01 & 02 - Introduction to Sales Management

7/28/2019 01 & 02 - Introduction to Sales Management

1/57


2/57

01 & 02 Introduction

toSales Management

2


3/57

Selling is Everywhere We are selling all the time.

Everybody is selling something to someone.

Salespeople are called by various names such asSalesman, Saleswoman, Sales Representative, Sales

Executive or Customer Contact Executive.

3


4/57

Evolution of Sales Management The history of salesmanship is as old as human

civilization. The techniques of modern sales management and

selling techniques were refined by John Henry

Patterson, widely known as the father of modern

sales management. Today a sales person is no longer an order taker or

information provider but is viewed as a consultant.

The sales managers job is not only limited to sales

but also includes recruiting, training, selecting,motivating, forecasting, controlling and

administering salespeople while performing the

primary responsibility of revenue generation and

profitability for the firms.4


5/57

1950s 1970s 1980s` 1990s

Marketing Era X

Consultative

Selling Era

X

Strategic

Selling Era

X

Relationship

Selling Era

X

Evolution of Personal Selling

Prior to the 1950s, peddling, or pushing products

was the primary style of Personal Selling.

5


6/57


Evolution of Personal Selling (1950 to Present)

Marketing Era

Organizations determined

needs and wants of target

markets and adaptedthemselves to delivering

desired satisfaction.

Product orientation was

replaced by customer

orientation.

Middle

1950s-

1960s

Selling

Emphasis

Organizations

recognised thatthe salesperson

could collect

product, market,

and service

information

regarding the

buyers needs.


7/57



Consultative SellingEra

Salespeople became

diagnosticians of

customers needs aswell as consultants

offering well-

considered

recommendations.

Mass markets were

breaking into target

markets.

Late 1960s-

1970s

Selling EmphasisBuyer needs were

identified through

two-way

communication.Information-

giving and

negotiation

tactics replacedmanipulation.


8/57



Strategic Selling Era

The evolution of a

more complex selling

environment andgreater emphasis on

market niche created

the need for greater

structure and more

emphasis onplanning.

1980s

Selling Emphasis

Strategy was

given as much

attention asselling tactics.

Product

positioning was

given more

attention.


9/57



Relationship Selling

Era

Salespeople are

encouraged to think inthe context of long-

term, high-quality

partnership with

individual customers.Sales force automation

provides specific

customer information.

1990s-

present

Selling Emphasis

Customer

supplants the

product as thedriving force in

sales.

Greater emphasis

is placed onstrategies that

create customer

value.


10/57

Personal Selling in the Information Age

Major Developments(1960-2020)

Major advances in information technology

Information is a strategic resource

Business is defined by customer relationships

Sales success depends on creating and adding

value for the customer

INCREASE IN RELATIONSHIP SELLING AND RELATIONSHIP MARKETING

Industrial Economy

1860-1960

Information Economy

1960-2020

10


11/57

What is Personal Selling?

Personal selling refers to personal

communication with an audience

through paid personnel of an

organization or its agents insuch a way that the audience

perceives the communicators

organization as being the source

of the message.

11


12/57

What is Personal Selling? Personal Selling involves person-to-person

communication with a customer or prospect. It is a process of developing relationships,

discovering needs, matching appropriate

products to these needs and communicating

benefits through informing, persuading and

reminding.

12


13/57

Sales management is defined as the

planning, direction and control ofpersonal selling, including recruiting,

selecting, equipping, assigning, routing,

supervising, paying and motivating asthese tasks apply to the personal sales

force.

What is Sales Management?

13


14/57

What is Sales Management?

Sales Management is defined as the

management of a firms personal sellingfunction while distribution is the

management of the indirect selling effort,

that is, selling through extra corporate

organizations which form the distributionnetwork of the firm.

The sales management task thus includes

analysis, planning, organizing, directing and

controlling of the companys sales effort.

14


15/57

Distribution Management

Distribution (or place) is one of the four

elements of marketing mix. An organization or set of organizations (go-

betweens) involved in the process of

making a product or service available for

use or consumption by a consumer orbusiness user is part of the distribution

management.

Distribution Management comprisesmanagement of channel institutions as well

as physical distribution functions.

15


16/57

Sales management helps in achieving the

organizational objectives. The principal objective is that the products should

be sold at such a price that realizes profits.

Buyer and seller have business relationship

that is based on exchange of goods and/or

services and money. Salesperson develops a positive relationship with

the customers. The role of sales team is

interdependent and success of one team member

depends on the other. The sales team continuously monitors the

customer preference, competitorssituation,

government policy and other regulatory bodies.

Nature and Importance of Sales Management

16


17/57

Need for Relationship Selling Relationship selling centres on all activities directed

toward establishing, developing and maintaining

successful exchanges with customers and other

constituents.

A business marketer may begin a relationship with a

buyer as a supplier (one of many), move to a

preferred supplier status (one of a few) andultimately enter a collaborative relationship with the

buyer (sole source for particular items).

At one end of the relationship range is the

transactional exchange or relationship and at theother end, the relationship is called collaborative

exchange or partnering.

17


18/57

Need for Relationship Selling Transactional Exchange or Relationship focuses on

timely exchange of a basic product for a competitive

price between the customer and the supplier.

Value-added Exchange or Relationship focuses on

complete understanding of the present and future

needs of the customer and meeting those needs

better than competitors so as to obtain a maximumshare of the customers business.

Collaborative or Partnering Exchange or

Relationship focuses on building strong social,

economic, service and technical ties with the buyingfirm over a long period of time.

18


19/57

Prepare sales plans and budgets

Set sales force goals and objectives

Estimate demand and forecast sales

Determine the size and structure of the sales force

organization

Recruit, select and train sales people

Design sales territories, set sales quotas anddefine performance standards

Compensate, motivate and lead the sales force

Conduct sales volume, cost and profit analysis

Evaluate sales force performance Monitor the ethical and social conduct of the sales

force

19

Responsibilities of the Sales Manager


20/57

ORDER

GETTERS

Currentcustomers

New

customers

ORDER

TAKERS

Inside OrderTakers

(via mail,

telephone,

internet)Outside Field

Sales

SUPPORT

PERSONNEL

MissionarySalespersons

Trade

Salespersons

Technical

Salespersons

Types of Salespersons

20


21/57

Personal Selling

Salespeople have many names

Agents

Sales consultants

Sales Representatives

AccountExecutives

Sales Engineers

District Managers

Marketing representatives Account Development

Representatives

21


22/57

Positions of Salesperson What products are delivered by a salesperson where

his or her job is predominantly to deliver the

product?Milk, bread, oil, gas, etc

What is the position or designation of a salesperson

where he or she is just an internal order taker?

The counter sales clerk

What is the position or designation of a salesperson

where he or she is not expected or permitted to take

an order but only builds goodwill or educates an

actual or potential user?

The medical representative22


23/57

Positions of Salesperson What products are sold by a salesperson

predominantly based on technical knowledge?

Engineering or computer equipment

What tangible products are sold by a salesperson?

Vacuum cleaners, refrigerators, etc

What intangible products are sold by a salesperson?

Insurance, advertising, education

23


24/57

Contributions of Personal Selling

Salespeople help stimulatethe economy

Salespeople help with thediffusion of innovation

24


25/57


Salespeople generate revenue

Salespeople provide market research

and customer feedback

Salespeople become future leaders in

the organization

25


26/57


Salespeople provide solutions to

problems

Salespeople provide expertise and serveas information resources

Salespeople serve as advocates for the

customer when dealing with the selling

organization

26


27/57

Why Personal Selling Has Evolved

Increasing sophistication of products and

services

Increased competition

Increased customer demand for quality,

value, and service

27


28/57

Difference between Selling and Marketing

Selling has a product focus.

The emphasis is on price reduction for closing the

sale.

The short-term focus does not consider building up

the brand and winning competitive advantage

through a large set of loyal customers.

The key objective is maximizing profits throughsales maximization.

When the focus is on selling, the task is to sell

whatever is manufactured.

Aggressive sales methods are employed. Customers satisfaction is taken for granted.

Selling converts the product in to cash for the

company in the short run.

28


29/57


While selling revolves around the needs and interest

of the manufacturer, marketing revolves around that

of consumer.

Marketing consists of all those activities that are

associated with product planning, pricing, promoting

and distributing the product or service.

The task commences with identifying consumerneeds and does not end till feedback on consumer

satisfaction is received.

The activity comprises production, packing,

promotion, pricing, distribution and then the selling. Consumer needs become the guiding force behind

all these activities.

Profits are not ignored but they are built up on a long

run basis.29


30/57


Mind share is more important than market share.

A truly marketing firm tries to create value satisfying

goods and services which the consumers will want

to buy.

What is offered for sale is determined not by the

seller but by the buyers.

The seller takes the cues from the buyer and theproduct becomes the consequence of the marketing

effort.

Selling does not bother about the value satisfaction.

Marketing views the entire business as consisting ofa tightly integrated effort to discover, create, arouse

and satisfy customer needs.

30


31/57

Successful sales force management means:

the right organisation and aggregation of

product lines and geographies

the right strength and qualification

the right compensation and incentive

system

31

Managing the Sales Force


32/57

Objective Setting Training for Sales Policies

Designing Sales Force: Structure and

Size

Deciding Sales Force Compensation

Recruiting and Selecting Sales Force

Guiding and Motivating Sales Force Performance Rating of Sales Force

32

Steps in Designing and Managing the SalesForce


33/57

Cont

.

Designing and Managing Sales Force Actual supervision of, and guidance to,

individual salesmen is also a s ine qua nonof a

successful and responsible Sales Manager

Sales Force Authority

Sales force requires delegation of authority with

respect to the following:

Changing or fixing prices

Credit facilities to old and existing customers

Assurance regarding quality and after-saleservice

Payment terms and settlement of claims

33

Challenges of Sales Management


34/57

Target-setting Sales targets are fixed on the basis of

past experience, time period and

brand positioning in the market. The

targets should be fixed in such amanner that they are achievable.

Sales Forecasting

Sales forecasts must change as

conditions change. Accuracy depends onmeticulous planning and dynamic

strategies.

34

Challenges of Sales Management


35/57


36/57

Sales Manager

RM(North)

RM

(South)

RM

(East)RM(West)

RM

(Staff)

BMBM BMBM BMBM BMBM BMBM BMBM BMBM BMBM BMBM BMBM

Field Staff Field Staff Field Staff Field Staff Field Staff

36


37/57

Organization uses two types of compensations: Financial

Financial includes compensation, salary,

incentives and fringe benefits

Non-financial

Non-financial includes motivation and its

implications to sales management

Monetary compensation is one of the most direct andleast ambiguous ways of communicating to sales

people about their performance.

37

Types of Compensations


38/57

The compensation plan is undoubtedly to reward the

salesman for his performance.

The plan should provide a regular income at least at

minimum level.

In addition to this regular income, it should provide

adequate incentive to induce minimum performancefrom the salesman.

The plan should be simple and easy to understand

for the salesman.

It should be economical and should inducecompetition among salesmen.

It should be fair to both the sales force and

management.

38

Reasons for Providing Financial Compensation

Timken India Limited


39/57

Timken India Limited In keeping with global standards the first state-of-the-art

manufacturing facility was set up by Tata Timken in

Jamshedpur in 1987.

Since then, Timken has led the industry with significant

breakthroughs in bearing technology. Timken offers friction

management solutions that maximize performance, fuel-

efficiency and equipment life.

Wherever parts move and turn, you will find Timken products

and services making things run a little smoother, safer andmore efficiently.

39



40/57

Timken India Limited Timken India Limited was incorporated in 1987 as Tata Timken

Limited (TTL), a joint venture between Tata Iron and Steel

Company (TISCO) and The Timken Company, USA.

It commenced commercial production at its Jamshedpur plant

in March 1992.

The Timken Company is a world leader in tapered roller

bearings and a leading producer of quality alloy steel.

Tata Steel is the world's 10th largest steel manufacturer.

TISCO and TIMKEN each held 40% equity stake in the companyand the public held the rest.

In 1999, Timken acquired from Tata Steel its 40% stake in Tata

Timken Limited.

The name of the Company was changed to Timken India

Limited on July 2, 1999. Timken markets heavy equipment ball bearings in India.

They had a countrywide sales network of 120 salespeople but

the sales were stagnant and the organization was in the red.

40



41/57

Timken India Limited As a restructuring exercise, the company decided to follow a

different selling model and fired the entire sales staff.

They appointed 55 independent manufacturers

representatives.

Manufacturers representatives were not employed in the

company and they sold goods of other companies as well. The

representatives sold various other items with the ball bearing

equipment.

The sales picked up, old customers came back to the companyand new customers also started buying.

What reasons can be attributed to this development?

What were the advantages and disadvantages of appointingmanufacturers representatives compared to the companys

salespeople?

41

M th d f R ti


42/57

The sales force can be remunerated in the following

ways:

A straight salary

A straight commission on sales

Salary and commission on sales

Salary and commission on sales above a certainamount

Salary and different rate of commission on varying

totals or for different types of goods

Salary and share in the profits

42

Methods of Remuneration


43/57

The major sales expense accounts are categorised as

follows:

Salary accounts

Commission accounts

Bonuses

Meals and entertainment

Air travel

Automobiles rentals

Lodging

Travel accounts Tour expenses accounts (Advance accounts)

Communication and services expenses accounts

43

Expense Accounts


44/57

Types of fringe benefits are:

Company Car

Supplemental life insurance and medical

insurance

Personal tax and financial planning

Low or no interest loans

Supplemental retirement benefits

Air travel and First class A.C. for Train Travel

Relocation allowance

Laundry benefits, while on the tour Special perquisites for outstanding performance

Medical expenses

Special business associations membership

44

Fringe Benefits


45/57

Managing the Sales Force

Evaluating Salespeople

Several tools can be used

Sales reports

Call reports

Expense reports

45


46/57

The Sales ProcessSalesperson

Attributes

Prospecting

Preapproach Presentation Planning

Approaching the

Customer

Developing

Customer

Relationships

Initiating Customer

Relationships

Enhancing

Customer

Relationships

46


47/57


48/57

Adding Value through Follow-up,Self-leadership, and Teamwork

The Sales ProcessSalesperson

Attributes

Developing

Customer

Relationships

Initiating Customer

Relationships

Enhancing

Customer

Relationships

48


49/57

Importance of Personal Selling and SalesManagement

The only function / department in a company

that generates revenue / income

The financial results of a firm depend on the

performance of the sales department /management

Many salespeople are among the best paid

people in business

It is one of the fastest and surest routes tothe top management

49


50/57

Skills of a Successful Sales Manager

People skills include abilities to motivate,

lead, communicate, coordinate, team-

oriented relationship, and mentoring

Managing skills consist of planning,organizing, controlling and decision making

Technical skills include training, selling,

negotiating, problem-solving, and use of

computers

50


51/57

Types of Sales Managers / Levels ofSales Management

CEO /

President

V. P. Sales /

V. P. Marketing

National Sales Manager

Regional / Zonal / Divisional

Sales Managers

District / Branch / Area Sales Managers

Sales Trainee / Sales Person / Sales Representative

First / Lower Level Sales Managers

Middle-Level Sales Managers

Top-Level Sales Managers /

Leaders


52/57

Sales Objectives, Strategies and Tactics

The main components of planning in a company are

objectives, strategies and tactics. Their relationship isshown below

Decide / Set

ObjectivesDevelop Strategies

Evolve Tactics /

Action Plans

Let us say, Crompton Greaves wants to increase sales ofelectric motors by 15 percent, as one of the salesobjectives.

52

To illustrate the relationship between sales


53/57

To illustrate the relationship between salesobjectives, strategies and tactics, consider:

Sales Goals /

Objectives

Marketing

Strategy

Sales and Distribution

Strategy

Tactics /

Action plans

Increase

sales

volume by

15 percent

Enter

export

markets

Identify the countries

Decide distribution channels

Marketing / sales head to

get relevant information

Negotiate and sign

agreements in 3-5 monthswith intermediaries

Penetrate

existing

domesticmarkets

Review and improve

salesforce training,

motivation andcompensation

Use effective and efficient

channels

Add channels and

members

Train salespeople indeficient areas

Train field salesmanagers

in effective supervision

Link sales volume quotas

to the incentive scheme of

the compensation plan


54/57

Emerging Trends in Sales Management

Global perspective

Revolution in technology

Customer relationship management (CRM)

Salesforce diversity

Team selling approach

Managing multi-channels

Ethical and social issues Sales professionalism

54

Li ki S l d Di t ib ti M t


55/57

Linking Sales and Distribution Management

Either sales management or distribution

management cannot exist, operate orperform without each other

To achieve the sales goals of sales revenueand growth, the sales management plans the

strategy and action plans (tactics), and thedistribution management has the role toexecute these plans

55

Role of Distribution Management for some of


56/57

Role of Distribution Management for some ofthe Sales Management Actions / Tasks

Sales Management Actions /

Tasks

Distribution Management Role

Strategy for effective

coverage of markets and

outlets

Follow call plan / beat plan

Make customer call productive

Use multi-channel approach

Strategy for handling

customer complaints

Prompt action at the customer interface

level

If the problem persists, involve senior sales

and service people

Planning of local advertising

and sales promotion

Co-ordination with distribution channels

Responsibility of execution with

distribution channels

Expenses are shared between the company

and intermediaries

A Key to Success


57/57

A Key to Success

Stay Close to

Your

Customerand

LISTEN!

01 & 02 - Introduction to Sales Management

Documents

Transcript of 01 & 02 - Introduction to Sales Management