Sales Management

Sales Management 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 highprofit-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    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    Sales Management Responsibilities Strategic Planning Performanc e Evaluation (Figure 15) Organizing the sales force Communication Coordination Integration Motivation and supervision Training and developmen t Recruiting, selection, assimilation Executive Ladder in Personal Selling President (Figure 16) 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. Executive Ladder in Team Selling President (Figure 17) Vice president of marketing Distribution logistics specialist Client-team leader Product engineer Customer sales/service representative Sales Force Management Challenges in the 21st Century  Customer relationship management (CRM)  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 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. on three fundamental beliefs  Based  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 orientation The marketing concept first emerges.  Relationship  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  Set Objectives Objectives are the broad goals around which a strategic plan is formulated. Formulate Strategies  Strategies are the plans of action.  Tactics are the specific activities that people must perform in order to carry Develop Tactics Company StrategyMarketing Objectives and Strategy Company Objectives Earn 20% ROI Marketing 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% Sales Force Objectives Increase share of customer business Strategy Increase share of customer business Strategy Build long-term customer relations Develop sales teams Provide bonuses for greater customer share Tactics Strategic Trends Selling  Multiple Sales Channels  Multiple Relationship Strategies   Internet 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 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 Purchased 45% No longer in market Plan to buy *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 Sale  Includes all the information-gathering activities salespeople perform to learn relevant facts about the prospects, their needs, and their overall situation. selling:  Adaptive  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. 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? A 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. in the U.S.:  Expectations  Firm handshake  Professional attire  Good eye contact. Need Assessment 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. The 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  TM 3- Product Camera Presentation of Product, Features, Benefits, Advantages Features Benefits Telephoto lens Take pictures from longer distance Advantages Able to capture image from a distance. Bicycle New D.V.D. Drill Press Attached water bottle holder Can hold a water bottle. Don’t get dehydrated. Avoid multiple units. Saves time. Saves money. Saves money. Can play any round Convenience Multiple drill bits attached Rust inhibitor Can change bits without shutting down the machine. engine to have have longer life. Motor Oil 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 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. Sales Closes  Common   The Assumptive Close “Now what size do you want?” “If you buy this product today, we’ll double the length of the warranty.” “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  Special Offer Close   Summary Close  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 Executive Opinion Sales force composite Advantages Quick, easy, and simple Relatively simply Usually fairly accurate Involves those people who are responsible for the results Disadvantages Subjective Lacks analytical rigor Salespeople are sometimes overly optimistic Salespeople may sandbag (estimate low) to look better Time consuming Time consuming High cost Customer may not cooperate No consideration for major product or market changes Require some statistical analysis Best Used For new products When reps are of a high caliber When each rep has a small number of customers Survey of buyers intentions Trend projection s: -moving average -exponential smoothing -regression analysis Done by those who will buy the product, so accuracy should be good. Objective and inexpensive Use historical data For new products When there are a small number of customers For established products When market factors are predictable For aggregate company forecasts Analysis of market Objective Unforeseen changes in the market can lead to When market factors are stable and predictable Market Factor Forecast: Dryever Diapers Next Year Second Year Projected population, ages 0-18 months 4,850,000 4,800,000 Percentage using diapers 100 100 Number using diapers 4,850,000 4,800,000 Average daily diapers per child 2.55 2.55 Diapers daily, ages 0-18 months 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 2,640,000 2.19 5,781,600 3,200,000 80 2.19 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 1,400,000 1.10 1,540,000 3,300,000 40 1.10 Total daily diapers, all ages Percentage disposable diapers 19,689,100 95 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 Revenues Expenses Administrative expense budgets Production department budgets Profit-andloss budget Revenues 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 Provides travel time and selling costs more equitable rewards Aids evaluation of sales force Increases sales for the sales organization Procedure 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 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 TM 13-6 (Fig. 13-3) 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 Increase/Decrease Nature of Job: Lots of presale and post-sale activity Nature of product: A frequently purchased product A limited repeat-sale Market development stage: New market--fewer accounts Established market--more accounts Market coverage Selective coverage Extensive coverage Competition: Intensive Territory Size Decreases Decreases Increases Increases Decreases Increases Decreases Decreases – unless market is oversaturated Limited Increases Breakdown Method of Territorial Design Management must determine TM 13-9 (Fig. 13-5) 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  Lack of resources of job specification and qualifications not objectively  Qualifications established  Lack of managerial training prejudices for managerial talent  Personal  Search 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 Number of reps needed = Market workload: Workload Analysis Calls = per year 20 Total workload in market Workload one rep can handle Customer class A Number of x accounts 400 Total calls 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 14,000 Number of reps needed = 1250 = 112 reps Fig. 5-4 Ten traits and abilities of top salespeople Trait Ego strength Sense of urgency Ego drive Assertiveness Willingness to take risks Sociability Abstract reasoning Sense of skepticism Creativity Related Ability To handle rejection To complete the sale To persuade people To be firm in negotiations To be innovative To build relationships To sell ideas To question, to be alert 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? Content of training Teaching methods used in training program Determine how training will be reinforced Reinforcement Program design What outcomes will be evaluated? Evaluation What measures will be used? Objectives of Sales Training Programs Increased Sales Productivity Improved SelfManagemen t Lower turnover Sales training program objectives Improve customer relations Improve morale Improved communication 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 Improve prospecting methods Improve strategy selection Improve presentation skills Improve closing techniques Improve understanding of and handling objectives Selling skills: Improve pre-call planning 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 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?  Management of the Field force  Leadership Compensation   Evaluation Leadership Effectiveness Personal characteristics Leadership style (the leader behaviors) Leadership effectiveness Managerial skills SITUATION 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 contact  Sales reports  Telecommunications       Personal Better customer and industry information Selling assistance Sales support Reporting responsibilities Communication aids  Meetings  Indirect supervisory aids       Printed 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 performance Substance abuse Cheating on expense accounts Engaging in unethical behavior Poor 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 Quota Market potential (i.e., market share)  Sales volume as a percentage of:   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 Percentage of accounts sold Number of new accounts Number of lost accounts Number of accounts with overdue payment  Accounts     Quantitative Input Factors Used as Evaluation Bases 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   Calls  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 relations  Personal appearance and  Personality and attitudinal  health factors Cooperativeness  Resourcefulness  Acceptance of responsibility  Ability to analyze logically and make decisions Ratio Measures Sales = Days worked X Calls Days worked X Orders Calls X Sales Orders Days worked X Call rate X Batting average X Average order