CHAPTER 9

Personal Selling,
Relationship Building,
and Sales Management

McGraw-Hill/Irwin Copyright © 2013 by the McGraw-Hill Companies, Inc. All rights reserved.
 IMPORTANCE OF PERSONAL
SELLING
• Personal selling - A two-way flow of
communication between a potential buyer and a
salesperson

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IMPORTANCE OF PERSONAL
SELLING
• Designed to accomplish the following:
• Identify the potential buyer’s needs
• Match those needs to one or more of the firm’s
products or services
• On the basis of this match, convince the buyer to
purchase the product

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IMPORTANCE OF PERSONAL
SELLING
• Personal selling is used when goods are:
• New and different
• Technically complex
• Expensive and require negotiation

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THE SALES PROCESS

• Sales process refers to two basic factors:

• Objectives the salesperson is trying to achieve
while engaged in selling activities
• Sequence of stages the salesperson should follow
to achieve the objectives

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OBJECTIVES OF THE SALES FORCE

• Information provision
• Persuasion
• After-sale service

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FIGURE 9.1 - THE SALES
RELATIONSHIP-BUILDING PROCESS

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PROSPECTING

• It is the process of locating potential customers

• Involves two activities undertaken on a
continual, concurrent basis:
• Location of prospects
• Random lead generation
• Selected-lead generation

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SCREENING
• The salesperson in this stage determines whether the prospect is a true
prospect.

• This stage gathers information that answer the following questions:

1. Does the lead have a want or need that can be satisfied by the purchase
of the firm’s products or services?
2. Does the lead have the ability to pay?
3. Does the lead have the authority to pay?
4. Can the lead be approached favorably?
5. Is the lead eligible to buy?

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PLANNING THE SALES CALL
• Some key areas of knowledge sales people should
possess are:
• Thorough knowledge of representative company,
including past history
• Thorough knowledge of products and product line
• Good working knowledge of competitor’s products
• In-depth knowledge of the market for their
merchandise
• Accurate knowledge of prospect

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PRESENTING

• Be well prepared and set a goal for your

presentation
• Develop a checklist of items for discussion
• Development of good interpersonal skills
• Adapt your style to the prospect

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RESPONDING TO OBJECTIONS

• Expect objections to occur at any time

• In response to an objection, a sales person
should not challenge the customer
• Make the necessary presentation in order to help
the client make an intelligent decision

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OBTAINING COMMITMENT

• Not all sales end in a successful closing

• Salespeople should analyze the reasons and
determine whether:
• More sales calls are necessary to obtain
commitment
• There just does not exist a good match between
customer needs and seller offerings

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BUILDING LONG-TERM RELATIONSHIPS

• Important goal for salespersons: Focusing on

building and maintaining a long-term
relationship with customers
• Aftermarketing: Focuses the organization’s
attention on providing continuing satisfaction
and reinforcement to individuals or
organizations that are past or current customers

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BUILDING LONG-TERM RELATIONSHIPS

• Aftermarketing activities include:

• Establishing and maintaining a customer information
file
• Monitoring order processing
• Ensuring initial proper use of product or service
• Providing customers ongoing guidance and support
• Analyzing customer feedback
• Continually conducting customer satisfaction
research

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RELATIONSHIPS CAN LEAD TO
PARTNERSHIPS
• When the interaction between a salesperson and a customer does not
end with the sale, the beginnings of a relationship are present.

• Functional relationship: When a buyer and a salesperson have a close

relationship, they both begin to rely on each other and communicate
honestly.
• Strategic partnership: Long-term, formal relationships in which both
parties make significant commitments and investments in each other in
order to pursue mutual goals and to improve the profitability of each
other.

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PEOPLE WHO SUPPORT THE SALES
FORCE
• Missionary salespeople: Focus solely on
promoting existing products and introduction of
new products
• Technical sales specialists: Support the sales staff
by providing training or other technical assistance
• Cross-functional sales teams: Used when the
product is extremely high priced and is being sold
to the whole organization

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MANAGING THE SALES AND
RELATIONSHIP-BUILDING PROCESS
• From a sales management point, the company’s
part of the sale involves:
• Efficient and effective sales tools
• An efficient delivery and reorder system
• An equitable compensation plan to reward and
motivate performance
• Adequate supervision and evaluation of
performance for continual improvement

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FIGURE 9.2 - ORGANIZING THE SALES
FORCE

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CONTROLLING THE SALES FORCE

• It is critical that the sales force be properly

controlled because:
• Personal selling can be the largest marketing
expense component in the final price of the
product

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CONTROLLING THE SALES FORCE

• Unless the sales force is somehow directed,

motivated, and audited on a continual basis, it is
likely to be less efficient than it is capable of being.
• Controlling involves four functions:
1- Forecastingsales
2- Establishing sales territories and quotas
3- Analyzing expenses
4-Motivating and compensating performance

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FORECASTING SALES

• Estimate of how much of the company’s output

can be sold during a specified future period
under a proposed marketing plan and under an
assumed set of economic conditions

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FORECASTING SALES

• Sales forecast is used to:

• Establish sales quotas
• Plan the personal selling efforts and other types
of promotional activities
• Budget selling expenses
• Plan and coordinate production, logistics,
inventories, personnel, and so forth

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FORECASTING METHODS

• Jury of executive opinion method

• Sales force composite method
• Customer expectations method
• Time-series analysis
• Correlation analysis
• Other quantitative techniques

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ESTABLISHING SALES TERRITORIES
AND QUOTAS
• Represents management’s need to match
personal selling effort with sales potential
• Sales territories can be segmented on the bases
of:
• Geography
• Product specialization

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SALES TERRITORIES AND QUOTAS

• Sales quotas:
• Provide incentives for salespeople
• Provide a quantitative standard for performance measurement
• Evaluate and control the efforts of the sales force
• Activity quotas - Allow monitoring of whether salespersons
are engaging in activities to the extent desired

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SALES TERRITORIES AND QUOTAS
• Sales quotas represent specific sales goals assigned
to each territory or unit over a designated time
period
• Factors in establishing sales factors:
• All territories will not have equal potential and,
hence, compensation must be adjusted
• All salespeople will not have equal ability and
assignments may have to be made accordingly
• Sales task in each territory may differ from time
period to time period

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ANALYZING EXPENSES

• Each territorial or district manager submits

estimates of expenses and forecasted sales quotas.

• These estimates are usually prepared for a year and

then broken down into quarters and months.

• The sales manager reviews the budget requests

from the field offices and from staff departments.

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MOTIVATING AND COMPENSATING
PERFORMANCE
• An important task for the sales manager is motivating and
compensating the sales force

• Two basic types of compensation:

• Salary - A specific amount of monetary compensation at
an agreed rate for definite time periods
• Commission - Monetary compensation is provided for
each unit of sales and expressed as a percentage of sales

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MOTIVATING AND COMPENSATING
PERFORMANCE
• Commission may be computed on the bases of:
• Volume of sales in units of product
• Gross sales in dollars
• Net sales after returns
• Sales volume in excess of a quota

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FIGURE 9.4 - TYPES OF SALES FORCE
INCENTIVES AND SOME POSSIBLE
PERFORMANCE OUTCOMES

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