chapter 20ps

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Chapter 20, Personal Selling and Sales

Management, Class Notes

Content List

Scope and Importance of Personal Selling Nature of Personal Selling Types of Sales People Elements of the Personal Selling Process Prospecting and Evaluating Preapproach Approaching the Customer Making the Presentation Closing the Sale Following Up Management of the Salesforce Establishing Salesforce Objectives Organizing the Salesforce Recruiting and Selecting the Salesforce Training the Salesforce Compensating Sales People Motivating Sales People Please Email [email protected] any comments Return to Syllabus Return to Homepage

Scope and Importance of Personal Selling

In the US, 14 million people are employed in sales positions, according to the departmentof labor.Sales personnel include stockbrokers, manufacturing sales representatives, real estatebrokers etc.Most students in this class will have been employed as a sales person.Return to Contents

Nature of Personal Selling

Gives marketers:

The greatest freedom to adjust a message to satisfy customers informationalneeds, dynamic.

Most precision, enabling marketers to focus on most promising leads. vs.advertising, publicity and sales promotion

Give more information Two way flow of information, interactivity.
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Discover the strengths and weaknesses of new products and pass this informationon to the marketing department.

Highest cost. Businesses spend more on personal selling than on any other formof promotional mix.

Goals range fromo finding prospects

o convincing prospects to buy

o keeping customers satisfied--help them pass the word along.

Return to Contents

Types of Sales Persons

Order Takers

Seek repeat sales, make certain that customers have sufficient product quantitieswhere and when they need it. Do not require extensive sales effort. Arrangedisplays, restocks them, answer phone calls. Low compensation, little training

required. High turnover of personnel. 2 types:

o Inside Order Takers receive orders by mail/phone, sales person in a retail

store.o Field Order Takers travel to customers. Use laptop computers to improve

tracking of inventory and orders etc.

Order Getters

Sell to new customers and increase sales to present customers, sometimes calledcreative selling.Generate customer leads, provide information, persuading customers and closing

sales. Required for high priced, complex and/or new products. High pressure,requires expensive, time consuming training.

Support Personnel

Facilitate the selling function. Primarily business to business products.

o Missionary Salespeople Distribute information regarding new goods or

services, describes attributes and leaves materials, does not close sales.Assist producers' customers in selling to their own customers. IE call onretailers and persuade them to carry the product. Pharmaceuticals may go

to doctors offices and persuade them to carry their products.o Trade Salespeople May perform order taking function as well. Spend

much time helping customers, especially retail stores, to promote theproduct. Restock the shelves, set up displays. Technical SalespersonsOffer technical assistance to current customers. Usually trained engineersetc.

o Service Salespeople interacts with customers after sale is complete.
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Team selling...entire team of selling professionals in selling to and servicingmajor customers, especially when specialized knowledge is needed to satisfydifferent interests in customers' buying centers.

Return to Contents

Elements of the Personal Selling Process

No 2 salespersons use exactly the same sales method, but it is generally a seven stepprocess:

Prospecting and Evaluating

Seek names of prospects through sales records, referrals etc., also responses toadvertisements. Need to evaluate if the person is able (Undergraduate degree toattend a graduate program), willing and authorized to buy. Blind prospecting-relyon phone directory etc.Return to Contents

Preapproach (Preparing)

Review key decision makers esp. for business to business, but also family

o assess credit histories

o prepare sales presentations

o identify product needs.

Helps present the presentation to meet the prospects needs.

Approaching the Customer

Manner in which the sales person contacts the potential customer. Firstimpression of the sales person is Lasting and therefore important.Strive to develop a relationship rather than just push the product.Can be based on referrals, cold calling or repeat contact.Return to Contents

Making the Presentation

Need to attract and hold the prospectsAttention to stimulateInterest and stir up

Desire in the product so the potential customer takes the appropriateAction.AIDATry to get the prospect to touch, hold or try the product. Must be able to changethe presentation to meet the prospect needs.Three types of presentations:

o Stimulus Response Format: Appropriate stimulus will initiate a buy

decision, use one appeal after another hoping to hit the right
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button...Counter Clerk @ McDonald's "Would you like fries with yourburger?"

o Formula Selling Format: (Canned Sales Presentation) memorized,

repetitive, given to all customers interested in a specific product.Good for inexperienced sales people.Better with heavily advertised items that are presold.Telemarketing a credit card!!

o Need Satisfaction Format: Based on the principal that each customer has a

different set of needs/desires., therefore the sales presentation should beadapted to the individual customer's needs, this is a key advantage ofpersonal selling vs. advertising.Sales person asks questions first, then makes the presentation accordingly.Need to do homework, listen well and allow customers to talk etc.Must answer two types of questions:

for more information overcome objections.

Overcoming Objections

Seek out objections and address them.Anticipate and counter them before the prospect can raise them.Try to avoid bringing up objections that the prospect would not have raised.Price objection is the most commonNeed to provide customers with reasons for the $s, build up the value before priceis mentionedMust be convinced of price in own mind before you can sell to customer.Get budget info. on buyer before you try to sell, and mustknow what they want,must sell service on top of product augmented product--to create value!!Must know value of product, provide warranties etc.!!Return to Contents

Closing

Ask prospect to buy product/products. Use trial closes, IE ask about financialterms, preferred method of delivery.20% sales people generally close 80% sales., Avon, over 1/2 US $1.4 bn businessfrom 17% of 415,000 SRs.Need to be prepared to close at any time. The following are popular closingtechniques:

o Trial Close (Minor decision close)

o Assumptive close (Implied consent close)o Urgency close

o Ask for the sale close

If prospect says no, they may just need more reasons to buy!!Return to Contents

Following Up
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Must follow up sale, determine if the order was delivered on time, installation OKetc. Also helps determine the prospects future needs. Accomplishes fourobjectives:

o customer gain short term satisfaction

o referrals are stimulated

o in the long run, repurchase

o prevent cognitive dissonance

Old school, sell and leave!!--Quickly before customer changes her mind!!Now:

o Stay a few minutes after sale--reinforce, make them feel good, made wise

choice, leave small gift (with co. name on it!!), call office at any time etc!!o Follow up, reinforce, know birthdays, new year etc, friendly

correspondence...relationship building!!

Handout...Toyota Calling In Japan's Car Market

Half of cars are sold door-to-door. This is shrinking due to environmentalchanges. Toyota has more than 100,000 door-to-door sales people.Developing Long-term relationships is key, Keiretsu, do business with only thoseyou know and trust. Face-to-face meetings before business to establish trust, theapproach stage.Follow up is key to relationship:After sales:

o call inquiring on car's immediate performance

o hand written greeting cards

o written invitations for low cost oil changes

Prospecting includes:

o Driving schools for people to obtain licenses = prospects

o Also referrals from existing customers is very important

o Curtesy calls to clients who referred new customers.

Timing of presentation:

o To housewife in the middle of the day

o Just before 3 year "Shaken", following 2 years

"At first I had no intention of buying a new car, but Mr. Saito is very good atproposing reasons why I should change" = $1,600 shaken.Return to Contents

Management of Salesforce
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Sales force is directly responsible for generating sales revenue.Eight general management areas:

Establish Salesforce objectives

Similar to other promotional objectivesDemand oriented or image oriented.Major objective is persuasion, converting consumer interest into sales.

Sales objectives; expected to accomplish within a certain period of time.Give direction and purpose and act as a standard for evaluation.Set for total salesforce and each individual salesperson.Can be $s, units sold, market share to achieve, for individual salespersons,also include ave. order size, ave. # of sales/time period, and ratioorders/calls.Return to Contents

Organizing the Salesforce In-house vs. independent agents (manufacturer's sales agents). Organize by:

Geography (simplest, but not suitable if product(s) arecomplex or customers require specialized knowledge)

Customer: Different buyers have different needs Product: Specific knowledge re: products is needed

Size. Marginal analysis, or determine how many sales calls/yearare needed for an organization to effectively serve its customersand divide this total by the average # of sales calls that a personmakes annually. Also use subjective judgement.MBNA estimates how many calls to expect, one year in advance,and then determines the size of the salesforce at any given time.

Return to Contents

Recruiting and Selecting Salespeople

Need to establish a set of required qualifications before beginning torecruit. Prepare a job description that lists specific tasks the salespersonshould perform and analyze traits of the successful salespeople within theorganization.May use assessment centers--intense training environment that placescandidates in realistic problem settings in which they give priorities totheir activities, make and act on decisions.

Recruitment should be a continual activity aimed at reaching the bestapplicants.Applicants that most match the demographics of the target market.Changing demographics, may be wise to hire hispanic sales people if yourterritory is in Florida!!Return to Contents
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Training Sales Personnel

Use formal programs, or Informal on-the-job training. Can be complex orsimple.Training should focus on:

the company products selling techniques.

Aimed at new hires andexperienced personnel.Can be held in the field, educational institutions or company facilities.Oldsmobile spent $25 million last year to teach its dealers how to bettertreat its customers.Return to Contents

Compensating Sales People

To attract, motivate and retain sales people, that facilitate and encourage

good treatment of the customers. Need to understand personalities of salespeople. Strive for proper balance of freedom, income and incentives.Need to determine the best level of compensation required, and the bestmethod of calculating it.

Straight salary straight commission (selling insurance)--single percentage of sales

or sliding rate Combination plan

Return to Contents

Motivating Sales People

Need a systematic approach, must also satisfy non-financial needs:

Job security Working Conditions Opportunities to succeed

Sales contests increase sales.Symbolic awards--plaques, rings etc.Can also use negative motivational methods for under performers.Due to burn out--even the best need motivating!!Ongoing process...keep reps. hungryNeed a motivational program.Spend time with reps, personal attention!!Take interest in them and the sales goals
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11 Compensation packet that rewards quality salesmanshipand extra effort

11 Recognition of extra effort of sales force11 Make sure SR feel important11 Keep SR informed of company activities11 Make certain reps. believe in the company11 Goals must be realistic and achievable and changeable11 Determine what they want and give it to them11 Controlling and Evaluating Salesforce performance

Rely on information from call reports, customer feedback and invoices.Performance is determined by objectives. May compare withpredetermined performance standards or with other sales people workingunder similar conditions.

Handout Avon....

$4 billion business, relied solely on personal selling until recently,environmental changes have changed this...no longer is the wife expected

to be at home...model is dual income earning parents with children in daycare.Need to develop more efficient ways to reach customers.Salespeople earn pure commission, 10%...50% for top sellers (over$32,750)Strategies tried:

Avon Select.

Direct mail catalog and toll free number, attract those that didn'tknow an "Avon Lady", or didn't want to deal with one. Also usednational TV and print campaign in conjunction. Problems =

Salesperson creates confidence in the brand, deliveringmuch more than advertising is able to do. When you takeaway the selling relationship, you're left with a brand that'srelatively naked.

Key is not to undercut the field salesforce, similar to dualdistribution creating channel conflict.

Mary Kay Corp has also tried this strategy but differently and moresuccessfully:

Catalogs carry different merchandise

Forward commission to sales rep. in customer's area "Neverhave a grey area regarding competing with sales force."

Other demotivational concerns:

Restructured commissions Dropped awards, trips and other incentives
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Leadership Program.

A Multi-level marketing (MLM) concept. Rewarded for productssold as well as people you recruit as a sales rep....by getting someof their commission and a portion of the commission of reps. theyrecruit etc. Created a hard sell environment and was consequentlyscrapped.

To remotivate:

New CEO

Reinstate Birthday presents Anniversary plates Annual Pins Phone Blitzs to indicate appreciation

"Gifts [and recognition] are part of the magic"


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PERSONAL SELLING

PERSONAL SELLINGdirectly paid, personal communication that attempts to inform and persuade prospects andcustomers

CANNED APPROACHES -STIMULUS-RESPONSE and FORMULA SELLING:

AIDA

====>attention

====>interest

====>desire

====>actionThe AIDA approach could be effective when prospects are in similar situations and canbe sold using the same basic presentation. This would be aprpropriate, for example, inroute sales, where the salesperson calls on the same customers each and every week.

In some situations, however, canned sorts of approaches can be seen by a prospect aspushy. Focus in such an approach is in making a presentation that results in a sale, ratherthan focusing on the special needs on the prospect.

NEEDS BASED SELLING:

SEVEN-STEP SELLING PROCESS

====>prospecting

====>preapproach/approach

====>needs assessment

====>presentation

====>questions/objections

====>close

====>followupThe focus of this approach is in finding organizations or people who need what you havefor sale and in finding solutions to a prospect's needs.


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SEVEN-STEP SELLING PROCESS

prospectingdeveloping a list of potential buyers

preapproachinitial preapproach letter, telephone call, etc.

approachinitial face-to-face contact with prospect during which first impressions areformed

needs analysisdiscovery and assessment of prospects needs

presentationpresentation/demonstration of how the product fills a need or solves a problem forthe prospect

answering questions and overcoming objectionsprospect provides feedback and salesperson attempts to further tailor thepresentation for the prospect's needs

closesalesperson asks the prospect to buy

followupdelivery, customer service, referrals


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how to print notes

Chapter 20Personal Selling & Sales Management

I.Scope & Significance OSelling & Sales ManagA. Scope & Significance Of Personal Selling

Personal sellingo Two-way flow ofcommunication betweenbuyer & sellero Often face-to-face

o Can influence apurchase decision.

Other Person

o telephoneo video teleconfe

o Internet/Web-e

377Definition

o Seekingout peparticular need.

o Assistingthemof needs they havebuying your produco Demonstratingsatisfies a prospec
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o Persuadingquyour product will fi

Sales management

Managinga Sales Force

Involves

o Setting Objecti

o recruiting,o hiring,o training,o supervisingo compensating

o motivating

B. Pervasiveness of Sellino Every job with customer contact has a sellingo Almost 16 million work in sales positions (U.S

o About 20% of the chief executive officers in tcorporations have significant sales experience.

C. Personal Selling in Marke

o Salespeople are the critical link between the o Salespeople are the company in a consumer'

They represent what the company is or a Often the only personal contact a custom

o Selling may be dominant in marketing prograstrategy

D. Creating Customer Value through Relationship and Partnership S

Salespeople can create customer vo Identifying creative solutions to customer proo Easing the customer buying process


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o Following through after the sale is made.

Relationship Sellingo Building ties to customers based on a salesp

attention to customer needs

commitment to customer needs

o over time.

II. The Many Forms Of PersA. Order Taking

Preserve an ongoing relationship with existing csales.

Outside order takerso visit customers

o replenish inven

Inside order takers

o Answer questio Take orderso Complete trans

o Often employetelemarketing

B. Order Getting

Tasks Invo identifies prospectivecustomerso provides informationo presentspersuasively

o a high degree oo and customer o product knowl

o sales training


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o closes sales

o follows up .

o Time-consuming (outside order getters work

o Expensive. Sales call costs about $170, (comexpenses.)

C. Customer Sales Support Per

Missionary salespeopleo do not strictly solicit orderso Perform promotional activities

o

Introduce new products.Sales engineerso Specializes in identifying, analyzing, and solvo Brings know-how and technical expertise to t

o Often does not actually sell products and ser

D. Cross-Functional Team Se

o Team of professionals selling to and servicin

o Specialized knowledge used to satisfy differein a buying center.

Some Types of Team Sellin

Conference sellingo Team meets wproblems and oppo

Seminar sellingo Team conductsa customer's techn


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III. The Personal Selling ProcRelationships

A. Prospecting
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Three types of prospectsLead o Name of a person who may be

Prospect o Person who wants or needs th

Qualifiedprospect

o Person who Wants or needs the produ Can afford to buy it

Is the decision maker.

Lead sources

o Advertisingo Coupono Toll-freeo Trade showso Professional meetingso Conferences

o Lists and directories.o Cold canvassing in persono Telephone canvassingo Networkingo Referrals

o Center of influence

B. Preapproach


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o Obtaining further information on the prospeco Deciding on the best method of approach.o Important in international selling (customs di

o Failure to learn as much as possible about thunprofessional and can ruin a sales call.

C. Approach

The approach stage involves the initial meeting betweprospect, where the objectives are to gain the prospeinterest, and build the foundation for the sales presenfor a working relationship. First impressions are critic

The approach stage is very important in internationalsocieties, considerable time is spent establishing a rasellers. Besides a different pace, different actions ma

it is important to know how to exchange business carhands-as well as when not to.

D. Need Discovery

E. Presentation
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Stimulus

ResponseFormat

o Assumes that the appropriatethe prospect will buy.

o Salesperson tries one appeal

o Often for simple situations

Formula

SellingFormat

o Information must be provided accurate thorough step-by-step

o Canned sales presentation Memorized, standardized Conveyed to every prospe

o Lacks flexibilityo Lacks spontaneity

o Does not provide much feedba

NeedSatisfaction

Format

o Emphasizes probing and liste

interests of prospective buyers.o Presentation is then tailored to

o Product benefits valued by theAdaptive

Sellingo Adjusting the presentation to


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that a sale has been finalized.Urgency

Closeo Used to commit the prospect qreference to the timeliness of the p

Buying

Signals

o Knowing when the prospect is

o More difficult in cross-culturawhere societal customs and langu

G. Follow-up

o Making certain that the purchase has been delivered installed any difficulties are addressed.

o Solidifies the buyer-seller relationship.

o Cost and effort to obtain repeat sales from a of obtaining a new sale.

IV. The Sales Managemen


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A. Sales Plan Formulatio

1. Setting Objectiveso Specifies what is to be achieved.o Objectives can be

output related input related behaviorally related.

o Objectives must be precise

measurable time specific

o Objectives serve as performance standards f

2. Organizing the Salesforco Should the company use its own salesforce, independent agents such as manufacturer's repreo Should they be organized according to geogr

product or service?

o How many company salespeople should be e

In-House or Independent?o Economic analysis examines the costs of us


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salespeople in a form of break-even analysis.o Behavioral analysis should focus on issues r

control flexibility effort

availability

Types of StructuresGeographical

Structureo Simplest organizatioo Country or the world


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regionso Region is divided into Salespeople

are assigned to e call on all custom represent all pro

o Minimizes travel time expense

duplication of eff

Customer

Structure

o Different types of buy

o Different salesforce ctype of buyer or marketino Higher administrativeo Some duplication of

o


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Major (key) accouo Variation of customeo Using team selling oo Build long-term, coo

o "customer specialistservice.

Products

Structure

o When specific knowl

certain types of productso Salespeople developexpertise with

technical charac applications


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selling methodso High administrative c

o Duplication of selling

How many salespeople should be e

workloadmethod NS = NC * CFNS = number of salespeopleNC = number of customersCF = call frequency necessareach year


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CL = length of an average calAST = average amount of sellyear

Developing Account Management o Whom salespeople should contacto Kinds of selling and service activities to cond

o How these activities should be carried out

C. Sales Plan Implementat

1. Salesforce Recruitment and Seo Create a job analysiso Write a clear job description

o Develop job qualifications


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2. Salesforce Trainingo Ongoing process for new and seasoned saleo Covers more than selling practiceso On-the-job training is the most popular

o Individual instruction taught by experienced

3. Salesforce Motivation and Comp

Straight salarycompensation plan, a salesperson is paid a fixed year.Straight commissioncompensation plan,

a salesperson's earnings are or profit generated.

Combinationcompensation plan

contains

a specified salary plus a comgenerated.

D. Salesforce Evaluation and CQuantitative Assessments

TypicalQuotaBases

o Number of calls mado Selling expenses pero Reports submitted


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o Dollar sales volumeo Last year/current yeao Number of new acco

o Sales of specific prod

Behavioral Evaluation

Subjective &often informalassessments

o Attitudeo Attention to customeo Product knowledgeo Selling and communo Appearanceo Professional demean

o About 60 U.S. compacustomer satisfaction as salesperson performance

E. Salesforce Automation and Customer Rela

Salesforce

Automation(SFA)

o Use of technology tomore effective and efficieo SFA applies to a wide

Each stage in the

Management of t

Salesforce

Computerization

o Valuable in sales preo Used in sales trainingo Allows salespeople t

process orders

plan time allocat forecast sales communicate wi

communicate wiSalesforce o Facsimile, electronic


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Communication

the three most common ctechnologies used by salo Growth of Home Offi

Advances in compossible the mobile a Savings from cloand staff salaries oftesetting up home offic

o Salesforce communithe availability of Internet

o Sales force automation (SFA) has become a c Changing how selling is done Changing how salespeople are managed Applications promise to

boost productivity improve customer relationships decrease selling cost.

o SFA combines automated sales support integration of sales data

o SFA encompasses technologies, both hardwto the sales function

o CRM is the next step up from SFA

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