Sales Management

Second semester AY 2011-2012 University of St. La Salle Bacolod

The Sales Force

Sales Management- is the attainment of sales force goals in an effective and efficient manner through planning, staffing, training, leading, and controlling organizational resources (Futrell1998) Managing a sales force involves recruiting, hiring, training, supervising, compensating salespeople, motivating them to become problem solvers, and providing the proper planning and backup support so they can perform their jobs properly.

Sales Management

Sales Representatives
Robert McMurray s Sales Representative types:
1. 2. 3. Deliverer a salesperson whose major task is the delivery of a product (e.g. Water, fuel, oil, etc.) Order Taker an inside order taker ( standing behind the counter) or outside order taker (calling on the supermarket manager). Missionary a salesperson not expected or permitted to take an order but rather to build goodwill or educate the actual or potential user. (the medical detailer representing an ethical pharmaceutical house). Technician a salesperson with a high level of technical knowledge (the engineering salesperson who is primarily a consultant to client companies). Demand creator a salesperson who relies on creative methods for selling tangible products (vacuum, cleaners, brushes) or intangibles (insurance, advertising services or education). Solution vendor a sales person whose expertise is solving a customer s problem, often with a system of the company s products and services (computer & communications systems)

4. 5. 6.

Sales Representatives
Sales personnel serve as the companys personal link to the customers.
Active representatives of the company can influence peoples perception of it through their ability to interact, to customize3 and to build relationships with the customers

- Fred Hasaan, CEO Schering-Plough ScheringIn designing the sales force, the company must consider the development of sales force objectives , strategy, structure, size and compensation.

Designing the Sales Force

Sales Force Design

Sales Force Compensation Sales Force Objectives

Sales Force Size Sales Force Strategy

Sales Force Structure

Designing the Sales Force

Leaders must secure that personal goals and objectives of the salespeople are consistent with those of the organization. Sales managers strive to seek balance and consistency between organizational goals and their salespeoples goals.

Designing the Sales Force

Leverage Sales Force - An approach or strategy
where sales force focuses reps on selling the companys more complex and customized products to large accounts and uses inside sales people and online sales force for low-end selling.

To maintain market focus salespeople should know how to analyze sales data, measure market potential, conduct marketing research and intelligence, & develop marketing strategies and plans

Designing the Sales Force

Direct Sales Force - consists of full or part time paid employees who work exclusively for the company. Contractual Sales Force consists of manufacturers reps, sales agents and brokers who earn a commission based on sales.

Designing the Sales Force

Common Tasks for Sales People
Prospecting searching for prospects or leads Targeting Deciding how to allocate their time among prospects and customers Communicating disseminating information about the company s products and services Selling approaching, presenting, answering questions, overcoming objections and closing sales. Servicing providing various services to the customersconsulting on problems, rendering technical assistance, arranging financing expediting delivery. Information gathering conducting market research and doing intelligence work. Allocating deciding which customers will get scarce products during product shortages

Designing the Sales Force

SALES FORCE STRUCTURE A sales force strategy has implications for its structure. A company that sells one product line to one end-using industry with customers in many locations would use a territorial structure.

Designing the Sales Force

Sales-Force Structures

Territorial: Each sales representative is assigned an exclusive territory. This sales structure results in a clear definition of responsibilities. It increases the reps incentive to cultivate local business and personal ties. Travel expenses are relatively low because each rep travels within a small area. Territory size: Territories can be designed to provide equal sales potential or equal workload. Territories of equal potential provide each rep with the same income opportunities and provide the company with a means to evaluate performance. Territories can also be designed to equalize the sales workload so that each rep can cover the territory adequately. Territory shape: Territories are formed by combining smaller units, such as counties or states, until they add up to a territory of a given potential or workload. Companies can use computer programs to design territories that optimize such criteria as compactness, equalization of workload or sales potential, and minimal travel time.

Designing the Sales Force

Sales-Force Size
Workload approach:

1. Customers are grouped into size classes 2. Desirable call frequencies are established for each class 3. The number of accounts in each size class is multiplied by the corresponding call frequency 4. The average number of calls a sales representative can make per year is determined 5. The total number of sales representatives needed is determined

Designing the Sales Force

Sales-Force Size
Suppose the company estimates that there are 1,000 A accounts, and 2,000 B accounts in an area. A accounts requires 36 calls a year, and B accounts require 12 calls a year. Thus the company needs a sales force that can make 60,000 sales calls a year. Suppose the average rep can make 1,000 calls a year. Thus the company would need 60-full time sales representatives.

Designing the Sales Force

Product Sales Force Structure -A sales force organization under which salespeople specialize in selling only a portion of the companys products or lines. Customer Sales Force Structure - A sales force organization under which salespeople specialize in selling only to certain customers or industries.

Designing the Sales Force

Sales Force Compensation Four Components:
Fixed amount a salary, is intended to satisfy the need for income stability. Variable amount which might be commissions, bonus or profit sharing, is intended to stimulate and reward effort. Expense allowances enable sales reps to meet the expenses involved in travel and entertaining. Benefits- such as paid vacations, sickness or accident benefits pensions and life insurance, intended to provide security and job satisfaction

Sales Force Management

Managing the Sales Force
Recruiting and selecting sales representatives Training

Supervising

Evaluating

Motivating

Sales Force Management

Training Programs Have Several Goals

Sales Representatives Need to: Know and identify with the company Know the companys products Know customers and competitors characteristics Know how to make effective sales presentations Understand field procedures and responsibilities

Sales Force Management

Supervising Sales Reps
Reps paid mostly on commission generally receive less supervision. Those who are salaried and must cover definite accounts are likely to receive substantial supervision.

Norms for Customer Calls

Norms for Prospect Calls (n% of daily time

Companies took advantage of telecom innovations. Inside sales people: Technical Support, Sales assistants, & Telemarketers

spent on prospecting &stop calling after 3 unsuccessful calls)

Using Sales Time Efficiently

Sales Force Management

In order to maximize and use time efficiently Sales Force needs to:

Time-and-duty analysis Preparation Travel Food and breaks Waiting Selling Administration

Sales Force Management

Motivating Sales Reps 1. Churchill, Ford, & Walker Motivation Model: Sales managers must be able to: convince salespeople that they can sell more by working harder or being trained to work smarter. Sales managers must be able to: convince salespeople that the rewards for better performance are worth the extra effort.

Sales Force Management

Motivating Sales Reps

2. Sales Quotas (Forecast vs. Actual Sales) 3. Supplementary Motivators Sales meetings Sales contests

Sales Force Management

Evaluating Sales Representatives 1. Sources of Information - Sales Reports ( Activity plans vs. Activity results)
- Addtl: customer letters & complaints, surveys, conversations with other sales reps & Actual observation

2. Formal Evaluation - a type of evaluation where current

performance is compared to past performance

Sales Force Management

Evaluating Sales Representatives
1. Form for Evaluating Sales Representatives Performance Territory: Midland Sales Representative: John Smith 1999 1. Net sales product A $251,300 2. Net sales product B 423,200 3. Net sales total 674,500 4. % of quota product A 95.6 5. % of quota product B 120.4 6. Gross profits PA $50,260 7. Gross profits PB 42,320 8. Gross profits total 92,580

2000 $253,200 439,200 692,400 92.0 122.3 $50,640 43,920 94,560

2001 $270,000 553,900 823,900 88.0 134.9 $54,000 55,390 109,390

2002 $263,100 561,900 825,000 84.7 130.8 $52,620 56,190 108,810