Chapter 12 Preparing For The Sale

What is Selling? Section 12.1

Objectives Define selling and different types of selling situations Explain the purpose and goals of selling Define consultative selling Differentiate between rational and emotional buying motives List three levels of consumer decision making

Key Terms Personal selling Business-to-business selling Telemarketing Consultative selling Feature-benefit selling Product features Customer benefits Rational motive Emotional motive Extensive decision making Limited decision making Routine decision making

Selling Personal selling Any form of direct contact between a salesperson and a customer. The key factor that sets it apart from other forms of promotion is this two-way communication between seller and buyer. Types of personal selling Retail Selling Business-to-Business Selling Telemarketing

Selling Retail Selling Business-to-Business Selling Customers come to the store Salesperson is available to answer any questions about the product or its features Business-to-Business Selling Takes place in a manufacturer’s or wholesaler’s showroom or a customer’s place of business Most sales reps schedule appointments A few do “cold calls” – show without an appointment

Selling Telemarketing The process of selling over the phone The law prohibits telemarketers from calling any number registered with the National Do Not Call Registry This law reduces the number of people telemarketers may contact

Goals of Selling The purpose and goals of selling are the same regardless of the sales situations To help customers make satisfying buying decisions, which creates ongoing, profitable relationships between buyer and seller. Repeat business is crucial to the success of a company Easier and less expensive to keep current customers happy than to generate new customers Happy customers are more likely to pass along positive recommendations

Consultative Selling Sales people accomplish goals by engaging in a process called consultative selling Consultative selling Providing solutions to customers’ problems by finding products that meet their needs Analysis of customer needs combined with product knowledge is the essence consultative selling Reps should be trained in feature-benefit selling

Feature-Benefit Selling The concept of matching the characteristics of a product to the customer’s needs and wants. Product Features Are the basic, physical, or extended attributes of the product or purchase A salesperson needs to learn how a product’s features will benefit the customer

Feature-Benefit Selling Customer Benefits The advantages or personal satisfaction a customer will get from a good or service It is salesperson’s job to analyze the product features from the customer’s point of view A salesperson will need to answer two questions about each product feature: How does the feature help with the product’s performance? How does the performance information give the customer a personal reason to buy the product?

Feature-Benefit Selling Feature Benefit Chart After identifying the features of a product and their benefits, you should put together a feature-benefit chart. Product features are listed with its corresponding customer benefits The more useful a feature, the more valuable the product is to the customer

Product Feature Customer Benefit 100% nylon Hydro Rip-Stop Fabric Durable, water/wind resistant, washable 100% nylon Hydro Plus shell Durable, water/wind resistant washable 65% polyester & 35% cotton jersey lining Comfortable, washable Designed to fold into zippered pouch that is part of the jacket Packable, great for hiking and trail trips Radial sleeve and articulated elbow Free range of motion, comfortable Colors: abalone, wink, Columbia navy, tilt blue Unisex colors, offers variety Sizes: 7/8, 10/12, 14/16, 18/20, 4/5, 6/6X, 2T, 3T, 4T Children’s sizes, covers full age range Limited warranty Covers defects in materials and workmanship in outerwear manufactured by Columbia Sportswear Company

Feature Benefit Chart Project Consider a Smart Phone you would like to own, or the one that you do own. Think about all its features and what you like about it. Activity You will work with a partner to develop a feature-benefit chart for a new Smart Phone coming to the market this holiday season. Use the following features in your chart: reduced physical size, increased storage capacity, improved shock absorption/crack and scratch resistant, music player/music playing ability, voice recorder/recognition, colors, and LCD or touch screen. Create a table in Microsoft Word to develop your Feature Benefit chart List all of the phone’s features, plus how each feature will benefit the customer Include a picture of the new phone Give your new phone a name Be Creative!!!!! Sell me this phone!

Customer Buying Motives Salespeople must know what motivates customers to buy and what decisions customers make before the final purchase. Customers have rational or emotional motives for making purchases Rational motives A conscious, logical reason for a purchase Product dependability Time or monetary savings Health or safety considerations Service Quality Emotional motives A feeling experienced by a customer through association with a product. Social approval Recognition Power Love Prestige Successful salespeople determine customers’ rational and emotional motives in a potential buying situation. Then they suggest the features and benefits of the product that best match those motives.

Customer Decision Making Some customer need no help from salespeople, while others require significant time and effort. Three types of decision making Extensive Limited Routine How a person makes a decision is affected by the following factors: Previous experience with the product and company How often the product is purchased The amount of information necessary to make a wise buying decision The importance of the purchase The perceived risk involved in the purchase (product functioning) The time available to make the decision

Customer Decision Making Extensive Decision Making Used when there has been little or no previous experience with an item A customer buying their first home will use extensive decision making High degree of perceived risk Limited Decision Making Used when a person buys goods and services that he or she has purchased before but not regularly Moderate degree of perceived risk Person often needs some information before buying the product A customer purchasing a second car will use limited decision making

Customer Decision Making Routine Decision Making Used when a person needs little information about a product Perceived risk may be low Item may be inexpensive and bought frequently Grocery purchases fall into this category

12.1 Critical Thinking Questions What sets personal selling apart from other forms of promotion? Identify a basic, a physical, and an extended product feature for a camera. Explain levels of customer decision making. When buying advertising time on television or in magazines, advertisers calculate the cost per thousand (CPM) people reached by the ad. If the cost of advertising was $100,000 and the reach or circulation was 10,000,000 people, what would be the CPM? (Note: M is the Roman numeral for 1,000)

Getting Ready To Sell Section 12.2

Objectives Name the sources of product information Explain the main focus of preparation in business-to-business Explain the main focus of preparation in retail selling

Key Terms Pre-approach Prospect Referrals Endless chain method Cold canvassing Sales quotas

The Pre-Approach The Pre-Approach The preparation for the face-to-face encounter with potential customers. Salespeople study their products Keep abreast of industry trends and competitors Research potential customers Develop familiarity with their company’s policies and procedures Review ethical and legal issues involved in their selling situation

Product Information Salespeople can usually find all the product information they need through four main sources: Direct experience Some businesses offer employee discounts to encourage employees to become familiar with products Also study display models and visit manufacturing facilities Written publications User manuals Manufacturer warranty Catalogs and promotional materials Labels Websites Other people Formal training Training sessions on product usage

Industry Trends Sales representatives read periodicals related to their trade to gain insight into the industry.

Prospecting Looking for new customers is called prospecting. Prospect Also called lead A potential customer Especially important activity in business-to-business selling situations Salespeople are evaluated on how many new accounts they open through prospecting efforts

Prospecting Employer Leads Some firms employ entire telemarketing teams to generate leads for their sales staff. They also attend trade shows, where they display their products for review by buyers in the industry Other firms rely entirely on their salespeople to find new customers Many employers will do what they can to help locate potential customers for their salespeople

Prospecting Directories Newspapers The Yellow Pages list businesses that may be potential customers for certain industrial goods and services Business-to-business sales representatives can use trade and professional directories to locate potential customers. Newspapers Provide good leads for some salespeople Engagement announcement for bridal shops, caterers, florists, and printers

Prospecting Commercial Lists Salespeople may buy a list of potential customers from companies that specialize in categorizing people Age Income Credit card purchases Location Businesses may be listed by: Net sales Profits Products Geographic location

Prospecting Customer Referrals Satisfied customers often give salespeople a referral The names of other people who might buy the product. Opens the market to potential customers whom you might not have reached without a recommendation When salespeople ask previous customers for names of potential customers, they are said to be using the endless chain method.

Prospecting Cold Canvassing Potential customers are selected at random, such as by going door-to-door or selecting names from a telephone directory. This technique is also called blind prospecting

Preparing For The Sale in B2B Selling In B2B sales, pre-approach activities depend on whether the sales call is with a previous customer or a new prospect. With previous customers, salespeople can analyze sales records and review notes about the buyer’s personality, family, interests, and hobbies. When dealing with new customers, the salesperson must do some homework before jumping into the selling process. Questions should include: Does the prospect need this product or service? Does the prospect have the financial resources to pay? Does the prospect have the authority to buy?

Preparing For The Sale In Retail Selling Since the customer comes to you in retail selling situations, the preparation centers around the merchandise and work area. Retail sales associates are often responsible for the merchandising, stock keeping, and housekeeping. Those activities include: Straightening, rearranging, and replenishing the stock Adjusting price tickets before and after special sales Learning where stock is located and how much is available Arranging displays Vacuuming the floor, dusting the shelves, and keeping the selling and display areas neat and clean

Company Policies and Training Sales management establishes the guidelines and policies under which salespeople function Some of their specific duties involve: scheduling sales staff overseeing and evaluating their performance training

Company Policies and Training A four step process is often used by sales managers responsible for training new personnel Explanation Demonstration Trial Critique A sales technique is first explained and then demonstrated by the person conducting the training The new sales associate performs the newly learned task or demonstrates product knowledge in a role-playing format The trainer then give constructive criticism

Compensation and Sales Quota Salespeople are usually compensated by: Straight commission Get paid only when they sell something Straight salary Get paid a set amount regardless of how much they sell Salary plus commission Have a set salary, and their commission rate is lower than those who are paid only commission Regardless of the methods of compensation, sales managers often establish sales quotas Sales quotas Dollar or unit sales goals set for the sales staff to achieve in a specified period of time Weekly Monthly Quarterly

Legal and Ethical Issues Commission sales and sales quotas can create pressure on the sales staff to produce sales. Sales associates may engage in hard-sell tactics or lie to prospective customers A sales order is a legal agreement, or contract, between the buyer and seller, and signed by both parties. It contains all legal elements of a contract: Offer Acceptance Consideration Competent parties Legal form Legal subject matter Another aspect of a sales contract is full disclosure of the facts All services and materials that will be used should be clearly identified

12.2 Critical Thinking Questions In all selling situations, what can salespeople do to prepare for the sale? What is prospecting? Which of the three sales compensation methods would you prefer? Why? Mark can be paid a straight commission of 8 percent of his sales or a salary of $55,000 plus a 2 percent commission on sales. Which is a better deal for Mark if sales are projected to be $1,000,000 in his territory? Which method of compensation would you recommend? Why?