2006 Jeffrey E' Newcomb Red Widget Strategies

1
Marketing PrinciplesSession 13Personal Selling
and Direct Marketing

• Jeffrey E. Newcomb
• Red Widget Strategies
• for Hosei University

2
Looking ForwardWhere are we going?
Session 13, Personal Selling and Direct
Marketing, will help you to

• Discuss the role of salespeople in creating value
  for customers, and building customer
  relationships.
• Identify and explain steps in managing a sales
  force.
• Discuss the personal selling process.
• Define direct marketing and discuss its benefits
  to customers and organizations.
• Identify and discuss major applications of direct
  marketing.

3
CDW Corporation Case Story

• CDW is USs largest reseller of technology
  products and services
• Core market target small and
• mid-sized businesses
• Products for sale include computers, software
  accessories, network equipment
• Brands represented include Sony, Hitachi, HP,
  IBM, Toshiba, Apple
• 400,000 active commercial customer accounts
• Sales up 21 and profits up 17 annually sales
  6 billion

• Circle of Service philosophy everything revolves
  around the customer
• Salespeople are highly knowledgeable
• Training is extensive 340,000 hours of training
  annually for 2,000 salespeople
• 120 Factory trained specialists
• CDWs Clicks and People direct marketing strategy
  combines personal selling with strong Web
  presence

4
Personal Selling
Salespeople have many names

• Sales Engineers
• District Managers
• Marketing Representatives
• Account Development Representatives

• Agents
• Sales Consultants
• Sales Representatives
• Account Executives

In a sense, we are all salespeople. Each day we
are selling our skills and ideas. Sometimes, we
may want to persuade others to our point-of-view.
Consider various salespeople you have may know.
What do they do in sales?
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But wait

• Why do we need sales?
• If the societal marketing concept is designed to
  satisfy customers needs and wants, why is selling
  a necessary part of marketing?

Consider reasons why personal selling may be
useful for customers and business.
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Personal Selling
Why do we need sales in practicing the Societal
Marketing Concept?

• Professional salespeople are well-educated,
  well-trained, and committed to building and
  maintaining long-term customer relationships
• Sales positions cover a range of activity
• Order taker Transaction-based selling a
  facilitator of the exchange between buyer and
  seller
• Example Department store clerk
• Order getter Relationship-based selling a
  developer or builder of buyer-seller connections,
  in various environments
• Examples IT (information technology) systems
  sales Boeing aircraft, valued at 100 million
  each

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Personal Selling

• The Role of the Sales Force
• Success of the sales force is based upon
• two-way personal communication
• Personal selling is more effective than
  advertising in complex selling situations
• Examples Komatsu, Cisco Systems
• The sales force serves as critical link between
  organization and its customers
• -Representatives of organization, values and
  products
• -Champions of customer interests
• Goal of the sales force customer satisfaction
  and organization profit

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How Salespeople Use Their Time
12.7 Service calls
28.8 Face-to-face selling
16 Administrative tasks
17.4 Traveling and waiting
25.1 Telephone selling
Source Armstrong and Kotler
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Managing the Sales Force

• Sales Force Strategy.
• Territorial sales force
• Product sales force
• Customer sales force
• Complex sales force
• Product Sales force sells only certain product
  lines
• Example At Kodak, different sales groups may
  call upon the same client for different
  applications coordination is vital
• Customer Sales force organizes along customer or
  industry lines Example At IBM, a sales force
  works specifically with an assigned large
  customer
• Complex Combination of several types of
  structures
• Outside Sales Force Call on customers in the
  field

and Structure

• Territorial Salesperson assigned to exclusive
  area and
• sells full line of products
• Examples Avon Products Campbells Soup

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Managing the Sales Force

• Sales force structure, based on brand and
  geographic region

Nivea
Nivea
Source Armstrong Kotler
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Inside Sales Force

• An inside sales force conducts business from
  offices
• by telephone, or through visits from perspective
  buyers
• Example CDW uses phone and internet to
• make close contact with customers
• Typically, an inside sales force includes
• -Technical support people
• -Sales assistants
• -Telemarketers
• Inside sales teams Used by IBM, Xerox, Procter
  Gamble
• Typical for servicing large, complex accounts
• Teams include experts from different areas of
  selling firm
• Challenges of inside sales teams
• -Can confuse or overwhelm customers
• -Some people have trouble working in teams
• -Hard to evaluate individual contributions

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Managing the Sales Force

• Key talents of salespeople
• Intrinsic motivation
• Disciplined work style
• Skill to close a sale
• Ability to build relationships with customers
• How large should a sales force be?
• It depends.
• Microsoft 23,000 salespeople in US alone
• Pepsi 36,000 salespeople
• Workload approach grouping accounts
• according to size and customer needs

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Managing the Sales Force

• Recruiting and selecting salespeople
• Careful recruiting can
• -Increase overall sales force performance
• -Reduce turnover
• -Reduce recruiting and training costs
• To find good salespeople, recruiters use
• Recommendations from current sales force
• Employment agencies
• Classified ads
• -Web searches
• -College students
• -Recruit from other organizations

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Online Job Search Sites for Recruiting Salespeople
!
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Managing the Sales Force

• Training salespeople
• Training period can be superficial or extensive
  
• from a few weeks to a year or more
• Training can be initially expensive, but yields
  strong returns, with substantial multiplier
  effects
• Web-based sales training programs 20 billion
  industry, with grow estimated by 35 annually
• Example Cisco Systems
• Typical training components
• Training programs have many goals
• Learn about and skillfully represent the sales
  organization
• Know the organizations products and services
• Understand customers and competitors
  characteristics
• Determine how to make effective presentations
• Master field procedures and responsibilities
• Practice negotiation strategies

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AIDA in Personal Selling

• The AIDA process applies to any communication
  when response is needed
• AIDA is a guideline for design of marketing
  material
• A Attention
• I Interest
• D Desire
• A Action
• When we buy, we buy according to the AIDA
  process
• When we sell, we sell through the AIDA stages
• If a product or service gets our attention
• If the product or service is relevant, we are
  motivated to learn more
• If the product or service appears to match our
  needs, wants and resources, our desire
  increases
• If we are stimulated to overcome our natural
  caution we may become motivated to taking
  action, to buy

If you remember just one sales or selling model,
remember AIDA
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Managing the Sales Force

• Compensating salespeople
• Compensation elements salary, bonuses,
  commissions, expenses, and fringe benefits
• Basic compensation plans
• Straight salary
• Straight commission
• Salary plus bonus
• Salary plus commission
• Compensation plans should direct the sales force
  toward activities that are consistent with
  overall marketing objectives

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Compensation Data Online
Source www.salary.com
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Managing the Sales Force

• Supervising Salespeople
• Effective supervisors also
• motivate the sales force
• Organizational climate
• Sales quotas
• Positive incentives
• Sales meetings, sales contests, honors, etc.
• US companies spend 30 billion annually on
  incentives
• Evaluating Salespeople
• Several tools are used
• Sales reports
• Call reports
• Expense reports

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Seven Steps of a Sale

• 1. Prospecting Salesperson identifies and
  screens
• qualified potential customers. Good marketing
  research provides added-value for the potential
  customer, and helps sales to be efficient
• 2. Pre-approach Salesperson learns about a
  prospective customer before a first sales call.
  Research helps to avoid wasting resources with
  unnecessary effort
• 3. Approach Salesperson meets customer for the
  first time.
• Practice naïve listening! Ask good questions.
  Use a facilitative approach - helping to identify
  the buying criteria
• 4. Presentation Salesperson gives the product
  story or sales proposition, highlighting
  benefits to the customer

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Seven Steps of a Sale

• 5. Handling Objections and Negotiating
  Salesperson overcomes customer objections to
  buying. Use facilitative questioning to shape the
  sales proposition to customers needs
• 6. Closing Salesperson asks customer for order,
  with collaborative agreement. Use facilitative
  help where appropriate
• 7. Follow-up Salesperson is in close contact
  with the customer after the sale to support
  customer satisfaction and repeat business

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Managing the Customer Relationship

• Good salespeople facilitate supplier fulfillment
  to the customer, and satisfaction of the customer
  with the sale
• Managing the customer relationship may require
  internal support and buy-in within the
  customers organization and good project
  management skills
• Good salespeople take responsibility for periodic
  checks with the customer, and effective sales
  follow-through
•  

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Direct Marketing

• Direct Marketing one-to-one connections with
  targeted individual consumers to
• obtain an immediate response and
• cultivate lasting customer relationships

• Direct marketings added value for buyers
• Convenient
• Easy to use
• Private
• Access to a wealth of information
• Immediate
• Interactive

Direct sales to consumers businesses in the US
represents 18 of the economy, over 2
trillion direct sales growing faster than all
other forms of sales
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Direct Marketing Channels
Online Marketing

• Disintermediation

Direct-Mail Marketing
Continuous access
Personal Selling
Kiosk Marketing
Speed
Catalog Marketing
Direct-Response TV Marketing
Telemarketing Email
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Benefits of Direct Marketing

• Added value for sellers
• Direct marketing is a useful tool for
• building good customer relationships
• Allows for targeting of small groups or
  individuals with customized offers
• Can be scheduled to reach customer prospects at
  the right time, to meet customer needs
• Offers access to buyers who cannot be reached
  through other marketing channels
• Low-cost, effective alternative for reaching
  specific markets

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Direct Marketing

• Customer Databases Direct Marketing
• Databases include comprehensive customer data,
  representing geographic, demographic,
  psychographic and behavioral segmentation
  variables
• Databases can be used to identify prospects,
  customize products, and maintain customer
  relationships
• Database marketing requires investment in
  hardware, software, skilled personnel

Examples Dell is 1 PC maker globally, largest
computer direct marketer USAA supplies
financial services to US military and families
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Direct-Mail and Catalog Marketing

• Direct Mail
• Sending an marketing offer, announcement or
  reminder
• to a customer or prospect
• Accounts for more than 30 of all
  direct-marketing sales
• Permits high target-market selectivity
• Personal and flexible
• Easy to measure results
• Catalog
• Increasingly, catalogs are published online
• But print catalogs today remain the primary media
• Expected sales in 2008 176 billion

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Other Forms of Direct Marketing

• Direct Response Television
• Direct-response advertising
• Infomercials
• Home shopping channels
• Kiosks
• Information and ordering machines in stores,
  airports, other high-traffic locations

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Public Policy and Ethical Issues in Direct
Marketing

• Consumer irritation from noise, clutter
• Taking unfair advantage of impulsive or
  less-sophisticated buyers
• Deception and fraud
• Invasion of privacy
• -Google, Yahoo
• -Sale of credit card information
• -Sale of government records

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1. As a sales representative for your firm, your
territory is limited to accounts located within
the region where you live. This type of sales
force structure is called
3QQ 3 Question Quiz

• Customer sales force structure 
• Product sales force structure
• Territorial sales force structure 
• Combination sales force structure

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1. As a sales representative for your firm, your
territory is limited to accounts located within
the region where you live. This type of sales
force structure is called
3QQ 3 Question Quiz

• Customer sales force structure 
• Product sales force structure
• Territorial sales force structure 
• Combination sales force structure

Under a territorial sales force structure,
salespeople sell the entire line of products and
services to customers within an exclusive
geographic area
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2. Using referrals from suppliers and dealers to
identify potential customers is part of which
step in the selling process?
3QQ 3 Question Quiz

• Prospecting 
• Pre-approach 
• Approach 
• Handling objections

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2. Using referrals from suppliers and dealers to
identify potential customers is part of which
step in the selling process?
3QQ 3 Question Quiz

• Prospecting 
• Pre-approach 
• Approach 
• Handling objections

Prospecting is the process of identifying
qualified potential customers who have the need
for a product or service, a willingness to buy,
and the ability to pay
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3. The most challenging public policy issue
currently facing the direct marketing industry
is/are
3QQ 3 Question Quiz

• Sweepstakes contest rules 
• Invasion of privacy 
• Investment, research in direct marketing
• Irritating infomercials

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3. The most challenging public policy issue
currently facing the direct marketing industry
is/are
3QQ 3 Question Quiz

• 1. Sweepstakes fraud and deceit 
• 2. Invasion of privacy 
• 3. Investment, research in direct marketing
• 4. Irritating infomercials

Computer database technology allow companies to
collect excessive information about consumers,
including that which many buyers feel should be
private
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Your TOP TEN Terms

• Closing
• Direct marketing
• Follow-up
• Handling objections
• Inside sales force
• Pre-approach
• Prospecting
• Outside sales force
• Sales quota
• Territorial sales force structure

37
Looking BackWhere have we been?

• Understand the role of an organizations
  salespeople in creating value.
• Know the major sales force management steps.
• Understand the personal selling process -- and
  specifically, how to distinguish between
  transaction-oriented marketing and relationship
  marketing.
• Define direct marketing and discuss its benefits
  to customers and organizations.
• Know the major forms of direct marketing.