Sales and Sales Management Personal Selling Chapter Thirteen Sales and Sales Management Personal Selling

Learning Objectives Sales’ role in the organization - Identify sales’ strategic communication role Sales strategies and customer relationships - Select the types of selling used for different types of relationships; Outline the sales strategy associated with each type of selling Organizing the sales force - Compare and contrast organizational structures used to manage sales Directing the sales force - Illustrate when to use different control and compensation program Evaluating performance - Discuss how sales force performance is evaluated

Sales’ Role In the Organization Sales are person-to-person; only personal selling are able to tailor the sales message to the unique needs/preferences of each individual customer Salespeople create value by adapting their products to fit customer needs - training customers to use the product correctly; - handling customer complaints Manage customer relationships – must be adept at interacting with personnel representing credit and billing, shipping, manufacturing and customer service Gather information – a prime source of customer/market information - From Customers - From Competitors - About Market Forces Play an important part in the product design process

Sales Strategies and Customer Relationships Script-based selling Needs satisfaction selling Consultative selling Partnering

Sales Strategies and Customer Relationships Script-based selling involves using scripts or memorized sales pitches from which the salesperson does not deviate Used when all customers’ needs are similar Popular in telemarketing and in selling MRO items and other supplies

Sales Strategies and Customer Relationships Needs satisfaction selling is a process of selling that involves identifying the buyer’s needs and tailoring the sales pitch (presentation) to fit those needs A more sophisticated approach which works best when buyer needs vary and choices must be made from among various products and/or brands Identifying buyers’ needs and selling to them

Sales Strategies and Customer Relationships Consultative selling is a process of selling that the seller brings specialized expertise into a complex problem in order to create a somewhat customized solution May appear similar to needs satisfaction selling, but in this case, the buyer has less information about what is needed and relies on the consultant’s knowledge to custom-tailor a solution

Sales Strategies and Customer Relationships Partnering Seller-Customer joint effort for developing product solutions Goes beyond consultative selling because the long-term nature of partnerships Both parties share expertise/resources to create customized solutions and a commitment to joint planning for mutual benefit There are many sales strategies that can be used when partnering including cross selling and full-line selling

Selling across the stages of the partnership Generate reorders Upgrade Full-line sell Secure complete commitment from both companies Manage change Limited relationships Failure to monitor competitors or industry Complacency Exploration Awareness Commitment Expansion Set correct expectations Ensure proper initial use Follow up Make personal visits Handle complaints Achieve customer satisfaction Dissolution

Selling across the stages of the partnership Exploration – The major goal is building trust. In order to begin a relationship properly, the salesperson must Set proper expectation Monitor order processing and delivery Ensure proper use of the product Assist in servicing the customer

Selling across the stages of the partnership Expansion – From generating repeat sales to … Upgrade (upselling) – convincing the buyer to use a high-quality or newer product; high-tech firms are vitally dependent upon upgrading Full-line selling – the entire line of associated products; Many companies try to get their foot in the door with any sale, hoping to then blossom into full-line selling once the initial product has proven its value Cross selling – sell additional products to customers currently buying unrelated products; works best when the salesperson can leverage the relationship with the buyer and trust in the salesperson and the selling organization already exists

Selling across the stages of the partnership Commitment Preferred supplier status – a supplier is assured a large percentage of the buyer’s business and first chance at any new business A stated or implied pledge to continue the relationship

Type of customers and choice of sales strategies Simple, lower-margin items sold to customers whose needs are uniform can be served by lower caliber salesperson following a script As margins, product complexity, and customer diversity/importance increases, the firm moves to need satisfaction, consultative, and strategic partner selling The strategy upgrades require a higher investment in salesforce quality and training

Partnership Communication: From single level to multi-level Production Marketing Accounting Finance Purchasing Department Shipping & Receiving Buying Company Engineering Credit and Billing Sales Selling Company Purchasing Credit & Billing Sales Purchasing Before Partnering After Partnering Agent Salesperson

Organizing the Sales Force The sales function can be organized in many ways, depending on the sales strategy Sales Executive At the top of the structure is the sales executive, who has responsibility for deciding the size and type of sales force. - the choice of strategy - the number and location of salespeople (the workload approach, based on the expected number of sales calls that a salesperson can make) - the setting of sales quotas and compensation plans - sales forecasting

Organizing the Sales Force Organization of the sales force Assign each salesperson a geographic territory (geographically) Assign salespeople to accounts, including key accounts, national accounts, or global accounts Organize by product Create sales teams (matrix team) to meet the needs of customers Account managers works with product specialists; Account manager coordinates activities and determines sales strategies; Product specialists carry out more specific objectives Customer-focused teams are one type of team structure that includes representatives from manufacturing, billing, shipping, and other areas that serve the customer

Buying and Selling Teams Streamline Multilevel Selling Buying Company Selling Company Vice President Of Purchasing Vice President Of Sales Director of Purchasing Account Manager Engineer Product Specialist

CFT Structure Sales Specialists Manufacturing Account Consultant F&A Rep. Customer Sales Specialists Account Manager Team Leader Manufacturing Finance and Accounting Other Business Units Other Rep.(s) Purchasing Agent Shipping CSS Rep. Customer Support Service Purchasing Shipping Manager Prod. / Ind. Mktg. Groups

Outsourcing The Sales Force Organization of the sales force Assign each salesperson a geographic territory (geographically) Assign salespeople to accounts, including key accounts, national accounts, or global accounts Organize by product Create sales teams (matrix team) to meet the needs of customers Account managers works with product specialists; Account manager coordinates activities and determines sales strategies; Product specialists carry out more specific objectives Customer-focused teams are one type of team structure that includes representatives from manufacturing, billing, shipping, and other areas that serve the customer

Organizing the Sales Force Organization of the sales force Assign each salesperson a geographic territory (geographically) Assign salespeople to accounts, including key accounts, national accounts, or global accounts Organize by product Create sales teams (matrix team) to meet the needs of customers Account managers works with product specialists; Account manager coordinates activities and determines sales strategies; Product specialists carry out more specific objectives Customer-focused teams are one type of team structure that includes representatives from manufacturing, billing, shipping, and other areas that serve the customer

Organizing the Sales Force Outsource the selling effort – Some companies choose to use manufacturers’ reps, distributors, and telemarketing service firms rather than hiring their own salespeople Outsourcing selling temporarily – Hiring temporary salespeople for special sales campaigns The advantages of outsourcing include Lower costs Selling expenses are borne by the distributor or rep Less upfront investment needed Greater local knowledge and contacts

Do you outsource the sales force? YES NO Establish relationships Salary and selling expenses can be limited Little/no up-front investment Loss of control over sales presentation Products may not be a selling priority with representative TO MAKE IT WORK: INVEST IN TRAINING AND MERCHANDISING MATERIALS

Allocation Grid for Sales Resources Relatively fewer resources should be allocated here Low Maintain sufficient resources to continue to reap the sales potential and strong position High Direct more sales resources here Assign to alternative method of communicating, such as telemarketing Weak Strong Sales Potential Market Position

Directing the Sales Force ESTABLISH QUOTAS – Minimum levels of acceptable performance; Fair and Understandable Activity Quotas (number and type of activities: new business calls, turning in call reports; collecting customer feedback; collect competitor intelligence) Performance Quotas (level of performance: revenue, margin, or unit sales in a period of time) ESTABLISH COMPENSATION PLAN – Equitable, Stable, Understandable Straight Salary Straight Commission Bonus System Combination Plans Base rewards on results and efforts; provide equal rewards for equal performance; provide competitive rewards; are easy to understand and implement MOTIVATION ACTIVITIES – Keep Sales Force Producing

Evaluating Performance Sales performance is measured in two ways: in outcomes and by activities By combining outcomes and activities, conversion ratios can be calculated to measure salesperson efficiency These three figures (outcomes, activities, and conversions) enable sales executives to compare salesperson performance

Five Steps in Evaluating Performance Review specific sales objectives Obtain appropriate performance data (outcomes and effort, observing both performance and activity) Evaluate what was beyond salesperson’s control (the economy, the weather, etc) Identify problems and opportunities Create a strategy that resolves problems and seizes opportunities