Sales management is defined as the planning, direction, and control of personal selling including recruiting, selecting, equipping, assigning, routing, supervising, paying, and motivating as these tasks apply to personal sales force.
Sales management originally referred exclusively to the direction of the sales force. Later the term took on broader significance in addition to the management of personal selling.
Sales management specifically contributes to achieve the marketing objectives of a firm. In fact, sales managers set their personal selling objectives and formulate the personal selling policies and strategies.
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1. Introduction to Sales Management 2. Meaning of Sales Management 3. Objectives 4. Functions 5. Aspects 6. Scope 7. Steps
8. Determinants 9. Positions 10. Responsibilities, Planning and Practices. 11. Sales Management and Forecasting 12. Sales Management and Control 13. Tools 14. How to Make Sales Management Effective?
Sales Management: Meaning, Objectives, Functions, Aspects, Scope, Steps, Determinants, Tools and Other Details
Sales Management – Introduction
The word sales management is a combination of two words- sales and management. Sales is the art of planning in the mind of another a motive which will induce favourable action. The committee of American Marketing Association has defined it as- “Selling is the personal or impersonal process of assisting and or persuading a prospective customer to buy a commodity or a service or to act favourably upon an idea that has commercial significance to the seller.”
On the other hand controlling is any common activity to achieve a per determined goal. Hence, “sales management is the planning, direction and control of selling of business unit including recruiting, selecting, training, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personnel of sales force”.
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Sales management originally referred exclusively to the direction of the sales force. Later the term took on broader significance in addition to the management of personal selling.
Sales management meant all marketing activities, including advertising, sales promotion, marketing research, physical distribution, pricing and product merchandising.
According to the definition committee of the American marketing association sales management meant “The planning, direction, and control of personal selling including recruiting, selecting equipping, assigning, routing, supervising, paying, and motivating as these tasks apply to the personal sales force”.
Many believed that marketing would make sales superfluous ultimately. But this belief proved wrong. The sunrise sectors like insurance, financial products, information technology are all sales driven. In this age of commodity brands and mass retailing even traditionally marketing-driven industries like FMCG and white goods have rediscovered sales.
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Initially, sales management was equated with salesforce management. As time rolled on, sales management became broader. Apart from the management of personal selling, it encompassed other marketing activities like advertising, sales promotion, marketing research, physical distribution, pricing, merchandising and so on. However, the comprehensive broad function later got labelled as “Marketing Management.”
Sales management, according to the above definition, is the management of the salesforce. This is a personnel-type function.
Sales management also organizes the selling effort. To do so, it creates a suitable organisational structure, with appropriate communication system. Sales management interfaces with the distribution channels, and external publics.
Sales management provides critical inputs for the key marketing decisions like budgeting, quotas and territory management. Sales management interfaces with other marketing functions while policies of these functions are being formulated.
According to Zoltners, Sinha and Lorimar (Building a Winning Salesforce), the sales process is the most dynamic corporate undertaking. Market conditions constantly change, as do customers’ wants, needs and expectations. A company’s salesforce must be equally dynamic to stay competitive. Therefore, business now invests enormous sums to develop their sales departments.
Sales Management – Meaning and Definitions
According to American Marketing Association, sales management is “the planning, direction and control of professional selling including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating to the personal sales force.” It is also often referred to as management of the personal selling part of a company’s marketing function.
Sales is the only function in an organization that generates revenue or income for a company and hence it needs to be managed properly. The financial results of a company depend upon the performance of the sales department.
There are couple of aspects observed that should be motivating for the potential sales people. The first is that sales people are ‘often the best paid people in the business and sales is often considered the fastest and surest route to top management.
It is important for organizations to develop and maintain an effective sales force. This is because a sales manager is not only entrusted with managing the sales force to derive target-based sales outcomes but also perform managerial functions comprising planning the sales efforts and organizing, directing, motivating, coordinating, and controlling the sales force to achieve sales goals. Sales management operates within the periphery of marketing management. In a broad sense, marketing management decides the role of various promotional activities including personal selling.
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Sales management is assigned the task of managing the personal selling activities, the results of which ultimately affect the marketing department. Sales management specifically contributes to achieve the marketing objectives of a firm. In fact, sales managers set their personal selling objectives and formulate the personal selling policies and strategies. They prepare the sales budget as components of marketing plans, taking in confidence the broad objectives of the marketing department.
Sales management covers planning and organizing personal selling activities. It further performs sales force recruiting, selecting, training, assigning, routing, directing, motivating, remunerating, evaluating, and controlling functions of personal selling. Sales management implements the marketing plan to generate sales performance.
Ingram et al. (2007) noted that sales managers are involved in both the strategy (planning) and people (implementation) aspects of personal selling, as well as evaluating and controlling personal selling activities.
The American Marketing Association (AMA) defines sales management as the planning, direction, and control of personal selling including recruiting, selecting, equipping, assigning, routing, supervising, paying, and motivating as these tasks apply to personal sales force.
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Still et al. (1988) illustrated that sales management, originally referred to direction of sales force, later assumed a broader description in addition to management of personal selling to include advertising, sales promotion, marketing research, physical distribution, pricing, and product merchandising. In time, it became more popularly known as marketing management which described the broader concept. So, in simpler terms, sales management is the managerial process of utilizing people and other resources optimally to achieve the goals of an organization in a cost-effective way.
Indeed, the role of sales management becomes more pervasive by finding its importance both within and outside the firm. Within the firm, it builds an organizational structure which allows both formal and informal communication amongst sales and other departments. This also helps in establishing a distribution network outside the company encompassing salespeople and/or intermediaries that serve as a medium to reach target customers.
Sales Management is the planning of a company’s sales strategies and the hiring, training, supervision, and motivation of salesmen to carry out those strategies. As such, it is the key function of the marketing process. Without it, most companies would revert to the simplicities of a hundred years ago, when the emphasis was on manufacturing, and it was considered somewhat immoral for people to buy more than necessary to meet their daily needs.
There are four major branches (all interrelated) in successful sales management:
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(1) Top Level Policy Planning, which establishes a framework of policy within which the sales objectives of a company or institution may be achieved, depending on an individual company’s particular situation,
(2) Line and Staff Operational Planning, through which procedures are established in advance, against which the quality and quantity of work may be controlled,
(3) Organization, the setting up of a structure of responsibilities and normal interrelations—charting the organization, assigning responsibility, delegating authority, tracing accountability, and clarifying the character of collaboration, and
(4) Administration, by which management meets planned objectives through guidance and evaluation of activity, including Sales Training, Motivation, Coordination, and Execution.
Sales management methods are conditioned by the nature of individual products or product lines, and by the channels through which selling moves. Quite dissimilar problems develop in the sale of industrial and consumer goods, for instance, and within each field there are many variations depending upon whether sales are made to consumers or middlemen. There is also a wide variety in personal preference among sales managers with regard to methods and techniques of organization, motivation and planning.
Thus the way in which the sales management function is organized differs from industry to industry, and even among firms selling the same type of product. Organization becomes more and more complex as the company size and diversity increase. Many firms have hundreds of salesmen, and a few have thousands.
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Some firms (such as those selling technical products) have sophisticated sales personnel requiring less supervision than do less sophisticated representatives (such as route salesmen).
The relative emphasis placed on order-getting versus order- taking varies among different selling jobs. However, all sales persons must sell aggressively in some situations and in others need only take orders coming their way. Thus the driver-salesman for a soft drink bottler is mainly an order-taker since the product has been presold to consumers and dealers reorder automatically.
The salesman of aluminium siding calling on homeowners is much more of an order-getter, and his main goal is demand stimulation. If a manufacturer’s selling strategy relies heavily upon advertising to attract business and build demand, marketing channels are likely to include several layers of middlemen, arid the manufacturer’s salesmen may primarily be order-takers, and only incidentally order-getters. When advertising is used mainly to back up personal selling, marketing channels contain fewer layers of middlemen, and sales-people concentrate more on order-getting.
What makes sales management challenging and difficult is that personnel in the field are pretty much on their own, with relatively little close supervision. Their hours are usually irregular and working time is hard to conserve because of waiting for interviews, broken appointments, and other problems of dealing with customers, each of whom may have different needs and different buying motives. Moreover, each territory has different potential and characteristics, making norms of performance more difficult to set up than in other activities of the business.
Thus the sales manager’s most important functions are to find sales people who are likely to be productive self-starters, train them, assign them to the right territories, motivate them, and keep track of their efforts. In short, sales management is a people-oriented profession. To be successful, a sales manager must know not only what makes people buy, but also what keeps salespeople happy and productive.
Additionally, the successful sales manager must be a good organizer. He or she must determine how the total selling job should be set up—by geographical areas, by product lines, by type of customer, consumer or industrial, and the like.
Sales Management – Basic Objectives
There are three basic objectives of sales management viz. increasing sales volume, contributing to company profits and long term growth of an organization. Sales management has over the years assumed broader significance as in addition to the management of personal selling, sales management includes marketing activities like advertising, sales promotion, marketing research, physical distribution, pricing and product merchandising.
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The American Marketing Association’s definition makes sales management synonymous with the management of the sales force but then the fact is that modern sales managers have assumed broader responsibilities.
Sales managers are not just in charge of personal selling activity but also managing large and often diverse set of sales people. They are responsible for organizing the sales effort both within and outside companies. Sales managers have been found to build formal and informal organizational structures within the company and outside the company, they serve as a key contact with customers and other external publics.
Sales management as such is a key function in many enterprises. Problems related to sales management exists across a cross section of companies including manufacturing concerns, retail institutions and service enterprises. Hence recruiting able and effective people in the job of managing sales is extremely crucial for the profitability of a company.
There are three general objectives of sales management viz- sales volume, contribution to profits and continuing growth. It is often observed that sales executives do not carry the full burden in the effort to reach the above said objectives but then they do make major contributions.
Objectives often get translated into more specific goals by breaking down and restating as definite goals. Planning precedes goal setting. In planning, sales executives provide estimates on market and sales potentials the capabilities of the sales force and middlemen.
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Sales management is instrumental in charting the course of future operations. The activity provides top management with informed estimates and facts for making marketing decisions and for setting sales and profit goals. Sales management and the financial results of a company are related.
Sales, gross margin and expenses are influenced by the performance of sales management which go on to impact the net profit of a company. The cost of sales are not directly affected by how sales are being managed within a company but then it can be indirectly affected since sales volume must be large enough to permit maintenance of targeted unit costs of production and distribution.
Some other objectives of sales management are as follows:
1. Revenue Generation – One of the main objectives of sales management is to generate revenue for the organization. The sales department is solely responsible to bring in the money.
2. Increase Sales Volume – Through efficient sales management, the organization wishes to increase the number of units sold. This will ensure that the production facilities do not remain idle and are utilized to the fullest.
3. Sustained Profits – Sales management has an objective of improving the profits of the organization through effective planning, coordination and control. Sales management strives to increase sales and reducing costs, this ensures good profits for the organization.
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4. Organization Growth – With the sustained and continuous sales management techniques, the organization tends to gain market share and results in growth of the organization.
5. Market Leadership – With increased sales volumes and profits, ‘sales management’ enables an organization to become the market leader.
6. Converting Prospects to Customers – Getting prospects to become customers is an art and a science, it requires good planning and sustained efforts. This is accomplished through sales management.
7. Motivate the Sales Force – One of the core objectives of sales management is to motivate the sales force. Selling is a very stressful task, achieving sales targets can become very challenging. Therefore, the sales management task is to ensure that the sales force is continuously motivated through proper incentives and reward systems.
8. Compliment Marketing Activities – Sales management’s task is to support the marketing functions of the organization. Marketing and sales need to go hand in hand to achieve the desired results.
Sales volume, contribution to profits and growth are the three major objectives the sales function is expected to achieve. Though these are broad corporate functions to be achieved by the top management, sales contribute a great deal in achieving them. Corporate objectives are communicated to the marketing department who in turn passes on the responsibility to the sales department.
Sales provides invaluable feedback to the higher management while achieving these objectives.
Sales Management and Financial Results:
The trading account records the sales and cost of goods sold to arrive at gross profit. Gross profit minus expenses gives the net income.
Sales provides thus critical figures in overall financial performance of the organisation. Sales management by being effective is in a position to affect sales, gross margin and expenses; and thereby net income. Sales must exceed cost of goods sold to keep manufacturing and distribution in a healthy state. The finalized accounts are used by the board and outsiders to judge a business. Sales growth while profits decline is no good.
It is necessary to control costs. Even lower sales volume can achieve higher gross margins, with proper expense control. It is also necessary not to over-emphasize the gross margins only with inadequate sales and net profits. Net margins are healthy if there is optimum relationship among the four factors. Sales contribute a great deal to achieve optimum relationship amongst three factors – sales, gross profit and expenses. Sales have to work in collaboration with production and promotion to cover cost of goods, which is the fourth factor.
Co-Ordination of Sales with other Departments:
Sales has to co-ordinate with the marketing department. Particularly promotional activities and sales do need harmonization. Sales has to co-ordinate with market planning. Sales co-ordinate with distribution channels on introduction of products and later on the buyers must be made aware where the products are available. Sales has to balance the interests of the trade and those of the manufacturer.
Sales has to motivate the trade for joint promotional efforts. It is necessary to have the co-ordination of sales and overall marketing strategy. New product introduction rightly calls for a high degree of co-ordination between sales and marketing. It is necessary to be careful about inventory levels, sales plans, branch management, sales training and sales operations while a new product is being introduced. It is also necessary to co-ordinate with publicity, sales promotion and advertising of a new product.
Planning and control go hand-in-hand. Sales objectives are reviewed to examine where we stand today, how we travelled up to this point, where we are headed to, and how to reach there. Sales plans are examined along with the policies and procedures.
The control process starts by setting up performance standards. The actual performance is then measured. The results are compared with the standards set. Variations are deeply examined. Lastly, corrective action is taken to set the matter right. Sales objectives may have to be revised in the light of the feedback received.
In smaller organizations, the informal control works. As organizations grow in size, formal control is exercised. The sales policies are put in black and white. Policies provide permanent solution to recurrent problems. Sales policies are subject to review in the light of the situation.
Sales volume is controlled by specifying how much we can sell in future. It serves as a standard. Sales budgets extend control over sales volume to exercise control over margins and expenses. It takes the individual territories as units for this exercise.
Sales control can be centralized or decentralized in an organisation. In a decentralized organization, control is exercised by executive down the line. Higher executives are concerned with the overall policy; or control just by exception.
Sales Management – 20 General Functions
The general functions of sales management are as follows:
1. Preparing the Sales Plan
2. Recruiting the right people to execute the sales plan
3. Training the people selected to build competency in achieving the targets set and fulfilling the organization’s objectives.
4. Defining the sales territories
5. Specifying the sales quota to be achieved for each territory
6. Defining the remuneration and reward system for the sales force
7. Providing welfare and healthcare facilities to the sales force
8. Devising a sales force development program
9. Analyzing past performance with the current performance and making predictions on demand
10. Coordinating with the marketing department and the consumers
11. Sales planning and sales policies
12. Pricing policy and price fixing
13. Advertising and sales promotion
14. Scientific salespersonship, management and control of sales force
15. Marketing research
16. Planning and control of sales operations and control of sales costs
17. Selection and management of channels of distribution
18. Branding, packing and labeling
19. After sales service, if necessary
20. Integration and coordination of all functions
Sales Management – Aspects
In many respects, sales team management has been a neglected element of management training, yet the sales manager’s responsibility—managing the entire interface with the customer—is probably the most critical of all in terms of ultimate success for the organization. Because it is a very complex role, we will look at those aspects that are the province of sales management alone.
In many organizations, the sales manager is responsible for all marketing activities. Even in those where there is a parallel marketing structure, he or she is usually responsible for a range of marketing activities beyond those of simply managing the sales force. In this context, therefore, the sales management role often requires an appreciation of the range of techniques.
The struggle between sales and marketing departments for mutual respect and proper credit has been waged constantly. Despite such a struggle, sales and marketing departments depend on each other. And now, with globalization and e-commerce beginning to take hold at many companies, this reliance is especially important. The market is moving so fast that if marketing and sales organizations aren’t communicating, then a company could be in real trouble.
For example, Eastern Transport Corporation, a shipping and logistics company based in Quebec, Canada, ensures this type of communication in a couple of ways. First, all sales meetings include every member of the company’s marketing department. When the company’s salespeople see marketing reps in sales meetings, it sends the message that they are involved in the sales process and in how their ideas are implemented. Second, the company also sets this tone by having nine salespeople each go to lunch with a marketing employee at least once a month. This gives them a chance to exchange ideas.
Technology has enhanced the need for a cooperative relationship between salespeople and marketing representatives. With Web sites, database marketing, and electronic data interchange (EDI) all becoming major parts of companies’ business processes, leads and sales are coming from many directions. If an organization’s salespeople are not in tune with everything that marketing is putting out, they can easily be caught off guard and miss out on deals.
For example, D. A. Stuart Company uses an intranet to keep salespeople up to date in promotional material or other projects that marketing is developing. Any time a change is made to its Web site or a promo piece is mailed out, a memo is put up on the intranet so salespeople have access to the information.
In general, the company’s human resource practices closely follow the local practices of the country in which it operates. The age-old saying, “When in Rome, do as Romans do,” generally applies to sales management. For international sales executives, some understanding of cultural differences is crucial. These human resource practices include time off, benefits, gender composition, training, executive bonuses, and employee participation in management.
Human resource practices also depend on the strategy desired, the culture of the company, and even the country from which the company originated. Although we can say that the sales management process should adapt to the local environment, we acknowledge the difficult give-and-take involved in adapting a U.S. Company’s culture and procedures to the sales and management practices of a foreign country.
When host country standards seem substandard from the perspective of the home country (manager), the manager faces a dilemma. Should the multi national corporation (MNC) implement home country standards and so seem to lack respect for the cultural diversity and national integrity of the host (country)? Or, should the MNC implement seemingly less optimal host country standards?
It would be wonderful to provide a diagram that could help managers plot the appropriate solutions for each country. Although such a diagram is too much to hope for, we can take a look at some common generalizations and categorizations of cultural traits and think how they might affect our sales approach. We must take care, though, not to imply that any culture can be described accurately in a few words or categories.
As an example of a cultural generalization with both helpful insights and misleading oversights, consider the foreign view of Germans. Germans are’ typically viewed as scientifically exacting and industrious people. We might therefore approach sales in Germany by building a small core of technically trained, independent sales agents to deal with technically exacting German customers.
But if we think Germans look at work the same way Americans do, we will be misguided! The typical German manufacturing work week is only 30 hours. And Germans jealously guard their free time and show little interest in working more to earn more.
We must also be careful not to group people from cultures that may appear to us as very similar but who consider themselves and their reactions to situations in a very distinct manner. Consider, for example, South Korea and Japan. We may think that Koreans would be accustomed to the same bottom-up consensual decision-making approach the Japanese are known for.
Korean workers, however, tend to work within, a top-down, authoritarian leadership structure and require a higher level of definition in their job structure to avoid suffering from role conflict. A Korean salesperson might accept as normal a short-term position with a few prospects for long-term progress, whereas a Japanese salesperson would not dream of it.
Another example is the difference in the orientation of salespeople in Australia and New Zealand. Most of us tend to think that their cultures are very similar. However, salespeople in New Zealand tend to be more committed to, and generally more satisfied with, their work than their Australian counterparts.
Additionally, there are differences in compensation (Australians preferring greater security in the form of larger salaries) and special incentives (New Zealanders having a much higher preference for travel with other sales contest winners and supervisory staff). In a way, salespeople in New Zealand share more similarities in their value system with their Japanese counterparts than their Australian neighbour’s.
One of the most widely used tools for categorizing cultures for managerial purposes is Hofstede’s scale of five cultural dimensions. Hofstede’s scale uses a large number of questions to determine where countries stand on each dimension.
The most obvious, and crucial, role of any sales manager is managing the sales professionals. The same applies almost as forcefully to the managers of service and support personnel (including the very large numbers in the service industries).
A successful sales manager must have the following qualities:
(i) Desire to be a manager
(ii) Ability to lead and motivate others
(iii) Good organizing and planning skills
(iv) Capabilities of control and administration
(v) Full understanding of the implications of finance
(vi) Skills to recruit, train, motivate, and develop those who will form part of the team
(vii) Acceptance of the fact that the computer is here to stay!
Apart from the rather idiosyncratic emphasis on the last item, this list is fairly typical of what many sales management writers also recommend. It is significant that, in common with those others, this list lacks any direct reference to marketing skills. On the other hand, it is even more significant for its emphasis on people management, which accounts for five out of the six main categories. To be successful, sales managers must inspire teamwork and cooperation while motivating salespeople to achieve their own peak performance.
1. Recruitment:
This is a particularly difficult process where sales personnel are concerned because quality sales skills are all-important. Yet there are relatively few good sales professionals, and considerably more mediocre ones, many who hamper their performance even more by an unnecessary (and often enthusiastic) commitment to the stereotype.
The success of a sales team is therefore almost entirely dependent on the number of high-quality sales personnel who can be recruited. Fortunately, for college students, “many sales managers who recruit at colleges say they found their best salespeople on campus.”
The recruitment process is probably the single most important task for sales management, yet it is often the most neglected. The first requirement for successful recruitment is that it must be taken seriously by being given the resources, including sales management time that it deserves.
Recruitment can be broken down into a number of stages – (i) Generation of prospects, (ii) Creation of a short list, (iii) Final selection, and (iv) Persuasion. Recruitment is also a sales process; the candidate will be buying an organization just as much as a customer, and for him or her it is a very important decision. Therefore, the whole recruitment process should entail continuously selling the organization and the job. In fact, continuous recruiting may be costly but it costs less than constant high turnover.
2. Motivation and Compensation:
Even the above average salesperson rarely works at more than 60 percent of capacity. This problem is very different from that of “managing” teams of other employees, for a number of reasons, including (i) lack of contact, (ii) complexity of role, and (iii) entrepreneurship.
These challenges are dealt with (or perhaps, more accurately, evaded) by the traditional tools of sales force motivation, which concentrate almost exclusively on the single task of motivating sales personnel to achieve their narrow short-term targets. Examples are commission payments (often seen as the basic motivator behind overall sales performance), sales competitions (used to stimulate short- term interest), and leadership.
Financial compensation is one of the key motivators for employees in all cultures. However, successful sales programs make use of a wide variety of motivators. The sales manager will want to adapt the incentive structure to best meet local desires, regulations, and situations. For example, the recent devaluation of the Mexican peso posed problems for many sales compensation plans. Electrolux’s 250-person-strong Mexican sales force is being switched from a pure commission system to a combined salary-commission plan as a result of the 45 percent decrease in sales resulting from the devaluation.
Unlike in the United States, the use of commissions to motivate salespeople is not publicly acceptable in many countries. Commissions reinforce the negative image of the salesperson benefiting from the sale, with no regard for the purchaser’s well-being. Salary increases may substitute for commissions to motivate salespeople to consistently perform well. However, under certain circumstances, large salary discrepancies between employees are also not acceptable.
Strong unions may tie a company’s hands in setting salaries. The “collectivist” culture of a country like Japan may not accept that one person should earn substantially more than another in the same position. Koreans, for example, are used to working under conditions where compensation is not directly contingent on performance, but rather on seniority.
When financial rewards are not acceptable, the company must rely more heavily on nonfinancial rewards, such as recognition, titles, and perquisites for motivation. Foreign travel is another reward employed by international companies. For example, in order to encourage its more than 350 dealers to sell four of its high-ticket copiers, Konica, based in Windsor, Connecticut, gave the top seller for each month of the five-month program a choice of 16 trips—including such adventurous activities as dogsledding and skiing, as well as more traditional tennis and golf excursions.
To promote the program, each month Konica sent dealers oversized postcards promoting that months’ vacation package offer and announcing the previous month’s winner. Reps used an 800 number to report the model, price, and customer each time they made a sale. The system also helped Konica track the success of the program. Sales of the targeted copiers increased by 26 percent during the months of the program.
3. Leadership:
Their personal characteristics—in particular, leadership qualities— of the sales manager are probably the most important motivator. Some oft-cited qualities that make an effective leader are enthusiasm, courage, self-confidence, integrity, interest, and a sense of humour. Charisma, ability to delegate, and communication ability are also often mentioned.
4. Control:
There is one further complication – time. Most sales campaigns now take a number of calls over several months. The sales manager has to manage this process by controlling the interim stages without the measure of the final result by which to judge the effectiveness of these actions. But sales management does have, in the final outcome (the sales itself), the ultimate measure of performance. The performance of sales personnel, more than that of almost any other employees, can be measured with some degree of accuracy—at least in the long term.
The salesperson’s performance is typically measured by numbers, and in particular by sales volumes. These numbers may be compared with (i) past sales, (ii) performance of other sales personnel, and (iii) sales targets. In practice, many other judgments are qualitative. The sales manager judges his or her subordinates on the basis of what they seem to be doing and how they are doing it.
This is particularly true of those involved in the sale of capital goods, where long periods may elapse between orders, and management becomes almost an act of faith. However, such subjective judgments are notoriously unreliable.
The manager may define the employee’s roles explicitly and require a standardized sales pitch. Alternatively, the manager may set broad, general goals that allow each salesperson to develop his or her own skills. A number of studies have found that the best management approach varies by culture and country.
For example, Dubinsky and associates found that role ambiguity, role conflict, job satisfaction, and organizational commitment were just as relevant to salespeople in Japan and Korea as in the United States, and that role conflict and ambiguity have deleterious effects on salespeople in any of the countries. However, specific remedies for role ambiguity, such as greater job formalization (or more hierarchical power, defined rules and supervision), have a distinct effect on the salespeople in different countries.
One generalization is that greater formalization invokes negative response – from the sales force in countries in which the power distance is low and the individualism is high (such as in the United States). Greater formalization invokes positive responses from the sales force in countries in which the power distance is high and the individualism is low (such as in India).
For example, Kraft Foods’ sales reps visit fewer stores than before its restructuring, and most will serve a single retail chain rather than different retailers in the same area. They have more freedom to set up more displays and build better relationships with store managers on their own. This incentive program is expected to generate some 30 percent more time that Kraft sales reps will spend at each store.
5. Ethical Perceptions:
Culture, or nationality, also influences salespeople’s beliefs about the ethics of common selling practices and the need for company policies to guide those practices. Why is this important? Salespeople need to stay within the law, of course. More important, in order to maintain the respect of customers, salespeople must know what is ethically acceptable in a culture.
For example, in the United States, giving a bribe is tantamount to admitting that your product cannot compete without help. However, in many cultures, receiving a bribe is seen as a privilege of having attained a position of influence. An understanding of the ethical norms in a culture will help the company maintain a clean image and will also help the company create policies that keep salespeople out of tense and frustrating situations where they feel they are compromising their ethical standards.
As an example of differences in ethical perceptions, consider the results of a study by Dubinsky and associates. The study presented salespeople in Korea, Japan, and the United States with written examples of “questionable” sales situations.
Such examples were:
(i) Having different prices for buyers for which you are the sole supplier
(ii) Attempting to circumvent the purchasing department and directly reach other departments when it will help sales
(iii) Giving preferential treatment to customers who management prefers or who are also good suppliers
The salespeople were asked to rate the extent to which it was unethical to take part in the suggested activity. The results indicated that, in general, American salespeople felt the situations posed fewer ethical problems than did the salespeople from Japan and Korea.
The study also disproved the assumption that Japanese gift giving would extend into the sales realm. In fact, the Japanese felt it was more of an ethical problem to give gifts to a purchaser than did U.S. salespeople. For Koreans, however, gift giving was less of an issue.
Paradoxically, U.S. salespeople indicated that they wanted their companies to have more policies explicitly addressing these ethical questions! Why? Apparently, they feel more comfortable when the ethical guidelines are explicitly stated, whereas in Korea and Japan, the cultural exchange of living in a more community- oriented society provides the necessary guidelines.
Sales Management – Scope
Sales strategy is the key to drive the salesforce. It identifies the best prospects, details the basic value proposition and defines the selling process. The salesforce’s task is to transform the strategy into a workable reality. Proper implementation of the sales strategy allows the company to achieve the sales volume and customer satisfaction.
Sales management directs the salesforce. It, therefore, must know the art and science of personal selling. Personal selling is accomplished through salesmanship. The sales executive must know the activities of salespersons including salesmanship and the problems of salespersons including those in salesmanship and must be able to provide the right solutions.
Salesmanship has to live with a notorious reputation. In the cocktail circuitry the world over, we can hear many jokes about the salesmen. A salesman pushes too hard. He has lost his credibility. It seems he inveigles us into buying. A tailor is comparable to a salesman as far as the credibility crisis is concerned. He fails to deliver on the promised date in spite of all the glib talk.
Even brand managers come closer to salesmen in respect of credibility. A brand manager sits in an ivory tower, far removed from reality. When someone chatters at a party, he is asked to shut up his salesmanship. A salesman is considered to lack honesty, though he may be a hard worker.
Brand communication is hyped, and does suffer from credibility crisis. Sales promotion offers many things ex gratia so difficult to understand. Selling is too short term. It has become pagan with no care to what happens to the reputations of firms. Consumers suffer from post-purchase dissatisfaction.
Glib tongued salesmen are on their way out. We have had enough of their glib talk. We now welcome sober gentlemen – a different breed of salespeople. He just assists the sale. He helps us to take the buying decision.
According to Seth Godin, real growth comes from doing what you believe in, what make sense, and what is right. A good salesperson believes in his job. After all what is sales? “It is the transfer of emotion.”
Sales management together with personal selling constitute an important element of the marketing mix. Though it is a part of the overall marketing task, it contributes significantly to the achievement of the overall marketing objectives. Sales function, therefore, must be professionalized.
It calls for not only persuasive communication, relationship management but also proper co-ordination. This is a broad view of the sales resource; which plays an appropriate part in whatever overall marketing mix an organisation decide to use. Personnel in any area must be managed well for their better performance.
Sales is a special area on account of a number of factors-
i. Geography – Salespeople are away from the headquarters or their base. It is not easy to control them from a distance. It is more time-consuming also.
ii. Isolation – Salespeople are on their own in the field. Without supervision, they are likely to be dissociated with the marketing plan.
iii. Task – Selling skills are operative in a social setting. These must be fine-tuned time and again. It is all the more necessary in a dynamic marketplace.
Selling Skill as a Differentiator:
The markets of the 21st century are dynamic. The competition is increasing. Salespeople have a three dimensional job – communicating, persuading and differentiating. By differentiating, salespeople make the product more desirable than similar products. Here, the quality of selling itself can be made a differentiating factor, giving a competitive advantage to the organisation.
Patrick Forsyth defines ‘sales management as the function responsible for creating and maintaining a suitable sales activity through management and supervision of the sales team, and hence achieving through them, the required sales results’.
Sales Management – Process of Selling
The communication view of the selling process is a much richer and comprehensive view of salesmanship. Personal selling is an oral presentation in conversation (by salesperson) with one or more prospects for the purpose of making sales.
Hence, we have the interpersonal communication of the interaction between the buyer and the seller. Both are active participants in the direct face-to-face communication. Both function as sender and receiver of messages. Both try to influence each other.
The process of selling involves a number of steps such as:
1. Pre-sale preparation,
2. Prospecting,
3. Pre-approach and approach,
4. Sales presentation or sales interview, and
5. Post-sale activities.
The sales presentation or interview may adopt the AIDAS formula (attention, interest, desire, action and satisfaction). Objections raised by the prospect are handled during the interest and desire stages. The climax of sales presentation is the securing of action, i.e., purchase. Following up is necessary after securing purchase. It will check buyer’s satisfaction and reduce his dissonance (after purchase anxieties and doubts) if any. Post-purchase activities assure buyer satisfaction and repurchase.
Let us describe in brief the usual steps of sales process:
Step # 1. Pre-Sale Preparations:
Anticipating the sale means getting ready. A salesman has to serve the customer. He must identify a customer’s problem, solve that problem and prescribe a solution to the customer according. To do these things, a salesman must be familiar with the product, the market and the organisation and the techniques of selling. He must know his customers, their unsatisfied needs and their problems.
He must know himself and his company. He must know buying motives and buying behaviour of the customers or prospects to whom he has to sell his products. He should be aware of current competition and market environment in which he has to operate. Background knowledge (of the company, its products and its rivals) constitutes the essence of pre-sale preparation.
Step # 2. Prospecting:
A salesman has to seek potential customers who are called prospects. A prospect means a probable buyer-the one who brings prospects to the seller’s business. A prospect is one who has an unsatisfied need, ability to buy (purchasing power) and willingness to buy (motivation). Prospecting relates to locating of prospects.
They can be located through present customers, other salesmen, use phone directories, or by direct cold canvassing (calling on strangers and developing contacts by scouting out leads). Located potential customers have to be qualified, i.e., they must have need, purchasing power, inclination to buy and buying authority or power. These qualified prospects must, of course, be accessible to the salesman. Prospecting is similar to the seeking function of the total marketing activities.
Step # 3. Pre-Approach:
Once a prospect is located and qualified, salesman should find out his needs, problems to be solved, his preferences, personal habits, nature, behaviour, etc. The product has to be tailored to the specific requirements of the customer.
On the basis of adequate information of the customer wants and desires, salesman can prepare his plan of sales presentation or interview. The sales presentation must match to the needs of the individual prospect. It should enable the salesman to handle his prospect smoothly through the buying process, i.e., during the sales talk.
Approach:
The third step is the stage where the salesman comes face-to-face with the prospect. The approach consists of the two major parts? Obtaining an interview, and the first contact. The salesman may use various means of obtaining an interview.
He may use the telephone, obtain an introduction from a customer, or use his business card. What is more important is the first contact. The salesman must be able to attract the prospect’s attention and get him interested in the product. It is very important to avoid being dismissed before he can present his product.
Step # 4. Sales Presentation:
Once the salesman has sought and found potential customers and he has matched their wants with his product, he is ready to formally present that product to the customer. The sales presentation should be closely related to the buying process of customers. It should be in the language the prospect understands. The sales interview should generally go according to AIDAS theory.
Scouring attention is the first step. Attention is attracted through proper approach Gaining interest is the second step. Many devices are used to arouse and increase interest in the product. Salesman can do this through lively and interesting sales talk as well as through actual demonstration of the product and interesting sales talk as well as through actual demonstration of the product and its operations wherever feasible.
Product or sample can be shown. Visual aids can be used in sales demonstration. Sales presentation should be clear, concise, to the point and positive. A planned sales presentation is more effective. Some companies have standardised sales talks which can be used with a few modifications if the situation demands. The product characteristics and expected benefits, the salesman should find out the customer’s reactions and objections.
These objections or doubts should be welcome and they should be answered with confidence. The customer should be satisfied on all his doubts. Objections and reactions represent feedback to salesman’s communications.
They reflect growing interest of the customer in the product. Genuine objections should be interpreted correctly and removed tactfully. The prospect must be convinced about the benefits, expected performance and services of the product. The ability to face and meet a buyer’s objections is acquired with time and experience.
A good presentation must satisfy four main objectives:
(i) It must be complete; that means, it must cover every point which is likely to influence the prospect.
(ii) It must be clear, and should leave no misunderstanding or vagueness in the prospect’s mind.
(iii) It must remove competition by providing that the salesman’s product is definitely superior and is the only product that will satisfy the prospect’s want.
(iv) It must win confidence of prospect that the salesman’s statements are true and that the salesman is honestly trying to help the prospect.
The salesman uses the sales talk and a demonstration of the product, if possible, to achieve these objectives. He may also make use of testimonials, guarantees, and other means of creating confidence. He uses comparisons and test to prove the superiority of his product.
A salesman can learn the empathetic ability. It is the ability to sense the reaction one produces in another person and to understand his thoughts and feelings. Thought reading of the prospect enables a salesman to anticipate buyer’s objections and relations and meet these to buyer’s satisfaction.
The problem solving approach should be adopted by the salesman. The product offered on sale must offer adequate solutions to buyer’s needs, difficulties and specific problems. As objection should be regarded as cue that your sales presentation is not yet convincing enough and so yet not complete.
Objectives:
At any stage during the sales interview the salesman may be confronted by an objection. Prospects will always try to resist sale by raising arguments for not buying the product. Unless the objection is satisfactorily answered, the sale cannot take place. A salesman must always welcome objections.
He must consider an objection as an indication of how the prospect’s mind is working. A prospect who raises objections is easier to satisfy than a prospect who does not show any interest in the proposition. The clever salesman will always welcome all objections, interpret the objections correctly and will remove it tactfully, without arguing with the customer. He may sometimes even anticipate an objection and forestall it.
Close:
The close is the act of actually getting the prospect’s assent to buy. It is culmination of the efforts so far made by the salesman, and is, therefore, the climax of the entire sales process. A salesman who cannot close the sale cannot in the real sense be called a successful salesman. It is very important for salesman to be alert and find out the right moment at which to close the sale.
This is known as the “psychological moment” or the “reaction moment” the salesman’s mind and the prospect’s are in perfect accord. The salesman must watch for every sign which may indicate that the prospect is willing to buy, and apply the close. He must also remember that the initiative must come from him.
He cannot wait for the customer to ask for the product. A sale is never complete until the product is finally in the hands of a satisfied user. Salesman alone can assure such completion of sale.
Step # 5. The Follow-Up (Post-Sale Contacts):
Moving the customer to the action stage (the purchase decision) does not complete the salesman’s task. He must write the order, arrange for dispatch and delivery of the product, facilitate grant of credit, reassure the buyer on the wisdom of his decision, and minimize his dissatisfaction, if any.
The salesman should contact the customer frequently to maintain his goodwill and smoothen over any post-purchase problems. The follow up is a good source of feedback to the salesman.
A sale is made not in the mind of the salesman, nor over the counter, but in the mind of the buyer. Let the buyer decide to purchase not because you want him to do so but because he himself is motivated (set into motion) to buy your product because it is going to solve his problem and satisfy his wants.
Salesman must develop the faculty of empathy i.e., mind or thought reading of the customers. This will provide him accurate information of his (buyer’s) motives, feelings, emotions, attitude etc. Buying motives enable the salesman to know why a person buys his products.
A knowledge of various types of customers, their attitudes and/behaviour and ability to recognise and handle the different types of customers is a basic requirement for success in selling.
Theoretical Aspects of Selling:
A. AIDAS Approach:
AIDAS theory of selling was a very popular basis for many sales and advertising tests till recently. It is a seller-oriented approach. A successful sales interview takes the prospect through five mental stages, viz.- (1) attention, (2) interest, (3) desire, (4) action, and (5) satisfaction of the buyer.
B. Buying Formula Theory:
Buying formula theory of selling is the modern approach. It is buyer-oriented. It gives emphasis on the buyer’s needs and buyer’s problems to be solved. Salesman is to help the buyer to find solutions to his problems. Problem-solving approach recognizes that a sale is made in the mind of the buyer.
In purchasing, the solution has two parts:
(I) Product or service,
(II) Brand or Firm’s name, i.e., the source of supply.
The solution must be adequate and it must create pleasant felling in the buyer’s mind. The problem-solving approach adopted by a salesperson in the sale interview and the sales presentation.
The product or service and the brand must be considered adequate by the buyer. The buyer must experience a (pleasant) feeling of anticipated satisfaction when thinking of the product or service and the brand. The elements shown by dashed lines i.e., adequacy and pleasant feelings are the elements of defense in the buying habit. As long as they are present, buying will continue as in the past and repeat sale is assured.
The salesman is called first to emphasise the need for the product or service. Then he has to indicate that the product is adequate in solving the buyer’s problem. If the prospect knows the problem or need and is also aware of the product which can satisfy his need, the salesman will have to emphasise the brand name and convince the buyer that his brand is the solution to the problem.
If the prospect recognises quite well his need, solution to his problem and also your brand name, the only points to be stressed are conviction and purchase. When a salesman presents a rival brand to a customer, he shall give more emphasis on the adequacy of his brand and the peasant feelings it is capable to create.
Sales Management – 4 Main Determinants of Sales Activity Management
When we mixed recognition with coaching- One common sales management faux pas is to congratulate your sales force for a job well done and quickly move to areas of improvement. This tactic can often be interpreted by sales staff as a lack of appreciation. A best practice is to separate the recognition from the coaching.
Save the performance improvement areas for coaching sessions. Set up separate recognition of your sales representative success even if it’s a small celebration. It’s the little gestures of respect and celebrations of achievement that gain the hearts and minds of the sales force.
1. When we don’t have any Sufficient Sales Plan:
Another common sales management faux pas is not developing a sales plan to help manage the sales team. A successful sales team requires regular planning tracking, and review to achieve the targeted results. Every sales representative requires their own action plan to direct day-to-day activities and set up accountabilities.
All sales plans have at least 3 requirements:
i. Sales Representatives Development:
Where most plans fail if they are developed by the sales manager not the sales representative. To ensure a high level of plan acceptance, have the representative develop the plan and guide them toward the right objectives.
ii. Regular Reporting:
Sales plans should be established on a weekly basis to provide flexibility in the planning cycle. Reviewing can take place on a monthly basis. Sales management excellence involves reviewing the results against the plan to determine missed opportunities and areas for improvement.
iii. Sales Metrics:
A successful sales plan focuses on results and activities. Establish the proper sales metrics to drive your business results. Metrics can include: number of client phone calls, number of contacts, appointments set, appointments conducted and sales closed. Do not overwhelm your sales staff with excessive tracking numbers. Focus on the few measures that matter the most to your business.
2. When we have no Appropriate Sales Support:
A common sales management faux pas is to hire a sales person without providing them with the level of support required to succeed. Even if your new representative is well-versed in your industry and a top performer, they will still require help to familiarize themselves with your company, products, and markets.
Not all sales representatives require the same level of support. For many small business owners, a hands- off approach to sales management is not the best strategy. Successful sales management requires a commitment to sales force training. Regardless of the size of your firm, an investment in sales training and support can pay big dividends on profitability.
Spending the time one-on-one and in the field with your sales team will not only provide support but convey a sense of the importance of sales people in your organization.
3. When we only Focus on Control Sales Management:
Many new and unsuccessful sales managers will focus on the traditional sales management by intimidation or control approach. The top sales performers know they have a valuable skill set and will quickly walk to a competitor if treated poorly. Sales management is a partnership between the sales representative and the sales manager.
Effective sales management requires sharing in the responsibility to find the problems and bottlenecks in your sales process. Seek the solution together with your representatives. Be a champion for helping them achieve their agreed results.
4. When no Sales Accountability:
There will be times when sales representatives regardless of the support and training they receive. It is easy to pass off the lack of results to external forces such as competitors, the economy, or poor marketing. Remember the sales representative hired to bring in sales. When support, training, and market potential are available, a lack of results often means it’s the representative’s performance.
If your small business lacks a clear policy of sales accountability, it remains your responsibility to implement the process. Creating a culture of sales accountability will not happen overnight. Expect to lose sales staff.
Sales representatives that have underperformed and will not accept personal responsibility for their own results will leave. This is a good thing. A sales accountability culture only accepts top performers; exactly what our business needs to survive in a competitive market.
Sales Management – Different Sales Positions at Various Levels of Organization
The exhibit below gives an overview of the different sales positions at various levels of an organizational hierarchy (Exhibit-II.II).
As can be observed from the exhibit, there are sales positions at various levels within an organization and each position is created keeping in mind certain definite set of objectives. At the bottom of the hierarchical pyramid, are the positions like sales trainees or sales representatives.
The objective behind such positions is to be in direct contact with the customers in the market and to understand their pulse as far as their requirements are concerned. The positions basically provide a last mile reach with the customers in the market.
These positions are meant to represent a company or in other words the sales representatives or executives are the face of an organization and the reputation of any selling organization depends a lot on their actions and behavior. At the next level we find positions like branch managers, area managers or territory managers.
The objective behind these positions is to have a first level of control on the sales representatives. There are certain plans to be formulated and executed at the branch level which are to be done by these managers. Certain local recruitments and controlling of sales force is done by the managers at the territory level.
The next level of sales management position is occupied by regional or zonal managers who are being reported to by territory managers. There are several sales organizations where enormous selling activity is taking place and that too at diverse locations and hence some kind of a more suitable control at the zonal level is required for which these positions are created.
It is the sales manager at the national level who is supposed to oversee the sales performance in a particular country. The objective behind this position is to offer general guidelines to the managers reporting to him or her apart from formulating strategies and targets for the national market. The vision of the national sales manager is to be executed and customized by the managers working under him or her.
The VP position and the position of the President are more focused on strategy formulation rather than focusing on tactical measures. One important aspect to be understood while discussing about sales positions is that with the advent in hierarchy, the number of staff representing the position will go down since it is understood that position will require more skilled manpower who has the capacity to control larger group of members under him or her by dint of his experience and expertise. The sales management positions are thus to be observed at the top and middle levels of any organization.
Sales Management – Sales Responsibilities, Sales Planning and Sales Practices
Sales management is a business discipline which is focused on the practical application of sales techniques and the management of a firm’s sales operations. It is an important business function as net sales through the sale of products and services and resulting profit drive most commercial business. These are also typically the goals and performance indicators of sales management.
The duties and responsibilities of the sales persons can vary depending upon the nature of the business.
i) A sales person should have all the knowledge about the product so that he may communicate with the customers.
ii) He should sell the products with persuasion and it is the responsibility of sales person to satisfy the customers while they are looking for the products.
iii) Sales person should also handle and maintain the cash.
iv) Sales person is also responsible to greet the customers, to help the customers in identifying their requirements, to promote products, to answer the customers’ questions regarding the products, to negotiate the price on the spot, to arrange the merchandise properly and to supervise the ordering the supplies.
Sales planning are the process of determining the number of sales persons or sales force required the sales targets to be achieved, the expenditures to be incurred and everything required for an effective sales organization in the firm.
There are four types of sales managers.
They are:
1. The Dictator Manager
2. The Disappearing Manager
3. The Demonstrator Manager
4. The Developer Manager
Here is an in-depth discussion of the different types of sales manager in any kind of company.
1. The Dictator Manager:
There are managers that are called as dictators. These managers love to dictate and usually want their opinions to be done all the time. Their listening skills are only limited and they do not regard the opinions of their subordinates. Although the dictator managers are regarded as evil managers, there is still an advantage of being one. In fact, your subordinates exactly know where they stand and therefore do not cross the line.
Since being a dictator means that you follow the guidelines strictly, then you can be ensured that your subordinates will also learn the rules themselves. However, the major drawback about being one is that you tend to monopolize the entire work place. Moreover, your subordinates will follow you not because they respect you but because they are afraid.
2. The Disappearing Managers:
These managers have a lot of things to do and are often out from the office most of the time. This type of manager is always on the go. If you are this kind of manager, then you need to make sure that change yourself. As found out, this type of manager can be very frustrating since they are nowhere around when their representatives need them.
3. The Demonstrator Manager:
This particular manager loves to work most of them time on their own without the need to work with others. Although this is good, sometimes the manager does not give his or her subordinates a chance to work for themselves. The downside to this manager is that he or she does not illicit the value of teamwork among the subordinates.
4. The Developer Manager:
This manager takes time with his or her subordinates and develops ways to improve them. In all types of manager, this particular manager is the best type of all. This makes the subordinates feel comfortable with the manager thus they perform well with their jobs.
HR Practices in Sales Management:
The recruitment and selection of a sales force often is the key to success for an organization. A successful sales team leads to profitability and future growth. Most organizations that hire sales professionals use a very detailed, well-orchestrated process to ensure that the candidates selected will meet or exceed targeted sales goals.
A detailed job description is created that represents a top-notch sales person. The job description includes the overall function of the job, detailed responsibilities, sales expectations, as well as education and personal attributes required to be successful. A sales job description also represents the challenges of the job. When the job description is posted to find candidates, the goal is to attract highly skilled sales professionals willing to take on the challenge.
Applications received from candidates interested in the opportunity are reviewed carefully. Candidates’ cover letters and resumes often are scrutinized, and recruiting professionals look for enthusiastic candidates who exhibit potential to provide successful accomplishments in sales.
After resumes are screened, selected candidates are contacted. In many cases, the candidates are screened during a phone interview to verify that they qualify for the job opening. During the screening process, hiring professionals evaluate sales skills, as well as the candidates’ personalities to ensure they match the overall requirements for the position. One or several candidates are then selected to proceed to the next phase of the recruitment and selection process.
When candidates are selected after an initial phone interview, many organizations administer an assessment to evaluate the candidate’s personality and how it reflects on his/her sales abilities. In many cases, the assessment is administered online. After the assessment is completed, hiring professionals evaluate the results and determine if the candidate’s personality and skills are a fit for the sales position.
Sales Management – Sales Management and Forecasting
Selling is an art largely associated with the behavioral skills of the sales personnel of a sales organization. Today, selling is performed using scientific methods of product presentation, advertising and various approaches drawn to take the customer into confidence.
The efficiency of sales depends upon the type of sales person and the techniques used in selling goods or services. The consumers are the decision makers in buying the goods and services proposed for sales and hence play a key role in the sales process. There are four categories of sales which include every type of sales position.
These types of selling are:
i. Consultative sales
ii. Technical sales
iii. Commercial sales
iv. Direct sales
It is necessary for the business-to-consumers (B-to-C) companies to develop sales philosophy derived from launching high-profile, customer-focused marketing initiatives. But business-to- business companies may have the most to win from programs organized around accounts and clients instead of products and processes.
Success to consumer-products company means much more than how many new customers it can prospect and generate repeat-order behavior, but how deeply it can penetrate its current distributor accounts for augmenting the volume of intake.
So it is important to remember the difference between market penetration and account development through the effective deployment of sales force and implementation of the concepts of time, target and territory (3Ts). The former is a product-centric process, often driven by price competition. The latter is a customer-centric process, driven primarily by an improvement in customer loyalty.
The salesforce of the company is trained to understand the consumer behavior and develop their strategies accordingly. The needs, desires and the technology preference for the better perceived use value of the products are slated by the staff of the company and necessary information and supports are pooled through high involvement in the subject, cost-benefit ratio of the product purchase, referrals and available point of purchase sources with the dealers.
The alternatives are evaluated to frame the customer-focused decision on the basis of the product attribute analysis and comparative advantages in reference to price, quality and services of the products of the company.
The purchase decisions of the buyers are stimulated by providing the point of purchase of their choice that satisfies their requirements and optimizes the level of satisfaction in terms of personal attention and product handling. The post-purchase evaluation is done in reference to the product performance, warranty administration and customer services by the call center division of the company.
Get out on the street and study your competitors. Visit their stores or the locations where their products are offered. Analyze the location, customer volumes, traffic patterns, hours of operation, busy periods, prices, quality of their goods and services, product lines carried, promotional techniques, positioning, product catalogues and other handouts. If feasible talk to your customers and sales staff to seek and update business information.
Consider how well your competition satisfies the needs of potential customers in your trading area. Determine how you fit into this picture and what niche you plan to fill. Will you offer a better location, convenience, a better price, later hours, better quality, and better service? The sources of market information on selling activity are listed in Box 12.1.
Surveys and focus groups represent more formal ways of getting insight from your customers. If you have a specific information requirement and a definable audience, it is likely that you can undertake a useful survey. Designing a non-biased questionnaire requires attention to detail. There are many good books available on questionnaire design and initiating a survey.
If you are depending on the survey to assist with a costly decision, you may want to consider hiring a professional marketing research firm. A focus group involves getting feedback from a specially picked group using controlled interview techniques. The process usually allows the participants to provide their opinions, come up with new ideas and brainstorm.
This is valuable for generating new concepts, getting feedback on proposed advertising or gaining insight into attitudes and opinions about a new product. Focus groups require a skilled interviewer and hand-picked participants. Professional firms can be hired to tackle the project for you.
Understanding the Sales Force:
An important ingredient in the successful retail or service business is good selling. Without it, many sales are lost-sales that may mean the difference between success and failure. This publication tells how you can train yourself and your employees to become creative sales people.
To many customers, the salesperson is the business. Therefore, if the sales personnel are bad, then so is the firm. Although important to all business, effective sales personnel are especially important to small business to compete with the big firms on things like assortment, price, and promotion. Selling effort, on the other hand, is one place where the small product or service retail business can compete with larger competitors, and win.
Effective selling does not happen by accident. The small entrepreneur must work to achieve a high level of sales effectiveness in his or her business. In order to work toward this goal, the businessperson should be aware of the different types of salespersons, the selling process, and the attributes of effective salespersons. Applying such knowledge to a business situation should result in the desired goal of effective sales personnel – the competitive advantage.
Measuring Sales Performance:
Owner-managers who have to be their own sales managers have the problem of measuring the performance of each of their sales representatives. Their tasks are complicated because of the many criteria that can be used. One of the methods that is workable and effective discusses the development of benchmarks that will allow a sales representative’s performance to be measured in numbers that are profit-oriented. Some owner-managers find it difficult to measure the performance of sales representatives because representatives vary, customers vary, and business conditions vary.
Following are sound criteria for measuring the performance of sales representatives:
1. Volume of sales in your national currency/US dollars.
2. Amount of time spent in office.
3. Personal appearance: for example, clothes, hair, cleanliness and neatness.
4. Number of calls made on existing accounts.
5. Number of new accounts opened.
6. Completeness and accuracy of sales orders.
7. Promptness in submitting reports.
8. Amount spent in entertaining customers.
9. Extent to which sales representative sells the company.
10. Accuracy in quoting prices and deliveries to customers.
11. Knowledge of the business.
12. Planning and routing of calls.
Usually owner-managers make one of the five following errors- They evaluate their sales representatives primarily on the basis of sales volume. Secondly, they rely too much on the number of sales calls made by each of their sales representatives.
They compare each sales representative’s present sales results with past sales for a corresponding period – for instance, May of the current year against May of last year. Moreover, they expect their sales representatives to follow explicitly the selling methods that worked for them when they were selling. Or they give their sales representatives too much freedom.
Sales Management – Sales Management and Control
Selling is an art largely associated with the behavioural skills of the sales personnel of a sales organisation. In recent days, selling is performed using scientific methods of product presentation, advertising and various approaches drawn to take the consumer into confidence.
The efficiency of sales depends on the type of sales person and the techniques utilised in selling goods or services. The consumers are the decision-makers in buying the goods and services proposed for sales and hence play the key role in the process of sales. There are four distinguished categories of sales which include each type of sales position.
These types of selling are:
1. Consultative sales.
2. Technical sales.
3. Commercial sales.
4. Direct sales.
These categories require a specific management approach for conducting the task in the market.
1. Consultative Sales:
Consultative sales may be defined as an approach of selling specific goods or services to the technical organisations. The consultative types of companies keep the accounts of their clients and assign the Salesforce to attend on the specific client accounts. Examples of computer systems management, structural planning of factories, human resource management, capital market services and the like may be listed in the category of consultative sales.
Since performing sales for the goods and services of this category involves high skills, they require low-key, low-pressure approach for the sales personnel. It requires a comprehensive knowledge of the product or services and the user orientation. A successful salesperson in this field needs to have strong confidence and an experience of few large successes achieved periodically. Of all the sales types, the consultative sale is probably the most professional and demands the highest compensation for the skills and abilities of the salespersons.
2. Technical Sales:
The product knowledge, its application, relevance to contemporary technology development and sales skills are the essential characteristics that need to be present in the salespeople engaged in the sales of goods and services of technical products. The dominant industries in this field are electronics, engineering products of all branches, medical equipments and the like.
The buying influence is generally drawn from a professional manager. The personal sales in this category are limited. However, the organisational sales of technical goods and services are higher as compared to personal sales. The compensation to the Salesforce of this category is often linked with performance besides a low salary.
3. Commercial Sales and Direct Sales:
A large Salesforce is engaged in performing the commercial sales of goods and services of consumption nature. These sales are very much individual consumer oriented. The sales personnel operate as sales representatives of the company or as facilitators of an in-house retail stores. The major takeoff of the sales representatives will be to collect orders from the consumers or organisations.
In performing the direct sales, the representatives attempt to generate an emotional appeal and motivate the buyer. It has been observed that the turnover rate in the direct sales is higher as compared to the other three categories of sales. The sales personnel engaged in direct sales require a strong persuasive ability and skills to identify a prospect’s buying motives. The direct salespeople receive the compensation in terms of commission on the volume of sales.
Sales Management – 11 Main Tools Used in Sales Activities
These are the basic various sales management tools used in sales activities:
Tool # 1. Sales Plans:
Each salesperson is supposed to have a formal written sales plan that details how much they are supposed to sell (and target margins) during the year.
Tool # 2. Itineraries:
Salespeople should submit their schedules in advance. This will force better sales planning by the sales team and will also provide the manager with the ability to do something unique influence behaviour. When you look at a call report, there is nothing you can do about it but when you look at an itinerary, you can make changes. This is the essence of management, anyway, directing future behaviours.
Tool # 3. Account Profiles:
The most successful salespeople have exceptional account knowledge. Your organization needs to know what your salespeople know about their key customers and prospects. Do they know enough to sell them? To sell them effectively? You need to develop a template of what your salespeople need to know to sell—and teach them to gather and record the information. Then, you need to show them the importance of the information by regularly using it when you do joint calls with the salespeople.
Tool # 4. Joint Calls:
Also known as “buddy calls.” A joint call is your opportunity to understand what happens on sales calls. You do not get this understanding by taking calls over, by the way. You should just sit and listen and unless a major order is about to get away, you should be quiet.
You should keep a notebook of these calls and document what you see. Furthermore, you need to give a copy to the salesperson of your observations so both of you have the same understanding. All salespeople, even veterans, need joint calls. Inside people need them, too. You need to have a formal schedule of ride-along and sit-along calls scheduled.
Tool # 5. Sales Meetings:
Part of your management effort is the formal sales meeting. To make these meetings effective, you need to have them regularly scheduled (1st Monday of the month at 8 am, for example), definite start/stop times, and a regular agenda everyone knows about in advance.
Tool # 6. Numbers:
What were our goals? How are we doing, by salesperson? Use this time to review specific goals such as sales from new customers and sales of focus products.
Tool # 7. Product/Service Training:
Tell one of your salespeople to prepare a 10-15 minute presentation on a focus product or service. This will help them to learn it better and help you to understand how they present it. It also gives the salespeople a chance to take a leadership role.
Tool # 8. Sales Tip:
This is your moment to shine. Review your notes from recent joint calls and focus on an area of weakness.
Tool # 9. Forecast:
Ask your salespeople to tell you the significant pieces of business they will book in the next 30 days. Nothing helps you to understand how well salespeople understand their business than this little exercise.
Tool # 10. Opportunity Management:
Many organizations have some sort of sales pipeline report. To a sales manager, there is nothing more important than a clear understanding of what is really happening. Call reports often obscure the real point of sales which is to find a new piece of business and drive it toward a yes/no. If your only tracking mechanism is quotes, you are getting a late look at the pipeline. Use your pipeline report to tell you some specifics about sales performance.
Tool # 11. Sales Compensation:
One of the most complex areas of sales management is creating the right compensation plan. The only right plan is the plan that encourages the results you want. Too often, however, compensation plans are in place because they are easy to administer or because this is what you have always used.
Also, remember every time you change a compensation plan, the first reaction is you are trying to take something away. A change in a compensation plan has to be “sold” not “told.”
Sales Management – How to Make Sales Management Effective? (10 Ways)
Some key areas do merit special attention of the sales manager:
(1) Vision:
Selling over a period of time becomes routinized. There are sales calls. Some lessons are learnt. They are helpful in individualizing the presentation. Salespersons have to keep an eye on the company they serve and the portfolio they handle. They also should be sensitive to the market in which they operate. Standardized presentations become uninteresting. All promotion is to be seen in the larger context.
The organisation must have a clear vision, a strategic view of the business. The sales manager must know where we stand today and where we are headed to, say five or ten years hence. This should be shared with the sales team. This becomes a direction to the whole team. Selling then becomes exciting, a smaller but significant part that contributes to the larger picture. That makes the routine less taxing.
(2) Market Focus:
Though it sounds obvious, it is a common tendency to be aloof from the market. There should be contact with the customers and their demand pattern. There should be contact with the environment – product development, technological change and competitive organizations. Such interface with the customer contributes a great deal to success.
(3) Clear Guidelines:
All salespeople must have clear idea about what they have to achieve, or else their performance would not be maximized. There should be clarity about job descriptions, targets, goals, standards and procedures. Goals should be realistic, yet sufficiently challenging. These should be supported by organisational processes, for e.g., quality control, sales aids, and POP material. It is the job of a sales manager to be clear about the overall sales objectives.
(4) A Good Team:
Selection is the key to success in the sales function. A good team is selected by observing good selection process right from advertising, testing, interviewing and selecting. A good team so selected must be motivated and rewarded adequately.
(5) Spending Time with the Team:
Amongst the several tasks set for the sales manager, the most crucial is the devotion of time to the sales team so as to develop the team in such a way that it becomes self-directed. Another task that is equally important is that of communications.
(6) Motivation:
A motivated team is a great asset. Just monetary compensation is not enough. Compliments are equally important. Motivation has taken care for consideration for the human element and having variety in the job. Motivation must be fine-tuned to the kind of sales team involved. It is an on going process, motivated people put in more work. They are at their creative best.
(7) Good Communications:
Communication must be clear, understandable, and persuasive. Sales meetings are important and must be paid attention they deserve. In motivation, communication plays a great role. Appraisal and counselling after appraisal are also communication exercises. One of the biggest mistakes salespeople make is to talk too much. They should exercise restraint and talk to the point.
(8) Sales Excellence:
Sales excellence is a result of field training, sales meetings, formal training and appraisals. Salespeople are provided newsletters. A good salesman believes in the product and believes in himself. He interacts with people, and has a good sense of timing. He has a good sense of humor. He visits existing customers, while tapping the new opportunities. He is particular about post-sale service. His approach is commonsensical. Self-development is natural. Competence is desirable.
(9) Innovations:
Sales is dynamic. We should recognize change and have an open mind. Sales managers must not be indecisive. It is necessary to introduce changes.
(10) Leadership:
Leadership influences people and their activities. Managers, as Drucker said, do things right, leadership does the right things. A good sales manager must lead.