Transcript Sales management - Executive Blog | Excellence Through

Sales management
The only business function that
generates revenue.
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sales management
 Planning, direction and control of personal
selling including recruiting, selecting,
training, equipping, assigning, supervising,
compensating and motivating as these
tasks apply to the personal sales force.
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Sales management
 Management of the personal selling task.
 Is there anything like ‘impersonal selling’ or ‘non-
personal’ selling?
 Selling is an exchange transaction. Exchange of
Product or service for money
 Money is the revenue or the earnings of an
enterprise often called ‘turnover’ or ‘top line’
 Sales therefore is the only revenue generating
function in an enterprise.
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Objectives of sales
management
 3 general underlying objectives:
1. SALES VOLUME
2. PROFITS
3. GROWTH
Sales – cost of sales = gross margin.
Gross margin – expenses =net profit.
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Sales management: evolution
 Industrial Revolution – 1760
 Small home industries – Large scale
manufacturing –marketing – sales and
sales support
 Concept of hunters and farmers
 The modern day sales manager is both
an administrator in-charge of personal
selling activity and a member of the
group that makes marketing decisions of
all types.
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The salesman
 …..they make more noise and more
mistakes, create more cheer, correct
more errors, adjust more differences,
spread more gossip, hear more
grievances, pacify more belligerence and
waste more time under pressure, all
without loosing their temper, than any
other class of professionals –including
politicians.
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The salesman
 …they live in hotels, cabs and tents on
trains, buses, eat all kinds of food, drink
all kinds of liquids –good and bad- sleep
before, during and after business, with
no sympathy from the office.
 They draw and spend more money with
less effort, they come at the most
inopportune time, under the slightest
pretext, ask more personal questions.
 Yet they are a power in society…
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The salesman
 With all their faults, they keep the wheels
of commerce turning, and the currents of
human emotions running. More cannot
be said any man. Be careful whom you
call a salesman, lest you flatter him.
-Donald Benenson in Ziglar on Selling
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Sales Management
“QUALITIES THAT LEAD TO EFFECTIVE SALES MANAGEMENT
ARE OFTEN OPPOSITE THE ATTRIBUTES OF A SUCCESSFUL
SALES PERSON”
Sales organization
 With various tasks required to be
performed the enterprise had to create a
structure to ensure that work is done.
(the Sears story)
 Principles of structure: authority,
responsibility, performance, support/coordinate.
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Sales organization
 Concept of organization: Group of
individuals working jointly to achieve a
defined goal and bearing formal and
informal relations with one another. An
organization is oriented towards and a
co-operative endeavor and a structure of
human relationships.
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Purpose of organization
 Eliminate waste of effort
 Minimize friction
 Maximize co-operation
 Permit development of specialists
 Ensure that all activities get done
 Achieve co-ordination/balance
 Define authority
 Fix responsibility
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Types of organization
structures
 Line organization: line managers
perform sales and sales management
activities.
 Line and staff organization: Staff
managers have advisory or support
responsibility. e.g.Market research
manager, Training manager.They are not
directly responsible for achieving sales
targets.
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Organization structures
 Functional organization: focus is on
the principle of specialization. Each
specialist has a functional responsibility
and are permitted to direct and control
the salesperson thru their immediate
superior.
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Organization structure
 Horizontal structure.
 Specialised structure:
Geographical;
Product;
Market or customer;
Combination of specialised structures.
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Line Sales Organization structure
Head –Marketing
Sales Manager
Area Sales
Mgr
Area Sales Mgr
Area Sales
Mgr
Area Sales
Mgr
Sales Force
Sales Force
Sales Force
Sales Force
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Clear authority & Responsibility
Quick response & Decision, Low Cost
Weak on marketing inputs
Sales manager controlled
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Functional Sales Organization
Head -Marketing
Marketing
Services
Sales
Promotion Brand
Market Research
Area Sales
Managers
Sales Force
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Administrative Simplicity
Access to Specialists
Multiple reporting
HOD is Pressures to co-ordinate
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Operations team
Production
QA
Engineering Systems
Research & Design team
Customer Research
Product / Service design
Planning Team
Strategy
Finance
HR
COO
Customer Support team
Service
Training
Information
Customer Satisfaction
teams
Sales & Marketing
Pricing & Promotion
Channels
Logistics
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Sales relation with marketing
activities
 Sales &Advertising: both stimulate
demand. They need to be blended.
Salespersons can improve advertising
effectiveness. Advertising needs to
support sales where and when they
need it most.
 Sales & Marketing information: data is
needed for analysis of sales problems,
for determining sales potential. Raw data
is collected by sales people.
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relationships
 Sales and service: contributes to
strategy success.
 Sales and distribution: minimizes stock
out situation; improves inventory control;
helps sales to focus on demand
generation.
 Sales & Production:
 Sales and R&D
 Sales &Finance
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SALES PLANNING
a managerial function
 EXISTING BUSINESS
LONG RANGE PLAN
3 TO 5 YEAR PROJECTIONS
ANNUAL OPERATING PLAN
REVISED YEAR TO YEAR
SEGMENTWISE PLAN
PAST TREND
GEOGRAPHICAL PLAN
PREVIOUS YEAR SALES
CUSTOMERWISE PLAN
CURRENT YEAR ACHIEVEMENT
PLAN BY VALUE
NEXT YEAR PLANS
PLAN BY VOLUME
ASSUMPTIONS
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PLANNING FOCUS AREAS:
• PROFITABILITY IMPROVEMENT
 A REGION OR TERRITORY CEASES TO
CONTRIBUTE
 DISCONTINUATION OF SALES TO AN ACCOUNT
 DE-EMPHASISING PRODUCTS
 ACCEPTING A PRIVATE BRAND ORDER

VARIANCE BETWEEN BUDGET AND ACTUAL
SALES
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SALES PLANNING
 NEW BUSINESS
 VISION
MISSION
GOALS
 STRATEGY
 *ACTION PLANS
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Key Deliverables of the Sales
function
 Planning
 Organizing
 Training
 Motivating
 Controlling
 Leading
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Sales planning
 Forecasting a key planning tool
PRODUCT LEVEL –
total sales industry sales
company sales
product line sales
product variant sales
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Time period forecast
 Long Range
 Medium range
 Short term (range)
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Planning process
 Sales plan
 Capacity plan
 Production plan
 Cash flow plan
 Procurement plan
Human resource plan
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Sales forecast
 Why forecast?
One of the keys to success in sales is
knowing where customers are located
and being able to predict how much they
will buy.
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Sales forecasting;
Industry estimates
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Objective definition
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Identifying critical factors (assumptions)
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Selecting method of forecasting
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Collecting, analysing, interpreting data.
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Concluding predictions.
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Geographic Area forecast
 Nation
 Region ( REGION OR ZONE )
 Territory ( BRANCH / DISTRICT )
 Customer
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Forecasting Approaches
 Top - down / Break –down approach
An SBU level forecast broken down to
region, district, territory, salesperson and
individual customer sales quotas
 Bottom –up / Build – up approach
Individual customer to branch to zone to
company level forecast
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Methods of sales forecast
 Qualitative methods:
Executive opinion
Delphi method – prediction by a panel
Sales force composite – ‘grass roots’
approach.
Test marketing –controlled or simulated
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Sales forecast methods
 Quantitative methods:
Moving averages
Exponential smoothing
Regression analysis
Econometric analysis
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Selling situations
 Customer’s intention and expectation are
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specific. (insurance, mobile service)
Customer is contacted over phone
Customer is an organizational buyer
Customer seeking service or solution
Customer in a retail store
Cold calling situation
Pharmaceutical selling
Creative selling ( ad.campaign)
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The sales budget
 To the sales department, the budget is a
blue print for making sales. It involves
money invested in distribution facilities,
promotion efforts, and sales personnel. It
is the foundation on which to plan sales
objectives and the means of achieving
them during the coming year.
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Sales budget
 A budget is a quantitative expression of plans.
Most well managed enterprises use a budget which
is a comprehensive and coordinated plan for the
operations and resources of the enterprise.
 It is a formal and intricate process
 Approaches are either incremental or zero based.
 In a volatile economic climate organizations
estimate optimistic, realistic and pessimistic
scenarios.
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Sales budget
Critical factors considered:
1. past trends
2. Sales force estimates
3. Trade prospects
4. Present scenario
5. Customers: existing and potential
6. Government policies
7. Industry environment
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Number of sales people
 Decision on the size of the sales force is
very complicated because structure of
the customers vary in each territory, the
level of competition varies across
territories, the connectivity for travel
varies etc.
 There are 3 generally accepted
approaches: affordability, incremental
and workload methods.
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Sales territories
 Definition : A sales territory consists of
existing and potential customers
assigned to a sales person. The territory
may or may not have geographic
boundaries.
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Reasons for territories
 Increase / improve customer coverage
 Control selling expenses
 Effective evaluation of salesman’s
performance.
 improve customer relations
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Territory design
 Main procedural steps:
1. Selection of a basic geographical control
unit
2. Determination of sales potential present in
each unit
3. Combining the basic units into tentative
territories
4. Adjust for differences in coverage difficulty
and readjust the tentative territories ( build
up / break down method )
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Territory design
 Build up method:
Decide call frequency
Calculate total no of calls in the unit
Estimate workload capacity of salesman
Make tentative territories
Develop final territories
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Territory design
 Break down method:
Estimate company sales potential for
total market.
Forecast sales potential for each control
unit.
Estimate sales expected from each
salesman.
Make tentative territories.
Develop final territories.
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Routing Scheduling and
control
 Reasons / advantages:
 Maintain lines of communication
 Improve territory coverage
 Minimize wasted time
 Closer scrutiny of sales force movement
 Journey plans for improving customer
satisfaction
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Quotas
 Quotas are quantitative goals assigned
to individual sales persons for a
specified period of time.
 One of the most widely used tools in
sales management.
 Should not be confused with sales
potential or sales forecast.
 Quotas may be set equal to ,above or
below the sales forecast.
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Why Quotas ?
 To help management motivate sales
people.
 To direct sales people where to put there
efforts.
 To provide standards of performance
evaluation
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Types of Quotas
 Sales volume Quotas : Rupee volume /
Unit volume
 Profit based Quotas: contribution / gross
margin
 Activity Quotas: calls per day; sales
meetings; product demos; ( efforts =
results.)
 Expense Quotas
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QUOTA SETTING
MECHANISM
 S-specific
 M-measurable
 A-achievable
 R-realistic
 T-time bound
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What is Motivation??
 Drive to initiate an action.
 The intensity of effort in an action
 The persistence of effort over
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Why motivation
 Frequent rejection
 Physical separation from company
support
 Direct influence on quality of sales
presentation
 Indirect influence on performance
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Sales force motivation
 “the desire to make an effort to fulfill a
need is motivation”
 Motivation includes three dimensions:
Direction, Intensity and persistence.
 Motivation may also be Intrinsic or
extrinsic
 Maslow’s hierarchy of needs:
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Maslow’s theory
Self
Actualisation
Esteem needs
Social needs
Safety needs
Physiological needs
Food, clothing, shelter, health
care
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MASLOW’S HIERARCHY OF NEEDS
Intense job challenge, full potential, full
expression, creative expansion.
Achievement, respect, recognition,
responsibility, prestige, independence, attention,
importance, appreciation.
Belonging, acceptance, love, affection,
family
and group acceptance, friendships.
Security, stability, dependency, protection,
need for structure, order, law, tenure,
pension,
insurance.
Hunger, thirst, reproduction, shelter,
clothing,
air, rest.
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Frederick Herzberg theory
 “Two factor theory” of motivation
 Hygiene ,maintenance, or job context
factors.( dis satisfiers )
 Achievement, challenge, advancement,
growth in the job. (satisfiers )
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SELLING
THE WORD SELL IS DERIVED FROM A Norwegian WORD SELJE
WHICH MEANS TO SERVE
TO SERVE YOUR PROSPECTS YOU MUST UNDERSTAND THEIR
NEEDS.
PEOPLE INVARIABLY BUY WHAT THEY WANT, EVEN ABOVE
WHAT THEY NEED
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The sales process
 Process: a sequential series of decisions
and or actions.
BUYING PROCESS
NEED
SEARCH
IDENTIFY
ISOLATE
SELECT
BUY
CONSUME
SELLING PROCESS
PREPARE
FOCUS
DEFINE
PROPOSE/PRESENT
HANDLE OBJECTIONS
CLOSE THE SALE
FOLLOW UP
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The sales process
1.
2.
3.
4.
5.
6.
7.
Prospecting & Qualifying
Pre approach (pre call planning )
Approach
Presentation & Demonstration
Overcoming Objections
Trial close / Closing the sale
Follow –up and Service.
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SELLING PROCESS
the Ziglar method
 Focus on Prospects NEEDS and
WANTS.
 Sell by design, not by chance.
Follow a proven 4 step formula:
NEED ANALYSIS
NEED AWARENESS
NEED SOLUTION
NEED SATISFACTION
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Prospecting
 Process of identifying potential buyers.
 A prospect has a reasonable probability
of buying ,has sufficient need to justify a
profitable sale ,has financial resources to
buy and can be classified as ‘eligible to
buy’
MONEY? AUTHORITY? DESIRE?
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Locating prospects
Lead generation – a three step process.
1. Defining the target market :what it
wants; what it buys; where and when it
buys; what it buys; how it buys;
2. Using communication tools to gather
leads –Advertising, Direct mail,
Telemarketing, Trade shows, buying
data
3. Qualifying the Leads.
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Selling first time to Prospects
(pre sale planning)
 Adequate knowledge of the product to be sold, company
being represented, the market competition ,category or
segment of customers and selling techniques.
 Product knowledge: Evolution-Features-BenefitsUniqueness-Price
 Company knowledge: History-Values-AchievementsManagement-Policies
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Pre sale plan
 Competitors knowledge :structure-share-
strategy-systems.
 Customer knowledge :attitudespreferences- behavioural habits
 Selling techniques :
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Pre approach planning
 Focus on understanding customer needs and
characteristics and preparing a proposal on
how the product or service offered can satisfy
the need.
 Steps involved are:
Determining call objectives.
Development of customer profile.
Determine customer benefits.
Determine the flow and content of the
presentation.
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Understanding buyer’s needs
 Situational questions: questions about
prospect’s current situation. (who will decide? is
it the first time ? Changing source ?
 Problem identification question: Questions to
uncover problems, difficulties or needs (
problems on quality, delivery ?)
 Problem impact questions: questions to make
the buyer realise the impact of the problem and
the need to solve it.( what will be the impact on
costs , on customer satisfaction ?)
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 Solution value questions :questions to
help the buyer asses the value or
usefulness of the solution ( for x benefit
how much would you save ?
 Confirmation questions: (how would
an error free system help?)
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Need awareness
 At this stage you need to THINK
 Prospect and Salesperson should both
be aware of the need. (remove blind
spots)
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Need solution
 Present your product
 Time to stop asking questions and start
providing solutions.
 People don’t buy products, they buy
what the product does for them.
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Questions are the answer
 Thinking vs. feeling questions.
 When you learn how the customer feels
you are more likely to find out what the
person thinks.( the seat belt case)
 Tying emotion to logic.
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The questioning process
 Three basic types of questions enable us
to discover the needs of our potential
customers.
 1st The Open Door Questions.-allows the
prospect the freedom to go where ever
they like. the “who, what where ,when,
how and why” questions
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Questioning …
 The closed door question: “would you
tell me more”; “what do you mean
by…Answers to these give you
information to helping the prospect
and building trust.
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Questioning…
 “yes or no” questions demand a
direct response. “do you agree..”
“would my proposal..” “are we in
agreement..”
 They allow you to check on your
progress on the sales process. “trial
close”
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Presentation methods
 Stimulus response method: also called a
‘canned approach’, a memorised sales
presentation .It assumes that if a right stimuli is
made it will get a favourable response.
 Formula method: the AIDA process.
 Need-satisfaction method: an interactive
sales presentation. The most challenging and
creative method. The FAB way.
Features, Advantages, Benefits.
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The presentation
 Attracting Attention
 Creating Interest
 Building Desire and conviction
 Initiate Action to buy.
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Presentation methods
 Team selling method: a multi person sales
team deals with a multi person buying centre
(or buying committees)
Sales team consists of Account executive,
technical support engineer, logistics expert, IT
or systems executive and Finance executive.
Buying committee consists of materials exec.
manufacturing/operations exec. supply chain
exec. Materials manager and Finance exec.
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Presentation methods
 Consultative selling method: problem-
solution method.
Requirements are:
Knowledge of the industry, clients
company, awareness of key members
needs,
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Objections
 Objections , opposition , resistance to
the presentation typically happens during
the presentation or while asking for the
order.
 Objections should be welcomed.
 Objections indicate that the prospect is
involved and not indifferent.
 Objections reflect the prospect’s view.
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Objections
1.
2.
Psychological ( hidden ) – includes
pre-determined ideas or beliefs,
preference for established brands,
dislike of making decisions , anxiety or
resistance to spend money , suspect
about quality etc.
Logical or practical or real –delivery
schedule, high price , product
availibility,
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Handling objections
 Listen
 Understand
 Negotiate
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Methods of handling
objections
 Ask questions: listen, rephrase,
reconfirm the objection and explain.
 Turn objection into a benefit and trial
close.
 Deny objections tactfully. (arrogance and
sarcasm to be strictly avoided)
 Testimonials, referals
 Compensation for valid objections.
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Negotiation
 Plan – pre determine ‘firm’ and ‘flexible’
factors; define limits.
 Ensure an atmosphere of trust ,
understanding and respect.
 Define purpose and objective.
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Negotiation styles
 Win – loose
 Win – Win
 Loose - Loose
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Closing the sale
 Summarize
 Advantage and disadvantage
comparison
 Opportunity benefit
 Emotional appeal
 Direct closure
A.A.F.T.O=Always Ask For The Order
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