the job content

Reliability and validity
• 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

Selection methods-research 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

Selection methods-research 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?

Format of a structured interview
• 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?

Format of a structured interview
• 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?

Format of a structured interview
• 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 nonintellectual 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

Interest tests/temperament tests
• Temperament tests help to evaluate the various factors of temperaments such as likes and dislikes, habits and preferences

Interest tests/temperament tests
• 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

The ‘big-five’of personality 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

The ‘big-five’of personality 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 preview”

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

Not just training but training and 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

Not just training but training and 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

Not just training but training and 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

Conditioning/connectionist theories
• 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

Conditioning/connectionist theories
• 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

6 steps for a trainer
• 3)material should be designed and arranged in a logical manner and should be presented in meaningful sections rather than in one go

6 steps for a trainer
• 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

Knowledge about self
• Ability to make sales calls within the framework of company norms

Knowledge about self
• 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

Personal or individual analysis
• The assessment phase should lead to the identification of the objectives of the training program

Personal or individual analysis
• 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

Glen mark's training assessment
• 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

Glen mark's training assessment
• 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

Glen mark's training assessment
• 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

Training need discovery-William Berliner and William McLarney• 3)comparing the actual performance against standards

Training need discovery-William Berliner and William McLarney• 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 problemproduct, organization, job-related knowledge deficiency, skill related problems, strategic and regulatory issues within the organization, job related and job-induced problems

Training need identification
• 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

Training need identification
• 3)management requests-need to be double checked • 4)interviewing and observing the personnel on the job

Training need identification
• 5)performance appraisal-by comparing past performance and current level of performance • 6)questionnaire survey-with sales people

Training need identification
• 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

On-the –job training (OJT)
• 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)

On-the –job training (OJT)
• 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

On-the –job training (OJT)
• 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

On-the –job training (OJT)
• 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

Off-the-job training
• Avoids the distraction and interruptions of on-the-job training environment

Off-the-job training
• 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

FACT-developed by Firearms Training Systems
• Pizza outlets have used simulators for training pizza boys

FACT-developed by Firearms 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 teamcentric

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

Creativity training at Bajaj Auto(for 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

Creativity training at Bajaj Auto(for sales managers)
• In the next round logical reasoning) managers participated in the process of rationalization of the solutions offered by the students

Creativity training at Bajaj Auto(for 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

Creativity training at Bajaj Auto(for 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

Creativity training at Bajaj Auto(for 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

Sensitivity training
• Objective is to increase the awareness of one’s behavior and to understand how it is received and interpreted by others

Sensitivity training
• 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

Sensitivity training
• The focus is on personal behavior and the discussion focuses on one’s private thoughts

Sensitivity training
• Atmosphere is created in which participants are willing to be frank, open and honest with each other

Sensitivity training
• 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

Transaction analysis (TA)
• 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

Transaction analysis (TA)
• 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 programkey 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, costprobing 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

De-centralized 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

De-centralized training
• Off-site training programs are conducted at a non-company location

De-centralized training
• 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

Anticipatory socialization
• Realism reflects the degree to which the new sales person has an accurate reflection of what is life in an organization

Anticipatory socialization
• Congruence is the degree to which an organization’s resources and demands and that of the salesperson are compatible

Anticipatory socialization
• 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

Nature of motivation
• 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

Nature of motivation
• Reinforcement shapes the intensity of drive and the direction of energy of an individual

Nature of motivation
• 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

Nature of motivation
• 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

Process of motivation
• Motives arise continuously and determine the general direction of the sale person’s behavior

Process of motivation
• 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

Need-hierarchy theory proposes• 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

Need-hierarchy theory proposes• 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

Self-actualization need
• 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

Self-actualization need
• 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.

Alderfer’s ERG theory
• Relatedness needs involve being understood and accepted by people above, below and around the sales staff at work and away from them

Alderfer’s ERG theory
• Growth needs are those involved with the desire for self-esteem and selfactualization • Does not believe that people move on the lines of Maslow

Alderfer’s ERG theory
• 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

Alderfer’s ERG theory
• 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

McGregor theory of X and Y
• 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

McGregor theory of X and Y
• 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

Z theory of William Ouchy
• • • • This is possible because ofTechnology Culture Management systems

Z theory of William Ouchy
• 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

Z theory of William Ouchy
• 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

Z theory of William Ouchy
• 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 selfefficacy 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

Organizational factors
• Incentive and compensation policies • Too close a supervision is normally not appreciated by sales people

Organizational factors
• 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 StrategyEnculturation 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

How to select motivational tools?
• Frequency and nature of the travel in the job • Alternate tools used in the past to motivate the sales staff and their effectiveness

How to select motivational tools?
• 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

Objectives of a sales compensation plan
• Helps in optimizing the sales effort by the sales people and maximize the sales ,reducing the sales expenses and also the production cost

Objectives of a sales compensation 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

Objectives of a sales compensation plan
• Helps in retaining quality manpower and reducing the attrition rate in the organization

Objectives of a sales compensation 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 plancharacteristics
• 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

Effective compensation plancharacteristics
• 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

Effective compensation plancharacteristics
• 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

Effective compensation plancharacteristics
• 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

Effective compensation plancharacteristics
• 9)Economical to the company-should have a link to the paying capacity and budgetary provisions of the sales organization

Effective compensation plancharacteristics
• 10)Sales person’s opinion be considered while designing the sale compensation plan participatory method)

Effective compensation plancharacteristics
• 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

Factors influencing the design of a compensation plan
• In pull strategy following organizations, the salesperson does the job of a order giver hence the salary given can be less

Factors influencing the design of a 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

Factors influencing the design of a 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

Factors influencing the design of a 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

Types of compensation plan
• Financial compensation includes current income, promised and deferred income, profit sharing and pension and retirement benefits

Types of compensation plan
• 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-tobusiness marketing (sales realization takes longer time) • 1)fixed salary plan-the sales people receive fixed payments in regular intervals

Straight salary plan
• 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

Straight salary plan
• Works better when individual performance assessment becomes difficult (pharmaceutical industry) • If efforts required for selling are less, then straight salary plan is better

Straight salary plan
• 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

Straight salary plan
• High %of the work day is devoted to nonselling activities for which performance evaluation is difficult

Straight salary plan
• Routine selling jobs, extensive missionary and educational selling job ,jobs requiring lengthy pre-sale and post-sale service and negotiations

Straight salary plan
• Offering companies have • a dominant market share and • are operating in a mature market,

Straight salary plan
• 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

Straight commission plan
• 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

Straight commission plan
• 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

Straight commission plan
• 1)popular flat rate commissioncommission 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

Disadvantages-straight commission
• 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

Disadvantages-straight commission
• 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

Bonus and incentives
• In Indian companies, there is a practice of paying bonus during festival times

Bonus and incentives
• Bonuses are not a part of the final compensation design but they are paid as supplemental measures for motivating people

Bonus and incentives
• 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

Drawing account and commission 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)

Drawing account and commission 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

Drawing account and commission plan
• The advantage of this method is the control which the sales person can have on the sales force by checking the drawing account

Drawing account and commission 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 compensation objectives
• 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 compensation objectives
• 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 benchmark • Wage level (in relation to the competitor’s sales force)

Determine major compensation issues
• wage structure (pay differential inside the organization)

Determine major compensation 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 shortterm 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

Appraise the compensation plan
• 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

Appraise the compensation plan
• 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

Performance appraisal
• Appraisal system should not include characteristics like an individual’s age, gender and stage in the life cycle as they are irrelevant

Performance appraisal
• 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

Absolute judgment method
• 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

Absolute judgment method
• 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 asProduct 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
• • • • • InstrumentsRating 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

Behavioral observation 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

Behavioral observation 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

Conducting performance appraisal(basic guidelines)
• In many companies, the evaluation of the immediate supervisor is taken for pay revision and promotion

Conducting performance appraisal(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

Base rate information
• 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

Base rate information
• 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

Fundamental attribution error
• Policies of the company • Performance of the sales people

Fundamental attribution error
• 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

individual vs. team appraisal
• Modern organizations have brought the concept of team based selling (to cover technological specifications ,financing patterns and after-sales-service)

individual vs. team appraisal
• 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

Influence of external variables
• 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

Influence of external variables
• 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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