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INTRODUCTION SALES MANAGEMENT LECTURE 1 Introduction to Sales Management • Sales Management – is the planning, organizing, leading and controlling of an organization’s sales force in order to create exchange to satisfy individual and organizational objectives. • Communication tools available to any firm are typically classified as personal selling, advertising, sales promotion and publicity. Sales Management Process • Describing the personal selling function • Defining the strategic role of the sales function • Developing the Salesforce • Directing the salesforce • Determining performance the salesforce effectiveness and Personal Selling in the context of marketing mix • Basically the nature of personal selling is derived from the marketing mix. • We cannot do selling without a product, price, promotion and place. • These ingredients are a variety called 4ps especially when they relate to a tangible product. Evolution of Marketing and the Marketing Concepts • Traditionally, the roots of modern marketing have been traced to the 1950s, when the marketing concept was first articulated. • In the 1950s, leading firms presumably embraced the customeroriented marketing concept. • However, recent historical analysis provides strong evidence that marketing activities and customers orientations were commonplace in firms much earlier than the 1950s in the United States, Germany, and England. Evolution of Marketing and the Marketing Concepts (Cont.) • The Production Concept: The production concept holds that consumers will favor products that are available and highly affordable. This concept is one of the oldest orientations that guide sellers. • The product concept: The product concept holds that consumers will favor products that offer the most in quality, performance, and innovative features. Evolution of Marketing and the Marketing Concepts (Cont.) • The Selling Concept: holds that consumers will not buy enough of the firm’s products unless it undertakes a large-scale selling and promotion effort. • The Marketing Concept: holds that achieving organizational goals depends on knowing the needs and wants of target market and delivering the desired satisfaction better than competitors do. • Evolution of Marketing and the Marketing Concepts (Cont.) • Holistic Marketing Concept: is based on the development, design, and implementation of marketing programs, processes, and activities that recognizes their breadth and interdependencies. • Relationship marketing • Integrated marketing • Internal marketing • Performance marketing Evolution of Marketing and the Marketing Concepts (Cont.) • The Societal Marketing Concept: The societal marketing concept questions whether the pure marketing concept overlooks possible conflicts between consumer’s consumer’s short-run long-run wants and welfare. LECTURE 2 THE NATURE OF SALES MANAGEMENT • What is the role of sales manager? • Owing to the fact that the sales force constitutes the interface between the organization and its markets, the management of salespeople goes beyond equipping them with the basic skills in salesmanship. • It includes addressing personal issues such as dress code, interpersonal skills, comportment, etc The Sales Person’s Job • Van Selling: - Deliverer • Retail Selling: - order taking • The staple commodity selling • Missionary / Ambassadorial selling • Technical Selling • Specialty selling of tangible products • Specialty selling of Intangible products Pre-requisite for Sales People Success • The will to succeed in the selling career. • The sales person must have the will to succeed no matter the stiff competition that may exist in the business environment. • Human understanding • Interpersonal communication skills • Salespeople must have high Ego Strength • Habitual “wooer” • Effective use of time Some Sales Techniques Though it may be denied, sales people fall into recognizable styles which project certain characteristics. Some of these categories are as follows: • High pressure sales techniques • Master sales techniques • Low pressure sales technique • Joiner Sales Techniques • The expense accounts sales technique • Roast – beefing technique • Sales Trap Technique etc. LECTURE 3 PERSONAL SELLING: APPROACHES AND PROCESS There are five(5) basic approaches to personal selling; • Stimulus response selling • Mental States • Need Satisfaction • Problem Solving • Consultative Selling Personal Selling Approaches Stimulus – Response Selling • This is the simplest, and is based on that fact that various stimuli can elicit predictable responses. Salespeople furnish the stimuli from a collection of words and actions designed to produce a desired response. • For example, the salesperson design a series of questions just to condition the prospective buyer to say ‘yes’ to the entire sales proposition. • This is often used by telemarketing personnel, who rely on comprehensive sales scripts read or delivered from memory. • Also used by inexperienced sales people Personal Selling CONTD • Mental State Selling • This assumes that the buying process for most buyers is essentially identical and that buyers can be led through certain mental states, or steps in the buying process. • These steps are typically referred to as AIDA (attention, interest, desire, and action). Appropriate sales messages provide a transition from one mental state to the next. It relies on highly structured sales presentation and the salesperson does most of the talking. This forces the salesperson to plan presentation prior to calling their customer. • One problem is that it is difficult to determine which state the prospect is in. • Need Satisfaction Selling • This is based on the notion that the customer is buying to satisfy a particular need or set of needs. • Salesperson’s task is to identify the need to be met, then to help the buyer meet the need. • Focus is on the customer rather than the salesperson • It relies on questionnaire that would bring out customer needs. Customers appreciate this selling method and are often willing to spend considerable time in preliminary meetings to define needs prior to a sales presentation or written proposal. • Problem Solving Selling • This is an extension of need satisfaction selling and goes beyond identifying needs to developing alternative solutions for satisfying these needs. Sometimes even competitors’ offerings are included as alternatives in the purchase decision. Insurance salespeople, for example, report this to be so in their field. The problem-solving approach appears to be the most successful in technical industrial sales situations, in which the parties involved are usually oriented towards scientific reasoning and processes and thus find this approach to sales amenable • Consultative selling • This is the process of helping customers reach their strategic goals by using the products, services and expertise of the organization. • Salespeople confirm their customers’ strategic goals, and then work collaboratively with customers to achieve those goals. • This was just a recent approach that was added and has gained popularity. THE PERSONAL SELLING PROCESS This may be defined as the process of assisting and persuading a prospect to buy a good or service or to act upon an idea through person to person communication. There are some steps in the personal selling process which are as follows; • Prospecting and qualifying • Pre-approach/Precall Planning • Approach • Presentation and Demonstration • Objections • Handling Objections • Closing the sale • Follow-up Personal Selling Process • Prospecting and qualifying: • This involves searching for potential for the product in question. The contemporary salesperson locates a pool of potential customers and then screens them to determine which ones are qualified prospects. • After potential prospects are located, they must be evaluated in terms of screening criteria to determine whether they merit further sales attention. Some commonly used criteria are; compatibility, accessibility, eligibility, authority, and profitability Personal Selling Process Contd Preapproach/Precall planning • The salesperson gathers information about prospects that would be used to formulate the sales presentation. Salesperson may determine buyer needs, buyer motives, and details of the buyers situation that are relevant to the upcoming sales presentation. Self confidence is increased by the acquisition of knowledge, and the salesperson’s credibility with the prospect is enhanced. Contd Approach • This involves making the actual contact with the prospect and it is in two phases. • The first phase is securing an appointment for the sales interview, and the second phase covers the first few minutes of the sales call. Each step is very critical. • Bad impression on the customer can be difficult or impossible to overcome. • Presentation and Demonstration • This stage includes the actual presentation of the product to prospect. With any major purchases, prospects perceive a considerable amount of risk. To be able to reduce that perception of risks in prospects, the salesperson must appear a credible source of information. Personal behaviors that build credibility are; dressing appropriately, showing common courtesy for all personnel. The salesperson must be a good listener and this is essential for building credibility. • Objections • Frequently, prospects before buying a product are likely to raise some objections in order to minimize post- purchase dissonance. Objections may be classified as • Psychological resistance ; due to sentimental attachment to money, dislike for decision making, reluctant to give out something • Logical resistance; relates to delivery schedules, price disagreement, product characteristics, etc • Handling Objections • To handle objections effectively, the sales person must maintain a positive attitude towards the prospects. That is the salesperson must be patient and persistent. The salesperson can ask for clarification of objection if necessary, question the buyer in a manner that he or she answers his or her own objection, or turn the objection into a reason to buy. • • Closing the sale • There are several techniques for closing the sale. – The sales person may ask for the order – The sales person may offer to write-up the order, e.g. LPO or a pro-forma invoice – A salesperson may ask which one the prospective buyer wants or prefer. – The salesperson may offer specific inducement, e.g. discounts, extra quantity, and special price. • It must be noted that immediately after closing the sale, the sales person must complete necessary details agreed upon, delivery times and confirmed terms of payment or terms of purchase. Follow-up • This ensures customer satisfaction and repeat order. It also helps in dissipating post purchase dissonance. Follow-up sales may be necessary for other service such as proper installation of the products, servicing, regular servicing, detection of problems and general advice on the use of the product. • LECTURE 4 ORGANIZATION OF THE SALES FORCE • Sales structure provides a framework for sales organization operations by indicating what specific activities are performed by whom in the sales organization. The sales organization structure is the vehicle through which strategic plans are translated into selling operations in the marketplace. The important role of sales organization structure for a firm has been described as follows: • The role of organization in sales has been compared to that of the skeleton in the human body; it provides a framework within which normal functions must take place. There is however, a degree of uniformity in the human skeleton that does not characterize the sales organization. Each firm has its own objectives and problems, and the structure of the sales organization reflects its diversity. ORGANIZATION OF THE SALES FORCE Organization of the sales force refers to all activities involved in organizing a given sales department. To ensure effective implementation of strategies in order to achieve set objectives, key activities involved are: • Division of the work load into tasks – specialization • Grouping identified similar tasks into positions • Assigning authority to position • Synchronizing responsibility with volume authority, that is, responsibility must go commensurate with volume of authority. • Establishing channels of communications • Establishing relationship • Establishing chain of command • Staff the department. Principles of Organization • Organize activities and not people • Responsibility and authority should be properly related • Activities must be well balanced and coordinated • Span of executive control and responsibility should be reasonable. • The organization should be stable and flexible. Organizational Process The organizational process would basically involve the following steps: • Setting of objectives for the sales department • Determine sales department activities • Group related activities locally • Develop a structural arrangement of all activities • Staff the structure • Test the soundness of the structure in the light of the above mentioned principles. Types of Sales Organizational Structure • Line structure • Line and Staff structure • Line and functional • Regional • Divisional Sales Structures Line structure • This is the simplest structure any given sales department can have. Here, the head of department does all the planning and performs most of the operations. The line structure has certain key characteristics and is hierarchical in nature. These include; • Authority flows fr om top to bottom • Orders are relayed from the top sales manager through each successive level to the rank and file. • There are no specialists • There is centralization of authority • The line and staff structure • Relevant when the firm has expanded marketing operations in terms of scope and complexity. In this regard sales executives are assisted by staff assistants who provide specialist services. In this structure the specialist only have advisory relationships with sales managers and sales representatives. However, they may have line authority over people in their specific department. Thus there are two parallel lines of authority; - two bosses. • Functional Sales Organization • This type of specialization is functional specialization. Most selling situations require a number of selling activities, there may be efficiencies in having sales people specialize in performing certain of these required activities. Many firms are using a telemarketing salesforce to generate leads, qualify prospects, monitor shipments, and so forth, while the outside salesforce concentrates on sales-generating. These firms are specializing by function. • Geographic Sales Organization • Most sales forces use some type of geographic specialization. This is the least specialized and most generalized type of sales force. Sales people are typically assigned a geographic area and are responsible for all selling activities to all accounts within the assigned area. There is no attempt to specialize by product, market or function • All geographic areas are served by only one sales person • Product sales organization • Product specialization has been popular in recent years, but it seems to be declining in importance at least in certain industries. Salesforce specializing by product assigned sales people selling responsibility for specific product or product lines. The objective is for sales people to become expert in the assigned product categories • Thus, the structure involves the division of firm’s product lines into groups with sales executives responsible for each group. It’s therefore useful when the firm’s product lines are diversified or when the product has varied end uses. The sales executive responsible for a given product group is therefore an expert with expert knowledge of that product division. Staff executive in this type of organization are not specialized by product lines and therefore they are of little help to product managers in terms of provision of product knowledge. Market Sales Organization • An incredibly important type of specialization is market specialization. Sales people are assigned specific types of customers and are required to satisfy all needs of these customers. The basic objective of market specialization is to ensure that salespeople understand how customers use and purchase their products. Salespeople should then be able to direct their efforts to satisfy customer needs better. Salesforce deployment • Salesforce Deployment • The important sales management decisions involved in allocating selling effort, determining salesforce size, and designing territories are often referred to as sales force deployment. • These decisions are closely related to the sales organization structure decisions. Changes in structure often require adjustments in all three areas of salesforce deployment - selling effort allocation, salesforce size determination and territory design. • Salesforce deployment decisions can be viewed providing answers to three interrelated questions. • 1. How much selling effort is needed to cover accounts and prospects adequately so that sales and profit objectives will be achieved? • 2. How many salespeople are required to provide the desired amount of selling effort? • 3. How should territories be designed to ensure proper coverage of accounts and to provide each salesperson with a reasonable opportunity to success? • Decisions in one salesforce deployment area affects decisions in other areas. For example, the decision on allocation of selling effort provides input for determining salesforce size, which provides input for territory design. Interrelated of salesforce dev’t decision 1 Interrelationship of Salesforce Development Decision 2,000 accounts multiplied by 25 sales Allocations of Selling calls/accounts = Efforts 5,000 sales calls required to cover accounts 50,000 sales calls required Salesforce Size divided by 1,250 sales/salesperson = 40 salespeople needed 40 territories needed to provide each salesperson Territory Design with opportunity for success and to ensure proper coverage of accounts. LECTURE 5 SALES TERITORIES A sale territory is a number of present and potential customers located within a geographical area and assigned to a sales person, a branch, a dealer or a distributor. • It ensures proper coverage of the potential market. • It increases the sale person’s interest and effectiveness. • It also increases the sales person’s ability to route, plan calls, and identify problems which needs to be addressed. Justification for establishing sales territories. • i. It ensures proper coverage of the potential market. • ii. It increases the sale person’s interest and effectiveness. This is because with effective and efficient coverage and a well-defined job, the salesperson takes either the credit or the debit so that when there is a credit it serves as a morale booster. Additionally there is a better definition of the salesperson’s job. The salesperson’s interests is also increased on the job • iii. It also increases the sales person’s ability to route, plan calls, and identify problems which needs to be addressed. iv. It serves as a basis for control and evaluation of the salesperson’s activities. Since the territory is a defined and assigned territory given, management is able to follow activities within that territory and based on the performance of the territory the sales person is evaluated. v. Sales territories facilitate the performance of other sales and management function. For example ; • It enhances research and development collection and analyses of sales and cost data. • Sales territories help reduce selling cost. This benefit derives from the fact that territorial definition eliminates overlapping of territories and waste of expenditure. This is derived from the fact that there is better routing which reduces travelling time and expenditure. vi. It improves customer relations. This is because the salesperson assigned to a given territory is able to apply him or herself to relationship marketing skills, thereby creating better acquaintances, which is; through knowledge of customer habits, preferences and motivations – buying patterns. Designing Territories • The size of a salesforce determines the total amount of selling effort that a firm has available to generate sales from accounts and prospects. The effective use of this selling effort often requires that sales territories be developed and each salesperson be assigned to a specific salesperson. The overall objective is to ensure that all accounts are assigned salesperson responsibility and that each salesperson can adequately cover the assigned accounts. Although territories are often defined by geographic area (e.g., the Oklahoma territory, the Tennessee territory, the Adenta territory), the key components of a territory are the accounts within the specified geographic area The territory can be viewed as the work unit for a salesperson. The salesperson is largely responsible for the selling activities performed and the performance achieved in a territory. Salesperson compensation and success are normally a direct function of territory performance; thus, the design of territories is extremely important to the individual salespeople of a firm as well as to management. 5 Territory Design Example Trading Areaa c Effort (%) 1 Andy 2 3 4 5 Total 6 Sally 7 8 9 10 11 Total a b Present Effort (%)b 10 60 15 5 10 100 18 7 5 35 5 30 100 Recommended 4 20 7 2 3 36 81 21 11 35 11 77 236 Each territory is made up of several trading areas. The percentage of salesperson time spent in the trading area (100% = 1 salesperson The current territory design does not provide proper selling coverage of the trading areas. The trading areas in Andy's territory should require only 36 percent of his time, yet he is spending all his time there. Clearly, the firm is wasting expensive selling effort in Andy's territory. The situation in Sally's territory is just the opposite. Proper coverage of Sally's trading areas should require more than two salespeople, yet Sally has sole responsibility for these trading areas. In this situation the firm is losing sales opportunities because of a lack of selling attention. Sales performance in Sally's territory is much lower than it might be if more selling attention were given to her trading areas. Profit performance is low in Andy's territory because too much selling effort is being expended in his trading areas. The firm is not achieving the level of sales and profits that might be achieved in the territories were design to provide more productive market coverage. Procedure for Establishing Territories: (Reviewing Territories) Sales territorial planning must be proceeded by a comprehensive research to ensure that; • Districts are equal in sales potential • They are equal in work load Steps involved include; • Selection of the base or control unit • Analyze sales people workload • Determine basic territories considering the sales potential and core patterns • Assignment of sales people to territories are based on some factors(farmers, or hunters) • To establish a route plan for sales people Procedure in Designing Territories The procedure is illustrated manually by using Andy's and Sally's territories as an example application. The basic problem is to organize the 11 trading areas into three territories that provide proper market coverage of account in each territory and equal performance opportunities for each salesperson. Three territories are developed because the decision model results presented indicate that two salespeople cannot adequately cover these trading areas. FIGURE 5.17 Territory Design Procedure Select Planning and Control Unit Analyze Form Assess Planning Initial Territory and Control Territories Workload Unit Opportunit y Designing territories requires a multi-stage approach. Although most territory design approaches follow the stages presented in this figure, the method used at each stage differ considerably, depending on the analytical tools used. Finalize Territor y Design EXHIBIT 5.6 Territory Design Data Trading Area Market Potentials Sales Calls 1 2 3 4 5 6 7 8 9 10 11 $ 250,000 $ 700,000 $ 350,000 $ 150,000 $ 200,000 $ 2,000,000 $ 750,000 $ 500,000 $ 1,000,000 $ 500,000 $ 1,750,000 Number of Sales of 25 100 35 15 20 175 65 50 100 50 175 Select Planning and Control UnitThe first step in territory design is to select the planning and control unit that will be used in the analysis-that is, some entity that is smaller than a territory. The total market area served by a firm is divided into these planning and control units, then they are analyzed and grouped together to form territories. Analyze Opportunity of Planning and Control Unit First, determine the amount of opportunity available from each planning and control unit. Specific methods for performing these calculations will be converted. However, the most often used measure of opportunity market potential. The market potentials for the11 trading areas in our example have been provided. Everything else being equal, the higher the market potential, the more opportunity is available. Form Initial Territories Once planning and control units have been selected and opportunity evaluated, initial territories can be designed. The objective is to group the planning and control units into territories that are as equal as possible in opportunity. This step may take several iterations as there are probably a number of feasible territory designs. It is also unlikely that any design will achieve complete equality of opportunity. The best approach is to design several different territory arrangements and evaluate each alternative. Each alternative must be feasible in that planning and control units grouped together are contiguous. Assess Territory Workloads The preceding step produces territories of nearly equal opportunity. It may, however, take more to realize this opportunity in some territories than in others. Therefore, the workload of each territory should be evaluated by (1) the number of sales calls required to cover the accounts in the territory, (2) the amount of travel time in the territory, (3) the total number of accounts, and (4) any other factors that measure the amount of work required by a salesperson assigned to territory. Finalize Territory Design The final step is to adjust the initial territories to achieve equal workloads for each salesperson. The objective is to achieve the best possible balance between equal opportunity and equal workload for each territory. Typically, both of these objectives cannot be completely achieved, so management must decide on the best trade-offs for its situation. Territory Design Data Alternative 1 Territory 1 Trading Area Alternative 2 Market Potentials Trading Area Market Potentials 1 2 3 4 5 $ 250 $ 700 $ 350 $ 150 $ 200 1650 1 2 3 4 5 250 700 200 500 1000 2650 2 6 7 8 $ 2,000 $ 750 $ 500 3250 6 7 8 2000 750 350 2750 3 9 10 11 $ 1,000 $ 500 $ 1,750 9 10 11 150 500 1750 3250 2750 Workload Evaluations Territory Trading Area Sales Calls 1 2 5 8 9 25 100 20 50 100 295 2 6 7 175 65 240 3 3 4 10 11 35 15 50 175 275 1 EXHIBIT 5.9 Final Final Territory Design Territory 1 Trading Area 1 5 7 8 9 Market Potentials 250 200 750 500 1000 2700 Sales Calls 25 20 65 50 100 260 2 2 6 700 2000 2700 100 175 275 3 3 4 10 11 350 150 500 1750 35 15 50 175 2750 275 Routing of sales people Routing is a managerial activity which establishes a formal pattern for a sales person to follow as he or she goes through a given territory. The pattern is usually marked or listed. Procedure for establishing Routing Plan. a. List present and potential customers. b. Locate these customers on a map of the territory. c. Determine how many times you will visit your heavy users’ or high users / high volume / low volume. This implies the number of calls/visit per day or week in addition, the method of transportation should also be determined. d. Draw an itinerary on a map to minimize travel time and back tracking. e. Establish several route plans because sales frequencies usually differ. For example plan A would include all customers and plan B only the profitable firms of the customers. f. The plan should be tentative until timed out and proved accurate. g. Establish control mechanisms such as call reports to ensure efficiency and accountability e.g. call report, visit, and delivery. • Adjust/revise territories if problem are identified or market condition change or there is a change in the caliber of sales people. NB: It must be noted that for effective adjustment of sales territories, there is the need to conduct territorial sales and cost studies on a continuing basis. LECTURE 6 SALES FORECASTING AND BUDGETING • This analysis involves the study and assessment of the various environments that affect the business. • It requires determining the market potential for the goods and service that the firm currently produces or considering producing. Clarification of terms • There is a need to clarify some terms in order to understand market opportunities analysis. • Market potential • Sales potential • Sales forecast • Sales quotas Market potentials Market potential is an estimate of the possible sales of a commodity, a group of commodities or a service for an entire industry in a market during a stated period under ideal conditions. The components of this definition are; (a) Defined for a particular market (b) At a specified time period (c) Refers to specific customer group (d) Specific geographical area. Sales potential Sales Potential refers to the portion of the market potentials that a particular firm can reasonably expect to achieve .Whereas market potential equals maximum possible sales for all sellers of the good or services under ideal conditions, sales potential reflects the maximum possible sales for each individual firm. For example the sales potential for Nokia to the cellular phone industry in the Accra Metropolitan area in 2006 would be 5000 unite or ¢100.000 Sales Forecast The sales forecast is the estimate of the cedi or unit sales for a specified future period under sales marketing plan or programme. The forecast may be for specified item merchandised, or for an entire line. It may be for a market as a whole or for a portion of it. Note that not only sales forecast include specification of commodities; customer groups, geographical location and time periods, but also includes a specific market plan as an essential element. If the proposed plan is changed, predicted sales are expected to change. Furthermore forecasting sales are typically less than the company sales potential. Potential 350 Actual Sales 250 Industry sales (¢ million) 200 150 100 Firms X’ Sales sales forecast 40 Firms X’ Sales 30 20 10 1 2 3 4 5 6 7 8 9 10 11 12 Time periods Note that one can speak of the firm’s forecast or an industry forecast. In fact the latter is often developed before the former is generated. Just as the company forecast presumes a specific marketing plan, industry forecast presumes a specific level of marketing effort. Like all the firms that serve the industry, as the firm’s marketing plan becomes more effective, realized sales and forecasting sales should come closer to sales potential (industry potential). Sales Quota This is a goal or objective that is assigned to marketing units. Sales quotas are typically one of the key elements to evaluate the personal selling effort. They apply to specific period and can be specialized in great details. For instance sales of a particular item to a specific customer by sales man Badu Alhasan in December. Assess economic environment Estimate market/sales potential Develop sales Forecast Redesign marketing Program Compare forecast With objectives No In agreement Yes Estab Methods for sales forecasting Basically they are 2 broad types as shown below; 1. Subjective methods • • • • Delphi techniques Sales fore composite Jury of executive opinion User’s expectation 2. Objective method • This method gets its name from the fact that initial input is the opinion of each member of the field sales staff. BUDGETING Factors that influence revenue • Sales budget is dependent on sales forecast. • Your marketing plan – your needs. • Your projected profit • Top management perception of the importance of sales force in the attainment of corporate goals. BUDGETING (Cont.) Cost Areas • Transportation • Salaries • Vehicle running cost • Commissions and bonuses • Entertainment cost • Product samples • Sales administration. BUDGETING (Cont.) Controls • Involve the spending person to agree on the expenditure. • Monitoring must be done on quarterly basis. • Budget must be subject to review and must be flexible BUDGETING (Cont.) How do we determine the sales budget? • The most popular or common ones are as follows; • Percentage of sales example 10% - 15% of sales • Executive judgment – Top management • Estimation of running cost of each sales unit (force) The control of the budget All these must be from bottom up to the top, approved and brought down again. • This must be controlled effectively to achieve sales revenue • Expenditure must be monitored against the revenue and budget. • There is a need to break down budget into smaller components; example, fuel samples, entertainment. • In addition, there is a need to input and understand the process from the sales force. • Sales force performance must be monitored LECTURE 7 STAFFING THE SALES FORCE • Hiring the right caliber of recruit is very critical to the success of the firm and it is important that actions are taken to enhance the chances of attracting the right salespeople for the job. Importance of Recruitment and Selection Recruitment and Selection is important where there is; • inadequate sales coverage and lack of customer follow-up • increased training cost to overcome deficiencies • higher turn over rates • more supervisory problems • Suboptimal total salesforce performance Recruitment and Selection Process There are basically three (3) steps in this process; • Planning activities • Recruitment • Selection Source of qualified personnel A sales organization has several sources of recruit which could be considered, some of which are as follows” • • • • • • From within the company Other Companies Educational Institution Voluntary applicants Employment agencies Part – time workers Factors influencing the choice • Nature of the product • The nature of the market • Policy on promoting from within • Availability of recruiting sources Processing of applicants Major selection tools include • personal interviews, • applications blanks, • Test / Mental & Intelligence Tests • references, and • physical examinations LECTURE 8 SALES TRAINING • Organizations basically look out for salespeople who can help their businesses grow. • To achieve this goal, salespeople must undergo training which normally leads to a higher level of performance Role of Sales Training in Sales force Socialization • Salesforce Socialization refers to the process by which salespeople acquire the knowledge, skills, and values essential to perform their jobs. • Newly hired people go through orientation where they familiarize themselves with company’s policies, history, facilities or procedures. Managing the Sales Training Process The management of the sales training process involves six (6) steps. They are; • Assess training needs • Set training objectives • Evaluate training alternatives • Design the sales training program • Perform sales training • Conduct follow-up and evaluation LECTURE 9 SALES MANAGEMENT LEADERSHIP AND SUPERVISION • This deals with leadership and supervisory roles of sales managers, and to be a successful leader, one needs to work efficiently with salespeople by empowering them. Contemporary Views of Sales Leadership Sales researchers have advanced three especially relevant views of sales leadership: • The Leader-Member Exchange (LMX) model, • Transformational Leadership, and • Behavioral Self-Management. A Leadership Model for Sales Management In all three models, the key thought in the leadership model is; build a strong, trust-based relationship with individual salespeople. Power and Leadership Sales managers must use their leadership skills in dealing with other personnel in the firm as well as outside parties. The power held by an individual in an interpersonal relationship can be one or more of the following five types as seen below; • Expert power • Referent power • Legitimate power • Reward power • Coercive power Situational Factors What makes an effective leader? • Trait approach • Behavioral approach • Contingency approach Leadership Skills • The exact personality traits or leadership behaviors that make an effective sales management leader has not been identified. • A particular skill is no more important than the others, but the time and use of skill is what is important Selected Leadership Function The three important leadership functions of sales management are; • Coaching • Planning and conducting integrative sales meeting • Meeting ethical and moral responsibility Problems associated in leadership Some problems sales managers are likely to face are; • Conflict of interest • Chemical abuse and dependencies • Sales people who will not conform to guidelines • Termination of employment • Sexual harassment Conflicts of interest • Sales people assume a boundary-role position so they sometimes encounter conflict of interest. • In some cases, meeting customer demands can violate company policy. • Many companies require that employees periodically sign an agreement not to engage in specified situations that may represent conflicting interest Problematic salespeople • There are salespeople who are problematic • if behavior or attitude can be identified, it can be corrected through motivation, supervision and further training and development. • Some of the sales people can be ruler breakers Termination of Employment • Where problems cannot be solved and performance consistently fails to meet standards, and coaching, training, and retraining are unsuccessful, termination or reassignment may be the only remaining alternative. • Because of legal issues, sales managers must be careful how some of these are done before firing the salesperson. Sexual Harassment • Company should have guidelines for dealing with this offense especially with women being the target of harassment. • Policies for dealing with sexual harassment should be developed for the entire company LECTURE 10 MOTIVATION AND REWARD SYSTEMS • Motivation and Reward Systems varies from one company to the other because some organizations are bigger than others. • Records have proved that Rewards and Motivation lead to increase in the number of accounts or sales. • Sometimes there is a need to even motivate on a tight budget, meaning that it is important to motivate. MOTIVATION Most commonly used dimensions• Intensity • Persistence and • Direction definition include three Optimal Sales force Reward System This is a system that balances the needs of the organization, its salespeople, and its customers against one another. The reward system should help accomplish the following: • Provide acceptable ratio of costs and sales force output in volume, profit, or other objectives • Encourage specific activities consistent with the firm’s overall, marketing, and sales force objectives and strategies. • Attract and retain competent salespeople, thereby enhancing long-term customer relationships • Allow the kind of adjustments that facilitate administration of the reward system. Types of Sales force Rewards Rewards can be classified into six categories• pay, • promotion, and • sense of accomplishment, • personal growth opportunities, • recognition, and • job security, But these falls under two main categories. That is, financial and nonfinancial compensation. COMPENSATION Compensation is a motivational tool which combines financial remuneration and/ or nonfinancial rewards to ensure desired performance: Some basic requirements of a sound compensation plan are; • It must provide for two types of income – • Flexibility • It must be simple and easy to understand • Fairness Financial Compensation This is composed of current spendable income, deferred income or retirement pay, and various insurance plans that may provide income when needed. Types of Financial Compensation • Straight Salary • Straight Commission • A combination(salary plus incentive) LECTURE 11 EVALUATING THE PERFORMANCE OF THE SALESPEOPLE • The competency model serves as a measure against which to evaluate salespeople’s performance. • Using a 360-degree feedback process, salespeople are evaluated on model competencies by their managers, their colleagues, and their customers. • Results are then reviewed with their manager, and methods for improving competencies are determined. Purposes of Salesperson Performance Evaluations • To ensure that compensation and other reward disbursements are consistent with actual salesperson performance • To identify salespeople who are due for promotion • To identify salespeople whose employment should be terminated • Through evaluation the specific training needs of the salespeople can be determined • It gives information that helps in the effective planning of the human resources Salesperson Performance Evaluation Approaches • Some organizations evaluate their salesforce annually • Most firms also use combinations of input and output criteria that are evaluated by quantitative and qualitative measures • Sales organization that set performance standards or quotas • Some sales organizations assign weights to different performance objectives and incorporate territory data when establishing these objectives • Most salespersons’ performance evaluations are conducted by the field manager who supervises the salesperson. • Most sales organizations provide salespeople with a written copy of their performance review and have sales managers discuss the performance evaluation with each salesperson. Criteria for Performance Evaluations • Behavior • Professional development • Results • Profitability