sales training, compensation
DESCRIPTION
by İnanç ALIKILIÇTRANSCRIPT
American companies spend more than $50 billion American companies spend more than $50 billion ––milyar--milyar--
annually on training. annually on training.
Sales Training: Objectives, Techniques, and Evaluation
TTop 10 training organizations as determined by op 10 training organizations as determined by ““Training magazineTraining magazine””..
Sales Training: Objectives, Techniques, and Evaluation
National sales manager wantsNational sales manager wants to develop to develop close relationships with customersclose relationships with customers..
Sales Training: Objectives, Techniques, and Evaluation
Market managers are interested in how much Market managers are interested in how much training sales training sales rep.rep. receive in dealing with the receive in dealing with the
complex customer problemscomplex customer problems
Sales Training: Objectives, Techniques, and Evaluation
Product managers, hope the salespeople have been well Product managers, hope the salespeople have been well schooled in product knowledge, specifications, and schooled in product knowledge, specifications, and
applications.applications.
Sales Training: Objectives, Techniques, and Evaluation
When determining sales training needs, three When determining sales training needs, three issues must be considered: issues must be considered:
Sales Training: Objectives, Techniques, and Evaluation
1. W1. Who should be trained? ho should be trained? 2. 2. What should be the What should be the
training primary emphasis?training primary emphasis?3. 3. How should the training How should the training
process be structured?process be structured?
On-the-job training and On-the-job training and experience? experience?
Formal and more Formal and more consistent centralized consistent centralized
program?program?Web-based? Web-based?
Instructor-based?Instructor-based?
WWho should be trained? ho should be trained?
Sales Training: Objectives, Techniques, and Evaluation
New One Old OneNew One Old One
Why?Why?
OBJECTIVES OF SALES TRAINING
•Increase productivity •Improve morale•Lower turnover•Improve customer
relations•Improve selling skills
Increase productivity Increase productivity
OBJECTIVES OF SALES TRAINING
Improve moraleImprove morale
OBJECTIVES OF SALES TRAINING
Lower turnoverLower turnover
OBJECTIVES OF SALES TRAINING
Improve customer relationsImprove customer relations
OBJECTIVES OF SALES TRAINING
Improve selling skillsImprove selling skills
OBJECTIVES OF SALES TRAINING
ObstaclesObstacles (Engel) (Engel) to Introducing to Introducing TrainingTraining
THE DEVELOPMENT OF SALES TRAINING PROGRAMS
• Top management not dedicated to sales training
• Lack of buy-in from frontline sales managers and salespeople
• Salespeople’s lack of understanding of what training is supposed to accomplish
• Salespeople’s lack of understanding regarding application of training to everyday tasks
management expects sales training to management expects sales training to solve all the company’s sales problemssolve all the company’s sales problems when, in fact, the problem with sales might not even be when, in fact, the problem with sales might not even be connected with the sales force (for example, poor product connected with the sales force (for example, poor product quality or an inefficient supply chain that is unable to quality or an inefficient supply chain that is unable to deliver products on time)deliver products on time)
THE DEVELOPMENT OF SALES TRAINING PROGRAMS
If the sales problems are not resolved, budget-cutting If the sales problems are not resolved, budget-cutting activities often start with the sales training programactivities often start with the sales training program..
THE DEVELOPMENT OF SALES TRAINING PROGRAMS
1 . S1 . Sales training analysis ales training analysis
Creating Credibility in Sales Training
One way to do this is to travel with sales reps, observe and ask them what they need to know to perform their
jobs more effectively. “Field sales managers”
2 . Determine Objectives2 . Determine Objectives
Creating Credibility in Sales Training
The objectives may include learning about new products, sales techniques, or company procedures. Keep it sample.
3 . Develop and Implement 3 . Develop and Implement Program Program
Creating Credibility in Sales Training
At this point, a decision has to be made concerning developing the training program or hiring an outside organization to conduct it
4 . Evaluate and Review 4 . Evaluate and Review Program Program
Creating Credibility in Sales Training
• What do we want to measure?
• When do we want to measure?
• How do we do it? What measuring tools are available?
This is why field sales managers are an important link:
They can provide follow-up and feedback information on the salesperson’s ability to retain and use sales training takeaways in the field. The
field sales managers can also coach the salesperson if there is a need for follow-up.
TRAINING NEW SALES TRAINING NEW SALES RECRUITS RECRUITS
SALES TRAINING
• Companies with less than $5 million in annual sales are spending more on sales training per new hire - $5,500 worth of training per salesperson.
• Training in smaller companies has increased from 3.3 months to 4.4 months.
• Smaller companies are placing more emphasis on training than several years ago.
• Companies are spending time and money on training experienced salespeople
• Companies with more than $5 million in annual sales, are spending less money on training
TRAINING EXPERIENCED SALES TRAINING EXPERIENCED SALES PERSONNEL PERSONNEL
SALES TRAINING• Experienced sales reps are given, on
average, 32.5 hours of ongoing training per year at a cost of $4,032 per rep
• Continuing increasing amounts of training reflects a commitment to provide ongoing learning opportunities for senior salespeople
• Companies are spending an increasing amount of time on product training and less on training in selling skills
SALES TRAINING TOPICS
SALES TRAINING TOPICS
• Product or service knowledge• Market/Industry orientation • Company orientation• Selling skills• Time and territory
management• Legal and ethical issues• Technology• Specialized topics
Product or service knowledgeProduct or service knowledge
SALES TRAINING TOPICS• Critical information for
rational decision-making – Company’s product
specifications– Common product
uses/misuses
• Competitive products comparison on – Price– Construction– Performance– Compatibility
• Technical products require more time on product knowledge training
Market/Industry orientationMarket/Industry orientation
SALES TRAINING TOPICS• Industry fit into overall
economy• Knowledge of industry and
economy• Economic fluctuations that
affect buying behavior and require adaptive selling techniques
• Customers' buying policies, patterns and preferences in light of competition
• Customers' customers needs
• Wholesaler and retailer needs
Company orientationCompany orientation
SALES TRAINING TOPICS• Company polices that
affect their selling activities– Personnel– Structure– Benefits
• Handling customer requests for price adjustments, product modifications, faster delivery, different credit terms
• Sales manuals– Hard copy, online– Product information– Company policy
information
Time and territory managementTime and territory management
SALES TRAINING TOPICS
• Sales trainees need to learn to manage time and territories
• Time spent training out of the field is costly
• 80/20 rule applies:– 20% of the customers account for – 80% of the business and– Require the same proportion of
time and attention
Legal and ethical issuesLegal and ethical issues
SALES TRAINING TOPICS• Federal law dictates corporate
action or avoidance of action in areas of marketing, sales and pricing
• Sales personnel need to understand the federal, state and local laws that constrain their selling activities
• Statements made by salespeople carry both legal and ethical implications
TechnologyTechnology
SALES TRAINING TOPICS• Notebook computers
– Presentations– Connecting to company intranet or extranet – Delivering documentation quickly and accurately
• Home offices eliminate the need to go to another office
• Salesperson can be almost totally self-sufficient with – High-speed network connection– Computer – Printer – Cell phone
• Effective computer use affords sales personnel more face-to-face customer contact time
• Effective use requires training
Specialized topicsSpecialized topics
SALES TRAINING TOPICS
• Specialized, job-tailored training most effective
• Sample topics;– Price negotiations– Trade show effectiveness– Reading body language
Specialized topicsSpecialized topics
SALES TRAINING TOPICS
• Price and objections video:
Common Instraction MethodsCommon Instraction Methods
SALES TRAINING TOPICS
Creative Sales TrainingCreative Sales Training
• Effective training can take place beyond the classroom or computer
• Requirements– Focus on knowledge, selling skills for success
• Examples– Boot camps– Cooking classes
Keys for Effective OJTKeys for Effective OJT
• Teaming - bring together people with different skills
• Meetings - set aside times when employees can get together
• Customer interaction - include customer feedback as part of learning process
• Mentoring - provide informal mechanism for new salespeople to learn from more experienced ones
• Peer-to-peer communication - create opportunities for mutual learning among salespeople
On-the-Job Training
“learning by doing”
Classroom TrainingClassroom Training• Advantages
– Standard briefings in• Product knowledge• Company polices• Customer and market characteristics• Selling skills
– Formal training sessions save executive time
• Disadvantages– Expensive– Time-consuming– Too much material = less retention
• Role playing a popular technique
Electronic Training MethodsElectronic Training Methods
• Online training > $18billion industry (2009)
• IBM plans 35% sales training to be over Internet
• CD-ROM currently #1 delivery method
• 30% of server-based training over intranets
• Effectiveness not well-documented
• Not likely to eliminate one-on-one training
Measuring the Costs and BenefitsMeasuring the Costs and Benefits
• Sales training consumes large time, budget and support resources
• Relationship between sales training and revenue is difficult to measure
• Relationship between sales training and other broad objectives difficult to measure
Training Road BlocksTraining Road Blocks• Busy, tired salespeople are
not open to learning new skills
• Conflicting methods and philosophies are taught at each session
• The training isn’t relevant to the company’s pressing needs
• The training format doesn’t fit the need
• E-learning is overused, or used in wrong situations
• There’s no follow-up after training
Sales Training CostsSales Training Costs
• Training funds are often allocated with little regard for results
• Results and benefits are difficult to measure
• Difficult to isolate training impact from– Economic conditions– Environmental changes– Seasonal trends– Competitive activity– Etc.
Measuring Broad BenefitsMeasuring Broad Benefits
• Improved morale
• Lower turnover
• Higher customer satisfaction
• Measuring changes in skills, reactions and learning assists both new and experienced sales personnel
• Salary – a fixed sum of money paid at regular intervals
• Incentive Payments (TEŞVİKLER)– Commission – a payment based on short-term results, usually a dollar or unit
sales volume– Bonus – a payment made at management’s discretion for achieving or
surpassing some set level of performance
• Quota - often the minimum requirement for a salesperson to earn a bonus
• Sales contests – encourage extra effort aimed at specific short-term objectives
• Benefits - medical and disability insurance, life insurance, retirement plan
• Non-financial incentives - opportunities for promotion or various types of recognition for performance
Salesperson Compensation and IncentivesSalesperson Compensation and Incentives
Components and objectives of Components and objectives of Financial compensation PlansFinancial compensation Plans
Compensation Methods for Compensation Methods for SalespeopleSalespeople
No incentive
Requires close supervision
Selling expenses remain same during sales declines
Maximum security
Control over reps
Easy to administer
Predictable expenses
New sales reps
New sales territories
Many required nonselling activities
Straight Salary
DisadvantagesAdvantagesEspecially Useful For
Compensation Method
No incentive
Requires close supervision
Selling expenses remain same during sales declines
Maximum security
Control over reps
Easy to administer
Predictable expenses
New sales reps
New sales territories
Many required nonselling activities
Straight Salary
DisadvantagesAdvantagesEspecially Useful For
Compensation Method
Little security
Little control over reps
Reps may provide inadequate service to smaller accounts
Selling costs less predictable
Maximum incentive
Managers can encourage sales of certain items
Selling expenses relate directly to selling resources
Highly aggressive selling
Minimal required nonselling tasks
When company can’t closely control sales force
Straight Commission
DisadvantagesAdvantagesEspecially Useful For
Compensation Method
Little security
Little control over reps
Reps may provide inadequate service to smaller accounts
Selling costs less predictable
Maximum incentive
Managers can encourage sales of certain items
Selling expenses relate directly to selling resources
Highly aggressive selling
Minimal required nonselling tasks
When company can’t closely control sales force
Straight Commission
DisadvantagesAdvantagesEspecially Useful For
Compensation Method
Compensation Methods for Compensation Methods for SalespeopleSalespeople
Selling expenses are less predictable
May be difficult to administer
Some security
Some incentive
Selling expenses vary with revenue
Manager has some control over nonselling activities
Similar sales potential across territories
When company wants to offer incentive but maintain some control
Combination
DisadvantagesAdvantagesEspecially Useful For
Compensation Method
Selling expenses are less predictable
May be difficult to administer
Some security
Some incentive
Selling expenses vary with revenue
Manager has some control over nonselling activities
Similar sales potential across territories
When company wants to offer incentive but maintain some control
Combination
DisadvantagesAdvantagesEspecially Useful For
Compensation Method
Compensation Methods for Compensation Methods for SalespeopleSalespeople
Combination PlansCombination Plans
• Offer a base salary plus some proportion of incentive pay
• Most popular form of compensation
• Well-suited for relationship selling by compensating for nonselling activities while providing incentives to motivate sales
Combination PlansCombination Plans
When the salesperson’s selling skill is the key to sales success, the incentive portion of compensation generally should be relatively large.
However, when the product has been presold through advertising and the salesperson is largely an order taker, or when the salesperson’s job involves a large proportion of missionary or customer service work, the incentive component should be relatively small.
Design Questions for Combination Design Questions for Combination PlansPlans
• Appropriate size of incentive relative to base salary?
• Should ceiling be imposed on incentive earnings?
• When should the sale be credited?
• Should team incentives be used? How?
• How often should incentive payments be made?
Sales ContestsSales Contests
• Short-term incentive programs to accomplish specific objectives
• Winners receive prizes, recognition, sense of accomplishment
• Successful contests require:– Clearly defined, specific objectives– An exciting theme– Reasonable probability of rewards for all– Attractive rewards– Promotion and follow-through
Structuring Effective Sales Structuring Effective Sales ContestsContests
• Prize structure :Contest rewards can take the form of cash, merchandise, or travel.– Prize value
• Unique• Rank-ordered
– Number of prize winners• > 1• Not so large incentive is
lessened
– Contest structure will be unique for each situation
Criticisms of Sales ContestsCriticisms of Sales Contests
• Salespeople may borrow sales from another period to increase sales during contest period
• Poorly administered contests can hurt morale
Nonfinancial RewardsNonfinancial Rewards
• Recognition makes peers and superiors aware of outstanding performance
• Effective recognition programs: – Offer everyone a
reasonable chance of winning
– Recognize best performers across several dimensions
Expense AccountsExpense Accounts
• Types
– Direct reimbursement GERİÖDEME – of all “allowable and reasonable” expenses
– Limited reimbursement – sets expense limits by-item
(such as a policy that limits reimbursement for restaurant meals to $40 per person)
– No reimbursement – salespeople covers all expenses; usually combined with higher total compensation
—travel, lodging, meals, and entertaining customers
Rewarding A While Hoping for B?Rewarding A While Hoping for B?
• Straight commission may work for transactional selling, but…
• Relationship selling is more complex; requires– Operating within a team– Securing, building, long-term relationship with
profitable customers
• Organizations must reward these additional behaviors