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PLANNING THE SALES
TEAMS
EFFORTS
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T E
BUILDING RELATIONSHIPS THROUGH STRATEGIC PLANNING
Four key questions:1. Where are we?
2. Where do we want to be?
3. How should we get there?
4. Can we afford it?
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FIGURE 3.1 RELATIONSHIP BETWEEN THE ORGANIZATIONS STRATEGIC PLAN AND
OPERATIONAL PLANS
Organizations Strategic Plan
MissionObjectives
Strategies
Portfolio plan
Operational Plans
Objectives
ForecastBudgets
Strategies and
Policies
Objectives
ForecastBudgets
Strategies and
Policies
Objectives
ForecastBudgets
Strategies and
programs
Policies
Objectives
ForecastBudgets
Strategies and
programs
Policies
Human Resources
Plan
Financial PlanMarketing PlanProduction Plan
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WHAT ISMARKETING?
Production of goods or creation of services.Marketing those goods and services.
Businesses have two major functions:
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Marketing is defined as the process of
planning and executing the conception,
pricing, promotion, and distribution ofgoods, services, and ideas to create
exchanges that satisfy individual and
organizational objectives.
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Marketing Production Human
Resources
Top Management
Functional Departments
Salespeople
Customers ManufacturersServiceWholesalersRetailersConsumers
FIGURE 3.2 THE MARKETING GROUPTHE LINK BETWEEN CUSTOMERS AND THE
ORGANIZATION
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Marketing people typically have these four
basic objectives to accomplish:
1. Maximize sales of existing products in existing
markets.
2. Develop and sell new products.
3. Develop new markets for existing or new
products.
4. Provide the quality of service necessary forcustomers to be satisfied with their
transactions and to continue doing business
with the organization.
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RELATIONSHIP MARKETING
Relationship marketing is the creation of
customer loyalty.
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Transaction selling: Customers are sold to and not
contacted again.
Relationship selling: The seller contacts
customers after the purchase to determine if theyare satisfied and have future needs.
Partnering: The seller works continually to
improve its customers operations, sales, andprofits.
LEVELS OF RELATIONSHIP MARKETING
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TECHNOLOGY BUILDS RELATIONSHIPS AND PARTNERS
Most dramatic force shaping anorganizations marketing efforts today.
Helps salespeople increase the speed with
which they can find leads, gatherinformation, reduce paperwork, and
provide service.
Technology is expensive.
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RELATIONSHIPMARKETING AND THE SALES FORCE
These four basic questions are guidelines that define the role of
the sales force:
1. How much selling effort is necessary to gain and hold
customers?
2. Is the sales force the best marketing tool, compared to
advertising and other sales promotion methods, in terms
of cost and results?
3. What type of sales activitiesfor example, technicalassistance and frequent or infrequent sales callswill
be necessary?
4. Can the firm gain strength relative to its competition
with its sales force?
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Salespeople generate revenue.
Salespeople provide service.
Service quality is a subjective assessment that
customers arrive at by evaluating the service level that
they perceive being delivered.
Salespeople implement relationship marketing.
PERSONAL SELLING BUILDS RELATIONSHIPS
SALES OBJECTIVES DIRECT OTHER ACTIVITIES
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FIGURE 3.3 THE STRATEGIC SALES FORCE PLANNING PROCESS
Sales Force Objectives
Define Roles, Activities,
and Markets of Sales Force
Establish Organizational
Design and Structure
Staffing Training Directing
Sales Analysis andEvaluation of Sales Personnel
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THE MARKET-DRIVEN SALES ORGANIZATION
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FACTORS INFLUENCING
ORGANIZATIONAL DESIGN AND
STRUCTURE
Examine customers in each market.
Determine the types of sales jobs needed toserve a market.
Note the job activities salespeople must do.
Design sales jobs around customers. Set up the sales force organizational
structure, which includes the various salesjobs and geographic territories.
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Performance
Establish Sales
Organizational
Structure
Quality of
Work Life
Customersand Markets
Typesof Jobs
RequiredJobActivities
Designthe Job
FIGURE 3.4 THE RELATIONSHIPS AMONG MARKETS, JOBS, AND ACTIVITIES
INFLUENCE SALES JOB DESIGN AND ORGANIZTATIONAL STRUCTURE
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MARKETING ANDMARKETS
Marketing is the process of planning andexecuting the conception, pricing,promotions, and distribution of ideas,
goods, and services to create exchangesthat satisfy individual and organizationalobjectives.
SALESPEOPLE WORK IN TWO MARKETS
Consumer
Business
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THE SALESPERSONS JOB
ACTIVITIES AS A TERRITORIALMANAGER
1. Provides solutions to customers problems.
2. Provides services to customers.
3. Sells to current and new customers.
4. Helps customers resell products to their customers.
5. Helps customers use products after purchase.
6. Builds goodwill with customers.
7. Provides company with market information.
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SALES ORGANIZATIONAL DESIGN
Organizational design refers to the formal,
coordinated process of communication, authority,and responsibility for sales groups and individuals.
PURPOSES AND IMPORTANCE OF JOB DESIGN
Content
Qualifications required to perform
Returns and rewards for performance
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SALES ORGANIZATIONALSTRUCTURE
Organizational structure is the relativelyfixed, formally defined relationship
among jobs within the firm.
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THE LINEORGANIZATION
In the pure line organization, the chiefexecutiveusually the presidentdoes the
decision making for the firm. The president
has complete authority.
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Lewis StonerPresident-Owner
Jake Preston
Vice President of Sales
Two Salespeople
FIGURE 3.5 COMPUTE CORPORATIONS LINE ORGANIZATION
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SPECIALIZEDDESIGN
Functional organizational design is thegrouping of work according to its
characteristics.
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Staff
Charles Thompson
Sales Manager
John Friedman
Advertising/Promotion
Manager
Pete Likert
Market Research
Manager
FIGURE 3.6 ALARM SYSTEM CORPORATIONS FUNCTIONAL ORGANIZATIONAL
DESIGN
Line John Abbott
Vice President of Marketing
TenSalespeople
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Line authority means that people in
management positions have formal authority todirect and control immediate subordinates.
Staff authority is narrower and includes the right
to advise, recommend, and counsel in the staff
specialists areas of expertise.
Staff Positions with Line Authority
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Geographic Specialization
Many large corporations are organized bygeographic territory. This type of organization is
generally used by companies with more than
strictly local distribution of their products.
FIGURE 3 7 TEXTRON CHEMICAL CORPORATION GEOGRAPIC SPECIALIZATION
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FIGURE 3.7 TEXTRON CHEMICAL CORPORATION GEOGRAPIC SPECIALIZATION
Managerial
Level
Operating
Level
Vice President
of Marketing
National Sales
Manager
Central Divisional
Sales Manager
6 Regional Sales
30 District Sales
240 Salespeople
Eastern Divisional
Sales Manager
7 Regional Sales
Managers
35 District Sales
240 Salespeople
Western Divisional
Sales Manager
5 Regional Sales
25 District Sales
200 Salespeople
A
ManagersA Managers
A
ManagersB
ManagersB Managers
B
C CC
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Product Specialization
Another common type of organization in largecompanies is based on the firms product. The
entire company may be organized by product,
with separate sales, advertising, marketing, and
so on, along with staffs for each, or somefunctional units may remain centralized.
Customer Specialization
Companies with several separate and distinct
markets accounting for major portions of their
sales often organize based on these markets or
customers.
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Combination of Design Elements
Many companies organize on the basis of somecombination of functional, geographic, product,
or customer design.
FIGURE 3.8 MULTIPLE DESIGN FACTORS
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Functional
Geographic
Customer
Product
President
Vice PresidentMarketingVice PresidentProduction
U.S.MarketingManager
InternationalMarketingManager
ConsumerGoodsManagers
IndustrialGoodsManagers
InternationalSalesManager
EuropeanDivision
LatinAmericanDivision
Asian andAfricanDivision
Soap ProductsDivisionalManager
Paper ProductsDivisionalManager
Food ProductsDivisionalManager
EasternSalesDivision
CentralSalesDivision
WesternSalesDivision
Vice PresidentEngineering
FIGURE 3.8 MULTIPLE DESIGN FACTORS
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PLANNING FOR AND RECRUITING SUCCESSFULSALESPEOPLE
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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.
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FIGURE 3.9 ACTIVITIES INVOLVED IN MANAGING A SALES FORCES HUMAN
RESOURCES
Sales
HumanResourceManagee
People Planning Employment Planning
How Many
to Hire?
Type of
People?
Recruitment Selection Socialization
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FIGURE 3.10 FROM INTERVIEW TO TERRITORY: A LONG TIME
Determine
How Many
to Hire
First
Interview
Graduation Begin
Work
Training
Ends
Assigned
Territory
Time Line
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Whats a salesperson worth?
A salespersons worth depends on what thesalesperson costs to the company and on the
profits from the products he or she sells.
Goal: Hire above-average performers.
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.
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WHO DOES THE PLANNING?
National sales manager.
Field sales managers.
Top management.
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FIGURE 3.11 SALES FORCE PEOPLE-FORECAST MODEL: FACTORS TO CONSIDER WHEN
DETERMINING HOW MANY TO HIRE
S a l e s F o r c e
O b j e c t i v e s
S t r a t e g i cP l a n s
T e r r i t o r i a l
D e s i g n
Current
Sales Force
Personnel+
Hiring,
Promotions,
Transfers In
Quits,
Terminations,
Promotions,
Transfers Out,
or Retirement
PeopleForecasts
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DETERMINING THE TYPE OF PERSON FOR THE JOB
A job analysis refers to the formal study of jobs todefine specific roles or activities to be performedin 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 throughobservation of what people actually do in the jobs,interviews of people in the jobs, andquestionnaires completed by job holders.
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JOB DESCRIPTIONS AND SPECIFICATIONS FOR SUCCESSFUL PEOPLE
Job specifications convert job descriptions intothe qualifications.
TABLE 3.12 FORMAL JOB DESCRIPTION, TRANSTEX AUTOMOTIVE SUPPLY
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CORPORATION
Position: Sales Representive Reports to: District
Manager
Organizational
Unit:
replacement Parts
Date: ( When
Job WasDescribed)
NATURE OF JOB
Responsible for developing new accounts and reaching profitable sales goals in assigned territory.
PRINCIPAL RESPONSIBLITIES
Meeting total sales goals for product lines and individual products.
Maintaining an average of six daily sales calls.
Maintaining an average of one monthly product presentation to wholesalers.
DIMENSIONS
Develop strong promotional support from retail and wholesale customers.
Plan effective territorial coverage resulting in high sales/call ratio.
Inform management of activities by submitting daily and weekly call and sales reports to district manager.
SUPERVISION RECEIVED
General and specific tasks are assigned for each sales period. Every two months work with supervisor for aminimum of one day.
SUPERVISION EXERCISED
None
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WHAT ARE JOB SPECIFICATIONS FOR
SUCCESFUL SALESPEOPLE?
Intelligence
Education
Personality
Experience
Appearance
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TABLE 3.13 SELECTED 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
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RECRUITMENTS PURPOSE
Recruitment is the set of activities and processesused to legally obtain a sufficient number ofindividuals in such a manner that the recruits andthe sales forces best interests are taken intoconsideration.
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FIGURE 3.14 MAJOR INFLUENCES AND COMPONENTS OF SALES RECRUITMENT
Sales
HumanResource
Planning
Recruitmet
I n t e r n a l
S o u r c e s
E x t e r n a l
S o u r c e s
ApplicantPool
Qualified
Applicant
Pool
Evaluate
Recruitment
Results
Selection
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To be an effective recruiter, a sales managermust 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
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2
3
3 0
1 2 0
Recruitment Pyramid Ratio Days
Report to Work
Offer/Hires
Interview/Offer
Leads/Interview
2:2
3:2
10:1
4:1
21
14
21
30
FIGURE3.15 RATIO AND DAYS FROM SALES JOB ANNOUNCEMENT TO REPORTING TO
WORK
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Current Employees.
Promotions.
Transfers.
SOURCES OF RECRUITS WHERE ARE THEY FOUND?
INTERNAL SOURCES
Internal recruitment sources come from insidethe company:
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EXTERNAL SOURCES
Walk-ins. The Internet.
Employment agencies. Internships.
Radio and television. Colleges and universities.
Newspaper advertisements. Competitors.
Telephone-in advertisements.
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SELECTION,PLACEMENT, AND SOCIALIZATION OF SUCCESSFUL
SALESPEOPLE
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SELECTION AND PLACEMENT OF SUCCESSFUL SALES PERSONNEL
Selection of sales personnel refers to the processof selecting the best available person for the job.
Placement is concerned with ensuring that job
demands match an individuals skills, knowledge,and abilities, along with preferences, interests,and personality.
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IS SELECTION THE MOST IMPORTANT ELEMENT
IN FIELDING A SALES FORCE?
The selection of the right people is, without a
doubt, extremely important to the success of the
sales district, the region, and the total sales force.
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PURPOSES AND IMPORTANCE OF SELECTION
AND PLACEMENT
Selection and placement procedures provide thefuel that runs the sales force.
Sales managers want to improve productivity.
The proper match between person and job can
improve productivity and reduce operating costs.
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FIGURE 4.1 MAJOR INFLUENCES AND COMPONENTS OF SALES FORCE
SELECTION
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SOURCES FOR COLLECTING INFORMATION
Skills, knowledge, and ability.
Preferences, interests, and personality.
Other category: employment tests,interviews, etc.
Other characteristics: physical examinations,reference checks, etc.
FIGURE 4.2 MAJOR STEPS IN SALES PERSONNEL SELECTION PROCESS
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1. Application
2. Initial
Interview
3. In-depth
Interviews
4. Testing
5. Reference
Checks
6. Physical
Examination
DecisionYes
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THE SELECTION PROCESS
THE JOB APPLICATION BLANK
An orderly, convenient method of collecting
necessary information for determining an
applicants minimum qualifications.
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Minimum job requirements.
All dates accounted for.
Number of jobs and length of time spent on
each job.
Reason given for leaving jobs. Pattern of growth.
When reviewing an application blank, the sales
manager should look for the following:
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THE PERSONAL INTERVIEW
A ONE-ON-ONE SELLING SITUATION
The personal interview usually involves the one-
on-one, face-to-face meeting of two strangers,
both seeking to sell themselves to the other.
TABLE 4.3 INTERVIEWS ARE IMPORTANT FOR THE SALES MANAGER AND THE
APPLICANT
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FOR THE SALES
MANAGER
FOR THE APPLICANT
Act as a screening device to create the
pool of qualified applicants.
Confirm application blanks, written
tests, and feedback from references
relative to SKAs, PIPs, the othercategory, and other characteristics
Judge if the applicant can be successful
in the short and long run
Meet the potential employee anddetermine if a match exists
Act as a screening device to create a pool of
qualified jobs
Determine skills, knowledge and
abilities required
Determine what will be received from
the job, such as training, compensation,
promotional opportunities
Meet the potential boss and determine if amatch exists
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In an unstructured interview, the recruiterasks few preplanned questions and oftenbegins with open-ended questions such as
Tell me about yourself or Why do youwant to sell for IBM?.
Types of Interviews
In a structured interview, the recruiter asksquestions, often from a standard form.
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The Stress InterviewAn interviewer mayplace the applicant in a stressful situation toascertain how the person might cope withstress when selling.
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Body movements.
Gestures.
Firmness of handshake.
Eye contact.
Physical appearance.
One of the reasons nonverbal cues are so powerful is that,in most cases, interviewers are not aware of them as
possible casual agents of impression formation.
Interpretation of nonverbal cues varies with each person.
Nonverbal cues in interviews:
FIGURE 4.4 FIVE PHASES OF THE SALES INTERVIEW
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1. Preparatio
2. Opening the Interview
3. The Interview Proper
4. Ending the Interview
5. Post-intervie
Activities
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TESTS
Employment test refers to a procedure, technique,or measurement instrument for ascertaining
characteristics such as aptitudes, capacities,
intelligence, knowledge, skills, or personality.
Sales managers may decide the following:
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Not to use tests.
To administer tests and interpret the resultsthemselves.
To administer tests and have someone else
interpret the results.
To turn the testing over to consulting
industrial psychologists.
The majority of sales managers use tests as only
one part of the selection process.
To be used successfully, tests must have
reliability and validity.
Sales managers may decide the following:
EMPLOYMENT REFERENCES
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EMPLOYMENT REFERENCES
References are the names of persons from whominformation can be obtained on an applicantsability and character.
PHYSICAL EXAMINATIONS
Almost all companies require their prospective
employees to undergo physical examinations. Asa general rule, if the applicant gets this far in theprocess, he or she has the job unless healthproblems are discovered.
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THE SOCIALIZATION OF SALES PERSONNEL
Socialization is the process by which salespeoplelearn the sales culture and behaviors appropriatefor their roles in the organization.
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TRAINING THESALES TEAM
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WHAT IS SALES TRAINING?
Sales training is the effort an employer puts forth
to provide sales people job-related culture, skills,
knowledge, and attitudes that should result in
improved performance in the selling
environments.
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REENGINEERING TRAINING
On-time training, one-on-one coaching, and
behavioral-change training are just some of the
strategies companies are applying to sales training
curricula across the country.
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PURPOSES OF SALES TRAINING
Increasing customer satisfaction.
Helping salespeople become managers.
Orienting new salespeople to the job.
Improving knowledge in areas such as product, company, competitors,or selling skills.
Lowering absenteeism and turnover.
Positively influencing attitudes in such areas as job satisfaction.
Lowering selling costs.
Informing salespeople.
Obtaining feedback from salespeople.
Increasing sales in a particular product or customer category.
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FIGURE 4.5 A SALES TRAINING MODELDETERMINE HOW TO EVALUATE TRAINING WHEN
PLANNING
PlanningPhase OrganizingPhase StaffingPhase DirectingPhase EvaluationPhase
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PHASE ONE: PLANNING FOR SALES TRAINING
The first step when developing or maintaining anongoing sales training program is assessing needs.
Needs assessment entails determining the trainingneeds of the sales force and setting objectives forsatisfying those needs.
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MAKING THE NEEDS ASSESSMENT
1. Identify the requirements of the position.
2. Determine the difference between performance
objectives and results.
3. Determine why a difference exists.
5. Revise the training program (if needed). Developtraining objectives.
6. Conduct the training program.
7. Evaluate the training program.
8. Revise the training program (if needed).
This requires the following sequence:
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FIGURE 5.1 REVISION OF TRAINING PROGRAM BASED ON NEEDS ASSESSMENT
JobDescriptio
JobObjectives
JobEvaluatio
TrainingRevisi
TrainingObjectiv
TrainingProgra
TrainingEvaluati
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SOURCES OF INFORMATION FOR DETERMINING
TRAINING NEEDS
Questionnaires.
Interviews.
Tests given during meetings for diagnosticpurposes.
Direct observation in the field.
Analyses of sales, profits, and activity reports.
Other ways to assess training needs:
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Failure analysis determines the reasons low-performing salespeople fail to achieve their
sales goals.
Success analysis is used to identify factors
that appear to make salespeople successful.
Other ways to assess training needs:
Exit interviews determine attitudes towardthe job.
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PHASE TWO: ORGANIZING FOR SALES TRAINING
Training objectives to be accomplished.
Number of trainees.
Trainers experience.
Each salespersons understanding of the subject matter.
Each trainees ability to learn and past
experience.
Training materials available.
The costs per trainee of each method.
Extent of presession assignments
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TECHNOLOGY-BASED TRAININGMETHODS
Interactive multimedia training.
Electronic performance support system.
High-tech customer service.
Distance learning.
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ROLE PLAYING
In role playing the trainee acts out an event such
as the sale of a good or service to a hypothetical
buyer.
ON-THE-JOB TRAINING
The best and most frequently used training takes
place on the job.
W D T T P ?
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Centralized training.
Decentralized training.
WHERE DOES TRAINING TAKE PLACE?
Training begins the first day of work.
It continues throughout the career.
Sales meetings serve as important training
methods.
WHEN DOES TRAINING OCCUR?
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PHASE THREE: STAFFING FOR SALES TRAINING
Corporate staff trainers.
Sales force personnel.
Outside training specialists.
WHO IS INVOLVED IN TRAINING?
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PHASE FOUR: DIRECTING THE SALES TRAINING EFFORT
Sales culture is the set of key values, ideas,
beliefs, attitudes, customs, and other capabilities
and habits shared or acquired as a sales groupmember.
TRAINING CULTURE
PHASE FIVE: SALES TRAINING EVALUATION
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PHASE FIVE: SALES TRAINING EVALUATION
1. Determine what should be measured.
2. Determine the information collection
method.
3. Determine the measurement methods.
4. Analyze the data, determine the results, and
draw conclusions for making
recommendations.
STEPS IN THE EVALUATION
WHAT SHOULD BE MEASURED?
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Components to measure:
Reactions Learning
Behavior
On-the-Job Training (OTJ)results
What should be the measurement methods?
1. After only
2. Before/after
3. Before/after with control group
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SALES SKILLS DEVELOPMENT
Involves two key elements:
1. Persuasive communications.
2. The selling process.
Several main persuasive communication
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Talking about product benefits to the prospectrather than theproductsfeatures and
advantages.
Nonverbal body languagelearning torecognize a buyers nonverbal signs and how
to send out positive nonverbal body signals.
Questioning or probing skills and courses in
listening.
Using visual aids, drama, and demonstrations
in the sales presentation.
Several main persuasive communication
skills are:
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THE SELLING PROCESS
Most sales trainers believe logical,
sequential steps do exist that, if followed,
can greatly improve the chance of making
a sale.
FIGURE 5.2 THE SALES PROCESS
Prospecting
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Prospecting
Preapproach
(Precall Planning)
Approach
Presentation
Participatio
Deonstrti
Draatizti
Persuasive
isli
Trial Close
DetermineObjectio
MeetObjectios
Trial Close
Close
Follow-upandServi
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Pre-sale
preparation Prospecting
Pre-approach
Before the
Interview
Approach the
Customer
Sale
Presentation
Handling the
Customer
Objections
Closing
The Sale
Follow up
Action
TABLE 5.3 POPULAR PROSPECTING METHODS
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Cold canvassing Public exhibitions and demonstrations
Endless chaincustomer referral Center of influence
Orphaned customers Direct mail
Sales lead clubs Telephone and telemarketing
Prospect lists Observation
Get published Networking
Referrals are Popular
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Referrals are Popular
1. Leads2. Referrals
3. Orphans
4. Customers
The prospect pool is a group of names gatheredfrom various sources. The prospect pool is
usually created from four main sources:
FIGURE 5.4 THE PROSPECT POOL
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Leads
Orphans
Custo
mers
Referrals
ProspectPool
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FIGURE 5.5 STEPS IN PLANNING THE SALES CALL
Determinationof
Call Objectives
Development of
Customer Profile
Determinationof
Customer Benefits
Determinationof
SalesPresentation
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The sales opener, or approach, is the first major
part of the sales presentation.
The first impression is critical to success.
THE APPROACH OPENING THE SALES PRESENTATION
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Introductory approach.
Product approach.Customer benefit approach.
Curiosity approach.
Approach Techniques are Numerous
FIGURE 5.6 THE SALESPERSONS PRESENTATION MIX IS TYPICALLY DEVELOPED BY SALES
MANAGERS AND TRAINERS
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Persuasive
Communication
Dramatization
Demonstration
Visual Aids
Proof
Participation
Salesperson
The Sales
Presentation
Mix
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Techniques for Meeting Questions:
Postponing objections
Boomerang
Asking questions
THE CLOSE
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Closing is the process of helping people make abeneficial decision.
Closing Techniques
The complimentThe summary
Minor decision
Assumptive
follow up action
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follow-up action
Objectives
Generate additional leads from satisfiedcustomers.
Cross-selling and upselling
Maintain goodwill
After sales service etc.
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DIRECTING THE
SALES TEAM
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Compensation and
Motivation of Sales Force
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Compensation Plans
Compensation plans for the sales force are designed to achieve several objectives.
Some of these are:
i. To assist the company in meeting its sales projections,
ii. To bring the earnings of the sales force to desired levels,
iii. To reward individual salespersons in direct proportion to their efforts and
performance.
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Formal Compensation Process
Establish Sales
Force Objectives
Appraisal and
Recycling
Measure Individual,Group
and OrganisationalPerformance
DetermineCompensation
Objectives, Strategies
and Tactics
Determine
CompensationFactors
Implement Long andShort-term Range
Programmes
CommunicateCompensation Policy
Relate Rewards
to Performance
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Various Modes ofCompensating the Sales Force
SalaryA straight salary payroll is by far the easiest for employers to handle. Deductions for
provident fund, income taxes and other fringe benefits are fixed and the work of
accounting is reduced. In many industries, this method of compensation is generally
used. There is always an overriding reason for choosing a salary plan. The followingindustries are using this method
Highly seasonal industries
High-tech industries
Trade salespeople
Route salespeople
Missionary and educational salesmen
Group selling
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Strengths of the Salary Compensation Plan
1. For the sales force
Simple to calculate
Fixed income
Job security2. For the company
Reduces turnover in sales force
Increases authority of sales manager in controlling sales force
An effective tool in case
Group efforts are required Of business that is technical in nature
Hiring new staff Of seasonal business
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Straight Commission
Paying a commission is a variable expense rather than a fixed one. If sales are made, a
commission is paidno sales, no commission. This keeps sales expenses strictly in line.
A straight commission pay plan has many advantages. It is desirable for a company
suffering from a severe cash shortage since the commission need not be paid untilproceeds are received from a sale. Flexible commission rates can be a strong incentive
and many organisations are successful because the sales force enjoys a liberal
commission schedule.
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Target Commission
A straight commission is paid on sales volume. On a fixed commission base, a fixed
percentage of sales volume is paid to the sales force. Other plans call for increase in rate
as volume increases. A fixed rate commission is easy to figure and administer. If the rate
is 2 per cent, it stays at that percentage whether the salesperson sells goods worth Rs
40,000 or Rs 4,00,000. A progressive commission rate accomplishes a major objective of
most companies: it provides a constant incentive to the sales force to do better. The
following example explains this:
Sales (Rs) Commission Rate
Up to 40,000 2%
From 40,000 to 1,00,000 3%Above 1,00,000 4%
If asalespersonsquota is Rs 80,000, he would earn Rs 2,000 if he achieved that
target exactlya composite rate of 2.5 per cent.
Bonus Profit Sharing Fringe Benefits
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Bonus, Profit Sharing, Fringe BenefitsPaying bonus is a method that a company adopts to reward special contribution and as an
incentive to superior performance.
Profit Sharing
Many experts in the field of sales management disapprove extending profit sharing to
salespeople. For once, companies agree with them. There may be an argument in favour
of such a payment if no bonus plan is established for excellence in sales performance.
Fringe Benefits
Fringe benefits have become a fascinating subject and an item of considerable expense to
organisations. The costs of fringes can be as high as 30 per cent of direct compensation
expense depending on what benefits are offered and whether a portion of the expense is
shared with the employee.
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Reimbursement of Expenses
Travelusually by car or scooter
Meals
Lodging
Entertainment
Miscellaneous
Proper Sales Compensation Plan
Provide a living wage
Have performance Based pay levels
Be adjustable to meet companysgoals and individual aspirations.
Such a plan not only helps in normal times but also takes care of special needs of
a company.
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Motivation refers to the arousal, intensity,
direction, and persistence of effort
directed toward job tasks over a period of
time.
Motivation to the Sales Force
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Motivation is the force within us that directs our behaviour..
MOTIVATION EFFORT PERFORMANCE REWARDS SATISFACTION
Low-Cost Ways to Motivate
A pat on the back.
A smile.
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Cont.
A simple, sincere, thank you.
A personal letter to the employee, with copies sent to your immediate supervisor and to the
employees supervisor.
Public recognition in front of peers. Public recognition in front of ones boss.
A letter of praise from a customer or vendor praising an employee, posted on the companys
bulletin board.
Listening to an employee who has an idea for improving efficiency and then acting
affirmatively on that suggestion.
Arranging employee discounts from your vendors or customers.
Allowing the employee to work on an especially exciting project that he or she would notusually work on.
Asking employees what non-monetary rewards they would like to have and, if possible,
providing them.
Issuing a You Were Mentioned certificate to employees whenever you hear something nice
about them, whether from a customer, co-worker, or superior.
Electing a high-achieving employee to a quality circle or to a company wide task force.
Providing free lunch for employees caught in the act of victory by an appointed group of
company wide catchers
Rotating the company flag or other symbols of excellence from one deserving unit to
another on a quarterly basis.
Source: Sam Deep, Lyle Sussman,Smart Moves Reading, Mass: Addison-Wesley, 1990
Importance of Motivation for Sales Force
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Importance of Motivation for Sales Force
i. Nature of Job:A salesrepresentativesjob is usually tiring with irregular working hours.
They do not often have the authority to do what is necessary to win an account and
they sometimes lose large orders that they have worked hard to obtain.
ii. Human Nature:Most people operate below capacity in the absence of special
incentives, such as financial gain or social recognition.iii. Personal Problems:They are occasionally preoccupied with personal problems, such
as sickness in the family, debt, etc.
High productivity in a sales force comes about neither naturally nor accidentally. It requires
motivation.
The problem of motivating sales representatives has been studied by Churchill, Ford & Walker.They propose the following way.
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Model of the Motivation Process
The motivation process consists of six steps :
1. Recognise need deficiency
2. Search for ways to satisfy needs
3. Establish goal-directed behaviour
4. Performance
5. Provide rewards or punishment
6. Process needs.
The Six Step Motivation Process
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The Six Step Motivation Process
Process beginsRecognise need
deficiency
Search for ways to
satisfy needs
Establish goaldirected behaviour
Performance
Provide punishmentor rewards
Needs reassessment
SALESPERSON
Non-financial Factors and their Impact on Sales Force
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Motivation
Meetings between Manager and Sales Force
Clarity of Job
Sales Contests
Sales Conferences and Conventions
Positive Feedback
Reward and Recognition
Persuasion
Observations and Future Directions
SalesContestsOne can devise different types of sales contests but their objective is always one and the
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One can devise different types of sales contests but their objective is always one and the
sameachieve higher sales and motivate the salesmen.
Following types of sales contests are common:
Daily productivity contests
Monthly productivity contests
Sales during a particular month contest
Sales during promotional period contest
Quarterly sales growth contest
Half-yearly sales growth contest
Annual sales target contest
Growth in retail universe contest
Level of distribution, width and depth contest
Reduction in selling expenditure contest.
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Monitoring andPerformance ppraisal
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Purpose of Performance Appraisal
1. Identify the specific job criteria on the basis of performance.
2. Measurement of performance.
3. Rewarding the individual of their high performance.
4. Define the development experience the employee needs to both enhance
performance in the current job and prepare for future responsibilities.
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Importance ofPerformance Appraisal
The following benefits of performance appraisal justify the designing of an effective
programme of performance appraisal
1. It gives us scientific base to with the help of which we can calculate the worth
of an employees.
2. It helps us in finding out worthy and unworthy workers.
3. It helps the supervisors to evaluate the performance of the subordinates.
4. The record of performance appraisal are available help to protect the
management against subsequent charges of discrimination.
Traditional Method ofPerformance Appraisal Ranking Method: It is the simplest method of rating system. In this method
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Ranking Method: It is the simplest method of rating system. In this method
we give the rank to every employee on the basis of their job performance.
Graphic Rating Scale:In this method the management places a checkmark on a
form next to the word or phase describing the degree of merit for each of several traits
such as quality of work, quantity of work, dependability, attitude and so worth. A major
drawback of Graphic rating is that the words likeexcellentandpoormean different
things to different people.
Forced distribution Method:In this method rated are distributed along the given
scale and fixed percentages of employees are assigned to the best and worst ends of the
scale and to the middle bracket.
Check List Method:In this method a list of statement is prepared which describe
the performance of an employee. Each statement have a definite scale rate.
Critical incident Method:Every supervisor prepare a record notebook in which all
the successful and poor performance of an employee is mentioned.
Field Review Method:In this method the supervisors are interviewed by an expert
belonging to the personnel department. The expert questions to the supervisor to obtain
information about each em lo ee
Essentials of Sales Force Monitoring Programme
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A sales manager must design the complexity and sophistication of the sales programme
based on the environment under which his company operates.
A sales evaluation programme comprises of three stages, viz.,
Establishing standards for performance appraisal.
Identifying and evaluating reasons for performance under or above the laid down
standards.
To adopt measures to correct deficiencies leading to the lower performance and
evaluate methods for further improvements.
Field Sales Reports
The field sales reports are prepared for obtaining control information
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The field sales reports are prepared for obtaining control information.
A good field sales report helps the sales force in their self-evaluation and self-
improvement.
It serves various purposes which are elaborated below.
Sales Planning
Data for Evaluation
Records
Market Information
Barometer of Market/Economic Conditions
Help Organise Logistics
A field sales report can be devised to serve various purposes. Some typical examples
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are:
Call Report or Progress Report
Expense Report
Sales Work Plan
New Business Report
Complaint Report