A. Salespeople are the company’s personal link to its customers.
B. In designing the sales force, the company must develop sales force objectives,
strategy, structure, size, and compensation
i. Sales Force Objectives and Strategy
1. Prospecting. Searching for prospects or leads
2. Targeting. Deciding how to allocate their time among prospects
and customers
3. Communicating. Communicating information about the
company’s products and services
4. Selling. Approaching, presenting, answering questions,
overcoming objections, and closing sales
5. Servicing. Providing various services to the customers—
consulting on problems, rendering technical assistance,
arranging financing, expediting delivery
6. Information gathering. Conducting market research and doing
intelligence work
7. Allocating. Deciding which customers will get scarce products
during product shortages
ii. Salespeople handle fewer accounts and are rewarded for key account
growth; lead generation, proposal writing, order fulfillment, and
postsale support are turned over to others.
iii. Companies must deploy sales forces strategically so they call on the
right customers at the right time in the right way, acting as “account
managers” who arrange fruitful contact between people in the buying
and selling organizations.
iv. To maintain a market focus, salespeople should know how to analyze
sales data, measure market potential, gather market intelligence, and
develop marketing strategies and plans.
v. Marketers believe sales forces are more effective in the long run if
they understand and appreciate marketing as well as selling.
vi. Too often marketing and sales are in conflict: the sales force complains
marketing isn’t generating enough leads, and marketers complain the
sales force isn’t converting them.
vii. Once the company chooses its strategy, it can use a direct or a
contractual sales force.
1. A direct (company) sales force consists of full- or part-time
paid employees who work exclusively for the company. Inside
sales people conduct business from the office and receive visits
from prospective buyers, and field sales people travel and visit
customers.
2. A contractual sales force consists of manufacturers’ reps, sales
agents, and brokers who earn a commission based on sales.
C. Sales Force Structure
i. A company that sells one product line to one end-using industry with
customers in many locations would use a territorial structure.
ii. A company that sells many products to many types of customers might
need a product or market structure.
iii. Four types of sales force:
1. A strategic market sales force assigned to major accounts
2. A geographic sales force calling on customers in different
territories
3. A distributor sales force calling on and coaching distributors;
4. An inside sales force marketing and taking orders online and
via phone
D. Sales Force Size: workload approach has five steps:
i. Group customers into size classes according to annual sales volume.
ii. Establish desirable call frequencies (number of calls on an account per
year) for each customer class.
iii. Multiply the number of accounts in each size class by the
corresponding call frequency to arrive at the total workload for the
country, in sales calls per year.
iv. Determine the average number of calls a sales representative can make
per year.
v. Divide the total annual calls required by the average annual calls made
by a sales representative to arrive at the number of sales
representatives needed.
E. Sales Force Compensation: to attract top-quality reps, the company must
develop an attractive compensation package.
i. Sales reps want income regularity, extra reward for above-average
performance, and fair pay for experience and longevity.
ii. Management wants control, economy, and simplicity.
iii. Some of these objectives will conflict.
iv. Four components of sales force compensation:
1. The fixed amount, a salary, satisfies the need for income
stability.
2. The variable amount, whether commissions, bonus, or profit
sharing, serves to stimulate and reward effort.
3. Expense allowances enable sales reps to meet the costs of
travel and entertaining on the company’s behalf.
4. Benefits, such as paid vacations, sickness or accident benefits,
pensions, and health and life insurance, provide security and
job satisfaction.
v. Fixed compensation is common in jobs with a high ratio of nonselling
to selling duties and jobs where the selling task is technically complex
and requires teamwork.
vi. Variable compensation works best where sales are cyclical or depend
on individual initiative.
vii. Fixed and variable compensation give rise to three basic types of
compensation plans—straight salary, straight commission, and
combination salary and commission.
1. Straight-salary plans provide a secure income, encourage reps
to complete nonselling activities, and reduce incentive to
overstock customers. For the firm, these plans deliver
administrative simplicity and lower turnover.
2. Straight-commission plans attract higher performers, provide
more motivation, require less supervision, and control selling
costs. On the negative side, they emphasize getting the sale
over building the relationship.
3. Combination plans feature the benefits of both plans while
limiting their disadvantages.
II. Managing the Sales Force
A. Recruiting and Selecting Representatives
i. It’s a great waste to hire the wrong people.
ii. Sales force turnover leads to lost sales, the expense of finding and
training replacements, and often pressure on existing salespeople to
pick up the slack
iii. Effective predictors of high performance in sales are composite tests
and assessment centers that simulate the working environment and
assess applicants in an environment similar to the one in which they
would work
B. Training and Supervising Sales Representatives
i. Today’s customers expect salespeople to have deep product
knowledge, add ideas to improve operations, and be efficient and
reliable, so companies are investing more in sales training.
ii. Training time varies with the complexity of the selling task and the
type of recruit.
iii. Reps paid mostly on commission generally receive less supervision.
iv. Those who are salaried and must cover definite accounts are likely to
receive substantial supervision.
C. Sales Rep Productivity
i. Companies often specify how much time reps should spend
prospecting for new accounts.
ii. Some companies rely on a missionary sales force to create new interest
and open new accounts.
iii. In the course of a day, reps plan, travel, wait, sell, and perform
administrative tasks (writing reports and billing, attending sales
meetings, and talking to others in the company about production,
delivery, billing, and sales performance).
1. The best sales reps manage their time efficiently.
2. Time-and-duty analysis and hour-by-hour breakdowns of
activities help them understand how they spend their time and
how they might increase their productivity.
iv. To cut costs, reduce time demands on their outside sales force, and
leverage technological innovations, many have increased the size and
responsibilities of their inside sales force.
1. Inside selling is less expensive and growing faster than
in-person selling.
2. Virtual meeting software such as WebEx, communication tools
such as Skype, and social media sites such as LinkedIn,
Facebook, and Twitter make it easier to sell with few if any
face-to-face meetings.
3. Inside sellers don’t need to be in the office—a growing
percentage work at home.
4. The inside sales force frees outside reps to spend more time
selling to major accounts, identifying and converting new
major prospects, and obtaining more blanket orders and
systems contracts.
5. Inside salespeople spend more time checking inventory,
following up orders, and phoning smaller accounts.
6. They typically earn a salary or salary-plus-bonus pay.
v. Sales Technology: sales and inventory information transferred much
more quickly, but specific computer-based decision support systems
have been created for sales managers and sales representatives.
1. Going online with a tablet or laptop, salespeople can prime
themselves on backgrounds of clients, call up prewritten sales
letters, transmit orders and resolve customer-service issues on
the spot, and send samples, pamphlets, brochures, and other
materials to clients.
2. One of the most valuable digital tools for the sales rep is the
company Web site.
a. Defines the firm’s relationships with individual
accounts and identify those whose business warrants a
personal sales call
b. Provides an introduction to self-identified potential
customers and a way to contact the seller
c. Might receive the initial order
3. Social media is a valuable digital selling tool
a. Social networking is useful in “front end” prospecting
and lead qualification as well as in “back end”
relationship building and management.
b. Companies can listen to social media to identify needs
D. Motivating Sales Representatives: the majority of sales representatives require
encouragement and special incentives, especially those in the field who
encounter daily challenges.
i. Most marketers believe that the higher the salesperson’s motivation,
the greater the effort and the resulting performance, rewards, and
satisfaction—all of which in turn further increase motivation.
ii. Marketers reinforce intrinsic and extrinsic rewards of all types.
1. One research study found the employee reward with the
highest value was pay, followed by promotion, personal
growth, and sense of accomplishment.
2. Least valued were liking and respect, security, and recognition.
In other words, salespeople are highly motivated by pay and
the chance to get ahead and satisfy their intrinsic needs, and
they may be less motivated by compliments and security.
iii. Compensation plans may even need to vary depending on the type of
salespersons: stars, core or solid performers, and laggards.
1. Stars benefit from no ceiling or caps on commissions,
overachievement commissions for exceeding quotas, and prize
structures that allow multiple winners.
2. Core performers benefit from multi-tier targets that serve as
stepping stones for achievement and sales contests with prizes
that vary in nature and value.
3. Laggards respond to consistent quarterly bonuses and social
pressure.
iv. Sales Quotas: companies set annual sales quotas, developed from the
annual marketing plan, for dollar sales, unit volume, margin, selling
effort or activity, or product type.
1. Compensation is often tied to degree of quota fulfillment.
2. The company first prepares a sales forecast that becomes the
basis for planning production, workforce size, and financial
requirements.
3. Management then establishes quotas for regions and territories,
which typically add up to more than the sales forecast to
encourage managers and salespeople to perform at their best.
4. Even if they fail to make their quotas, the company
nevertheless may reach its sales forecast.
5. Setting sales quotas can create problems.
a. If the company underestimates and the sales reps easily
achieve their quotas, it has overpaid them.
b. If it overestimates sales potential, the salespeople will
find it very hard to reach their quotas and be frustrated
or quit.
c. Quotas can drive reps to get as much business as
possible—often ignoring the service side of the
business, so the company gains short-term results at the
cost of long-term customer satisfaction.
E. Evaluating Sales Representatives: Good feed-forward requires good
feedback, which means getting regular information about reps to evaluate
their performance.
i. The most important source of information about reps is sales reports.
ii. Additional information comes through personal observation,
salesperson self-reports, customer letters and complaints, customer
surveys, and conversations with other reps.
iii. Many companies require representatives to develop an annual
territory-marketing plan in which they outline their program for
developing new accounts and increasing business from existing
accounts.
iv. Reports provide raw data from which sales managers can extract key
indicators of sales performance:
1. Average number of sales calls per salesperson per day
2. Average sales call time per contact
3. Average revenue per sales call
4. Average cost per sales call
5. Entertainment cost per sales call
6. Percentage of orders per hundred sales calls
7. Number of new customers per period
8. Number of lost customers per period
9. Sales force cost as a percentage of total sales.
v. The sales force’s reports along with other observations supply the raw
materials for evaluation.
III. Principles of Personal Selling
A. SPIN method to build long-term relationships by asking prospects several
types of questions:
i. Situation questions—These ask about facts or explore the buyer’s
present situation.
ii. Problem questions—These deal with problems, difficulties, and
dissatisfactions the buyer is experiencing.
iii. Implication questions—These ask about the consequences or effects of
a buyer’s problems, difficulties, or dissatisfactions.
iv. Need-payo” questions—These ask about the value or usefulness of a
proposed solution.
B. Most sales training programs agree on the major steps in any effective sales
process.
i. Prospecting and Qualifying
ii. Preapproach
iii. Presentation and Demonstration (features, advantages, benefits, and
value (FABV) approach)
iv. Overcoming Objections
v. Closing
vi. Follow-up and Maintenance
C. Relationship Marketing: In many cases the company seeks not an immediate
sale but rather a long-term supplier–customer relationship.
i. Salespeople working with key customers should call or visit at other
times and make useful suggestions about the business to create value.
ii. Relationship marketing is not effective in all situations.