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Chapter 20 - Personal Selling and Sales Management
20-21
a. Is a statement describing:
• What is to be achieved.
• Where and how the selling effort of salespeople is to be deployed.
b. Involves three tasks:
• Setting objectives.
• Organizing the salesforce.
• Developing account management policies.
1. Setting Objectives.
a. Setting objectives:
• Is central to sales management.
• Specifies what is to be achieved for:
– The total salesforce.
– Each salesperson.
b. Selling objectives can be:
• Output-related. Focuses on:
– Dollar or unit sales volume.
• Input-related. Focuses on:
– The number of sales calls.
– Selling expenses.
– Also used for the salesforce as a whole and for each salesperson.
• Behaviorally-related. Focuses on:
– Product knowledge.
– Customer service satisfaction ratings.
c. Firms also emphasize knowledge of competition:
• Since salespeople are calling on customers.
• Should see what competitors are doing.
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• 89 percent of firms ask their salespeople to gather competitive
intelligence.
• Issue: Should salespeople explicitly ask their customers for information
about competitors?
MAKING RESPONSIBILE DECISIONS
Ethics: The Ethics of Asking Customers about Competitors
Salespeople are a valuable source of information about what is happening in the
marketplace. By working closely with customers and asking good questions, salespeople
often have firsthand knowledge of their problems and wants. Also, they can spot the
activities of competitors. However, should salespeople explicitly ask customers about
competitor strategies?
d. Objectives should:
• Be precise and measurable.
• Specify the time period over which they are to be achieved.
• Serve as performance standards for the evaluation of the salesforce.
2. Organizing the Salesforce.
a. Three questions relate to establishing a selling organization:
• Question #1: Should the company use its own salesforce or should it use
independent agents as manufacturer’s reps?
• Question #2: If the decision is made to employ company salespeople, then
should they be organized according to geography, customer type, or
product/service?
• Question #3: How many company salespeople should be employed?
b. The decision to use company salespeople or independent agents is based on:
• Economic analysis.
• Behavioral factors.
c. Question #1: Should the company use its own salesforce or should it use
independent agents as manufacturer’s reps?
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• Set the costs of the two options equal to each other and then solving for
the sales level amount.
– Total cost of company salespeople (CS) equals:
* Annual sales volume (X) multiplied by…
* Commission percentage paid to company salespeople (Y%) plus…
* Total fixed costs for sales administration (FC).
– Total cost of independent agents (IA) equals:
* Annual sales volume (X) multiplied by…
* Commission percentage paid to company salespeople (Z%).
– Set the costs of the two options equal to each other [CS = IA].
– Solve for the sales level amount (X):
CS = IA
• [Figure 20-5] Example:
– Independent agents would receive a 5 percent commission on sales.
– Salespeople would receive a 3 percent commission, salaries, and
benefits.
– Sales administration costs with company salespeople would be a total
fixed cost of $500,000 per year.
– At what sales level would agents or salespeople be less costly?
– Set the costs of the two options equal to each other [CS = IA].
– Solve for the sales level amount (X):
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[See CH20BEAgentsSalesforce.xls]
[See CH20Fig20-05.xls]
• A behavioral analysis:
– Is also necessary.
– Should focus on issues related to the control, flexibility, effort, and
availability of independent and company salespeople.
d. [Figure 20-6] Question #2: Should companies organize their sales force on
the basis of (1) geography, (2) customer, or (3) product or service?
• Geographical sales organization.
– Is the simplest organization, where:
* The United States or the world is first divided into regions.
* Each region is then divided into districts or territories.
– Salespeople:
– If a firm’s products or customers require specialized knowledge, then a
geographical structure is not suitable.
• Customer sales organization.
– Is used when different types of buyers have different needs.
– Means that a different salesforce calls on each separate type of buyer
or marketing channel.
– Promotes more effective, specialized customer support and knowledge
to buyers.
– This structure:
– Key account management.
* Is the practice of using team selling to focus on important
customers.
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* Builds mutually beneficial, long-term, cooperative relationships.
* Is a variation of the customer sales structure.
* Involves:
• Product sales organization.
– Is used when specific knowledge is required to sell certain products.
– The advantage is that:
* Salespeople:
◊ Can develop expertise with…
◊ Technical characteristics, applications, and selling methods
associated with…
– The disadvantage is that:
* It leads to higher administrative costs and duplication of selling
effort because…
• Because there is no one best sales organization for all firms in all
situations, the firm’s salesforce should reflect its marketing strategy.
• Each year about 10 percent of U.S. firms change their sales organizations
to implement new marketing strategies.
e. Question #3: How many company salespeople should be employed?
• A common approach for determining the size of a salesforce is the
workload method:
– Integrates the number of:
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• Example: Frito-Lay.
– Frito-Lay sells its products to 350,000 stores.
– Salespeople call on these accounts once a week or 52 times a year.
[See CH20WorkloadMethod.xls]
• The workload formula is flexible; a change in any one of the variables will
affect the number of salespeople needed.
3. Developing Account Management Policies.
a. Account management policies specify:
• Whom salespeople should contact.
• What kinds of selling and customer service activities should be done.
• How these activities should be carried out.
b. These policies might state:
• Which individuals in a buying organization should be contacted.
c. [Figure 20-7] Different accounts or customers can be grouped according to:
• Level of opportunity.
• The firm’s competitive sales position.
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• When specific account names are placed in each cell, salespeople see:
– Which accounts should be contacted.
– What level of selling and service activity.
– How to deal with them.
B. Sales Plan Implementation: Putting the Plan into Action
• The sales plan is put into practice through the tasks associated with its
implementation.
• Sales plan formulation focuses on “doing the right things.”
• Sales plan implementation emphasizes “doing things right.”
1. Salesforce Recruitment and Selection.
a. Effective recruitment and selection of salespeople entails finding people who
match the type of sales position required by the firm.
b. Job analysis. Is a study of:
• How the sales job is to be performed.
• The tasks that make up the job.
c. Job description.
• Is a written document that describes job relationships and requirements
that characterize each sales position.
• Is based on information from a job analysis.
• Explains:
– To whom a salesperson reports.
– How a salesperson interacts with other personnel.
• Is translated into a statement of job qualifications.
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d. Job qualifications include those behavioral characteristics considered
necessary to successfully do the job:
• Aptitudes. • Skills.
• Knowledge. • Other behaviors.
e. Qualifications for order-getting sales positions mirror buyers’ expectations:
• Imagination and problem-solving ability.
• Strong work ethic.
f. Firms use personal interviews, reference checks, and background information
provided on application forms to evaluate prospective salespeople.
g. Successful selling also requires a high degree of emotional intelligence:
• Is the ability to understand:
• Is important for adaptive selling.
• Spells the difference between effective and ineffective order-getting
salespeople.
MARKETING INSIGHTS ABOUT ME
What Is Your Emotional Intelligence? You Might Be Surprised.
A person’s success at work depends on many talents, including intelligence, technical
skills, and emotional intelligence! Emotional intelligence (EQ) has five dimensions: (1) self-
motivation skills; (2) emotional self-awareness; (3) the ability to manage one’s emotions and
2. Salesforce Training.
a. Salesforce training:
• Is an ongoing process that affects both new and seasoned salespeople.
• Covers both selling practices and the technical aspects of seller’s business.
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b. Training new salespeople is expensive.
c. Employer-sponsored training costs over $7 billion annually.
d. Sales training includes the following:
• On-the-job training is the most popular.
3. Salesforce Motivation and Compensation.
a. Salespersons are motivated by:
• A clear job description.
• Effective sales management practices.
• A personal need for achievement.
• Proper compensation, incentives, or rewards.
b. Salespeople are paid using one of three plans:
• Straight salary compensation plan.
– A salesperson is paid a fixed fee per week, month, or year.
– Is easy to administer.
• Straight commission compensation plan.
– A salesperson’s earnings are tied directly to the sales or profit
generated.
– Provides the maximum amount of selling incentive.
• Combination compensation plan.
– Contains a specified salary plus a commission on sales or profits.
– Builds on the advantages of salary and commission plans.
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– A majority of firms use this plan.
c. Nonmonetary awards:
• Are given to salespeople for meeting or exceeding objectives.
• Include trips, salesperson awards, letters of commendation, etc.
d. Ineffective recruitment, selection, training, motivation, and compensation
programs often lead to costly salesforce turnover.
C. Salesforce Evaluation: Measuring Results
Quantitative and behavioral measures evaluate the salesforce and assess whether sales
objectives were met and account management policies were followed.
1. Quantitative Assessments.
Are based on input- and output-related objectives set forth in the sales plan.
a. Input-related measures focus on the actual salespeople activities such as:
• Sales calls. • Account management policies.
• Selling expenses. • Sales reports submitted to superiors.
b. Output measures often appear in a sales quota, which:
• Contains specific goals for a stated time period that are assigned to a:
– Salesperson. – Branch sales office.
– Sales team. – Sales district.
• Contains specific goals, which consist of:
– Dollar or unit sales volume. – New accounts generated.
• The time period for the goal ranges from one month to one year.
2. Behavioral Evaluation.
a. Because behavioral characteristics often determine sales success, firms
measure the following salespeoples’ attributes:
• Attitude. • Selling and communication skills.
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b. About 60 percent of U.S. companies now include customer satisfaction as a
behavioral measure of salesperson performance.
APPLYING MARKETING METRICS
Tracking Salesperson Performance at Moore Chemical & Sanitation Supply, Inc.
A Variety of Metrics
Moore Chemical & Sanitation Supply, Inc. (MooreChem) is a large midwestern
supplier of cleaning chemicals and sells to janitorial companies that clean corporate and
professional office buildings. MooreChem uses a marketing dashboard for each of its sales
representatives to track seven measures—sales revenue, gross margin, selling expense, profit,
average order size, new customers, and customer satisfaction. Each measure shows actual
salesperson performance relative to target goals.
Your Challenge.
Review a particular salesperson’s performance for the previous quarter.
Your Findings.
The salesperson’s performance is displayed on the marketing dashboard. He has
exceeded targeted goals for sales revenue, selling expenses, and customer satisfaction. All of
these measures show an upward trend. He also has met his target for gaining new customers
and average order size. But, his gross margin and profit are below targeted goals. These
measures evidence a downward trend as well. His mixed performance requires a
constructive and positive correction.
Your Action.
Focus attention on the salesperson’s gross margin and selling expense results and
trend. He is spending time and money selling lower margin products that produce a targeted
average order size. While he is actually expending effort selling more products to his
customers, this product mix yields lower gross margins, resulting in a lower profit.
D. Customer Relationship Management Systems and Technology
• Personal selling and sales management have:
a. Undergone a technological revolution with…
b. The integration of sales force automation into customer relationship
management.
• Salesforce automation (SFA).
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a. Is the use of computer, information, communication, and Internet technologies
to…
b. Make the sales function more effective and efficient.
c. Applies to each stage in the personal selling process and management of the
sales force itself.
• SFA applications include:
a. Account analysis. d. Sales presentations.
b. Time management. e. Proposal generation.
c. Order processing and follow-up. f. Product and sales training.
• SFA is designed to:
a. Ease administrative tasks.
b. Free up time for salespeople to build customer relationships.
c. Develop solutions.
d. Provide customer service.
1. Marketing Automation
a. Marketing automation applies systems and technologies to provide
intelligence to sales people.
b. Identify qualified prospects, provide support, track customer buying process,
and identify opportunities for additional sales
c. Marketing automation:
• Emphasizes sophisticated analytical techniques and computer software.
• Allows salespeople to:
2. Customer Service and Support Automation
a. Customer service and support automation consists of processes and tech that
supply customers with information about post-sale activities.
c. U.S. companies spend $37+ billion annually on CRM applications.
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LEARNING REVIEW
20-8. What are the three types of selling objectives?
20-9. What three factors are used to structure sales organizations?
20-10. How does emotional intelligence tie to adaptive selling?
Chapter 20 - Personal Selling and Sales Management
APPLYING MARKETING KNOWLEDGE
1. Jane Dawson is a new sales representative for the Charles Schwab brokerage firm.
In searching for clients, Jane purchased a mailing list of subscribers to The Wall Street
Journal and called them all regarding their interest in discount brokerage services.
She asked if they have any stocks and if they have a regular broker. Those people
without a regular broker were asked their investment needs. Two days later, Jane
called back with investment advice and asked if they would like to open an account.
Identify each of Jane Dawson’s actions in terms of the personal selling process.
Answer:
SELLING STAGE
ACTION
2. For the first 50 years of business, the Johnson Carpet Company produced carpets for
residential use. The salesforce was structured geographically. In the past five years,
a large percentage of carpet sales has been to industrial users, hospitals, schools, and
architects. The company also has broadened its product line to include area rugs,
Oriental carpets, and wall-to-wall carpeting. Is the present salesforce structure
appropriate, or would you recommend an alternative?
20-35
3. Where would you place each of the following sales jobs on the order taker/order
getter continuum shown below? (a) Burger King counter clerk, (b) automobile
insurance salesperson, (c) Hewlett-Packard computer salesperson, (d) life insurance
salesperson, and (e) shoe salesperson?
Answers:
Sales Job
Order
Taker
Order
Getter
a.
Burger King
counter clerk
X
4. Listed below are two different firms. Which compensation plan would you
recommend for each firm, and what reasons would you give for your
recommendations? (a) A newly formed company that sells lawn care equipment on a
door-to-door basis directly to consumers and (b) the Nabisco company, which sells
heavily advertised products in supermarkets by having the salesforce call on these
stores and arrange shelves, set up displays, and make presentations to store buying
committees.
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5. Tyler Automotive, Inc., supplies 1,000 independent auto parts stores throughout the
United States. Each store is called on 12 times a year, and the average sales call lasts
30 minutes. Assuming a salesperson works 40 hours a week, 50 weeks a year, and
devotes 75 percent of the time to actual selling, how many salespeople does Tyler
Automotive need?
Answer: Using the workload method formula, the number of salespeople is calculated
below:
[See CH20AMKQ5.xls]
6. A furniture manufacturer is currently using manufacturer’s representatives to sell its
line of living room furniture. These representatives receive an 8 percent commission.
The company is considering hiring its own salespeople and has estimated that the
fixed cost of managing and paying their salaries would be $1 million annually. The
salespeople would also receive a 4 percent commission on sales. The company has
sales of $25 million dollars, and sales are expected to grow by 15 percent next year.
Would you recommend that the company switch to its own salesforce? Why or why
not?
Answer: The question is answered by setting the costs of the two options equal to each
other and solving for the sales level amount. At the point at which any sales are above the
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7. Suppose someone said to you, “The only real measure of a salesperson is the amount
of sales produced.” How might you respond?
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BUILDING YOUR MARKETING PLAN
Does your marketing plan involve a personal selling activity? If the answer is “no,”
read no further and do not include a personal selling element in your plan. If the answer is
“yes”:
1. Identify the likely prospects for your product or service.
2. Determine what information you should obtain about the prospect.
3. Describe how you would approach the prospect.
4. Outline the presentation you would make to the prospect for your product or service.
5. Develop a sales plan, focusing on the organizational structure you would use for your
salesforce (geography, product, or customer).
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TEACHING NOTE FOR VIDEO CASE VC-20
Xerox: Building Customer Relationships through Personal Selling
Synopsis
Show Slide 20-46. Xerox was founded in 1906 as a manufacturer of photographic
paper called the Haloid Company. In 1947, the company purchased the license to xerographic
patents and began a period of rapid growth through the development and sales of plain paper
copiers. In 2001, Xerox began a shift to a consultative selling model that focused on helping
customers solve their business problems rather than just placing more equipment in their
offices.
Xerox is well-known for its sales representative training program. Every new sales
representative at Xerox receives eight weeks of training development in the field and at the
Xerox Corporate University in Virginia. The case follows Alison Capossela, a Washington,
D.C.-based Xerox sales representative on a sales call as she narrates her activities during the
stages of the personal selling process. She says “I’m like the quarterback of the team.”
Today, Xerox is the world’s leading document management enterprise, with 130,000
employees in 160 countries and sales of $22.3 billion. Xerox has more than 8,000 sales
professionals, 9,000 technical service employees, and 100,000 employees serving customers
through on-site operations or off-site delivery centers.
Teaching Suggestions
1. Ask the class if any of them have had experience working in sales. Have the students with
some sales experience describe (a) their training, (b) how the sales force was organized,
(c) the compensation plan, and (d) key motivators. After watching the video, compare the
students’ answers to the situation at Xerox. Ask the students if they would recommend any
changes to the sales management process or the personal selling process at Xerox. Why?
2. To provide additional information about selling careers you may want to visit the career
Answers to Questions
1. How does Xerox create customer value through its personal selling process?
