Sales Training, Compensation

American companies spend more than $50 billion American companies spend more than $50 billion ––milyar--milyar--

annually on training. annually on training.

Sales Training: Objectives, Techniques, and Evaluation

TTop 10 training organizations as determined by op 10 training organizations as determined by ““Training magazineTraining magazine””..


National sales manager wantsNational sales manager wants to develop to develop close relationships with customersclose relationships with customers..


Market managers are interested in how much Market managers are interested in how much training sales training sales rep.rep. receive in dealing with the receive in dealing with the

complex customer problemscomplex customer problems


Product managers, hope the salespeople have been well Product managers, hope the salespeople have been well schooled in product knowledge, specifications, and schooled in product knowledge, specifications, and

applications.applications.


When determining sales training needs, three When determining sales training needs, three issues must be considered: issues must be considered:


1. W1. Who should be trained? ho should be trained? 2. 2. What should be the What should be the

training primary emphasis?training primary emphasis?3. 3. How should the training How should the training

process be structured?process be structured?

On-the-job training and On-the-job training and experience? experience?

Formal and more Formal and more consistent centralized consistent centralized

program?program?Web-based? Web-based?

Instructor-based?Instructor-based?

WWho should be trained? ho should be trained?


New One Old OneNew One Old One

Why?Why?

OBJECTIVES OF SALES TRAINING

•Increase productivity •Improve morale•Lower turnover•Improve customer

relations•Improve selling skills

Increase productivity Increase productivity


Improve moraleImprove morale


Lower turnoverLower turnover


Improve customer relationsImprove customer relations


Improve selling skillsImprove selling skills


ObstaclesObstacles (Engel) (Engel) to Introducing to Introducing TrainingTraining

THE DEVELOPMENT OF SALES TRAINING PROGRAMS

• Top management not dedicated to sales training

• Lack of buy-in from frontline sales managers and salespeople

• Salespeople’s lack of understanding of what training is supposed to accomplish

• Salespeople’s lack of understanding regarding application of training to everyday tasks

management expects sales training to management expects sales training to solve all the company’s sales problemssolve all the company’s sales problems when, in fact, the problem with sales might not even be when, in fact, the problem with sales might not even be connected with the sales force (for example, poor product connected with the sales force (for example, poor product quality or an inefficient supply chain that is unable to quality or an inefficient supply chain that is unable to deliver products on time)deliver products on time)


If the sales problems are not resolved, budget-cutting If the sales problems are not resolved, budget-cutting activities often start with the sales training programactivities often start with the sales training program..


1 . S1 . Sales training analysis ales training analysis

Creating Credibility in Sales Training

One way to do this is to travel with sales reps, observe and ask them what they need to know to perform their

jobs more effectively. “Field sales managers”

2 . Determine Objectives2 . Determine Objectives


The objectives may include learning about new products, sales techniques, or company procedures. Keep it sample.

3 . Develop and Implement 3 . Develop and Implement Program Program


At this point, a decision has to be made concerning developing the training program or hiring an outside organization to conduct it

4 . Evaluate and Review 4 . Evaluate and Review Program Program


• What do we want to measure?

• When do we want to measure?

• How do we do it? What measuring tools are available?

This is why field sales managers are an important link:

They can provide follow-up and feedback information on the salesperson’s ability to retain and use sales training takeaways in the field. The

field sales managers can also coach the salesperson if there is a need for follow-up.

TRAINING NEW SALES TRAINING NEW SALES RECRUITS RECRUITS

SALES TRAINING

• Companies with less than $5 million in annual sales are spending more on sales training per new hire - $5,500 worth of training per salesperson.

• Training in smaller companies has increased from 3.3 months to 4.4 months.

• Smaller companies are placing more emphasis on training than several years ago.

• Companies are spending time and money on training experienced salespeople

• Companies with more than $5 million in annual sales, are spending less money on training

TRAINING EXPERIENCED SALES TRAINING EXPERIENCED SALES PERSONNEL PERSONNEL

SALES TRAINING• Experienced sales reps are given, on

average, 32.5 hours of ongoing training per year at a cost of $4,032 per rep

• Continuing increasing amounts of training reflects a commitment to provide ongoing learning opportunities for senior salespeople

• Companies are spending an increasing amount of time on product training and less on training in selling skills

SALES TRAINING TOPICS


• Product or service knowledge• Market/Industry orientation • Company orientation• Selling skills• Time and territory

management• Legal and ethical issues• Technology• Specialized topics

Product or service knowledgeProduct or service knowledge

SALES TRAINING TOPICS• Critical information for

rational decision-making – Company’s product

specifications– Common product

uses/misuses

• Competitive products comparison on – Price– Construction– Performance– Compatibility

• Technical products require more time on product knowledge training

Market/Industry orientationMarket/Industry orientation

SALES TRAINING TOPICS• Industry fit into overall

economy• Knowledge of industry and

economy• Economic fluctuations that

affect buying behavior and require adaptive selling techniques

• Customers' buying policies, patterns and preferences in light of competition

• Customers' customers needs

• Wholesaler and retailer needs

Company orientationCompany orientation

SALES TRAINING TOPICS• Company polices that

affect their selling activities– Personnel– Structure– Benefits

• Handling customer requests for price adjustments, product modifications, faster delivery, different credit terms

• Sales manuals– Hard copy, online– Product information– Company policy

information

Time and territory managementTime and territory management


• Sales trainees need to learn to manage time and territories

• Time spent training out of the field is costly

• 80/20 rule applies:– 20% of the customers account for – 80% of the business and– Require the same proportion of

time and attention

Legal and ethical issuesLegal and ethical issues

SALES TRAINING TOPICS• Federal law dictates corporate

action or avoidance of action in areas of marketing, sales and pricing

• Sales personnel need to understand the federal, state and local laws that constrain their selling activities

• Statements made by salespeople carry both legal and ethical implications

TechnologyTechnology

SALES TRAINING TOPICS• Notebook computers

– Presentations– Connecting to company intranet or extranet – Delivering documentation quickly and accurately

• Home offices eliminate the need to go to another office

• Salesperson can be almost totally self-sufficient with – High-speed network connection– Computer – Printer – Cell phone

• Effective computer use affords sales personnel more face-to-face customer contact time

• Effective use requires training

Specialized topicsSpecialized topics


• Specialized, job-tailored training most effective

• Sample topics;– Price negotiations– Trade show effectiveness– Reading body language

Specialized topicsSpecialized topics


• Price and objections video:

Common Instraction MethodsCommon Instraction Methods


Creative Sales TrainingCreative Sales Training

• Effective training can take place beyond the classroom or computer

• Requirements– Focus on knowledge, selling skills for success

• Examples– Boot camps– Cooking classes

Keys for Effective OJTKeys for Effective OJT

• Teaming - bring together people with different skills

• Meetings - set aside times when employees can get together

• Customer interaction - include customer feedback as part of learning process

• Mentoring - provide informal mechanism for new salespeople to learn from more experienced ones

• Peer-to-peer communication - create opportunities for mutual learning among salespeople

On-the-Job Training

“learning by doing”

Classroom TrainingClassroom Training• Advantages

– Standard briefings in• Product knowledge• Company polices• Customer and market characteristics• Selling skills

– Formal training sessions save executive time

• Disadvantages– Expensive– Time-consuming– Too much material = less retention

• Role playing a popular technique

Electronic Training MethodsElectronic Training Methods

• Online training > $18billion industry (2009)

• IBM plans 35% sales training to be over Internet

• CD-ROM currently #1 delivery method

• 30% of server-based training over intranets

• Effectiveness not well-documented

• Not likely to eliminate one-on-one training

Measuring the Costs and BenefitsMeasuring the Costs and Benefits

• Sales training consumes large time, budget and support resources

• Relationship between sales training and revenue is difficult to measure

• Relationship between sales training and other broad objectives difficult to measure

Training Road BlocksTraining Road Blocks• Busy, tired salespeople are

not open to learning new skills

• Conflicting methods and philosophies are taught at each session

• The training isn’t relevant to the company’s pressing needs

• The training format doesn’t fit the need

• E-learning is overused, or used in wrong situations

• There’s no follow-up after training

Sales Training CostsSales Training Costs

• Training funds are often allocated with little regard for results

• Results and benefits are difficult to measure

• Difficult to isolate training impact from– Economic conditions– Environmental changes– Seasonal trends– Competitive activity– Etc.

Measuring Broad BenefitsMeasuring Broad Benefits

• Improved morale

• Lower turnover

• Higher customer satisfaction

• Measuring changes in skills, reactions and learning assists both new and experienced sales personnel

• Salary – a fixed sum of money paid at regular intervals

• Incentive Payments (TEŞVİKLER)– Commission – a payment based on short-term results, usually a dollar or unit

sales volume– Bonus – a payment made at management’s discretion for achieving or

surpassing some set level of performance

• Quota - often the minimum requirement for a salesperson to earn a bonus

• Sales contests – encourage extra effort aimed at specific short-term objectives

• Benefits - medical and disability insurance, life insurance, retirement plan

• Non-financial incentives - opportunities for promotion or various types of recognition for performance

Salesperson Compensation and IncentivesSalesperson Compensation and Incentives

Components and objectives of Components and objectives of Financial compensation PlansFinancial compensation Plans

Compensation Methods for Compensation Methods for SalespeopleSalespeople

No incentive

Requires close supervision

Selling expenses remain same during sales declines

Maximum security

Control over reps

Easy to administer

Predictable expenses

New sales reps

New sales territories

Many required nonselling activities

Straight Salary

DisadvantagesAdvantagesEspecially Useful For

Compensation Method

No incentive

Requires close supervision

Selling expenses remain same during sales declines

Maximum security

Control over reps

Easy to administer

Predictable expenses

New sales reps

New sales territories

Many required nonselling activities

Straight Salary


Compensation Method

Little security

Little control over reps

Reps may provide inadequate service to smaller accounts

Selling costs less predictable

Maximum incentive

Managers can encourage sales of certain items

Selling expenses relate directly to selling resources

Highly aggressive selling

Minimal required nonselling tasks

When company can’t closely control sales force

Straight Commission


Compensation Method

Little security

Little control over reps

Reps may provide inadequate service to smaller accounts

Selling costs less predictable

Maximum incentive

Managers can encourage sales of certain items

Selling expenses relate directly to selling resources

Highly aggressive selling

Minimal required nonselling tasks

When company can’t closely control sales force

Straight Commission


Compensation Method


Selling expenses are less predictable

May be difficult to administer

Some security

Some incentive

Selling expenses vary with revenue

Manager has some control over nonselling activities

Similar sales potential across territories

When company wants to offer incentive but maintain some control

Combination


Compensation Method

Selling expenses are less predictable

May be difficult to administer

Some security

Some incentive

Selling expenses vary with revenue

Manager has some control over nonselling activities

Similar sales potential across territories

When company wants to offer incentive but maintain some control

Combination


Compensation Method


Combination PlansCombination Plans

• Offer a base salary plus some proportion of incentive pay

• Most popular form of compensation

• Well-suited for relationship selling by compensating for nonselling activities while providing incentives to motivate sales

Combination PlansCombination Plans

When the salesperson’s selling skill is the key to sales success, the incentive portion of compensation generally should be relatively large.

However, when the product has been presold through advertising and the salesperson is largely an order taker, or when the salesperson’s job involves a large proportion of missionary or customer service work, the incentive component should be relatively small.

Design Questions for Combination Design Questions for Combination PlansPlans

• Appropriate size of incentive relative to base salary?

• Should ceiling be imposed on incentive earnings?

• When should the sale be credited?

• Should team incentives be used? How?

• How often should incentive payments be made?

Sales ContestsSales Contests

• Short-term incentive programs to accomplish specific objectives

• Winners receive prizes, recognition, sense of accomplishment

• Successful contests require:– Clearly defined, specific objectives– An exciting theme– Reasonable probability of rewards for all– Attractive rewards– Promotion and follow-through

Structuring Effective Sales Structuring Effective Sales ContestsContests

• Prize structure :Contest rewards can take the form of cash, merchandise, or travel.– Prize value

• Unique• Rank-ordered

– Number of prize winners• > 1• Not so large incentive is

lessened

– Contest structure will be unique for each situation

Criticisms of Sales ContestsCriticisms of Sales Contests

• Salespeople may borrow sales from another period to increase sales during contest period

• Poorly administered contests can hurt morale

Nonfinancial RewardsNonfinancial Rewards

• Recognition makes peers and superiors aware of outstanding performance

• Effective recognition programs: – Offer everyone a

reasonable chance of winning

– Recognize best performers across several dimensions

Expense AccountsExpense Accounts

• Types

– Direct reimbursement GERİÖDEME – of all “allowable and reasonable” expenses

– Limited reimbursement – sets expense limits by-item

(such as a policy that limits reimbursement for restaurant meals to $40 per person)

– No reimbursement – salespeople covers all expenses; usually combined with higher total compensation

—travel, lodging, meals, and entertaining customers

Rewarding A While Hoping for B?Rewarding A While Hoping for B?

• Straight commission may work for transactional selling, but…

• Relationship selling is more complex; requires– Operating within a team– Securing, building, long-term relationship with

profitable customers

• Organizations must reward these additional behaviors

Education

Sales Training, Compensation