DOCUMENT RESUME

ED 373 253 CE 067 087

TITLE Selling. Unit 16. Level 3. Instructor Guide. PACE.Program for Acquiring Competence in Entrepreneurship.Third Edition. Research & Development Series No.

303-16.INSTITUTION Ohio State Univ., Columbus. Center on Education and

Training for Employment.PUB DATE 94

NOTE 35p.; For the complete set, i.e., 21 units, each doneat three levels, see CE 067 029-092. Supp,tted by theInternational Consortium for EntrepreneurshipEducation, the Coleman Foundation, and the Center forEntrepreneurial Leadership Inc.

AVAILABLE FROM Center on Education and Training for Employment, 1900Kenny Road, Columbus, OH 43210-1090 (order no.RD303-16 IG, instructor guide $4.50; RD303-16 M,student module, $3; student module sets, level1--RD301M, level 2--RD302M, level 3--RD303M, $45each; instructor guide sets, level 1--RD301G, level2--RD302G, level 3--RD303G, $75 each; 3 levels andresource guide, RD300G, $175).

PUB TYPE Guides Classroom Use Teaching Guides (ForTeacher) (052) Guides Classroom UseInstructional Materials (For Learner) (051)

EDRS PRICE MF01/PCO2 Plus Postage.DESCRIPTORS Behavioral Objectives; Business Administration;

*Business Education; *Competency Based Education;*Entrepreneurship; Learning Activities; Marketing;Postsecondary Education; Retailing; *Salesmanship;Secondary Education; *Small Businesses; StrategicPlanning; Teaching Guides

IDENTIFIERS *Program for Acquiring Competence Entrepreneurship

ABSTRACTThis instructor guide for a unit on selling in the

PACE (Program for Acquiring Competence in Entrepreneurship)curriculum includes the full text of the student module and lessonplans, instructional suggestions, and other teacher resources. Thecompetencies that are incorporated into this module are at Level 3 oflearning--starting and managing one's own business. Included in theinstructor's guide are the following: unit objectives, guidelines forusing PACE, lists of teaching suggestions for each unitobjective/subobjective, model assessment responses, and overview ofthe three levels of the PACE program. The following materials arecontained in the student's guide: activities to be completed inpreparation for the unit, unit objectives, student reading materials,individual and group learning activities, case study, discussionquestions, assessment questions, and references. Among the topicsdiscussed in the unit are the following: the role of selling,product/service analysis, potential customers, policies andprocedures tnat emphasize quality of service, competitive advantage,steps of the selling process, training and motivating salespeople,and a sales plan. (KC)

UNIT 16LEVEL 3

PACETHIRD EDITION

CCENTERON EDUCATIONMIO TFLUMPAS FOR EMPLOYMENT

COLLEGE OF EoucAncorTIC WO SIMI umiVIANYr

Program for AcquiringCompetence inEntrepreneurship

Research & e lopm ent Serie" No. 30-16

Objectives:

Define the role of selling in your small business.

Analyze your product/service to determine benefits.

Analyze potential customers.

Design policies and procedures that emphasize qualityof service.

Determine your competitive advantage.

Demonstrate the steps of the selling process.

Develop a plan for training and motivating sales-people.

Develop a sales plan for your business.

INSTRUCTOR GUIDE

Unit 16

SellingLevel 3

U S DEPARTMENT OF EDUCATIONOffice of Educational Research and Improvement

EDU TIONAL RESOURCES INFORMATIONCENTER (ERIC)

. This document has been reproduced asreceived from the person or organizationoriginating itMinor changes have been made toimprove reproduction quality

Points of view or opinions stated in thisdocument do not necessarily representofficial OERI position or policy

HOW TO USE PACE

Use the objectives as a pretest. If a studentis able to meet the objectives, ask him orher to read and respond to the assessmentquestions in the back of the module.

Duplicate the glossary from the ResourceGuide to use as a handout.

Use the teaching outlines provided in theInstructor Guide for assistance in focusingyour teaching deli Ay. The left side ofeach outline page lists objectives with thecorresponding headings (margin questions)from the unit. Space is provided for you toadd your own suggestions. Try to increasestudent involvement in as many ways aspossible to foster an interactive learningprocess.

When your students are ready to do theActivities, assist them in selecting thosethat you feel would be the most beneficialto their growth in entrepreneurship.

Assess your students on the unit contentwhen they indicate they are ready. Youmay choose written or verbal assessmentsaccording to the situation. Model re-sponses are provided for each module ofeach unit. While these are suggestedresponses, others may be equally valid.

-PERMISSION TO REPRODUCE THISMATERIAL HAS SEEN GRANTED f Y

TO THE EDUCATIONAL RESOURCESwrommAnow CENTER MERSCI'

4BEST COPY AVAILABLE

Objectives Teaching Suggestions

1. DEFINE THE ROLE OFSELLING IN YOURSMALL BUSINESS

What is the role of selling in asmall business?

2. ANALYZE YOUR PRODUCT/SERVICE TO DETERMINEBENEFITS

How can you analyze your pro-duct/service to determine thebenefit to the customer?

What is the importance of productknowledge?

What product information do youneed?

3. ANALYZE POTENTIALCUSTOMERS

How can you identify your poten-tial customers?

How do you identify your currentcustomers' service needs?

4. DESIGN POLICIES ANDPROCEDURES THAT EMPHA-SIZE QUALITY OF SERVICE

What is required for a business toprovide quality of service?

Use the profit equation (Profit = Sales Revenue - Expenses) toshow the importance of selling in small business.

Emphasize the difference between selling benefits and sellingfeatures. Begin the discussion by explaining why satisfying thecustomer's needs is the main goal of a business. Use the exam-ple presented in the unit (the "Everbright" spotlight) to createother similar selling situations.

Explain the importance of product knowledge to selling success.Focus on the high degree of sophistication exhibited by today'scustomer due to the increased amount of media advertising.

Create a chart containing the product information a salespersonshould be familiar with. Choose a specific product to illustratehow this information relates to the selling process.

Invite a local entrepreneur to speak about how he/she identifiespotential customers. Ask the speaker to use a step-by-step ap-proach like the one shown in this unit.

Refer to above suggestion.

Invite a salesperson to speak about what is required for a busi-ness to provide high-quality service. Ask the speaker to giveexamples of his/her own sales experience.

Objectives Teaching Suggestions

5. DETERMINE YOURCOMPETITIVE ADVANTAGE

How can you determine your com-petitive advantage?

6. DEMONSTRATE THE STEPSOF THE SELLING PROCESS

How can the steps of the sellingprocess be implemented?

What are some methods for clos-ing a sale?

What are some other ways of sell-ing?

7. DEVELOP A PLAN FORTRAINING AND MOTIVATINGSALESPEOPLE

How do you develop a plan fortraining salespeople?

How can a small business moti-vate the salesperson?

8. DEVELOP A SALES PLANFOR YOUR BUSINESS

Why is a sales plan important?

Use the Mrs. Field's Cookies example to show how a successfulentrepreneur can determine his/her business' competitiveadvantage.

Use the chalkboard or an overhead to show the steps of the sell-ing process. Have students explain what actions the salespersonshould take to successfully complete each step. It is importantthat students understand the logic of the steps in the sellingprocess. Refer to the ideas presented in the text to guide anextensive discussion.

Ask the guest salesperson to speak about various sales closingmethods.

Define telemarketing and mail order. Discuss the shifts inselling strategies over the last decade (i.e., telemarketing was amost successful strategy in the 1980s; however, in the 1990s, thediffusion of information, overuse of cold calling, and the in-creased speed of life shifted the focus from telemarketing to mailorder and customer networking.)

Have the entrepreneur speaker speak about how he/she develop-ed a plan for training salespeople.

Use Maslow's hierarchy of needs to introduce the concept ofhuman motivation.

Create a list of reasons for developing a sales plan. Link thesereasons with strategies for finding a competitive niche in themarketplace. Use examples of successful entrepreneurs to em-phasize the importance of marketing competitive advantage (e.g.,WalMart, Mrs. Field's Cookies, Apple Computers, The Limited,etc.).

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Objectives Teaching Suggestions

What about developing sales fore-casts?

Use a simple e-cample to show how entrepreneurs make salesforecasts (choose a dollar amount for 1994 sales revenue, say$200,000). Next, choose a growth rate for 1995, 1996 . . . basedon current, past, and long-term future sales trends, competitiveconditions, economic conditions, customer base, etc. Supposeyou choose a constant 6 percent growth for the next three years.Your sales forecasts will be as follows:

Sales in 1995 = Sales in 1994 x growth rate = $200,000 x 1.06= $320,000

Sales in 1996 = Sales in 1995 x growth rate = $320,000 x 1.06= $512,000, etc.

MODEL ASSESSMENT RESPONSES

1. Salespeople are responsible for developing product knowledge in order to effectively communicate withboth the informed and uninformed customers. To be able to give a complete and correct response to thecustomer's questions, the salesperson should keep up-to-date on new product developthents and the chang-ing business environment.

The proper handling of prospects' questions will help them make the right buying decisions and the sales-person to build a good reputation in the community. Generally, the more complex and expensive the pro-duct, the more knowledgeable the salesperson needs to be.

Besides knowing the product line and prices, the salesperson should have a thorough understanding of theproduct's features, benefits, and pricing. In addition, product knowledge includes: (1) the correct nameof the product/service, (2) the name of the manufacturer, (3) the composition and description of the product,(4) the method of production, (5) the product's uses and purposes, (6) the way the product operates and per-forms, (7) the sizes, styles, colors, and models available, and (8) services provided, guarantees andwarranties.

2. The sales presentation should catch the prospect's attention, stimulate interest, and create desire for theproduct. To accomplish these objective,. *he prospect has to be directly involved in the sales presentation.The salesperson should let the prospect express his/her own opinions in order to learn his/her needs/desires,and should tailor the presentation accordingly. This can be achieved by listening to the prospect's objec-tions, understanding them, and handling them properly.

A prospect's passive attitude will not lead to closing a sale. Objections handled carelessly can also leadto lost sales. The salesperson should not argue with the prospect, try to win an argument, or magnify objec-tions. The use of "yes-but," "boomerang" and "direct question" can help to overcome objections. Thesemethods give the prospect the opportunity to raise objections, but also gives the salesperson the opportunityto address them.

3. Prospecting is the process of adding new sales contacts to a salesperson's list of customers. Basically,prospecting includes locating and classifying potential buyers. Ultimately, prospecting means taking theinitiative to reach a customer base with a product/service.

Prospecting sources include joining organizations, making contact with people who do business with yourtype of customers, securing additional prospects from current customers through referrals, surveying publicreferences, door-to-door and phone solicitations, attending trade shows, reading directories, newspaper an-nouncements, public records, the company's sales records, and trade registers.

4. Four methods to close a sale are: (1) ask for the order, (2) summarize the main points oc the sales presen-tation, (3) close on a minor point, and (4) offer added incentives.

Asking for the order is an obvious closing method, yet it is often overlooked. Basically, after all questionshave been answered, the salesperson asks the customer to buy the product in a direct, straightforward way.

Summarizing the main points of the sales presentation gives the salesperson the opportunity to briefly re-view the main points of the presentation, and focus on the points that appeal most to the customer.

Closing on a minor point involves shifting the buying decision to a minor detail, such as asking which colorthe customer prefers, or whether he/she will pay cash or charge.

Offering added incentives might help the customer finalize his/her buying decision. For example, delivery,alteration, cash discounts, or a free home trial can help the customer decide to buy the product.

lk

W

Program for AcquiringCompetence in

I ik EntrepreneurshipIncorporates the needed competencies for creating and operating a -small business at three levels oflearning, with experiences and

outcomes becoming progressively more advanced.Level 1 Understanding the creation and operation of a business.Level 2 Planning for a business in your future.Level 3 Starting and mana0ig your own business.

Self-contained Student Modules include: specific objectives, questions supporting the objectives, complete contentin form of answers

to the questions, case studies, individual activities, group activities, module assessmentreferences. Instructor Guides include the full text

of each student module and lesson plans, instructional suggestions, and other resources. PACE,Third Edition, Resource Guide includesteaching strategies, references, glossary of terms, and a directory of entrepreneurship assistance organizations.

For information on PACE or to order, contact the Publications Department at theCenter on Education and Training for Employment, 1900 Kenny -Road, Columbus, Ohio 43210-1090

(614) 292-4353, (800) 848-4815.

Support for PACE, Third Edition provided in whole or in part by:

International Consortium for Entrepreneurship Educationand

International Enterprise AcademyCenter on Education and Training for Employment

The Ohio State University

ANNI111=IMMIllilMMI

The Coleman Foundation

Center for Entrepreneurial Leadership Inc.8 Ewing Marion Kauffman Foundation

SellingUNIT 16LEVEL 3

Your Potentialas an

Entrepreneur

Nature ofSmall Business

BusinessOpportunities

Global MarketsThe

Business Plan

Help forthe

Entrepreneur

LegalIssues

Types ofOwnership

MarketingAnalysis

LocationPricing

StrategyFinancing

the Business

Business Human

Management ResourcesPromotion

Record FinancialKeeping Analysis

CustomerCredit

RiskManagement

Operations

Progr for Acquiring11 Competence in

Entrepreneurship

CENTER ON EDUCATIONAND TRAINING FOR EMPLOYMENT

COLLEGE OF EDUCATIONTHE OHIO STATE UNIVERSITY Research & Development Series No. 303-16

SELLING

BEFORE YOU BEGIN .

1. Consult the Resource Guide for instructions if this is your first PACE unit.

2. Read What are the Objectives for this Unit on the following page. If you thinkyou can meet these objectives now, consult your instructor.

3. These objectives were met in Level 1 and Level 2:

Level 1

Discuss the concept of selling.

Examine the role of selling in small business.

Describe the selling process.

Identify the, characteristics of a successful salesperson.

Level 2

Discuss the importance of selling.

Desi;ribe customer buying motives.

Analyze proiuct features to determine benefits.

Explain the steps of the selling process.

Identify different types of customers.

4. Look for these business terms as you read this unit. If you need help with themeanings, ask your instructor for a copy of the PACE Glossary contained in theResource Guide.

Competitive advantage Sales forecastCompetition Sales quotaMail order Sales strategyMarketing plan Shotgun approachProspecting TelemarketingQualifying buyers Trade areaQuality of service

Copyright © 1994, Center on Education and Training for Employment,The Ohio State University. All rights reserved.

3

SELLING

WHAT ARE THE OBJECTIVES FOR THIS UNIT?

Upon completion of this unit you will be able to

define the role of selling in your small business,

analyze your product/service to determine benefits,

analyze potential customers,

design policies and procedures that emphasize quality of service,

determine your competitive advantage,

demonstrate the steps of the selling process,

develop a plan for training and motivating salespeople, and

develop a sales plan for your business.

WHAT IS THIS UNIT ABOUT?

This unit will help to implement sellingstrategies appropriate for your business. Itwill define the role of selling, analyze theproduct/service to determine benefits, andanalyze potential customers. Also discussedin this unit is the need for understandingyour competitive advantage, as well asdemonstrating the seven steps of the sellingprocess. A plan for training and motivatingsalespeople will be developed and a salesstrategy will be generated.

WHAT IS THE ROLE OFSELLING IN A SMALL

JSINESS?

Selling is the life-blood of a business.Without it a business can't exist. The effec-tiveness of selling is an important determi-nant of a firm's success because selling in-creases revenue.

Selling is the process of informing customersand persuading them to purchase a productor service. The exact process of sellingvaries among individuals and among busi-nesses. No two businesses will sell theirproducts or service exactly the same way.However, there are usually three generalsteps to selling. These include finding

4

prospects, helping them make a buying deci-sion, and offering quality service after thesale.

A small business must determine the needsand wants of customers, and convince cus-tomers that the product or service will fulfilltheir needs and wants. The sales goalsshould be stated in precise, measurableterms. It is important to specify the timeperiod in which the goals are to be accom-plished.

Many businesses have good products orgood services yet are not successful becausetheir salespeople lack the necessary skills.These sales skills include:

developing a prospecting plan,

precall preparation,

preplanning sales presentation, and/or

emphasizing benefits instead of features.

Many small business owners do not like tosell or do not know how to sell. Instead,they just like to produce. Selling is the leastunderstood function within most companies.The role of the salesperson must be that ofa positive, open communicator. Competitionis greater than ever. For a business to exist,much thought and planning must take placein the selling process.

HOW CAN YOU ANALYZEYOUR PRODUCT/SERVICE TODETERMINE THE BENEFITTO THE CUSTOMER?

The effective salesperson knows that cus-tomers buy to satisfy their needs and wants.The customer is not buying a product; he orshe is buying the benefit that they perceivethey will get from the product. You mustsell benefits! To sell benefits, you first mustknow what benefits your product or serviceoffers the customer.

Unless your product or service is of a highlytechnical nature, the features can be easilydetermined. For example, if you are sellinga special type of high-intensity spotlight, youtell your prospect that the bulb has a lifespanof 500 kilowatt hours. This is certainly agreat feature considering that the averagebulb on the market lasts only 100 kilowatthours. The trick lies in converting this fea-ture into a benefit to the customer. Thesteps involved in this conversion are verysimilar to the basic steps in successfulselling.

Ask open-ended, probing questions

Listen carefully

Identify wants and needs of customer

Sell

Using the above example, let's assumewe've determined that the main need theprospect has is to save money. This is notan unusual need. What if we presented itthis way?

"Mr. or Ms. (prospect's name), ourspotlight is priced at $10, our compe-titors light is priced at $5. You toldme earlier that you use approximate-ly 20 of our competitor's bulbs in agiven year for a total expenditure of$100. If you were to purchase our"EVERBRIGHT" spotlights youwould use only four lights over thesame time period. So, as you cansee, you will save $60 each year. IfI also told you our lights were guar-anteed, would you be interested inthat kind of savings Mr./Ms. (pro-spect's name)?"

The feature of spotlight's longevity convertsto the benefit of cash savings to the cus-tomer. In this case, the salesperson canmake t. e benefits actually visible by show-ing the figures on a calculator as theyaddress the prospect.

WHAT IS THE IMPORTANCEOF PRODUCT KNOWLEDGE?

Promotions keep the general public and in-dustrial customers abreast of new productdevelopments. Radio, television, magazines,and newspapers provide the latest informa-tion about goods and services. Trade publi-cations inform the industrial customer aboutproducts. M'iny books and magazines evalu-ate product quality for consumers. In addi-tion, the salesperson is expected to giveconsumers up-to-date product information.

Before the salesperson contacts the customer,he or she should take time to analyze theproduct and its application for the customer.Product knowledge is more important than it

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use to be because products and services arebecoming more complex. Customers arealso better informed and more concernedwith quality and value. Successful sales-people know their merchandise thoroughlybefore they make a sales presentation.When selling expensive, complicated, andtechnical products, c ,plete knowledge ofthe goods is invaluable. A retailer who sellsfarm tractors, for example, should be knowl-edgeable of the features, benefits, and opera-tion of the tractor, because a customer in themarket for a tractor usually wants to com-pare one model with the others. By know-ing and understanding what it is the farmervalues in a tractor, the salesperson will beable to provide the customer with informa-tion specific to his or her needs.

WHAT PRODUCTINFORMATION DOYOU NEED?

What information should the salespersonhave in order to sell any product success-fully? The salesperson should know what isavailable. He or she should also know theproduct's features, benefits, uses and pricing.

Other necessary information includes thefollowing:

The name of the product or service

The name of the manufacturer or pro-cessor

The composition of the product (i.e.,plastic, steel, rayon), or description of aservice

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The method of production (i.e., how theproduct is made)

The product's uses and purpose (i.e.,what the product will do)

How the product operates or performs

The sizes, styles, colors, and modelsavailable

Care instructions

Services provided (i.e., alternations,installations, repairs)

Guarantees, warranties, maintenancecontracts

Other information that might be useful inthe sales presentation, such as method ofpayment, and delivery

As you can see, obtaining product/serviceinformation is important for a good sales-person. The following sources will help youget the information you need:

Printed materials (tags, labels, manufac-turer's booklets, etc.) that accompany theproduct

Advertisements

Instructions with product

Salespeople and supplier's representa-tives

Catalogs, trade magazines, and news-papers

Coworkers

Customers who have used the product

Your experience with the product

Training programs for salespeople

Using the above sources to identify the fea-tures and benefits of a particular product orservice.

HOW CAN YOU IDENTIFYYOUR POTENTIALCUSTOMERS?

Population shifts can create new customers.Trends for the 1990s include an aging of thelabor pool as well as the customer popula-tion. Women and minorities will dominatethe work force, and have a major impact onproduct and service selection. In addition,global markets will expand. The small busi-ness owner must constantly check to see ifmarket shifts have changed their customerbase.

Unfortunately, in many cases the approach togenerating a list of new customers is dis-organized. Customer names and addressesare gathered randomly. This is called theshotgun approach.

The preferred approach to generating a cus-tomer list involves some straight-forwardinitial analysis. This approach is often less

expensive and more productive than theshotgun approach. This approach involvesfive steps:

1. Specify. The first step is to decide whatkind of customer is needed. This in-volves a brief customer "specification."Identify the type of customer that wouldbuy the specific product being offered.What is the difference between custom-ers who would buy a simple drill press,and those who would buy a numericallycontrolled multiple spindle processingunit? Good analysis of the strengths andweaknesses of present customer accountscan help in preparing your customer spe-cification.

2. Quantify. How many new customersare needed this quarter or this year? Asmall business owner might quantifytheir needs with a statement like this:"To increase revenue by $225,000 annu-ally I need two new large accounts withvolume potential of $50,000, plus fivenew smaller accounts with a volumepotential of $25,000 each."

By proper attention to maintenance sell-ing, business accounts can be upgradedand expanded to new applications. Themaintenance aspect of selling is oftenminimized because the battle has beenwonthe customer is on the books.Neglect gives your competitors theopportunity to develop a new account bytaking away one of your customers. Inmost cases, developing an existing ac-count is much less costly than acquiringa new one.

3. Identify. Having specified and quanti-fied the type and number of accountswanted, the next step is to identify androughly screen the most likely candi-

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dates. A few days devoted to secondaryresearch can prove rewarding. The pre-cise research method depends on thescope of the project, the number of re-quired new accounts, and the geographicarea involved. For the smaller localbusiness, the telephone directory is anobvious reference for new accounts. Infact, a study of the directories for severalcities provides a fast, comprehensive,and specific source of information forthe trading centers in a region. Tele-phone directories list products and ser-vices, the business location, the businessphone number, and zip codes.

4. Qualify. One of the best sources of newaccounts among existing users are yourdirect or indirect competitors. Examina-tion of the sales literature, catalogs, andtrade releases of a competitor often re-veals distribution, customer accounts,and new product applications. Competi-tor advertising may also indicate areas ofconcentration, selling methods, and ma-jor markets.

5. Convince. Convincing a potential buyerto try, or continue to use, your productor service is the next step. This step isthe pay off for all your efforts. Ideally,once sold on your product your new cus-tomers will purchase from you for manyyears in the future.

Keeping customers over time involves ser-vicing, collecting, measuring account pro-fitability, and expanding customer buying.If you remember to treat old customers thewas you treat new ones, you may not needso many new ones.

There are many aids for helping small busi-nesses identify potential customers. TheU.S. Census Bureau offers information such

8

as population by age, household size, genderof head of household, and much more usefulinformation. Lists can be purchased fromDun & Bradstreet, Dunhill, and ThomasRegister to name a few. Other useful andreadily available secondary sources of namesare directories of associations, clubs, labo-ratories, manufacturers, chambers of com-merce, mail order catalogs, libraries andlicensing agencies. The source of lists isonly limited the imagination of theresearcher.

HOW DO YOU IDENTIFYYOUR CURRENTCUSTOMERS' SERVICENEEDS?

Understanding one's customers is so impor-tant that large corporations spend hundredsof millions of dollars annually on marketresearch. Although such formal research isimportant, a small firm can usually avoidthis expense. Typically, the owner or mana-ger of a small business knows the customerspersonally. From this foundation, an under-standing of your customers' needs can bebuilt by a systematic effort. It is importantto answer six questions about the customer:

Who? Identification of customers andprospects makes effective targeting pos-sible. A small firm might prosper byconcentrating its resources on onesegment.

What? It is important to find out whatthe customer wants or needs. Identifyingwhat the customer wants will increaseprofits.

Why? Successful business people un-derstand the reason for their customers'buying decisions. To learn why custo-mers buy can be quite difficult as well astime consuming, but shrewd businesspeople will take the time to find out whycustomers make certain purchases.

When? The seller must be ready to sellwhen the buyer wants to buy, or an op-portunity is lost. Although a transactionmay be concluded in a moment, manypurchases actually entail a drawn-outprocess.

How? Knowledge of how customersbuy can pay off in several ways. Theseller can design their offerings to meetthe exact needs of their buyers. Sellerscan influence decision-makers at crucialsteps of the buying process, and sellerscan lay the groundwork for repeatbusiness.

Where? From a multitude of studiesemerge different criteria for decidingwhere to shop. Most research on thisagrees that store location is a majorconsideration for the customer.

A small firm that understands its customerssells exactly what the customers want. Thefirm's sales effort is efficient because it isbuilt on what its customers need.

WHAT IS REQUIRED FORA BUSINESS TO PROVIDEQUALITY OF SERVICE?

Companies that emphasize quality of ser-vice should foster a positive employee

attitude. Those who genuinely enjoy work-ing with people are more likely to haveprofitable businesses. Serving the customerwith enthusiasm is vital in a sales situation.A successful business will allow the cus-tomer to be right (even on those occasionswhen they are not). The difference betweeneffective and ineffective service is a matterof sensitivity, sincerity, attitude, and humanrelations skillsall of which can be learned!

Two primary dimensions make up qualitycustomer service: the procedural dimensionand personal dimension. Each is critical tothe delivery of quality service. The pro-cedural side of service consists of the estab-lished systems and procedures to deliver pro-ducts and/or service. The personal side isdetermined by employee attitudes, behaviors,and verbal skills. Included in quality ofservice are the following approaches:

A positive attitude is presented by ap-pearance, body language, and the soundof a person's voice. It is important toremember that people decide in the first30 seconds to four minutes whether theylike a person. So it is vital to a salespresentation that you display a positiveattitude.

Identifying customer needs requires asensitivity to customer's wants andneeds. This means that a business ownermust be tuned-in to the human needs ofthe customer. The customer's four basicneeds include the need to be understood,the need to feel welcome, the need tofeel important, and the need for comfort.The customer also wants help, respect,comfort, empathy, satisfaction, support,and a friendly face. Skillful listening aswell obtaining feedback are included inthis step.

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9

Demonstrating to the customer howyour product or service meets theirneeds. This means you must describethe features and benefits in terms of thecustomer's wants and needs.

Ensuring continued customer loyalty iscritically important. Businesses mustrespond to customer complaints, andlearn to deal with difficult customers.Businesses that go beyond what is re-quired or expected will strengthen cus-tomer loyalty. Remember, the customerservice policies will help keep yourcustomer base strong, loyal, andgrowing.

HOW CAN YOUDETERMINE YOURCOMPETITIVEADVANTAGE?

Competitive advantage is being one step infront of businesses who sell the same type ofproduct and service you sell. Competitiveadvantage can be established if you knowhow to do the following:

Identify a certain target population whereyour product will fit.

Know the products and services of yourcompetition and know the advantagesand disadvantages of the competition'sproducts or service.

Be familiar with the pricing structure ofthe competition.

10

Do something extra for the customer thatwill create loyalty.

Be able to objectively look at your ownadvantages and disadvantages.

Small businesses should monitor and assessany competitive changes. Knowledge oftheir competitors' marketing strategy, and itsimpact on their own marketing strategy, willhelp the small business owner define theircompetitive advantage. Such market infor-mation might include data about marketshares, product movement, sales volume, andexpenditure levels.

Don't let your business fall in the trap of"keeping up with the competition." Thisputs you in a reactive position, when youshould be in a proactive position. A goodbusiness manager needs to be assertive.Take the lead in advertising. It will tell thepublic and your competitors that you trustyour own judgement. You can learn fromyour competitors, but don't let them lead.You want your competitors to react to you,not vice-versa. Also, remember your com-petitors will also be watching you, so don'tget into a rut. If you follow a pattern, theywill soon pick up on it. Toss in a few sur-prises to keep your advertising fresh.

HOW CAN THE STEPS OFTHE SELLING PROCESSBE IMPLEMENTED?

The exact activities involved in the sellingprocess vary among businesses and differ forparticular selling situations. The generalprocess however might include: prospectingand evaluating, preparing, approaching the

customers, making the presentation, over-coming objections, closing, and following up.The following section will describe theselling steps while offering suggestions onimplementation.

Prospecting. Developing a list of potentialcustomers is called prospecting. This listcan be obtained from company's sales rec-ords, referrals, trade shows, newspaperannouncements, public records, telephone di-recto'ies, and many other sources. Next, thelist needs to be screened to determinewhether the customer is willing, able, andauthorized to buy the product. During thisevaluation, some prospects will be deletedand others will be added.

Prospecting involves aggressively seekingnew customers. You must take the initiativeby going to the customer with a product orservice idea. Prospecting can be categorizedin two ways: new or regular customer pro-specting. Both approaches are viable waysto generate more sales. Prospecting is mostappropriate in industrial selling and certainhigh-end consumer products such as auto-mobile sales, high fashion clothing, andcomputers.

Preparation. Before contacting acceptableprospects, much preparation is required. It

is important to determine the prospect's spe-cific product needs, and current usage. Per-sonal characteristics of the prospect may alsobe pertinent. If it is possible to identify thecustomer buying characteristics, the chancesof a sale will be greater.

Sales training will prepare the staff to antici-pate the target markets particular needs andbe prepared to meet them. This will best beaccomplished by linking the benefits of yourproduct with customer needs. This prepara-tion is possible only if you have a thorough

i3

knowledge of your product, the needs ofyour customer, and the business environ-ment.-

Approaching the customer is a critical stepin the selling process. The customer's firstimpression of the business or salespersoncan make or break the sale. If the contacthas been made through a referral, a smoothIntroduction might be made by the persongiving the referral. In a retail setting it isespecially important to show a willingness tobe of service without being perceived aspushy.

Neatness in appearance and a sincere pridein your company and the products it repre-sents will go a long way toward making apositive first impression. This first impres-sion will set the tone for all future business.Whether the sales call is a "cold call" inindustrial selling or greeting a prospectivecustomer in a retail store, the old adage"You never get a second chance to make agood first impression" is always true.

Determining a customer's needs. In alltypes of selling, the object is to meet theneeds of the buyer. In some selling situa-tions you may have prior knowledge of whatit is the customer wants or at least have ageneral idea. Rarely, customers state exactlywhat they want. Most often it requires care-ful questioning, and more importantly carefullistening.

Beware of close-ended questions that require"yes" or "no" answers. These questions pro-vide little information. Try to ask questionsthat are open-ended such as, "What kind offence did you have in mind Mr. Brown?."Open-ended questions start conversationsthat will help you better define the wantsand needs of your customer.

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Sales presentation. When making the salespresentation the salesperson must initiallyattract, then hold the prospect's attention. Aquality presentation is designed to stimulateinterest and create i desire for the product.It is important to include the prospect in thesales presentation. Allow the customer tohold, examine, and try the product. Involve-ment is the key word in a successful salespresentation. If you can involve the custo-mer by having them express to you theirpersonal needs and wants, then the sales pre-sentation can be tailored accordingly. Forexample, if while asking questions about theprospect's business you find that durabilityis really what they are looking for in thisproduct, you would focus the presentation onthe incredible durability of your product.

It is also important to limit the choices givento a prospect during the presentation. It isbest to focus on finding the right product orservice for that particular customer. If morethan three items are in front of the customer,the chances of a sale are reduced. The cus-tomer will likely not to buy anything be-cause of their inability to choose.

In presenting merchandise (or a service) tothe customer, the salesperson should pointout buyer benefits. Although it is good totalk about the product features, customerswill probably be more interested in thebenefits.

The salesperson must remember to listen aswell as talk. Often sales are lost because thesalesperson does too much talking and notenough listening.

Objections. When attempting to overcomeobjections, a smart salesperson will be pre-pared and will know in advance how to han-dle them. An effective salesperson will seekout a prospect's objections to create the

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opportunity to be proactive in overcomingthem. Remember, if objections are present,progress is probably being made on the sale.Many salespeople are afraid of objections.However, objections are a natural part of theselling process. The fact that a prospectvoices objections certainly does not meanthat the sale is lost. In most cases, all thatis required to overcome an objection is moreselling on the part of the salesperson.

Before objections can be overcome, theymust first be understood. During the courseof the sales presentation, a customer mayraise objections for any number of reasons,real or fabricated. Some common objectionsare as follows:

The customer is not convinced of aneed for the item. In this case, youmust provide additional informationabout the product, or point out theadditional worth of your product.

The customer has insufficient informa-tion on which to make a buying deci-sion. He or she may not know aboutcertain features of your product. If thecustomer is not aware of an importantfeature, he or she will almost certainlynot be aware of the ultimate benefit.

The customer thinks the price is toohigh. If you can give the customer moreinformation about the quality of yourproduct that will justify the price, theobjection may be diffused. If the priceobjection cannot be solved by justifyingthe price, then less expensive, alternativeitems can be shown. If price is still anissue, you might try offering a credit orlay-away plan.

The customer is misinformed aboutthe product. It would be best if youhad sufficient product knowledge to beable to answer any conceivable questionabout your product. Since this is oftennot realistic, it is better to say "I don'tknow about that, but I'll find out and getright back to you."

The customer wants to "think it over"before buying. The customer may wantto "shop" a little more first, or ask theopinion of a friend before he or shebuys. You should not be "pushy" in try-ing to convince customers to buy imme-diately. Encourage them to take theirtime. Let them know they are welcometo come back anytime. If it is not awk-ward, try to remind them of the benefitsof your product before or as they (oryou) leave the premises.

Too many inexperienced salespeople fear ob-jections because they are not prepared toaddress them. To a professional salesperson,an objection is often a signal that the pro-spect wants to know more about the productor service. Correctly handled objections canbe turned into real selling opportunities.

How can salespeople prepare themselves toanswer objections? First, liswn carefully tothe customer. This may be the most criticalstage of the sales process. It is very impor-tant to determine what the prospect is think-ing. Then, when responding to the objec-tion, don't hurry. Pausing not only allowsyou time to carefully frame your answer butalso shows respect for your prospect and hisor her concerns.

Two additional rules to follow when answer-ing objections are:

Never argue when overcoming objec-tions. The best way to lose a sale is towin an argument.

Never magnify an objection. General-ly, the longer an objection is discussed,the larger it becomes.

There are a number of methods used in an-swering objections. One method is calledthe yes-but method. In this method, thesalesperson agrees with the customer butpoints out an advantage that is equal to or,preferably, greater than the objection. Whena customer raises an objection you wouldfirst agree with their comment, then respondaccordingly. For example, "Yes, I under-stand how you feel about the difficulty inironing 100% cotton. But, did you knowthat cotton is the coolest fabric? For yourtrip to Acapulco in August, cotton would beideal."

Another approach to handling objections isknown as the boomerang method. In thismethod the salesperson attempts to turn theprospect's objection around and direct itback at the prospect in the form of a reasonto buy the product or service. Here is anexample.

Customer: "You mean you aren't goingto use soap to clean my carpet. I can'tbelieve that it'll come out clean."

Salesperson: "We have found that soapresidue resulting from carpet cleaning isthe main cause of new soiling. Withsteam cleaning, we can clean your carpetwithout leaving soap residue. Yourcarpets will stay clean much longer."

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Sometimes you will discover hidden or un-expressed objections. The direct questionmethod is used when customers are not yetready to buy and have not raised any objec-tions as to why they will not buy the items.Direct questions should ask who, why, what,and when. For example

"What color did you buy last time?And were you happy with it?"

"When did you start to feel youneeded new office furniture?"

"Why did you buy a convertible thelast time you bought a car?"

"Who will be using the car themost?"

These techniques for handling objections canbe used alone or in combination with eachother. You will probably find that in certainsituations a specific method may be mostcomfortable and effective for you. However,don't attempt to rigidly classify methods ofdealing with objectives. You must be com-fortable with a variety of methods and usethem flexibly during the presentation.

Closing is the step in the selling processwhen the salesperson asks the prospect tobuy the product or service. The salespersonshould try to close at several points duringthe presentation because the prospect may beready to buy. Often an attempt to close thesale will result in objectiveF. Thus closingcan be an important stimulus that uncovershidden objections. If objections are present-ed at this phase of the process, they must beanswered. Then follow with another attemptto close.

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In today's competitive markets, a good sales-person must know when to close. Moresales are lost because the salesperson did nottry to close at the right time; he or she eitherwaited too long or tried to close before thebuyer was ready.

The salesperson should be prepared to closeat any time during the selling process. Thethree steps of the selling processthe pre-sentation, overcoming objections, and clos-ingare all closely connected. It is impos-sible to tell exactly where one step ends andthe next begins. A customer may be readyto buy before you get through your presenta-tion. The customer may have no objectionsabout buying the product. If there are objec-tions, closing should be attempted when thesalesperson feels that he or she has met thecustomer's objections. In general, if youhave created favorable conditions throughoutthe selling process the closing of the salewill come naturally.

It should be noted that your first try atclosing often does not succeed. Do notbecome discouraged. The closing may havefailed because the customer desired moreinformation. You may need to reemphasizeproduct/service benefits or answer additionalobjections. You should attempt to closeagain and again. Do this, of course, in amanner that does not offend your customer.

Do not be afraid to close. You are a sales-person and the customer expects you to sellmerchandise. Don't be bashful. Be boldand assertive in closing, but avoid being toopushy and possibly irritating your customer.Closing should be natural and logicalnot abattle of nerves or wits.

There are two ways to determine whether thecustomer is transmitting a buying signal:one is to watch the customer and the other isto listen to the customer.

Watch the customer. You should be awareof physical actions and facial expressions.The customer may be smiling, have a peace-ful look, and have on an overall agreeableexpression. The customer may reach for apurse or billfold. The customer may pick upa certain item several times to examine spe-cific features. The customer may step backfor a better look, or may lift an item or givesome other sign, such as rereading part ofthe literature or examining the label. Usual-ly, these actions indicate that the buyerwould like some help in making a decision.These are times when you should try toclose the sale.

Listen to the customer. Customers mayask certain questions that tell you they arethinking about buying the product. Listenfor questions, such as "Do you deliver?""May I put this in lay-away?" "May I ex-change this or get my money back if I

change my mind later?" Such questions in-dicate that they are interested in making apurchase. Customers may make statementsthat show they want to buy but need furtherencouragement to do so. For example, "Ihadn't planned on buying this today," or "Idon't really need this jacket, but I like it."They may also simply state that they wish tobuy. These are all good items to close thesale.

WHAT ARE SOMEMETHODS FORCLOSING A SALE?

There are a number of methods to use inclosing a sale. Experimentation with theseand other closing methods is advisable. Byexperimenting you will learn the "best" waysto close in specific situations. Four of thesemethods include the following:

1. Ask for the order. This is the mostoverlooked method for closing a sale.Some customers like this frank, straight-forward approach.

2. Summarize the main points of thesales presentation. You should empha-size the selling points that appeal most toyour customer.

3. Close on a minor point. It is easier fora customer to make a minor decisionthan a major one. Asking which colorthe customer prefers, or if he or she willpay cash or charge, can close the sale.

4. Offer added incentives. Offering freedelivery, alterations, or a cash discountwhen the customer hesitates are exam-ples of incentives.

Following-up. Although not apparent tomany salespersons, and not an actual step inthe sales process, follow-up is a part ofevery sale. The closing statement, "Thankyou for your purchase," is a form of salesfollow-up if done with enthusiasm. After asuccessful closing, the salesperson mustfollow-up the details of the sale. In thefollow-up stage, the salesperson should

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determine whether the order was handledproperly. The follow-up stage also can beused to determine customers' future productneeds. A sharp salesperson will consider thefollow-up as the beginning of a new sale. Asalesman who stays in touch with the cus-tomer is more likely to get the next sale. Inaddition, they may generate new leads.

WHAT ARE SOME OTHERWAYS OF SELLING?

Telemarketing is a cost-effective, flexiblesales tool that can both help expand busi-ness-to-business and consumer sales effort.The capabilities of modern telecommunica-tion equipment combined with knowledge-able sales personnel and a well-designedcampaign can enable any company to reachnew customers and markets. Telemarketersmust be able to capture the prospective cus-tomer's attention quickly. Many companiescan use telemarketing to increase sales.Telephone sales provide an inexpensivemeans of generating leads, selling, filingrepeat orders, or upgrading sales. Telemar-keting can also be the most cost-effectivemethod of improving service and support toexisting clients. Developing a successfultelemarketing campaign requires carefulplanning. Equipment and telecommunicationservices must be carefully selected to maxi-mize the efficiency of the telemarketingeffort. Similarly, support efforts such astraining the staff, drafting the sales script,and designing a telemarketing facility mustbe carefully planned.

Mail order both inspires and excites themind of the business entrepreneur. Mailorder conjures up visions of enormous

3

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wealth, easy living and the proverbial "pot ofgold". There is a magica mystica mag-netic attraction that draws people to mailorder. Mail order has its advantages anddisadvantages.

To succeed in mail order pay close attentionto details! Keeping accurate records of theresults of advertisements, advertising costs,printing, postage, cost-per-order, and otherfigures are important to the success of thebusiness. However, do it in the simplest,easiest, least time-consuming way possible.

Repeat business is the key to maximum pro-fits. To stimulate repeat orders at minimalcost consider using package stuffers, offeringquantity discounts, and advertising on theenvelopes. Mail order can be profitable orunprofitable, depending upon personal skills,ability, business judgement, capital re-sources, imagination, and aggressiveness.

HOW DO YOU DEVELOPA PLAN FOR TRAININGSALESPEOPLE?

To many customers, the salesperson is thebusiness. Therefore, if the sales people aregood, the business is good. This is the rea-son for the need for effective sales training.

Small business owners typically associatetraining with the formalized programs con-ducted by some large organization. How-ever, sales training by the small businessdoes not have to be a formal and structuredprogram. Actually, any conscious effort thesmall business owner makes aimed at im-proving the basic skills needed for effectiveselling is a form of sales training. Allemployees in a small business may be called

on to be sales representatives at any giventime. Everyone involved in the businessshould be trained to know the product andthe business at least well enough to answerbasic questions if asked.

An excellent method for developing a sales-person's skills in identifying a customer'sneeds is role playing. Role playing consistsof acting out the customer salesperson rela-tionship. Role playing enables salespeopleto see various sales situations from thecustomer's point of view. The skill neces-sary to quickly "size up" customers (learnabout their needs) is rapidly sharpenedthrough role playing. A good time to try outthis method is during slow periods whensalespeople are just "standing around."

Salespeople can always use more training inproduct knowledge. A good way to improveproduct knowledge is to make use of regu-larly scheduled sales meetings. Such meet-ings offer an excellent opportunity to discussthe features of new products, changes instore policies, new merchandising strategies,or other matters relating to the products orservices. These sales meetings do not haveto be formal and precisely scheduled events.Instead, you can conduct them right on thesales floor during slack periods or shortlybefore the store opens for business. It isimportant is that you hold these sales meet-ings regularly and frequently (once per weekat a minimum) and that each meeting shouldhave a specific theme or focus. These meet-ings will lead to ^ much better informedsales staff.

Developing a program for improving basicselling skills is the essence of building abetter personal selling effort for your busi-ness. The framework for the program con-sists of three basic elements:

1. Selecting people who are suitable forparticular sales positions

2. Providing the actual training

3. Matching an appropriate compensationplan with the company's goals

Training in the ability to actually sell isperhaps the most difficult. Some peoplebelieve that salespeople are "born not made"and therefore training makes little difference.There may be some degree of truth to thisbelief. But, to the extent that people dodiffer in their natural communication abili-ties, training can still make a difference.Such training can range from encouragingyour salespeople to take a formal course insalesmanship to informal sales meetings inyour business. These sales meetings may bevery relaxed. The manager may just discusscustomer communications with the salesstaff during a coffee break. These sessionswill foster a constructive interchange ofideas about selling.

The importance of recruiting and retrainingan effective and motivated sales force cannotbe overstated. Some of the largest and mostsqccessful companies in the world todayhave attained their prominence with the helpof this carefully hired, well-trained employeecomponent. After all, IBM didn't start outa corporate giant. Nor did WalMart. Whocan forget the humble beginnings of Applecomputer in the garage of its founder? So,remember that the key element standing be-tween you and your competition just may beyour sales force. Showing that your firmvalues their talents through techniques thatpromote loyalty and continuity will go along way in developing a team marked byhigh performance, good morale, and a strongsense of self-motivation.

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HOW CAN A SMALLBUSINESS MOTIVATETHE SALESPERSON?

An important ingredient in the sales processis motivation. Without it, many sales willnot even get to the point that they can belost. What causes some employees to exertmore effort than others? Since motivation isan internal force, can a business owner hopeto actually motivate his or her sales force?The answer to these questions are rooted inthe very complicated area of human psy-chology.

The two most important aspects of motiva-tion as it relates to selling are leadership andthe rewards system. Both effective manager-ial leadership, and the salesperson's knowl-edge that exceptional performance will berewarded affect motivation. The most im-portant thing to determine is what will moti-vate your particular sales force. Salespeople,just like their customers, have needs andwants that must be met. It is the job of thebusiness owner to determine the sales-person's specific needs, and adapt the rewardsystem and the work environment accord-ingly. The foremost contributor to thistheory of motivation was Abraham Maslow.Maslow's theory suggests that although indi-viduals will respond differently to the saniestimuli under identical conditions, certainneeds and wants are shared by everyone.Maslow ranked these needs in the followinghierarchical order shown in Figure 1.

1. Physiological needs include the need forfood, water, shelter, rest, and exercise.All these needs are essential to sustainlife, and therefore, are the most basic.

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Self Actualization

Esteem

Belonging or Love

Safety or Security

Physiological Needs

Figure 1. Maslow's Hierarchy of Needs

2. Safety and security needs include pro-tection against the forces of nature andother means of physical and psychologi-cal danger. One of the safety and se-curity needs is the need for job security.

3. Love or belonging refers to the need foraffection, and acceptance.

4. Self-esteem relates to the need for self-respect, achievement, and recognition.

5. Self-actualization is the ultimate level ofthe Hierarchy of Needs. This refers toself-fulfillment through the realization ofone's full potential.

Maslow believed that as each level of needis satisfied people will strive to satisfy thenext level of need. The lower level needsare more definable and, therefore, more eas-ily satisfied. As we move up the ladder, theneeds are more ambiguous. For example,for some people owning a Cadillac wouldsatisfy their need for self-esteem for othersacquiring a Ph.D. may serve the same pur-pose. For the most part Maslow's theoryhas stood the test of time. However, today

most managers see the hierarchy as a basicguideline rather than a "by-the-numbers" ap-proach. An individual's emotional and psy-chological needs are far too complicated toattempt to tightly categorize them. Once awant or need has been satisfied it will nolonger act as a motivator. Therefore, amanager or business owner must be con-stantly aware of the movement of his or heremployees up and down this continuum.

It is not sufficient for salespeople to betrained in the techniques of selling, theymust also be motivated to sell. There areseveral ways the owner of a small businesscan motivate salespeople to want to sell.This may be accomplished either throughfinancial incentives, or nonfinancial in-centives. Salespeople are usually motivatedby a combination of these incentives. It isthe responsibility of the employer to dis-cover what each individual salesperson needsor wants.

The most basic nonfinancial incentive 17-volves close personal supervision of employ-ees. The fear of being caught doing some-thing wrong motivates the employee to stay

26

on task. There are two basic disadvantagesto close personal supervision. First, itrequires too much of the supervisor's time.Secondly, it is a negative, push approach tomotivation. The employee is forced to dotheir work rather than inspired to do theirwork.

There are a number of other, more positive,nonfinancial motivation methods. The mostcommonly used and often the most effectiveis personal recognition. Simply telling theemployee, "You did a great job," may havetremendous impact. Other nonfinancialincentives include such things as sales con-ventions and meetings, sales contests, andhonors and recognition.

Two types of financial incentives are usuallyprovided to salespeople. These may be di-rect monetary payments, such as salaries andcommissions, or they may be indirect mone-tary rewards. Many times indirect monetaryrewards are referred to as fringe benefits.With indirect monetary rewards you maywant to include such items as paid vacations,insurance plans, or pension plans.

To keep in touch with the needs of employ-ees requires commitment and concern on thepart of the sales manager. The managermust constantly monitor the rewards systemfor appropriateness.

WHY IS A SALESPLAN IMPORTANT?

From the moment your business is con-ceived, you should begin developing a de-tailed, long-range marketing plan that willhelp you through every phase of your busi-ness. It should include everything fromcustomer research to a regular schedule for

19

advertising and public relations activities.Your marketing plan will help answer im-portant questions:

What business am I in?

Who are my customers?

How big is my market?

What's unique about my product/serviceor business?

How should I price the product/service?

How should I promote the product/service?

How should I distribute the voduct/service?

Remember, the marketing plan drives and di-rects the sales plan. In other words, the sizeand makeup of the market will dictate issuessuch as sales territories and quotas.

Think of a marketing plan as a map. Itguides you toward sound business decisionsand keeps you aware of your competitiveniche in the marketplace. The sales plan (orstrategy) is built on the information com-piled in the marketing plan. Basic sales"trategy components consist of

establishing the revenue goals of thecompany,

determining competitive advantage, and

developing program of action.

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A sales strategic plan is a step by stepaction plan for the sales section of themarketing plan. A strategic plan mightinclude the following:

Identifying various target markets.

Defining sales territories.

Setting sales quotas.

Developing a training program for thesales staff.

Cultivating new sales by effectivefollow-up techniques, such as callingcustomers to inquire about additionalorders, or sending greeting cards.

Once these tasks are completed, a sales fere-cast must be established.

WHAT ABOUT DEVELOPINGSALES FORECASTS?

A sales forecast predicts the volume of pro-duct or service a business actually expects tosell in a given time. For instance, the furni-ture division of an office supply company isslated for a solid month of newspaper adver-tising. It is anticipated that this activity willgenerate more sales. Past performance andlevel of marketing activity will drive theforecasts. To develop a useful sales forecastcertain relevant information must be avail-able. To estimate sales dollars, you need thefollowing data:

A long-term sales trend report that isreflective of a normal growth rate,

Conditions outside the business that mayaffect sales,

Conditions within a business that mayaffect sales,

There are two different graphs which may beused to motivate the sales force. First, agraph of actual corporate sales verses fore-cast corporate sales will help the sales forcevisualize the financial status of the company.Secondly, a chart comparing the actual salesof a given salesperson versus the expectedsales (quotas) may prove to be a useful plan-ning tool. Developing these documents mayalso be helpful in creating a solid personnelstructure for your business. For example, ifyou are the owner of a small appliance store,these documents might look like Figure 2.

Note in the graph of total sales, Januarysales were slightly above the sales forecast.Now look at the chart for the individualsalespersons. Mary S. sold eight more unitsthan expected, and Bill T. sold four moreunits than expected. But, Jan M. sold fourless units than expected. As the owner ofthe appliance store, you might verballypraise or give bonuses to Mary and Bill forselling more than expected.

When examining long-term sales trends, besure to review past sales experience. Suchpast sales information should give you agood indication of future sale activity. Salesforecasts are based on projections establishedby using existing or current data. As theseconditions change, they may have some af-fect on the projected sales.

Several conditions outside the business canaffect the sales forecast. Entrepreneurshould note the current economic conditionsin the country and the local community.

450

403

350

xo

250

200

150

100

50

Actual Sales vs. Forecast SalesABC Appliance Store

0

Jan Feb Mar Apr May Jun July Aug Sep Oct Noe Dec

Figure 2

Changes in the population and/or anychanges in the characteristics of the custo-mer base should be noted. Changes in acompetitors' promotional strategy shouldalso be examined.

There are also conditions within the businessthat will affect the sales forecast. Changesin personnel or staff, in credit policies, orcompany policies may affect sales forecasts.

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Businesses that lack an effective sales stra-tegy program become crisis-driven. Withouta strategy, they react impulsively when theylose a key customer, or when there's achange in the marketplace. Another possi-bility is that without a sales strategy a com-panypany ay become competitor-driven. Theymay react impulsively to every change intheir competitors' product, price or salesstrategy.

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ACTIVITIES

The following activities are designed to helpyou apply what you have learned in thisunit.

INDIVIDUAL ACTIVITIES

A.

Interview the owners or managers of twolocal businesses that employ salespeople.Use the following questions to guide you.Approach your contact as you would a salescall. Script the "sales presentation" that youwill use when trying to secure the interview.Practice in front of a mirror and make sureyour purpose in speaking to them is clear.Try to add some of your own questions andpractice until you are comfortable with whatyou are going to say.

1. How many sales people do you have?

2. What type of selling does your companydo?

3. What skills are required for your salespersonnel?

4. What personal characteristics do youlook for in a sales person?

5. Do you offer sales training programs? Ifso, what type of training, formal?informal?

6. NAIIt suggestions would you offer tosomeone interested in a sales career?

Analyze what you have learned about sellingin a report to your instructor or to the class.

B.

Make a list of the general steps in a salespresentation. For each step, consider what isreally involved. You'll probably find that itis not as easy as it sounds. From the per-spective of the salesperson, describe howyou would personally approach each step.What do you think is required to sell effec-tively and creatively? Draw on past experi-ence in situations that involved you as aseller or consumer.

GROUP ACTIVITIES

A.

Work in teams of four to six. Compile alist of suggestions that would help a businessowner to create a plan to motivate the salesforce. Try to identify where any benefitsyo.. might offer would fall on Maslow'shierarchy of needs. Explain how each of theproposed actions will satisfy need(s) andhow this may improve job satisfaction andincrease performance.

B.

Work in teams of four to six. Develop aset of reasonable objections and effectiveresponses for them. Try to incorporate aclosing statement when possible.

Example: "I like your product, but it's tooexpensive. I think I could get nearly thesame quality for less money."

Response: "You may be able to get a simi-lar product for less money, but the addedquality of our product translates into manymore years of service. So, in the long run,you will save money by purchasing ourproduct."

Example: "Well, Ms. Jones, I really likeyour product but was really hoping it camein red" (your sample was blue).

Response: "Mr. Buyer, I'm glad youbrought that to my attention. If we coulddeliver our "X" product to you in red bytomorrow could we sign a deal today?"

C.

Divide the class into teams of four to sixlearners. Karen Woods recently acquired asales position at a department store. Herimmediate supervisor has stressed the impor-tance of suggestive selling. Here is a list ofthe types of products that are in Karen's de-partment. Please help her with ideas forother products that can be sold along withthese listed.

PRODUCT

Hair blow dryer

Women's dress suit

Shower curtains

Televisions

Ladies bathrobe

Belts

Eye makeup

Winter coats

v.j

23

SUGGFSITON

24

CASE STUDY

Tom has just accepted a part-time positionsoliciting funds for Capital University.Capital University is a small, private collegein Farming, Michigan. His job responsibili-ties will entail personally contacting localbusinesses to ask for a donation to thecollege.

The University tries to recognize all sizablecontributions. All businesses which donate

DISCUSSION QUESTIONS

$1,000 or more are listed in the University'smonthly newsletter. All contributions of$5,000 or more are noted in the yearbook.The names of all contributors of $10,000 ormore are engraved on a permanent plaquewhich hangs in Community Hall. In addi-tion, the University holds an annual dinnerfor all contributors of $1,000 or more.Donors of $5,000 and $10,000 sit at special

1. What is Tom selling?

2. What benefits and features should Tom emphasize?

3. Do some prospecting for Tom. What are the characteristics of the businesses which are mostlikely to donate to Capital University?

4. Make a list of open-ended questions Tom could ask to determine his customers' needs.

5. What should Tom know about Capital University and his business contacts before his salescalls?

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ASSESSMENT

Read the following questions to check your knowledge of the topics presented in this unit.When you feel prepared, ask your instructor to assess your competency on them.

1. Discuss why it is important for a salesperson to possess complete knowledge about theproducts or services he/she sells.

2. Presentation is a very important part of the sales process. Discuss some of the positive andnegative characteristics of an effective sales presentation.

3. Define prospecting. What are some of the sources available for finding new prospects?

4. Name and discuss four methods to close a sale.

REFERENCES

Bolen, W. Creative Selling: The Competitive Edge. Fort Worth, TX: U.S. Small BusinessAdministration Management Assistance Office, Support Services Branch, GovernmentPrinting Office, 1988.

Cohen, W. Selling by Mail Order. Fort Worth, TX: Small Business Administration, U.S.Government Printing Office, 1988.

Evans, J., and Berman, B. Marketing, 3rd edition. New York, NY: Macmillan PublishingCompany, 1987.

Futrell, C. ABC's of Selling. Homewood, IL: Irwin, 1989.

Hersey, P. Selling, A Behavioral Science Approach. Englewood Cliffs, NJ: Prentice-Hall, 1988.

Jackson, D., et al. Selling: The Personal Force in Marketing. New York, NY: Wiley andSons, 1988.

Kolter, P., and Armstrong, G. Marketing, An Introduction. Englewood Cliffs, NJ: Prentice-Hall, Inc., 1987.

Kurtz, D., and Dodge, R. Fundamentals of Selling. Homewood, IL: Irwin, 1989.

Maslow, A. H. Motivation and Personality, 3rd edition. New York, NY: Harper CollinsPublishers, 1987.

Pride, W., and Farrell, 0. Marketing Concepts and Strategies. Boston, MA: Houghton MifflinCompany, 1989.

Ramdo, M. Maintaining an Effective Customer Orientation. Cincinnati, OH: MCR, Inc., 1989.

Schewe, C. Marketing Principles and Strategies. New York, NY: Random House Publishing,1987.

Small Business Success. Building a Successful Sales Team. San Francisco, CA: Pacific Bell,A Pacific Telesis Company, 1991.

Level 3

PACE

Unit 1. Your Potential as An Entrepreneur

Unit 2. The Nature of the Small Business

Unit 3. Business Opportunities

Unit 4. Global Markets

Unit 5. The Business Plan

Unit 6. Help for the Entrepreneur

Unit 7. Types of Ownership

Unit 8. Marketing Analysis

Unit 9. Location

Unit 10. Pricing Strategy

Unit 11. Financing the Business

Unit 12. Legal Issues

Unit 13. Business Management

Unit 14. Human Resources

Unit 15. Promotion

* Unit 16. Selling

Unit 17. Record Keeping

Unit 18. Financial Analysis

Unit 19. Customer Credit

Unit 20. Risk Management

Unit 21. Operations

Resource Guide

Instructor's Guide

Units on the above entrepreneurship topics are available, at the following levels:

Level 1 helps you understand the creation and operation of a businessLevel 2 prepares you to plan for a business in your futureLevel 3 guides you in starting and managing your own business