SALES AND DISTRIBUTION MANAGEMENT
Rahul Pratap Singh Kaurav
2
WHAT IS SALES
HUMAN RESOURCE MANAGEMENT? / Sales Force Management
SHRM or SFM refers to activities undertaken to attract, develop, and retain effective sales force personnel within an organization.
FIGURE: ACTIVITIES INVOLVED IN MANAGING A SALES FORCE’S HUMAN RESOURCES
Sales H um an R esource M anag em ent
P eo p le P lann ing E m p lo ym ent P lann ing
H ow M any to H ire?
T yp e o f P eo p le?
R ecruitm ent Selec tio n So cializ atio n
FIGURE: FROM INTERVIEW TO TERRITORY: A LONG TIME
D eterm in e H o w M an y
to H ire
F irst I n terv iew
G raduatio n B egin W o rk
T rain in g E n ds
A ssign ed T errito ry
T im e L in e
Selection
What’s a salesperson worth?
A salesperson’s worth depends on what the salesperson costs to the company and on the profits from the products he or she sells.
WHO DOES THE PLANNING?
• National sales manager.• Field sales managers.• Top management.
FIGURE:
SALES FORCE PEOPLE-FORECAST MODEL:
FACTORS TO CONSIDER WHEN DETERMINING HOW MANY TO HIRE
Sales F orce O b jectives
Strateg ic P lan s
T errito rial D esig n
C urren t Sales F orce P erson nel
+H iring , P ro m otions, T ransfers I n
-
Q uits, T erm inatio ns, P ro m o tions, T ransfers O ut, o r R etirem ent
=P eo p le F o recasts
DETERMINING THE TYPE OF PERSON FOR THE JOB
Job Analysis
Job Description
Skills for the job
FORMAL JOB DESCRIPTION, TRANSTEX AUTOMOTIVE SUPPLY CORPORATION
Position: Sales Representative Reports to: District ManagerNATURE OF JOB
Responsible for developing new accounts and reaching profitable sales goals in assigned territory.
PRINCIPAL RESPONSIBLITIES
Meeting total sales goals for product lines and individual products.
Maintaining an average of six daily sales calls.
Maintaining an average of one monthly product presentation to wholesalers.
DIMENSIONS
Develop strong promotional support from retail and wholesale customers.
Plan effective territorial coverage resulting in high sales/call ratio.
Inform management of activities by submitting daily and weekly call and sales reports to district manager.
SUPERVISION RECEIVED
General and specific tasks are assigned for each sales period. Every two months work with supervisor for a minimum of one day.
SUPERVISION EXERCISED
None
RECRUITMENT’S PURPOSE
Recruitment is the set of activities and processes used to legally obtain a sufficient number of individuals in such a manner that the recruits’ and the sales force’s best interests are taken into consideration.
FIGURE: MAJOR INFLUENCES AND COMPONENTS OF SALES RECRUITMENT
Sales H u m an R eso urce P lann ing
R ecruitm ent
I nternal Sou rces
E x ternal Sou rces
A p p lican t P oo l
Q u alifi ed A p p lican t P oo l
E valuate R ecru itm en t R esults
Selection
To be an effective recruiter, a sales manager must have the answer to several questions, including: • How many people do I need to recruit?• Where do I find recruits?• How can I develop a qualified pool of
applicants?• How can recruiting programs be evaluated?
RECRUITMENT OF SALESPEOPLE
• Current Employees.• Promotions.• Transfers.
SOURCES OF RECRUITS – WHERE ARE THEY
FOUND?
INTERNAL SOURCES
Internal recruitment sources come from inside the company:
EXTERNAL SOURCES
• Walk-ins. • The Internet.
• Employment agencies. • Internships.
• Radio and television. • Colleges and universities.
• Newspaper advertisements. • Competitors.
MOTIVATING
SALESPEOPLE TOWARD
HIGH PERFORMANCE
UNDERSTAND WHAT MOTIVATION IS ALL
ABOUT
• What arouses salespeople’s behavior?
• What influences the intensity of the behavioral arousal?
• What directs the person’s behavior?
• How is this behavior maintained over time?
In any discussion about the motivation of salespeople, the following four questions need to be considered:
Motivation refers to the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period of time.
THE SALES MOTIVATIONAL MIX
Motivational Mix – The arousal, intensity, direction, and persistence of people’s behavior.
Extrinsic Outcomes – Rewards obtained from individuals’ environment.
Intrinsic Outcomes – Occur purely from the performance of the task itself.
TRAINING THE SALES TEAM
WHAT IS SALES TRAINING?
Sales training is the effort an employer puts forth to provide sales people job-related culture, skills, knowledge, and attitudes that should improve performance in the selling environments.
PURPOSES OF SALES TRAINING
• Helping salespeople become managers.
• Orienting new salespeople to the job.
• Improving knowledge in areas such as product, company, competitors, or selling skills.
• Positively influencing attitudes in such areas as job satisfaction.
FIGURE: REVISION OF TRAINING PROGRAM BASED ON NEEDS ASSESSMENT
Jo b D escrip tio n
Jo b O b jectives
Jo b E valuatio n
T rain ing R evision
T rain ing O b jectives
T rain ing P rog ram
T rain ing E valuatio n
SOURCES OF INFORMATION FOR
DETERMINING TRAINING NEEDS
• Questionnaires.• Interviews.• Tests given during meetings for diagnostic purposes.• Direct observation in the field.• Analyses of sales, profits, and activity reports.
24METHODS OF TRAINING
TECHNOLOGY-BASED TRAINING METHODS
• Interactive multimedia training.
• Electronic performance support system.
• High-tech customer service.
• Distance learning.
• CBT
ROLE PLAYING
In role playing the trainee acts out an event such as the sale of a good or service to a hypothetical buyer.
ON-THE-JOB TRAINING
The best and most frequently used training takes place on the job.
• Training begins the first day of work.
• It continues throughout the career.
• Sales meetings serve as important training methods.
WHEN DOES TRAINING OCCUR?
29 COMPENSATION
Sales is one of the few jobs where you earn your money – every day.
Any type of sales organization can reward sales performance in three fundamental and interrelated ways:
1. Direct financial rewards.
2. Career advancement and personal development opportunities.
3. Nonfinancial compensation.
COMPENSATION IS MORE
THAN MONEY…
A sales reward system is not the only means of motivating salespeople, but it is the most important.
PURPOSES OF COMPENSATION
• Connect individual with organization.
• Influence work behavior.
• Organizational choice.
• Influence satisfaction.
• Reinforcement.
EFFECTS OF PAY DISSATISFACTION
P a y D issa tisfa ction
D esire for M ore P a y
J ob
Absenteeism
Grievances
Job Dissatisfaction
Turnover
Performance
S tress, A n x iety
P oor M en ta l H ea lth
P sych ologica l W ith dra wa l
35
COMPENSATION AND STRATEGIC PLANNING To get salespeople to aid in successfully implementing the company’s strategic marketing plan,
management needs to coordinate its sales compensation plans with the company’s goals.
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OBJECTIVES OF COMPENSATION PLAN
i) The Company’s Perspective: To Motivate Salespeople To Correlate Efforts and Results with Rewards To Control Salespeople’s Activities To Attract and Keep Competent Salespeople
ii) The Salespeople’s Perspective A Secure Income and an Incentive Income Fairness: A good compensation plan must treat all salespeople fairly.
STRAIGHT SALARY
TYPES OF COMPENSATION
PLANS
Of all the compensation plans, the straight salary plan is the simplest: The salesperson is paid a specific amount (`) at regular intervals.
PROFILE OF A STRAIGHT SALARY COMPANY
• Dominant market share in mature, stable industry
• Highly defined and stable customer base
• Strongly centralized and closely managed selling effort
• Highly team-oriented sales effort
• Service versus selling emphasis
STRAIGHT COMMISSION PLANS
Two basic types of commission plans exist:
1. Straight commission.
2. Draw against commission.
The straight commission plan is a complete incentive plan. If salespeople do not sell anything, they do not earn anything.
Drawing Accounts
Drawing accounts combine the incentive of a commission plan with the security of a fixed income.
Situations where commission plans can be used:
• Little non-selling, missionary work involved.
• The company cannot afford to pay a salary and wants selling costs to be directly related to sales.
• The company uses independent contractors and part-timers.
PROFILE OF A COMMISSION PLAN COMPANY
• Low barriers to entry into the job
• Limited corporate cash resources
• Small entrant into an emerging market or market segment
• High risk reward sales force culture
• Undefined market opportunity or customer base
• Inability to set quotas or other performance criteria
• Volume-oriented business strategy
• Salary and commission
• Salary and bonus: individual or group bonus
• Salary, commission, and bonus: individual or group bonus
Numerous types of combination salary plans exist. The more popular plans are:
• Established company with growth potential, many products, and active competition
• Need for a variable pay component that will ensure top performers are rewarded commensurately
PROFILE OF A COMBINATION-PAY PLAN COMPANY
1. To motivate the sales force.
2. To attract and hold good people.
3. To direct the sales force efforts in a profitable direction.
When to Use a Combination Salary Plan
SALES FORCE EXPENSES
Expense plans have the same basic objectives as a compensation system, that is, to motivate the salesperson’s behavior in terms of membership, performance, and attendance.
• The company pays all expenses.
• The salesperson pays all expenses.
• The company partially pays expenses.
Types of Expense Plans:
FACTORS TO CONSIDER WHEN
DEVELOPING A NEW PLAN
1. Companies with a sales force on a straight salary may find it highly advantageous to move to a salary-plus-incentive plan.
2. Companies with a sales force on straight commission may sometimes adopt a salary-plus-incentive plan to gain more control over the sales force.
SALES CONTESTS
Sales contests are short-term incentive programs implemented to motivate salespersons to achieve specific goals or activities
A sales contest is a special selling campaign offering incentives in the form of prizes or awards beyond those in the compensation plan.
SALES CONTEST ELEMENTSContest Objectives
To obtain new customers.To secure larger order per call.To overcome seasonal sales slump.To sale more profitable mix of products.To promote seasonal merchandise.
ThemeContests receive a theme to create excitement
Chance of winningCompete against self, others, or as a team? In U.S. salesperson has about a 40% chance of winning
and, in India it 20-30% only.
TYPES OF REWARDSSales contests can offer many types of reward in the form of: Cash, prizes, or travel Perceived value very important as it must be of sufficient value to motivate additional effort
Promotion of contest is more important Launched as a special event with handouts Large scorecards to communicate progress Newsletter articles or interim prizes can keep motivation up
EVALUATION & ANALYSIS OF
SALESPEOPLE’S
PERFORMANCE
EVALUATION & ANALYSIS OF
SALESPEOPLE’S
PERFORMANCE
Numerous specific reasons for performance appraisals exist:
• Compensation• Development• Feedback• Goals• Legal compliance• Motivation
• Penalties• Personnel• Planning• Promotion• Training
FIGURE: THE SALESPERSON PERFORMANCE APPRAISAL SYSTEM WITH ITS NUMEROUS PARTS, PROCESSES, AND PROCEDURES
Jo b A naly sis D im ensio ns
Jo b D escrip tio n
Jo b Sp ecifi catio ns
Jo b R eq uirem en ts
P erfo rm ance C riteria
Im p lem en tin g
P lannin g
E valuating
Purpose of
Performance
Evaluation
Evaluative
• Compensation
• Legal
• Penalties
• Personnel
• Promotion
Developmental
• Development
• Feedback
• Goals
• Motivation
• Planning
• Training
WHO SHOULD EVALUATE
SALESPEOPLE?The primary evaluator should be the salesperson’s immediate supervisor because this person has direct knowledge, having actually worked with the salesperson.
WHEN SHOULD SALESPEOPLE BE
EVALUATED?
Salespeople should be evaluated at the end of each performance cycle.
A performance cycle is a period related to specific product goals or job activities.
Quantitative Performance Criteria
1. Sales volumea. Percentage of increaseb. Market sharec. Quotas obtained
2. Average sales calls per day3. New customers obtained4. Gross profit by product, customer,
and order size5. Ratio of selling costs to sales
6. Sales ordersa. Daily number of orders
1) Total2) By size, customer
classification, and productb. Order to sales-call ratioc. Goods returned
Qualitative Performance Criteria1. Sales Skills
a. Finding selling pointsb. Product knowledgec. Listening skillsd. Obtaining participatione. Overcoming objectionsf. Closing the sale
2. Territorial managementa. Planningb. Utilizationc. Recordsd. Customer servicee. Collectionsf. Follow-up
3. Personal traitsa. Attitudeb. Empathyc. Human relationsd. Team spirite. Appearancef. Motivationg. Care of carh. Self-improvement
• Graphic appraisal scales
• Descriptive statements
• Management by objectives
• Behaviorally anchored rating scales
• 360 degree feedback
PERFORMANCE EVALUATION FORMS
FOR GATHERING INFORMATION