LECTURES

SALES
MANAGEMENT
EXAM PREPARATION
SALES MANAGEMENT INTRODUCTION
SALES PLANNING
CRM AND KAM
SALES PROMOTIONS
SALES MANAGEMENT

WHAT IS SALES MANAGEMENT ?

Few jobs are more crucial to the ultimate success of a business than sales management, as sales
management shapes and determines nearly all the firm’s interactions with customers. This activity
involves the analysis, planning, implementation, and control of sales force activities.

RESPONSABILITIES AND DUTIES OF SALES MANAGEMENT

Sales managers oversee the salesforce as they are the direct income producers who determine
the financial health of their organizations
Sales managers plan, lead, and control the selling activities

They continuously monitor and adjust marketing strategies to dynamic technological,

competitive, economic, legal, and cultural factors
Sales managers also consider the interests of the company's stakeholders

TRANSLATING CORPORATE OBJECTIVES INTO SALES STRATEGIES

CORPORATE OBJECTIVES

MARKETING
STRATEGIES
SALES STRATEGIES
 SALES MANAGEMENT

MODEL OF SALES MANAGER COMPETENCIES

An overview of sales management...

DETERMINANTS OF THE
THE MARKETING SALES MANAGEMENT
SALESPERSON OUTCOMES CONTROL
ENVIRONMENT STRATEGIES ACTIVITIES
PERFORMANCE

HOW IMPORTANT IS SELLING ?

"everyone lives by selling something"

"the ability to sell is the single most critical success factor of any new enterprise"
"nothing happens until a sale is made"

"the key purpose of selling is to create, build and sustain mutually beneficial and profitable
relationships through personal and organizational contact"
"without sales, the entire business model is an exercise in frustration"

A SALE IS A SOLUTION TO SOMEONE´S PROBLEM

 SALES MANAGEMENT

THE SALESPERSON
An individual acting for a company by performing one or more of the following activities: prospecting,
communicating, servicing, and information gathering. This job may have other names like sales engineers,
district managers, marketing representatives and account managers.

THE ROLE OF THE SALES FORCE

Involves two-way, personal communication between salespeople and individual customers. Personal
selling is effective because salespeople can: probe customers to learn more about their problems,
adjust the marketing offer to fit the special needs of each customer, negotiate terms of sale and build
long-term relationships with key decision makers.

Represent the company to customers to Represent customers to produce

produce company profit SALES FORCE customer satisfaction

Serve as a critical link between a

company and its customers

SALES RESPONSABILITIES

PRIMARY RESPONSABILITY SECONDARY RESPONSABILITY

Build a long-term sales success by

Conclude a sale successfully, by identifying
prospecting, developing database and
the customer needs, presentation,
knowledge management, self-management,
demonstration, negotiation, handling
handling complaints, providing services and
objectives and, finally, closing the sale
relationship management

SELLING APPROACHES

Transactional selling, a form of personal selling that focuses on making an immediate sale with little
or no attempt to develop a relationship with the customer
Relationship selling, a form of personal selling in which the salesperson seeks to develop a mutually
satisfying relationship with the consumer so they can work together to satisfy each other’s needs
Consultative selling, meeting customer needs by listening to them, understanding their problems,
paying attention to details, and following through after the sale

Team selling, selling situation in which several sales associates or other members of the organization
are recruited to help the lead sales representative reach all those who influence the purchase
decision
TYPES OF SALESPEOPLE AND SALES JOBS

Creative selling - assesses situation and determine needs; presents capability of satisfying needs
and gets orders

Order taking - this role is much more casual and often involves straight rebuying

Missionary sales - essentially is a support role and may not actually take the order
DESIGNING SALES FORCE STRATEGY AND STRUCTURE

DEFINING SALES FORCE STRATEGY

Objectives (sales volume and profitability)

Strategy (customer relationship management and account manager)

Type of sales force can be direct (company) or contractual

OUTSOURCING SALES FORCE

MANUFACTURER´S REPRESENTATIVES

Intermediaries who sell part of the output of their principals

Can take or not the ownership or physical possession of the goods they sell
Cover a specific territory and specialize in a limited range of complementary products

SELLING AGENTS

Intermediaries who do not take title or possession of the goods they sell

Compensated by commissions from their principals

Have broad authority by their principals to modify prices and terms of sale

Actively shape the manufacturer’s promotional and sales programs

The Manufacturer´s representative has the advantages of familiarity with the technical nature and
applications of specialized products; the ability to keep expenses low by spreading selling costs; well
established contacts and prospects and, finally, they appear as a variable cost item on their principals
income statement

THE 6 C´s OF FINDING THE RIGHT REPRESENTATIVE

1. Compatible lines of products

2. Compatible territories
3. Compatible customers
Consideration for outsourcing the sales force
4. Credibility of the representative
5. Capabilities
6. Credits

Depends on economical criteria,

level of control, transactional
costs and strategic flexibility
 DESIGNING
SALES FORCE

OTHER SALES FORCE STRATEGIES AND STRUCTURE ISSUES

Outside salespeople call on customers in the field

Inside salespeople conduct business from their offices and often provide support for the outside
salespeople, for example, technical sales support people and sales assistants

Team selling is used to service large, complex accounts

STABLISHING SALES FORCE OBJECTIVES

Objectives tell salespeople what they are expected to accomplish during a specified time period
Objectives for the total sales force, for example, in terms of sales volume, market share or profit

Objectives for individual salespersons by quotas ( € or units sold, average order size, average
number of sales, ratio of orders and others)

QUOTAS

Are a quantitative goals assigned to individual salespersons for a specified period of time, as it is one of
the most widely used tool in sales management. However, it should not be confused with sales potential
or sales forecast, as quotas may be set equal to, above or below the sales forecast.
The objectives aim to help management motivate salespeople, to direct sales people where to put their
efforts and to provide standards for performance evaluation. There are different types of quotas, such as

sales volume quotas (cash volume/ unit volume)

profit based quotas (contribution / gross margin)
activity quotas (calls per day, sales meetings, product demos)
expense quotas

Quotas should be SMART, Specific, Measurable, Achievable, Realistic and Time bound.

Types of Sales Force Organization

 DESIGNING
SALES FORCE
NEEDS AND COMPLEXITY MATRIX
DIFFERENT CUSTOMER NEEDS

SIMPLE PRODUCT COMPLEX RANGE

OFFERING OF PRODUCTS

SIMILAR CUSTOMER NEEDS

STAGES IN TERRITORY DESIGN

THE BUILD UP APPROACH

GEOGRAPHICAL ORGANIZATION

When defining each geographic hypotheses, the company should ask: is it

viable? Is it realistic? Profitable? Is it possible? Practical? Reasonable? Is it fair for
the salespeople? If the answer is yes (proceed to assign), but if no (return back
to the hypotheses).

Examples of geographical hypothesis are...

1. Viana do Castelo, Braga, Porto, Vila Real and Bragança
2. Viana do Castelo, Braga, Porto, Vila Real and Aveiro
3. Viano do Castelo, Braga, Porto, Aveiro and Coimbra
4. Viana do Castelo, Braga, Porto, Aveiro, Coimbra and Leiria
 DESIGNING
SALES FORCE

DETERMINING SALES FORCE SIZE

Salespeople are one of the company’s most productive, however they are also among the most
expensive! Therefore, increases in sales force size can increase sales and costs. Consequently, the sales
force size affects the compensation (salary plus bonus), motivation and spirit, and overall sales force
management.
NUMBER OF SALESPEOPLE

Deciding on the size of the sales force is very difficult, there are 4 generally accepted approaches...

Affordability (what is affordable)

Incremental method suggests that sales representatives should be added as long as the
incremental profit produce by their addition exceeds the incremental cost
Workload method uses the buildup method to estimate the work required to serve the entire
market
Sales Potential method - the sales potential method builds on the workload method but adjusts
for individual levels of effort and abilities

THE WORKLOAD METHOD

Organize your potential customers into categories based on expected level of effort to
manage them. Perhaps your company sells to consumers, small businesses and large
businesses. The variance in effort required to close a sale for each type of customer
warrants that each one be placed in its own category

For each category, estimate the length of the sales cycle, amount of salesperson time,
intensity and travel required to manage a potential customer throughout the entire
sales cycle

Based on these estimates, determine the aggregate salesperson time required for each
category and across all categories

Estimate the amount of time that each salesperson has available. Assume that all
salespeople will have an equal amount of time available (ex:50 hours per week)

Divide the total amount of time required for all of your sales prospects by the amount
of time available on average per salesperson. The result is the number of salespeople
you should have in your sales force at a given point in time

WORKLOAD METHOD CASE STUDY

Consider the following information regarding a company's customers and sales

A) Considering that customers with average purchases of EUR 20 000

should be visited once a month set a consistent frequency of visit for
the other categories.

B) Determine the theoretical number of sellers needed to serve the

market using the workload method by considering the following
information,
1. Each seller works on average 11 months per year, 19 days per
month and 8 hours per day
2. The average visiting time per customer is 40 minutes (including
travel)
3. Assume that all customers work 12 months a year
 DESIGNING
SALES FORCE

WORKLOAD METHOD CASE STUDY

DEMAND (THE TOTAL WORK NEEDED TO SERVE THE MARKET)

SUPPLY (THE WORK CAPACITY FOR EACH SELLER PER YEAR)

THE SALES POTENTIAL METHOD

Take the estimated number of salespeople needed under the workload method as a starting point

Assume that this estimate is for a sales force that consists exclusively of “average salespeople”, consider each
“average salesperson” needed as a representative unit

Rank your existing salespeople as “below average,” “average” or “above average". Estimate how much less a below
average salesperson can accomplish relative to an average one, and do the same for an above average
salesperson. For example, maybe a below average salesperson is equivalent to 0.75 average salespeople while an
above average salesperson is equivalent to 1.5 average salespeople

Using this ranking, determine the difference between your needed representative sales units and the actual units
you have in your sales force. Adjust as needed.

This method offers a more realistic sales force estimate because it takes into account the individual abilities

RECRUTING AND SELECTING SALESPEOPLE

Recruiting (developing a list of qualified applicants for sales positions and with the development of
the profile and selection criteria)
Establish a set of qualifications that best match the firm’s particular sales tasks (prepare a job
description listing specific tasks then, analyze successful salespeople among current employees;
traits are common to successful sales representative)
Source of applicants (other departments in the company, other firms, employment agencies,
educational institutions, job ad respondents, employee referrals, social media)

THE RECRUTING PROCESS

Careful recruiting can increase overall sales force performance, reduce turnover and reduce recruiting
and training costs.
 DESIGNING
SALES FORCE
THE RECRUTING PROCESS

SELECTION

Is the process of choosing the candidate with the highest probability of success in the position, the
methods can be through... intelligence/personality testing, interviews, role play exercises, references and
background checks.

THE PERFORMANCE PROCESS

PSYCHOLOGICAL DETERMINANTS OF MOTIVATION

TRAINING SALESPEOPLE

TRAINING

Training helps salespeople to become more productive employees. The Sales training objectives can
be... increase productivity, improve morale, lower turnover, improve customer relations, improve selling
skills, imporve efficiencies (time and territory) and introduce to new products, markets or programs.
 DESIGNING
SALES FORCE
TRAINING SALESPEOPLE

FRAMEWORK FOR TRAINING SALESPEOPLE

OBJECTIVE INFORMATION SOURCES AND PROCESSES

WHAT INFORMATION
EVALUATION METHOD - HOW TO COLLECT ?
TO COLLECT?

Did participants
Reaction towards attitudinal Evaluation through questionaries, comments, anecdotes
respond favorably to
and interviews with other participants
the program?

Learning towards understanding

Did participants learn
of concepts and ability to use Before and after test
concepts or skills?
skills

Did participants
Behavior ratings before and after, critical incident
change their "on the "on the job" behavior
techniques and time-series analysis
job" behavior?

What personal or
Results/Changes in sales,
organizational Cost-benefit methods
productivity or other performance
results occurred?
 DESIGNING
SALES FORCE
COMPENSATING SALESPEOPLE

Compensation is used to direct activities and attract, retain, and motivate salespeople, which
objectives are...
Compensation plans should direct the sales force toward activities that are consistent with overall
marketing objectives (gain market share, reinforce market leadership and maximize profitability)

The companies must have an attractive plan made up of several elements.

ELEMENTS OF GOOD COMP DESIGN

Pay for persuasion Protect against runaway commissions

Protect Top Reps earnings Stay within the budget

Share (not give) the profit Make the Sales Force self-managing

Performance insurance

STEPS IN DESIGNING COMPENSATION PROGRAMS

COMPENSATION
Four components of compensation... Compensarion plans options...

fixed amount straight salary

variable amount (commission and bonus) straight commission

expense allowances quota-bonus plan

other benefits combination

Motivate effort or non-selling activities; adjust for differences in territorial potential

SALARY
and reward experience and competence

COMMISSIONS Motivate a high level of selling effort and encourage sales success

Direct effort toward strategic objectives, provide additional rewards for top
INCENTIVE PAYMENTS
performers and encourage sales success

SALES CONTESTS Estimulate additional effort targeted at specific short-term objectives

PERSONAL BENEFITS Satisfy salespeople security needs and match competitive offers

COMPENSATING SALESPEOPLE
METHOD WHEN ESPECIALLY USEFUL
Comensating new salespersons; firm
moves intonew sales territories that
STRAIGHT require developmental work; sales
SALARY
requiring lengthy presale and
postsale service
Highly aggressive selling is
STRAIGHT required; non selling tasks are
COMMISSION minimized; company uses
contractors and part-timers
Sales territories have relatively
similar sales potential; firm
COMBINATION
wishes to provide incentive but
still control sales force activities
REWARDS AND INCENTIVE AND SALES FORCE MOTIVATION
WHAT PERCENT OF SALES PERSONNEL SHOULD ACHIEVE TARGET PAY?
ADVANTAGES
Give salesperson security, give
sales manager control over
salespersons; easy to administer;
yields more predictable selling
expenses
Provides maximum amount of
incentives; by increasing
commission rate, sales managers
can encourage salespersons to sell
certain items; selling expenses
relate directly to sales resources
Provide certain level of financial
security; provides some incentive;
can move sales force efforts in
profitable direction
DESIGNING
SALES FORCE
DISADVANTAGES
Provides no incentive; necessitates
closer supervision of salesperson;
during sales declines, selling
expenses remain constant
Salespersons have little financial
security; sales manager has
minimum control over sales force;
may cause salespeople to give
inadequate service to smaller
accounts; selling costs less
predictable
Selling expenses less predictable;
may be difficult to administer
60 to 70% achieve or exceed
quota
Top 10% of sellers earn or
exceed excellence pay
Bottom 5 to 10% enter
performance improvement
program
 DESIGNING
SALES FORCE
COMPENSATING SALESPEOPLE

LINKED VS. UNLINKED TEAM INCENTIVE PLANS

Linked plans are plans in which incentive payout for both components, including the individual
component, depends on achievement of team objectives (sales representatives may receive either a payout
based on both individual and team achievement, or no bonus at all, while other members may receive
only the team performance bonus).

Unlinked plans are plans with additive components; sales representatives may earn either bonus or
both. Achievement of team objectives is not required to earn the individual bonus.

BONUS GROUP VS. INDIVIDUAL BONUS

Consistent findings in compensation literature across job categories suggest that...

Group bonuses become less motivating as the group gets bigger (creates the sense of “who cares” and
develops social pressure not to “free ride” decreases), while individual bonuses may lead to cut-throat
behavior and do not estimate teamwork.

Total Compensation

REGOGNITION INTRINSIC REWARDS

SPECIAL
COMPENSATION
CONTESTS FOCUSED EFFORTS
PERFORMANCE-BASED
COMPENSATION
OVERTARGET
OUTSTANDING PAY
INCENTIVE PAY SALES
TARGET COMPENSATION
AT RISK PAY
INCENTIVE PAY

RETENTION
SALARY
NONSALES PAY FIXED
COMPENSATION
BENEFITS SECURITY NEEDS

MOTVATING SALESPEOPLE

The goal of motivation is to encourage salespeople to work hard and energetically toward sales force
goals, therefore motivation should be provided on a continuous basis. Motivation incentives can be...
enjoyable working conditions, power and authoritym job security and opportunities to excel. While
Motivational methods can be... sales contests, recognition programs and awards (travel, merchandise or
cash).

There are 2 types of motivators...

Positive motivators Negative Motivators

Commisions Fear
Recognition Intimidation
Acceptance Revenge
Respect Obligation
Trust Social Comparison
Achievment
Pride
 DESIGNING
SALES FORCE
COMPENSATING SALESPEOPLE
THE BEST AND WORST MOTIVATORS

The most valued rewards includes pay, promotion, personal growth and sence of accomplishment.
While, the least valued rewards can be linking and respect, security and recognition.
Do not forget that Sales Quotas could also act as a motivation tool!

SUPERVISING SALESPEOPLE

SUPERVISION
Supervision is used to direct and motivate salespeople, as the goal of supervision is to help salespeople
work smart by doing the right things in the right ways. Directing salespeople aims to...
identify customer targets and call norms
reduce the time spent prosprecting new accounts
teach them on how to use sales time efficiency (annual call plan, time-and-duty analysis and sales force
automation tool)

EVALUATION AND CONTROL

The goal is to assess if objectives are being met, by evaluating the sales force using several sources of
information and even types of formal evaluation (like performance comparisons and knowledge
assessments). Also, is important to establish performance measures type that include...
Behaviour-based (subjective)
Outcome-based (objective)

Focuses on objective measures of results with little monitoring or directing of

OUTCOME BASED salesperson behavior by sales managers. This control method is most appropriated when
CONTROL you want a very motivated sales force (results=efforts), you are willing to let salespeople be
PRESPETCTIVE very independent and make a good deal of money; when you are in a hurry or when you
can not afford or don't want to support an expensive sales organization.

There are some characterisitcs related to this method...

Oriented toward personal bottom line
“Get off my back”
Take customers’ side more than management’s side
Generates short-term results: sales, growth, etc.
Long term= next week
Often work harder
More interested in tangible rewards, such as money and trips
More likely to sell on personal relationships, closing techniques
Lean and mean

Incorporates complex and often subjective assessments of salesperson characteristics

BEHAVIOR BASED and behaviors with considerable monitoring and directing of salesperson behavior by
CONTROL sales managers. This method fits best when you want a loyal sales force (when the
PRESPETCTIVE turnover is particularly expensive; job knowledge, relationship and experience are highly
valuable), when you want an obedient sales force (want to know what they are doing; want
to direct them to do particular behaviors) and when you can affort to support the
overhead. The characteristics can be....
more oriented toward mutual benefit
Relatively cooperative with mgmt.
Tends to see management’s viewpoint more when balancing customer interests
Generates strategic results: customer satisfaction, new product introduction, lower
turnover, etc.
Salesperson is allow to think
Often work smarter
More interested in non-tangible rewards, such as feeling of achievement, personal
growth, etc.
More likely to sell on expertise
Kinder, gentler, and fatter

COMPENSATING SALESPEOPLE
ASSESSING PRODUCTIVITY
QUALITATIVE CRITERIA
Sales volume
Sales compared with last year
Volume by product or line
Number of new accounts
Amount of new account sales
Net profit on each account
Number of customer calls made
DIMENSIONS OF SALESPERSON PERFORMANCE EVALUATION
WHAT MAKES A JOB PERFORMANCE DECLINE
DESIGNING
SALES FORCE
QUANTITATIVE CRITERIA
Attitude
Product knowledge
Communication skills
Personal experience
Customer goodwill generated
Selling skills
Initiative
Team collaboration
Organizational climate
Job (in)satisfaction
Turnover
Leadership
 DESIGNING
SALES FORCE
PERSONAL SELLING PROCESS
STAGES AND OBJECTIVES OF THE PSP

METHOD OBJECTIVE COMMENTS

Start of the selling process; prospects produced

PROSPECTING Search for and qualify prospects
through advertising, referrals and cold canvassing

Gather information and decide how Information sources include personal observation,
PREAPPROACH
to approach the prospect other customers and own salespeople

Gain prospects attention, stimulate
APPROACH interest and make transition to the
presentation
Being converting a prospect into a
customer by creating a desire for
PRESENTATION
the product or service
Obtain a purchase commitment from
CLOSE
the prospect and create a customer
Ensure that the customer is satisfied
FOLLOW-UP
with the product or service
First impression is critical; gain attention and
interest through reference to common
acquaintances, a referral or product demonstration
Different presentation formats are possible;
however, involving the customer in the product or
service through attention to particular needs is
critical; important to deal professionally and
ethically with prospect skepticism, indifference or
objections
Salesperson asks for the purchase; different
approaches include the trial close and assumptive
close
Resolve any problems faced by the customer to
ensure customer satisfaction and future sales
possibilities

Personal Selling Process and AIDA

Prospecting is the development of a potential customers list with...

Sales records, trade shows, commercial databases, newspaper announcements, public
records, trade associations directories, internet
PROSPECTING Responses to advertisements with information request forms
AND Referrals - recommendations from current customers
QUALIFYING
Qualifying is...
Screening leads
Financial ability, Volume of business, Needs, Location, Growth potential
 DESIGNING
SALES FORCE
PERSONAL SELLING PROCESS

STAGES AND OBJECTIVES OF THE PSP

Pre-approaching is the...

Finding and analyzing information about the prospect (specific product needs, current use
of brands, feelings about available brands and personal characteristics)
PRE-APPROACHING
Additional research (Identifying key decision makers (reviewing account histories and
problems, contacting other clients for information, assessing credit histories and
problems, preparing sales presentations and identifying product needs)

Approach is the...
Stage of the selling process where the salesperson meets the customer for the first time

APPROACHING The manner in which a salesperson contacts a potential customer (purpose is to gather
information about the buyer’s needs and objectives, important to create a favorable first
impression and build rapport with prospective customer, appearance and opening lines)
Typical approaches (referral by another customer to a prospective customer, “Cold
canvass” call without prior introduction to the customer and repeat contact based on prior
meeting(s) with the potential customer

Presenting is...
Making the presentation (benefits of the product are presented or demonstrated,
understanding prospect needs is key)

PRESENTING During the presentation (Attract and hold the prospect’s attention (stimulate interest in the
product, spark a desire for the product, listen and respond to the prospect questions and
comments)
Ways to enhance the presentation´s effects (have the prospect touch, hold, or use the
product; use audiovisual technology to heighten the impact of the presentation)

Overcoming objectives is...

The process where salespeople resolve problems that are logical, psychological, or
unspoken
Anticipate objections and counter them during the presentation
OBJECTIVES Generally, best to handle objections as they arise
AND
CLOSING Closing the sale is...
Closing is the stage in the selling process when the salesperson asks the prospect to buy
the product
Salespeople should recognize signals from the buyer - including physical actions,
comments, and questions - to close the sale

Following up is...
The final step in which the salesperson follows up after the sale to ensure customer
CLOSING AND satisfaction and repeat business
FOLLOW UP Determining if the delivery and setup of order was completed to the customer’s
satisfaction
Ascertaining the customer’s future product needs
SALES PLANNING

Planning Sales is the process that involves determining the goals, timing, and budgets of sales efforts.

PLANNING SALES
BUDGET
Is a quantitative expression of plans, as is a comprehensive and coordinated plan for the operations
and resources of the enterprise - it is a formal process. The budget approaches are either incremental
or zero based also, in volatile economic climate organizations estimate optimistic, realistic and pessimistic
scenarios.
SALES BUDGET FUNCTIONS

Is a financial sales plan outlining how to allocate resources and selling efforts to achieve
the sales forecast.

THE MASTER BUDGET

Basically, the Sales Budget predicts sales quantities and selling prices to determine
the amount of sales revenue the company expects to generate, which is prepared first
- once developed, other budgets can be developed as it will affect the level of
SALES operating activities and the amount of resources needed for operations. To the sales
BUDGET department, the budget is a blueprint for making sales, as it involves money invested
in distribution facilities, promotion efforts, and sales personnel. It is the foundation
on which to plan sales objectives and the means of achieving them during the coming
year. In a service organization, the sales budget is called the service revenue budget.
 SALES PLANNING

SALES BUDGET
FACTORS AFFECTING THE SALES BUDGET

Customer tastes Competitors Changes in economy

Price sensibility Production capacity Production and
advertising strategies

SALES BUDGET CRITICAL FACTORS

Past trends Trade projections Existing and potential customers

Sales force estimates Present scenario Government policies

Industry environment

The Sales Budgeting Process

BENEFITS OF PREPARING THE ANNUAL SALES BUDGET

Ensure a systematic approach to allocate resources

Develop the sales manager’s knowledge of profitable resource use
Create awareness of the necessity of coordinating selling efforts with other divisions of the company

Establish standards for measuring the performance of the sales organization

Obtain input from all areas of the company in the profit-planning process

Is a prediction of the future market potential for a specific product. It sets the sales
expectations for a given time period based on an analysis of internal and external
factors, and is a tool to estimate sales managers performance when forecasting: total,
SALES industry, company, product line and product variant sales. Sales Forecasting provides
FORECAST the starting point for assumptions used in various planning activities, as well it is
used for the short-term financial control systems (as the financial budget is
dependent upon the sales forecast for the projected revenue figures). Also, it should
be address a time period, a geographic are and a type of product or customer
(segmentation).

TYPES OF SALES FORECASTS

MARKET POTENTIAL

It is the highest possible expected industry sales of a good or service in a specified market segment for
a given time period.

SALES POTENTIAL

It refers to an individual firm market share of the market potential, where market share is defined as the
percentage of market controlled by a particular company or product. It is the maximum sales a firm can
hope to obtain.
 SALES PLANNING

TYPES OF SALES FORECASTS

SALES FORECAST

It is the sales estimate the company actually expects to obtain, based on the market conditions,
company resources, and the firms marketing plan. The sales forecast is less then the sales potential since
it is based on realistic set of circumstances.

MARKET (INDUSTRY) FORECAST (MARKET SIZE)

It is the expected market (or industry) demand at one level of industry marketing expenditure.

SALES QUOTAS

It is a sales goal assigned to a salesperson, region marketing unit or a team. They are usually derived
from the sales forecasts. Sales goals and objectives sought by management.

SALES BUDGETS

It is a management plan for the expenditures to accomplish sales goals.

BASIC FORECASTING APPROACHES

TOP-DOWN APPROACH (OR BREAK-DOWN)

Is the forecast relevant for external environmental

factors, as it estimates the industry sales or market
potential. To calculate, basically, is the company sales
potential = market potential x company share.
Additionally, it decides the company sales forecast, as
lower than company sales potential because sales
potential is maximum estimated sales, without any
constraints!
Factors important to consider such as, economic
influences, demographic or social changes, competitive,
legal and political developments, and internal company
factors.

TOP-DOWN APPROACH (OR BREAK-DOWN)

Refers to an approach which salespersons estimate expected sales from their customers, where the
area/branch managers combine sales forecasts received from salesperson. Regional managers combine
sales forecasts received from area/branch managers, while the sales or marketing head to combine the
sales forecasts received from regional managers into company sales forecast, which is presented to CEO
for discussion and approval.

However, some companies use both approaches to

increase their confidence in the forecasts.
 SALES PLANNING

FROM SALES FORECASTING TO SALES QUOTAS

Unattainable goals demoralize sales teams and kill

their confidence, therefore setting quotas far above
reasonable expectations of performance is a proven
recipe for failure, and the primary reasons why
salespeople miss their quotas - disproportionate
quotas are the second most popular reason why reps
leave a company. Some companies would raise quotas as
soon as the salesperson hit his/her best month ever,
continuously raising quotas makes many top-performing
reps feel cheated - so called the double-digit sales
increase obsession.

SALES FORECASTING METHODS

QUALITATIVE METHODS QUANTITATIVE METHODS

Executive opinion Moving averages

Delphi method Exponential smoothing

Salesperson composite Decomposition

Survey of buyer´s intentions Naive/Ratio method

Market test Regression analysis

CHOOSING A FORECASTING METHOD

Choosing a forecasting technique is based on who and how it will be used, time frame, data available and
cost/benefits. In general, the various forecast comparisons suggest that no method remains superior
under all conditions, as good forecasters apply multiple forecasting methods to the problem.

CRITERIA FOR EVALUATING FORECASTING METHODS

Comprehensibility - sales managers must understand the basic methods of developing forecasts.
Accuracy - a forecasting method must provide results that are sufficiently accurate for the purpose desired
Timeliness - the forecasting method must generate forecasts in time for managers to use them
Quality and quantity of information - in forecasting as in other areas, “garbage” input leads to “garbage” output
Qualified personnel - experts can give opinions on qualitative techniques like the jury of executives’ opinions
or the Delphi method
Flexibility - managers continually monitor actual sales for any deviations from forecast that may indicate the
need for revised sales forecasting tools
Costs/benefits - the benefits from forecasting must more than offset the costs of generating the sales forecast
 SALES PLANNING

IMPACT OF ERRONEOUS SALES FORECASTS

FUNCTIONAL AREA TOO HIGH TOO LOW

Inadequate output to meet

PRODUCTION Excess output, unsold products
customer demand

INVENTORY Overstock Understocks

FINANCE Idle cash Cash shortage

Insufficient expenditures to cover

PROMOTION Wasted expenditures
the market

Costly, insufficient to sell excess

DISTRIBUTION Inadequate to reach market
products

Price increases to allocate scarce

PRICING Reductions to sell excess product
products

Too many salespeople, high Too few salespeople, market not

SALES FORCE
selling costs covered

Money wasted on unneeded Unsatisfactory due to out-of-stock

CUSTOMER RELATIONS
actives, resulting in low profits products

Lower unit profits since expenses Lowertotal profits because market

PROFITS
are high not covered

CRM AND KAM

CUSTOMER RELATIONSHIP MANAGEMENT

Is a cross-functional process for achieving...

Continuing dialog with customers across all contact and access points
Personalized service to the most valuable customers
Increased customer retention
Continued marketing effectiveness

CRM is not just technology, but instead... it represents a strategy, a process and a business goal that an
organization must embrace - a business philosophy and a set of strategies, programs, and systems that
focus on identifying and building loyalty with the most valuable customers. A true CRM brings together
information from all data sources within an organization (and where appropriate, from outside the
organization) to give one, holistic view of each customer in real time. All customers are not equally
profitable, and more or less profitable customers need to be treated differently.

CRM is designed to reduce costs, increase profitability and solidifying customer loyalty

CRM enables an organization to...

Identify types of customers
Design individual customer marketing campaigns
Treat each customer as an individual
Understand customer buying behaviors
 CRM AND KAM

CUSTOMER RELATIONSHIP MANAGEMENT

FINDING THE MOST VALUABLE CUSTOMERS

Retailers must concentrate on providing more value to their best customers using targeted promotions
and services to increase their share of wallet (the percentage of the customers’ purchases made from
the retailer). Organizations can find their most valuable customers through “RFM” - Recency (how recently
a customer purchased items), Frequency (how frequently a customer purchased items) and Monetary
value (how much a customer spends on each purchase).

BUSINESS VALUE OF CRM

Business benefits Churn rate decrease

Increased customer satisfaction Indicator of growth or decline of firm’s customer base

Reduced direct-marketing costs Number of customers who stop using or purchasing
products or services from a company
More effective marketing

Lower costs for customer acquisition/retention

Increased sales revenue

EVOLUTION OF CRM

CRM REPORTING CRM ANALYSIS CRM PREDICTING

TECHNOLOGY TECHNOLOGY TECHNOLOGY

Help organizations identify Help organizations segment their Help organizations make predictions
their customers across other customers into categories such regarding customer behavior such as
applications as best and worst customers which customers are at risk of leaving

REPORTING ANALYZING PREDICTING

WHAT HAPPENED ? WHY IT HAPPENED ? WHAT WILL HAPPEN ?

What is the total revenue by Why did sales not meet What customers are at risk of
customer? forecast? leaving?

How many units did we What products will the

Why was production so low?
manufacture? customer buy?

Where did we sell the most Why did we not sell as many Who are the best candidates
products? units as last year? for mailing?

What were total sales by What is the best way to reach

Who are our customers?
products? the customer?

How many customers did we Why was customer revenue What is the lifetime
serve? so high? profitability of a customer?

Why are inventory levels so What transactions might be

What are our inventory levels?
low? fraudulent?

As an iterative process, CRM turns customer data into customer loyalty

through four activities, whose programs are software systems that capture
information and integrate sales, marketing and customer service information.
CRM programs can gather information from many sources including
email, call centers, service and sales reps, as the information is available in the
organization in real time to implement CRM programs.
 CRM AND KAM

CUSTOMER RELATIONSHIP MANAGEMENT

TYPES OF CRM

OPERATIONAL Supports traditional transactional processing for day-to-day front- office operations or
CRM systems that deal directly with the customers

ANALYTICAL Supports back-office operations and strategic analysis and includes all systems that
CRM do not deal directly with the customers

COLLABORATIVE Deals with synchronization and integration of customer interaction and channels of
CRM communications

Front Office Operational CRM

SALES MARKETING CUSTOMER SERVICE

SYSTEMS SYSTEMS SYSTEMS

COLLABORATIVE DATA DATA

CRM SYSTEM WAREHOUSE MINING

Back Office Analytical CRM

GOAL OF OPERATIONAL CRM

The goal of Operational CRM is to provide electronic support for the "front office" business processes,
which include all customer contact (eg. sales, marketing and service). As it aims to deliver customer-
centric business processes and operations. The benefits are....

Enables a 360-degree view of each customer

Each employee from sales people to service engineers can access complete history of all customer
interaction with the organisation regardless of the initial point of contact
Delivers personalised and efficient marketing, sales, and service

COMPONENTS OF OPERATIONAL CRM

SALES FORCE AUTOMATION ENTERPRISE MARKEITNG CUSTOMER SERVICE AND

(SFA) AUTOMATION (EMA) SUPPORT (CSS)

Sales management
List generator Contact center
Contact management
Campaign management Web-based self-service
Opportunity management
Cross-selling and Up-selling Call scripting
Forecasting

Sales force automation is the sales department was the first to begin developing CRM systems with
sales force automation – a system that automatically tracks all of the steps in the sales process. SFA
requires a well designed database in order to store and retrieve customer details.

Enterprise Marketing Automation provides information about the business including competitors and
industry trends, as EMA uses Data Mining and OLAP (online analytical processing) technologies.

Customers Service and Support automates (1) service requests, (2) complaints, (3) product returns and
(4) information requests. Call-center support for customer inquiries has evolved into the customer
interaction centre (CIC) and it uses multiple channels (Web, phone/fax, mobile apps, face-to-face, kiosk...),
CSS technology is database oriented and is underpinned by Service Level Agreements (SLAs).
 CRM AND KAM

CUSTOMER RELATIONSHIP MANAGEMENT

RELATIONSHIP BETWEEN OPERATIONAL AND ANALYTICAL CRM

GOALS OF ANALYTICAL CRM

As a certain key customer identities and directions, while boosting organizational and customer values.

CUSTOMER ACQUISTION CUSTOMER RETENTION CUSTOMER INFORMATION

Offer key information to

Cross-selling and Up-selling Retain current customers
customers effectively

OUTCOMES OF ANALYTICAL CRM

Design and execution of specific customer campaigns, including cross-selling, up-selling

Analysis of customer behavior to help product and service decision making (for
example pricing, new product development, etc.)
Management decisions, e.g. financial forecasting and customer profitability analysis
Prediction of the probability of customer defection (churn analysis)

APPLICATIONS OF ANALYTICAL CRM

Financial Forecasting Customer Satisfaction evaluation Fraud detection
Program evaluation Customer Satisfaction growth Risk management
Price optimization Product development Contact optimization
Sales coverage optimization

COLLABORATIVE CRM
Collaborative customer relationship management focus on exploiting interaction with customers through
customer touch points for enhancing customer self service. It's ultimate goal is to use information
collected from all departments to improve the quality of customer service. Collaborative CRM aims to
get various departments within a business, to share the useful information that they collect from
interactions with customers. The benefits are...
Enables efficient productive customer interactions across all communications channels
Enables web collaboration to reduce customer service costs
Integrates call centres enabling multi-channel personal customer interaction
Enables everyone in an organization to see who is talking to whom (for example, feedback from a technical
support center could be used to inform marketing about specific services and features requested by
customers)

Become a solution that brings people, processes and data together.

 CRM AND KAM

CUSTOMER RELATIONSHIP MANAGEMENT

APPLICATIONS OF COLLABORATIVE CRM

Online services for enhancement of convenience and cost reduction

Improve the effectiveness of communication by using many channels
including automated phone, email and internet
Profiling customer information during customer interaction

E-CRM allows customers to access company services electronically

M-CRM allows customers or managers to access the systems for instance

from a mobile phone with internet access, resulting in high flexibility

WHAT MAKES CRM FAIL?

The main risk factors of failing when implementing a CRM strategy may be...
Lack of planning – no strategy
Underestimating implementation costs, timeframes and organizational commitment
Poor front and back-end integration
Not being customer focused or customer centric
Political friction within the organization that restrains the sharing of customer information
Initiatives are driven by technology rather than by customer strategy and service process design

Stages in the Development of a Key-Account relationship

Degree of involvement

Nature of customer relationship

Key account management is an approach which includes developing long term relationships with
strategic, whose customers whose needs you understand in depth, and for whom you develop a specific
offer with a differential advantage over the offers of competitors...

What is a key account ?

Purchases a significant volume as a percentage of sales
Involves several organizational members in the process
Buys for an organization with geographically dispersed units
Expects a carefully coordinated response and specialized services
 CRM AND KAM

KEY ACCOUNT MANAGEMENT

MANAGING KEY ACCOUNTS

Selecting Key Accounts

Look at profit potential and degree to which customer values support services
Look at Startup companies with unique support requirements that can generate value
Consider degree to which transaction complements seller’s business

The trouble is to determine what sort of customer justifies this level of investment... as the “best”
customers place 40% of unprofitable orders, while “suppliers who are not able to collaborate effectively
lose money trying”. Therefore, supposedly “key” relationships do breakdown

TRADITIONAL BOW-TIE BUYER-SELLER

RELATIONSHIP
The communication is between
salesperson and buyer

KEY ACCOUNT DIAMOND BASED

RELATIONSHIP

The key account manager co-ordinates

communication which is direct between
functions

KEY ACCOUNT MANAGEMENT
ACCOUNT MANAGERS TASKS AND SKILSS
TASKS
WHAT MAKES A SUCCESSFUL KEY ACCOUNT MANAGER ?
Building internal relationships
Forging relationships with customer organization
Aligning and crafting
Enhanced internal reputation
KEY ACCOUNT MANAGEMENT PROCESS
UNDERSTANDING NEEDS AND
DEVELOP CUSTOMER INSIGHTS
Stakeholder identification and mapping
Identify key decision-maker needs
Understand competitor landscape
Develop SWOT analyses
Summarise customer insights
KEY ACCOUNT IDENTIFICATION
AND PRIORISITATION
Determine and agree the
selection criteria
Assess all customers and map
priority ‘key accounts"
Internally agree top 20 Key Accounts
Allocate responsibilities
for initial contacts
CRM AND KAM
SKILLS
1. Relationship building
2. Co-ordination
3. Negotiation
4. Human Relations
5. Focus on specific objectives
6. Diagnosing customer problems
7. Presentation skills
8. Generating visibility, reputation
9. Communication
10. Working in a team
FROM THE VIRTUAL DEVELOPING THE JOINT KEY
ACCOUNT TEAM ACCOUNT STRATEGIC PLAN
Select and point key players Historic performance
(internal and external) SoWhat analyses
Establish Account responsibilities Develop a joint vision for the future
and ways of working Establish common goals
Agree strategies and objectives
Formulate action plans
Agree KPIs and performance targets
Create financial plan
Build contingencies
REVIEW AND COMMUNICATE COMMUNICATE AND IMPLEMENT
RESULTS THE JOINT PLAN
KPI tracking and reporting
Develop value proposition by category and
Performance review
brand
meetings
Implement the action plans
Re-calibrate plan (+ / -)
Sell and negotiate the objectives
Celebrate and communicate success
Contemporise understanding of needs and
customer insights
 CRM AND KAM

CRM AND MARKETING AUTOMATION

Marketing Automation

CRM and E-commerce system

Newsletter system

Generally "Marketing" Generally "Sales"

SALES PROMOTIONS

Sales promotion refers to the short-term incentives that marketers design to build interest in or to
encourage purchase (or sales) of a product or service during a specified time period. They may come in
several varieties, such as trade promotions, consumer promotions, loyalty programs or even sales force
promotions. The key difference from advertising is in its time frame: sales promotion is intended to
produce short-term results, particularly those that are measurable.

Sales Promotion are ideally suited to the way most

consumers shop, which is mostly unplanned
purchases, while it stimulates impulse buying
behavior.

TYPE OF BUYER DESIRED RESULTS SALES PROMOTION EXAMPLE

RAPID GROWTH OF SALES PROMOTIONS

Product managers are under pressure to increase sales

Companies face more competition
Competing brands offer less differentiation
Advertising efficiency has declined due to rising costs, clutter, and legal constraints
Consumers have become more deal-oriented

SALES PROMOTION TYPES

CONSUMER PROMOTIONS TRADE PROMOTIONS SALES FORCE PROMOTIONS

Which goal is to drive immediate

Target the consumer market Target the marketing channel
purchase influence behavior
 SALES PROMOTIONS

SALES PROMOTIONS

COMPARISON OF PULL VS. PULL PROMOTIONAL STRATEGIES

TRADE (PUSH)
CONSUMERS (PULL)
Trade shows
Incentive programs Coupons
POP displays Samples
Push money Contests
Promotional products Bonus packs
Cooperative promotion Premiums
Rebates
Frequency programs
Brand placement

SALES PROMOTION TECHNIQUES BY TARGET

END-USERS INTERMEDIARIES AND PRODUCERS

(CONSUMER OR BUSINESS) THEIR SALES FORCE OWN SALES FORCE

Coupons Trade show and exhibitions Sales contests

Cash rebates Point-of-purchase displays Sales training manuals

Premium (gifts) Free goods Sales meetings

Free samples Advertising allowances Packets with promotional materials

Contests and sweepstakes Contests for salespeople Demonstration model of product

Point-of-purchase displays Training intermediaries sales force

Product demonstrations Product demonstrations

Trade shows and exhibitions Advertising specialities

Advertising specialities

TRADE SALES

DEFINITION

Trade sales promotion methods stimulate wholesalers and retailers to carry a producer’s products and to
market those products more aggressively. While, encourage resellers to carry a product or stock more of
it.
 SALES PROMOTIONS

TRADE SALES PROMOTION

TRADE SALES METHODS

Trade allowances
Buying allowance – Temporary price reduction for purchasing specified quantities
Buy-back allowance – Money given to a reseller for each unit bought after an initial promotion is over
Scan-back allowance – Manufacturer’s reward based on the number of pieces scanned
Merchandise allowance – Manufacturer’s agreement to pay in exchange for providing special promotional
efforts
Cooperative Advertising – Manufacturer agrees to pay a portion of retailer’s media costs for
advertising the manufacturer’s products

Dealer Listings – Ads that promote a product and list the names of retailers of that product

Free merchandise – manufacturer’s reward to retailers for purchasing a stated quantity of product

Dealer Loader – Gift given to a retailer for purchasing a stated quantity of product

Premium (push) money – Extra compensation to salespeople for pushing a product line

Sales contest – Used to motivate distributors, retailers, and salespeople by recognizing outstanding
sales achievements

TRADE PROMOTION TOOLS

Conventions and trade

are effective to reach many customers not reached with the regular sales force
shows

are effective in motivating salespeople or dealers to increase performance overs

Sales contests
a given period

Merchandise
are promotions that reimburses the retailer for in-store support of the product
allowance

Case allowance a discount to the retailer or wholesaler based on the volume of product ordered

events at which many companies set up exhibits to show their products, give
Trade Shows
away samples, distribute product literature, and troll for new business contacts

Promotional
specialty items imprinted with corporate logos
products

Push money a bonus paid by a manufacturer to a salesperson for selling its product

sales promotions that allow the customer to recover part of the products cost
Rebates
from the manufacturer

Price-based
includes coupons, price deals, refunds, rebates, and special packs
consumer promotions

Premium an item included without charge with a purchased product

Sampling distributing trial-size versions of a product for free to encourage people to try it

Point-of-purchase
the use of signs or displays to influence purchases at the store
(POP) promotion

are used as part of a firm’s customer retention efforts, the rewards given can be
Loyalty programs
discounts, free product or services, or redeemed for gifts from a catalogue

two or more companies combining forces and using a single promotional tool to
Cross-promotion
create interest in their products or services
 SALES PROMOTIONS

CONSUMER PROMOTION

CONSUMER PROMOTION TOOLS

Samples offer a trial amount of a product

Coupons are certificates that give buyers a saving when they purchase specified products

Rebates similar to coupons except that the price reduction occurs after the purchase

Price packs offer consumers savings off the regular price of a product

Premiums are goods offered either for free or at a low price

Advertising are useful articles imprinted with the advertiser’s name, logo, or message that are
specialities given as gifts to consumers

Point-of-purchase
include displays and demonstrations that take place at the point of sales
promotion

Contests, sweepstakes gives consumers the chance to win something, such as cash, trips or goods - by
and games luck or through extra effort

SWEEPSTAKES CONTESTS LOTTERIES

Prizes are anything of value, like goods and services with a monetary value.
Chance is a drawing where the participant has no control over the outcome. Usually, this is a random
drawing where luck is the deciding factor.
Consideration is when a participant is required to make a purchase, pay an entry fee, or expend
significant effort to participate.

SWEEPSTAKES SWEEPSTAKES

Sweepstakes are one of the most widely used
marketing strategies because overall, they can help
a business achieve a variety of goals, such as...
Increase email subscribers
Increase website traffic
Increase leads
Increase awareness of products or services
Increase sales
Increase engagement and followers on
social media
Increase brand loyalty
Sweepstakes are powerful because all of
these goals can be achieved in a relatively
short amount of time with a modest budget.
Contests are also a widely used marketing strategy;
however, they are not always as effective as
sweepstakes because of the effort and skill that is
required of the participant. Brands will usually run a
contest to reach a smaller range of goals, such as...
Increase brand awareness
Increase brand loyalty
Increase user generated content
Increase engagement and followers on social
media
 SALES PROMOTIONS

SALES PROMOTION TECHNIQUES SUMMARY

TECHNIQUES PRIMARY TARGET DESCRIPTION EXAMPLE