Chapter 09 - Personal Selling, Relationship Building, and Sales Management
Chapter 9
Personal Selling, Relationship Building, and
Sales Management
High-Level Chapter Outline
I. Importance of Personal Selling
II. The Sales Process
A. Objectives of the Sales Force
B. The Sales Relationship-Building Process
Prospecting
Planning the Sales Call
Presenting
Responding to Objections
Obtaining Commitment
Building a Long-Term Relationship
Relationships Can Lead to Partnerships
C. People who Support the Sales Force
III. Managing the Sales and Relationship-Building Process
A. The Sales Management Task
B. Controlling the Sales Force
Forecasting Sales
Establishing Sales Territories and Quotas
Analyzing Expenses
C. Motivating and Compensating Performance
Detailed Chapter Outline
I. Importance of Personal Selling
The importance of the personal selling function depends partially on the nature of the
product. As a general rule, goods that are new and different, technically complex, or
expensive require more personal selling effort.
The salesperson plays a key role in providing the consumer with information about such
products to reduce the risk involved in purchase and use.
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
For many companies, the salesperson represents the customer’s main link to the firm. In
fact, to some, the salesperson is the company.
It is the salesperson who serves as the conduit through which information regarding
product flaws, improvements, applications, or new uses can pass from the customer to the
marketing department.
Along with other sales techniques, personal selling provides the push needed to get
middlemen to carry new products, increase their amount of goods purchased, and devote
more effort in merchandising a product or brand.
In summary, personal selling fulfills two vital duties:
oThe salesperson dispenses knowledge to buyers.
oSalespeople act as a source of marketing intelligence for management.
II. The Sales Process
Personal selling is as much an art as it is a science.
The term sales process refers to two basic factors:
oThe objectives the salesperson is trying to achieve while engaged in selling activities
oThe sequence of stages or steps the salesperson should follow in trying to achieve the
specific objectives (the relationship-building process)
A. Objectives of the Sales Force
Personal selling can be viewed as a strategic means to gain competitive advantage in
the marketplace.
Marketing management understands that while, ultimately, personal selling must be
justified on the basis of the revenue and profits it produces, other categories of
objectives are generally assigned to the personal selling function as part of the overall
promotion mix. These objectives are:
oInformation provision: Especially in the case of new products or customers, the
salesperson needs to fully explain all attributes of the product or service, answer
any questions, and probe for additional questions.
oPersuasion: Once the initial product or service information is provided, the
salesperson needs to focus on the following objectives:
Clearly distinguish attributes of the firm’s products or services from those
of competitors
Maximize the number of sales as a percent of presentation
Convert undecided customers into first-time buyers
Convert first-time customers into repeat purchasers
Sell additional or complimentary items to repeat customers
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
Tend to the needs of dissatisfied customers
oAfter-sale service: Whether the sale represents a first-time or repeat purchase,
the following objectives should be met:
Delivery or installation of the product or service that meets or exceeds
customer expectation
Immediate follow-up calls and visits to address unresolved or new
concerns
Reassurance of service or superiority through demonstrable actions
Build relationships
B. The Sales Relationship-Building Process
For many years the traditional approach to selling emphasizes the first-time sale of a
product or service as the culmination of the sales process.
The relationship-building process, which is designed to meet the objectives, contains
six sequential stages (see Figure 9.1).
These stages are—prospecting, planning the sales call, presentation, responding to
objections, obtaining commitment/closing the sale, and building a long-term
relationship.
Prospecting
The process of locating potential customers is called prospecting.
The prospecting activity is critical to the success of organizations in maintaining
or increasing sales volume.
Continual prospecting is necessary for several reasons, including the fact that
customers—switch to other suppliers, move out of the organization’s market area,
go out of business because of bankruptcy, are acquired by another firm, or have
only a onetime need for the product or service.
The prospecting process usually involves two major activities that are undertaken
on a continual, concurrent basis.
oProspects must be located. They can be generated by randomly calling on
businesses or households or by employing mass appeals. This process is
called random lead generation.
For most professional, experienced salespeople, a more systematic
approach to generating leads from predetermined target markets is
used.
This approach, aptly named selected-lead generation, uses existing
contacts and knowledge to generate new prospects.
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
oThe second step in the prospecting process involves screening. This
qualifying process usually entails gathering information which leads to
answering the following five questions:
Does the lead have a want or need that can be satisfied by the
purchase of the firm’s products or services?
Does the lead have the ability to pay?
Does the lead have the authority to pay?
Can the lead be approached favorably?
Is the lead eligible to buy?
Depending on the analysis of answers to these questions, the
determination of whether a lead is a true prospect can be made.
Planning the Sales Call
Salespeople will readily admit that their number one problem is getting through
the door for an appointment with the prospect.
Customers have become sophisticated in their buying strategies. Consequently,
salespeople have to be equally sophisticated in developing their selling strategies.
Some key areas of knowledge salespeople should possess are listed below:
oThey should have thorough knowledge of the company they represent,
including its past history.
oThey should have thorough knowledge of their products and/or product
lines.
oThey should have good working knowledge of competitor’s products.
oThey should have in-depth knowledge of the market for their merchandise.
oThey should have accurate knowledge of the buyer or the prospect to whom
they are selling.
Presenting
Successful salespeople have learned the importance of making a good impression.
Some salespeople actually develop a checklist of things to take to the presentation
so that nothing is forgotten.
Salespeople who can adapt their selling style to individual buyer needs and styles
have a much stronger overall performance than less-flexible counterparts.
Responding to Objections
To assume the buyer will passively listen and positively respond to sales
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
presentation by placing an immediate order would be unrealistic.
Objections can be raised when the salesperson attempts to secure appointments,
during the presentation, when the salesperson attempts to obtain commitment, or
during the after-sale follow-up.
When sales prospects raise an objection, it is a sign that they are not ready to buy
and need an acceptable response to the objection before the buying decision can
be made.
In response to an objection, the salesperson should not challenge the respondent.
Rather, the salesperson’s objective should be to present the necessary information
so that the prospect is able to make intelligent decisions based on that information.
Obtaining Commitment
It should be noted that not all sales calls end in commitment, a successful closing.
If commitment is not obtained, salespeople should analyze the reasons and
determine whether (l) more sales calls are necessary to obtain commitment; or (2)
currently, there just does not exist a good match between customer needs and
seller offerings.
Building a Long-Term Relationship
Focusing on building and maintaining a long-term relationship with customers
have become an important goal for salespersons.
Terry Vavra focuses on the value of current customers of the organization and has
developed the concept of aftermarketing, which focuses the organization’s
attention on providing continuing satisfaction and reinforcement to individuals or
organizations that are past or current customers.
Successful aftermarketing efforts require the following activities:
oEstablishing and maintaining a customer information file
oMonitoring order process
oEnsuring initial proper use of the purchased product or service
oProviding ongoing guidance and suggestions
oAnalyzing customer feedback and responding quickly to customer questions
and complaints
oContinually conducting customer satisfaction research and responding to it
Relationships Can Lead to Partnerships
When the interaction between a salesperson and the customer does not end with
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
the sale, the beginnings of a relationship are present.
When a buyer and a salesperson have a close personal relationship, they both
begin to rely on each other and communicate honestly.
When each has a problem, they work together to solve it. Such market
relationships are known as functional relationships.
When organizations move beyond personal relationships, they develop strategic
partnership or strategic alliances.
The reasons for forming strategic partnerships vary.
C. People Who Support the Sales Force
In many instances, sales personnel will require some assistance at various stages of the
sales process.
Missionary salespeople are used in certain industries such as pharmaceuticals to focus
solely on promotion of existing products and introduction of new products.
A technical sales specialist supports the sales staff by providing training or other
technical assistance to the prospect.
When the product is extremely high priced and is being sold to the whole organization,
cross-functional sales teams are often used.
III. Managing the Sales and Relationship-Building Process
Every personal sale can be divided into two parts: the part done by the salespeople and the
part done for the salespeople by the company.
Salespeople have the responsibility of being thoroughly acquainted with the product, its
selling features, and points of superiority and posses a sincere belief in the value of
product.
From a sales management point, the company’s part of the sale involves the following:
oEfficient and effective sales tools
oAn efficient delivery and recorder system
oAn equitable compensation plan that rewards performance
oAdequate supervision and evaluation of performance
A. The Sales Management Task
Marketing managers and sales managers must take some very important decisions
regarding how the sales force should be organized (Figure 9.2).
In a geographic structure, individual sales people are assigned territories to cover.
In a product structure, each sales person is assigned to prospect and customers for a
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
particular product or product line.
In a customer structure, a salesperson or selling team serves a single customer or
single type of customer.
In a variation of the customer’s structure, a company may employ major account
management, or the use of team selling to focus on major customers to establish
long-term relationships.
A newer variation of the customer structure is the global account manager who may
be in charge of a single customer and all of its global needs.
B. Controlling the Sales Force
There are two obvious reasons why it is critical that the sales force be properly
controlled:
oPersonal selling can be the largest marketing expense component in the final
price of the product.
oUnless the sales force is somehow directed, motivated and audited on a continual
basis, it is likely to be less efficient than it is capable of being. The sales force
involves four key functions:
Forecasting sales
Establishing sales territories and quotas
Analyzing expenses
Motivating and compensating performance
Forecasting Sales
Sales planning begins with a forecast of sales for some future period or periods.
Forecasts are made on a short-term basis of a year or less, although long-term
forecasts of one to five years are made for purposes other than managing the sales
force such as financing, production, and development.
The sales forecast is an estimate of how much of the company’s output can be
sold during a specified future period under a proposed marketing plan and under
an assumed set of economic conditions.
A sales forecast has several important uses:
oIt is used to establish sales quotas.
oIt is used to plan personal selling efforts as well as other types of
promotional activities in the marketing mix.
oIt is used to budget selling expenses.
oIt is used to plan and coordinate production, logistics, inventories,
personnel, and so forth.
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
A forecast is never a substitute for sound business judgment.
Some commonly used sales forecasting methods are:
oJury of executive opinion method
oSales force composite method
oCustomer expectations method
oTime-series analysis
oCorrelation analysis
oOther quantitative techniques
Establishing Sales Territories and Quotas
The establishment of sales territories and sales quotas represent management’s
need to match personal selling effort with sales potential (or opportunity).
Sales people restricted to a geographic area are likely to get more sales in the
territory.
Other than geography, an important criterion is product specialization.
Quotas represent goals assigned to salespeople. As such, quotas provide three
main benefits.
oThey provide incentives for salespeople.
oThey provide a quantitative standard against which the performance of
individual sales representatives or other making units can be measured.
oThey can be used not only to evaluate sales person performance but also to
evaluate and control their efforts.
Activity quotas allow the company to monitor whether salespeople are engaging
in these activities to the extent desired.
The most common method of establishing sales quotas for territories is to relate
sales to forecasted sales potential.
In establishing sales quotas for its individual territories or sales personnel,
management need to take into account three key factors:
oAll territories will not have equal potential and, therefore, compensation
must be adjusted accordingly
oAll sales people will not have equal ability and assignments may have to be
made accordingly
oThe sales task in each territory may differ from time period-to-time period
Analyzing Expenses
Sales forecasts should include a sales expense budget.
In some companies, sales expense budgets are developed from the bottom up.
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
C. Motivating and Compensating Performance
An important task for the sales manager is motivating and compensating the sales
force. There are two basic types of compensation: salary and commission:
oSalary—usually refers to a specific amount of monetary compensation at an
agreed rate for definite time periods.
oCommission—is usually monetary compensation provided for each unit of sales
and expressed as a percentage of sales.
Very often, several compensation approaches are combined.
In addition to straight dollar compensation, there are numerous other forms of
incentives that can be used to motivate the sales force. Some of these types of
incentives and their potential performance outcomes are described in Figure 9.4.
Key Terms
After marketing: A concept that focuses attention on the value of current customers to the
organization and on providing continuing satisfaction and reinforcement to them as well as past
customers. The goal is to build lasting relationships with customers.
Correlation analysis: A method used in sales forecasting that involves measuring the
relationship between the dependent variable, sales, and one or more independent variables that
can explain increases or decreases in sales volume.
Cross-functional sales teams: A team that might include people from sales, engineering,
customer service, and finance, depending on the needs of the customer. When the product is
extremely high priced and is being sold to the whole organization, cross-functional sales teams
are often used.
Customer organization structure: A structure that assigns a salesperson or team to serve a
single customer or type of customer that has large or significant needs.
Geographic organization structure: Structure in which individual salespeople are assigned
geographic territories. The salesperson calls on all prospects in the territory and usually
represents all of the company’s products.
Lead: A prospect that may or may not have the potential to be a true prospect, a candidate, to
whom a sale could be made.
Major account organization structure: A variation of the customer organization structure, in
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
which a company may assign a salesperson or a team to focus on major customers to foster
long-term relationships.
Missionary salesperson: Used in many industries to focus solely on the promotion of existing
products and introduction of new products.
Objectives of the sales force: Ultimately, revenue and sales. Other objectives include
information provision, persuasion, and after-sale service.
Product organization structure: Structure in which each salesperson is assigned customers and
prospects for a particular product or product line. This structure is useful when the sales force
must have specific technical knowledge about products in order to sell effectively.
Prospecting: The process of locating potential customers. The process usually involves random
lead generation which usually requires a high number of contacts to gain a sale or selected lead
generation which uses existing contacts and knowledge to generate new prospects.
Sales forecast: An estimate of how much of the organization’s output, either in dollars or in
units, can be sold during a specific period under a proposed marketing plan and under an
assumed set of economic conditions. It has many important uses in sales management, marketing
planning, and strategic planning.
Sales relationship-building process: Process that views the initial sale as the first step in a
long-term relationship-building process, not as the end goal. It contains six sequential stages: (1)
prospecting, (2) planning the sales call, (3) presenting, (4) responding to objections, (5) obtaining
commitment/closing the sale, and (6) building a long-term relationship.
Strategic alliance: Also called strategic partnership, long-term, formal relationships in which
both parties make significant commitments and investments in each other in order to pursue
mutual goals and to improve the profitability of each other. The partners in a strategic alliance
actually invest in each other.
Technical sales specialist: Often used when the product is to be used to solve technical
problems of the buyer. They support the salesperson by providing training or other technical
assistance to the prospect.
Time-series analysis: A method used in forecasting sales that involves analyzing past sales data
and the impact of factors that influence sales (long-term growth trends, cyclical fluctuations,
seasonal variations).
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Chapter 09 - Personal Selling, Relationship Building, and Sales Management
Additional Resources
Ash, Mary Kay. The Mary Kay Way: Timeless Principles from America’s Greatest Woman
Entrepreneur. Hoboken NJ: John Wiley and Sons, 2008.
Jantsch, John. The Referral Engine. New York: Portfolio, 2010.
Gonzalez, Gabriel R., Douglas Hoffman, and Thomas N. Ingram. “Improving Relationship
Selling Through Failure Analysis and Recovery Efforts: A Framework and Call to Action.”
Journal of Personal Selling and Sales Management. Spring 2005, pp. 24–32.
Hunter, Gary K., and William D. Perreault. “Making Sales Technology Effective.” Journal of
Marketing, January 2007, pp. 16–34.
Goldon, John. Winning the Battle for Sales. New York: McGraw-Hill, 2013.
Schroder, Richard M., From a Good Sales Call to a Great Sales Call. NY: McGraw-Hill, 2011.
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