MKT 3525 SALES MANAGEMENT FINAL Chapter 3: Territory Management Sales opportunity management - Generating new accounts - Managing existing accounts - Sales versus profits - Personal time management A process for generating new accounts Three ways by which a firm can increase the value of its customer base: 1. Acquiring new customer 2. Retaining existing customers 3. Increasing the profitability of each customer by increasing its purchases The key to building sales through prospecting is to spend time with
prospects that are likely to become good customers Building a prospect profile - decide what factors determine who is a good prospect. Prospect profile is a simple profile of what the best prospect looks like. Demographics frequently used to build a prospect profile include the following: - Size - Age - Distance - Specialty Building a prospect list The traditional method of generating prospects is through cold canvassing which involves contacting prospective customers without appointment. 1. Direct inquiry - Advertising - Direct mail
- Trade publications - Trade shows 2. Directories 3. Referrals 4. Cold canvassing Qualifying prospects convert a prospect to a buying customer. The salesperson needs information about customer needs, buying authority, and ability to pay. Managing existing accounts Computing the cost per call for an industrial products salesperson Four methods for setting account priorities 1. Single-factor model 2. Portfolio model 3. Decision model 4. Sales process model - Unqualified opportunities - Qualified opportunities - Best few opportunities
Time management How salespeople spend their time with customers, selling, or service calls Time wasters 1. Telephone interruptions 2. Drop-in visitors 3. Lack of self-discipline 4. Crises 5. Meetings 6. Lack of objectives, priorities, and deadlines 7. Indecision and procrastination 8. Attempting too much at once 9. Leaving tasks unfinished 10. Unclear communication Ch.4 Account management Purchasing process - Recognition of needs - help customers recognize a need or opportunity. - Derived demand the dynamic which demand for a products or
services is derived from the demand for the customer products and services - Evaluations of options - identify options and provide solutions. - Purchase decision make process convenient hassle free Price is usually a factor in business to business marketing - Implementation and evaluation support the purchase decision. - Value analysis developed for cost reduction, focus on the relative cost of providing a necessary function or service at the desired time and place with the necessary quality. Supplier Tiers - In-supplier Traditional arms-length relationship Individual level relationship dominates Standardized nonstrategic products. - Preferred Relationship focus on products High level of familiarity High level of trust.
- Extended A bundle of products Several collaborative processes Supplier is viewed as best in class. - Partner Supplier is viewed as key to customer s competitive position Business relationship is rarely challenged Some degree of exclusivity Buying center all of the people formally or informally involved in the purchasing decision. Advocate - Personal Wants you to win because he/she knows you, likes you, and wants to see you be successful - Professional Wins by doing his/her job better, achieving goals, and helping the companies meet objectives Recognition Wins by receiving recognition from his or her own Organization
- Negative Really want someone else to lose
Chapter 5: The sales presentation The selling process and skills This chapter is about sales force activities by focusing on customer interactions which are the activities that take place just prior to and following face-to-face customers. Also, many skills are required in performing these activities. We divided the customer interaction process into three phases: 1. Pre-interaction actions that are initiated prior to interaction with key decision makers requiring skills in precall planning - Setting objectives - Knowledge management - Information gathering - Rehearsal
2. Interaction actions initiated while interacting with decision makers, calling on skills in relating, discovery, advocating, handling objections, and closing - Gaining access - Relating - Needs discovery - Advocating - Closing 3. Post-interaction activities following a transaction involving supporting skills. - Supporting - Implementing - Handling dissatisfaction - Relationship enhancement Basic types of selling models 1. Standardized model - Appropriate for Transactional Relationship - Low cost - Standardized products
- Same benefits 2. Need-Satisfaction model - Appropriate for Consultative Relationship - Customers become consultant of the firms 3. Problem-Solution model - Appropriate to Enterprise Relationship - More formal studies of the customer s operations
Chapter 9: Leading a sales force Leadership skills 1. Empowerment - Expertise power : manager has special knowledge - Referent power : salespeople admire the manager - Legitimate power : manager has a right to expect the effort - Reward power : leader has ability to reward subordinates - Coercive power : leader has ability to give punishment 2. Intuition 3. Self-understanding 4. Vision 5. Value congruence Leadership styles - Transformational leadership - Situational leadership - Four leadership styles Important leadership functions - Coaching : need feedback, rolemodeling, and trust
- Team building - Sales meeting o Meeting objectives o Meeting budgets o Locations and timing o Common problems Sales force personnel issues - Plateauing: occur when people stop showing an interest in the job - Termination of employment - Sexual harassment - Alcohol and chemical abuse
Chapter 11: Sales Force Motivation Reasons for Motivating Salespeople Frequent rejection Physical separation from company support Direct influence on quality of sales presentation Indirect influence on performance Maslow s Hierarchy of Needs Physiological: Hunger, thirst, reproduction, shelter, clothing, air, rest. Safety-Security: Security, stability, dependency, protection, need for structure, order, law, tenure, pension, insurance. Love-Belonging : Belonging, acceptance, love, affection, family and group acceptance, friendships Self-Esteem: Achievement, respect, recognition, responsibility, prestige,
independence, attention, importance, appreciation. Self-Actualization: Intense job challenge, full potential, full expression, creative expansion. Maslow s Needs & Related Sales Force Motivators Physiological : Cash wages and bonuses Safety-Security: Job security and fringes Love-Belonging : President s Club $1 million Self-Esteem : Recognition programs Self-Actualization: Challenging tasks calling for creativity Career Stages 1. Exploration Stage Motivational Needs Learning the skills required to do the job well. Manager Role Reinforce accomplishments Spend time with
salesperson Discuss long-term benefits of working for the organization 2. Establishment Stage Motivational Needs Use skills to produce results, increase job autonomy Manager Role Provide high rewards for high achievers Have salespeople recognize success has something other than promotion 3. Maintenance Stage Motivational Needs Develop a broader view of work and organization, maintain a high level of performance Manager Role Challenge salespeople to use their knowledge in new ways Introduce significant rewards for mastering new challenges 4. Disengagement Stage Motivational Needs Establish a stronger self-identity outside of work, maintain performance
level Manager Role Maintain focus on personal goals and importance of organizational citizenship behaviors (e.g., being a role model, assist in other aspects of the organization) Career Stage Effects on Satisfaction Select Research Findings: All stages are least satisfied with promotion and pay o However, pay satisfaction is only dimension on which disengagement salespeople are more satisfied than establishment or maintenance salespeople Maintenance salespeople are less satisfied with supervision than are establishment salespeople Disengagement as well as maintenance occurs quite early for some people -- Is this a management concern? Giving Status to Salespeople 1. Compensation - exceed first-line managers 2. Job Title - no cost but considerable payback
3. Company Car Upgrade - salespeople spend much time in car reminds them of their value. 4. Car Phone - justified on a purely business basis 5. Field Sales Council - meet president for 1/2 day open-ended discussion on field marketing conditions - report back to field meetings the results 6. Outside Secretarial Support - or more exclusive central. 7. Published Success Stories - high form of recognition 8.Task Force Assignments - e.g., review of all paperwork. Expectancy Theory System The amount of effort an individual will put into an activity depend on Expectancy Instrumentality Valence A Self-Contract Clear detailed description of behavior targeted for change.
* how behavior is to be observed, measured and recorded * Detail of criterion for reinforcement * designates the reinforcement * stipulates the negative consequences of not fulfilling contract * Sets timing for delivering reinforcement Quotas 1. Sales volume in dollar or point system Points allow for different weights for different important products independent of price. Points not affected by inflation. Sales quota may be developed for: Total territory sales, and/or Individual product or product group. 2. Profit-based quotas are rarely based on bottom line profits Difficult to account for indirect expenses Profits are usually configured as gross margins minus some load factor
3. Activity-based quotas are based on activities directly related to sales volume More directly under control of the salesperson Biggest problem is falsification of call reports Issue of quantity vs. quality of activity?
Chapter 12: Compensating the Sales Force Goals of a Sales Force Reward System - Acceptable ratio of costs to sales force output in volume, profit, or other objectives - Encourage activities consistent with firm s overall, marketing, and sales force objectives and strategies - Attract and retain competent salespeople, thereby enhancing longterm customer relationships - Be clear and be flexible enough to allow adjustments that facilitate administration Compensating Salespeople Components Needs SALARY n Motivate effort on nonselling activities
- Adjust for differences in territory potential - Reward experience and competence COMMISSIONS n Motivate a high level of selling effort - Encourage sales success INCENTIVE PAYMENTS - Direct effort toward strategic objectives - Provide additional rewards for top (Bonus) performers - Encourage sales success SALES CONTESTS - Stimulate additional effort targeted at specific shortterm objectives PERSONAL BENEFITS
- Satisfy salespeople s security needs - Match competitive offers Selecting Benefits - Salespeople expect cars - Insurance and travel are very common - Some plans offer a choice of alternatives
Chapter 13: Sales Person Performance Evaluation Evaluating Sales Force Performance: - Cost Analysis Net Sales Less Variable Costs: Cost of Goods Sold Sales Commissions Equals: Contribution Margin Less: Direct Fixed Selling Costs Equals: Profit Contribution - Product Costs CGS + Commissions higher for computers - Paying too much for parts - Competition has driven down selling prices - Salespeople cutting computer prices to make deals -- possible actions: - Limit price negotiation capabilities - Shift to a gross margin commission - Change commission structure to emphasize accessories and software
Evaluating Sales Force Performance: Fleet Car Management -- A Motivator + Salesperson owned car (per mile travel allowance) Salesperson gets car preference Allowances rarely cover full salesperson car costs + Company owned & managed cars Ties up a lot of cash
Costs less than salesperson owned car + Leased sales fleet of cars Frees up cash Company performs routine maintenance