Sales Management

Vinod Puri
98206 94960; 26314644

Importance of Selling

Only activity that generates revenue

Everything 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

Selling
Transaction
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-profitpotential 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

Provide service
to customers:
Provide
management/technical
consulting
Oversee installations
and repairs
Check inventory levels

Entertain

Stock shelves

Arrange for
credit/financing

Provide merchandising
assistance:

Collect payments

Co-op advertising,
point-of-purchase
displays, brochures

Participate in trade
shows

Oversee product and

equipment testing
Train wholesalers and
retailers salespeople

Territory
management:

Professional
development:

Company
service:

Gather and analyze

information on
customers, competitors
general market
developments

Participate in:

Train new salespeople

Disseminate
information to
appropriate personnel
within salespersons
company
Develop sales
strategies and plans,
forecasts, and budgets.

Sales meetings
Professional
associations
Training programs

Sales jobs differ from other jobs

because salespeople

implement a firms 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 firms 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.

(Figure 15)

Sales Management
Responsibilities
Strategic
Planning
Organizing
the sales
force

Performanc
e Evaluation

Communication
Coordination
Motivation
and
supervision

Integration

Training and
developmen
t

Recruiting,
selection,
assimilation

(Figure 16)

Executive Ladder in Personal

Selling
President
Vice president of sales
National sales manager
Regional/divisional sales manager
District sales manager
Sales supervisor
Salesperson

Staff assistants
available for advice
and support at any
step along the
ladder.

(Figure 17)

Executive Ladder in Team

Selling
President

Vice president of marketing

Distribution
logistics
specialist

Client-team
leader

Customer
sales/service
representative

Product
engineer

Sales Force Management

Challenges in the 21st
Customer relationship management (CRM)
Century
Sales

force diversity
Electronic communication systems and
computer-based technology
Selling teams
Complex channels of distribution
An international perspective
Ethical behavior and social responsibility

The Marketing Concept

A

philosophy: Achieving organizational goals depends

on the firms 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

Focus on mass-producing a limited variety of products

for as little cost as possible.

Sales

orientation

Age of the hard-sell.

Marketing

orientation

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
Customers
Working

employees

to be included in planning

in teams

Strategic Planning

Objectives are the broad

Set
Objectives

goals around which a

strategic plan is formulated.

Strategies are the plans of

action.

Formulate
Strategies

Tactics are the specific

activities that people must
perform in order to carry out
the strategy.

Develop Tactics

Company StrategyMarketing Objectives and Strategy

Company
Objectives

Marketing

Earn 20% ROI

Strategy
Increase marketing share 10%

Objectives
Increase market
share 10%

Strategy
Increase share of customer business

Marketing StrategySales Force Objectives, Strategy and

Tactics

Marketing
Objectives

Increase market share 10%

Strategy
Increase share of customer business

Sales Force
Objectives
Increase share of
customer business

Strategy
Build long-term
customer relations

Tactics

Develop sales teams

Provide bonuses for greater customer share

Strategic Trends
Internet

Selling
Multiple Sales Channels
Multiple Relationship Strategies

In

Transaction selling Consultative selling

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
Management
CRM

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

TM 3-2

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

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

Plan to
buy 25%
No longer
in market
30%

Purchased
45%

*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
buyers
business if
not followed
up 40%

Share of buyers
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

Sale
Includes

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 buyers
needs.
The best way to uncover and
understand needs is by asking
questions.

NEED ASSESSMENT
Situational questions
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?
Problem discovery questions
Have you experienced any delays in getting repair parts?
In which part of the production process is quality control the most important?
Problem Impact questions
How do these delays in getting parts affect your production costs?
What impact do the quality consistency problems have on your production costs?
Solution value question
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
that save you?
Confirmatory questions
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 one
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 presentations

Keep it simple
Talk the prospects language
Stress the application of the product/service to the
prospects situation
Seek credibility at every turn.

TM 3-

Presentation of Product, Features, Benefits,

Advantages

Product

Features

Benefits

Camera

Telephoto lens

Bicycle

Attached water
bottle holder

New D.V.D.

Can play any round Convenience

Drill Press

Multiple drill
bits attached

Can change bits

without shutting
down the machine.

Motor Oil

Rust inhibitor

engine to have
have longer life.

Take pictures
from longer distance
Can hold a water
bottle.

Advantages

Able to capture
image from a distance.
Dont get dehydrated.
Avoid multiple units.
Saves time.
Saves money.
Saves money.

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 buyers 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 buyers 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
thethesale
forward
It checks
attitude
of the prospect

Can be used at the following points

After making a strong selling point
After the presentation
After answering an objection
Immediately 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

The Assumptive Close

Now what size do you want?

Special Offer Close

Sales Closes

If you buy this product today, well 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 production
The need of raw materials required
Leads to the level of funds needed
Level of working capital required
Calls for decisions on the level of activity
This 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
projection
s:

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

Objective

Unforeseen changes in
the market can lead to

When market factors are

stable and predictable

-moving
average
-exponential
smoothing
-regression
analysis

Analysis
of market

Market Factor Forecast: Dryever Diapers

Next Year
Projected population, ages 0-18 months
Percentage using diapers
Number using diapers
4,800,000
Average daily diapers per child
2.55
Diapers daily, ages 0-18 months

Second Year

4,850,000
100

4,800,000
100
4,850,000
2.55

12,367,500

12,240,000

Projected population, ages 19-30 months

Percentage using diapers
Number using diapers
2,560,000
Average daily diapers per child
Diapers daily, ages 19-30 months
5,606,400

3,300,000
80

3,200,000
80

Projected population, ages 31-42 months

Percentage using diapers
Number using diapers
1,320,000
Average daily diapers per child
Diapers daily, ages 31-42 months
1,452,000

3,500,000
40

Total daily diapers, all ages

Percentage disposable diapers

2,640,000
2.19
5,781,600

2.19

3,300,000
40
1,400,000

1.10
1,540,000

19,689,100
95

1.10

19,298,400
95

Guiding Principles for

Forecasting
Fit

the method to the product/market

Use more than one method
Minimize the number of market factors
Recognize the situation limits
Use the minimum/maximum technique
Understand math and statistics

Fig 12-8 Flow of Information from

Sales Budget to Other Budgets
Sales budget

Sales department
expense budgets
(advertising, selling
costs, administration)
Cash budget

Production
department budgets

Administrative
expense budgets

Profit-andloss budget

Revenues

Revenues

Expenses

Expenses

Sales Territory
Comprises

TM 13-2

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

Benefits of Good Territory

Design

Enhances

TM 13-3

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

Procedure for Designing Sales Territories

Select a
Control Unit

Assign
Salespeople to
Territories

Determine Location
and Potential of
Customers

Set Up
Territorial
Coverage
Plans

TM 13-4
(Fig. 13-1)

Determine
Basic
Territories

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

TM 13-8

Workload Factor

Territory Size

Increase/Decrease
Nature
of Job:
Lots of presale and post-sale activity

Decreases

Nature of product:
A frequently purchased product
A limited repeat-sale

Decreases
Increases

Market development stage:

New market--fewer accounts
Established market--more accounts

Increases
Decreases

Market coverage
Selective coverage
Extensive coverage

Increases
Decreases

Competition:
Intensive
Limited

Decreases unless
market is oversaturated
Increases

Breakdown Method of Territorial Design

TM 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

TM 13-13

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
Area C
efficient territory coverage.
Area B
Some reps resent it.
Area A
Best for routine sales
x
jobs with regular call
frequencies.
Area B: Typically the problem area.

Routing the Sales Force

Routing

TM 13-13

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
Area C
efficient territory coverage.
Area B
Some reps resent it.
Area A
Best for routine sales
x
jobs with regular call
frequencies.
Area B: Typically the problem area.

Sales Manpower

Recruitment

Training

Assimilation

Recruiting and Selection

Problems
Lack

of resources

Lack

of job specification and

qualifications

Qualifications
Lack

not objectively established

of managerial training

Personal
Search

prejudices

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

Determine Hiring
Qualifications

Recruit Applicants
Select Applicants
Design a
System For
Measuring
Applicants

Measure Applicants
Against Hiring
Qualifications

Make Selection
Decisions

Hire The People

Assimilate New People Into Sales Force

Workload Analysis

Number of reps needed =

Workload one rep can handle

Market workload:
Customer
class

Total workload in market

Number of
x
accounts

Calls
=
per year

Total
calls

400

20

8,000

600

10

6,000
14,000

One reps workload:

Calls/day x Selling days/week x Working weeks/year = Annual workload
5

50

14,000
Number of reps needed =

1250

112 reps

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
Establish program objectives

Identify who should be trained

Training assessment

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?

Program design

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?

Reinforcement

Evaluation

Objectives of Sales Training

Programs
Increased
Sales
Productivity
Improved
SelfManagemen
t

Lower
turnover

Sales training
program
objectives

Improve
customer
relations

Improved
communication

Improve
morale

Examples of Specific Training

Objectives
Company
orientation
and
administrativ
e skills:

Understand company goals and objectives

Understand company selling philosophy
Understand organizational structure
Understand company policies and procedures
Improve call reports
Improve call patterns
Improve time management

Knowledge:

Existing products - features, benefits, and applications

New products - features, benefits, and applications
Industry trends
Competitive products - features, benefits, and
applications
Specific customer applications and problems
Promotional programs

Selling skills: Improve pre-call planning

Improve prospecting methods

Improve strategy selection
Improve presentation skills
Improve closing techniques
Improve understanding of and handling objectives

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
Effectiveness
Managers Should Ask the Following Questions

Is your training aligned with your companys 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
Leadership style
(the leader
behaviors)

Managerial
skills

SITUATION

Leadership
effectiveness

Leadership Characteristics and

Skills
Personal

Characteristics

Self-Confidence
Initiative
Energy
Creativity
Maturity

Managerial

Skills

Problem-solving skills
Interpersonal skills
Communication skills
Persuasive skills

Two Leadership Styles

Transactional

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

Leadership

Personal contact
Sales reports
Telecommunications

Better customer and industry information

Selling assistance
Sales support
Reporting responsibilities
Communication

Printed

aids
Meetings
Indirect supervisory aids

Compensation plans
Territories
Quotas
Expense accounts
Sales analysis procedures

Coaching Sales Reps

Three

elements of leadership most often

used to describe coaching

Verbal 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

TM 13-3

Outcomes of Effective Leadership

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

performance
Substance abuse
Cheating on expense accounts
Engaging 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 worked
Selling time versus nonselling time
Direct 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
Competitors products and strategies
Customers

Customer

relations
Personal appearance and health
Personality and attitudinal factors

Cooperativeness
Resourcefulness
Acceptance of responsibility
Ability to analyze logically and make decisions

Ratio Measures
Sales =
Days worked

Days worked

Calls
Days worked X

Call rate

Orders
Calls

Sales
Orders

Batting average

Average order