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Sales Management: Shaping Future Sales Leaders

The Sales Function and


Multi-Sales Channels
Chapter 2

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Learning Objectives
Explain what the sales function consists of and
how salespeople affect a firms supply chain
Identify the various channels in which the sales
function can be carried out
Explain how effective sales management efforts
can align a firms sales strategy in a multichannel
environment

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

The Sales Function


Locating potential buyers
Persuading them
Consummating the transaction

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

The Supply Chain


Complete process of
events and people needed
to bring product to the
customer
Key term Sales forecast:
what the salesperson
expects to sell in a
particular period of time

2-4
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Managing the Supply Chain:


Active vs. Passive
Passive

Active

Example: salesperson turns in


sales forecast

Salesperson actively seeks to


influence what supply chain does

Sales forecast influences what


happens in supply chain, but
salesperson is not taking active
role in influencing chains activity

Example: buyer that needs


special payment terms will need
the salespersons help in securing
those terms from the company
Example: salesperson might need
to arrange expedited delivery in
order to meet a buyers needs

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Multichannel Environment
Using a number of methods, or channels, to accomplish
the selling function

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

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Global Sales Management:
Outsourcing to India

EDS manages some 500 call centers worldwide


Indian call center employees selling to US must
Learn to speak with American accent
Learn American slang

EDS must

Set appropriate metrics


Write scripts for salespeople
Match its customer tracking system to the clients

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Global Sales Management:


Why Outsource?
Lower cost
Willing and highly educated workforce availability

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Strategies to Reduce Sales Force


Costs Without Sacrificing Performance
Purifying
Shifting non-selling activities to lower-cost alternatives

Outsourcing
Hiring another company to carry out a task or set of
tasks

2-9
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Advantages of Company-Employed
vs. Outsourced Sales Force
Company-Employed
Company can exert greater
control over their efforts
Greater control over who is
hired
Focus on only the companys
products, whereas an
outsourced representative
might be free to sell many
companies products

2-10
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Outsourced
Firms selling costs can be
shared with other
manufacturers, reducing cost
per sales call
Established relationships with
customers from which the
manufacturer can benefit
These can yield greater
coverage of the market for the
manufacturer

Types of Outsourced Salespeople


Mfg Rep
Mfg Agent
Rep

Independent contractor who does not take


ownership of product and does not maintain an
inventory

Distributor

Sells for many manufacturers and take ownership


of products, sell them on consignment, or
otherwise maintain an inventory

Broker

Represents either buyer or seller and sometimes


both, carries an inventory of products but does
not take ownership of them

2-11
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

A Few Manufacturers Reps


Organizations
Foodservice Sales & Marketing Association
Mfr. Reps Educational Research Foundation
United Association of Manufacturers Reps
Manufacturers Agents National Association
Association of Independent Manufacturers Reps
All offer certification to upgrade professionalism
Most specialize in industries
2-12
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Types of Company-Employed
Salespeople
Inside
Salesperson

Sells at a companys facilities, either by


telephone or in person

Field
Sells at the customers location
Representative

Account
Manager

Has responsibility for building sales within


specific accounts or accounts within a specific
area (geographic rep)

2-13
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Types of Company-Employed
Salespeople (continued)
Vertical Market
Accounts all operate in the same industry
Rep
Retail Sales
Rep

Sells to consumers who come into stores

Trade Rep

Sells to organizations in the supply chain,


usually retailers

Missionary
Salesperson
(detail rep)

Sells to people who recommend or prescribe a


product to others but do not personally use it

2-14
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

More on Outsourcing
Can outsource Call Centers
Can outsource parts of the sales cycle
To different sales organizations

Often used to
Enter new markets
Keep costs variable (no overhead)
Leverage market coverage costs (share with others)

2-15
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Seamless Integration
Seamless integration: a firms
customers can easily shift
transactions across various
channels
Goal: all areas have all the
customer information they
need so the customer is
treated properly

2-16
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Alignment
Getting all of functional areas of a firm to work together
This includes the companys various salespeopleits inside
reps, geographic reps, customer service reps, etc.

2-17
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Alignment
Alignment occurs at 3 levels

2-18
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Areas to Align
Technology

CRM system
used by
salespeople
also supports
marketing

Processes
and Goals

Lead
management

2-19
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Sales
Metrics

Marketing &
sales have
same sales
targets for a
new product

Self-Assessment Library
Go to http://www.prenhall.com/sal/
Access code came with your book

Click the following


Assessments
Life in Organizations
Careers
How Motivated Am I to Manage?

2-20
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Ethics in Sales Management:


Stuck in AOHell
Customer tried to cancel his AOL service 21 times
Recorded the call and posted the conversation on the Web

Customer claimed moving to France, still had to talk


to manager in order to cancel
AOL: every Member that calls in to cancel their
account is a hot lead
State of New York fined AOL $1.25 million for
hassling customers who wanted to cancel and then
billing them anyway
Source: Keith Dawson, Your Call is Not Particularly Important to Us, Call Center Magazine (Oct.
2006), p. 4; Anonymous, Customers Complain of Cancellation Problems, FinancialWire (July 2, 2006),
p. 1.
2-21
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Role Play: Mechanix Illustrated


Family-owned magazine serving diesel mechanic
shops
5000 subscribers, 10% increase over past 2 yrs
Advertising sales stagnant
Bill North, editor
Does advertising sales

Sandy Lake, Lake Sales


Wants to sell advertising
Wants to take over subscriber management
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Role Play (continued): Action Steps


Bill
List objectives
List concerns regarding outsourcing advertising sales

Sandy
Develop particular sales format (phone, field, etc.)
List advantages for that format

Role play the sales call

2-23
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Caselet 2.1:
Hereford Promotions
Promotional products company with 3 sales
people
In past year, sales up 8%, but customer
complaints have doubled
In past quarter, 12 new customers, 15 lost
Companys net income averaging
~$1000 / month

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Caselet 2.1 (continued):


Running the numbers
Salespeople paid 10%
commission on each sale
Earn an average of
$10,000 /month

Company averages 40
large customers per
salesperson
Large customer bills
$20,000 / year

Each rep earning


$10,000 /month adds $5000 Small customers account
profit margin to the company
for $20,000 /month for
each rep
New salespeople wont work
Each rep might have 100 small
for straight commission, they
customers
expect a salary ($3000) until
sales are high enough to
cover expenses

2-25
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Caselet 2.1 (continued):


Making decisions
What alternatives for growth might Sandy
consider?
What multichannel options might she
pursue?

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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Caselet 2.2:
Marchetti Machines, Problem 1
Salesperson Frank McCaslin is close to landing a
large account, one of the biggest sales of the year
Accounts CFO plays golf with Marchetti service
manager Louis Ruggieri
Ruggieri says the service team hates to work on
the system Frank proposed
Accounts CFO emails, if that is the case, were
going to have to open our search up to some other
companies to try to find something more reliable
2-27
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Caselet 2.2 (continued):


Marchetti Machines, Problem 2
Sales division is reorganizing
Bottom 10% of accounts moving to inside sales
Inside sales moving to new division with Web sales and
distributor sales
Distributors are only allowed to sell to

Accounts under $100,000 in annual revenue


Accounts that require engineering that Marchetti doesnt do
Accounts they find first
Cannot sell to government or accounts already on Marchettis
customer list

Current issue: distributors sell to Marchetti accounts


Company names are not obvious or divisions operate under different
names
Difficult to know who owns the account
2-28
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Caselet 2.2 (continued):


Marchetti Machines, Questions
1. How should Franks boss, Emily, handle the
problem with Louis Ruggieri?
What should she do about the account?
What should she tell Frank if the account is lost
completely?

2. What problems are likely to occur because of


the reorganization?
Did these issues exist before the reorganization?
Will these issues be better or worse as a result of the
change in structure?

2-29
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall.

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