Personal Selling and Sales Force Management

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Personal Selling and Sales Force Management

• Marketing Management

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AGENDA

• Role of salespeople
• Why have a salesforce
• Own salesforce versus independent reps
• Selling job
• Salesforce size
• Organizing the sales force
• Recruiting selecting salespeople
• Motivation compensation
• Evaluation of the sales force

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ROLE OF SALESPEOPLE

• Two-way personal communication
• More effective than advertising in complex
  selling situations
• The sales force plays a major role in most
  companies
• The sales force works to produce customer
  satisfaction and company profit.

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Reps versus Own Sales Force?
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Company Salespeople

• Advantages
• Sell only your products
• Can be directed to specific accounts
• Can train them to sell by company guidelines
• Sell full product line

• Disadvantages
• High fixed costs
• Takes time to hire
• Costs more initially
• Sales grow more slowly

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Independent Reps

• Advantages
• Low fixed costs (commission-based)
• No need to hire
• Produce sales quickly
• Have established relationships

• Disadvantages
• Sell for several firms
• Cost more as sales grow
• Tend to push popular items
• Only call on best accounts
• More difficult to control

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The Personal Selling Process
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The Selling Job Seven Tasks

• Step 1 Locating and qualifying prospects
• Identifying potential customers
• Tradeshows often provide excellent source
• Screening leads
• Can they use what you are selling?
• Do they have financial resources?

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The Selling Job Seven Tasks

• Step 2 Pre-call planning
• Good salesperson spends considerable amount of
  time planning the call
• Planning includes
• Finding information on past sales calls,
  competition, product service
• Whom to contact
• Customer need analysis

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The Selling Job Seven Tasks

• Step 3 The approach
• Stage where salesperson meets customer for the
  first time
• Step 4 The presentation
• Benefits of product are presented demonstrated
• Presentation tailored to needs of prospect
  (adaptive selling)

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The Selling Job Seven Tasks

• Step 5 Answering objections
• Be prepared with counterarguments
• Step 6 Closure
• Ask for the order
• Average number of calls to close 4
• Step 7 Follow-up
• Help ensure customer satisfaction
• Tasks include
• Expediting orders, setting up displays, taking
  inventories, training dealer personnel, etc.

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SALESFORCE SIZE HOW MANY? Workload method

• Calculate total amount of work necessary to serve
  entire market
• Nr of salespeople total workload divided by
  amount of work average salesperson is expected to
  handle

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SALES FORCE SIZE HOW MANY? The Workload Method

• Number of Salespeople (number of existing
  customers potential customers) x ideal calling
  frequency x length of call selling time
  available to one salesperson

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HOW MANY SALESPEOPLE Workload method - example

• 3,000 existing 2,250 potential clients
• Called 5 x per year for 2 hrs. (incl. travel)
• Available selling time per salesperson 1,000
  hrs.
• Size (3,0002,000) x 5 x 2 / 1,000 50

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Sales Force Turnover

• Size influenced by turnover
• Turnover rate separations per year / average
  size of sales force
• Issue
• Customers prefer long-term relationships with
  suppliers
• Empty territories mean lost sales
• High recruiting and training costs

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Sales Force Turnover

• Remedies
• Balancing territories
• Improve financial incentives
• Offer non-financial rewards (trips, trophies,
  recognition awards, etc.)

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Sales force Turnover

• Problems of low turnover
• Salespeople resting on their laurels
• Overpaid

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ORGANIZING THE SALES FORCE

• Geographic units
• Product
• Companies having diverse product lines
• Issue customer called on by several salespeople
• Customer
• Customers have unique purchasing requirements

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ORGANIZING SALES FORCE

• All 3 forms have been used successfully
• Reorganization necessary as
• Companies grow
• Customers change
• Industry structure changes
• Reorganizing can have negative effects on staff
  morale companys profits (e.g., Xerox)

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RECRUITING AND SELECTING SALESPEOPLE

• Careful recruiting can
• Increase overall sales force performance
• Reduce turnover
• Reduce recruiting training costs
• Recruiting involves
• Soliciting applications
• Screening candidates
• Interviews
• In-field observation
• References, work history, etc.
• Hiring experienced versus inexperienced
  salespeople

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Traits of Successful Salespeople

• Enthusiasm
• Patience
• Initiative
• Self-Confidence
• Job Commitment
• Customer Orientation
• Independent

• Self-Motivated
• Excellent Listeners
• Friendly
• Persistent
• Attentive
• Honest

• Internally Motivated
• Relationship Oriented
• Disciplined
• Hardworking
• Team Players

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MOTIVATING COMPENSATING SALESPEOPLE Straight
Salary

• Advantages
• More control over wage levels
• More control over salespeoples activities
• Easier to divide territories and reassign people
• More effort on relationship-building other
  tasks that do not bring immediate revenues
• Useful with long selling cycles (e.g., planes,
  construction)

• Disadvantages
• No incentives for extra efforts

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MOTIVATING SALESPEOPLE Commission Plans

• Advantages
• Reward accomplishments, not time spent
• Fair
• Attract better-qualified applicants

• Disadvantages
• Little control over salespeople
• Non-selling tasks neglected
• Salespeople sell themselves
• Reluctance to have territories changed or
  reassigned
• Fluctuating incomes for salespeople

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MOTIVATING SALESPEOPLE

• Most companies use combination plans
• Base salary commission and/or bonus

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EVALUATING SALESPEOPLE

• Complex
• Territories differ
• Vast array of jobs
• Host of control measures
• Qualitative versus quantitative
• Input- versus output-based

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EVALUATING SALESPEOPLE

• Output measures
• Orders
• Number
• Size
• Orders per call (batting average)
• Accounts
• Active, new, overdue, lost
• Sales
• To potential
• To quota
• Per order
• Margin

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EVALUATING SALESPEOPLE

• Input measures
• Sales calls
• Expenses
• Per call
• Per sale
• Time spent on non-selling tasks