Management

Shaping Future Sales Leaders JOHN F. TANNER JR.

Baylor University

Sales
Elon University

EARL D. HONEYCUTT JR. ROBERT C. ERFFMEYER

University of Wisconsin - Eau Claire

Pearson Education International

Contents

Preface xix Acknowledgments xxi About the Authors xxiv

PART ONE

Strategic Planning "xxvi

From Sales Rep to Sales Manager Statement 5 5 7 4

Chapter 1 Introduction to Sales Management 2

Establishing the Parameters of the Firm's Strategy: The Mission The Strategy Hierarchy

What Markets Do We Serve with What Products? GLOBAL SALES MANAGEMENT SELF-ASSESSMENT LIBRARY 12

What Types of Relationships Do We Form and with Whom? 8 Going Global to Achieve Growth

What Level of Investment Will Be Required, and How Will We Allocate the Needed Resources? 10 What Are the Detailed Objectives and Action Plans? 11

Selling Approaches The Selling Process

Prospecting Pre-Approach Approach 14 14 14

12 13

Needs Identification Presentation 15 Handling Objections Closing the Sale 16

14 16 17 17

Implementation/Follow-up

The Selling Process versus the Selling Approach Sales Leaders 17 18 The Sales Executive

ETHICS IN SALES MANAGEMENT Culture 19 20 21 21 22 22

Maintaining NCR's Ethical Sales

The Field Sales Manager Summary Key Terms

Questions and Problems Role Play: T&G Supply CASELET1.1 CASELET 1.2

Killebrew Manufacturing Morton's Ice House 23

23

References

23 IX

CONTENTS

Chapter 2

The Sales Function and Multi-Sales Channels

The Sales Function 26 28 Selling in a Multi-Channel Environment M GLOBAL SALES MANAGEMENT Types of Outsourced Salespeople Aligning the Organization Achieving Alignment 34 Stuck in AOHell 36 32 30 31

24

Outsourcing to India 30

29

To Outsource or Not to Outsource the Sales Function Types of Company-Employed Salespeople

SELF-ASSESSMENT LIBRARY 35 ETHICS IN SALES MANAGEMENT 37 37 38 38 39 41 40

Summary Key Terms

Questions and Problems

Role Play: Mechanix Illustrated CASELET 2.1 CASELET 2.2 42

Sales Manager's Workshop: Promedia Technology (PMT) Hereford Promotions

Marchetti Machines: One Big Happy Family

Reference

PART TWO Chapter 3

Sales Leadership
What Is Leadership? 46

43 44

Leadership and the Sales Executive

Leading versus Managing 46

Understanding Leadership: An Historical Perspective B GLOBAL SALES MANAGEMENT Marketplace 50 SELF-ASSESSMENT LIBRARY 51

47 49

The Behavioral Approach: "This is How a Leader Behaves"

Identifying Leaders in a Global

Situational Approaches "Assess the Situation, then Adjust Behavior to It" Leadership" 53 54

52

Contemporary Perspectives of Leadership: "Motivate Your Followers Through Emerging Leadership Concepts: "Develop Your Followers" ETHICS IN SALES MANAGEMENT Motors 55 57 58 58 58 59 60

Ethical Leadership at Ken Vance 56

Leadership Challenges for the Sales Executive Summary Key Terms

Questions and Problems CASELET 3.1 CASELET 3.2 60

Role Play: Jackson Kramer Clothiers

"I Never Thought About It" "Coach" Charlie Hustle

References

Chapter 4

Ethics, the Law, and Sales Leadership

Approaches to Ethics The Golden Rule 65 65

62

CONTENTS SELF-ASSESSMENT LIBRARY 66

XI

The Conventionalist Approach 66 The Protestant Ethic 67 The Market Imperative The Libertine Ethic 67 The Utilitarian Ethic 68 68 69 70 74 Done Right The Salesperson as a Boundary Spanner ETHICS IN SALES MANAGEMENT 72 The Caux Round Table Common Ethical Issues Facing Salespeople Creating an Ethical Sales Climate GLOBAL SALES MANAGEMENT 76 79 Sales-Related Laws Summary Key Terms 80 81 81 83 83 84 67

Laws for Sales Managers

Questions and Problems CASELET 4.1 CASELET 4.2 84

Role Play: Magnum Performance

Patman Paper Co. Callahan Car Parts

References

PART THREE Analyzing Customers and Markets

87

Chapter 5 Business-to-Business (B2B) Sales and Customer Relationship Management 88

Understanding B2B Purchasing Decisions 90
The Buyer's Decision-Making Process 90 Organizational Buying Situations Understanding the Buyer's Criteria Team Selling and Multi-Level Selling 90 92 94 96 Technology Can Help Ensure

Buying Center, or Group, Purchases 92 SELF-ASSESSMENT LIBRARY 95 TECHNOLOGY IN SALES MANAGEMENT a Firm's Sales Are Profitable 97 98 Forming Business Relationships in 100 102 GLOBAL SALES MANAGEMENT Other Cultures 100

B2B Customer Relationship Management

The Nature of B2B Relationships

Customer Lifetime Value (CLV) Strategies Maximizing the Buyer's Value 102 103 104

The Stages of B2B Customer Relationship Management Risk and the Organizational Buyer Important Salesperson Behaviors Summary Key Terms 105 106 106

Why Business Relationships End 104

Questions and Problems

XII

CONTENTS Role Play: Managing a Sales Team at Alamance Associates CASELET 5.1 107 108 108

Sales Manager's Workshop: Adjusting the Territory Sizes within a Sales District Managing Buying Dynamics at Hughes Aircraft CASELET 5.2 Choosing a CRM System for Burlington Mechanical Solutions 109 110

References

Chapter 6 Leveraging Information Technologies 112

Commonly Used Technology Sales Management Software Sales Force Automation Systems 114 115 115 116 118 119 124 Global Issues in Sales Technology

Knowledge Management, Proposal Writing, and Pricing Software Customer Relationship Management Software GLOBAL SALES MANAGEMENT

The Challenges of Implementing CRM and SFA Systems O SELF-ASSESSMENT LIBRARY 125 Salesperson/Sales Manager Issues ETHICS IN SALES MANAGEMENT Benefits of CRM Systems 127 128 128 129 129 125 125 Encouraging Salespeople to Use Technology Effectively

Ensuring Salespeople Derive the

Summary Key Terms

Questions and Problems

Role Play: Blackburg Technologies Aplicor 130 CASELET 6.1 CASELET 6.2

Sales Manager's Workshop: Promedia Technology: Familiarizing Yourself with Frisco Solutions Zeron Corporation 130 131

References

131

PART FOUR Designing and Developing the Sales Force Chapter 7 Designing and Organizing the Sales Force 134
How a Firm's Goals Affect the Design of Its Sales Force The Size of the Sales Force 137 Specialists versus Generalists Key Account Structures 143 139 140 Geographical, Product, and Market Structures GLOBAL SALES MANAGEMENT 136 137 Organizing the Members of the Firm's Sales Force

133

Sales Structures in Global Markets 146

144

D SELF-ASSESSMENT LIBRARY 145 Telemarketing and Computerized Sales Structures GLOBAL SALES MANAGEMENT Home 147 149 150 152 Ethical Dilemmas with Partners 152 Some Offshore Call Centers Go Back 149

Reporting Relationships within a Firm's Sales Force Span of Control Adding Independent Sales Reps to the Sales Structure ETHICS IN SALES MANAGEMENT Company Salesperson or Sales Agent?

CONTENTS Summary Key Terms 154 154 154 155 156 157

XIII

Questions and Problems CASELET 7.1 CASELET 7.2 157

Role Play: Structuring the Sales Effort at Green River Software

Jefferson Pilot Reorganizes Its Sales Force IMC Considers Offshoring Its Call Center

References

Appendix 7A Computing the Point When It Is Time To Switch From a Company Salesperson To a Sales Agent 159

Chapter 8

Recruiting and Selecting the Right Salespeople

Successful Hiring Requires Sales Managers to Follow a Process Planning to Hire 162 163 164 165 166 166 Calculating the Turnover Rate Conducting a Job Analysis Writing a Job Description 162

160

Finding and Recruiting Applicants Recruiting Internal Applicants External Applicants 167

ETHICS IN SALES MANAGEMENT When Should a Sales Manager Raid Her Competitors'Sales Force? 167 170 171 174 177

Selection Procedures Application Forms

SELF-ASSESSMENT LIBRARY 173

The Personal Interview Background Verification Physical Exam 177 Making the Job Offer

177 178 179 Who Should You Hire to Represent 180

Transitioning New Hires

Why a Diverse Sales Force Is Important Avoiding Common Hiring Mistakes GLOBAL SALES MANAGEMENT Your Company Abroad? 181

Evaluating the Success of the Firm's Sales Force Recruiting and Selection Efforts 182 Summary Key Terms 183 183 183 184 185 185

Questions and Problems CASELET 8.1 CASELET 8.2 186

Role Play: WRT Plans for Salesperson Interviews Southeastern Industrial Harmony International

References

Chapter 9

Training and Developing the Sales Force

How Important Is Sales Training? The Training Process 193 190

188

Identifying the Firm's Sales Training Needs 193 GLOBAL SALES MANAGEMENT Sales Force 196 The Challenges of Training a Global

XIV

CONTENTS D SELF-ASSESSMENT LIBRARY 198 Designing and Developing the Sales Training Program ETHICS IN SALES MANAGEMENT 206 Delivering the Training 205 Assessing the Firm's Training Efforts Summary Key Terms 210 211 211 211 212 212 213 Completing the Sales Training Cycle 208 198 199 Can You Teach Sales Ethics?

Questions and Problems

Role Play: Home Fire Lights CASELET 9.1 CASELET 9.2 214

Sales Manager's Workshop: Identifying Training Needs

Justifying the Cost of a Firm's Sales Training Good, Good Enough, or Not Good Enough?

References

PART FIVE

Process Management

217

Chapter 10 Supervising, Managing, and Leading Salespeople Individually and in Teams 218
Supervising Managing 220 221 What Are the Traits of a

Sources of Power 222 ETHICS IN SALES MANAGEMENT Bad Leader? 224

The Up-Close Perspective: Becoming the Boss 225 The Sales Representative's Perspective: What It Takes to Be a Good Sales Manager Leading 226 227 227 229

A New School of Managerial Thought? Coaching 229 Mentoring 230

What Leadership Competencies Do Sales Managers Need?

The Ability to Organize and Work Effectively with Teams 231 D SELF-ASSESSMENT LIBRARY 231 Being a Team Member 232 233 Developing Global Leaders 233 The Future of Sales Management GLOBAL SALES MANAGEMENT 234 235 236 236 237 235 Friend or Mentor? Deciding When to Take Action Teamwork? Summary Key Terms

Questions and Problems Role Play: Outside Escapes CASELET 10.1 CASELET 10.2 238

References

Chapter 11 Setting Goals and Managing the Sales Force's Performance 240
Why Are Sales Goals Important to an Organization? 242

CONTENTS Using Goals to Guide and Manage the Performance of a Firm's Sales Force 243 GLOBAL SALES MANAGEMENT Goals Are Goals, Right? Not Quite. 244 248 248 244 Different Types of Goals or Quotas Choosing the Right Metrics to Track D SELF-ASSESSMENT LIBRARY 248 What About Almost Meeting a Goal? When is a Sale a Sale? 249 250 251 250 251 When Do Difficult Goals Become 249 249 Should Salespeople be Involved in Setting Their Own Goals? Should Everyone Achieve Their Sales Goals? Do Goals Ever Get Changed or Altered? The Process of Setting Good Goals ETHICS IN SALES MANAGEMENT Too Difficult? 252 253 254 254 255 256 256

XV

Choosing the Right Time Period to Track

What Happens When Salespeople Do Not Achieve Their Sales Goals?

Summary Key Terms

Questions and Problems

Role Play: Oval Track Promotions CASELET 11.1 CASELET 11.2 257

Sales Manager's Workshop: Setting Threshold, Actual, and Stretch Goals All in a Day's Work Sandwiched In 257

References

Chapter 12

Motivating and Rewarding Salespeople

What Motivates Salespeople? 262 264 D SELF-ASSESSMENT LIBRARY 263 Generational Motivational Issues Matures 266 266 Baby Boomers 266 Generation X'ers Millennial 268

260

The Dos and Don'ts of Motivating Your Sales Representatives Financial and Nonfinancial Rewards GLOBAL SALES MANAGEMENT Right?" 270 272 269

268

"We're All In It for the Money, 270

The Components of a Reward Program Compensation

ETHICS IN SALES MANAGEMENT What Do You Do If Your Company's Compensation System Encourages Unethical Behavior? 276 279 279 280 282 282

Benefits

Work-Life Rewards Expense Accounts Summary Key Terms 283 284

Recognition Programs

Personal Development and Career Opportunities

XVI

CONTENTS Questions and Problems Role Play: BiolDs 286 285

CASELET 12.1 Adjusting Your Compensation Plan to Motivate Your Sales Representatives 287 CASELET 12.2 Which Is Better? A Market Share-Based Incentive System or a Revenue-Based Incentive System? 288 289

References

PART SIX

Measurement, Analysis, and Knowledge Management 291

Chapter 13 Turning Customer Information Into Sales Knowledge 292

Knowledge Generated by the Firm's Sales Force Sales Forecasting 297 299 300 Estimating Market Potential Forecasting Methods 301 306 Forecasting or Fortune Telling? 307 294

ETHICS IN SALES MANAGEMENT

The Limitations of Forecasting

SELF-ASSESSMENT LIBRARY 306 GLOBAL SALES MANAGEMENT 308 309 310 310 311 312 313 Englander Container Freud Testing Services

Guidelines for Forecasting Summary Key Terms

Questions and Problems CASELET 13.1 CASELET 13.2

Sales Manager's Workshop: Making Forecasts

Chapter 14

Assessing the Performance of the Sales Force and the People Who Comprise It 314
Evaluation Helps the Sales Manager Know What Is Working and Why 316 Evaluating the Performance of the Sales Force as a Whole Sales Analysis Cost Analysis Profit Analysis 317 319 321 323 317

Ratio Measures for Evaluating the Sales Force 321 Relating the Performance of the Sales Force to the Firm's Salespeople Evaluating Individual Sales Representatives Input Measures 328 329 330 331 333 333 Evaluating Salespeople Working 323 324 Leveraging Technology to Manage Sales Rep Performance Outcome Measures Profitability Measures

Ratio Measures for Performance Appraisals The Four-Factor Model of Evaluation Qualitative Performance Measures

GLOBAL SALES MANAGEMENT Overseas 335

CONTENTS The Problem of Evaluation Bias 336 Informal Evaluations 336 337 Reducing Sales Management Errors in Performance Evaluations D SELF-ASSESSMENT LIBRARY 337 What Happens When Salespeople Don't Achieve Their Sales Goals? Developing and Reallocating Salespeople's Skills and Efforts Modifying the Performance Setting 338 Summary Key Terms 339 339 340 338 338

XVII

Questions and Problems

Role Play: Johnson Controls Considers Changing Its Assessment Criteria 340 Sales Manager's Workshop: Promedia Technology (PMT) Analyzing the Performance of Your Sales Representatives 341 CASELET 14.1 Goals? 341 CASELET 14.2 343 "Happy Hannah": Did the Sales Reps Meet Their Ligon Industrial 342

References

Chapter 15

Internal and External Cultural Forces That Affect a Firm's Sales Performance 344
How the Corporate Culture of a Firm Affects Its Sales Force 346 346 348 The Firm's Marketplace Orientation Achieving Internal Alignment Misalignment and Entropy 349 What Constitutes a Bribe? 351

Low- versus High-Performance Cultures 350 351

ETHICS IN SALES MANAGEMENT

Sales Managers as Culture Creators The Different Levels of Culture The Components of Culture Communication Style Religion Aesthetics Technology Time 358 Values and Norms 359 Managing the Global Sales Force 357 357 358 357 358 Educational Levels Social Organizations 355 353 355

How External Cultures Affect a Firm's Sales Force , 353

360

Designing the Global Sales Force 360 Selecting Sales Personnel 361 D SELF-ASSESSMENT LIBRARY 361 Training Global Salespeople 362 362 363 363 Motivating Global Sales Personnel

Compensating Global Sales Personnel Evaluating Global Sales Personnel 363

Changing Demographics and Diversity in the Sales Force The Benefits of Embracing Diversity 364

XVIII

CONTENTS Summary Key Terms 365 366 366 367 368

Questions and Problems

Role Play: Expatriate Pay and Benefits at RPG, Inc. CASELET 15.1 CASELET 15.2 369

Long Island Manufacturing China Enterprises N.A. 368

References

PART SEVEN
Case Study 1

Cases 373
The Plantation Planning, Setting Goals, and Team Selling 374 Lexington Industries Conducting Business Ethically in the Pacific Rim 380 The San Francisco Giants A CRM Case Analysis 382 TIP Financial Services Corporation Managing a Field Sales Force 386 Wellco Distributors Considering a Diversity Program 391 Pacific Medical Supply Company Hiring, Motivating, and Retaining Good Salespeople 394 Southeastern Sales Associations Evaluating and Coaching Salespeople to Improve Their Performance 399 Afgar Corporation Managing Multi-channel Sales 401 Freedom Telecom Setting New Sales Goals to Turn the Sales Force Around 406 The Sarasota Journal Inevitable Change and the Restructuring of the Sales Force 412 Concord and Associates Evaluating a Sales Territory 417 Cannon Associates Achieving Internal Alignment among Your Old and New Sales Force 421 424

Case Study 2

Case Study 3

Case Study 4

Case Study 5

Case Study 6

Case Study 7

Case Study 8

Case Study 9

Case Study 10

Case Study 11

Case Study 12

Name Index

Subject Index 427