For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 15: Personal Selling

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales Is Important! Weak Revenues = No Firm Sales is often the largest marketing expense Selling mistakes increase costs and lose revenues 1 in 10 workers are in sales Sales is the #1 job of AU grads Salespeople can earn very high incomes Pay is often a function of risk-return

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Personal Sales works better than Ads Salespeople get more attention than ads Salespeople can adjust to cultural or situational factors Salespeople can ask questions Salespeople can adjust to customer questions Salespeople can take the order - now! Salespeople can act to make sure the customer is satisfied - fix problems

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Salespeople are marketing managers for their territory Identify which customers to aim at Which products to emphasize Which customers to call on and work hardest How to use promotions/sales support money When and how to adjust prices Good salespeople help the customer buy.

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Critical Selling Skills Product/marketing knowledge Listening Asking good questions Asking for the order Being Organized Being able to handle failure Keeping promises and being dependable

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Supporting Order-Taking Order-Getting 15-4 Basic Sales Tasks

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Supporting Salespeople MISSIONARY SALESPEOPLE Supporting salespeople who work for producers—calling on their middlemen and the middlemen's customers TECHNICAL SPECIALISTS Supporting salespeople who provide technical assistance to order-oriented salespeople

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Business Telemarketing Growing fast because of cost per contact ($250 vs $1 - $20 per contact). Very helpful to identify prospects who are ready to buy Calls & letters can often handle routine tasks without the cost of a face to face call Remember, time is a critical resource for salespeople!

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Consumer Telemarketing Outbound Calling Industry Killed by “Do Not Call” legislation Only exceptions are for charities & politicians Inbound calls still very important to many companies

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Limitations of Telemarketing 1] Very difficult to sell complex products 2] Very difficult to sell when there are multiple decision makers 3] Very difficult to sell when customer needs are complex However, telemarketing can often cover the basics and a face to face call can close the deal.

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Effective Telephone Communication 1. Keep mouth clear and voice wet 2. Smile! 3. Have a long cord so you can use your normal gestures 4. Eliminate distractions. Clear desk. 5. Chose effective words. No jargon. 6. Confirm any action by reading it back. Also read back critical information 7. Be an active listener

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Some Ways to Set Sales Territories Geographic areas Customer types Account size Product to be sold Any combination of the above

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Salesforce Turnover Salesforce Turnover = (# of salespeople who leave the company in a time period) / (Total Number of Salespeople)

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Salesforce Turnover Example A company starts the year with 100 salespeople During the year, 5 are fired, 6 leave the company and 1 dies. Another salesperson has a heart attack and is on medical leave for 90 days. 12 people are hired during the year. What is the salesforce turnover?

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Turnover Answer 5 Fired + 6 Leave + 1 death / 100 = 12% turnover

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Salesforce Turnover is Costly Not covering customers Not covering them well (stretching) Hiring Costs Most firms underspend on hiring costs or just “make do” with weak people. This is very costly in the long term.

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Very Low Turnover May Indicate Salesforce is over paid Salesforce is not challenged

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales Recruiting A written job description lays the groundwork—by specifying what tasks the salesperson needs to be able to do Commonly used selection tools are best when used in combination multiple interviews—with several different people personnel and psychological tests background checks

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Training Initial and ongoing training can help both experienced and inexperienced salespeople company policies and practices product information selling techniques (and customer knowledge)

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales Compensation 3 Main Types Straight Salary Straight Commission Combination Plan They differ in: Degree of fixed costs Motivation Control over salesperson activities

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Sales Compensation Example Company 1, 2 & 3 each have 10 salespeople Company 1 pays each salesperson $80,000 in salary and benefits annually Company 2 pays salespeople a flat 4% commission on sales Company 3 pays their salespeople $30,000 in salary and a 2% commission What is total salesforce compensation for each company at sales of $10, $20 and $40 million?

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill $10 Million in Sales Company 1 = 10 salespeople x $80,000 each = $800,000 Company 2 = $10 million in sales x.04 = $400,000 Company 3 = 10 salespeople x $30,000 and $10 million in sales x.02 = $500,000

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill $20 million in Sales Company 1 = $800,000 Company 2 = $20 million x.04 = $800,000 Company 3 = $300,000 + ($20 million x.02) = $700,000

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill $40 million in Sales Company 1 = $800,000 Company 2 = $1,600,000 Company 3 = $1,100,000

For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Prospecting Prospecting = following all the leads in the target market to identify potential clients (415) Salespeople who are effective at prospecting: Follow up on inquiries quickly (when customer is “Ready to buy” Rapidly Identify: buying center, decision makers, ability to pay, customer needs