Basics of selling skills

Selling

Slide 20-23

Stages in the personal selling process

Slide 20-25

THE PERSONAL SELLING PROCESS: BUILDING RELATIONSHIPS

• Preapproach

• Approach

Slide 20-27


• Presentation

Stimulus-Response Format

Formula Selling Format

• Stimulus-Response Presentation

• Suggestive Selling

• Formula Selling Presentation

• Canned Selling Presentation

Slide 20-28


• Presentation

Need-Satisfaction Format

• Need-Satisfaction Presentation

• Adaptive Selling

• Consultative Selling

Slide 20-30


• Presentation

Handling Objections

• Acknowledge and Convert the Objection

• Postpone

• Agree and Neutralize

• Accept the Objection

• Denial

• Ignore the Objection

Slide 20-31

Techniques for handling objections

Slide 20-32


• Close

Trial Close

Assumptive Close

Urgency Close

• Follow-Up

Final Close

Slide 20-37

THE SALES MANAGEMENT PROCESS

Sales Plan

Setting Objectives

• Sales Plan Formulation: Setting Direction

The Consultative Selling—Customer Relationship Model

7-1

Customerstrategic

needs

Customerstrategic

needs

Salesperson’screativesolutions

Salesperson’screativesolutions

Mutualbeneficial

agreements

Mutualbeneficial

agreements

Long-termrelationships

Long-termrelationships

PerformanceGoals

•Costs

•Productivity

•Sales

•Profits

PerformanceGoals

•Costs

•Productivity

•Sales

•Profits

Steps in the Preapproach: Planning the Sale

7-2

Determine sales call objective

Determine sales call objective

Developcustomer profile

Developcustomer profile

Developcustomer benefits

Developcustomer benefits

Developsalespresentation

Developsalespresentation

Information Used in Profile and Planning

Customer Profile and Planning Sheet1. Name:

Address:2. Type of business:

Name of buyer:3. People who influence buying decision or aid in using or selling our product:

4. Buying hours and best time to see buyer:5. Receptionist’s name:6. Buyer’s profile:7. Buyer’s personality style:8. Sales call objectives:9. What are customer’s important buying needs:

7-3A

Information Used in Profile and Planning

10. Sales presentation:a. Sales approach:b. Features, advantages, benefits:c. Method of demonstrating FAB:d. How to relate benefits to customer’s needs:e. Trial close to use:f. Anticipated objections:g. Trial close to use:h. How to close this customer:i. Hard or soft close:

11. Sales made—product use/promotional plan agreed on:

12. Post sales call comments (reason did/did not buy; what to do on next call; follow-up promised):

7-3B

Major Phases in a Presentation:A Sequence of Events to Complete in

Developing a Sales Presentation

7-6A

Rapport-buildingUncover needsAttention, interest, transition

FeaturesAdvantagesBenefits

How to resell (for reseller)How to use (for consumers andindustrial user)

1. Approach1. Approach

2. Fully discussyour product

2. Fully discussyour product

3. Present yourmarketing plan

3. Present yourmarketing plan

Major Phases in a Presentation:A Sequence of Events to Complete in

Developing a Sales Presentation

7-6B

What’s in it for your customers?

Recommend what to buy in orderto fill their needs uncovered inthe presentation

Ask for the business!

Do not give up!Act as a professionalLeave the door open

4. Explain yourbusiness proposition

5. Suggested purchase order

6. Close

7. Exit

The Prospect’s Five Mental Steps in Buying

7-7

AttentionAttention InterestInterest DesireDesire ConvictionConviction PurchasePurchase

The Selling Process and Examples of Prospect’s Thoughts and Questions

7-8A

Steps in the Selling Process

1. ProspectingSalesperson locates

and qualifies prospects

2. PreapproachSalesperson determines sales call

objective, develops cus-tomer profile, customer benefit program, and selling strategies. Customer’s needs are determined.

Prospect’s Mental Steps

Prospect’s Potential Verbal and Mental

Questions


7-8B


3. ApproachSalesperson obtains interview, meets prospect, and begins individualized sales presentation. Needs are further uncovered.


Attention due to arousal of potential need or problem.

Interest due to recognized need or problem and the desire to fulfill the need or solve the problem.


Questions

Should I see salesperson?Should I continue to listen,

interact, devote much time to a salesperson?What’s in it for me?


7-8C


4. PresentationSalesperson relates product benefits to needs, using demonstration,

dramatizations, visuals, and

proof statements.


Interest in information that provides knowledge and influences perceptions and attitude.

Desire begins to develop based on information eval-uation of product features, advantages, and benefits. This is due to forming posi-tive attitudes that product may fulfill need or solve problem. Positive attitudes brought about by

knowledge obtained from presentation.


Questions

Is the salesperson prepared? Are my needs understood? Is the seller interested in my

needs?Should I continue to listen

and interact?So what? (to statements

about features)Prove it! (to statements about advantages)Are the benefits of this

product the best to fulfill my needs?


7-8D


5. Trial closeSalesperson asks prospect’s opinion

on benefits during and after presentation.

6. ObjectionsSalesperson

uncovers objections.


Desire continues based on information evaluation.

Desire continues based on information evaluation.


Questions

Do I understand the salesperson’s marketing

plan and business proposition?

I need more information to make a decision.

Can you meet my conditions?


7-8E


7. Meet ObjectionsSalesperson satisfactorily answers objections.


Desire begins to be transformed into belief.

Conviction established due to belief the product and salesperson can solve needs or problems better than competitive products.

Appears ready to buy.


Questions

Let me see the reaction when I give the salesperson a

hard time.I have a minor/major

objection to what you are saying.Is something nonverbal being communicated?Did I get a reasonable answer to my objection?


7-8F


8. Trial CloseSalesperson uses another trial close to see if objections have been overcome; or if presentation went smoothly before the close, to determine if the prospect is ready to buy.


Conviction becomes stronger.


Questions

Can I believe and trust this person?

Should I reveal my realconcerns?


7-8G


9. CloseSalesperson has

determined prospect is ready to buy and now

asks for the order.


Action (purchase) occurs based on positive beliefs that the product will fulfill needs or solve problems.


Questions

I am asked to make a buying decision now.

If I buy and I am dissatisfied, what can I do?Will I receive after-the-sale

service as promised?What are my expectations

toward this purchase?Why don’t you ask me to

buy?Ask one more time and I’ll

buy.


7-8H


10. Follow-UpSalesperson provides customer service after the sale.


Satisfaction—Dissatisfaction


Questions

Did the product meet my expectations?

Am I experiencing dissonance?

How is the service associated with this product?Should I buy again from this

salesperson?

Sales planning & Forecasting

Estimating the top line

Sales ForecastingSales Forecasting

IntroductionIntroduction

• Sales forecasting is a difficult area of Sales forecasting is a difficult area of management. Most managers believe they management. Most managers believe they are good at forecasting. However, are good at forecasting. However, forecasts made usually turn out to be forecasts made usually turn out to be wrong! Marketers argue about whether wrong! Marketers argue about whether sales forecasting is a science or an art. sales forecasting is a science or an art. The short answer is that it is a bit of both.The short answer is that it is a bit of both.

• Why estimate market potential? – Entry/exit decisions– Resource allocations– Location decisions– Set sales objectives & evaluate performance– Set forecast (% of potential)

Estimating potential for new product

• Relative advantage over current product

• Compatibility with current system / norms

• Risk (monetary, social and psychological)

• Rate of adoption of comparable products

Estimating potential for mature product

• Past experience

• Recent trends– Competition– Customers– Environment

Information sources

• Secondary data

• Past sales data

• Primary data

Forecasting: specific product & target

• Why forecast sales?– Compare proposed changes to current results– Help set budgets– Provide basis for monitoring results– Aid in production planning

Considerations in forecasting

• Customer behavior (past & future)

• Competitors’ behavior (past & future)

• Environmental trends

• Product strategies

Range of forecasted results

• Each combination provides one scenario

• Each scenario has range of possible results– Limit to three – expected, better and worse than expected

Types of forecastingTypes of forecasting

• There are two major types of forecasting, which can be There are two major types of forecasting, which can be broadly described asbroadly described as macro macro and and micromicro::

• Macro forecastingMacro forecasting is concerned with forecasting is concerned with forecasting markets in total. This is about determining the existing markets in total. This is about determining the existing level of Market Demand and considering what will level of Market Demand and considering what will happen to market demand in the future.happen to market demand in the future.

• Micro forecastingMicro forecasting is concerned with detailed unit sales is concerned with detailed unit sales forecasts. This is about determining a product’s market forecasts. This is about determining a product’s market share in a particular industry and considering what will share in a particular industry and considering what will happen to that market share in the future.happen to that market share in the future.

The selection of which type of forecasting to use The selection of which type of forecasting to use depends on several factors as under:depends on several factors as under:

• (1) (1) The degree of accuracy requiredThe degree of accuracy required – if the – if the decisions that are to be made on the basis of the decisions that are to be made on the basis of the sales forecast have high risks attached to them, sales forecast have high risks attached to them, then it stands to reason that the forecast should then it stands to reason that the forecast should be prepared as accurately as possible. be prepared as accurately as possible. However, this involves more costHowever, this involves more cost

• (2) (2) The availability of data and informationThe availability of data and information - - in some markets there is a wealth of available in some markets there is a wealth of available sales information (e.g. clothing retail, food sales information (e.g. clothing retail, food retailing, holidays); in others it is hard to find retailing, holidays); in others it is hard to find reliable, up-to-date informationreliable, up-to-date information

The selection of which type of forecasting to use The selection of which type of forecasting to use depends on several factors as under:depends on several factors as under:

• (3) (3) The time horizon that the sales forecast is The time horizon that the sales forecast is intended to coverintended to cover. For example, are we . For example, are we forecasting next weeks’ sales, or are we trying to forecasting next weeks’ sales, or are we trying to forecast what will happen to the overall size of forecast what will happen to the overall size of the market in the next five years?the market in the next five years?

• (4)(4) The position of the products in its life The position of the products in its life cycle.cycle. For example, for products at the For example, for products at the “introductory” stage of the product life cycle, less “introductory” stage of the product life cycle, less sales data and information may be available sales data and information may be available than for products at the “maturity” stage when than for products at the “maturity” stage when time series can be a useful forecasting method.time series can be a useful forecasting method.

Methods of forecasting

• Judgment based

• Sales extrapolation

• Customer based

• Model based

Judgment-based forecasting: qualitative

• Jury of expert opinion (most common)– Delphi method

• Naïve extrapolation / opinion (2nd most common)

• Sales force composite (3rd most common)

Sales extrapolation: quantitative

• Assumes future will follow on past– Appropriate for mature, static industry

• Moving average (most common quantitative method)– Average of three period sales over time– Average of change in three period sales over time

• Exponential smoothing – Alternative method to smooth data

• Regression analysis (next most common in U.S.)– Forecast sales = a intercept + b slope (time)

Customer-based forecasting methods

• Does not assume future will follow on past– Appropriate for dynamic markets / new

products

• Market testing

• Market surveys

• Can be fed into forecasting model

Model-based forecasting methods

• Regression with other factors– Sales = a intercept + b (advertising) + c

(price)– Develop model on half of past data– Test model on other half of data

Forecasting products with new features

• Show basic product– Ask what they would pay– This price may be arbitrary

• Add feature: e.g., a videogame expansion card– Ask what they would pay– Follow-up prices are coherent

• Add another feature: e.g., a “Friendstar” device– Ask what they would pay

• Add another feature: e.g., a hard drive– Ask what they would pay

• Add another feature: e.g., a Microsoft office– Ask what they would pay

Creating the Sales Forecast for a Creating the Sales Forecast for a ProductProduct

The The First stageFirst stage in creating the sales forecast is to in creating the sales forecast is to estimate estimate Market Demand.Market Demand.

Definition:Definition:Market Demand for a product is the total Market Demand for a product is the total volume that would be bought by a defined volume that would be bought by a defined customer group, in a defined geographical customer group, in a defined geographical area, in a defined time period, in a given area, in a defined time period, in a given marketing environment. This is sometimes marketing environment. This is sometimes referred to as the Market Demand Curve.referred to as the Market Demand Curve.

Stage two in the forecast is to Stage two in the forecast is to estimate estimate Company DemandCompany Demand

• Company demand is the company’s share of market Company demand is the company’s share of market demand.demand.

• This can be expressed as a formula:This can be expressed as a formula:• Company Demand = Market Demand v/s Company’s Company Demand = Market Demand v/s Company’s

Market ShareMarket Share• A company’s share of market demand depends on how A company’s share of market demand depends on how

its products, services, prices, brands and so on are its products, services, prices, brands and so on are perceived relative to the competitors. All other things perceived relative to the competitors. All other things being equal, the company’s market share will depend on being equal, the company’s market share will depend on the size and effectiveness of its marketing spending the size and effectiveness of its marketing spending relative to competitors.relative to competitors.

Step Three is then to develop theStep Three is then to develop the

Sales ForecastSales Forecast • The Sales Forecast is the expected level of company sales based on The Sales Forecast is the expected level of company sales based on

a chosen marketing plan and an assumed marketing environment.a chosen marketing plan and an assumed marketing environment.

• Note that the Sales Forecast is not necessarily the same as a “sales Note that the Sales Forecast is not necessarily the same as a “sales target” or a “sales budget”.target” or a “sales budget”.

• A sales target A sales target (or goal) is set for the sales force as a way of defining (or goal) is set for the sales force as a way of defining and encouraging sales effort. Sales targets are often set some way and encouraging sales effort. Sales targets are often set some way higher than estimated sales to “stretch” the efforts of the sales force.higher than estimated sales to “stretch” the efforts of the sales force.

• A sales budgetA sales budget is a more conservative estimate of the expected is a more conservative estimate of the expected volume of sales. It is primarily used for making current purchasing, volume of sales. It is primarily used for making current purchasing, production and cash-flow decisions. Sales budgets need to take into production and cash-flow decisions. Sales budgets need to take into account the risks involved in sales forecasting. They are, therefore, account the risks involved in sales forecasting. They are, therefore, generally set lower than the sales forecast.generally set lower than the sales forecast.

Obtaining information on Obtaining information on existing market demandexisting market demand

• As a starting point for estimating market demand, As a starting point for estimating market demand, a company needs to know the actual industry a company needs to know the actual industry sales taking place in the market. This involves sales taking place in the market. This involves identifying its competitors and estimating their identifying its competitors and estimating their salessales..

• An industry trade association will often collect and An industry trade association will often collect and publish (sometime only to members) total industry publish (sometime only to members) total industry sales, although rarely listing individual company sales, although rarely listing individual company sales separately. By using this information, each sales separately. By using this information, each company can evaluate its performance against the company can evaluate its performance against the whole market.whole market.

Obtaining information on Obtaining information on existing market demandexisting market demand

• This is an important piece of analysis. Say, for example, This is an important piece of analysis. Say, for example, that Company A has sales that are rising at 10% per year. that Company A has sales that are rising at 10% per year. However, it finds out that overall industry sales are rising However, it finds out that overall industry sales are rising by 15% per year. This must mean that Company A is losing by 15% per year. This must mean that Company A is losing market share – its relative standing in the industry.market share – its relative standing in the industry.

• Another way to estimate sales is to buy reports from a Another way to estimate sales is to buy reports from a marketing research firm such as AC Neilsen, Mintel etc. marketing research firm such as AC Neilsen, Mintel etc. These are usually good sources of information for These are usually good sources of information for consumer markets – where retail sales can be tracked in consumer markets – where retail sales can be tracked in great detail at the point of sale. Such sources are less great detail at the point of sale. Such sources are less useful in industrial markets which usually rely on useful in industrial markets which usually rely on distributors.distributors.

Estimating Future DemandEstimating Future Demand • So far we have identified how a company can determine the current So far we have identified how a company can determine the current

position:position:• Current Company Demand = Current Market Demand x Current Current Company Demand = Current Market Demand x Current

Market ShareMarket Share• How can future market demand and company demand be forecast?How can future market demand and company demand be forecast?

• Very few products or services land themselves to easy forecasting . Very few products or services land themselves to easy forecasting . These tend to involve a product whose absolute level or trend of These tend to involve a product whose absolute level or trend of sales is fairly constant and where competition is either non-existent sales is fairly constant and where competition is either non-existent (e.g. monopolies such as public utilities) or stable . In most markets, (e.g. monopolies such as public utilities) or stable . In most markets, total demand and company demand are not stable – which makes total demand and company demand are not stable – which makes good sales forecasting a critical success factor.good sales forecasting a critical success factor.

A common method of preparing a A common method of preparing a sales forecast has three stages sales forecast has three stages

(1)(1) Prepare a macroeconomic forecast Prepare a macroeconomic forecast – what will – what will happen to overall economic activity in happen to overall economic activity in the the relevant economies in which a product is to be relevant economies in which a product is to be sold.sold.

(2)(2) Prepare an industry sales forecast Prepare an industry sales forecast – what will – what will happen to overall sales in an industry based on happen to overall sales in an industry based on the issues that influence the macroeconomic the issues that influence the macroeconomic forecast.forecast.

(3)(3) Prepare a company sales forecastPrepare a company sales forecast – based on – based on what management expect to happen to the what management expect to happen to the company’s market share.company’s market share.

Sales forecasts can be based on Sales forecasts can be based on three types of information: three types of information:

(1)(1) What customers sayWhat customers say about their intentions to continue about their intentions to continue buying products in the industrybuying products in the industry

(2)(2) What customers are actually doingWhat customers are actually doing in the market. in the market.(3)(3) What customers have doneWhat customers have done in the past in the market. in the past in the market.

There are many market research businesses that undertake surveys of customer intentions – and sell this information to businesses that need the data for sales forecasting purposes. The value of a customer intention survey increases when there are a relatively small number of customers, the cost of reaching them is small, and they have clear intentions. An alternative way of measuring customer intentions is to sample the opinions of the sales force or to consult industry experts

Time Series AnalysisTime Series Analysis

• Many businesses prepare their sales forecast on the basis Many businesses prepare their sales forecast on the basis of past sales.of past sales.

• Time series analysis involves breaking past sales down Time series analysis involves breaking past sales down into four components:into four components:

• (1) (1) The trendThe trend: are sales growing, “flat-lining” or in decline?: are sales growing, “flat-lining” or in decline?

• (2) (2) Seasonal or cyclical factorsSeasonal or cyclical factors. Sales are affected by . Sales are affected by swings in general economic activity (e.g. increases in the swings in general economic activity (e.g. increases in the disposable income of consumers may lead to increase in disposable income of consumers may lead to increase in sales for products in a particular industry). Seasonal and sales for products in a particular industry). Seasonal and cyclical factors occur in a regular pattern;cyclical factors occur in a regular pattern;

Time Series AnalysisTime Series Analysis

• (3) (3) Erratic eventsErratic events; these include strikes, fashion fads, war ; these include strikes, fashion fads, war scares and other disturbances to the market which need to scares and other disturbances to the market which need to be isolated from past sales data in order to be able to be isolated from past sales data in order to be able to identify the more normal pattern of salesidentify the more normal pattern of sales

• (4) (4) ResponsesResponses: the results of particular measures that have : the results of particular measures that have been taken to increase sales (e.g. a major new advertising been taken to increase sales (e.g. a major new advertising campaign).campaign).

Using time series analysis to prepare Using time series analysis to prepare an effective sales forecast requires an effective sales forecast requires

Mgt. to:Mgt. to: Smooth out the erratic factors (e.g. by Smooth out the erratic factors (e.g. by using a moving average)using a moving average)

Adjust for seasonal variationAdjust for seasonal variation

Identify and estimate the effect of specific Identify and estimate the effect of specific marketing responsesmarketing responses

SALES FORECAST VERSUS PLAN

• THE SALES FORECAST IS A PROJECTION INTO THE FUTURE OF EXPECTED SALES, GIVEN A STATED SET OF ENVIRONMENTAL CONDITIONS.

• THE SALES PLAN IS A SET OF SPECIFIED MANAGERIAL ACTIONS TO BE UNDERTAKEN TO MEET OR EXCEED

THE SALES FORECAST.

SALES FORECASTING TERMS

• THE SALES FORECASTING LEVEL IS THE FOCAL POINT IN THE CORPORATE HIERARCHY WHERE THE FORECAST IN NEEDED

• THE SALES FORECASTING TIME HORIZON IS THE TIME FRAME FOR THE PLAN

• THE SALES FORECASTING TIME INTERVAL COINCIDES WITH HOW OFTEN THE PLAN IN UPDATED

• THE SALES FORECASTING FORM IS THE MEASURE IN WHICH THE FORECAST NEEDS TO BE EXPRESSED (DOLLARS, UNITS, CUBE ETC.

Conclusions

• Forecasting is necessary, but difficult

• All methods have plusses and minuses– All are based on prior experience– Will generally miss the turning points

• Best to come up with different scenarios– Have expected, best and worst forecasts for

each

• Be prepared!

Sales territory management

Territory Management

GeneratingNew Accounts

ManagingExistingAccounts

PersonalTime

Management

33%

10%

15%

42%

AcquiringNew

Customers

Mergers andAcquisitions

IntroducingNew

Products

IncreasingBusiness with

Existing CustomersWhat’s theBest Way to Grow?

Sales Concentration% Total Sales

0

20

40

60

80

100

Source: SMM, Jan. 02, p. 40

Top Top 10%

Top20%

Top50%

Territory ManagementTerritory ManagementKey to ProductivityKey to Productivity

Developing a list of Prospects1. Direct Inquiry

• Advertising• Direct Mail• Trade publications• Trade shows

2. Directories/Internet -- Thomas Register

3. Referrals

4. Cold canvassing

Personal SellingPersonal Selling

Qualifying Prospects

1. Needs for your products/services

2. Authority to make purchase

3. Credit rating & ability to pay

4. Rating scale applied to characteristicsby each salesperson

Personal SellingPersonal Selling

Salesperson Cost per Call

Direct Selling ExpenseCost per Call =

Total Calls per Year

Total Calls per Year = (Net Selling Days) x ( Avg. Calls per day)

Territory Territory ManagementManagementKey to ProductivityKey to Productivity

Breakeven Sales Volume

(Cost per Call) x (Number of Calls to Close)

Sales Expenses as a % of Sales


Customer Break-even Analysis

What are appropriate strategies for each account?

A

B

C

• Greater account penetration• Sell expanded product mix• Consolidate orders

• Service by phone• Concede to competition

• Protect from competition


Account Analysis and Time Allocation

• Single Factor Model: ABC Account Classification• Portfolio Models

• Account Opportunity• Competitive Position

• Decision Models• Sales Funnel - complex selling; not straight rebuy

• Unqualified Opportunity• Qualified Opportunity• Best Few Opportunities

What are weaknesses of each???


Time Allocation: Problem 2

Why not allocate calls strictly based on % of sales?

What additional information should you considerin allocating time?


A Portfolio Model

Core Accounts

Accounts are veryattractive.

Invest heavily in

Selling resources.

Core Accounts

Accounts are veryattractive.

Invest heavily in

Selling resources.

Drag Accounts

Accounts are moderately attractive.

Invest to maintaincurrent position.

Drag Accounts

Accounts are moderately attractive.

Invest to maintaincurrent position.

GrowthAccounts

Accounts are Potentially attractive.

May want to investin heavily

GrowthAccounts

Accounts are Potentially attractive.

May want to investin heavily

Competitive Position

Strong Weak

Acc

oun

t O

pp

ortu

nit

y

High

Low

ProblemAccounts

Accounts are veryunattractive.

Minimal investmentof selling resources.

ProblemAccounts

Accounts are veryunattractive.

Minimal investmentof selling resources.

Competitive PositionCompetitive Position

Segment 1- Core Accounts

Attractiveness: Accounts are very attractive because they offer high opportunity and sales organization has strong competitive position.

Selling Effort Strategy: Accounts should receive a heavy investment of sales resources to take advantage of opportunity and maintain/improve competitive position.

Strong

High

OPPORTUNITY


Segment 2 – Growth Accounts

Attractiveness: Accounts are potentially attractive due to high opportunity, buy sales organization currently has weak competitive position.

Selling Effort Strategy: Additional analysis should be performed to identify account where sales organization’s competitive position can be strengthened. These accounts should receive heavy investment of sales resources, while other accounts receive minimal investment.

Weak

High

OPPORTUNITY


Segment 3 – Drag Accounts

Attractiveness: Accounts are moderately attractive due to sales organization’s strong competitive position. However, future opportunity is limited.

Selling Effort Strategy: Accounts should receive a sales resource investment sufficient to maintain current competitive position.

Strong

Low

OPPORTUNITY


Segment 4 – Problem Accounts

Attractiveness: Accounts are very unattractive: they offer low opportunity and sales organization has weak competitive position.

Selling Effort Strategy: Accounts should receive minimal investments of sales resources. Less costly forms of marketing (for example, telephone sales calls, direct mail) should replace personal selling efforts on a selective basis, or the account coverage should be eliminated entirely.

Weak

Low

OPPORTUNITY

Portfolio Analysis: Problem 3

Where do allocation problems seem to occur?Why might this happen?

• Salesperson allocating on basis of current competitive position, not on basis of account opportunity

• Too much time on low opportunity accounts

• Best Target: high opportunity, weak competitive cell

• High opportunity, strong comp may be vulnerable

to comp.


Portfolio Analysis: Problem 3Possible more productive effort allocation strategy:

Assuming number of Accounts in each cell roughly equal:

High/Strong 36 Calls per year

High/Weak 24 Calls per year

Low/Strong 10 Calls per year

Low/Weak 4 Calls per year

Is the assumption realistic?


Unqualified

Qualified

Best few

50% closure probability



2113 15 2322 18

24 2019 17

16 14

9 12

1011

8

7 5

6

3

1 2

4

The Sales Funnel

Prospecting Model -- Selling Priorities

FIRST Close your “Best Few” sales objectives

SECOND Prospect for “Unqualified” objectives

THIRD Work the “Qualified” objectives

Sales Funnel


13%

29%16%

17%25%

SellingFace-to-Face

Service Calls

AdministrativeTasks

Waiting andTravel

How SalespeopleSpend Their Time

Selling overthe phone

Salespeople’s Time Wasters

1. Telephone interruptions2. Drop-in visitors3. Lack of self-discipline4. Crises5. Meetings6. Lack of objectives, priorities & deadlines7. Indecision and Procrastination8. Attempting too much at once9. Leaving tasks unfinished10. Unclear communication


EmergenciesEmergencies

Personal Growth

Personal Growth

TimeWasters

TimeWasters

RecreationRecreation

Importance High Low

High

Low

Urg

ency

Source: Stephen Covey

Personal Time ManagementPersonal Time Management

Sales Management Guidelines for Involvement in Territory Management

1. Be aware of your management style whichwith you and your salespeople is most comfortable and productive.

2. Consider experience & maturity of your sales force in deciding management style

3. Cold calling & prospecting are special cases --- give extra attention when these are part of sales job.


Paths for Productivity Improvement% Rating

Rank Important*

1 New Technology 69%

2 Incentives for Strategic Accounts 69%

3 Incentives for Strategic Products 68%

4 Improve Motivation Programs 57%

5 Increase Incentives on Volume 56%

6 Use Alternative:Telemarketing 45%

Source: Sales & Marketing Management, Jan. 02, p. 41

*Based on 10000 salespeople from 192 companies


100,000Catalog Drops

2,000 Orders

10,000 Calls

100,000Website Visits

5,000 Calls

1,750 Orders500 E-Orders

Traditional Model Internet Model

Reasons Companies Develop and Use Sales Territories

• To obtain thorough coverage of the market.

• To establish each salesperson's responsibilities.

• To evaluate performance.

• To improve customer relations.

• To reduce sales expense.

• To allow better matching of salesperson to customer’s needs.

• To benefit both salespeople and the company.

Elements of Time and Territory Management for the Salesperson

Salesperson’s territory’s sales quota

Salesperson’s territory’s sales quota

Account analysisAccount analysisSet accountobjectives andsales quotas

Set accountobjectives andsales quotas

Territory-timeallocation

Territory-timeallocation

Customer salesplanning

Customer salesplanning

Scheduling androuting

Scheduling androuting

Territory and customerevaluation

Territory and customerevaluation

Location of Accounts and Sequence of Calls

66270

40

40

35

35

62

62

62

6.Texas Instruments

4. Ling Television

5.Jones Hardware

3. ZipGrocery

8.Trailor Mfg.

Home1, 9.

2.Distribution Center

7.Ace Equipment

Oklahoma City

Weekly Route Report

Today’s Date: For week beginningDecember 16 December 26

Date City Location

December 26 (Monday) Dallas Home

December 27 (Tuesday) Dallas Home

December 28 (Wednesday) Waco Holiday Inn/South

December 29 (Thursday) Fort Worth Home

December 30 (Friday) Dallas Home

Three Basic Routing Patterns

First call

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Straight-Line Pattern


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Cloverleaf Pattern

Each leaf out andback the same day


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Major-City Pattern

A Partial Map of Your Sales Territory

Start

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Sales quota

The relationship between sales objectives and quotas.

Why quotas are important.

The various types of quotas.

The methods for setting quotas.

Criteria needed for a good quota plan.

Major areas for establishing objectives.

How organizations set objectives.

The selling by objectives process.

LEARNING OBJECTIVES

Objectives and quotas are fundamental parts of a company, because they provide the sales force with direction and goals. Selling by objectives (SBO) is a system that unites the sales force. This chapter should help you understand:

WHAT IS A QUOTA?

A quota refers to an expected performance objective.

Quotas are tactical in nature and thus derived from the sales force’s strategic objectives.

WHY ARE QUOTAS

IMPORTANT?

• Quotas provide performance targets.

• Quotas provide standards.

• Quotas provide control.

• Quotas provide change of direction.

• Quotas are motivational.

TYPES OF QUOTAS

• Sales volume quotas.

Sales volume quotas includes dollar or product unit objectives for a specific period of time.

TYPES OF QUOTAS


• Break down total sales volume.

• Individual established and new products.

• Geographic areas based on how the sales organization is designed, which would include:

• Sales division.

• Sales regions.

• Sales districts.

• Individual sales territories.

• Product lines.

TYPES OF QUOTAS



• Profit quotas.

• Gross margin quota determined by subtracting cost of goods sold from sales

volume.

• Net profit quota determined by subtracting cost of goods sold and salespeople’s

direct selling expense from sales volume.

The two types of profit quotas:

TYPES OF QUOTAS



• Profit quotas.

• Expense quotas.

Expense quotas are aimed at controlling costs of sales units. Often expenses are related to sales volume or to the compensation plan.

TYPES OF QUOTAS



• Profit quotas.

• Expense quotas.

• Activity quotas.

Activity quotas set objectives for job-related duties useful toward reaching salespeople’s performance targets.

Customer satisfaction refers to feelings about any differences between what is expected and actual experiences with the purchase.

TYPES OF QUOTAS


• Breakdown total sales volume.

• Profit quotas.

• Expense quotas.

• Activity quotas.

• Quota combinations.

METHODS FOR SETTING SALES

QUOTAS

• Quotas based on forecasts and potentials.

• Quotas based on forecasts only.

• Quotas based on past experience.

• Quotas based on executive judgments.

• Quotas salespeople set.

• Quotas related to compensation.

TABLE 7.4 LEVELS OF ORGANIZATIONAL SALES PLANNING

LEVEL PURPOSE: WHAT IS PLANNED

WHO (USUALLY) IS INVOLVED

1. Marketing •Organizational goals (increase in market share or penetration, increase in customers, increase in sales dollars and units sold)

Upper management and sales and marketing executives

2. Regional plan •Priorities (which regions, markets, and products to emphasize)

Regional and district sales managers (which input from sales reps)

3. District plan •Dollar allotment (for promotion, advertising, new employees, sales incentives, and so on)

District managers and sales representatives

4. Territorial plan •Goals for number of new customers and for increased business with old customers in each region and territory

Sales representatives

SELLING BY OBJECTIVES SETS

FUTURE TARGETS

Two basic steps to implementing sales strategies:

Step 1: Organize the jobs.

Step 2: Define annual objectives in important areas.

FIGURE 7.2 THE FOUR MAJOR AREAS TO ESTABLISH OBJECTIVES WITH EACH SALESPERSON

Step 1: Organizing the Job

Step 2: Defining Annual Objectives

SALESMANAGEMENT

Salesperson

Account Management Call Management Self-ManagementTerritorial Management

1. Regular2. Problem Solving3. Innovative

• Portfolio of Accounts• Potentials• Coverage• Records• Order Size• Penetration• Reports• Customer Satisfaction

• Preparation• Selling Technique• Training• Communication• Buyer Behavior• Impact• Handling Resistance

• Appearance• Manner• Communication Skills• Abilities• Attitudes• Selling Abilities

• Limits• Potential Business• Size• Customer Base• Prospects• Leads• Market Share• Growth• Trade Relations• Dealer Relations

• Treating the territory as a business.

• Managing each account.


FUTURE TARGETS

1. Build the stars.

2. Harvest the cash cows.

3. Fix the problems.

4. Divest the dogs.

Tactical plan for managing accounts:



• Managing each call.


FUTURE TARGETS

• Is the sales rep properly armed with information, leads, and materials before

the call occurs?

• Is the sales rep applying the major principles of selling technique during the

presentation? Or is the sales rep inventing his or her own and perhaps making every mistake every salesperson in history has made?

• Has the salesperson planned some coherent attack for the sales presentation, and is it

working well?

Questions about the content of calls:

• Does the sales rep have enough training in communication, in meeting sales

resistance, in understanding buyer behavior, in improving call impact, in gaining greater account penetration, in follow-through methods to do the job?

• Does the sales rep have enough knowledge of the product and its applications,

service and system backup, and technical problems to handle the toughest calling situation?

Questions about the content of calls: continued



• Managing each call.

• Managing oneself.


FUTURE TARGETS

• Since selling involves making contact with strangers, dress, style, demeanor, and

personal decorum are part of the salesperson’s tool kit.

• Communication skills, memory, logical speaking habits, and writing competence are vested in the person.

• Attitudes and outlook toward the job, the product, the company, and the customers all have an

important bearing in the results to be achieved.

• The knowledge of selling techniques, what the various kinds are and how and when to use

them, are personally vested in the sales rep and can be produced and polished by training.

Self-management in selling includes the following:

BASIC LEVELS OF

INDIVIDUAL OBJECTIVES

1. Regular, ongoing, and recurring objectives.

2. Problem-solving objectives.

3. Innovative or creative objectives.

The highest level of excellence is reserved for people who are attaining all three.

THE PROCEDURES FOR

SETTING OBJECTIVES AND

QUOTAS WITH SALESPEOPLE

• Prepare the way.

• Schedule conferences with each salesperson.

• Prepare a written summary of goals agreed upon.

• Optional group meeting to share objectives.

N am e Fo r Y ear

L ist Y o ur R esp o n sib ility A rea

R esults E x p ected

P essim isticO utp ut

1. 2. 3. 4. 5. 6. 7. 8. 9.

10. 11. 12. O th er

$ V o lum e/ m o n th $ E xp en se/ m o n th G ro ss m argin / m o n th

O p tim isticR ealistic R esults

I n structio n : L ist the regu lar, o n go in g, recurrin g o b jectives. C o ver th e ten m ajo r resp o n - sib ilities o f yo ur jo b nex t year to m an age territo ry, acco un ts, calls, an d yo urself.

FIGURE 7.3 SELLING BY OBJECTIVES FORM

A GOOD OBJECTIVE AND

QUOTA PLAN IS SMART

Specific

Measurable

Attainable

Realistic

Time specific

Test 1: Does this quota state exactly what the intended result is?

Test 2: Does this quota specify when the intended result is to be

accomplished?

Test 3: Can the intended result be measured?

A simple three-way test to judge how well quotas and objectives are written:

SELLING-BY-OBJECTIVES

MANAGEMENT

Selling by objectives (SBO) is the process elaborated on earlier whereby the manager and salesperson jointly identify common goals, define major areas of responsibility, and agree on the results expected.

FIGURE 7.4 SETTING OBJECTIVES AND QUOTAS IS A TWO-WAY PROCESS BETWEEN MANAGER AND SALESPERSON

M u tu a lly S et O bjecti ves a n d Q u ota s

M ea su re P erform a n ce

E va lu a te P erform a n ce

R ewa rd or P en a lty

P u bliciz e P erform a n ce R esu lts

THE SALES TERRITORY IS

WHERE QUOTAS ARE MADE

The sales territory is “where the action is!”

THE BOTTOM LINE

Quotas are important to a company because they establish the “end state” sought, and they change according to external and internal forces.

Many different types of quotas exist.

Methods for setting quotas may vary.

Setting a sales quota can be an involved process.

Selling by objectives (SBO) is a common concept and is widely used by sales organizations.

Sales force -recruitment

What sales human resource management is and what its key relationships are.

The importance of planning for sales personnel needs.

What people planning and employment planning are.

What recruitment means and why it is so important.

The recruiting process: what it is, who does it, and where recruits are sought.

LEARNING OBJECTIVES

A successful sales force is determined by who is hired; this is the end result of sales human resource management. This chapter should help you understand:

WHAT IS SALES

HUMAN RESOURCE

MANAGEMENT?

Sales human resource management (SHRM) refers to activities undertaken to attract, develop, and maintain effective sales force personnel within an organization.

Sales H um an R esource M anag em ent

P eo p le P lan n ing E m p lo ym ent P lann in g

H ow M any to H ire?

T yp e o f P eo p le?

R ecruitm ent Selec tio n So cializ atio n

D eterm in e H o w M an y

to H ire

F irst I n terv iew

G raduatio n B egin W o rk

T rain in g E n ds

A ssign ed T errito ry

T im e L in e

What’s a salesperson worth?

A salesperson’s worth depends on what the salesperson costs to the company and on the profits from the products he or she sells.

Selecting someone who will become an above-average performer improves the overall performance of the sales group.

A successful hire is someone who performs above average.

Goal: Hire above-average performers.

WHO DOES THE PLANNING?

• National sales manager.

• Field sales managers.

• Top management.

Sales F orce O b jectives

Strateg ic P lan s

T errito rial D esig n

C urren t Sales F orce P erson nel

+H iring , P ro m otions, T ransfers I n

-

Q uits, T erm inatio ns, P ro m o tions, T ransfers O ut, o r R etirem ent

=P eo p le F o rec asts

DETERMINING THE TYPE OF

PERSON FOR THE JOB

A job analysis refers to the formal study of jobs to define specific roles or activities to be performed in sales promotions.

The three steps in the job analysis are to:

1. Examine the total sales force and each job, and determine how each job relates to other jobs.

2. Select the jobs to be analyzed.

3. Collect the necessary information through observation of what people actually do in the jobs, interviews of people in the jobs, and questionnaires completed by job holders.

JOB DESCRIPTIONS AND

SPECIFICATIONS FOR

SUCCESSFUL PEOPLE

Job specifications convert job descriptions into the qualifications.

WHAT ARE JOB SPECIFICATIONS FOR

SUCCESFUL SALESPEOPLE?

• Intelligence

• Education

• Personality

• Experience

• Appearance

CHARACTERISTICS OF SUCCESSFUL SALESPEOPLE

1. High energy level 8. Good physical appearance

2. High self-confidence 9. Likable

3. Need for material things 10. Self-disciplined

4. Hardworking 11. Intelligent

5. Requires little supervision 12. Achievement oriented

6. High perseverance 13. Good communication skills

7. Competitive

PROFILING THE SUCCESSFUL

CANDIDATE

• Intelligence

• Prospecting ability

• Ability to create a follow-up system

• Ability to influence people’s decisions and opinions

• Ability to cultivate long-term client relationships

• Ability to negotiate contracts and prices

Success in a company may include the following:

PROFILING THE SUCCESSFUL

CANDIDATE continued

• Ability to determine prospects’/customers’ needs (hot buttons).

• Computer skills.

• Selling ability.

• Conceptual ability.

RECRUITMENT’S PURPOSE

Recruitment is the set of activities and processes used to legally obtain a sufficient number of individuals in such a manner that the recruits’ and the sales force’s best interests are taken into consideration.

MAJOR INFLUENCES AND COMPONENTS OF SALES RECRUITMENT

Sales H u m an R eso urce P lann ing

R ecru itm ent

I nternal Sou rces

E x ternal Sou rces

A p p lican t P oo l

Q u alifi ed A p p lican t P oo l

E valuate R ecruitm en t R esults

Selection

Equal Employment Opportunity Commission (EEOC) is the principal governmental agency responsible for monitoring discriminatory practices.

LEGAL INFLUENCES

To be an effective recruiter, a sales manager must have the answer to several questions, including:

• How many people do I need to recruit?

• Who does the recruiting?

• Where do I find recruits?

• How can I develop a qualified pool of applicants?

• How can recruiting programs be evaluated?

RECRUITMENT OF

SALESPEOPLE

2

3

30

120

R ecru itm ent P yram id R atio D ays

R eport to W ork

O ffer/ H ires

Interv iew / O ff er

L ead s/ In terv iew

2:2

3:2

10:1

4:1

21

14

21

30

RATIO AND DAYS FROM SALES JOB ANNOUNCEMENT TO REPORTING TO WORK

• Current Employees.

• Promotions.

• Transfers.

SOURCES OF RECRUITS –

WHERE ARE THEY FOUND?

INTERNAL SOURCES

Internal recruitment sources come from inside the company:

EXTERNAL SOURCES

• Walk-ins. • The Internet.

• Employment agencies. • Internships.

• Radio and television. • Colleges and universities.

• Newspaper advertisements.

• Competitors.

• Telephone-in advertisements.

REALISTIC JOB PREVIEWS HELP BOTH COMPANY AND RECRUITS

A “realistic job preview” means that a person is given pertinent information about the job without distortion or exaggeration.

• Newly hired salespeople have a higher rate of job survival than those

hired using traditional previews.

• Salespeople hired indicate higher satisfaction.

• Managers can set the job expectations of new salespeople at realistic

levels.

• Realistic previews do not reduce the flow of highly capable applicants.

Companies can expect these results from realistic previews:

THE QUALIFIED

APPLICANT POOL

The organization should find out:

• How candidates obtain information regarding job availability.

• What attracts people to the job.

• What the likes and dislikes are about the job.

• Why the person took the job.

THE BOTTOM LINE

Sales human resource management (SHRM) is comprised of two elements: people planning and employment planning.

Developing a successful sales team requires the planning of personnel needs and analyzing the sales jobs to achieve more efficient use of human resources.

Job analysis is the definition of specific roles or activities to be performed.

The goal of managing sales human resources is to hire above-average performers.

In order to hire the right person for the job, there must be a recruitment strategy.

Sales force -training

Sales force training

• Product• Organizational culture• Reporting pattern• Understanding territory management• Team management• Management of the channel• Handling objections• Merchandising• MIS• Interpersonal relationships

Sales force - Motivation

What is Motivation??

• Drive to initiate an action.

• The intensity of effort in an action

• The persistence of effort over time.

Why the concernfor sales forcemotivation?

Why the concernfor sales forcemotivation?

What are thedifferent theoriesof motivation?

What are thedifferent theoriesof motivation?

Motivation Tools

Self- Quotas Incentive Recognition management programs programs

Motivation Tools

Self- Quotas Incentive Recognition management programs programs

Reasons for Motivating Salespeople

• Frequent rejection

• Physical separation from company

support

• Direct influence on quality of sales

presentation

• Indirect influence on performance

Steps to Greater

Personal Motivation

1. Define what you want.

2. Inform a special person of your goals.

3. Do something.

4. Don’t let failure deter you.

5. Break down problems into pieces.

6. Set deadlines.

7. Turn work into play.

8. Associate with people who motivate you.

Sales Force Needs and Ways to Fill Them

Sales Force Needs Company Actions to Fill Needs

Status Change title from “salesperson” to “area manager.”

Buy salespeople more luxurious cars to drive.

Control Allow salespeople to help plan sales quotas and sequences of calls.

Respect Invite salespeople to gatherings of top executives.Put pictures of top salespeople in company ads and newsletters.

Assign each salesperson a core of Routine loyal customers that are called on

regularly.

Sales Force Needs and Ways to Fill Them

Sales Force Needs Company Actions to Fill Needs

Accomplishment Set reasonable goals for the number of calls and sales.

Stimulation Run short-term sales contests.Schedule sales meetings in exotic locations.

Honesty Deliver promptly all rewards and benefits promised.

MASLOW’S HIERARCHY OF NEEDS

Self-Actualization

Self-Esteem

Love-Belonging

Safety-Security

Physiological

Intense job challenge, full potential, full Intense job challenge, full potential, full expression, creative expansion.expression, creative expansion.

Achievement, respect, recognition, responsi-Achievement, respect, recognition, responsi-bility, prestige, independence, attention, bility, prestige, independence, attention, importance, appreciation.importance, appreciation.

Belonging, acceptance, love, affection, familyBelonging, acceptance, love, affection, familyand group acceptance, friendships.and group acceptance, friendships.

Security, stability, dependency, protection, Security, stability, dependency, protection, need for structure, order, law, tenure, pension, need for structure, order, law, tenure, pension, insurance.insurance.

Hunger, thirst, reproduction, shelter, clothing,Hunger, thirst, reproduction, shelter, clothing,air, rest.air, rest.

Motivation and Personality, Abraham Maslow, 1970

AN EXERCISE TO DETERMINE YOUR MOTIVATIONAL NEEDS

To perform the exercise, read through the following statements…check those which are most important in motivating you to do your best work.

Select the ten most important statements.

629 Job security

847 Being trusted to do my job the way I think it should be done.

333 Participating in work group conversations.

311 Having adequate shelter to protect from the elements.

836 Having a job which allows me time with my family.

151 Having an opportunity for personal growth.

937 Socializing with my friends.

743 Being considered for an advancement opportunity.

431 Working with other people.

AN EXERCISE TO DETERMINE YOUR MOTIVATIONAL NEEDS

Select the ten most important statements. (Cont’d.)

819 Having children.

458 Doing something meaningful with my life.

757 Being in a position to contribute new ideas.

828 Having an associate that looks out for my interests.

735 Including other people in what I do.

949 Being selected for an exclusive award.

234 Being involved with work associates in social and recreational activities.

616 Being sexually satisfied.

146 Having a responsible person tell me when I’ve done a good job.

539 Having an active part in work related social activities.

341 Knowing that other people respect me and my work.

132 Acceptance as a work group member

Determining Your

Motivational NeedsSecond Number to left of statement indicates the

category; how many in each:

Number Category

1 Physiological

2 Safety - Security

3 Love - Belonging

4 Self Esteem

5 Self Actualization

YOUR SCORE

To determine results: the statements are divided into five categories intended to represent the five levels in Maslow’s Hierarchy of Needs. The second digit in each statement number indicates the category.

These categories are: 1-Physiological, 2-Safety-Security, 3-Love-Belonging,

4-Self-Esteem, 5-Self-Actualization.

Number Percent

847 86%

341 74%

757 54%

431 51%

828 37%

458 37%

743 34%

Maslow’s Hierarchy – Maslow’s Hierarchy – U.S. Salespeople’s ResponsesU.S. Salespeople’s Responses

INDIVIDUAL NEEDS

Maslow’s RelatedHierarchy Sales Forceof Needs Motivators

Self- Challenging tasks

actualization calling for creativity

Esteem Recognition programs

Belonging President’s Club $1 mil.

Safety & security Job security & fringes

Physiological Cash wages & bonuses

Self-actualizationin service to

society

Safety

Physiological

Affiliation (belonging)

Chinese Culture Hierarchy of NeedsChinese Culture Hierarchy of Needs

What Makes Great Salespeople?

The Competitor

This person not only wants to win, but derives satisfaction from beating specific rivals -- another company or even colleagues. They tend to verbalize what they are going to do, and then do it.

The Ego-driven

They are not interested in beating specific opponents, they just want to win. They like to be considered experts, but are prone to feeling slighted, change jobs frequently, and often take things too personally.

What Makes Great Salespeople?

The Achiever

This type of person is almost completely self-motivated. They usually set high goals and as soon as they hit one goal, they move the bar higher. They like accomplishment, regardless of who receives the credit.

The Service-oriented

Their strengths lie in building and cultivating relationships. Winning is not everything to this person, but they do respond to feelings of gratitude and friendship from other people.

• Sales is a boundary spanning position –

you must be responsive to expectations

of multiple people.

Company SalesManager

Customers Family

Salesperson’s Role Perceptions

• Expectations: What do others expect me to do?• Ambiguity: How sure am I about what others expect?• Accuracy: Is what I think what they really expect?• Conflict: Does meeting expectations of one person

mean not meeting the expectations of another?

Role PerceptionsRole Perceptions

• Typical Sales Job Activities

• Where is their potential for the following:

–Ambiguity

–Lack of Accuracy

–Conflict

Role PerceptionsRole Perceptions

Job Dimension Activities

SELLING FUNCTION Plan Activities Prepare PresentationsDevelop leads Make PresentationsProspecting Overcome ObjectionsIdentify Decision- Introduce New ProductsMakers

WORKING WITH ORDERS Write ordersFind last ordersExpedite orders Handle shippingHandle back problems orders

PRODUCT SERVICING Learn about Train customersproductTest equipment Supervise repairsSupervise Perform maintenanceinstallation

MANAGING INFORMATION Receive feedback Provide technicalProvide feedback information

Source: Adapted from William C. Moncrief, “Selling Activity and Sales Position Taxonomies for Industrial Sales Force,” Journal of Marketing Research, August, 1996), pp. 266-67.

Typical Sales Job ActivitiesTypical Sales Job Activities

Job Dimension Activities

SERVICING THE ACCOUNT Stock shelves Count inventorySet up displays Promote local

advertising

ATTENDING CONFERENCES Sales Product exhibitions

conferences Training sessions

Client conferences

TRAINING/RECRUITING Recruit new reps Train new repsTravel with trainees

ENTERTAINING Parties DinnerDrinks Lunch

TRAVELING Out-of-Town In-Town

DISTRIBUTION Sell through TrainEstablish Credit processingrelationships

Source: Adapted from William C. Moncrief, “Selling Activity and Sales Position Taxonomies for Industrial Sales Force,” Journal of Marketing Research, August, 1996), pp. 266-67.

Typical Sales Job ActivitiesTypical Sales Job Activities

Career Stages

• Does everyone go through these stages?

• What can be done to address the concerns of

management at each stage?

• How can sales managers address the

management concerns at each stage?

MotivationMotivation

Career Stage Characteristics

Exploration Establishment Maintenance DisengagementCareer Concerns Finding an Successfully Holding on to Completing

appropriate establishing what has been one’s occupational a career in a achieved; career. field. certain reassessing career,

occupation. with possible redirection.

Motivational Learning the Using skills to Developing Establishing a Job Related skills required produce results. broader view of stronger self-

to do Adjusting to work and identity the job well. working with organization. outside Becoming a greater Maintaining a high of work.

contributing autonomy. performance Maintaining an member of level. acceptable an organization. performance level.

Career Stages

Career Stage Characteristics

Exploration Establishment Maintenance Disengagement

Personal Establishing a Producing superior Maintaining Acceptance ofChallenges good initial results on the motivation, career

professional job in order to though accom- self-concept. be promoted. possible rewards plishments. have changed.

Facing concerns about aging.

Psychological Support Achievement Reduced Detachment Needs Peer Acceptance Esteem competitiveness from the

Challenging Autonomy Security organization position Competition Helping younger and organi- colleagues zational ife.

Career Stages

Career Stage Research Findings Job Satisfaction and Career Concerns 200 Salespeople -- Large Industrial

Organization: – all are least satisfied with promotion & pay

– pay satisfaction is only dimension on which

exploration sales people are more satisfied than

establishment or maintenance salespeople

– maintenance salespeople are less satisfied with

supervision than are establishment salespeople

Career Stage Research

Findings

Career Concerns and Age

200 Salespeople -- Large Industrial

Organization:– Note proportion of people in each stage

– Note overlap in ages of people in each stage

– Disengagement as well as maintenance occurs quite

early for some people --

Is this a management concern?

Relationship Between Career Concerns and Age

Proportion ofCareer Concerns Sales Force

Exploration 14%

Establishment 29%

Maintenance 42%

Disengagement 15%

Age Range20 30 40 50 60 65

Use of the Various Types of Quotas

14%

14%

55%

28%

32%

60%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Bar 2

Bar 1

Large firms’Sales >$40M

Small firms’Sales < $40M

Sales volume

quota

Profit-based

quotas

Activityquota

Quotas & Reasons

for Use1. Help motivate salespeople2. Direct where to put effort

3. Provide standards for evaluation.a. Sales volume in dollar or point system

• Points allow for different weights for different important products independent of price.

• Points not affected by inflation.• Sales quota may be developed for:

– Total territory sales, and/or– Individual product or product group.

Quotas & Reasons

for Use2. Profit-based quotas are rarely

based on bottom line profits

– Difficult to account for indirect expenses– Profits are usually configured as gross margins minus

some load factor

3. Activity-based quotas are based on activities directly related to sales volume– More directly under control of the salesperson– Biggest problem is falsification of call reports– Issue of quantity vs. quality of activity?

Incentive Programs• What is difference from regular

compensation such as commission?• Key decisions

– Goals -- Rules– Timing -- Awards– Participants -- Publicity– Theme -- Cost

• What is difference between Incentive and Recognition programs

Types of Incentive Awards Used by 168 Firms

Percentage ofType of Award Firms Using

Cash 59Selected Merchandise 46Merchandise Catalog 25Travel 22

Giving Status to

Salespeople

1. Compensation -- exceed first-line managers

2. Job Title -- no cost but considerable payback

3. Company Car Upgrade -- salespeople spend

much time in car - reminds them of their value.

4. Car Phone -- justified on a purely business basis

5. Field Sales Council -- meet president for 1/2 day open-ended discussion on field marketing conditions - report back to field meetings the results

6.Outside Secretarial Support -- or more exclusive central.

7. Published Success Stories -- high form of recognition

8. Task Force Assignments -- e.g., review of all paperwork.

Sales force – compensation , appraisal

Appraisal

• SMART objectives

• On the job

• Time period for review– Weekly– Monthly– Quarterly– Annual

Appraisal

• One to one

• Team appraisal

• Results of appraisal– Promotions– Competency development– Compensation review– New territory

Compensation

• Compensation in the global market is an extremely important managerial area

• This is because the compensation plan:– Helps attract potential salespersons– Impacts a salesperson’s motivation– Is a determinant of status and value– Determines lifestyle and purchasing power

In Global Market

• Compensation package is complex and affected by multiple forces:– A balance between company policies and

country-specific elements– Total compensation package includes

financial• Salary, commission, bonus, stock options, benefits

– and non-financial incentives• Awards, recognition, vacation, and promotion

Compensation Plans

• Hard to compare compensation plans because of their differences– Lower salary, but higher deferred components– Cannot simply transfer a compensation plan from

one culture to another• What works in one culture will not work in another!

– Compensation should motivate sales force to accomplish goals set by management

• Compensation may be changed to meet firm goals

Three Types of Compensation Plans

• Straight Salary

• Straight Commission

• Combination Plan

Straight Salary

• Salesperson paid a set amount of money based upon hours or days worked– Often adopted when salesperson must devote

significant amounts of time to other duties• Market research, customer service, administration

– Simple to administer by sales manager– But, no direct link between performance and

reward!• More commonly used in Europe and may be difficult to

change by global sales managers

Straight Commission

• Adopted by performance-oriented firms that pay salesperson for their achievements– Each person is paid a percentage of their total sales

• Easy to evaluate performance• Plans encompass an element of insecurity• Not believed acceptable in some cultures, like EU• Some evidence of acceptance in Japan• Can lead salesperson to shirk duties or pressure customers

to buy

Combination Pay Plan

• The combination plan is the most popular– Employed by more than 80% of US firms– May appear in many forms:

• Salary, commission, individual and group bonuses

– Basic security bestowed by set salary– Motivation introduced by commission/bonus

• Combination plans more time consuming for sales managers to oversee

Ethical Compensation Issues

• Major dilemma – hire the best salesperson for the lowest possible salary. Other dilemmas include:– Pay at, below or above market salaries?– Setting a cap on total pay?– Assigning lucrative sales territories?– Team vs. individual incentives?– Frequency of paying commission?– Pay discrimination?

Sales Contests

• Sales contests are short-term incentive programs implemented to motivate salespersons to achieve specific goals or activities

• For sales contests to be successful:– Objectives must be specific and clearly defined– Contest theme must be exciting and clearly

communicated– Each salespersons must believe they can win– Awards must be attractive to participants– Contest must be promoted and managed properly

Sales Contest Elements

• Contest Objectives– To increase total and product sales most common– Sales force must be given sufficient time– All contest information and rules must be clear

• Theme– Contests receive a theme to create excitement

• Chance of winning– Compete against self, others, or as a team?

• In U.S. salesperson has about a 40% chance of winning

Types of Rewards

• Sales contests can offer many types of reward in the form of:– Cash, prizes, or travel– Perceived value very important as it must be of

sufficient value to motivate additional effort

• Promotion of contest important– Launched as a special event with handouts– Large scorecards to communicate progress– Newsletter articles or interim prizes can keep

motivation up

Sales Contest Concerns

• A number of concerns have been raised about sales contests– When not properly designed contests take a

lot of managerial time to administer– Improper contests can actually de-motivate– Do sales contests generate additional sales?– Should sales force be paid twice for doing

job?– If contests are for short-term, then why have a

“never-ending” sales contest?

Non-Financial Incentives

• Human needs require approaches other than compensation to remain satisfied– Ability to grow– Recognition programs

• Salesperson of the year, President’s Club

– Opportunity to travel– Educational assistance

Sales Expense Plans

• Linked to salary in some ways– Globally, firm may pay salesperson’s

expenses to live overseas that include family– Expatriate expenses are significant

• Expense plans include– Unlimited– Per diem– Limited expense plan

Unlimited Expense Plan

• All legitimate expenses are reimbursed• Plan has a number of advantages

– Communicates trust to the sales force– Sales manager can focus on more important issues– Salesperson cannot complain that resources not

available to make sale

• Sales force must be given guidance and expenses must still be monitored to insure sound judgment– Reimbursed expenses vary by country – e.g.

entertainment and alcohol

Per Diem Expense Plan

• The salesperson is given a set amount of money for each day s/he is in the field– For example, US$250 per day

• Budget can be set by multiplying rate times total days sales force expected to travel

• Single rate unlikely to work in all locales due to varying costs

• Sales manager must adjust per diem rates regularly as prices expand or contract

Limited Expense Plan

• The firm sets a maximum daily amount paid for each category of expense– That is, US$125 for lodging, $50 for meals,

$30 for auto rental, and $20 for miscellaneous• Limits firm’s upper travel expense limit• Must be updated and will vary by location• When actual costs exceed plan, salesperson may

try to save in some areas to meet expenses in other

• Salesperson’s attention may be diverted from client

Documents

Basics of selling skills