Sales Management

Sales Management

Importance of Selling

Only activity that generates revenueEverything 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 SellingTransaction 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-

profit-potential 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

(Figure 1-(Figure 1-5)5)(Figure 1-(Figure 1-5)5)

Strategic Planning

Organizing the sales

force

Recruiting, selection,

assimilation

Training and developmen

t

Motivation and

supervision

Performance Evaluation

Communication

Coordination

Integration

Executive Ladder in Personal Selling

(Figure 1-(Figure 1-6)6)(Figure 1-(Figure 1-6)6)

Salesperson

Sales supervisor

District sales manager

Regional/divisional sales manager

National sales manager

Vice president of sales

President

Staff assistants available for adviceand support at anystep along the ladder.

Executive Ladder in Team Selling

(Figure 1-(Figure 1-7)7)(Figure 1-(Figure 1-7)7)

Customer sales/service representative

Distributionlogistics

specialist

Client-teamleader

Productengineer

Vice president of marketing

President

Sales Force Management Challenges in the 21st CenturyCustomer relationship management (CRM)Sales force diversityElectronic communication systems and computer-based technology

Selling teamsComplex channels of distributionAn international perspectiveEthical 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.

Based on three fundamental beliefs 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

Age of the hard-sell.Marketing orientation

The marketing concept first emerges.Relationship orientation

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

Empowered employees

Customers to be included in planning

Working in teams

Strategic Planning

Objectives are the broad

goals around which a

strategic plan is formulated.

Strategies are the plans of

action.

Tactics are the specific

activities that people must

perform in order to carry out

the strategy.

Set Objectives

Formulate

Strategies

Develop Tactics

CompanyCompany

MarketingMarketing Objectives

Strategy

Increase marketing share 10%

Company Strategy-Marketing Objectives and Strategy

Company Strategy-Marketing Objectives and Strategy

Earn 20% ROI

StrategyIncrease share of customer business

Increase marketshare 10%

Objectives

MarketingMarketing

Sales ForceSales Force

Strategy Increase share of customer business

Marketing Strategy-Sales Force Objectives, Strategy and

Tactics

Marketing Strategy-Sales Force Objectives, Strategy and

Tactics

Increase share of customer business

StrategyBuild long-term

customer relations

TacticsDevelop sales teams

Provide bonuses for greater customer share

Increase market share 10%

Objectives

Objectives

Strategic Trends

Internet SellingMultiple Sales ChannelsMultiple 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 ManagementCRM 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

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

TM 3-2

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

Leads 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

Purchased

No longer inmarket

Plan to buy

Plan to buy 25% Purchased

45%No longer in market

30%

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

Adaptive selling: 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.

Expectations in the U.S.: 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 questionsSituational questions

How often do you change the cutting oil in your drill presses?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?In addition to the hospital administrator, who else has an influence on the decision?

• Problem discovery questionsProblem discovery questions

Have you experienced any delays in getting repair parts?Have you experienced any delays in getting repair parts?

In which part of the production process is quality control the most important?In which part of the production process is quality control the most important?

• Problem Impact questionsProblem Impact questions

How do these delays in getting parts affect your production costs?How do these delays in getting parts affect your production costs?

What impact do the quality consistency problems have on your production costs?What impact do the quality consistency problems have on your production costs?

• Solution value questionSolution value question

If your inventories could be reduced by 20%, how much would that save you? 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 If your rejection rate on final inspection was reduced to under one percent, how much would that save you?that save you?

• Confirmatory questionsConfirmatory questions

So, you would be interested in an inventory control system that reduced your inventories by 20%?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 oneIf I can provide evidence to you that our products would lower your rejection rate to under one

percent, would you be interested?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 presentationsKeep it simpleTalk the prospects languageStress the application of the product/service to the

prospects situationSeek credibility at every turn.

Presentation of Product, Features, Benefits, Advantages

Product Features Benefits Advantages

Camera Telephoto lens Take pictures Able to capture from longer distance image from a distance.

Bicycle Attached water Can hold a water Don’t get dehydrated. bottle holder bottle.

New D.V.D. Can play any round Convenience Avoid multiple units.

Drill Press Multiple drill Can change bits Saves time. bits attached without shutting Saves money.

down the machine.

Motor Oil Rust inhibitor engine to have Saves money.have longer life.

TM 3-

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;Push the sale forward It checks the attitude of the prospect Can be used at the following points

After making a strong selling pointAfter the presentation

After answering an objectionImmediately 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.

Common Sales Closes The Assumptive Close

“Now what size do you want?” Special Offer Close

“If you buy this product today, we’ll double the length of the warranty.”

Summary Close “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.”

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 productionThe need of raw materials required

Leads to the level of funds neededLevel of working capital required

Calls for decisions on the level of activityThis helps in the manpower

planning Sets the level of activities required

Decision on the level of operational expenses

Sales Forecasting Methods Methods Advantages Disadvantages Best Used

Executive Opinion

Quick, easy, and simple Subjective

Lacks analytical rigor

For new products

Sales force composite

Relatively simply

Usually fairly accurate

Involves those people who are responsible for the results

Salespeople are sometimes overly optimistic

Salespeople may sandbag (estimate low) to look better

Time consuming

When reps are of a high caliber

When each rep has a small number of customers

Survey of buyers intentions

Done by those who will buy the product, so accuracy should be good.

Time consuming

High cost

Customer may not cooperate

For new products

When there are a small number of customers

Trend projections:-moving average

-exponential smoothing

-regression analysis

Objective and inexpensive

Use historical data

No consideration for major product or market changes

Require some statistical analysis

For established products

When market factors are predictable

For aggregate company forecasts

Analysis of market factors

Objective

Fairly accurate and simple

Unforeseen changes in the market can lead to inaccuracy

When market factors are stable and predictable

Test markets

Very accurate Time consuming

Cost

For new products which do not require large investments

Market Factor Forecast: Dryever Diapers

Next Year Second Year

Projected population, ages 0-18 months 4,850,000 4,800,000 Percentage using diapers 100 100Number using diapers 4,850,000

4,800,000 Average daily diapers per child 2.55 2.55Diapers daily, ages 0-18 months 12,367,500 12,240,000

Projected population, ages 19-30 months 3,300,000 3,200,000Percentage using diapers 80 80Number using diapers 2,640,000

2,560,000Average daily diapers per child 2.19 2.19Diapers daily, ages 19-30 months 5,781,600

5,606,400

Projected population, ages 31-42 months 3,500,000 3,300,000Percentage using diapers 40 40Number using diapers 1,400,000

1,320,000Average daily diapers per child 1.10 1.10Diapers daily, ages 31-42 months 1,540,000

1,452,000

Total daily diapers, all ages 19,689,100 19,298,400Percentage disposable diapers 95 95Number disposables daily 18,704,645 18,298,400Dryever market share percentage 20

20Expected daily sales (units) 3,740,929 3,666,696Wholesale price per diaper 0.07 0.07Annual sales forecast in dollars 95,580,736 93,684,083

Guiding Principles for Forecasting

Fit the method to the product/marketUse more than one methodMinimize the number of market factorsRecognize the situation limitsUse the minimum/maximum techniqueUnderstand math and statistics

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

Sales budget

Administrative expense budgets

Production department budgets

Sales department expense budgets

(advertising, selling costs, administration)

Revenues

Expenses

Revenues

Expenses

Cash budget

Profit-and-loss budget

Sales Territory

Comprises 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

TM 13-2

Benefits of Good Territory DesignEnhances customer coverage

Reduces travel time and selling costs

Provides more equitable rewards

Aids evaluation of sales force

Increases sales for the sales

organization

Increases morale

TM 13-3

Procedure for Designing Sales TerritoriesProcedure 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 TM 13-6 (Fig. 13-3)

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

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

Nature of Job:Lots of presale and post-sale activity Decreases

Nature of product:A frequently purchased product DecreasesA limited repeat-sale Increases

Market development stage:New market--fewer accounts IncreasesEstablished market--more accounts Decreases

Market coverageSelective coverage IncreasesExtensive coverage Decreases

Competition:Intensive Decreases – unless

market is oversaturated

Limited Increases

Workload Factor Territory Size

Increase/Decrease

TM 13-8

Breakdown Method of Territorial DesignBreakdown Method of Territorial DesignTM 13-9

(Fig. 13-5)

Management must determine

Company sales potential

Sales potential in each control unit

Sales volume expected from each sales person

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 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 efficient territory coverage.

Some reps resent it.Best for routine sales

jobs with regular call frequencies.

x

Area C

Area B

Area A

Area B: Typically the “problem” area.

TM 13-13

Routing the Sales Force

Routing 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 efficient territory coverage.

Some reps resent it.Best for routine sales

jobs with regular call frequencies.

x

Area C

Area B

Area A

Area B: Typically the “problem” area.

TM 13-13

Sales Manpower

Recruitment

Training

Assimilation

Recruiting and Selection Problems

Lack of resourcesLack of job specification and qualifications

Qualifications not objectively establishedLack of managerial trainingPersonal prejudicesSearch for managerial talent

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

Recruit Applicants

Select ApplicantsDesign a

System For Measuring Applicants

Hire The People

Assimilate New People Into Sales Force

Determine Hiring Qualifications

Measure Applicants Against Hiring Qualifications

Make Selection Decisions

Workload AnalysisNumber of reps needed = Total workload in market

Workload one rep can handle Market workload:

Customer Number of Calls Total class accounts per year calls

x =

A 400 20 8,000

B 600 10 6,000

14,000

One rep’s workload:

Calls/day x Selling days/week x Working weeks/year = Annual workload 5 x 5 x 50 = 1250

Number of reps needed = = 112 reps

14,000

1250

Fig. 5-4

Ten traits and abilities of top salespeople

Trait Related Ability

Ego strength To handle rejection

Sense of urgency To complete the sale

Ego drive To persuade people

Assertiveness To be firm in negotiations

Willingness to take risks To be innovative

Sociability To build relationships

Abstract reasoning To sell ideas

Sense of skepticism To question, to be alert

Creativity To sell complex products and ideas

Empathy 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

Training assessmentTraining assessment

Program designProgram design

ReinforcementReinforcement

EvaluationEvaluation

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?

Objectives of Sales Training Programs

Increased Sales

Productivity

Improved Self-

Management

Lower turnover

Improve customer relations

Improve morale

Improved communica-

tion

Sales training program

objectives

Examples of Specific Training Objectives

Company orientation and administrative skills:

Understand company goals and objectivesUnderstand company selling philosophyUnderstand organizational structureUnderstand company policies and proceduresImprove call reportsImprove call patternsImprove time management

Knowledge: Existing products - features, benefits, and applicationsNew products - features, benefits, and applicationsIndustry trendsCompetitive products - features, benefits, and applicationsSpecific customer applications and problemsPromotional programs

Selling skills: Improve pre-call planningImprove prospecting methodsImprove strategy selectionImprove presentation skillsImprove closing techniquesImprove understanding of and handling objectivesImprove customer sensitivity

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 EffectivenessManagers 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

Managerial skills

Leadership

effectiveness

Leadership style (the leader behaviors)

S I T U A T I O N

Leadership Characteristics and SkillsPersonal Characteristics

Self-Confidence Initiative Energy Creativity Maturity

Managerial Skills Problem-solving skills Interpersonal skills Communication skills Persuasive skills

Two Leadership StylesTransactional 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 LeadershipPersonal contact

Sales reportsTelecommunications

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

Printed aidsMeetings Indirect supervisory aids

Compensation plans Territories Quotas Expense accounts Sales analysis procedures

Coaching Sales Reps

Three elements of leadership most often used to describe coachingVerbal feedback

Praising salespeople when they do well.Leading by example

Coaches are role models; salespeople will emulate them.

Mutual trust and respect Created through two-way communication

Outcomes of Effective LeadershipOutcomes of Effective LeadershipTM 13-3

•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.

Problems Encountered in Leadership

Poor performanceSubstance abuseCheating on expense accountsEngaging in unethical behavior

Procedure for Evaluating Salespeople(Fig. 16-1)

1. Establish basic policies

2. Select evaluation bases

3. Set performance standards

4. Compare performances standards

5. Discuss results with salespeople

Output Factors Used as Evaluation Bases

Sales volume In dollars and in units By products and customers (or customer groups) By mail, telephone, and personal sales calls

Sales volume as a percentage of: Quota Market potential (i.e., market share)

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

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

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

Quantitative Input Factors Used as Evaluation Bases

Calls per day (call rate)Days workedSelling time versus nonselling timeDirect selling expense

In total As percentage of sales volume As percentage of quota

Nonselling activities Advertising displays set up E-mails/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

Qualitative Input Factors Used as Evaluation Bases

Personal efforts of the sales reps Management of their time Planning and preparation for calls Quality of sales presentations Ability to handle objections and to close sales

Knowledge Product Company and company policies Competitor’s products and strategies Customers

Customer relationsPersonal appearance and healthPersonality and attitudinal factors

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

Ratio Measures

Sales =

Days worked X

Days worked X Call rate X Batting average X Average order

CallsDays worked

OrdersCalls

SalesOrdersX X