unit iii sales force management

UNIT III

SALES FORCE MANAGEMENT

STAFFING THE SALESFORCE

• Sales force staffing is the most important activity of a sales manager.

• Sales force staffing includes planning, recruitment, selection, hiring,

and socialization, is among the most challenging and important

responsibilities of sales management.

RECRUITMENT AND SELECTION OF THE SALES FORCE

• Recruitment is a process of attracting prospective employees and encouraging

them to apply for job in an organization

• Recruitment involves searching for prospective candidates and encouraging

them to apply for the job

• Selection is concerned with choosing most suitable candidates out of many

available or interested. Available candidates are scrutinized, tests and

interviews are conducted to find out most suitable candidates

• The recruitment process includes analyzing the requirements

of a job, attracting employees to that job, screening and

selecting applicants, hiring, and integrating the new

employee to the organization

Recruitment Process

• Deciding the quantity of salesforce

• Conducting Job analysis

- Job Description

- Job Specification

• Finding or identifying the sources of sales recruits recruiting sources

• Evaluating and selecting the recruiting sources

• Contacting candidates through the selected source

Conducting job analysis:

• Before the company goes to the selection stage it should

conduct a job analysis. The job analysis should identify job

duties and responsibilities as well as critical activities to be

performed for the job success

job analysis consist of the following steps:

1. Analyze the environment in Which the salesperson is to work. -

customers, competitors, and knowledge and skills required for the

job.

2. Determine the duties and responsibilities that are expected from

the salesperson

3. The person conducting job analysis may be a person from the

sales team, or human resource department, or an outside

consultant.

Preparing a job description:

• Job description is formal, written statements describing detailed

account of the job. job description-generally cover the following

point:

• Title of job

• Reporting relationship

• Types of products and services sold

• Types of customers called on

• Duties and responsibilities

• Job demands

• Technical requirements

• Location and geographical area

• Developing job qualifications/specifications

• Job qualification should identify the characteristics and

abilities a person must have to meet the requirements of the

sales positions.

• General Qualities :Good personality, sound health, intelligence, honesty

and integrity of character, sociability, consistency, and power of

observation.

• Particular Qualities :Educational qualifications, past experience,

knowledge of the product, customers and market, languages known.

• Technical Knowledge

Sources Of Recruiting Salespeople

INTERNAL SOURCE EXTERNAL SOURCE

Employee referral

programmes

Advertisements

Current employees Educational institutions

Promotions and

transfers

Employment agencies

Re-employment of

former employees

Other companies

Past applicants Job fairs

Evaluation Of Recruiting Sources

• The focus in the evaluation of recruiting sources is on 3

factors:

• Performance rating of the sales force at the end of the 2 years of

working

• % retained after (2 yrs working with the organization).

• The cost of recruiting which should include the total cost of

recruiting, including travel, hotel, proportionate salary and so on

SELECTING THE SALES FORCE

Selection stage consists of two steps:

1. Developing the selection process consisting of tools and procedure

to measure the applicants against the job specifications or

qualifications

2. Selecting the salespeople

SELECTION PROCESS

RECEIVING APPLICATIONS

SCREENING APPLICATIONS

WRITTEN TESTS

PRELIMINARY INTERVIEW

FINAL INTERVIEW

REFERENCE CHECK

PHYSICAL EXAMINATION

FINAL SELECTION

TRAINING THE SALES FORCE

• Sales force training is a process by which an attempt is made to

develop the selling skills so as to increase the ability, knowledge

and experience of the salesmen.

• The purpose of sales training is to achieve improved job

performance

The Sales Training Process Consists Of 3 Phases

Assess sales training needs:

Determining the need for, and specific aims of, an initial sales

training program requires analysis of three main factors:

1. Job specifications

2. Individual trainee’s background and Experience

3. Sales -related marketing policies

Methods Used For Assessing Training Needs

Methods used for

assessing training needs

Sales manager’s

observation

Sales force

survey

Performing tests

Job description

Sales force audit

Popular sales training needs

Product knowledge

Customer knowledge

Competitive knowledge

Sales techniques

Company knowledge

Design & Execute Sales Training Programme

Aims (Why ?)Content

( What ?)

Methods

(How ?)

Execution

( Who, When, Where,

What ?)

Evaluation

1. Aims / Objectives of sales training:

The first step in designing the sales training

programme is to decide the specific aims or objectivesa. Increase sales productivity

b. Increase sales, profits or both

c. Lower sales force turnover rate

d. Improve customer relations

e. Introduce new products, markets, and promotional programme

f. Create positive attitudes and improve sales force morale.

g. Prepare new salespeople for assignment to a sales territory

h. Improve teamwork and co-operative efforts

2. Content of training programme

The content of the training programme for new sales people for initial

training will include:

1.Company knowledge

2.Product knowledge

3.Customer knowledge

4.Competitor knowledge

5.Selling skills or sales techniques

Sale Training Methods

Evaluation Of Sales Training Programme

REACTIONS

These outcomes point out the participants perceptions or reactions.

• whether objectives are achieved .

• whether training was worth while.

• reactions can be measured by interviewing or asking training staff to

complete a few questionnaire.

• reactions can be measured after the completion of the training.

LEARNING

This measures knowledge, skills or attitudes were learnt or

observed by the sales trainees.

Methods to collect info are interview.

BEHAVIOUR

This measures whether there was a hange in trainees behaviour.

self assessment by the trainee or observation from customers

RESULTS

These are the most important outcomes.

They point out whether the outcome of training has improved results, whether the

benefits of training were more than the costs.

The measures used to assess the final results are : sales profits, customer

satisfaction, new customers and market penetration.

REINFORCE SALES TRAINING

The training methods used to reinforce the training are

• Refresher training

• Coaching by senior sales manager

• web based or online methods to reinforce formal

training sessions

SALES FORCE MOTIVATION

• Motivation is the word derived from the word ‘ motive’ which means need, desires, wants or drives within the individuals.

• Motivation is some driving force wit in individuals by which them attempt to

achieve some goa in order to fulfill some need or expectation.

• Motivation is the effort sales people want to make to complete various aspects of

their jobs

•What motives salespeople

• Need Hierarchy Theory

Hertzberg’s two factor theory

• Motivation factors ( Achievement ,recognition, responsibilities)

• Hygiene factors (supervision, pay, job security , work condition

• The motivation factors or motivators are the primary causes of

motivation and address the question “why work harder”;

• The hygiene factors are necessary conditions to achieve a

state of neutrality and address the question “why work here”.

• How sales people choose their action

• Equity Theory

• Equity Theory is defined as the belief that one is treated fairly in relation to others

• A salesperson’s choice of effort to be expended is a result of a comparison

between his output-input ratio and the output-input ratios of others

• VROOM'S EXPECTANCY THEORY

Motivation = function of (Expectancy x Instrumentality x Valence)

Expectancy is the salesperson’s perception that a certain amount

of

effort will lead to successful performance (e.g., Can I do it?)

Instrumentality refers to salesperson’s perception of the probability

that performance will lead to certain outcomes or rewards

(e.g., What do I get for doing it?)Valence is the perceived attractiveness or unattractiveness of

an outcome or reward (e.g., How much do I value thereward?)

Salespeople Are Motivated By Different Needs

Need for status (e.g., need for recognition and promotion)

Need for control (e.g., need to be in control and influence others)

Need for respect (e.g., need to be seen as experts who can give advice)

Need for routine (e.g., need to follow a routine that must not be interrupted)

Need for accomplishment (e.g., need more money and challenges)

Need for stimulation (e.g., need to seek outside stimulation and challenges)

Need for honesty (e.g., need to believe in the rightness of their practices)

TECHNIQUES OF MOTIVATION

• Motivational tools should satisfy at least two criteria.

a) Should generate extra effort that will help the company to

achieve its objectives

b) Must increase job satisfaction among salespeople

• Financial Motivators : Financial motivation relates to the way for

sales person in which an organization uses compensation structure to

motivate workers to high performance.

• Some are as follows:

Straight salary,

Pay per hour,

Pay per production,

Commission,

Performance bonuses,

Profit sharing

➢ Non financial motivation: Non financial motivation is related with

the sales person in which he is satisfied by Recognition of

work done by him.

• Some are as follows:

➢ Participation

➢ Status

➢ Personal growth opportunities

➢ Job Enrichment appreciation and non monitory recognition.

SALES FORCE COMPENSATION

• Compensating sales force means giving monetary and non monetary

benefits in return for the services rendered by sales force.

• Sales compensation is the combination of base salary, commission,

and incentives that are used to drive the performance of a sales

organization..

• .

Objectives of A Compensation Plan

• The company’s view point: • The company wants to attract, retain and motivate competent

salespeople.

• To control salespeople’s activities

• To be competitive, yet economical

• To be flexible

• The salespeople’s view point:

• To have regular and incentive income

• To have a simple plan

• To have a fair payment plan

Structure Of Salesforce Compensation

Salesforce

compensation

Financial

compensation

Non financial

compensation

•Financial compensation

•Direct payment of money such as salary,

commission, and bonus

• Indirect payment, which includes fringe

benefits such as retirement plans, medical

reimbursement, and leave travel assistance

(LTA). It also includes various insurance plans.

• Non financial compensation

• Promotion

• Sense of accomplishment

• Personal growth opportunities

• Recognition

• Job security

• Sales meetings and conventions

• Sales training programmes

• Job enrichment

• Supervision

DESIGNING AN EFFECTIVE SALES COMPENSATION PLAN

Pretest, administer and evaluate the plan

Decide indirect payment plan

Develop the compensation mix

Decide levels of pay/compensation

Setup specific objectives

Examine job descriptions

Methods Of Sales Force Compensation

• Straight-Salary Plan

• Straight-commission Plan

• Combination Salary and Incentive Plan Salary Plus

Commission

Straight-salary Plan

• This is simplest compensation plan in which salesman

receive fixed salary at regular interval of time .

• Generally , salary is paid to sales force according to salary

grade approved at the time of appointment .

Straight-commission Plan

• In this remuneration plan , sales force is paid according to

their performance, efficiency and productivity.

• This plan pay fixed or floating rate of commission on the

sales volume achieved by the salesman.

• Commission can be paid on the basis of sales volume, sales

value ,profits ,collections , order size etc.

• Types of commission Plan

1.Commission at fixed rates

2. Commission at progressive rates

3. Differential commission plan

Salary Plus Commission Method

• Some firms combine salary and commission plans .

• This plan is designed to avail the advantages and remove the

disadvantages of both salary plan and commission plan.

• Types of Salary Plus Commission Method

• Salary plus commission

• Salary plus bonus

• Salary plus commission plus bonus

• Commission plus bones

Merits

• Flexible to reward and control

sales force activities

• Security for living costs and

incentives for superior

performance for sales people

• Rewards specific sales

performance

Demerits

• Complex and difficult to

administer

• May not achieve objectives if not

properly panned , implemented

and understood

SALES FORCE CONTROL AND EVALUATION

• Sales force control involves measuring sales force performance, comparing

it with standards, detecting deviations and causes, and, if necessary, taking

corrective actions so that performance takes place as per plan

• Sales force control includes verifying sale force performance and

taking corrective actions, if needed.

Sales Force Expenses

• Some companies allow full reimbursement to their salespeople for legitimate

sales expenses incurred while on the job. Typical reimbursement of

salesforce expenses includes

• Travel,

• Meals

• Lodging

• Entertainment of customers

• Telephone

Types Of Expense Plans

• The Salesperson Pays All Expenses

• The Company Pays All Expenses (Unlimited Payment Plan)

• The Company Partially Pays Expenses (Limited-payment

Plan)

• Combination Plan (Expense-quota Plan)

MARKETING AUDIT

• A marketing audit is a comprehensive, periodic, and systematic

examination of a company's marketing environment, objectives,

strategies and tactics with a view to find out opportunities and

problems.

• A marketing audit covers a company's total marketing system.

• The audit concept can be applied to a company's major functions

within the marketing management.

SALESFORCE AUDIT

• A salesforce audit (or sales management audit) is a comprehensive, systematic,

diagnostic, and prescriptive too1.

• The purpose of a salesforce audit is "to assess whether a firm's sales management

process is adequate, to give direction for performance improvement, and to

recommend the needed changes".

• The salesforce audit should be done by all organizations on a periodic basis,

whether or not they are achieving their goals.

Process Of A Salesforce Audit

Evaluation Of Effectiveness Of Sales Organization

Marketing Cost And Profitability Analysis

• Marketing cost is a managerial tool that is used for planning and

control of a company's future operations.

• The purpose of marketing cost analysis is to determine the

profitability of sales (or marketing) control units, like market

segments, sales territories, and products

Procedure For Marketing Cost And Profitability Analysis

1. State the purpose of the analysis,

2. Identify functional (or activity) expenses,

3. Convert (or change) natural accounting expenses into functional expenses,

4. Allocate functional expenses to market segments, products, or other

marketing/sales units,

5. Prepare the profitability of the marketing/ sales units.

Productivity Analysis

• Productivity is usually measured by ratios between outputs and

inputs.

• The productivity analysis gives useful information that is not

available with sales, marketing cost, and profitability analyses done

earlier.

• Sales profitability and productivity are highly interrelated.

Purposes Of Salesforce Performance Evaluation and Control

• To improve the salesperson's performance by identifying the

causes of unsatisfactory performance.

• To decide the increment in pay and incentive payment based on the

actual performance of the salesperson.

• To identify the salespeople who may be promoted.

• To determine the training needs of the individual salesperson and

the entire salesforce.

• To identify the salespersons whose services may be terminated,

after giving adequate chances for improvement.

• To find out their strengths and weaknesses.

Procedure For Evaluating and Controlling Salesforce Performance

Decide sales management actions and control

Review performance evaluation with salespersons

Compare actual performance with the standards

Establish performance standards

Decide the bases of salespeople's performance evaluation

Set policies on performance evaluation and control

Establish Performance Standards

• Performance standards are planned achievement levels that sales organization

expects to reach at progressive intervals throughout the year

Two types of performance standards

• Quantitative performance standards

• Qualitative performance standards

Quantitative Performance Standards

1. Sales Quotas

How much for what period

2. Gross Margin or Net Profit

Margin Net Profit / Total Sales

3. Sales Expense

Ratio Selling Expense / Total Sales

4. Market Share

Company sales as a percentage of

industry sales in territory

5. Returns on Asset management-

(Total sales - current sales expenses)

• 6. Call frequency ratio

Number of prospects contacted / Number of

calls made

• 7. Order call ratio

• Number calls made / Number of orders

received

• 8. Average order size

• Total sales / Number of orders

• 9. Sales coverage effectiveness index

• Number of customers / Number of prospects

in a territory

• 10.Average cost per call

• Total expense / Number calls made

Qualitative Performance Standards

• Sales related activities

• Customer relations

• Sales call preparation

• Report preparation

• Marketing intelligence

• Selling skills

• Company knowledge

• Competitors’ knowledge

• Product knowledge

• Customer knowledge

• Communication skills

• Quality of presentation

Methods Of Sales Force Evaluation

No Involvement of sales person

• Ranking

• Rating scale

• Essays

• BARS (Behaviorally Anchored Rating Scale)