Dr. S. Borna MBA 671

Lecture Outline Conditions under which personal selling effort is more important Sales Force Management Decisions Sales force organization Sales force organization Sales force Size Sales force Compensation sales force evaluation

Promo-tools Ad. Personal Sales Publicity Selling Promotion Selling Promotion

Conditions under which personal selling effort is more important: 1. Product is complex and requires a good deal of presale or post a good deal of presale or post sale service; sale service; 2. Target market is large and geographically concentrated; geographically concentrated;

3. Firm is pursuing a marketing strategy aimed at taking market strategy aimed at taking market share away from the established share away from the established competitors; competitors; 4. Firm has limited promotional resources resources

Advantages of Sales Force As A Communication Tool: 1. It is face-to-face communication with potential customer. with potential customer. 2. Message can be tailored to the needs of the target audience. needs of the target audience.

3. Because of immediate feedback, sales representative knows when sales representative knows when a particular sales approach is a particular sales approach is working or not. working or not. 4. More complex and large amounts of information can be transmitted of information can be transmitted to the customer. to the customer. 5. Personal relationship can be established. established.

The average cost of a personal sales call: It takes between 3 to 4 calls to close a sale Need for Effective Management of Sales force

Sales Force Management Decisions 1. Defining Sales Force Objectives 2. Planning the sales force program a. Sales force organization b. Territory design & deployment c. Setting quotas d. Formulating account d. Formulating account management policies management policies

3. Implementing the sales plan a. selecting & recruiting b. training salespeople c. compensation & reward 4. Evaluation and control

Personal Selling Objectives Objectives can vary across companies. A company may focus on one or more of the following objectives:

1. Winning acceptance of new products by existing customers 2. Developing new customers for existing products (a push strategy) for existing products (a push strategy) 3. Maintaining Customer Loyalty 4. Communicating product information to potential customers. 5. Gathering market information.

Salesforce Objectives ProspectingCommunicatingSellingServicingInformation gathering gathering Hunters Detail men FarmersMaintenanceIntelligence officers officers

Territorial-structured sales force Product-structured sales force Customer-structured sales force Organization by selling function Sales force organization Sales force organization

The Question of Territory Size Two Approaches Equal Territory Potential Equal Work-Load

Sales force Size Different Sales force Size Decisions Size of Total Generalized Size of Total Generalized Sales force Sales force Total size of all Specialized Total size of all Specialized Sales forces Sales forces No. of salespeople assigned No. of salespeople assigned to districts, zones, or regions to districts, zones, or regions Size of eachspecialized sales force

Workload Approach to Sales Force Size ä Classify customers by size ä Determine desirable call frequencies ä Determine total sales calls needed per year ä Determine average number of sales calls per sales representative per year ä Divide total by number per rep

Allocation of Sales force Effort (Call Norms) (Call Norms) How much selling effort is needed to cover accounts and prospects? Three analytical tools are available to answer the above question: 1. Single factor models 2. Portfolio models 3. Decisions models

Decision Models Increase the sales calls until the marginal costs equals their marginal revenues. Need to develop a response function

Portfolio Models Account Opportunity Competitive Pos. (Competitive position: Strength of the relationship) L H H L

Single Factor Models The typical procedure is to classify all accounts on one factor, such as market potential, size, etc. and assign all accounts in the same category the same number of sales calls.

Single factor models Easy to develop and use Low Analytical Rigor Portfoliomodels High Analytical Rigor Decisionmodels Difficult to develop and use

Sales Force Compensation

How Companies compensate their sales forces Straight Salary 23% All Commission Plans 27% Straight Commissions 24% Commissions + Bonus 3% All Commission Plans 50% Salary + Commissions 11% Salary + Bonus 28% Salary+Comm.+Bonus 11%

Managing Sales force Reward Systems Types of Sales force reward Ranked in order of Preference: PayPromotion Sense of Accomplishment Personal Growth Opportunities Job Security

30,000 8% commission $300,000 sales straightsalary 24,000 20,000 $

Management must determine the level and components of an effective compensation plan Level: Should it be higher or lower than going market rate? Components: Fixed and variable amounts; fringe benefits

NON-FINANCIAL COMPENSATION 1. Career advancement through promotion promotion 2. Sense of accomplishment note: note: cannot be delivered to the cannot be delivered to the salesperson from the salesperson from the organization. organization. cont.

3. Opportunity for Personal Growth (example, college tuition (example, college tuition reimbursement programs) reimbursement programs) 4. Recognition 5. Job Security

Setting Quotas Starting point is sales forecasts for each territory, product line, etc. Goals in dollar sales unit sales profit margins or specific activities (e.g. to make 24 presentation)

Setting Sales Quota Advantages and disadvantages of setting sales quotas too high or too low

Implementing the sales plan: a. Selecting & recruiting b. Training salespeople c. Compensation & reward

Staffing the Sales force: Recruitment and Selection Importance of Recruitment and selection: 1. Reduction in training costs 2. Less supervisory problems 3. Lower turnover rates 4. “Optimum” sales force performance performance

What makes a good salesperson? Looking for good predictor traits.

Steps involved in Recruiting and Selecting Salespeople: Step one Planning for Recruiting and Selection 1. R. and S. Objectives 2. Job Analysis 3. Job Qualifications 4. Job Description

Recruitment: Locating prospective candidates Internal Sources External Sources Step 2

Selection: Evaluation and Hiring 1. Screening Resumes and Applications. Applications. 2. Initial interview 3. Intensive Interview 4. Testing Step 3 cont.

5. Assessment Centers 6. Background Investigations 7. Physical Examination 8. Selection Decision (Job Offer)

Continual Development of the Sales force: Sales Training Knows the company? YES NO KnowstheProduct? NO New procedures New products New customers Emphasis on Product CompanyregulationProcedures Both Product & Company YES

Sales force Motivation INTENSITY: Amount of Physical and mental effort put forth by the salesperson PERSISTENCE: Salesperson’s choice to expend effort over a period of time. DIRECTION: Where the efforts of salesperson will be spent.

Evaluation and Control

Evaluating Sales Representative Formal Evaluation of Performance (need for developing evaluative criteria) Person-to-Person Comparisons Current-to-past Sales Comparisons

Evaluation and Control of Sales Performance Limitation of Total Dollar Sales Vol. 1. Product or Product Group 2. Class of Customer 3. Marketing Channel 4. Time Periods

Salesman Activity Days worked; calls per day; calls per customer; orders per call; size of order

Supervising Salespeople Establishing Standard of Performance Maintaining Communication Link Interpreting and Enforcing Policy and Procedures

Step 1. Prospecting andQualifying Identifying and Screening For Qualified Potential Customers. Steps in the Selling Process Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Step 2. Pre-approach Step 3. Approach Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Step 4. Presentation/Demonstration Telling the Product “Story” to the Buyer, and Showing the Product Benefits. Telling the Product “Story” to the Buyer, and Showing the Product Benefits.

Steps in the Selling Process Step 5. Handling Objections Step 6. Closing Step 7. Follow-Up 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.