MGT301 - Principles of Marketing - Lecture Handout 36

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Lesson overview and learning objectives:

Today, most companies use salespeople to bring their company’s offering to the consuming or business publics. The salesperson’s role is a key one in the organization. The high cost of maintaining a sales force means that management is especially interested in how to efficiently organize this vital element.
Six basic steps or decisions are important to the sales management process. These are:

  1. Designing sales force strategy and structure.
  2. Recruiting and selecting salespeople.
  3. Training salespeople.
  4. Compensating salespeople.
  5. Supervising salespeople.
  6. Evaluating salespeople.

This Lesson thoroughly explains some of these steps and remaining steps will be discussed in coming Lesson.

SALES FORCE MANAGEMENT

A. The Role of the Sales Force

Advertising consists of one-way, non personal communication with target consumer groups. Personal selling involves two-way, personal communication between salespeople and individual consumers. Personal selling can be more effective than advertising in more complex selling situations. The role of personal selling varies from company to company. Some firms have no salespeople at all. The sales force serves as a critical link between a company and its customers. The salesperson can represent both buyer and seller. They represent company to the customer and customers to the company. Salespeople are becoming more market-focused and customer-oriented. The old view was that salespeople should be concerned with sales and the company should be concerned with profit. The new view is that salespeople should be concerned with more than just producing sales—they must know how to achieve customer satisfaction and
company profit.

B. The Personal Selling Process

The selling process consists of several steps that the salesperson must master. These steps focus on the goal of getting new customers and obtaining orders from them. Most salespeople spend much of their time in maintaining existing accounts and building long-term customer relationship. These steps are:

  1. Prospecting and qualifying. In this step the salesperson identifies qualified potential customers.
  2. Qualifying lead is the process of identifying good ones and screening out poor ones.
    Prospects can be qualified by:
    • Financial ability.
    • Volume of business.
    • Special needs.
    • Location.
    • Possibilities for growth.
  3. Reproach is the step in which the salesperson learns as much as possible about a prospective customer before making a sales call.
      • Set call objectives.
      • Consider timing.
      • Have a sales strategy.
  4. During the approach step, the salesperson should know how to meet the buyer, make him satisfied and get the relationship off to a good start.
  5. The presentation and demonstration is the step in which the salesperson tells the product “story” to the buyer, showing how the product will make or save money for the buyer. A needsatisfaction approach where the salesperson investigates the buyer’s needs and then matches the product to those needs is advised.
  6. Handling objections is the step in the selling process in which the salesperson seeks out, clarifies, and overcomes customer objections regarding buying.
  7. Closing occurs when the salesperson asks the customer for an order. The techniques for closing include:
    • Ask for the order.
    • Review points of agreement.
    • Offer to help in writing up the order.
    • Ask whether the buyer wants this model or that one.
    • Note that the buyer will lose out if the order is not placed now.
  8. The follow-up occurs after the sale and ensures customer satisfaction.

The Personal Selling Process

C. Managing the Sales Force

Sales force management is the analysis, planning, implementation, and control of sales force activities.
It includes:

  1. Designing sales force strategy and structure,
  2. Recruiting, selecting
  3. Training
  4. Compensating
  5. Supervising
  6. Evaluating the firm’s salespeople

a. Designing Sales Force Strategy and Structure

Marketing managers face several sales force strategy and design questions. How should salespeople and their tasks be structured? Territorial sales force structure is a sales force organization that assigns each salesperson to an exclusive geographic area and sells the company’s full line products and services to all customers in that territory. Advantages include:

  • It defines the salesperson’s job.
  • The person gets credit for what they accomplish
  • person works in a territory
  • Increases the salesperson’s desire to build local business.
  • Traveling expenses are low (because of reduced territorial size).

This form is often supported at various levels by managerial structure. Product sales force structure is a sales force organization under which salespeople specialize in selling only a portion of the company’s products or lines. Problems can occur if a single customer buys many different products from the company. Extra costs of this method must be compared with the more specialized product knowledge and extra attention to individual products. Customer sales force
structure is a sales force organization under which sales people specialize in selling only to certain customers or industries. This form can help to become more customer focused. This form carefully consider primary customers. Complex sales-force structure forms are usually deviations of the basic three mentioned above where combinations occur. Each company should select a sales force structure that best serves the needs of its customers and fits its overall marketing strategy. Salespeople constitute one of the most productive and most expensive assets of the company. Most companies use some form of workload approach to determine sales force size. The workload approach is an approach of setting sales force size, whereby the company groups count into different sizes and classes (or status) and then determines how many salespeople are needed to call. The company may have an outside sales force (field sales-force) that travels to call on customers or they can have an inside sales force which conducts business from their offices via telephone or visits t the prospective buyers. To reduce time demands on their outside sales forces, many companies have increased the size of their inside sales forces and have added:

  1. Technical support people.
  2. S ales assistants.
  3. Telemarketers (using the telephone to sell directly to consumers).

The days when a single salesperson handled large and important customers are vanishing. Today, team selling, using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts, is being used. A structure has to be established that considers rewards and compensation if this method is to be effective. In team selling situations, Pitfalls include:

  1. Selling teams can confuse or overwhelm customers.
  2. Salespeople may have trouble in learning to work with and trust others on a team.
  3. There may be difficulties in evaluating individual contributions to the team selling effort.

b. Recruiting and Selecting Salespeople

At the heart of any successful sales force operation is the recruitment and selection of good salespeople. Careful salesperson selection can greatly increase overall sales force performance. There is no magic list of traits, however, that makes for a good salesperson.
These are the factors which should consider:

  1. Enthusiasm.
  2. Persistence.
  3. Initiative.
  4. Self-confidence.
  5. Job commitment.

To recruit salespeople the organization can begin by getting recommendations from: current salespeople, using employment agencies, placing ads in classified newspaper, contacting college students.
The selection process usually evaluates:

  1. Sales aptitude.
  2. Analytical and organizational skills.
  3. Personality traits.
  4. And other characteristics.

c. Training Salespeople

Many companies ignore the importance of training. Today, however, sales- people may spend anywhere from a few weeks to many months in training. The average training period is four months. Training programs usually have the following goals:

  1. Help salespeople to know and identify with the company.
  2. To knows how products are produced and how they work.
  3. Knows about the competitor’s strategies and customer’s characteristics.
  4. Learn how to make effective presentations.
  5. Understand field procedures and responsibilities.

d. Compensating Salespeople

To attract salespeople, a company must have an appealing compensation plan.
Compensation is made up of the several elements:

  1. A fixed amount, usually a salary, gives the salesperson a more stable income.
  2. A variable amount, which might be commissions or bonuses, rewards a sales- person for greater effort.
  3. Expense allowances (which repay salespeople for job-related expenses) let salespeople undertake needed and desirable selling efforts.
  4. Fringe benefits provide job security and satisfaction.

Management must decide which of these elements (and which combination or amount) makes the most sense for each sales job. The compensation plan can both motivate and direct a salesperson’s work.
Basic methods include:

  1. Straight salary
  2. Straight commission
  3. Salary plus bonus
  4. Salary plus commission.

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