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Outline what you believe to be wrong with the sales efforts at Gardnov Ltd.
1.
The diverse nature of the buying situation means that there are many different types and
functions of selling. In the case of Gardnov Ltd., the sales efforts and practises do not
seem to be in place and functioning effectively.
The problems seem to begin with the advertising of the businesses products and the
distribution of its' catalogues. The present system involves mailing the catalogue out to
garden centres and retail outlets "throughout the UK regardless of whether or not they are
existing customers"(1). This may well cause problems with customers; new customers
should be receiving the catalogue and existing customers should perhaps be receiving a
courtesy phone-call or visit to take any orders. Sending out catalogues to existing
customers is an additional unnecessary expense and reflects badly on the business. The
sales orientated firm focuses all its efforts on not how to produce the product, but how to
ensure that the product is sold in a way that revolves around the customer. This is
achieved by the sales team in Gardnov travelling to customers and promoting Gardnov.
Jobber and Lancaster define the type of selling that the sales team adopt: Order getters
(these are the front-line salespeople), New business salespeople (the selling task is to win
new business) and finally Organisational salespeople (they have the job of maintaining
close links with existing customers). It appears that the task of each salesperson is so
varied that perhaps a system where the team are separated into one of the three ways
would make the sales function more effective. Furthermore, the team are "all male". For
a customer, perhaps an "all male" team may seem slightly imposing and daunting - a
female presence should be experimented with.
The sales employees appear to be lethargic and unmotivated. This can affect the way
they perform considerably in the way that productivity will significantly decline and their
appearance/decorum when in contact with customers will be poor. This is shown by
some employees failing to visit some clients (Priority 'C's). With regard to priority 'B'
clients, it is taking up to 6 weeks for them to be visited and there is a satisfactory visiting
period for priority 'A' clients. This reflects badly on the company primarily as customers
will review their future business with the company. Gardinov must retain as much
business as possible, and the fact that customers are not feeling close to the sales-team
suggests a poor relationship, poor morale and an unwillingness to work by the
employees. To rectify this, they need to stay longer and associate themselves with their
clients.
The fact that sales figures are up five percent on average over the past ten years reflects a
mediocre effort by the team, and when compared with a total market increase of ten
percent reflects poorly. However, this may be due to new entrants into the market - a
'SWOT' analysis detailing "external cohesion" must be performed to identify the
competitors, strengths/weaknesses of Gardnov and the current market situation. The final
way in which sales efforts could be improved is by the selling concepts used. For
instance, Richard Booth's background is with selling double glazing - a hard and
aggressive style, similar to selling time shares. This is certainly not the way to sell
garden products to retailers. Instead, product knowledge is essential in order to identify
the needs of the customer and make a successful sale.
Outline what steps Richard should take to investigate further the problems highlighted by
his initial research, whilst gaining/maintaining the support of the sales force.
2.
Richard Booth must investigate the problems further and at the same time maintain or
improve the relationship with his sales force.
One way in which he could investigate the problems further is by organising appraisals
for each of the staff. This can provide an opportunity to identify his staff's weaknesses
and strengths. As Deming says, "It nourishes short term performance, annihilates longterm planning, builds fear, demolishes teamwork, and nourishes rivalry". Richard Booth
must know his facts though before organising appraisals - he must know the people that
are working for him and know what he wants to achieve by performing an appraisal. One
method is to ask the salesperson to explain 5-10 expectations that they hope to achieve in
the short-term. Richard Booth will then have to ensure that every form of assistance is
given to meet their expectations.
A further way is to monitor the sales team closely and attend visits to clients. This would
provide Mr. Booth the opportunity to find out what the content is of the meetings, how
long they last and what follow-ups his staff make. The disadvantage of this is that his
employees might feel like they are being "constantly watched" and distrust can occur perhaps feeling of inequity too.
Usually senior managers will make one of the five following errors: They evaluate their
sales representatives primarily on the basis of sales volume. Secondly, they rely too much
on the number of sales calls made by each of their sales representatives. They compare
each sales representative's present sales results with past sales for a corresponding period
- for instance, May of the current year against May of last year. Moreover, they expect
their sales representatives to follow explicitly the selling methods that worked for them
when they were selling. Or they might give their sales representatives too much freedom.
Be eradicating these errors and providing solutions i.e. measuring sales in view of how
major the client is, varying the year start to year end, and provide a system of supervising
and locating staff then Richard Booth might be able to investigate further the problems
with the company, whilst maintaining support from his sales force. However, the most
significant way is communication with staff and building up a rapport with them - once
trust has been built then hopefully an approachable manager will enable the team to
become motivated and discuss any problems they have with Richard.
What are the disadvantages of the present salary-only compensation plan?
3.
The salary-only compensation plan is the simplest form of compensation. For example,
an agreement will exist between the company and the sales employees that will pay the
staff a set amount on a periodic basis. "In return, the company will expect the staff to
accomplish a defined task or target"(3).
This method of pay encourages sales people to consider all aspects of the selling function
rather than those which lead to a quick sales return. It can also benefit the company in
the way that it establishes a fixed cost for it. However, there are drawbacks. The most
significant disadvantage is that it does not provide an incentive for the sales staff to
increase sales and improve on targets - it will not act as a motivator for them since they
already have the security of a fixed salary.
It can also act as a demotivator for those staff who perform above average within the
company. As a result, feelings of inequity will set in and productivity will begin to
decline for those 'high target' achievers. Employees might move to similar companies
and apply for jobs that have more financial rewards.
A further disadvantage is that selling costs will "remain constant in the short-term when
sales figures decrease"(2). In this way, this system of payment is not as flexible as other
systems such as commission only or salary plus commission or bonuses.
The fixed salary will also not attract top producers to join the company due to reasons
that I have mentioned before - there is no incentive for extra effort. The current method
of payment for Gardnov will cause the company to have higher direct sales costs, and it
will "require up-front working capital"(3). Finally a fixed-salary plan will also require
closer supervision by management in order to ensure that there is a balanced sales mix
(which there is no incentive for). This closer supervision will take up a lot of the
manager's time, will increase anxiety and invoke feelings of distrust between manager
and employee as well as increasing sales costs.
Produce some initial recommendations on how Richard might improve sales
performance.
4.
Initially, I would recommend that Richard Booth appraise each of his employees.
He could perform them by copying similar organisations reported in the Harvard
Business Review (Grote, 2000). For example "design appraisals around behaviours
collectively agreed between management and employees". This would mean sitting
down with the sales team individually and discussing exactly what each party would like
to get out of the appraisal.
In contrast to the argument that I have just made (that labour and management both gain
through the appraisal process), labour process theorists have seen the appraisal as a
method for "eliciting employee compliance with management objectives" (Newton "
Findlay 1999). This is allegedly achieved as the appraisal process encourages employees
to perceive themselves in terms of management's perspective, "rewarding adherence to
and punishing deviance from apparently rational criteria"(4).
As regards to motivation, (an essential requirement for the job) in a field such as selling
where rejections outnumber successes, motivation can be a serious problem. Vroom's
expectancy theory is based on three concepts: expectancy, (perceived relationship
between effort and performance), instrumentality (perceived relationship between
performance and reward) and finally valence (value placed upon a reward). Thus,
according to this theory a salesperson will believe that by working harder he will achieve
increased sales (high expectancy), or higher sales will signal greater commission (high
instrumentality) and finally higher commission (high valence) - this would result in a
highly motivated sales person. However different sales people will have different
valences, and it is the role of Richard Booth to communicate to his staff what is important
and "in keeping" with the company's objectives and targets.
I would recommend that he change the fixed-salary pay for a salary plus commission pay
scheme. This would eradicate some feelings of frustration and inequity. Adam's inequity
theory points out that inadequacies can occur "when monetary rewards are unfair", or
when there is a lack of recognition, or supervisory behaviour (whether it be too much or
too little supervision). By monitoring the sales team more, Richard would gain an idea of
how they are dealing with their clients.
Tied in with this is the approach and relationship between buyer and seller. A close
relationship is vital, and this is not happening according to Booth at the moment. Client
Relationship Management (CRM) relates to having a good understanding of who the
clients are and identifying what it is they like and want. Key account management is in
place with Gardnov Ltd., but a different approach and perhaps some training should take
place so that the staff recognise the need to serve higher potential customers and provide
special treatment in the areas of marketing, administration and service (taken from "The
Adversarial Model"(2)). According to Mari Sako in 1992, trust is also very important
and this can come in the form of contractual trust, competence trust and goodwill. An
effective CRM 'campaign' should be introduced and should directly contribute to sales
figures.
Perhaps Booth could commence an advertising campaign to promote the business. For
example instead of sending brochures out to existing customers, the money should be
saved and spent on advertising on the radio or in local newspapers.
Furthermore, some incentives for loyal customers would be appreciated by them and
would encourage them to stay loyal to the company (increase retention rate) and would
attract new customers at the same time.
I would recommend that Richard Booth should set new targets after having
consulted/appraised his staff. If the targets are to be effective in motivating his team then
they must be regarded as fair and attainable and at the same time offer a challenge.
Each member, I would recommend, should attend training sessions. Sales training
involves the development of a programme which develops selling skills. For example,
"enhanced product knowledge"(2) of what Gardnov Ltd. Sells, "self organisation"(2)
(which entails keeping customer records up to date and organisation of routes), "sales
skills"(2) (use of visual aids, ability to close the sale and identification of customer needs)
Finally, benchmarking would be a valuable approach to adopt within the range of
knowledge management practise as it brings together communities of practice and creates
conditions needed for effective learning with the sales team. Learning about good
practices in other organisations could significantly help Gardnov Ltd. The benchmarking
process involves learning at both the individual and organisational level. For instance as
Per V. Freytag and Svend Hollensen suggest, "The employees have to understand and be
willing and able to change their way of thinking, and the whole organisation has to
support the actions taken"(5).
Therefore in conclusion, I have mentioned many approaches that Richard Booth could
adopt to improve the business. Other more complex and long-term recommendations
could be to expand abroad. This however would take a great deal of initial research,
investment and finally, risk.
Keywords:
outline what believe wrong with sales efforts gardnov diverse nature buying situation
means that there many different types functions selling case gardnov sales efforts
practises seem place functioning effectively problems seem begin with advertising
businesses products distribution catalogues present system involves mailing catalogue
garden centres retail outlets throughout regardless whether they existing customers this
well cause problems with customers customers should receiving catalogue existing
should perhaps receiving courtesy phone call visit take orders sending catalogues existing
additional unnecessary expense reflects badly business sales orientated firm focuses
efforts produce product ensure that product sold that revolves around customer this
achieved team gardnov travelling promoting jobber lancaster define type selling team
adopt order getters these front line salespeople business salespeople selling task business
finally organisational salespeople they have maintaining close links appears task each
salesperson varied perhaps system where team separated into three ways would make
function more effective furthermore male customer perhaps male seem slightly imposing
daunting female presence should experimented employees appear lethargic unmotivated
this affect they perform considerably productivity will significantly decline their
appearance decorum when contact will poor shown some employees failing visit some
clients priority regard priority clients taking weeks them visited there satisfactory visiting
period priority clients reflects badly company primarily will review their future company
gardinov must retain much possible fact feeling close suggests poor relationship poor
morale unwillingness work employees rectify need stay longer associate themselves their
fact figures five percent average over past years reflects mediocre effort when compared
total market increase percent poorly however entrants into market swot analysis detailing
external cohesion must performed identify competitors strengths weaknesses current
market situation final which could improved concepts used instance richard booth
background double glazing hard aggressive style similar time shares certainly sell garden
products retailers instead product knowledge essential order identify needs customer
make successful sale outline what steps richard take investigate further problems
highlighted initial research whilst gaining maintaining support force richard booth must
investigate further same time maintain improve relationship force which could investigate
further organising appraisals each staff provide opportunity identify staff weaknesses
strengths deming says nourishes short term performance annihilates long term planning
builds fear demolishes teamwork nourishes rivalry booth know facts though before
organising appraisals know people working know what wants achieve performing
appraisal method salesperson explain expectations hope achieve short term then have
ensure every form assistance given meet expectations monitor closely attend visits would
provide opportunity find content meetings long last follow staff make disadvantage might
feel like being constantly watched distrust occur feeling inequity usually senior managers
five following errors evaluate representatives primarily basis volume secondly rely much
number calls made each representatives compare representative present results past
corresponding period instance current year against last year moreover expect
representatives follow explicitly methods worked them when were might give much
freedom eradicating these errors providing solutions measuring view major client varying
year start provide system supervising locating then might able company whilst
maintaining support from force however most significant communication building
rapport them once trust been built then hopefully approachable manager enable become
motivated discuss have disadvantages present salary only compensation plan salary only
compensation plan simplest form compensation example agreement exist between
amount periodic basis return expect accomplish defined task target method encourages
people consider aspects function rather than those which lead quick return also benefit
establishes fixed cost however there drawbacks most significant disadvantage does
incentive increase improve targets motivator since already security fixed salary also
demotivator those perform above average within result feelings inequity productivity
begin decline those high target achievers move similar companies apply jobs more
financial rewards disadvantage costs remain constant short figures decrease payment
flexible other systems such commission only plus commission bonuses fixed also attract
producers join reasons mentioned before incentive extra effort current method payment
cause higher direct costs require front working capital finally plan require closer
supervision management order ensure balanced incentive closer supervision take
manager time increase anxiety invoke feelings distrust between manager employee well
increasing costs produce some initial recommendations improve performance initially
would recommend appraise could perform copying similar organisations reported harvard
review grote example design appraisals around behaviours collectively agreed between
management mean sitting down individually discussing exactly party like appraisal
contrast argument just made labour management both gain through appraisal process
labour process theorists seen eliciting employee compliance objectives newton findlay
allegedly achieved process encourages perceive themselves terms perspective rewarding
adherence punishing deviance from apparently rational criteria regards motivation
essential requirement field such where rejections outnumber successes motivation serious
problem vroom expectancy theory based three concepts expectancy perceived
relationship effort performance instrumentality perceived reward finally valence value
placed upon reward thus according theory salesperson believe working harder achieve
increased high expectancy higher signal greater commission high instrumentality higher
valence result highly motivated person different people different valences role
communicate important keeping objectives targets recommend change plus scheme
eradicate feelings frustration inequity adam theory points inadequacies occur monetary
rewards unfair lack recognition supervisory behaviour whether little supervision
monitoring more gain idea dealing tied approach buyer seller close vital happening
according moment client relates having good understanding identifying like want account
place approach training place recognise need serve potential special treatment areas
marketing administration service taken from adversarial model according mari sako trust
very important come form contractual trust competence goodwill effective campaign
introduced directly contribute figures commence advertising campaign promote example
instead sending brochures money saved spent advertising radio local newspapers
furthermore incentives loyal appreciated encourage stay loyal retention rate attract same
recommend targets after having consulted appraised effective motivating regarded fair
attainable same offer challenge member attend training sessions training involves
development programme develops skills enhanced knowledge sells self organisation
entails keeping records date organisation routes skills visual aids ability sale
identification needs benchmarking valuable approach adopt within range knowledge
practise brings together communities practice creates conditions needed learning learning
about good practices other organisations significantly help benchmarking involves
learning both individual organisational level instance freytag svend hollensen suggest
understand willing able change thinking whole organisation support actions taken
therefore conclusion mentioned many approaches adopt other complex long
recommendations expand abroad great deal initial research investment risk
Keywords General:
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