sales management
DESCRIPTION
sales management in marketingTRANSCRIPT
Sales Management
Importance of Selling
Only activity that generates revenueEverything else is a cost centre only
Only opportunity to be in touch with the market
This allows for understanding and designing the value offering.
Contributes to the image of the company and building of the Brand Equity
Modes of Selling
There can be two approaches to selling:Selling by looking at the short term
gains Considering the long term business
How practical is the issue of long term approach in the low value products?
The Nature of Personal SellingTransaction Selling Get new accounts Get the order Cut the price to get the
sale Manage all accounts to
maximize short-term sales Sell to anyone
Relationship Selling Retain existing accounts Become the preferred
supplier Price for profit Manage each account for
long-term profit Concentrate on high-
profit-potential accounts
Selected Activities of Salespeople
Salesperson
Generate sales:•Precall planning
•Prospecting
•Make sales presentations
•Overcome objections
•Close by asking for the orders
•Arrange for delivery
•Entertain
•Arrange for credit/financing
•Collect payments
•Participate in trade shows
Provide service to customers:
•Provide management/technical consulting
•Oversee installations and repairs
•Check inventory levels
•Stock shelves
•Provide merchandising assistance:
•Co-op advertising, point-of-purchase displays, brochures
•Oversee product and equipment testing
•Train wholesalers’ and retailers’ salespeople
Territory management:
•Gather and analyze information on customers, competitors’ general market developments
•Disseminate information to appropriate personnel within salesperson’s company
•Develop sales strategies and plans, forecasts, and budgets.
Professional development:
Participate in:
•Sales meetings
•Professional associations
•Training programs
Company service:
•Train new salespeople
Sales jobs differ from other jobs because salespeople… implement a firm’s marketing strategies in the field. are authorized to spend company funds. represent their company to customers and to society in general. represent the customer to their companies. operate with little or no direct supervision and require a high
degree of motivation. develop innovative solutions to difficult problems. need more tact and social intelligence. travel extensively, which takes time from home and family. have large role sets. face role ambiguity, role conflict, and role stress.
Sales jobs differ from other jobs because salespeople… implement a firm’s marketing strategies in the field. are authorized to spend company funds. represent their company to customers and to society in general. represent the customer to their companies. operate with little or no direct supervision and require a high
degree of motivation. develop innovative solutions to difficult problems. need more tact and social intelligence. travel extensively, which takes time from home and family. have large role sets. face role ambiguity, role conflict, and role stress.
Sales Management Responsibilities
(Figure 1-(Figure 1-5)5)(Figure 1-(Figure 1-5)5)
Strategic Planning
Organizing the sales
force
Recruiting, selection,
assimilation
Training and developmen
t
Motivation and
supervision
Performance Evaluation
Communication
Coordination
Integration
Executive Ladder in Personal Selling
(Figure 1-(Figure 1-6)6)(Figure 1-(Figure 1-6)6)
Salesperson
Sales supervisor
District sales manager
Regional/divisional sales manager
National sales manager
Vice president of sales
President
Staff assistants available for adviceand support at anystep along the ladder.
Executive Ladder in Team Selling
(Figure 1-(Figure 1-7)7)(Figure 1-(Figure 1-7)7)
Customer sales/service representative
Distributionlogistics
specialist
Client-teamleader
Productengineer
Vice president of marketing
President
Sales Force Management Challenges in the 21st CenturyCustomer relationship management (CRM)Sales force diversityElectronic communication systems and computer-based technology
Selling teamsComplex channels of distributionAn international perspectiveEthical behavior and social responsibility
The Marketing Concept
A philosophy: Achieving organizational goals depends on the firm’s ability to identify the needs and wants of a target market, and then to satisfy those needs and wants better than the competition does.
Based on three fundamental beliefs Company planning and operations should be customer
or market oriented. Marketing activities in a firm should be organizationally
coordinated. The goal of the organization should be to generate
profitable sales volume over the long run.
Evolution of Marketing Management
Production orientation Focus on mass-producing a limited variety of products
for as little cost as possible.Sales orientation
Age of the hard-sell.Marketing orientation
The marketing concept first emerges.Relationship orientation
A natural extension of the marketing-orientation stage. The buyer and seller commit to doing business over a
long time.
Relationship Marketing: Four key issues
Open communication
Empowered employees
Customers to be included in planning
Working in teams
Strategic Planning
Objectives are the broad
goals around which a
strategic plan is formulated.
Strategies are the plans of
action.
Tactics are the specific
activities that people must
perform in order to carry out
the strategy.
Set Objectives
Formulate
Strategies
Develop Tactics
CompanyCompany
MarketingMarketing Objectives
Strategy
Increase marketing share 10%
Company Strategy-Marketing Objectives and Strategy
Company Strategy-Marketing Objectives and Strategy
Earn 20% ROI
StrategyIncrease share of customer business
Increase marketshare 10%
Objectives
MarketingMarketing
Sales ForceSales Force
Strategy Increase share of customer business
Marketing Strategy-Sales Force Objectives, Strategy and
Tactics
Marketing Strategy-Sales Force Objectives, Strategy and
Tactics
Increase share of customer business
StrategyBuild long-term
customer relations
TacticsDevelop sales teams
Provide bonuses for greater customer share
Increase market share 10%
Objectives
Objectives
Strategic Trends
Internet SellingMultiple Sales ChannelsMultiple Relationship Strategies
Transaction selling Consultative selling
In this era of global warming, toxic waste, pollution, and other concerns, marketing executives must act in a socially responsible manner if they wish to succeed or even survive.
Customer Relationship ManagementCRM practices
Involve software application utilizing Information technology.
Aggregate all information about customers into a single database.
Provide salespeople/customers access to timely and relevant information.
Allow effective management of every aspect of the buyer-seller relationship.
Needs a different mindset at the top. Only effective if salespeople embrace it willingly.
The Selling Process
How to proceed with the process of Selling Critical steps
The right steps to be handled carefully
THE EIGHT STEPS OF THE SALES PROCESS
8. Follow-up
7. Gaining Commitment
6. Meeting objections
5. Presentation
4. Need Assessment
3. Approach
2. Preapproach
1. Prospecting
TM 3-2
1) Prospecting: The method or system by which sales-people learn the names of people who need the product and can afford it.
Leads can be identified through… Referrals from customers Referrals from internal company sources
Sales manager; Marketing dept.; Telemarketing dept.
Referrals from external agencies Published directories
Industrial directories, Published data, governmental records
Networking by the Salesperson Cold canvassing
Qualifying Leads
A qualified prospect…Has a need for the products being sold.
Can afford to buy the products.Is receptive to being called on by the salesperson.
Lead Conversion Ratio: Inquiry to Decision 12 Months After Inquiring
Purchased
No longer inmarket
Plan to buy
Plan to buy 25% Purchased
45%No longer in market
30%
*SOURCE: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994.
The Value of Inquiry Follow-Up
Share of buyer’s
business if not followed
up 40%
Share of buyer’s business if
followed up 83%
*SOURCE: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994.
Planning : the Key
Determining the Sales Objectives Developing Customer Profile
Customer Benefits Developing the Sales Call Presentation
Pre approach: Planning the SaleIncludes all the information-gathering activities salespeople perform to learn relevant facts about the prospects, their needs, and their overall situation.
Adaptive selling: When a salesperson alters the initial objectives or
plans of the sales process because of new information gained from the customer during the actual call.
The Approach: The first minute or so of the call.
A good approach makes a favorable impression and establishes some degree of rapport between the salesperson and the buyer.
A lot can happen in the first minute.What all would you do in the first minute?
3) The Approach: The first minute or so of the call.
A good approach makes a favorable impression and establishes some degree of rapport between the salesperson and the buyer.
Expectations in the U.S.: Firm handshake Professional attire Good eye contact.
Need Assessment
The stage in which the salesperson must discover, clarify, and understand the buyer’s needs.
The best way to uncover and understand needs is by asking questions.
NEED ASSESSMENT
• Situational questionsSituational questions
How often do you change the cutting oil in your drill presses?How often do you change the cutting oil in your drill presses?
In addition to the hospital administrator, who else has an influence on the decision?In addition to the hospital administrator, who else has an influence on the decision?
• Problem discovery questionsProblem discovery questions
Have you experienced any delays in getting repair parts?Have you experienced any delays in getting repair parts?
In which part of the production process is quality control the most important?In which part of the production process is quality control the most important?
• Problem Impact questionsProblem Impact questions
How do these delays in getting parts affect your production costs?How do these delays in getting parts affect your production costs?
What impact do the quality consistency problems have on your production costs?What impact do the quality consistency problems have on your production costs?
• Solution value questionSolution value question
If your inventories could be reduced by 20%, how much would that save you? If your inventories could be reduced by 20%, how much would that save you?
If your rejection rate on final inspection was reduced to under one percent, how much would If your rejection rate on final inspection was reduced to under one percent, how much would that save you?that save you?
• Confirmatory questionsConfirmatory questions
So, you would be interested in an inventory control system that reduced your inventories by 20%?So, you would be interested in an inventory control system that reduced your inventories by 20%?
If I can provide evidence to you that our products would lower your rejection rate to under oneIf I can provide evidence to you that our products would lower your rejection rate to under one
percent, would you be interested?percent, would you be interested?
The Presentation
A discussion of those product and/or service features, advantages, and benefits that the customer has indicated are important.
Built around a forceful product demonstration
Prepared presentation vs. Adaptive selling
Tips for effective presentationsKeep it simpleTalk the prospects languageStress the application of the product/service to the
prospects situationSeek credibility at every turn.
Presentation of Product, Features, Benefits, Advantages
Product Features Benefits Advantages
Camera Telephoto lens Take pictures Able to capture from longer distance image from a distance.
Bicycle Attached water Can hold a water Don’t get dehydrated. bottle holder bottle.
New D.V.D. Can play any round Convenience Avoid multiple units.
Drill Press Multiple drill Can change bits Saves time. bits attached without shutting Saves money.
down the machine.
Motor Oil Rust inhibitor engine to have Saves money.have longer life.
TM 3-
The S E L L
S Show Feature E Explain Advantage L Lead into Benefits L Let the Customer Talk
the F A B approach
Need of the Dialogue
Meeting Objections Objections should be welcomed because they indicate
that the prospect has some interest in the proposition.
In responding to an objection… Listen to the buyer Clarify the objection Respect the buyer’s concern Respond to the objection
Common types of objections Price or value objections Product/service objections Procastinating objections Hidden objections
6) Meeting Objections Objections should be welcomed because they indicate
that the prospect has some interest in the proposition.
In responding to an objection… Listen to the buyer Clarify the objection Respect the buyer’s concern Respond to the objection
Common types of objections Price or value objections Product/service objections Procastinating objections Hidden objections
Trial Close: a great way to uncover needs;Push the sale forward It checks the attitude of the prospect Can be used at the following points
After making a strong selling pointAfter the presentation
After answering an objectionImmediately before closing the
sale
Using Trial Close
How does it sound to you What do you think Is this what you are looking for Is this important to you Does this answer your concern
Gaining Commitment
Asking the buyer to commit to some action that moves the sale forward.
Common Sales Closes The Assumptive Close
“Now what size do you want?” Special Offer Close
“If you buy this product today, we’ll double the length of the warranty.”
Summary Close “You have agreed that our product is the best on the market.
Correct? Then I suggest that you place your first order today so we can have it to you by the end of the week.”
Planning
Sales Forecasting
Quotas and Territories
Management Information Systems
Importance of Sales Forecast Basis for all the activities for the company
Help decide the levels of productionThe need of raw materials required
Leads to the level of funds neededLevel of working capital required
Calls for decisions on the level of activityThis helps in the manpower
planning Sets the level of activities required
Decision on the level of operational expenses
Sales Forecasting Methods Methods Advantages Disadvantages Best Used
Executive Opinion
Quick, easy, and simple Subjective
Lacks analytical rigor
For new products
Sales force composite
Relatively simply
Usually fairly accurate
Involves those people who are responsible for the results
Salespeople are sometimes overly optimistic
Salespeople may sandbag (estimate low) to look better
Time consuming
When reps are of a high caliber
When each rep has a small number of customers
Survey of buyers intentions
Done by those who will buy the product, so accuracy should be good.
Time consuming
High cost
Customer may not cooperate
For new products
When there are a small number of customers
Trend projections:-moving average
-exponential smoothing
-regression analysis
Objective and inexpensive
Use historical data
No consideration for major product or market changes
Require some statistical analysis
For established products
When market factors are predictable
For aggregate company forecasts
Analysis of market factors
Objective
Fairly accurate and simple
Unforeseen changes in the market can lead to inaccuracy
When market factors are stable and predictable
Test markets
Very accurate Time consuming
Cost
For new products which do not require large investments
Market Factor Forecast: Dryever Diapers
Next Year Second Year
Projected population, ages 0-18 months 4,850,000 4,800,000 Percentage using diapers 100 100Number using diapers 4,850,000
4,800,000 Average daily diapers per child 2.55 2.55Diapers daily, ages 0-18 months 12,367,500 12,240,000
Projected population, ages 19-30 months 3,300,000 3,200,000Percentage using diapers 80 80Number using diapers 2,640,000
2,560,000Average daily diapers per child 2.19 2.19Diapers daily, ages 19-30 months 5,781,600
5,606,400
Projected population, ages 31-42 months 3,500,000 3,300,000Percentage using diapers 40 40Number using diapers 1,400,000
1,320,000Average daily diapers per child 1.10 1.10Diapers daily, ages 31-42 months 1,540,000
1,452,000
Total daily diapers, all ages 19,689,100 19,298,400Percentage disposable diapers 95 95Number disposables daily 18,704,645 18,298,400Dryever market share percentage 20
20Expected daily sales (units) 3,740,929 3,666,696Wholesale price per diaper 0.07 0.07Annual sales forecast in dollars 95,580,736 93,684,083
Guiding Principles for Forecasting
Fit the method to the product/marketUse more than one methodMinimize the number of market factorsRecognize the situation limitsUse the minimum/maximum techniqueUnderstand math and statistics
Fig 12-8 Flow of Information from Sales Budget to Other Budgets
Sales budget
Administrative expense budgets
Production department budgets
Sales department expense budgets
(advertising, selling costs, administration)
Revenues
Expenses
Revenues
Expenses
Cash budget
Profit-and-loss budget
Sales Territory
Comprises a number of present and potential customers, located within a given geographical area and assigned to a salesperson, branch, or intermediary (retailer or wholesaling intermediary).Key word: customers
TM 13-2
Benefits of Good Territory DesignEnhances customer coverage
Reduces travel time and selling costs
Provides more equitable rewards
Aids evaluation of sales force
Increases sales for the sales
organization
Increases morale
TM 13-3
Procedure for Designing Sales TerritoriesProcedure for Designing Sales Territories TM 13-4 (Fig. 13-1)
Select a Control Unit
Determine Location and Potential of
Customers
Determine Basic
Territories
Assign Salespeople to
Territories
Set Up Territorial Coverage
Plans
Evaluate Effectiveness
of Design
Buildup Method of Territorial Design TM 13-6 (Fig. 13-3)
Management must determine:
Desirable call patterns:Call frequency per account per year
Total calls needed in each control group
Workload capacity:Total calls possible per rep per year = number of daily calls x days selling
Tentatively set territorial boundary lines by combining control units until total calls needed = total calls possible
Modify territories as needed
Territory Size and Workload Factors
Nature of Job:Lots of presale and post-sale activity Decreases
Nature of product:A frequently purchased product DecreasesA limited repeat-sale Increases
Market development stage:New market--fewer accounts IncreasesEstablished market--more accounts Decreases
Market coverageSelective coverage IncreasesExtensive coverage Decreases
Competition:Intensive Decreases – unless
market is oversaturated
Limited Increases
Workload Factor Territory Size
Increase/Decrease
TM 13-8
Breakdown Method of Territorial DesignBreakdown Method of Territorial DesignTM 13-9
(Fig. 13-5)
Management must determine
Company sales potential
Sales potential in each control unit
Sales volume expected from each sales person
Tentatively set territorial boundary lines by combining control units total sales potential = total sales volume expected
Modify territories as needed
Routing the Sales Force
Routing is the managerial activity that establishes a formal pattern for sales reps to follow as they go through their territories.
Reduces travel expenses as it ensures a more efficient territory coverage.
Some reps resent it.Best for routine sales
jobs with regular call frequencies.
x
Area C
Area B
Area A
Area B: Typically the “problem” area.
TM 13-13
Routing the Sales Force
Routing is the managerial activity that establishes a formal pattern for sales reps to follow as they go through their territories.
Reduces travel expenses as it ensures a more efficient territory coverage.
Some reps resent it.Best for routine sales
jobs with regular call frequencies.
x
Area C
Area B
Area A
Area B: Typically the “problem” area.
TM 13-13
Sales Manpower
Recruitment
Training
Assimilation
Recruiting and Selection Problems
Lack of resourcesLack of job specification and qualifications
Qualifications not objectively establishedLack of managerial trainingPersonal prejudicesSearch for managerial talent
Fig. 5-2 Sales Force Staffing Process: Plan for Recruiting & Selection
Establish Responsibility for Recruiting, Selection
and Assimilation
Determine Number of
People Wanted
Conduct Job Analysis
Prepare Job Description
Recruit Applicants
Select ApplicantsDesign a
System For Measuring Applicants
Hire The People
Assimilate New People Into Sales Force
Determine Hiring Qualifications
Measure Applicants Against Hiring Qualifications
Make Selection Decisions
Workload AnalysisNumber of reps needed = Total workload in market
Workload one rep can handle Market workload:
Customer Number of Calls Total class accounts per year calls
x =
A 400 20 8,000
B 600 10 6,000
14,000
One rep’s workload:
Calls/day x Selling days/week x Working weeks/year = Annual workload 5 x 5 x 50 = 1250
Number of reps needed = = 112 reps
14,000
1250
Fig. 5-4
Ten traits and abilities of top salespeople
Trait Related Ability
Ego strength To handle rejection
Sense of urgency To complete the sale
Ego drive To persuade people
Assertiveness To be firm in negotiations
Willingness to take risks To be innovative
Sociability To build relationships
Abstract reasoning To sell ideas
Sense of skepticism To question, to be alert
Creativity To sell complex products and ideas
Empathy To understand customer needs
Source: Erika Rasmusson, “The 10 Traits of Top Salespeople, “ Sales & Marketing Management, August 1999, pp. 34-37.
Recruiting for the Team
• Willingness to share
• Cooperative
• Trusting
• Empathetic
• Accepting of others
• Receptive to others ideas
• Selflessness
• Leadership skills
Developing and Conducting a Sales Training Program
Training assessmentTraining assessment
Program designProgram design
ReinforcementReinforcement
EvaluationEvaluation
Establish program objectives
Identify who should be trained
Identify training needs and specific goals
How much training is needed?
Who should do the training?
When should the training take place?
Where should training be done?
Content of training
Teaching methods used in training program
Determine how training will be reinforced
What outcomes will be evaluated?
What measures will be used?
Objectives of Sales Training Programs
Increased Sales
Productivity
Improved Self-
Management
Lower turnover
Improve customer relations
Improve morale
Improved communica-
tion
Sales training program
objectives
Examples of Specific Training Objectives
Company orientation and administrative skills:
Understand company goals and objectivesUnderstand company selling philosophyUnderstand organizational structureUnderstand company policies and proceduresImprove call reportsImprove call patternsImprove time management
Knowledge: Existing products - features, benefits, and applicationsNew products - features, benefits, and applicationsIndustry trendsCompetitive products - features, benefits, and applicationsSpecific customer applications and problemsPromotional programs
Selling skills: Improve pre-call planningImprove prospecting methodsImprove strategy selectionImprove presentation skillsImprove closing techniquesImprove understanding of and handling objectivesImprove customer sensitivity
When Should Training Take Place?Two basic attitudes:
#1) Train immediately because…-No rep should be placed in the field until he or she is fully trained.-Cannot risk exposing customers to poorly trained reps.
#2) Delay training because…-much easier to train people who have had some field experience.-weak salespeople are eliminated before company spends money on training them.
To Insure Training EffectivenessManagers Should Ask the Following Questions
Is your training aligned with your company’s strategic goals?
Does top management support your training? Does it reflect the needs of your customers/ Is it immediately relevant to your business? Are the salespeople empowered to leverage what they
learn? Is the training reinforced? Are the results of the training measurable?
Source: Adapted from Mark McCaster, “Is Your Training A Waste of Money?” Sales & Marketing Management, 2001, p. 47.
Management of the Field force Leadership
Compensation
Evaluation
Leadership Effectiveness
Personal characteristics
Managerial skills
Leadership
effectiveness
Leadership style (the leader behaviors)
S I T U A T I O N
Leadership Characteristics and SkillsPersonal Characteristics
Self-Confidence Initiative Energy Creativity Maturity
Managerial Skills Problem-solving skills Interpersonal skills Communication skills Persuasive skills
Two Leadership StylesTransactional Leadership
Those supervisory activities regarding the day-to-day operation and control of the sales force. Clarifying rules Providing verbal feedback
Transformational Leadership Transforms the basic values, beliefs, and attitudes of
followers such that they are willing to perform at levels above and beyond expectations. Articulating a vision Fostering group goals Role modeling Providing individualized support
Tools and Techniques of LeadershipPersonal contact
Sales reportsTelecommunications
Better customer and industry information Selling assistance Sales support Reporting responsibilities Communication
Printed aidsMeetings Indirect supervisory aids
Compensation plans Territories Quotas Expense accounts Sales analysis procedures
Coaching Sales Reps
Three elements of leadership most often used to describe coachingVerbal feedback
Praising salespeople when they do well.Leading by example
Coaches are role models; salespeople will emulate them.
Mutual trust and respect Created through two-way communication
Outcomes of Effective LeadershipOutcomes of Effective LeadershipTM 13-3
•Well-Trained Salespeople
•Trust among Salespeople
•Better Performance
•Sales Force Morale•A sense of common purpose and a belief among members that group goals can be attained.
Problems Encountered in Leadership
Poor performanceSubstance abuseCheating on expense accountsEngaging in unethical behavior
Procedure for Evaluating Salespeople(Fig. 16-1)
1. Establish basic policies
2. Select evaluation bases
3. Set performance standards
4. Compare performances standards
5. Discuss results with salespeople
Output Factors Used as Evaluation Bases
Sales volume In dollars and in units By products and customers (or customer groups) By mail, telephone, and personal sales calls
Sales volume as a percentage of: Quota Market potential (i.e., market share)
Gross margin by product line, customer group, and order size
Orders Number of orders Average size (dollar volume) of order Batting average (orders / calls) Number of canceled orders
Accounts Percentage of accounts sold Number of new accounts Number of lost accounts Number of accounts with overdue payment
Quantitative Input Factors Used as Evaluation Bases
Calls per day (call rate)Days workedSelling time versus nonselling timeDirect selling expense
In total As percentage of sales volume As percentage of quota
Nonselling activities Advertising displays set up E-mails/letters written to prospects Telephone calls made to prospects Number of meetings held with dealers and/or
distributors Collections made Number of customer complaints received
Qualitative Input Factors Used as Evaluation Bases
Personal efforts of the sales reps Management of their time Planning and preparation for calls Quality of sales presentations Ability to handle objections and to close sales
Knowledge Product Company and company policies Competitor’s products and strategies Customers
Customer relationsPersonal appearance and healthPersonality and attitudinal factors
Cooperativeness Resourcefulness Acceptance of responsibility Ability to analyze logically and make decisions
Ratio Measures
Sales =
Days worked X
Days worked X Call rate X Batting average X Average order
CallsDays worked
OrdersCalls
SalesOrdersX X