38173998 selling and negotiation skills 1st sem mms

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Selling and negotiation skills Qualities of a professional sales

executive-

Thorough analysis

Market efficient qualitative andquantitative personal-selling objectives



Selling and negotiation skills Appropriate sales policies

Personal selling strategy



Selling and negotiation skills Skillful application of organizational

principles to the conduct of a sales

operation

The ability to install, operate and usecontrol procedures appropriate to the

firm„s situations and objectives



Responsibilities of a sales

executive 1)to their organization

2)to the customers

3)to the society



Responsibilities towards the

organization 1)obtaining sales volume

2)providing profit contributions

3)continuing business growth




customer Customers can be wholesalers, retailers

or industrial users

All of them expect to supply easilyresalable products and services




customer Backed by supporting activities (training

to dealer‟s sales personnel, help in

preparing local advertisement, provisionof credit etc

Assurance that the products and

services are wise investment



Responsibilities to the society Society looks to them to assure the

delivery of goods and services that final

buyers wants at prices that final buyersare willing to pay

To develop and market products which

are minimal environment damaging(socially responsible products)



Evolution of the sales

department Prior to industrial revolution, small-scale

enterprises dominated the economic

scene. Orders were obtained with minimum

efforts

Single individual supervised all thephases of the business




department Manufacturing problems received the

most attention (selling and marketing

was handled on a part-time basis) With industrial revolution, which began

in 1760,in England (shortly after the

American revolution), finding newmarkets became essential




department Adjacent markets could not absorb the

increased quantities

Sales departments were establishedonly after the activation of manufacturing and financial

departments



Sales executive as a-

coordinator Coordination involving-

1)the organization

2)the planning

3)other elements in the marketingstrategy



Organization and co-

ordination Coordination of the different order-

getting methods personal selling,

advertising etc) Inside the sales department, under

democratic administration, co-

ordination of units under respectivecontrol



Planning and co-ordination In marketing objectives and draft plans

at optimum cost

Determine the elements (personalselling, advertising etc)



Planning and co-ordination Apportioning the relative amounts

Seek to secure a marketing program

that is both appropriate for marketconditions and reflects the probablecontribution of the sales force



Coordination with otherelements

Like advertising, display and otherpromotional efforts

Synchronizing personal selling withadvertising



Coordination with otherelements

Point-of-purchase displays are set up inretail stores where customers will see

them at the precise time that tie-inadvertisements appear in national andlocal media

Alerting dealers to special couponing orsampling effort so that they can benefitfrom heightened customer interest



Co-ordination with distributivenetwork

Gaining product distribution

Obtaining dealer identification to avoid

clogged distribution channels

Reconciling business goals-of manufacturers and middlemen

Sharing promotional risks (co-operativeadvertising)



Coordination and implementationof overall marketing strategy

Sales executives see that field salespersonnel integrate every phase and

segment of the promotional programsof distributors and dealers



Personal selling situations

1)services selling

2)developmental selling

3)developmental but unusual creative



Service selling

1)inside order taker-sales clerk behindneckwear counter at a store

2)delivery sales person-deliveringbread,milk,oil



Service selling

3)route or merchandising salesperson-the soap or spice salesperson calling on

retailers



Service selling

4)missionary-only to build goodwill, notexpected to take orders- pharma

detailing 5)technical sales person-engineering

sales person



Developmental selling

1)creative,selling tangibles-vacuumcleaners, automobiles, encyclopedias

2)creative,selling intangibles-insurance,advertising services, educationalprograms



Developmental-but unusualcreativity

1)political,indirect or back-doorsalesperson-getting large orders for

flour from baking companies bycatering to key buyer‟s interests infishing, golfing etc



Developmental-but unusualcreativity

2)salesperson engaged in multiplesales-involves sales of big-ticket items

to committee consisting of severalindividuals-ad agency account executive



Is selling an art or science?

In a survey of 173 marketingexecutives,

46% perceived selling as an art

8%as science

46% as an art evolving into a science



Selling theories-

1)AIDAS-attention,interest,desire,action,satisfacti

on 2)‟Right set of circumstances theory-

3)buying formula-

4)Behavioral equation theory-



1)AIDAS

Attention-can be grabbed by favorablefirst impressions like proper attire,

neatness, friendliness and genuinesmile

Opening remarks be about the prospect

or favorable comments about prospect‟sbusiness



How to create interest?

Develop a contagious enthusiasm forthe product or a sample

Use flipcharts ,sales portfolios or othervisual aids in case of technical or bulkyproducts

Find out basic motivation of prospects,their mood (receptive, skeptical, hostile)



Kindling desire

By keeping the conversation running onthe main course

Obstacles must be faced and waysfound to get around them



Kindling desire

Objections be answered, before theyare raised



Kindling desire

External interruptions cause break. After resuming,summarise what has

been said Digressive remarks be disposed off

tactfully with finesse (distracting

digression be handled bluntly)



Inducing action

Buying is not automatic and as a rulemust be induced

The trial close, close on a minor pointand the trick close are used to test theprospect‟s reactions

Ask for the order straightforwardly



Building satisfaction

By thanking the customer for the order

Reassure the customer that the decision

was correct



Building satisfaction

Customer should be left with theimpression that the sales person merely

helped in deciding The order is the climax of the selling

situation-possibility of anticlimax be

avoided Sales person should not linger too long



2)‟Right set of circumstances‟ -theory

Situation response theory



2)‟Right set of circumstances‟ -theory

Particular circumstances prevailing in agiven selling situation cause the

prospect to respond in a predictableway

More skilled the salesperson is in

handling the set of circumstances, themore predictable is the response



3)Buying formula-theory of selling

1)if the prospect does not feel a needor recognize a problem that can be

satisfied by the product or service, theneed or problem should be emphasized




2)if the prospect does not think of theproduct or service when he or she feels

the need or recognizes the problem, theassociation between need or problemand product or service should be

emphasized




3)if the prospect does not think of thetrade name when he or she thinks of

the product or service, the associationsbetween product or service and tradename should be emphasized




4)if need or problem, product orservice, and trade name are well

associated, emphasis should be putupon facilitating purchase and use




5)if competition is felt, emphasis shouldbe put upon establishing in the

prospect‟s minds the adequacy of thetrade-named product or service, andpleasant feelings toward it




6)if sales to new prospects are desired,every element in the formula should be

presented 7)if more sales to old customers are

desired, the latter should be reminded

(developing new uses is comparable toselling to new customers)



Behavioral equation theory(j.a.howard)

Is based on stimulus-response model

Sophisticated version of the „right set of

circumstances theory

4 elements of the learning process-drives, cue, response and reinforcement



equation

B=PXDXKXV where,

B=response or the internal response tendency,i.e.theact of purchasing a brand or patronizing a supplier

P=predisposition or the inward response D=present drive level (amount of motivation)

K=„inventive potential' that is, the value of theproduct or its potential satisfaction to the buyer

V=intensity of all cues:triggering,product,orinformational



Summary of J A Howardtheory

When the satisfaction (K) yields areward, reinforcement occurs, and,

technically, what is reinforced is thetendency to make a response in thefuture to the cue that immediately

preceded the rewarded response.



Summary of J A Howardtheory

After reinforcement, the probabilityincreases that the buyer will buy the

product (or patronize the supplier) thenext time the cue appears-buyer haslearned



prospecting

Is the planning work which is essentialin eliminating calls on non buyers

Steps in prospecting-

1)formulating prospect definitions



prospecting

2)searching out potential accounts

3)qualifying prospects and determining

probable requirements

4)relating company products to eachprospect‟s requirements



Formulating prospectdefinition-

Prospective customers-

Must have the willingness

The financial capacity

l



Formulating prospectdefinition-

Authority to buy

Must be available to the sales person

Key characteristics of profitableaccounts be found and used whilescreening the prospects

S h l



Searching out potentialaccounts

Directories of all kinds

News and notes in trade papers and

business magazines

Credit reports

S hi i l




Membership lists of chambers of commerce and trade and

manufacturer‟s association Lists purchased from list brokers

Responses to company advertising

S hi i l




Sales personnel of non-competing firmscalling on the same general class of

trade Conventions and meetings

Bankers and other centers of influence

S hi t t ti l




Salesperson‟s own observation

Endless chain (of satisfied customers)

Insurance salesman uncover prospectsamong their acquaintances, members of their professional ,religious and social

organizations and referrals of friends

ua y ng prospec s an



ua y ng prospec s andetermining probablerequirements

Prospects with requirements too smallto represent profitable business are

removed from further considerationunless their growth possibilities showpromise

Additional information by personal visitto confirm prospects from nonprospects

R l ti d t t



Relating company products toeach prospect‟s requirements

By a tailored presentation

Clear idea about specific likely

objections being raised and otherobstacles to the sale that may beencountered

R l ti d t t



Relating company products toeach prospect‟s requirements

The salesperson is ready to contact theprospect

The remaining tasks are-making anappointment, deciding how to open thepresentation and determining how to

persuade the prospect to become acustomer



Sales resistance-

In the form of obstacles or an objection

Obstacle is real or unreal

Objection is sincere or insincere



Obstacles to sales

E.g. “a temporary shortage of cashprevents buying”

Can be circumvented by explaining amethod for financing the purchase



Sales objections

At best, an objection requires asatisfactory answer; at worst, it blocks

the sale Sincere objections trace to

incompleteness, in-accuracy, or

vagueness in the sales presentation



Sales objections

Prospects may be confused about theirown need or may react unfavorably to

the salesperson‟s personality Sincere objections are overcome by

patient and thorough explanations



Sales objections

Insincere objections are raised by thecustomer to get rid of the salesman or

to check their competence Insincere objections should not be

allowed to provoke into an argument



Handling objections

One theory says that each objection betreated with utmost courtesy



Handling objections

Another theory suggests to ignoreinsincere objections

The best defensive strategy often is thestrong counterattack and thesalesperson should try to regain the

initiative as he or she can gracefullypossible



Closing sales

Low pressure sales are closed moreeasily than high pressure ones



Closing sales

In low pressure sales, prospects feelthat they are reaching the buying

decisions themselves, and primarilythrough rational processes of thought,so there is no need for extra push just

before the sales are consummated



Closing sales

In high pressure sales, the main thrustis to the prospect‟s emotions, so

salespersons attempt to propelprospects into buying decisions. Oftenthe prospect regains normal perspectiveas the sale nears its climax,and,if this

happens, the salesperson needsunusually effective persuasion to closethe sales



closing

When an attempted close fails, thesalesperson should normally try

another. The refusal does not necessarily imply

an unwillingness to buy; it may indicate

the prospect‟s need for additionalinformation or clarification of somepoint



closing

Some executives recommend that salespersonnel attempt as many as five

closes before giving up



closing

Early closing attempts should be soexpressed that a refusal will not cut off

the presentation The sales person first uses an indirect

close,i.e.attempts to get the order

without actually asking for it



In-direct close

The sales person may ask the prospectto state a preference from among a

limited number of choice (as to models,delivery dates, order size, or the like)so, phrasing the question that all

possible responses are in thesalesperson‟s favor.



In-direct close

Secondly, the salesperson maysummarize, emphasizing features that

visibly impress the prospect, showinghow the reasons for the purchaseoutweigh those opposed to it till he getsa response like, go ahead and write the

order and hand it to the prospect forapproval-if the prospect balks, the issueis clearer



In-direct close

Perhaps one last objection is voiced,but after it is answered, the sale is

made



Direct close

When one or more attempts at anindirect close fail, the sales person uses

the direct approach.



Direct close

Few prospects respond negatively to afrank request for the order

Many people, especially those who arethemselves engaged in selling, do notbuy unless the order is asked for

outright

Personal selling- qualitative



Personal selling- qualitativeobjectives

1)to do the entire selling job (as whenthere are no other elements in the

promotional mix 2)to „service' existing accounts (that is,

to maintain contacts with present

customers, take orders, and so forth)





3)to search out and obtain newcustomers

Personal selling-qualitative



Personal selling-qualitativeobjectives

4)to secure and maintain customer‟scooperation in stocking and promoting

the product line 5)to keep customers informed on

changes in the product line and other

aspects of marketing strategy





6)to assist customers in selling theproduct line (as though „missionary‟

selling) 7)to provide technical advice and

assistance to customers (as with

complicated products and whereproducts are especially designed to fitbuyer‟s specifications

Personal selling-qualitative



Personal selling-qualitativeobjectives

8)to assist with (or handle) the trainingof middlemen‟s sales personnel

9)to provide advice and assistance tomiddlemen on management problem

10)to collect and report market

information of interest and use tocompany management



Quantitative objectives

1)to capture and retain a certain marketshare

2)to obtain sales volume in ways thatcontribute to profitability (optimum mix)



Quantitative objectives

3)to obtain some number of newaccounts of a given types

4)to keep personal-selling expenseswithin set limits

5)to secure targeted percentages of

certain account‟s business



Some definitions-

Market potential-is an estimate of themaximum possible sales opportunities

present in a particular market segmentand open to all sellers of a good orservice during a stated future period



Some definitions-

Sales potential-is an estimate of themaximum possible sales opportunities

present in a particular market segmentopen to a specified company selling agood or service during a stated future

period



Some definitions-

Sales forecast-is an estimate of sales, indollars or physical units, in a future

period under a particular marketingprogram and an assumed set of economic and other factors outside the

unit for which the forecast is made



Sales forecasting methods

1)jury of executive opinion

2)the Delphi technique

3)poll of sales force opinion

4)projectino of past sales



Sales forecasting methods

5)time-series analysis

6)exponential smoothing

7)survey of customer‟s buying plans

8)regression analysis

9)economic model building and

simulation

Sales related marketing



Sales related marketingpolicies

1)product policies (what to sell)

2)distribution policies (to whom to sell)

3)pricing policies



Product policies

1)in relation to product objectives

2)product line policy

3)changes in product offerings



Product policies

4)reappraising the product line and linesimplification

5)reappraising the product line and linediversification

6)ideas for new products

7)appraisal of proposed new products

Policies on distribution



Policies on distributionintensity

1)mass distribution

2)selective distribution

3)exclusive agency distribution



Pricing policies

1)policy on pricing relative to thecompetition-meeting the competition,

pricing above the competition, pricingunder the competition

2)policy on pricing relative to costs-full

cost pricing, promotion pricing,contribution pricing



Pricing policies

3)policy on uniformity of prices todifferent buyers-one price or variable

price 4)policy on list pricing-either freedom to

middlemen or control his retail price



Pricing policies

5)policy on discounts-trade discount,quantity discount

6)geographical pricing policies-FOBpricing, delivered pricing,



Pricing policies

7)policy on price leadership-initiate orfollow price change

8)product line pricing policy 9)competitive bidding policy



Choice of basic selling style

1)trade selling

2)missionary selling

3)technical selling

4)new business selling



The effective sales executive

1)ability to define the position‟s exactfunctions and duties in relation to the

goals the company should expect toattain




2)ability to select and train capablesubordinates and willingness to

delegate sufficient authority to enablethem to carry out assigned tasks withminimum supervision




3)ability to utilize time efficiently

4)abiilty to allocate sufficient time for

thinking and planning 5)abiilty to exercise skilled leadership

Causes of turnover of sales



personnel

Under control of the company-

Poor recruiting

Improper selection and assignment

Training deficiencies

Inadequate supervision and motivation




personnel

Breakdown in communications

Unsatisfactory performance-customer

complaints etc Discharged for cause-alcoholism,

conviction of a felony, dishonesty etc




personnel

Cutbacks in personnel

Transfer to another department

Promotion to a higher position

Causes of turnover-not



controlled by the company

Retirement

Death

Illness or physical disability

Causes of turnover-not



controlled by the company

Personal and martial difficulties

Dislike for the job-travel, type of work,

working conditions etc Military duty

Better position elsewhere



Sales job analysis-

To whom does this person report?

who reports to this person?

What products does this person sell?



Sales job analysis-

To whom does this person sell?

What information should this person

gather?



Sales job analysis-

What reports should this person makeand to whom?

Specific duties and responsibilities,relations with customers, relations withother sales department and company

personnel



Sales job description

Is an organized factual statementcovering-

1)the reporting relationship of aparticular job to other job

2)the job objectives



Sales job description

3)duties and responsibilities

4)job performance criteria

Tells to whom the sales jobholderreports, what has to be done, how it isdone, and why and, in addition,

describes the standard against whichperformance is measured

Duties and responsibilities-check



plist-for sales job description

1)sales

2)service

3)territory management 4)sales promotion

5)executive

6)goodwill



Sales-

Make regular calls

Sell the line; demonstrate

Handle questions and objections Check stock; discover possible product

uses



Sales-

Interpret sales points of the line to thecustomer

Estimate customer‟s potential needs Emphasize quality

Explain company policy on

price,delivery,and credit Get the order



service

Install the product or display

Report product weaknesses, complaints

Handle adjustments,returns,andallowances



service

Handle requests for credit

Handle special orders

Establish priorities, if any Analyze local conditions for customers



Territory management

Arrange route for best coverage

Balance effort with customer against

the potential volume Maintain sales portfolios,samples,kits

and so forth



Sales promotion

Develop new prospects and accounts

Distribute home office literature,

catalogues and the like



Sales promotion

Make calls with customer‟s salespeople

Train personnel of wholesalers, jobbers

and so on Present survey reports, layouts and

proposals



executive

Each night make a daily work plan forthe next day

Organize field activity for minimumtravel and maximum calls



executive

Prepare and submit special reports ontrends, competition

Prepare and submit statistical datarequested by home office

Investigate lost sales and reason for

loss



executive

Prepare reports ondevelopments,trends,new objectives

met, and new ideas on meetingobjections

Attend sales meetings



executive

Build a prospect list

Collect overdue accounts; report on

faulty accounts Collect credit information



goodwill

Counsel customers on their problems

Maintain loyalty and respect for the

company Attend local sales meetings held by

customers



Recruiting sales personnel

1)sources within the company

2)sources outside the company



Sources within the company-

1)company sales personnel

2)company executives

3)internal transfers



Sources outside the company-

1)Direct unsolicited applications

2)Employment agencies

3)Sales people making calls on thecompany

4)Employees of customers



Sources outside the company-

5)Sales executive‟s clubs

6)sales forces of non competing

companies 7)sales forces of competing companies

8)educational institutions

9)older persons

ff



Recruiting effort-

College recruiting

Recruiting direct-to-consumer sales

personnel Recruiting consultants

Indirect recruiting

Recruiting brochures

l l l



Selecting sales personnel

Preliminary interview and pre-interviewscreening

Formal application Interview (s)

S l i l l



Selecting sales personnel

Reference and credit check

Testing-ability, habitual characteristics

and achievement Physical examination

Employment offer

Planning sales training



programs

A-C-M-E-E-aims-content-method-execution-evaluation

training need are identified from salesperson‟s reports, sales records,observation of sales personnel etc




programs

Training need-1)initial sales training(job specifications, individual trainee‟s

background and experience and salesrelated marketing policies




programs

2)continuous sales training-about basicchanges in products and markets,

changes in company related policies,procedures & organization, careless orsloppy habits of sales personnel

t t



content

1)product data-product use andapplication, initial factory training,

training on competitor‟s products 2)sales technique-

t t



content

3)markets-customers,their locations,product of their interest, buying habits

and motives

t t



content

4)company information-history,importance in the industry and

economy, relations withstockholders,unions,competitors,government and other group, pricing policies,product service policy, spare parts and

repairs credit extension and customerrelations etc

Training methods( /i di id l)



(group/individual)

1)the lecture

2)the personal conference

3)demonsatration 4)role playing

5)case discussion

T i i th d



Training methods

6)impromptu discussion

7)gaming-simulation

T i i th d



Training methods

8)on-the-job training-coach and pupilmethod

T i i th d



Training methods

9)programmed learning-subject matteris broken down into numbered

instructional units called frames, whichare incorporated into a book ormicrofilmed for use with a teachingmachine

T aining methods



Training methods

10)correspondence courses-forinsurance field to acquaint new

salespeople with industry fundamentalsand to instruct in basic sales technique. Also used to train distributor‟s salesforce

Executing and evaluating salestraining programs



training programs

Kipling‟s six honest serving men

What?

Why? When?

How?

Where?

Who?

Philosophies of sales training




1)conditioned response philosophy-fortrade or missionary-requires and aids

designed to facilitate memorizingprogrammed responses like multiplechoice test-can be measured objectively





2)insight response philosophy-fortechnical or new business requires

materials conducive to developanalytical skills and internalizing of responses like an essay test-can bemeasured subjectively

Organization for sales training



Organization for sales training

Who will be the trainees?

Who will do the training?

When will the training take place? Where will the training site be?





Difficult to identify for continuoustraining

Criteria for selection- 1)reward for good performance





2)punishment for poor performance

3)convenience of trainee and trainer

4)seniority(greater seniority moretraining opportunity)





Initial sales training-either by top salesexecutive if line function or personnel

director if staff function Continuous sales training-top sales

executive





Sales training staff- in case of largecompanies

training the sales trainer- Outside expert-for sales techniques

(prospecting, selling by telephone,

objections handling etc)

When will the training takeplace?



place?

Majority sales executives contend that newlyrecruited trainees should receive formalgroup training before starting to sell

Sizeable minority however assign trainees toselling jobs before sending them to salesschools-(not suitable when highly technical

products are sold to sophisticated buyers)

When will the training takeplace?



place?

In case of large number of newpersonnel, group training is advisable

Optimum group size-smaller than 12-15involves inordinate high cost, largerthan 30-40 incur heavy losses in termsof learning effectiveness

Training site decisions



Training site decisions-

Generally,

Initial sales training at central office

(provides better product training buthigher costs)

Training site decisions



Training site decisions-

Separate programs at branch office

Retraining programs are short and are

held either at centralized ordecentralized points

Instructional materials andtraining aids



training aids

1)manuals or workbooks

2)other printed materials

3)training aids 4)advance assignments

manuals



manuals

Are used in most group type sales trainingprograms

Contains-

Outlines or summaries of the mainpresentation

Related reading materials

Statement of learning objectives for eachsession

Thought provokers

manuals



manuals

Cases and problems

Directions for sessions involving role

playing or gaming Concise statements of

selling,pricing,training of sales

personnel and other policies

manuals



manuals

Details on company systems andprocedures

Information on the products and theirapplication

Purpose is-to serve as study guides

during training and as reference later

Other printed materials



Other printed materials

Include company bulletins

Sales and product handbooks

Information bulletins Standard texts

Technical and trade books

Industry and general businessmagazines and journals

Training aids



Training aids

Is an auxiliary device capable of transmission of sight and/or soundstimuli

Blackboard and chalk and othermechanical training aids like Vue-graphprojector, transparency roll and screen

Training aids



Training aids

Motion picture projector and film areeffective to explain complex situations

Training aids



Training aids

Actual demonstration in case of conveying technical information oninstallation and operation of newmachine tool models

All training films (company produced orcommercially produced) be previewedbefore use

Training aids



Training aids

Tape recording and playback equipmentis ideal for training in sales techniques

Training aids



Training aids

Actual or simulated sales presentationsare taped and played back for individualor group appraisal

Training aids



Training aids

Miniature (sometimes conceable)cassette type recorders make it easy forsalespersons to tape their own salesinterviews and play them back later

Training aids



Training aids

Closed circuit TV is used when timing isimportant (suitable for de-centralizedprograms like new product lines areintroduced to salesperson or dealers orin case of policy changes issues and asa substitute for training at national

sales meetings

Advance assignments



Advance assignments

1)reading assignment to provide someminimum comprehension of subjectsscheduled

2)read a case and prepare a plan of action

Advance assignments



Advance assignments

It is important that the traineesunderstand the purposes of advanceassignments and receive clearinstructions (written instructions)

They consume time outside formalsessions, reducing trainee‟s inclinationsto “go out on the town" or otherwisegoof off

Evaluating sales trainingprograms



programs

Compare the program‟s aims with theresults

Results, such as improved sellingperformance may come at a later time

Comparison of-




programs

Length of time new sales personnel(who have completed initial salestraining) take to attain the productivitylevel of the experienced salesperson

The performance against standards of trained and untrained sales personnel




programs

Respective training histories of the bestand worst performers

Plotting graph of each sales person‟ssales records on a before –and-aftertraining basis, generally convertingthem to market percentage




programs

Some companies use written tests (on abefore-and-after training basis)

Send observers to work with salespersonnel who have completed trainingprograms and ask a report




programs

Solicit customers for their reactions to asalesperson‟s performance after training

Effectiveness of program be measuredwhen the program is in progress andafter completion




programs

Tests and examinations measuretrainee retention of materialspresented, most appropriately whentrainees are to memorize certaininformation




programs

For sales technique measurement testsand examinations are not useful butperformance in role-playing assignmentis a better approach




programs

Rate each trainee‟s performance in roleplaying, panels and other discussions

Trainees also rate training programafter they return to their territories

Motivating sales personnel



Motivating sales personnel

Motivation as applied to sales personnelis the amount of effort the salespersondesires to expend on the activitiesassociated with the sales job, such ascalling on potential accounts, planningsales presentations, and filling out

reports

Why motivation for salespeople?



peop e

1)inherent nature of the sales job-awayfrom family,travelling,ups and downs

2)salesperson‟s boundary position androle conflicts-linkages with 1)salesmanagement, 2)order fulfillingdept,3)customers and 4)other companysales personnel




p p

Conflicts faced by salesman-

1)conflict of identification




p p

2)advocacy conflict

3)because of dual role as an advocate

for both the customer and companyand pecuniary interest as anentrepreneur




p p

3)tendency toward apathy-because of routine customers and territories

4)maintaining a feeling of groupidentity-works alone, no team spirit

5)salesperson‟s linkages with groups

with divergent interests

How to reduce conflict of salespeople?



p p

Improving sales training effectiveness

Revising selection criteria

Motivation theories



1)Hierarchy of human needs- Maslow-physiological, safety and security,belongingness and social relationsneed, esteem needs, self-actualizationneeds

Motivation theories



2)Motivation-Hygiene theory-Hertzberg

Hygiene factors-interpersonal

relations,peers,subordinates,supervisors,company policy, job security

Motivation theories



Motivation factors-achievement,recognition,advancement,work itself,growth potential, responsibility

Deficiencies in hygiene factors lead to job dissatisfaction

Motivation theories



Fulfillment of hygiene needs does notlead to job satisfaction but leads to „fairday‟s work‟

Motivation factors when fulfilled lead to job satisfaction

Motivation theories



3)Achievement motivation theory-DavidMcClelland-need for achievement(nAch)

nAch can be gauged by TAT (Thematicapperception test)

nAch qualities-

Motivation theories



1)Like problem situations in which theytake personal responsibility for findingsolutions (ones in which the possibilitiesof reaching them are reasonable)

Motivation theories



2)tend to set attainable achievementgoals

3)want feedback on how they aredoing?

Expectancy model-Vroom



p y

an individual's desire to produce at agiven time depends on that individual‟sspecific goals and perception of therelative worth of performancealternatives as paths to attainment of those goals

Other issues in motivatingsales personnel



Interdependence and motivation

Motivation and leadership

Motivation and communications Interpersonal contact

Written communications

Compensating sales personnel



Purpose of the plan-

1)provide a living wage

Compensating sales personnel



2)adjust pay levels to performance(expectancy motivation theory)

3)provide a mechanism fordemonstrating the congruency betweenattaining company goals and individualgoals (expectancy theory)

When total overhauling of plan?



1)when the morale is low because of low compensation

2)when a company is anticipating thecultivation of new and different markets

7 requirements of a goodcompensation plan-



1)it provides a living wage preferably inthe form of a secure income

2)fits with rest of the motivationalprogram

3)is fair-equal pay for equalperformance

7 requirements of a goodcompensation plan-



4)easy for sales personnel tounderstand

5)adjusts pay to changes inperformance

6)economical to administer

7)helps in attaining the objectives of the sales organization

Devising a sales compensationplan



1)define the sales job

2)consider the company‟s general

compensation structure

Devising a sales compensationplan-



3)consider compensation patterns incommunity and industry

4)determine compensation level 5)provide for the various compensation

elements

Devising a sales compensationplan-



6)special company needs and problems

7)consult the present sales force

8)reduce tentative plan to writing andpre-test it

9)revise the plan

10)implement the plan and provide forfollow-up

Define the sales job



Up-to date written job descriptions

Sales volume objectives

Define the sales job



Distribution policies, credit policies,price policies and other policies

Current and proposed advertising andsales promotional programs assist inclarifying the nature of thesalesperson‟s goals, duties and activities

General compensationstructure



As per job evaluation

Job evaluation methods-4

1)simple ranking 2)classification or grading

3)point system

4)factor-comparison method

Simple ranking



Inexpensive

Widely used by small businesses

Executive committee sorts out jobdescriptions in the order of worth

Simple ranking



Without considering current individualsin the job or their compensation levels

No effort is made to determine criticalfactors inherent in the job

Only relative appraisal of the relativeworth of different jobs are made

Classification or grading



The grades sometimes called classes,are described in terms of jobresponsibilitys,skills required,supervision given andreceived,exposure to hazardous andunfavorable working conditions

Classification or grading



Job descriptions are then classified intoappropriate grades by an executivecommittee or by personal specialists

All jobs within a grade are treated alikewith respect to base compensation

Point system



Most widely used method

Factors considered are-

Mental and physicalskills,responsibility,supervision givenand received, personality requirementsand minimum education required

Point system



Each factor is assigned a minimum andmaximum number of points (in line withimportance)

Appraised factor scores are combinedinto a total point value

Point system



Finally, bands of points are decidedupon and become the differentcompensation classes

Point values make it possible todetermine the gap, or distance,between job classes

Factor-comparison method



Resembles the point system but morecomplex

Utilizes a scheme of ranking and cross-comparisons to minimize error fromfaulty judgment




Employs selected factors and evaluationscales




Scale values are in dollars and cents,and no upper limit exists to thevaluation that can be assigned to any

one factor

A selected number of key jobs, typicalof similar jobs throughout the company

are then evaluated factor by factor




This is done by arranging them in rank order from highest to lowest for eachfactor




As a check against judgmentalevaluation, the compensation dollarsactually paid for each job are allocated

to the factor; the allocationautomatically establishes therelationship among jobs for each other




The judgment ranking and the rankingby allocation of compensation arecompared and differences are

reconciled, or else the jobs are removedfrom the key list




On the basis of dollar amounts assignedto the several factors making up key

jobs, additional jobs are evaluated and

their monetary values for each factorinterpolated into the scale

This process is repeated until all jobs

are evaluated

Compensation patterns incommunity and industry



What compensation systems are beingused?

What is the average compensation forsimilar positions?




How are other companies doing withtheir plans?

What are the pros and cons of departing from industry or communitypatterns?




A sound compensation is possible onlyif it considers the relation of externalcompensation practices to those of the

company

Vigil is to be maintained to see that thepay of sales personnel will not get out

of line with that paid for similar jobs inthe community or industry

4-determine compensationlevel



Decide on the average

Ascertain the caliber of the presentsales force measures up to what thecompany would like to have




Weigh the worth of individual personsthrough estimating the sales and profitdollars that would be lost, if particular

sales person resigns




Another consideration is thecompensation company can pay

Plot each cost estimate on a break-evenstyle chart

Similar companies butdifferent pay? Possibilities-



The first group of sales people may beovercompensated

Sometimes, management does notknow the true worth of individual salespersonnel




In other cases, management regardssome sales personnel as indispensableor managerial inertia prevents

adjustment of the compensation level toa changed selling conditions




Sales managers are biased in favor of high compensation for selling jobs

5-provide for the variouscompensation elements



4 basic elements-

1)a fixed element, either a salary ordrawing account, to provide somestability of income

2)a variable element (a commission,bonus or profit sharing arrangement) toserve as an incentive




3)an element covering the fringe or „plus‟ factor-such as paid vacation,sickness and accident benefits, life

insurance, pensions and the like




4)an element providing forreimbursement of expenses or paymentof expense allowances

Generally fixed and variable componentwill be 80/20 or 60/40

Special company needs andproblems



1)Sales people over emphasizing low-margin items and neglecting moreprofitable products-stimulate the selling

of better balanced orders-variablecommission rates for different products-higher rates to neglected products




2)small order problem-design plan thatencourages larger order with a in-builtmechanism to vary call frequency with

account size

3)securing retail displays-is normallyneglected when sales man are paid

based on sales volume-give incentivepayment for obtaining retail displays




4)securing new customers and newbusinesses

5)improving the quality of salespeople‟sreports




6)controlling expenses of handlingcomplaints and adjustments

7)eliminating price shading by the salesstaff




8)reducing traveling and otherexpenses

9)making collections and gatheringcredit information

For transitory issues, plan should not bechanged frequently

Consult the present salesforce



Consult everybody but give moreimportance to the opinions of desiredcaliber sales force

Reduce tentative plan towriting and pre-test it



The more the difference in the tentativeplan and current plan, the greater theamount of testing

Pretests are generally mathematical andcomputerized




Past payrolls( a year or two) arereworked to check operation of theproposed plan against experience under

the old system




If sales pattern shows considerablefluctuation, calculations are made forperiods representative of average, good

and poor business

The plan is tested for the sales force asa group and for individuals faced with

unique selling conditions




Analysis reveals whether the planpermits earning in line with the desiredcompensation level

If deficiencies show up, the plan maynot be at fault; weaknesses can trace tothe way territorial assignments have

been made or to inaccuracies in salesforecasts, budgets or quotas




For pilot test, several territoriesrepresentative of different sets of selling conditions are selected




The proposed plan is applied in eachone long enough to detect how it worksunder current conditions

Pilot tests are invaluable for spottingpossible sources of trouble and otherdeficiencies

revise



Revision to eliminate trouble spots ordeficiencies

If more alterations are there, therevised plan goes through furtherpretests and perhaps another pilot test

For minor changes, further testing is

not necessary

Implement the plan andprovide for follow-up



Explain it to sales personnel

Convince them of its basic fairness andlogic




Make them to understand whatmanagement hopes to accomplishthrough the new plan and how this is

done




Details of changes from the old planand their significance requiresexplanation

Send copies to all sales personnel




If complex, special training sessions areheld




Inadequate understanding of the salescompensation plan is common andoften a cause of low morale

No effort is spared to make certain thateveryone fully comprehends thecompensation plan and its working




Provision for follow-up are made

From periodic check-ups ,need forfurther adjustments is detected

Periodic checks provide evidence of theplan‟s accomplishment ,and theyuncover weaknesses needing correction

Types of compensation plans



1)straight salary

2)straight commission

3)combination of salary and commission

Straight salary



Once popular now less importance

@20%organizations use this

Straight salary



Most common among industrial goodscompanies

Suitable when the selling job requiresextensive missionary or educationalwork, when sales people service theproduct or give technical or engineering

advice, or when sales people doconsiderable sales promotion work

Straight salary



If non-selling tasks bulk large in thesalesperson‟s total time expenditure

Commonly used for people involved intrade-selling

Sometimes for driver-sales peopleselling liquor,beverages,milk,bread etc

Straight salary-advantages

d l l



Provides strong control over salespersonnel

Management can direct their activitiesalong the most productive lines

Economical to administer

Accounting costs are lower

Straight salary-advantages frosalesman

S bili f i



Stability of income

Less burden of planning routing andscheduling

Straight salary-disadvantages

M l l d l



Many sales people do only an averagerather than an outstanding job

There is tendency to under compensate

productive people and overcompensatepoor performer giving rise to turnoverand increased cost of recruiting

Maintaining morale


Diffi lt t dj t t h i



Difficult to adjust to changingconditions during downswings

During upswing, sales people will not

be ready to exceed previous salesrecords by any large amount


Th h d d i i t ti th



Through good administration, theseweaknesses can be overcome

Measuring average, good and poor

performance is difficult

Straight commission

I di id l l l h ld b



Individual sales personnel should bepaid according to productivity

Sales volume is the best productive

measure

More complex than straight salary plan

Straight commission

2 l ifi ti



2 classifications-

1)straight commission with salespersonnel paying their own expenses

2)straight commission with thecompany paying expenses, with orwithout advances against earned

commissions

Straight commission

S it bl h lli d ti



Suitable where non-selling duties arerelatively unimportant and managementemphasizes order getting

Straight commission

C i th l thi t til d



Common in the clothing,textile,andshoe industries and in drug andhardware wholesaling

Insurance, investment securities,furniture manufacturer, officeequipment

Less than 10%companies use this plan

Advantages-straightcommission

P o id i di t o t



Provides maximum direct monetaryincentive for the salesperson to strivefor high level volume

Advantages-straightcommission

A means for cost control all direct



A means for cost control-all directselling expenses except for travelingand miscellaneous expenses fluctuate

directly with sales volume changes andsales compensation becomes virtuallyan all variable expense

Great flexibility-by revising commissionrates applying to different products

Disadvantages-straightcommission

Provides little financial control over



Provides little financial control oversalespeople‟s activities

Negligence towards daily reports

etc,consider sales accounts as individualproperty, high pressure tactics and lossof goodwill


May push the easiest to sell low margin



May push the easiest-to-sell-low marginitems and neglect harder-to-sell high-margin items


Costs of checking and auditing



Costs of checking and auditingsalespeople‟s reports and of calculatingpayrolls are higher than under the

straight salary method Some salespeople‟s efficiency may

decline because of income certainties

(management needs to invest in timeand money to buoy up their spirits)

Determining commission base

Company selling policies and problems



Company selling policies and problemsinfluence selection of the base

If obtaining volume is the main

concern, the total sales is the base

If sales personnel make collections onsales, commissions are based on

collections

Determining commission base

In case of excessive order cancellation



In case of excessive order cancellationhistory, commission can be based uponshipments, billings or payments

Some companies base commissions ongross margins

Other companies use net profits as the

base

Drawing accounts

Company establishes separate accounts for



Company establishes separate accounts foreach salesperson, to which commissions arecredited and against which withdrawals aremade

Drawing accounts resemble salaries, sincecustomarily individual sales personnel areallowed to overdraw against future earnings

If sales personnel become greatly overdrawn,they may lose incentive to produce, becauseearned commissions are used to reduce theindebtedness

Drawing accounts

Some sales personnel become



Some sales personnel becomediscouraged with the prospect of payingback overdrawn accounts and quit the

company

Drawing accounts

To forestall quitting by overdrawn



To forestall quitting by overdrawnsalespeople, some firms use

“guaranteed" drawing account plans

(these do not require the paying back of overdrawls)

Commonly, drawing account plans

include a provision that covers thepossibility of overdrafts

Salary and incentivecombination plan-advantages

Sales personnel have both the security



Sales personnel have both the securityof stable income and the stimulus of direct financial incentive

Management has both financial controlover sales activities and the apparatusto motivate sales efforts

Salary and incentivecombination plan-advantages

Greater flexibility for adjustment to



Greater flexibility for adjustment tochanging conditions

Cooperative spirit develops between the

sales personnel and the company

Disagreement on pay increases andterritorial changes are less violent

Disadvantages of combinationplan

Clerical costs are higher



Clerical costs are higher

More records are maintained and ingreat detail

Generally 80-20 or 60-40 fixed andvariable element

bonus

Is an amount paid for accomplishing a



Is an amount paid for accomplishing aspecific sales task

Are paid for reaching a sales quota, a

performing promotional activities,obtaining new accounts, following upleads, setting up displays or carrying

out other assigned tasks

bonus

Is an additional financial reward to the



Is an additional financial reward to thesales person for achieving resultsbeyond a pre-determined minimum

Bonuses are never used alone-theyalways appear with one of the threemain sales compensation methods

bonus

The bonus conditions require thorough



The bonus conditions require thoroughexplanation, as all sales personnel mustunderstand them

The necessary records must be set upand maintained

bonus

Procedure for keeping sales personnel



Procedure for keeping sales personnelabreast of their current standingsrelative to the goals are needed

Any bonus misunderstandings orgrievances arising should be dealt withfairly and tactfully

Fringe benefits

Range from 25 to 40% of the total sales



Range from 25 to 40% of the total salescompensation package

Fringe benefits

Do not bear direct relationship to job



Do not bear direct relationship to jobperformance

Some fringe benefits like payments for

social security premiums,unemployment compensation andworker‟s compensation are required by

federal and state law

Why fringe benefits?

1)to be competitive with other



1)to be competitive with othercompanies in the industry or community

2)to furnish reasons for employees to

remain in the company‟s service

3)to comply with what employeesexpect as fringe benefits

Fringe benefits-possible forsales personnel

1)time-holidays vacations sick-



1)time holidays,vacations,sickleave,personal-leave,sabbaticals,pregnancy leave

2)organization dues-trade association,civic clubs, country clubs, professionalassociation


3)retirement programs-social security



3)retirement programs social security(mandatory) ,pension plan, profitsharing, salary reduction plans


4)miscellaneous-automobile,use of vacationk d l d l d l h ( ll



) ,spot,parking,dry cleaning and laundry,lunches(all orpart), secretarial services, employee stock purchaseplan, company-provided housing, legal services,financial counseling,tution for continuing educationprograms, financial support for dependent‟seducation, discount for purchase of companyproducts, child care payments, matching funds tocharities and schools, company social events,company sporting tournaments, retirementcounseling, career counseling, payment of movingexpenses


5)insurance and medical-physical



5)insurance and medical physicalexamination, medical payments andreimbursements, hospitalization insurance,dental insurance, disability insurance, lifeinsurance, travel insurance, accidentinsurance, worker's compensation(mandatory), unemployment insurance

(mandatory), cancer insurance,psychotherapy expense

Managing expenses of salespersonnel

Generally @9% in the electrical



Generally @9% in the electricalequipment industry

@34%in the automotive parts and

accessories industry

Most industries, amount from one-fourth to one-half of sales

compensation


Missionary selling incurs the lowest



Missionary selling incurs the lowestexpenses since involves calling onprofessionals who are extremely busy

New business selling results in thehighest selling expenses (calls arepromising investment)


Technical selling requires longer calls,



Technical selling requires longer calls,more spending

Trade selling-routine calls with short

times spent with each customer-mostexpenses for travel and lodging andlittle for entertainment


It is wiser to be overly liberal than to



It is wiser to be overly liberal than torestrict salespeople‟s activities throughinsufficient expense reimbursement


Some firms try to hold expenses within



Some firms try to hold expenses withina planned total amount or to somepercentage of sales volume of gross

margin


Others control sales expenses only in a



Others control sales expenses only in ageneral way by scrutinizing expensereports or through policy statements

outlining the conditions under which theexpenses are reimbursable

Reimbursement of salesexpenses-policies and practices

1)have sales personnel pay their own



) a e sa es pe so e pay t e oexpenses

2)reimburse sales personnel for all or

part of their expenses

2 common sense principles forexpense reimbursement policies

1)reimbursable expenses should be



) plarge enough to permit the performanceof assigned duties in the expected

manner 2)all expenses incurred because sales

personnel are away from home on

company business should bereimbursable

Sales personnel paying theirown expenses

Is the simpler by far



p y

Treat sales personnel as independentbusinesspeople using straight

commission plan

No records are necessary

Sales personnel paying theirown expenses

It is essential that their regular



gcommission be sufficient to permit themto further the company‟s best interest

Little management control can beexercised

Avoid missionary duties and „high spot‟

(call on large account)

Full or partial reimbursement

Factors affecting-



g

Territorial size and characteristics

Caliber of sales personnel

Nature and breadth of product line

Managerial efficiency

Intensity of competition Mode of travel

How a expense reimbursementpolicy should be?

Take into account the customary living



y gstandards of the salesperson and thecustomers (more emphasis)


The salesperson should eat and stay at



p yhotels of the class patronized by thecustomers


In some instances, different salespeople



, p pin the same company should be alloweddifferent amounts for expense,

reflecting deviations in customer‟s livingstandards (actual expenses vary a greatdeal from one territory to another)

Keep expenses reasonable


No bad feeling among the sales staff



g g

Easy to administer-minimumsupervision and record keeping

Avoid tendency to over economize

e o s o con ro ng an

reimbursing expenses of salespersonnel

1)flat expense account



) p

2)flexible expense account

3)honor system

4)expense quota

Flat expense account

No need to keep reports and no need to



p pcheck expense accounts

Makes possible the advance

determination of total sales expenses Forces sales personnel to control their

own expenses

Works best when-


1)the exact amounts of expense



) paccounts do not need changing often(selling staple products in small

territories) 2)when expense allowances come up

for frequent review and possibly

revision


Should have flexibility built into them



y

The weakness is the tendency of somesales personnel to over economize

thinking it as a regular addition tosalary and do not spend all of it,preferring to save a portion for personal

use

Flexible expense account

Known as „exact' plan and most



common

Sales personnel are reimbursed for all

allowable expenses incurred andreported

for this method to work management

must-


1)know the total amount of sales



personnel‟s probable expenses

2)classify expenses into „allowable' and

„non-allowable" categories with cleardescriptions of items under eachheading


3)set up a system and forms for the



sales staff to use in periodic expensereporting

4)establish procedures for checkingitemized expense reports and forexpeditious handling of reimbursements


Because of the flexibility sales



opportunities are fully capitalized on asthey arise


Administrative costs are sizable becausef h l f l l d



of the large amount of clerical andaccounting work in checking expense

reports and making reimbursements(good sales persons are generally poorrecord keepers)


Without close control, some peopled h ‟



spend the company‟s money toogenerously, further aggravated by the

opportunity for expense accountpadding giving rise to disputes

Honor system

Sales expenses are fully reimbursedO l l d



Only total expenses are reported

Indicates complete honesty of all sales

personnel Easy to administer thus paving way to

savings in both accounting expensesand time

Management control is weak

Honor system

Sales personnel may become freed di t d h d



spenders spending on unwanted heads

Regard expense accounts as sources of

income causing inequities in expenseallowances adversely affecting morale

Honor system

To control,establish maximum ratios of lli t l



selling expense to sales

Watch the trend of expenses; sudden

and sizable increase in reportedexpenses unless accompanied byparallel increase in sales

Remedial action in case of dishonesty

Expense quota

Permits week-by-week variations but controlstotal expenses over long period of time



total expenses over long period of time

Management first studies individual sales

territories and estimates the sales volumeand upper limit for each sales person

Prompt and full reimbursements are made

Expense quota

Drawback-the burden for controllingi th l l



expenses is upon the sales personnelrather than upon management

Expense quota

Skillful administration is necessary



In case of wrong forecasts, the salespersonnel may curtail their activities

towards the end of budgetary periodsbecause of low balances left in accounts

Reimbursement of automobileexpenses

1)flat mileage rate



2)graduated mileage rate

3)fixed periodic allowance

4)combination fixed periodic allowanceand mileage rate

5)runzheimer plan

Flat mileage rate

Must set the mileage rate high enough tocover all expenses of automobile ownership



cover all expenses of automobile ownershipand operation, yet low enough to permit thecompany to buy transportation economically

Works satisfactorily when a company‟s salesforce covers small territories all in the samegeographical area

Most local and regional wholesalers among

other small companies favor flat mileagerates

Flat mileage rate

Short-comings-



Ignores cost differentials arising fromthe use of various makes and models

Flat mileage rate

Ignores territorial differences inexpenses (price of



expenses (price of gasoline,oil,tires,insurance coverage,

license and inspection fee etc) Hesitation in adjusting the rate upward

as well as downward in line with

changing actual expenses

Graduated mileage rate

Different rates apply to mileages indifferent ranges



different ranges

Setting the rate per mile is difficult

Suitable when sales personnel travellong distances annually and serveconcentrated geographic areas without

significant regional expense differences

Fixed periodic allowance

To those who use their personal vehicleon company business on



on company business-onday,week,month basis

Assumes that total automobile expensesvary with duration of use rather thanmileage

Fixed periodic allowance

Difficult for sales personnel with largeterritories requiring extensive traveling



territories requiring extensive traveling

If allowances are uniform for all sales

personnel, morale suffers because of the inequities

Fixed periodic and mileagerate combination

Fixed periodic allowance to cover fixedand semi variable expenses such as



and semi variable expenses such asinsurance premiums, license fees and

depreciation

Fixed periodic and mileagerate combination

Mileage payment for operatingexpenses including cost of gasoline oil



expenses including cost of gasoline, oiland tires

Some companies using combinationssystems accumulate reserves to coverdepreciation on automobiles and

reimburse sales personnel when theybuy new cars

Runzheimer plan

Originated by consulting firmRunzheimer USA in 1933



Runzheimer USA in 1933

Divides USA into 29 auto-use basic cost

areas

Runzheimer plan

Allowances are for 20,000 miles of average annual travel within each of



average annual travel within each of the cost areas

Runzheimer plan

Recommends that certain expenseitems not provided for in the standard



items not provided for in the standardallowance be reimbursed as incurred

and reported by sales personnel such aslocal city license fees, property taxes,daytime parking, overnight parking

away from home and toll charges etc

Runzheimer plan

More than 1,50,000 drivers of businessautomobiles are reimbursed over $500



automobiles are reimbursed over $500million each year

Sales meetings and salescontests

5 major decisions for planning a salesmeeting-



meeting-

1)defining the specific training aims

2)deciding meeting content

Sales meetings and salescontests

3)determining methods of conductingthe meeting



the meeting

4)deciding how to execute (hold) the

meeting 5)how to evaluate the results

aims

1)a new product may be ready forintroduction



introduction

2)new insights on customer attitudes

and behavior (new research) 3)deficiency of sales personnel in using

sales techniques as per the supervisor

aims

4)improving the quality of sales forcereports



reports

5)orienting sales personnel on the

advertising program and its connectwith the sales force

aims

6)time management for sales force7)introducing new services (such as



7)introducing new services (such asinventory control assistance) for

customers

Content-(agenda)

New product being launched bycompetitor-



competitor

Content might include-

1)what we know about X‟s new product

Content-(agenda)

2)what we think the trade‟s reaction willbe and why



be and why

3)what your company is doing

4)what you should do and how

method

Depends upon the aim and content aswell as upon the time available and



well as upon the time available andmeeting place

Most local meetings are short andparticipative

method

GD is used Regional or national meetings are held



Regional or national meetings are heldless often and run for two or more

days have more ambitious aims andwider content

Execution

Room arrangement Audiovisual equipment and supplies



Audiovisual equipment and supplies

Provision of materials to attendees

(including pads and pencils)

Timing of breaks and refreshments

Execution

Starting time and closing time 1)Herringbone



1)Herringbone

2)workshop

3)Inverted U-shape

4)seminar or the „British Square‟

evaluation

As per specially designed forms for eachmeeting



meeting

National sales meetings

When? Comprehensive changes in marketing or



Comprehensive changes in marketing orsales policies are made

National sales meetings

Major executives attend nationalmeetings which provides stimulation



meetings which provides stimulationthan written or recorded messages

Informal meetings of sales personneland interchange of experience

Drawbacks of nationalmeetings-

Expense



Drawbacks of nationalmeetings-

Difficult to find a convenient time for allsales personnel to attend unless the



pproduct line is seasonal

Company routine is disrupted andcompetitors may cut into market sharehowever more aggressive selling results

from the national meeting

Regional sales meetings

Trend is towards regional meetingsfrom national meetings



g

Reduction in total travel costs and

lowering lost selling time

Regional sales meetings

HQ executives brought into directcontact with field personnel learn about



pcurrent problems at first-hand

Smaller attendance may increaseparticipation time per person attending

Regional sales meetings-disadvantages

Demands on executive time may beexcessive



Top sales executives often rotate

attendance among regional meetings

Regional sales meetings-disadvantages

Total attendance is smaller developing aspirit of contagious enthusiasm is more



p gdifficult

May not have top-flight speakers andentertainers featured at nationalmeetings

Opposition to national andregional sales meetings

Likely results do not justify expectedcosts



Ill affordability to have sales personnel

away from the field even for a week

Opposition to national andregional sales meetings

Demands on their time Low sales force morale since sales



Low sales force morale since salespersonnel will use the meetings to

compare complaints and to strengthentheir convictions that the company is abad place to work

Local sales meetings

Are conducted by district salesmanagers either weekly or biweekly



g y y

May last from 15 minutes to several

hours

Local sales meetings

Strengths-informality, opportunity topose personal questions and to state



p p qpersonal views

Occasion to get together, betteracquaintance and strengthen groupidentity

Remote control and travelingsales meetings

1)closed circuit television 2)sales meetings by telephone



2)sales meetings by telephone

3)sales meetings at home

4)traveling sales meetings

Closed circuit television

Suitable for companies with large scalesales force or large dealer organization



The program is „live‟

Suitable to introduce new products or tolaunch national sales campaigns

Sales meetings by telephone

Uses for small group meetings anddiscussions-not more than 20



Rules-only one individual will speak at a

time and speaker to identify themselvesand their cities

Save time and money

Loose less time, (time away from jobs)

Sales meetings at home-

Some companies mail recording or printedmaterials to sales personnel at their homes



One format is to record an executiveconference or meeting and to provide salespersonnel with cassette copies

Another is to print an illustrated script of ahome office meeting for distribution to sales

personnel

Sales meetings at home-

Advantages- 1)sales personnel receive the



) pinformation at home, free from

distractions 2)they can review the information many

times

3)there are savings in time and money

Traveling sales meetings

Suitable when manufacturer introducesa new product line which needs to be



displayed and demonstrated

Regional meetings become impossible,since shifting and arranging of displayand demonstration is cumbersome

Traveling sales meetings

Some companies use outfittingmotorized vans and trailers with



product displays and conference rooms

Moves from city to city and at eachstop sales personnel and/or dealerscome aboard

Sales contests-why?

1)to obtain new customers 2)to secure larger orders per sales call



) g p

3)to push slow-moving items, high

margin goods or new products 4)to overcome a seasonal sales slump

5)to sell a more profitable mix of

products

Sales contests-why?

6)to improve the performance of distributor‟s sales personnel



7)to promote seasonal merchandise

8)to obtain more product displays 9)to get re-orders

10)to promote special deals to

distributors, dealers or both

Contest formats-

1)direct-has a specific objective-Let‟s goafter new customers



2)novelty-focuses upon a current event,

sport or the like-e.g.-Let‟s hunt forhidden treasure( find new customers)or Let‟s start panning gold (sell more

profitable orders)

Themes for novelty formats

1)Games- 2)races



)

3)card games

4)hunting or fishing

5)travel


6)climbing 7)the rising



thermometer,pressure,gauge etc

8)building contests-skyscraper, othernew buildings, tower, smoke-stack etc

9)military

10)clothing contests


A) team type-football, baseball, hockey,bowling, tennis doubles, tug-of-war,



soccer etc.


B) individual type-tennissingles,golf,wrestling,archery,fencingb d j hi h j l l



broad jump, high jump, pole vault,

hammer throw, discuss throw, shootingmatch, javelin throw, bull fight, climbingthe greased pole etc

Races

Team-type-crew, crosscountry,relay,bobsled,yacht



Individual type-horse race, dog race, air

race, soap box derby, autorace,hurdles,dashes,marthons,dog sled,trotting race, swimming races,

speedboat races

Card-games

Poker Pinochle



Bridge

black jack etc.

Hunting or fishing

Treasure hunt Big-game hunt



Uranium rush

Gold rush

Land rush

Fishing derby

Trapping contest

Travel-

Trip around the world to Miami



to new York

to Hollywood

to Waikiki

to the moon

to space etc

climbing

Ladders Stairs



Mountains

Cliff scaling

Ascent to the stratosphere

The risingthermometer,pressure,gauge etc



Building contests

Sky scraper Other new buildings



Tower

Smokestacks

military

Naval battles Artillery engagements



Bombing runs

Invasions

Interplanetary wars

Clothing contests

In one of these, the sales person earnsone item of clothing at a time andappears at sales meetings clad only in



appears at sales meetings clad only in

those items earned up to that point

Contest prizes

Cash Merchandise



Travel

Special honors or privileges

cash

Once basic physiological needs andsafety and security needs are satisfied,whatever potency money retains as an



whatever potency money retains as an

incentive relates to unfulfilled esteemand achievement needs (non-cashprizes fill these needs better than cash)

cash

To be a strong incentive, it needs to besubstantial-10-25% of an individual‟sregular annual income



regular annual income

Cash-disadvantages

A cash price of $100 means a little tomost sales personnel and they exerttoken efforts to win it



token efforts to win it

Winners mix cash prizes with otherincome, thus have no permanentevidence of their achievements

merchandise

Is superior to cash in several respects Winners have permanent evidence of

th i hi t



their achievements

merchandise

The merchandise prize is obtained atwholesale, so it represents a valuelarger than the equivalent cash



larger than the equivalent cash

For the same total outlay,too,moremerchandise prizes than cash awardscan be offered; hence the contest canhave more winners

Merchandise-selection

Items should be desired by salespersons or their families

All i t l t f i t f



Allow winners to select from a variety of

offerings Merchandise incentive agencies can be

used

travel

travel awards are popular and a strongincentive

G ll id t i f i d



Generally provide trips for winners and

their spouses


A letter from a top executiverecognizing the winner‟s superiorperformance



p

A loving cup

A special trip to a home office meeting

Membership in a special group or club(million dollar club for life insurance

salesman)


Publicity through house organs and inhometown newspapers

A e sed b fi ms emplo ing sales



Are used by firms employing sales

personnel who are almost „independententrepreneurs”


These are suitable when managementdesires to strengthen group identity andbuild team spirit



build team spirit

These appeal to the sales person‟sbelongingness and social relationsneeds

How many prizes and howshould they be awarded?

Make it possible for everyone to win Present performance levels be

considered



considered

Basis for award be improvement ratherthan total performance( not the totalsales volume but %of quota achieved)

Contest duration

Be decided after considering the lengthof time interest and enthusiasmmaintainability plus the period over



maintainability plus the period over

which the theme can be kept timely andthe interval needed to accomplish thecontest objective

1-4 months,13 weeks, not longer than amonth etc

Contest promotion

A planned barrage of promotional materialdevelops enthusiasm

A teaser campaign may precede the formal



A teaser campaign may precede the formalcontest announcement; other times the

contest announcement comes as a surprise

As per the progress of the contest, othertechniques hold and intensify interest

Contest promotion

Results and standings are reported atsales meetings or by daily or weeklybulletins



bulletins

At intervals, new or special prizes areannounced

Contest promotion

Reports of standings are addressed tospouses to generate interest at home

Flash reports be shown additional



Flash reports be shown, additional

stimuli be added

Managerial evaluation of contests

Two levels-pre-evaluation and post-evaluation

Pre evaluation aims to detect and



Pre-evaluation aims to detect and

correct weaknesses

Managerial evaluation of contests

Post evaluation seeks insights helpful inimproving future contests

Both cover alternatives short term and



Both cover alternatives, short-term and

long-term effects,design,fairness andimpact upon sales force morale

Short and long-term effects

A sales contest accomplishes itspurpose if it increases sales volume,brings in more profitable volume, or



brings in more profitable volume, or

does both in the short and the long run No contest is successful if it borrows

sales from preceding months,succeeding months or both

Short and long-term effects

Successful contest increase bothcontest period sales and long-run sales

Successful contests boost the spirits of



Successful contests boost the spirits of

sales personnel to have a beneficialcarry over effect

design

A well designed contest providesmotivation to achieve the underlyingpurpose while increasing the gross



purpose while increasing the gross

margin earned on sales volume by atleast enough to pay contest costs

design

The format should tie in directly withthe specific objectives, include easy-to-understand and fair contest rules and



understand and fair contest rules and

lend itself readily to promotion

fairness

Should be visible to all sales contestants



fairness

While the contest is on, the salespersonnel should feel that they havereal chance of winning something



real chance o winning something

If its format causes some to give upbefore it starts and others to stop tryingbefore it is over indicates a unfairformat

Impact upon sales forcemorale

Successful sales contests result inpermanently higher levels of sales forcemorale



Impact upon sales forcemorale

If the format causes personal rivalry, itmay have the counter productive effectof creating jealousy and antagonism



g j y gamong the sales force

It is advisable to organize teams andplace the emphasis on competitionamong teams for recognition thanindividuals

Objections to sales contests

Only 1 in 4 sales departments use contests, why?

Sales persons are paid for their service underprovision of the basic compensation plan hence noneed to reward them further



High caliber and more experienced sales personnel

consider sales contests juvenile and silly Contests lead to unanticipated and undesirable

results such as increased returns andadjsutments,higher credit loss and overstocking of dealers


Sales slump occur before and after thecontest

The disappointment suffered by contest



The disappointment suffered by contest

losers causes a general decline in salesforce morale


Contests are temporary motivatingdevices and if used too frequently havea narcotic effect (no greater results in



( gthe aggregate are obtained withcontests than without them


The competitive atmosphere of contestweakens the team spirit

Good contest design, intelligent contest



Good contest design, intelligent contest

administration and proper handling of other aspects of sales forcemanagement will minimize objections

ew op c- on ro ng sa es

personnel-evaluating andsupervising

What is control?(4 steps) 1)Establish performance standards

2)recording performances



2)recording performances

3)evaluating performances against thestandards

4)taking action

Quantitative performancestandards

1)quotas 2)selling expense ratio

3)territorial net profit or gross margin



3)territorial net profit or gross margin

ratio 4)territorial market share

5)sales coverage effectiveness index

6)call-frequency ratio

Quantitative performancestandards

7)call per day 8)order call ratio

9)average cost per call



9)average cost per call

10)average order size 11)non-selling activities

12)multiple quantitative performance

standards

quotas

Is a quantitative objective expressed inabsolute terms and assigned to aspecific marketing unit



quotas

May be dollars, or units of product withthe marketing unit being a salespersonor a territory



Quotas specify desired levels of accomplishment for sales volume, grossmargin, netprofit,expenses,performance of non-selling activities etc

Selling expense ratio

Sales person can affect this both bycontrolling expenses and by makingsales



Selling expense ratios are determinedafter analysis of expense conditions andsales volume potentials in each territory

Selling expense ratio-shortcomings

Does not take into account variations inthe profitability of different products




May cause the salesperson to overeconomize on selling expenses to thepoint where sales volume suffer




In recession times, selling expenseratios inhibit sales personnel fromexerting efforts to bolster sales volume

38173998 selling and negotiation skills 1st sem mms

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