chapter thirteen sales and sales management personal selling

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Chapter Thirteen Sales and Sales Management Personal Selling

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Page 1: Chapter Thirteen Sales and Sales Management Personal Selling

Chapter Thirteen

Sales and Sales ManagementPersonal Selling

Page 2: Chapter Thirteen Sales and Sales Management Personal Selling

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Learning Objectives

1. Sales’ role in the organization - Identify sales’ strategic communication role

2. Sales strategies and customer relationships - Select the types of selling used for different types of relationships; Outline the sales strategy associated with each type of selling

3. Organizing the sales force - Compare and contrast organizational structures used to manage sales

4. Directing the sales force - Illustrate when to use different control and compensation program

5. Evaluating performance - Discuss how sales force performance is evaluated

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Sales’ Role In the Organization

Sales are person-to-person; only personal selling are able to tailor the sales message to the unique needs/preferences of each individual customer

1. Salespeople create value by adapting their products to fit customer needs- training customers to use the product correctly;- handling customer complaints

2. Manage customer relationships – must be adept at interacting with personnel representing credit and billing, shipping, manufacturing and customer service

3. Gather information – a prime source of customer/market information- From Customers- From Competitors- About Market Forces

4. Play an important part in the product design process

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Sales Strategies and Customer Relationships

1. Script-based selling

2. Needs satisfaction selling

3. Consultative selling

4. Partnering

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Sales Strategies and Customer Relationships

Script-based selling involves using scripts or memorized sales pitches from which the salesperson does not deviate

Used when all customers’ needs are similar

Popular in telemarketing and in selling MRO items and other supplies

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Sales Strategies and Customer Relationships

Needs satisfaction selling is a process of selling that involves identifying the buyer’s needs and tailoring the sales pitch (presentation) to fit those needs

A more sophisticated approach which works best when buyer needs vary and choices must be made from among various products and/or brands

Identifying buyers’ needs and selling to them

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Sales Strategies and Customer Relationships

Consultative selling is a process of selling that the seller brings specialized expertise into a complex problem in order to create a somewhat customized solution

May appear similar to needs satisfaction selling, but in this case, the buyer has less information about what is needed and relies on the consultant’s knowledge to custom-tailor a solution

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Sales Strategies and Customer Relationships

Partnering Seller-Customer joint effort for developing product

solutions Goes beyond consultative selling because the long-term

nature of partnerships Both parties share expertise/resources to create customized

solutions and a commitment to joint planning for mutual benefit

There are many sales strategies that can be used when partnering including cross selling and full-line selling

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Selling across the stages of the partnership

• Generate reorders• Upgrade• Full-line sell

• Secure complete commitment from both companies• Manage change

• Limited relationships• Failure to monitor competitors or industry• Complacency

Exploration

Awareness

Commitment

Expansion

• Set correct expectations• Ensure proper initial use• Follow up• Make personal visits• Handle complaints• Achieve customer satisfaction

Dissolution

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Selling across the stages of the partnership

Exploration – The major goal is building trust. In order to begin a relationship properly, the salesperson must

Set proper expectation Monitor order processing and delivery Ensure proper use of the product Assist in servicing the customer

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Selling across the stages of the partnership

Expansion – From generating repeat sales to …

Upgrade (upselling) – convincing the buyer to use a high-quality or newer product; high-tech firms are vitally dependent upon upgrading

Full-line selling – the entire line of associated products; Many companies try to get their foot in the door with any sale, hoping to then blossom into full-line selling once the initial product has proven its value

Cross selling – sell additional products to customers currently buying unrelated products; works best when the salesperson can leverage the relationship with the buyer and trust in the salesperson and the selling organization already exists

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Selling across the stages of the partnership

Commitment

Preferred supplier status – a supplier is assured a large percentage of the buyer’s business and first chance at any new business

A stated or implied pledge to continue the relationship

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Type of customers and choice of sales strategies

Simple, lower-margin items sold to customers whose needs are uniform can be served by lower caliber salesperson following a script

As margins, product complexity, and customer diversity/importance increases, the firm moves to need satisfaction, consultative, and strategic partner selling

The strategy upgrades require a higher investment in salesforce quality and training

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Partnership Communication:From single level to multi-level

ProductionMarketing

AccountingFinance

PurchasingDepartment

Shipping& Receiving

Buying Company

EngineeringMarketing

Credit andBilling

FinanceSales

Shipping& Receiving

Selling Company

ProductionMarketing

AccountingFinance

PurchasingDepartment

Shipping& Receiving

ProductionMarketing

AccountingFinance

Purchasing

Shipping& Receiving

Buying Company

EngineeringMarketing

Credit & BillingFinance

Sales Purchasing

Shipping& Receiving

Selling Company

Before Partnering

After Partnering

PurchasingAgent

Salesperson

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Organizing the Sales Force

The sales function can be organized in many ways, depending on the sales strategy

Sales ExecutiveAt the top of the structure is the sales executive, who has responsibility for deciding the size and type of sales force.

- the choice of strategy- the number and location of salespeople (the workload approach, based on the expected number of sales calls that a salesperson can make)

- the setting of sales quotas and compensation plans- sales forecasting

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Organizing the Sales Force

Organization of the sales force Assign each salesperson a geographic territory (geographically) Assign salespeople to accounts, including key accounts, national

accounts, or global accounts Organize by product Create sales teams (matrix team) to meet the needs of customers– Account managers works with product specialists;– Account manager coordinates activities and determines sales

strategies;– Product specialists carry out more specific objectives– Customer-focused teams are one type of team structure that includes

representatives from manufacturing, billing, shipping, and other areas that serve the customer

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Buying and Selling Teams Streamline Multilevel Selling

Vice PresidentOf PurchasingVice PresidentOf Purchasing

Vice PresidentOf Sales

Vice PresidentOf Sales

Director ofPurchasingDirector ofPurchasing

AccountManagerAccountManager

EngineerEngineerProduct

SpecialistProduct

Specialist

Buying Company Selling Company

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CFT Structure

AccountConsultant

F&A Rep.Customer

Sales Specialists

AccountManager

TeamLeader

Manufacturing

Finance andAccounting

Other Business Units

OtherRep.(s)

PurchasingAgent

Shipping

CSSRep.

CustomerSupportService

Purchasing

ShippingManager

SalesSpecialists

Prod. / Ind.Mktg. Groups

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Outsourcing The Sales Force

Organization of the sales force Assign each salesperson a geographic territory (geographically) Assign salespeople to accounts, including key accounts, national

accounts, or global accounts Organize by product Create sales teams (matrix team) to meet the needs of customers– Account managers works with product specialists;– Account manager coordinates activities and determines sales

strategies;– Product specialists carry out more specific objectives– Customer-focused teams are one type of team structure that includes

representatives from manufacturing, billing, shipping, and other areas that serve the customer

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Organizing the Sales Force

Organization of the sales force Assign each salesperson a geographic territory (geographically) Assign salespeople to accounts, including key accounts, national

accounts, or global accounts Organize by product Create sales teams (matrix team) to meet the needs of customers– Account managers works with product specialists;– Account manager coordinates activities and determines sales

strategies;– Product specialists carry out more specific objectives– Customer-focused teams are one type of team structure that includes

representatives from manufacturing, billing, shipping, and other areas that serve the customer

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Organizing the Sales Force

Outsource the selling effort – Some companies choose to use manufacturers’ reps, distributors, and telemarketing service firms rather than hiring their own salespeople

Outsourcing selling temporarily – Hiring temporary salespeople for special sales campaigns

The advantages of outsourcing include- Lower costs- Selling expenses are borne by the distributor or rep- Less upfront investment needed- Greater local knowledge and contacts

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Do you outsource the sales force?

YES NO

• Establish relationships• Salary and selling expenses can be limited• Little/no up-front investment

• Loss of control over sales presentation• Products may not be a selling priority with representative

TO MAKE IT WORK:INVEST IN TRAINING AND

MERCHANDISING MATERIALS

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Allocation Grid for Sales Resources

Relatively fewerresources shouldbe allocated here

Low

Maintain sufficientresources to continueto reap the salespotential and strongposition

High

Direct more salesresources here

Assign toalternative methodof communicating,such astelemarketing

Weak

Strong

Sales Potential

MarketPosition

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Directing the Sales Force• ESTABLISH QUOTAS – Minimum levels of acceptable performance; Fair and

Understandable• Activity Quotas (number and type of activities: new business calls, turning

in call reports; collecting customer feedback; collect competitor intelligence)• Performance Quotas (level of performance: revenue, margin, or unit sales

in a period of time)

• ESTABLISH COMPENSATION PLAN – Equitable, Stable, Understandable• Straight Salary• Straight Commission• Bonus System • Combination PlansBase rewards on results and efforts; provide equal rewards for equal

performance; provide competitive rewards; are easy to understand and implement

• MOTIVATION ACTIVITIES – Keep Sales Force Producing

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Evaluating Performance

Sales performance is measured in two ways: in outcomes and by activities

By combining outcomes and activities, conversion ratios can be calculated to measure salesperson efficiency

These three figures (outcomes, activities, and conversions) enable sales executives to compare salesperson performance

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Five Steps in Evaluating Performance

1. Review specific sales objectives

2. Obtain appropriate performance data (outcomes and effort, observing both performance and activity)

3. Evaluate what was beyond salesperson’s control (the economy, the weather, etc)

4. Identify problems and opportunities

5. Create a strategy that resolves problems and seizes opportunities