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Personal Selling and Sales Management

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1 Personal Selling and Sales Management
PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong Chapter 16 Personal Selling and Sales Management

2 The Nature of Personal Selling
Involves an individual acting for a company by performing one or more of the following activities: Prospecting, Communicating, Servicing, Information Gathering. The term salesperson covers a wide spectrum of positions from: Order Taking (department store salesperson) Order Getting (someone engaged in creative selling) Missionary Selling (building goodwill or educating buyers)

3 The Role of the Sales Force
Personal Selling is effective because salespeople can: probe customers to learn more about their problems, adjust the marketing offer to fit the special needs of each customer, negotiate terms of sale, build long-term personal relationships with key decision makers. The Sales Force serves as a critical link between a company and its customers since they: represent the company to customers, and represent customers to the company.

4 Managing the Salesforce
This CTR corresponds to Figure 16-1 on p. 483 and relates to the material on pp Instructor’s Note: This CTR provides an overview of the salesforce management process with following CTR covering each key area in greater detail. Managing the Salesforce Designing Salesforce Strategy and Structure Recruiting and Selecting Salespeople Training Salespeople Compensating Salespeople Supervising Salespeople Evaluating Salespeople Major Steps Salesforce Management Sales Force Management is the analysis, planning, implementation, and control of sales force activities. Major decisions include: Designing Strategy and Structure. Strategy requires decisions on salesforce structure, size, and compensation. Variations in this mixture are appropriate for differing industries, markets and sales objectives. Strategy and structure issues are covered in greater detail on a subsequent CTR. Recruiting and Selecting. Knowing in advance what characteristics will always produce good salespeople is very difficult. Selecting procedures should attempt to screen candidates for both ability and retention-related issues. Recruiting and selecting issues are covered in greater detail on a subsequent CTR. Training Salespeople. Issues in training center on skills such as order taking and order getting, seeing customers as unwilling to seeing them as people needing problem solutions. Training issues are covered in greater detail on a subsequent CTR. Compensating Salespeople. Compensation is made up of several elements -- a fixed amount, a variable amount, expenses, and fringe benefits. Compensation is covered in greater detail on a subsequent CTR. Supervising Salespeople. Supervision addresses problems in directing and coordinating salespeople's organization, time management, motivation, and customer relationships. Supervision issues are covered in greater detail on a subsequent CTR. Evaluating Salespeople. Evaluation requires both qualitative and quantitative measures of salesforce performance. Evaluation issues are covered in greater detail on a subsequent CTR.

5 Designing Sales Force Strategy and Structure
Types of Sales Force Structure Designing Sales Force Strategy and Structure Designing Sales Force Strategy and Structure This CTR relates to the discussion on pp Territorial Exclusive Territory to Sell the Company’s Full Product Line Complex Combination of Above Types of Sales Force Structures Designing Strategy Designing strategy requires decisions on salesforce structure: Territorial Salesforce Structure. Under this structure, each salesperson is assigned to an exclusive geographic region. This structure provides clear responsibility and encourages the building of relationships between the salesperson and the retailer. Product Sales Force Sells Along Product Lines Customer Sales Force Sells Along Customer/ Industry Lines Product Structure. Some companies organize separate sales forces for each product line. This is especially appropriate for complex products as it allows the salesperson to become expert on features and benefits. Customer Salesforce Structure. This structure organizes salespeople by customer levels, such as large, medium, and small companies or by different industries. Complex Structures. This approach combines variations of some or all of the previous structures. Very large companies that compete in many markets and have very different types of customers may find complex structures to be more adaptive and flexible to their needs.

6 Designing Sales Force Strategy and Structure
Sales Force Size Designing Sales Force Strategy and Structure This CTR relates to the discussion on pp Designing Sales Force Strategy and Structure Other Sales Force Strategy and Structure Issues Designing Strategy Designing strategy requires decisions on salesforce size, and other key issues:. Salesforce Size. Setting sales force size is an important consideration as the salesforce is an important, and expensive asset. The workload approach sets size according to the number of people needed to call on a specified number of customers during a specific time period. Other Issues. Sales management must make other decisions of strategic importance that affect sales force structure, including: Outside and Inside Sales Forces. Outside or field sales forces visit customers in person, inside sales forces make contact by telephone. The latter may include technical support people, sales assistants, and telemarketers. Team Selling. This approach services accounts with a team of specialists rather than a single salesperson. This is especially appropriate for large, complex accounts and products. Who Will Be Involved in the Selling Effort? Outside Sales Force Inside Sales Force How Will Sales and Sales Support People Work Together? Team Selling

7 Recruiting Procedures Salesperson Selection
Recruiting and Selecting Salespeople This CTR relates to the material on pp Some Characteristics of Salespeople Recruiting Procedures Salesperson Selection Process Enthusiasm and Self-Confidence Persistence Initiative Job Commitment Recruiting and Selecting Salespeople Current Salespeople Employment Agencies Classified Ads College Campuses Sales Aptitude Analytical & Organizational Skills Personality Traits Other Characteristics Recruiting and Selecting The traits of effective salespeople are not easy to identify, yet the decision is of critical importance for the company. Focusing on behavioral job duties may help set priorities. Areas to consider include: Who To Select. By linking traits to specific tasks, recruiters can more readily identify and screen potential employees. Recruitment must also address images of selling as a job versus a professional and legal requirements. Discussion Note: College students especially often have unrealistic expectations about selling and their initial role in the company. The demands of many customers for integrated performance-based knowledge about products often require the skills of a college educated salesperson. Recruiting Procedures. Many companies also face legal oversight in hiring and recruitment and/or they have their own agenda to match salesforce backgrounds to changing customer markets such as emerging minority and foreign owned businesses. Selecting Salespeople. For many large companies, tests are used to help select candidates from among recruits. Discussion Note: While tests can be useful, it is crucial that the content of the tests be related to Bona Fide Occupational Qualifications (BFOQs), or the company may be vulnerable to illegal discrimination suits.

8 Training Salespeople Help Salespeople Know & Identify With the Company Learn How the Products Work Learn About Competitors’ and Customers’ Characteristics Learn How to Make Effective Presentations Understand Field Procedures and Responsibilities The Average Sales Training Program lasts for Four Months and Has the Following Goals: Training Salespeople This CTR relates to the discussion on p. 488. Training Training issues involve teaching selected recruits good selling principles and instilling in them a good philosophical orientation about selling. The selling process is detailed on a following CTR. Training programs have several goals, including learning about the following: The Company. Salespeople need to know and identify with the company. Most programs begin by describing the company’s history and objectives, its organization, financial structure, facilities, chief products, and markets. The Products. Salespeople must know all they can about the company’s products. Training programs typically include learning about how the products are made and how they work. The Customers. Training programs teach salespeople about the types of customers targeted by the company, their needs, buying motives, and buying habits. The Competition. Training programs teach salespeople about the strategies and tactics of the competition. Presentation Skills. Effective presentation techniques are taught. Field Procedures. Trainees learn time management and record keeping responsibilities.

9 Compensating Salespeople
This CTR relates to the material on p. 489. Compensating Salespeople Sales Force Compensation Plans Can Both Motivate Salespeople and Direct Their Activities. Salary PAYCHECK Compensating Salespeople Compensation can be by salary, commission or bonus, and benefits. Variations in this mixture are appropriate for differing industries, markets and sales objectives. The sales force compensation plan can (and should) be designed to motivate and direct the salesperson. This can be accomplished by adjusting the combination of the following components accordingly: Salary. This is base rate of compensation. Salary levels communicate the importance the company places on the salesperson as an individual professional. High salaries tend to encourage company loyalty. Commission. This is a set percentage of compensation earned on the dollar amount of products sold. High commissions encourage higher volume per salesperson. Bonus. This is an incentive paid after reaching some specified goal. Discussion Note: Bonuses are an extremely flexible compensation tool because they can be added to reward a broad range of goal-related behaviors. For example, a bonus added to a commission rewards individual incentive and increases effort on a product or line in which it is offered. A bonus added to group, division, or department performance encourages teamwork. A bonus based on overall company profits encourages a total systems effort. Benefits. Benefits are compensation elements provided by the company that are not related to performance. An expense account covers costs. Medical and dental plans provide security. Components of Compensation Benefits Bonus Commission

10 Supervising Salespeople
This CTR relates to the material on pp Supervising Salespeople Directing Salespeople Motivating Salespeople Identify Customer Targets & Set Call Norms Develop Prospect Targets Use Sales Time Efficiently Annual Call Schedule Time-and-Duty Analysis Sales Force Automation Organizational Climate Sales Quotas Positive Incentives Honors Awards Merchandise/ Cash Trips Supervising Salespeople Issues in supervision of the sales force include: Directing Salespeople. Supervisors must determine how best to focus the efforts of salespeople to meet the needs of their customers in relation to the industry and competitive conditions. Developing Customer Targets and Call Norms. Companies often specify how much time their salesforce should spend prospecting for new accounts. Calls to accounts are often a function of how large or important the account is. Using Sales Time Efficiently. The annual call schedule is a tool that shows which customers and prospects to call on in which months. The time-and-duty analysis helps salespeople identify when they are selling versus waiting, traveling, eating and doing administrative work. Motivating Salespeople Organizational Climate. Climate describes the feeling that salespeople have about their opportunities, value, and rewards for a good performance within the company. Sales Quotas. Quotas are the standards stating the amount salespeople should sell and how sales should be divided among the company’s products. Positive Incentives. Companies can use other incentives to increase effort, including: Sales meetings. These provide social occasions, breaks from routine, and chances to meet and talk with others. Sales contests. These spur the salesforce to make a selling effort above what is normally expected.

11 How Salespeople Spend Their Time
Administrative Service Calls Tasks 12% 17% Companies Look For Ways to Increase the Amount of Time Salespeople Spend Selling. Telephone Selling 21% Face-to-Face Selling 30% Waiting/ Traveling 20%

12 Evaluating Salespeople
This CTR relates to the discussion on pp Expense Reports Sales Report Sources of Information Evaluating Salespeople Sources of Information. Managers get information on sales force performance from several sources, including: The Sales Report. This is the most important source of information managers have on their salesforce. The Work Plan. This is submitted and describes the calls and routing for the coming week or month. Annual Territory Marketing Plans. These are outlines for building new accounts and increasing sales. Call Reports. These log sales calls and Expense Reports. These provide information on activity and expenses to be reimbursed. Formal Evaluation of Performance. Many techniques are used to evaluate sales force performance for formal company objectives, including: Comparing Salespeople’s Performance. Comparisons are helpful although many other factors influence performance such as differing conditions in each territory. Comparing Current Sales with Past Sales. Past sales help identify trends. Interpretation is needed to evaluate trends with company expectations. Qualitative Evaluation of Salespeople. These subjective evaluations look at a salesperson’s knowledge of the company, products, customers, competitors, territory, and tasks. Call Reports Work Plan Annual Territory Marketing Plan

13 Steps in the Selling Process
Step 1. Prospecting and Qualifying Steps in the Selling Process Steps in the Selling Process This CTR corresponds to Figure 16-3 on p. 496 and relates to the material on pp Step 2. Preapproach Identifying and Screening For Qualified Potential Customers. Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Telling the Product “Story” to the Buyer, and Showing the Product Benefits. Step 3. Approach Steps in the Selling Process Prospecting and Qualifying. This step involves identifying qualified potential customers. Salespeople must always contact more people than will end up becoming a customer. Prospecting is the process of obtaining good sources of information on who might be interested in or need the product. Qualifying seeks to improve that list by separating more likely leads from poor ones. Preapproach. This step consists of doing the background research and preparation needed to understand the needs of the potential customer. Salespeople should set specific call objectives to accomplish when contacting the prospect. Approach. In this step consists of the first contact with the buyer and seeks to establish a good working relationship. The salesperson must be aware of the effect of his or her appearance, opening remarks, listening style, and closing comments. Presentation and Demonstration. In this stage the salesperson presents the product "story" to the buyer and demonstrates product benefits. Step 4. Presentation/ Demonstration

14 Steps in the Selling Process
Step 5. Handling Objections Steps in the Selling Process Steps in the Selling Process This CTR corresponds to Figure 16-3 on p. 496 and relates to the material on p. 497. Step 6. Closing Seeking Out, Clarifying, and Overcoming Customer Objections to Buying. Asking the Customer for the Order. Following Up After the Sale to Ensure Customer Satisfaction and Repeat Business. Step 7. Follow-Up Steps in the Selling Process Handling Objections. This requires seeking out and resolving concerns that would stop a customer from purchasing. Closing. This requires seeking out and resolving concerns that would stop a customer from purchasing. Follow-up. Follow-up is a necessary part of good selling to ensure satisfaction and repeat business.

15 Relationship Marketing
Process of creating, maintaining, and enhancing strong, value-laden relationships with customers and other stakeholders. Based on the idea that important accounts need focused and continuous attention.

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