Sales Management

Vinod Puri 98206 94960; 26314644

Importance of Selling

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

Modes of Selling

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

The Nature of Personal Selling
Transaction Selling
Get new accounts  Get the order  Cut the price to get the sale  Manage all accounts to maximize short-term sales  Sell to anyone

Relationship Selling
Retain existing accounts  Become the preferred supplier  Price for profit  Manage each account for long-term profit  Concentrate on high-profitpotential accounts

Selected Activities of Salespeople
Salesperson
Generate sales:
•Precall planning •Prospecting •Make sales presentations •Overcome objections •Close by asking for the orders •Arrange for delivery •Entertain •Arrange for credit/financing •Collect payments •Participate in trade shows

Provide service to customers:
•Provide management/technical consulting •Oversee installations and repairs •Check inventory levels •Stock shelves •Provide merchandising assistance: •Co-op advertising, point-of-purchase displays, brochures •Oversee product and equipment testing •Train wholesalers’ and retailers’ salespeople

Territory management:
•Gather and analyze information on customers, competitors’ general market developments •Disseminate information to appropriate personnel within salesperson’s company •Develop sales strategies and plans, forecasts, and budgets.

Professional development:
Participate in: •Sales meetings •Professional associations •Training programs

Company service:
•Train new salespeople

Sales jobs differ from other jobs because salespeople…
    

implement a firm’s marketing strategies in the field. are authorized to spend company funds. represent their company to customers and to society in general. represent the customer to their companies. operate with little or no direct supervision and require a high degree of motivation. develop innovative solutions to difficult problems. need more tact and social intelligence. travel extensively, which takes time from home and family. have large role sets. face role ambiguity, role conflict, and role stress.

    

Sales jobs differ from other jobs because salespeople…
    

implement a firm’s marketing strategies in the field. are authorized to spend company funds. represent their company to customers and to society in general. represent the customer to their companies. operate with little or no direct supervision and require a high degree of motivation. develop innovative solutions to difficult problems. need more tact and social intelligence. travel extensively, which takes time from home and family. have large role sets. face role ambiguity, role conflict, and role stress.

    

Sales Management Responsibilities
Strategic Planning Performanc e Evaluation Organizing the sales force

(Figure 1(Figure 15) 5)

Communication Coordination
Motivation and supervision

Integration

Recruiting, selection, assimilation

Training and developmen t

Executive Ladder in Personal Selling
President Vice president of sales National sales manager Regional/divisional sales manager District sales manager Sales supervisor Salesperson

(Figure 1(Figure 16) 6)

Staff assistants available for advice and support at any step along the ladder.

Executive Ladder in Team Selling
President Vice president of marketing

(Figure 1(Figure 17) 7)

Distribution logistics specialist

Client-team leader

Product engineer

Customer sales/service representative

Sales Force Management Challenges in the 21st  Customer relationship management (CRM) Century
 Sales

force diversity  Electronic communication systems and computer-based technology  Selling teams  Complex channels of distribution  An international perspective  Ethical behavior and social responsibility

The Marketing Concept
A

philosophy: Achieving organizational goals depends on the firm’s ability to identify the needs and wants of a target market, and then to satisfy those needs and wants better than the competition does. on three fundamental beliefs

 Based

Company planning and operations should be customer or market oriented.  Marketing activities in a firm should be organizationally coordinated.  The goal of the organization should be to generate profitable sales volume over the long run.

Evolution of Marketing Management
 Production

orientation

Focus on mass-producing a limited variety of products for as little cost as possible.

 Sales

orientation orientation orientation

Age of the hard-sell. The marketing concept first emerges.

 Marketing

 Relationship

A natural extension of the marketing-orientation stage.  The buyer and seller commit to doing business over a long time.

Relationship Marketing: Four key issues
Open

communication employees

Empowered Customers Working

to be included in planning

in teams

Strategic Planning

Set Objectives

Objectives are the broad goals around which a strategic plan is formulated.

Formulate Strategies

Strategies are the plans of action. Tactics are the specific activities that people must perform in order to carry out the strategy.

Develop Tactics

Company StrategyMarketing Objectives and Strategy

Company
Objectives
Earn 20% ROI

Marketing

Strategy
Increase marketing share 10%

Objectives
Increase market share 10%

Strategy
Increase share of customer business

Marketing StrategySales Force Objectives, Strategy and Tactics

Marketing
Objectives

Increase market share 10%

Sales Force
Objectives
Increase share of customer business

Strategy
Increase share of customer business

Strategy
Build long-term customer relations Develop sales teams Provide bonuses for greater customer share

Tactics

Strategic Trends
 Internet

Selling  Multiple Sales Channels  Multiple Relationship Strategies

Transaction selling  Consultative selling

 In

this era of global warming, toxic waste, pollution, and other concerns, marketing executives must act in a socially responsible manner if they wish to succeed or even survive.

Customer Relationship Management
 CRM

practices

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

The Selling Process
 

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

TM 3-2

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

1) Prospecting:
 Leads
 

The method or system by which sales-people learn the names of people who need the product and can afford it.

can be identified through…

Referrals from customers Referrals from internal company sources

Sales manager; Marketing dept.; Telemarketing dept.

 

Referrals from external agencies Published directories

Industrial directories, Published data, governmental records
 

Networking by the Salesperson Cold canvassing

Qualifying Leads
A

qualified prospect…

Has a need for the products being sold. Can afford to buy the products. Is receptive to being called on by the salesperson.

Lead Conversion Ratio: Inquiry to Decision 12 Months After Inquiring

Plan to buy 25% No longer in market 30%

Purchased 45%

Purchased No longer in market Plan to buy

*SOURCE: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994.

The Value of Inquiry Follow-Up

Share of buyer’s business if not followed up 40%

Share of buyer’s business if followed up 83%
*SOURCE: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994.

Planning : the Key
 

Determining the Sales Objectives Developing Customer Profile Customer Benefits Developing the Sales Call Presentation

Pre approach: Planning the
Sale
 Includes

all the information-gathering activities salespeople perform to learn relevant facts about the prospects, their needs, and their overall situation. selling:

 Adaptive

When a salesperson alters the initial objectives or plans of the sales process because of new information gained from the customer during the actual call.

The Approach: The first minute or so of
the call.
A

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

3) The Approach: The first minute or so
of the call.
A

good approach makes a favorable impression and establishes some degree of rapport between the salesperson and the buyer. in the U.S.:

 Expectations

Firm handshake  Professional attire  Good eye contact.

Need Assessment
The

stage in which the salesperson must discover, clarify, and understand the buyer’s needs. The best way to uncover and understand needs is by asking questions.

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

The Presentation
A discussion of those product and/or service features, advantages, and benefits that the customer has indicated are important.  Built around a forceful product demonstration
 

Prepared presentation vs. Adaptive selling Tips for effective presentations

Keep it simple  Talk the prospects language  Stress the application of the product/service to the prospects situation  Seek credibility at every turn.

TM 3-

Product
Camera Bicycle

Presentation of Product, Features, Benefits, Advantages
Features Benefits
Telephoto lens Attached water bottle holder Take pictures from longer distance Can hold a water bottle.

Advantages

Able to capture image from a distance. Don’t get dehydrated. Avoid multiple units. Saves time. Saves money. Saves money.

New D.V.D. Drill Press

Can play any round Convenience Multiple drill bits attached Rust inhibitor Can change bits without shutting down the machine. engine to have have longer life.

Motor Oil

The S E L L
   

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

Meeting Objections

Objections should be welcomed because they indicate that the prospect has some interest in the proposition. In responding to an objection…
Listen to the buyer  Clarify the objection  Respect the buyer’s concern  Respond to the objection

Common types of objections
Price or value objections  Product/service objections  Procastinating objections  Hidden objections

6) Meeting Objections

Objections should be welcomed because they indicate that the prospect has some interest in the proposition. In responding to an objection…
Listen to the buyer  Clarify the objection  Respect the buyer’s concern  Respond to the objection

Common types of objections
Price or value objections  Product/service objections  Procastinating objections  Hidden objections

Trial Close: a great way to uncover needs;  It checks the attitude of the prospect Push the sale forward

Can be used at the following points After making a strong selling point After the presentation After answering an objection Immediately before closing the sale

Using Trial Close
    

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

Gaining Commitment
 Asking

the buyer to commit to some action that moves the sale forward. Sales Closes

 Common

The Assumptive Close
“Now what size do you want?” “If you buy this product today, we’ll double the length of the warranty.” “You have agreed that our product is the best on the market. Correct? Then I suggest that you place your first order today so we can have it to you by the end of the week.”

Special Offer Close

Summary Close

Planning

Sales Forecasting

Quotas and Territories Management Information Systems

Importance of Sales Forecast

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

Sales Forecasting Methods
Methods Executive Opinion Advantages Quick, easy, and simple Disadvantages Subjective Lacks analytical rigor Best Used For new products Sales force Relatively simply composite Usually fairly accurate Involves those people who are responsible for the results Salespeople are sometimes When reps are of a high overly optimistic caliber Salespeople may sandbag When each rep has a small (estimate low) to look better number of customers Time consuming

Survey of buyers intentions

Done by those who will buy Time consuming the product, so accuracy High cost should be good. Customer may not cooperate No consideration for major product or market changes Require some statistical analysis

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

Trend Objective and inexpensive projections: Use historical data
-moving average -exponential smoothing -regression analysis

Analysis of market

Objective Fairly accurate and simple

Unforeseen changes in the When market factors are market can lead to stable and predictable

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

Second Year
4,800,000 100 4,850,000 2.55

12,367,500

12,240,000

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

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

3,200,000 80 2.19

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

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

3,300,000 40 1.10

Total daily diapers, all ages Percentage disposable diapers

19,689,100 95

19,298,400 95

Guiding Principles for Forecasting
 Fit

the method to the product/market  Use more than one method  Minimize the number of market factors  Recognize the situation limits  Use the minimum/maximum technique  Understand math and statistics

Fig 12-8 Flow of Information from Sales Budget to Other Budgets
Sales budget

Sales department expense budgets (advertising, selling costs, administration) Cash budget Revenues Expenses

Administrative expense budgets

Production department budgets Profit-andloss budget

Revenues Expenses

Sales Territory
Comprises

TM 13-2

a number of present and potential customers, located within a given geographical area and assigned to a salesperson, branch, or intermediary (retailer or wholesaling intermediary).

Key word: customers

Benefits of Good Territory Design
Enhances Reduces Provides Aids

TM 13-3

customer coverage

travel time and selling costs more equitable rewards sales for the sales organization morale

evaluation of sales force

Increases Increases

Procedure for Designing Sales Territories

TM 13-4 (Fig. 13-1)

Select a Control Unit

Determine Location and Potential of Customers

Determine Basic Territories

Assign Salespeople to Territories

Set Up Territorial Coverage Plans

Evaluate Effectiveness of Design

Buildup Method of Territorial Design
Management must determine: Desirable call patterns: Call frequency per account per year Total calls needed in each control group Workload capacity: Total calls possible per rep per year = number of daily calls x days selling

TM 13-6 (Fig. 13-3)

Tentatively set territorial boundary lines by combining control units until total calls needed = total calls possible Modify territories as needed

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

TM 13-8

Territory Size
Decreases Decreases Increases Increases Decreases Increases Decreases Decreases – unless market is oversaturated Increases

Breakdown Method of Territorial Design
Management must determine Company sales potential Sales potential in each control unit Sales volume expected from each sales person

TM 13-9 (Fig. 13-5)

Tentatively set territorial boundary lines by combining control units total sales potential = total sales volume expected Modify territories as needed

Routing the Sales Force
 Routing

TM 13-13

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

Routing the Sales Force
 Routing

TM 13-13

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

Sales Manpower

Recruitment Training Assimilation

Recruiting and Selection Problems
 Lack  Lack

of resources of job specification and qualifications not objectively established of managerial training prejudices for managerial talent

 Qualifications  Lack

 Personal  Search

Fig. 5-2 Sales Force Staffing Process: Plan for Recruiting & Selection
Establish Responsibility for Recruiting, Selection and Assimilation Determine Number of People Wanted Conduct Job Analysis Prepare Job Description Determine Hiring Qualifications

Recruit Applicants Select Applicants
Design a System For Measuring Applicants Measure Applicants Against Hiring Qualifications Make Selection Decisions

Hire The People
Assimilate New People Into Sales Force

Number of reps needed = Market workload: Customer class A B Number of x accounts 400 600

Workload Analysis
Calls = per year 20 10

Total workload in market

Workload one rep can handle Total calls 8,000 6,000 14,000

One rep’s workload:
Calls/day x Selling days/week x Working weeks/year = Annual workload 5 x 5 x 14,000 Number of reps needed = 1250 = 112 reps 50 = 1250

Fig. 5-4

Ten traits and abilities of top salespeople
Trait
Ego strength Sense of urgency Ego drive Assertiveness Willingness to take risks Sociability Abstract reasoning Sense of skepticism Creativity Empathy

Related Ability
To handle rejection To complete the sale To persuade people To be firm in negotiations To be innovative To build relationships To sell ideas To question, to be alert To sell complex products and ideas To understand customer needs

Source: Erika Rasmusson, “The 10 Traits of Top Salespeople, “ Sales & Marketing Management, August 1999, pp. 34-37.

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

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

Evaluation

Objectives of Sales Training Programs Increased
Sales Productivity Improved SelfManagemen t Lower turnover

Sales training program objectives

Improve customer relations

Improved communication

Improve morale

Examples of Specific Training Objectives
Understand company goals and objectives Company orientation and Understand company selling philosophy administrative Understand organizational structure Understand company policies and procedures skills: Improve call reports Improve call patterns Improve time management

Knowledge:

Existing products - features, benefits, and applications New products - features, benefits, and applications Industry trends Competitive products - features, benefits, and applications Specific customer applications and problems Promotional programs Improve prospecting methods Improve strategy selection Improve presentation skills Improve closing techniques Improve understanding of and handling objectives

Selling skills: Improve pre-call planning

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

To Insure Training Effectiveness
Managers Should Ask the Following Questions

   

 

Is your training aligned with your company’s strategic goals? Does top management support your training? Does it reflect the needs of your customers/ Is it immediately relevant to your business? Are the salespeople empowered to leverage what they learn? Is the training reinforced? Are the results of the training measurable?

Source: Adapted from Mark McCaster, “Is Your Training A Waste of Money?” Sales & Marketing Management, 2001, p. 47.

Management of the Field force

Leadership Compensation Evaluation

Leadership Effectiveness

Personal characteristics
Leadership style
(the leader behaviors)

Leadership effectiveness

Managerial skills

SITUATION

Leadership Characteristics and Skills
 Personal

Characteristics

Self-Confidence  Initiative  Energy  Creativity  Maturity
 Managerial

Skills

Problem-solving skills  Interpersonal skills  Communication skills  Persuasive skills

Two Leadership Styles
 Transactional

Leadership

Those supervisory activities regarding the day-to-day operation and control of the sales force.
 

Clarifying rules Providing verbal feedback

 Transformational

Leadership

Transforms the basic values, beliefs, and attitudes of followers such that they are willing to perform at levels above and beyond expectations.
   

Articulating a vision Fostering group goals Role modeling Providing individualized support

Tools and Techniques of Leadership  Personal contact
 Sales
    

reports  Telecommunications
Better customer and industry information Selling assistance Sales support Reporting responsibilities Communication

 Printed

aids  Meetings  Indirect supervisory aids
    

Compensation plans Territories Quotas Expense accounts Sales analysis procedures

Coaching Sales Reps
 Three

elements of leadership most often used to describe coaching

Verbal feedback
 Praising

salespeople when they do well. are role models; salespeople will emulate

Leading by example
 Coaches

them.

Mutual trust and respect
 Created

through two-way communication

TM 13-3

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

Poor

performance Substance abuse Cheating on expense accounts Engaging in unethical behavior

Problems Encountered in Leadership

1. Establish basic policies

Procedure for Evaluating Salespeople (Fig. 16-1)
2. Select evaluation bases

3. Set performance standards

4. Compare performances standards

5. Discuss results with salespeople

Sales volume
  

Output Factors Used as Evaluation Bases

Sales volume as a percentage of:
 

In dollars and in units By products and customers (or customer groups) By mail, telephone, and personal sales calls Quota Market potential (i.e., market share)

Gross margin by product line, customer group,  and order size  Orders

   

Accounts
   

Number of orders Average size (dollar volume) of order Batting average (orders / calls) Number of canceled orders

Percentage of accounts sold Number of new accounts Number of lost accounts Number of accounts with overdue payment

 Calls per day (call rate)  Days worked

Quantitative Input Factors Used as Evaluation Bases

 Selling time versus nonselling time  Direct selling expense

 Nonselling activities

In total  As percentage of sales volume  As percentage of quota Advertising displays set up  E­mails/letters written to prospects  Telephone calls made to prospects  Number of meetings held with dealers and/or  distributors  Collections made  Number of customer complaints received

 Personal efforts of the sales reps

Qualitative Input Factors Used as Evaluation Bases

 Knowledge

Management of their time  Planning and preparation for calls  Quality of sales presentations  Ability to handle objections and to close sales Product  Company and company policies  Competitor’s products and strategies  Customers

 Customer relations  Personal appearance and health  Personality and attitudinal factors

Cooperativeness  Resourcefulness  Acceptance of responsibility  Ability to analyze logically and make decisions 

Ratio Measures
Sales =
Days worked X Calls Days worked X Orders Calls Sales Orders

X

Days worked

X

Call rate

X

Batting average

X

Average order

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