Transcript Part One - Lingnan University

Chapter Thirteen
Sales and Sales Management
Personal Selling
Learning Objectives
1.
Sales’ role in the organization - Identify sales’ strategic
communication role
2.
Sales strategies and customer relationships - Select the types of
selling used for different types of relationships; Outline the sales strategy
associated with each type of selling
3.
Organizing the sales force - Compare and contrast organizational
structures used to manage sales
4.
Directing the sales force - Illustrate when to use different control
and compensation program
5.
Evaluating performance - Discuss how sales force performance is
evaluated
13-2
Sales’ Role In the Organization
Sales are person-to-person; only personal selling are able to tailor the sales
message to the unique needs/preferences of each individual customer
1.
Salespeople create value by adapting their products to fit customer needs
- training customers to use the product correctly;
- handling customer complaints
2.
Manage customer relationships – must be adept at interacting with personnel
representing credit and billing, shipping, manufacturing and customer service
3.
Gather information – a prime source of customer/market information
- From Customers
- From Competitors
- About Market Forces
4.
Play an important part in the product design process
13-3
Sales Strategies and Customer Relationships
1. Script-based selling
2. Needs satisfaction selling
3. Consultative selling
4. Partnering
13-4
Sales Strategies and Customer Relationships
Script-based selling involves using scripts or memorized sales
pitches from which the salesperson does not deviate

Used when all customers’ needs are similar

Popular in telemarketing and in selling MRO items and
other supplies
13-5
Sales Strategies and Customer Relationships
Needs satisfaction selling is a process of selling that involves
identifying the buyer’s needs and tailoring the sales pitch
(presentation) to fit those needs

A more sophisticated approach which works best when
buyer needs vary and choices must be made from among
various products and/or brands

Identifying buyers’ needs and selling to them
13-6
Sales Strategies and Customer Relationships
Consultative selling is a process of selling that the seller brings
specialized expertise into a complex problem in order to
create a somewhat customized solution

May appear similar to needs satisfaction selling, but in this
case, the buyer has less information about what is needed
and relies on the consultant’s knowledge to custom-tailor a
solution
13-7
Sales Strategies and Customer Relationships
Partnering
 Seller-Customer joint effort for developing product
solutions
 Goes beyond consultative selling because the long-term
nature of partnerships
 Both parties share expertise/resources to create customized
solutions and a commitment to joint planning for mutual
benefit
 There are many sales strategies that can be used when
partnering including cross selling and full-line selling
13-8
Selling across the stages of the partnership
Commitment
Expansion
Exploration
Awareness
• Set correct
expectations
• Ensure proper
initial use
• Follow up
• Make personal
visits
• Handle
complaints
• Achieve
customer
satisfaction
• Generate
reorders
• Upgrade
• Full-line
sell
• Secure
complete
commitment
from both
companies
• Manage
change
Dissolution
• Limited
relationships
• Failure to
monitor
competitors
or industry
• Complacency
13-9
Selling across the stages of the partnership
Exploration – The major goal is building trust. In order to begin a
relationship properly, the salesperson must




Set proper expectation
Monitor order processing and delivery
Ensure proper use of the product
Assist in servicing the customer
13-10
Selling across the stages of the partnership
Expansion – From generating repeat sales to …

Upgrade (upselling) – convincing the buyer to use a high-quality
or newer product; high-tech firms are vitally dependent upon
upgrading

Full-line selling – the entire line of associated products; Many
companies try to get their foot in the door with any sale, hoping to
then blossom into full-line selling once the initial product has proven
its value

Cross selling – sell additional products to customers currently
buying unrelated products; works best when the salesperson can
leverage the relationship with the buyer and trust in the salesperson
and the selling organization already exists
13-11
Selling across the stages of the partnership
Commitment


Preferred supplier status – a supplier is assured a large
percentage of the buyer’s business and first chance at any
new business
A stated or implied pledge to continue the relationship
13-12
Type of customers and choice of sales strategies

Simple, lower-margin items sold to customers whose
needs are uniform can be served by lower caliber
salesperson following a script

As margins, product complexity, and customer
diversity/importance increases, the firm moves to need
satisfaction, consultative, and strategic partner selling

The strategy upgrades require a higher investment in
salesforce quality and training
13-13
Partnership Communication:
From single level to multi-level
Buying Company
Production
Marketing
Purchasing
Department
Finance
Accounting
Shipping
& Receiving
Before Partnering
Purchasing
Agent
Selling Company
Salesperson
After Partnering
Buying Company
Selling Company
Production
Marketing
Purchasing
Finance
Accounting
Shipping
& Receiving
Engineering
Marketing
Sales
Finance
Credit and
Billing
Shipping
& Receiving
Engineering
Marketing
Sales Purchasing
Finance
Credit & Billing
Shipping
& Receiving
13-14
Organizing the Sales Force
The sales function can be organized in many ways, depending on
the sales strategy
Sales Executive
At the top of the structure is the sales executive, who has
responsibility for deciding the size and type of sales force.
- the choice of strategy
- the number and location of salespeople (the workload approach,
based on the expected number of sales calls that a salesperson can make)
- the setting of sales quotas and compensation plans
- sales forecasting
13-15
Organizing the Sales Force
Organization of the sales force




–
–
–
–
Assign each salesperson a geographic territory (geographically)
Assign salespeople to accounts, including key accounts, national
accounts, or global accounts
Organize by product
Create sales teams (matrix team) to meet the needs of customers
Account managers works with product specialists;
Account manager coordinates activities and determines sales
strategies;
Product specialists carry out more specific objectives
Customer-focused teams are one type of team structure that includes
representatives from manufacturing, billing, shipping, and other areas
that serve the customer
13-16
Buying and Selling Teams
Streamline Multilevel Selling
Buying Company
Selling Company
Vice President
Of Purchasing
Vice President
Of Sales
Director of
Purchasing
Account
Manager
Engineer
Product
Specialist
13-17
CFT Structure
Sales Specialists
Manufacturing
Customer
Support
Service
CSS
Rep.
Shipping
Manager
Shipping
Account
Manager
Account
Team
Leader Consultant
F&A Rep.
Customer
Sales
Specialists
Purchasing
Agent
Purchasing
Other
Rep.(s)
Finance and
Accounting
Prod. / Ind.
Mktg. Groups
Other Business
Units
13-18
Outsourcing The Sales Force
Organization of the sales force




–
–
–
–
Assign each salesperson a geographic territory (geographically)
Assign salespeople to accounts, including key accounts, national
accounts, or global accounts
Organize by product
Create sales teams (matrix team) to meet the needs of customers
Account managers works with product specialists;
Account manager coordinates activities and determines sales
strategies;
Product specialists carry out more specific objectives
Customer-focused teams are one type of team structure that includes
representatives from manufacturing, billing, shipping, and other areas
that serve the customer
13-19
Organizing the Sales Force
Organization of the sales force




–
–
–
–
Assign each salesperson a geographic territory (geographically)
Assign salespeople to accounts, including key accounts, national
accounts, or global accounts
Organize by product
Create sales teams (matrix team) to meet the needs of customers
Account managers works with product specialists;
Account manager coordinates activities and determines sales
strategies;
Product specialists carry out more specific objectives
Customer-focused teams are one type of team structure that includes
representatives from manufacturing, billing, shipping, and other areas
that serve the customer
13-20
Organizing the Sales Force
Outsource the selling effort – Some companies choose to use
manufacturers’ reps, distributors, and telemarketing service
firms rather than hiring their own salespeople
Outsourcing selling temporarily – Hiring temporary salespeople
for special sales campaigns
The advantages of outsourcing include
Lower costs
Selling expenses are borne by the distributor or rep
Less upfront investment needed
Greater local knowledge and contacts
13-21
Do you outsource the sales force?
YES
• Establish relationships
• Salary and selling
expenses can
be limited
• Little/no up-front
investment
NO
• Loss of control over
sales presentation
• Products may not be a
selling priority with
representative
TO MAKE IT WORK:
INVEST IN TRAINING AND
MERCHANDISING MATERIALS
13-22
Allocation Grid for Sales Resources
Sales Potential
Low
Relatively fewer
Strong resources should
be allocated here
Market
Position
Assign to
alternative method
Weak of communicating,
such as
telemarketing
High
Maintain sufficient
resources to continue
to reap the sales
potential and strong
position
Direct more sales
resources here
13-23
Directing the Sales Force
•
ESTABLISH QUOTAS – Minimum levels of acceptable performance; Fair and
Understandable
• Activity Quotas (number and type of activities: new business calls, turning
in call reports; collecting customer feedback; collect competitor intelligence)
• Performance Quotas (level of performance: revenue, margin, or unit sales
in a period of time)
•
ESTABLISH COMPENSATION PLAN – Equitable, Stable, Understandable
• Straight Salary
• Straight Commission
• Bonus System
• Combination Plans
Base rewards on results and efforts; provide equal rewards for equal
performance; provide competitive rewards; are easy to understand and
implement
MOTIVATION ACTIVITIES – Keep Sales Force Producing
•
13-24
Evaluating Performance

Sales performance is measured in two ways: in outcomes and
by activities

By combining outcomes and activities, conversion ratios can
be calculated to measure salesperson efficiency

These three figures (outcomes, activities, and conversions)
enable sales executives to compare salesperson performance
13-25
Five Steps in Evaluating Performance
1. Review specific sales objectives
2. Obtain appropriate performance data (outcomes and effort,
observing both performance and activity)
3. Evaluate what was beyond salesperson’s control (the
economy, the weather, etc)
4. Identify problems and opportunities
5. Create a strategy that resolves problems and seizes
opportunities
13-26