Sales Management

Vinod Puri

98206 94960; 26314644

 Importance of Selling

 Only activity that generates revenue

Everything else is a cost centre only
 Only opportunity to be in touch with the
market
This allows for understanding and
designing the value offering.
 Contributes to the image of the company and
building of the Brand Equity
 Modes of Selling

 There can be two approaches to selling:

Selling by looking at the short term gains
Considering the long term business

 How practical is the issue of long term

approach in the low value products?
The Nature of Personal
Selling
Transaction Relationship
Selling Selling
 Get new accounts  Retain existing accounts
 Get the order  Become the preferred

 Cut the price to get the supplier

 Price for profit
sale
 Manage all accounts to  Manage each account for

maximize short-term sales long-term profit

 Sell to anyone  Concentrate on high-profit-

potential accounts
 Selected Activities of
Salespeople
Salesperson

Generate sales: Provide service Professional Company

Territory
•Precall planning to customers: service:
management: development:
•Prospecting
•Provide Participate in: •Train new salespeople
•Make sales •Gather and analyze
management/technical
presentations information on •Sales meetings
consulting
•Overcome objections customers, competitors’
•Oversee installations •Professional
general market
•Close by asking for the and repairs associations
orders developments
•Check inventory levels •Training programs
•Arrange for delivery •Disseminate
•Entertain •Stock shelves information to
•Arrange for •Provide merchandising appropriate personnel
credit/financing assistance: within salesperson’s
•Collect payments company
•Co-op advertising,
•Participate in trade point-of-purchase •Develop sales
shows displays, brochures strategies and plans,
•Oversee product and forecasts, and budgets.
equipment testing
•Train wholesalers’ and
retailers’ salespeople
Sales jobs differ from other jobs
because salespeople…
 implement a firm’s marketing strategies in the field.
 are authorized to spend company funds.
 represent their company to customers and to society in general.
 represent the customer to their companies.
 operate with little or no direct supervision and require a high degree
of motivation.
 develop innovative solutions to difficult problems.
 need more tact and social intelligence.
 travel extensively, which takes time from home and family.
 have large role sets.
 face role ambiguity, role conflict, and role stress.
Sales jobs differ from other jobs
because salespeople…
 implement a firm’s marketing strategies in the field.
 are authorized to spend company funds.
 represent their company to customers and to society in general.
 represent the customer to their companies.
 operate with little or no direct supervision and require a high degree
of motivation.
 develop innovative solutions to difficult problems.
 need more tact and social intelligence.
 travel extensively, which takes time from home and family.
 have large role sets.
 face role ambiguity, role conflict, and role stress.
(Figure
(Figure 1-
1-

Sales Management
5)
5)

Responsibilities
Strategic
Planning
Organizing
Performanc
the sales
e Evaluation
force

Communication
Coordination
Integration
Motivation Recruiting,
and selection,
supervision assimilation

Training and
developmen
t
(Figure
(Figure 1-
1-
6)
6)
Executive Ladder in Personal
Selling
President

Vice president of sales

National sales manager

Regional/divisional sales manager

District sales manager

Staff assistants
Sales supervisor available for advice
and support at any
step along the
Salesperson ladder.
(Figure
(Figure 1-
1-
7)
7)
Executive Ladder in Team
Selling
President

Vice president of marketing

Distribution Client-team Product

logistics leader engineer
specialist

Customer
sales/service
representative
Sales Force Management
Challenges in the 21st
Century
 Customer relationship management (CRM)

 Sales force diversity

 Electronic communication systems and

computer-based technology
 Selling teams

 Complex channels of distribution

 An international perspective

 Ethical behavior and social responsibility

The Marketing Concept
A philosophy: Achieving organizational goals
depends on the firm’s ability to identify the needs
and wants of a target market, and then to satisfy
those needs and wants better than the competition
does.

 Based on three fundamental beliefs

 Company planning and operations should be customer or
market oriented.
 Marketing activities in a firm should be organizationally

coordinated.
 The goal of the organization should be to generate

profitable sales volume over the long run.

Evolution of
Marketing Management
 Production orientation
 Focus on mass-producing a limited variety of products
for as little cost as possible.
 Sales orientation
 Age of the hard-sell.
 Marketing orientation
 The marketing concept first emerges.
 Relationship orientation
 A natural extension of the marketing-orientation stage.
 The buyer and seller commit to doing business over a

long time.
Relationship Marketing:
Four key issues
Open communication
Empowered employees
Customers to be included in planning
Working in teams
Strategic Planning Set
Objectives
 Objectives are the broad goals
around which a strategic plan is
formulated.
Formulate
 Strategies are the plans of
action.
Strategies
 Tactics are the specific activities
that people must perform in order
to carry out the strategy.

Develop Tactics
Company Strategy-
Marketing Objectives and Strategy
Company

Objectives Marketing
Earn 20% ROI

Strategy
Objectives
Increase marketing share 10% Increase market
share 10%

Strategy
Increase share of customer business
Marketing Strategy-
Sales Force Objectives, Strategy and
Tactics
Marketing

Objectives
Increase market share 10%
Sales Force

Strategy
Increase share of customer business
Objectives
Increase share of
customer business

Strategy
Build long-term
customer relations

Tactics
Develop sales teams
Provide bonuses for greater customer share
Strategic Trends
 Internet Selling
 Multiple Sales Channels

 Multiple Relationship Strategies

 Transaction selling  Consultative selling

 In
this era of global warming, toxic waste,
pollution, and other concerns, marketing
executives must act in a socially responsible
manner if they wish to succeed or even survive.
Customer Relationship
Management
 CRM practices
 Involve software application utilizing Information
technology.
 Aggregate all information about customers into a

single database.
 Provide salespeople/customers access to timely and

relevant information.
 Allow effective management of every aspect of the

buyer-seller relationship.
 Needs a different mindset at the top. Only effective if

salespeople embrace it willingly.

The Selling Process

 How to proceed with the process of Selling

 Critical steps

 The right steps to be handled carefully

 TM 3-2

THE EIGHT STEPS OF THE SALES PROCESS

8. Follow-up
7. Gaining Commitment
6. Meeting objections
5. Presentation
4. Need Assessment
3. Approach
2. Preapproach
1. Prospecting
1) Prospecting: The method or system by
which sales-people learn the names of people who need the
product and can afford it.
 Leads can be identified through…
 Referrals from customers
 Referrals from internal company sources
 Sales manager; Marketing dept.; Telemarketing dept.
 Referrals from external agencies
 Published directories
Industrial directories, Published data,
governmental records
 Networking by the Salesperson
 Cold canvassing
Qualifying Leads

A qualified prospect…
Has a need for the products being
sold.
Can afford to buy the products.

Is receptive to being called on by

the salesperson.
Lead Conversion Ratio: Inquiry to
Decision 12 Months After Inquiring

Plan to
Purchased
buy 25% Purchased
45% No longer in
No longer market
in market Plan to buy
30%

*SOURCE: Bob Donath, James K.

Obermayer, Carolyn K. Dixon, and Richard
A. Crocker, “When Your Prospect Calls,”
Marketing Management, Vol. 3, No. 2,
1994.
The Value of Inquiry Follow-Up

Share of
buyer’s
business if
not followed
up 40%

Share of buyer’s
business if
followed up 83%

*SOURCE: Bob Donath, James K.

Obermayer, Carolyn K. Dixon, and Richard
A. Crocker, “When Your Prospect Calls,”
Marketing Management, Vol. 3, No. 2,
1994.
 Planning : the Key

 Determining the Sales Objectives

 Developing Customer Profile
Customer Benefits
 Developing the Sales Call Presentation
 Pre approach: Planning the
Sale
 Includes all the information-gathering activities
salespeople perform to learn relevant facts about
the prospects, their needs, and their overall
situation.

 Adaptive selling:
 When a salesperson alters the initial objectives or
plans of the sales process because of new
information gained from the customer during the
actual call.
 The Approach: The first minute or so of
the call.

A good approach makes a favorable

impression and establishes some degree of
rapport between the salesperson and the
buyer.
 A lot can happen in the first minute.

 What all would you do in the first minute?

3) The Approach: The first minute or so
of the call.

A good approach makes a favorable

impression and establishes some degree of
rapport between the salesperson and the
buyer.

 Expectations in the U.S.:

 Firm handshake
 Professional attire

 Good eye contact.

Need Assessment

The stage in which the

salesperson must discover, clarify,
and understand the buyer’s needs.
The best way to uncover and

understand needs is by asking

questions.
 NEED ASSESSMENT
• Situational questions
How often do you change the cutting oil in your drill presses?
In addition to the hospital administrator, who else has an influence on the decision?
• Problem discovery questions
Have you experienced any delays in getting repair parts?
In which part of the production process is quality control the most important?
• Problem Impact questions
How do these delays in getting parts affect your production costs?
What impact do the quality consistency problems have on your production costs?
• Solution value question
If your inventories could be reduced by 20%, how much would that save you?
If your rejection rate on final inspection was reduced to under one percent, how much would
that save you?
• Confirmatory questions
So, you would be interested in an inventory control system that reduced your inventories by 20%?
If I can provide evidence to you that our products would lower your rejection rate to under one
percent, would you be interested?
 The Presentation
 A discussion of those product and/or service features, advantages,
and benefits that the customer has indicated are important.
 Built around a forceful product demonstration

 Prepared presentation vs. Adaptive selling

 Tips for effective presentations

 Keep it simple
 Talk the prospects language

 Stress the application of the product/service to the

prospects situation
 Seek credibility at every turn.
 TM 3-

Presentation of Product, Features, Benefits,

Advantages
Product Features Benefits Advantages
Camera Telephoto lens Take pictures Able to capture
from longer distance image from a distance.
Bicycle Attached water Can hold a water Don’t get dehydrated.
bottle holder bottle.
New D.V.D. Can play any round Convenience Avoid multiple units.
Drill Press Multiple drill Can change bits Saves time.
bits attached without shutting Saves money.
down the machine.
Motor Oil Rust inhibitor engine to have Saves money.
have longer life.
 The S E L L

 S Show Feature
 E Explain Advantage
 L Lead into Benefits
 L Let the Customer Talk

the F A B approach
Need of the Dialogue
 Meeting Objections
 Objections should be welcomed because they indicate
that the prospect has some interest in the proposition.

 In responding to an objection…
 Listen to the buyer
 Clarify the objection

 Respect the buyer’s concern

 Respond to the objection

 Common types of objections

 Price or value objections
 Product/service objections

 Procastinating objections

 Hidden objections
6) Meeting Objections
 Objections should be welcomed because they indicate
that the prospect has some interest in the proposition.

 In responding to an objection…
 Listen to the buyer
 Clarify the objection

 Respect the buyer’s concern

 Respond to the objection

 Common types of objections

 Price or value objections
 Product/service objections

 Procastinating objections

 Hidden objections
Trial Close: a great way to
uncover needs;
Push
 thethesale
It checks forward
attitude of the prospect
 Can be used at the following points
After making a strong selling point
After the presentation
After answering an objection
Immediately before closing the sale
Using Trial Close

 How does it sound to you

 What do you think
 Is this what you are looking for
 Is this important to you
 Does this answer your concern
 Gaining Commitment
 Asking the buyer to commit to some action that moves
the sale forward.

 Common Sales Closes

 The Assumptive Close
 “Now what size do you want?”
 Special Offer Close
 “If you buy this product today, we’ll double the length of the
warranty.”
 Summary Close
 “You have agreed that our product is the best on the market.
Correct? Then I suggest that you place your first order today so we
can have it to you by the end of the week.”
 Planning

 Sales Forecasting

 Quotas and Territories

 Management Information Systems

Importance of Sales Forecast
 Basis for all the activities for the company
Help decide the levels of production
The need of raw materials required
Leads to the level of funds needed
Level of working capital required
 Calls for decisions on the level of activity
This helps in the manpower planning
 Sets the level of activities required
Decision on the level of operational
expenses
 Sales Forecasting Methods
Methods Advantages Disadvantages Best Used
Executive Quick, easy, and simple Subjective For new products
Opinion Lacks analytical rigor
Sales force Relatively simply Salespeople are sometimes When reps are of a high
composite Usually fairly accurate overly optimistic caliber
Involves those people who Salespeople may sandbag When each rep has a small
are responsible for the (estimate low) to look better number of customers
results Time consuming

Survey of Done by those who will buy Time consuming For new products
buyers the product, so accuracy High cost When there are a small
intentions should be good. number of customers
Customer may not
cooperate

Trend Objective and inexpensive No consideration for major For established products
projections: Use historical data product or market changes When market factors are
-moving average
Require some statistical predictable
-exponential
smoothing analysis For aggregate company
-regression
analysis
forecasts

Analysis of Objective Unforeseen changes in the When market factors are

market Fairly accurate and simple market can lead to stable and predictable
 Market Factor Forecast: Dryever Diapers
Next Year Second Year
Projected population, ages 0-18 months 4,850,000 4,800,000
Percentage using diapers 100 100
Number using diapers 4,850,000
4,800,000 Average daily diapers per child 2.55
2.55
Diapers daily, ages 0-18 months 12,367,500 12,240,000

Projected population, ages 19-30 months 3,300,000 3,200,000

Percentage using diapers 80 80
Number using diapers 2,640,000
2,560,000
Average daily diapers per child 2.19 2.19
Diapers daily, ages 19-30 months 5,781,600
5,606,400

Projected population, ages 31-42 months 3,500,000 3,300,000

Percentage using diapers 40 40
Number using diapers 1,400,000
1,320,000
Average daily diapers per child 1.10 1.10
Diapers daily, ages 31-42 months 1,540,000
1,452,000

Total daily diapers, all ages 19,689,100 19,298,400

Percentage disposable diapers 95 95
Guiding Principles for
Forecasting
 Fitthe method to the product/market
 Use more than one method

 Minimize the number of market factors

 Recognize the situation limits

 Use the minimum/maximum technique

 Understand math and statistics

Fig 12-8 Flow of Information from
Sales Budget to Other Budgets

Sales budget

Sales department Administrative Production

expense budgets expense budgets department budgets
(advertising, selling
costs, administration) Profit-and-
loss budget
Cash budget

Revenues Revenues
Expenses Expenses
Sales Territory
TM 13-2

Comprises a number of present

and potential customers, located
within a given geographical area
and assigned to a salesperson,
branch, or intermediary (retailer or
wholesaling intermediary).
 Key word: customers
 TM 13-3

Benefits of Good Territory

Design
Enhances customer coverage
Reduces travel time and selling costs
Provides more equitable rewards
Aids evaluation of sales force
Increases sales for the sales organization
Increases morale
Procedure for Designing Sales Territories TM 13-4
(Fig. 13-1)

Select a Determine Location Determine

Control Unit and Potential of Basic
Customers Territories

Assign Set Up Evaluate

Salespeople to Territorial Effectiveness
Territories Coverage of Design
Plans
 TM 13-6
Buildup Method of Territorial Design (Fig. 13-3)

Management must determine:

Desirable call patterns:

Call frequency per account per year

Total calls needed

in each control group

Workload capacity:
Total calls possible per rep per year =
number of daily calls x days selling

Tentatively set territorial boundary lines

by combining control units until total
calls needed = total calls possible

Modify territories as needed

 Territory Size and Workload Factors TM 13-8

Workload Factor Territory Size

Increase/Decrease
Nature of Job:
Lots of presale and post-sale activity Decreases
Nature of product:
A frequently purchased product Decreases
A limited repeat-sale Increases
Market development stage:
New market--fewer accounts Increases
Established market--more accounts Decreases
Market coverage
Selective coverage Increases
Extensive coverage Decreases
Competition:
Intensive Decreases – unless
market is oversaturated
Limited Increases
Breakdown Method of Territorial Design TM 13-9
(Fig. 13-5)
Management must determine

Company sales potential

Sales potential in each control unit

Sales volume expected from

each sales person

Tentatively set territorial

boundary lines by combining
control units total sales potential
= total sales volume expected

Modify territories as needed

Routing the Sales Force
TM 13-13

 Routing is the managerial activity that establishes

a formal pattern for sales reps to follow as they
go through their territories.
 Reduces travel expenses as it ensures a more

efficient territory coverage. Area C

 Some reps resent it. Area B

Area A
 Best for routine sales
x
jobs with regular call
frequencies.
Area B: Typically the “problem” area.
Routing the Sales Force
TM 13-13

 Routing is the managerial activity that establishes

a formal pattern for sales reps to follow as they
go through their territories.
 Reduces travel expenses as it ensures a more

efficient territory coverage. Area C

 Some reps resent it. Area B

Area A
 Best for routine sales
x
jobs with regular call
frequencies.
Area B: Typically the “problem” area.
 Sales Manpower

 Recruitment

 Training

 Assimilation
Recruiting and Selection
Problems
 Lack of resources
 Lack of job specification and qualifications
 Qualifications not objectively established
 Lack of managerial training
 Personal prejudices
 Search for managerial talent
 Fig. 5-2 Sales Force Staffing Process: Plan for Recruiting & Selection

Establish Responsibility Determine

Number of Conduct Job Prepare Job Determine Hiring
for Recruiting, Selection Analysis Description Qualifications
and Assimilation People Wanted

Recruit Applicants

Select Applicants
Design a Measure Applicants
Make Selection
System For Against Hiring
Decisions
Measuring Qualifications
Applicants

Hire The People

Assimilate New People Into Sales Force

 Workload Analysis
Number of reps needed = Total workload in market
Workload one rep can handle
Market workload:
Customer Number of Calls Total
x =
class accounts per year calls
A 400 20 8,000
B 600 10 6,000
14,000
One rep’s workload:
Calls/day x Selling days/week x Working weeks/year = Annual workload

5 x 5 x 50 = 1250

14,000
Number of reps needed = = 112 reps
1250
Fig. 5-4

Ten traits and abilities of top salespeople

Trait Related Ability
Ego strength To handle rejection
Sense of urgency To complete the sale
Ego drive To persuade people
Assertiveness To be firm in negotiations
Willingness to take risks To be innovative
Sociability To build relationships
Abstract reasoning To sell ideas
Sense of skepticism To question, to be alert
Creativity To sell complex products and ideas
Empathy To understand customer needs

Source: Erika Rasmusson, “The 10 Traits of Top Salespeople, “ Sales & Marketing Management, August
1999, pp. 34-37.
Recruiting for the Team
• Willingness to share

• Cooperative

• Trusting

• Empathetic

• Accepting of others

• Receptive to others ideas

• Selflessness

• Leadership skills
 Developing and Conducting a Sales
Training Program
Establish program objectives

Identify who should be trained

Training assessment
Identify training needs and specific goals

How much training is needed?

Who should do the training?

When should the training take place?

Program design
Where should training be done?

Content of training

Teaching methods used in training program

Reinforcement
Determine how training will be reinforced

What outcomes will be evaluated? Evaluation

What measures will be used?
 Objectives of Sales Training
Programs Increased
Sales
Productivity

Improved
Self- Lower
Managemen turnover
t

Sales training
program
objectives

Improve
customer Improve
relations morale
Improved
communica-
tion
Examples of Specific Training
Objectives
Company Understand company goals and objectives
orientation and Understand company selling philosophy
administrative Understand organizational structure
Understand company policies and procedures
skills: Improve call reports
Improve call patterns
Improve time management

Knowledge: Existing products - features, benefits, and applications

New products - features, benefits, and applications
Industry trends
Competitive products - features, benefits, and
applications
Specific customer applications and problems
Promotional programs

Selling skills: Improve pre-call planning

Improve prospecting methods
Improve strategy selection
Improve presentation skills
Improve closing techniques
Improve understanding of and handling objectives
When Should Training Take
Place?
Two basic attitudes:
#1) Train immediately because…
-No rep should be placed in the field until he
or she is fully trained.
-Cannot risk exposing customers to poorly
trained reps.
#2) Delay training because…
-much easier to train people who have had
some field experience.
-weak salespeople are eliminated before
company spends money on training them.
To Insure Training
Effectiveness
Managers Should Ask the Following Questions

 Is your training aligned with your company’s strategic goals?

 Does top management support your training?
 Does it reflect the needs of your customers/
 Is it immediately relevant to your business?
 Are the salespeople empowered to leverage what they
learn?
 Is the training reinforced?
 Are the results of the training measurable?
Source: Adapted from Mark McCaster, “Is Your Training A Waste of Money?” Sales & Marketing Management, 2001, p. 47.
 Management of the Field
force
 Leadership

 Compensation

 Evaluation
 Leadership Effectiveness

Personal
characteristics

Leadership style Leadership

(the leader
behaviors) effectiveness
Managerial
skills
SITUATION
Leadership Characteristics and
Skills
 Personal Characteristics
 Self-Confidence
 Initiative

 Energy

 Creativity

 Maturity

 Managerial Skills
 Problem-solving skills
 Interpersonal skills

 Communication skills

 Persuasive skills
Two Leadership Styles
 Transactional Leadership
 Those supervisory activities regarding the day-to-day
operation and control of the sales force.
 Clarifying rules
 Providing verbal feedback
 Transformational Leadership
 Transforms the basic values, beliefs, and attitudes of
followers such that they are willing to perform at levels
above and beyond expectations.
 Articulating a vision
 Fostering group goals
 Role modeling
 Providing individualized support
 Tools and Techniques of
Leadership
 Personal contact
 Sales reports
 Telecommunications
 Better customer and industry information
 Selling assistance
 Sales support
 Reporting responsibilities
 Communication
 Printed aids
 Meetings
 Indirect supervisory aids
 Compensation plans
 Territories
 Quotas
 Expense accounts
 Sales analysis procedures
 Coaching Sales Reps
 Threeelements of leadership most often
used to describe coaching
 Verbal feedback
 Praising salespeople when they do well.
 Leading by example
 Coaches are role models; salespeople will emulate
them.
 Mutual trust and respect
 Created through two-way communication
 TM 13-3

Outcomes of Effective Leadership

•Well-Trained Salespeople
•Trust among Salespeople

•Better Performance
•Sales Force Morale
•A sense of common purpose and a belief among members
that group goals can be attained.
 Problems Encountered in
Leadership
Poorperformance
Substance abuse

Cheating on expense accounts

Engaging in unethical behavior

 Procedure for Evaluating
Salespeople
(Fig. 16-1)
1. Establish 2. Select
basic evaluation
policies bases

3. Set 4. Compare
performance performances
standards standards

5. Discuss
results with
salespeople
 Output Factors Used as
Evaluation Bases
 Sales volume
 In dollars and in units
 By products and customers (or customer groups)
 By mail, telephone, and personal sales calls
 Sales volume as a percentage of:
 Quota
 Market potential (i.e., market share)
 Gross margin by product line, customer group, 
and order size
 Orders
 Number of orders
 Average size (dollar volume) of order
 Batting average (orders / calls)
 Number of canceled orders
 Accounts
 Percentage of accounts sold
 Number of new accounts
 Number of lost accounts
 Number of accounts with overdue payment
 Quantitative Input Factors Used as
Evaluation Bases
 Calls per day (call rate)
 Days worked
 Selling time versus nonselling time
 Direct selling expense
 In total
 As percentage of sales volume
 As percentage of quota

 Nonselling activities
 Advertising displays set up
 E­mails/letters written to prospects
 Telephone calls made to prospects
 Number of meetings held with dealers and/or 
distributors
 Collections made
 Number of customer complaints received
 Qualitative Input Factors Used as
Evaluation Bases
 Personal efforts of the sales reps
 Management of their time
 Planning and preparation for calls
 Quality of sales presentations
 Ability to handle objections and to close sales
 Knowledge
 Product
 Company and company policies
 Competitor’s products and strategies
 Customers
 Customer relations
 Personal appearance and health
 Personality and attitudinal factors
 Cooperativeness
 Resourcefulness
 Acceptance of responsibility
 Ability to analyze logically and make decisions 
 Ratio Measures

Sales =

Days worked X Calls Orders Sales

Days worked X Calls X Orders

Days worked X Call rate X Batting average X Average order