Personal Selling, Relationship Building, and Sales Management Chapter 9 Personal Selling, Relationship Building, and Sales Management Key Terms Information Provision, Persuasion, After-sale Service, Prospecting, Random Lead Generation, Lead, Selected-lead Searching, Planning the Sales Call, Presenting, Responding to Objections, Obtaining Commitment, Long-term Relationship, Functional Relationships, Strategic Alliances, Missionary Salespeople, Technical Sales Specialist, Cross-functional Sales Team, Sales Force Organization, Forecasting Sales, Sales Territories and Quotas, Salary, Commission

Personal Selling – Definition Defined as a two-way flow of communication between a potential buyer and a salesperson Use of personal selling depends partially on the nature of product Key role played by salesperson in providing information about product Use personal selling when products are New and different Technically complex Expensive and require negotiation

Sales Process Refers to two basic factors The objectives the salesperson is trying to achieve while engaged in selling activities The sequence of stages or steps the salesperson should follow to achieve the objectives (relationship-building process)

Sales Force Objectives Information provision Persuasion After-sale service

The Sales Relationship-Building Process

The Evolution of Personal Selling

Prospecting – Locating Potential Customers Lead – A candidate to whom a sale can be made – target of prospecting process Random lead generation – Mass appeals that require a high number of contacts to generate qualified leads Selected-lead searching – Uses existing contact to generate new ones – often called referrals

Prospecting – A Screening Process Does the lead have a want or need that can be satisfied by the purchase of the firm’s products or services? Does the lead have the ability to pay? Does the lead have the authority to pay? Can the lead be approached favorably? Is the lead eligible to buy?

Common Sources of Sales Leads

Planning the Sales Call Thorough knowledge of representative company, including past history Thorough knowledge of products and product lines Good working knowledge of competitor’s products and product line In-depth knowledge of the market for their merchandise Accurate knowledge of buyer, or prospect

Presenting Be well prepared and set a goal for your presentation Develop a checklist of items for discussion Development of good interpersonal skills Adapt your style to the prospect

Overcoming Objections Expect objections to occur at any time During efforts to secure appointments During the presentation and subsequent relationship During attempts to obtain a commitment During the after-sale follow-up In response to an objection, a sales person should not challenge the customer Make the necessary presentation in order to help the client make an intelligent decision

Obtaining Commitment Important to know how and when to close a sale Not all sales end in a successful closing – Salespeople should analyze the reasons and determine whether More sales calls are necessary to obtain commitment Currently, there just does not exist a good match between customer needs and seller offerings

Building Long-Term Relationships After-marketing activities include Establishing and maintaining a customer information file Monitoring order processing Ensuring initial proper use of product or service Providing customers ongoing guidance and support Analyzing customer feedback and responding quickly to questions and complaints Continually conducting customer satisfaction research and responding to it

Relationships Can Lead to Partnerships Functional relationships – When a buyer and a salesperson has a problem, they work together to solve it Strategic relationships (strategic alliances) – Long-term, formal relationships in which both parties make significant commitments and investments in each other in order to pursue mutual goals and to improve the profitability of each other

People Who Support the Sales Force Missionary salespeople – Focus solely on promoting existing products and introduction of new products (e.g.: pharmaceuticals) Technical sales specialists – Support the sales staff by providing training or other technical assistance Cross-functional sales team – Increased in popularity since products increase in technical complexity, and units of the buying organization require specialized knowledge

Why Cross-Functional Sales Teams Are Growing in Popularity

Managing the Sales and Relationship-Building Process Efficient and effective sales tools, continuous sales training, and adequate support from promotional tools Efficient delivery and reorder system Equitable compensation plan to reward and motivate performance, and promote company loyalty Adequate supervision and evaluation of performance for continual improvement

Organizing the Sales Force

Sales Management Task – Sales Force Organization Geographic structure – Provides practical benefit of limiting the distance each salesperson must travel Product structure – Useful when sales force must have specific technical knowledge about products Customer structure – Works best when different types of buyers have large or significantly different needs Major account management – Use of team selling to focus on major customers to establish long-term relationships

Forecasting Sales Estimate of how much of the company’s output, either in dollars or in units, can be sold during a specified future period under a proposed marketing plan and under an assumed set of economic conditions Used to Establish sales quotas Plan the personal selling efforts and other types of promotional activities Budget selling expenses Plan and coordinate production, logistics, inventories, personnel, and so forth

Forecasting Methods Jury of executive opinion method – Combines and averages views of top management from different departments Sales force composite method – Sales force becomes the jury Customer expectations method – Asks customer about the quantity they expect to purchase

Forecasting Methods Time-series analysis – Analyzes past sales data and the impact of factors influencing sales Correlation analysis – Measures relationship between dependent and independent variables Other quantitative techniques – Growth functions and simulation models

Sales Territories and Quotas Sales territories can be segmented on the bases of Geography Product specialization Sales quotas Provide incentives for salespeople Provide a quantitative standard for performance measurement Evaluate and control the efforts of the sales force Activity quotas – Allows monitoring of whether salespersons are engaging in activities to the extent desired

Sales Territories and Quotas Sales quotas represent specific sales goals assigned to each territory or unit over designated time period Management needs to consider these key factors All territories will not have equal potential and, hence, compensation must be adjusted All salespeople will not have equal ability and assignments may have to be made accordingly Sales task in each territory may differ from time period to time period Analyzing expenses – Sales forecasts should include a sales expense budget

Effort- and Results-Oriented Measures for Evaluating Salespeople

Medi-test Company Sales Activity Evaluation

Motivating and Compensating Performance Salary – Refers to a specific amount of monetary compensation at an agreed rate for definite time periods Commission – Is monetary compensation provided for each unit of sales and expressed as a percentage of sales May be computed on the bases of Volume of sales in units of product Gross sales in dollars Net sales after returns Sales volume in excess of a quota

Types of Incentives and Their Possible Performance Outcomes