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Sales management

The only business function that generates revenue.

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sales management

Planning, direction and control of personal selling including recruiting, selecting, training, equipping, assigning, supervising, compensating and motivating as these tasks apply to the personal sales force.

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Sales management

Management of the personal selling task. Is there anything like ‘impersonal selling’ or ‘non-

personal’ selling? Selling is an exchange transaction. Exchange of

Product or service for money Money is the revenue or the earnings of an

enterprise often called ‘turnover’ or ‘top line’ Sales therefore is the only revenue generating

function in an enterprise.

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Objectives of sales management

3 general underlying objectives:

1. SALES VOLUME

2. PROFITS

3. GROWTH

Sales – cost of sales = gross margin.

Gross margin – expenses =net profit.

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Sales management: evolution

Industrial Revolution – 1760 Small home industries – Large scale

manufacturing –marketing – sales and sales support

Concept of hunters and farmers The modern day sales manager is both

an administrator in-charge of personal selling activity and a member of the group that makes marketing decisions of all types.

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The salesman

…..they make more noise and more mistakes, create more cheer, correct more errors, adjust more differences, spread more gossip, hear more grievances, pacify more belligerence and waste more time under pressure, all without loosing their temper, than any other class of professionals –including politicians.

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The salesman

…they live in hotels, cabs and tents on trains, buses, eat all kinds of food, drink all kinds of liquids –good and bad- sleep before, during and after business, with no sympathy from the office.

They draw and spend more money with less effort, they come at the most inopportune time, under the slightest pretext, ask more personal questions.

Yet they are a power in society…

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The salesman

With all their faults, they keep the wheels of commerce turning, and the currents of human emotions running. More cannot be said any man. Be careful whom you call a salesman, lest you flatter him.

-Donald Benenson in Ziglar on Selling

Sales Management

“QUALITIES THAT LEAD TO EFFECTIVE SALES MANAGEMENT

ARE OFTEN OPPOSITE THE ATTRIBUTES OF A SUCCESSFUL

SALES PERSON”

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Sales organization

With various tasks required to be performed the enterprise had to create a structure to ensure that work is done. (the Sears story)

Principles of structure: authority, responsibility, performance, support/co-ordinate.

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Sales organization

Concept of organization: Group of individuals working jointly to achieve a defined goal and bearing formal and informal relations with one another. An organization is oriented towards and a co-operative endeavor and a structure of human relationships.

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Purpose of organization

Eliminate waste of effort Minimize friction Maximize co-operation Permit development of specialists Ensure that all activities get done Achieve co-ordination/balance Define authority Fix responsibility

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Types of organization structures

Line organization: line managers perform sales and sales management activities.

Line and staff organization: Staff managers have advisory or support responsibility. e.g.Market research manager, Training manager.They are not directly responsible for achieving sales targets.

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Organization structures

Functional organization: focus is on the principle of specialization. Each specialist has a functional responsibility and are permitted to direct and control the salesperson thru their immediate superior.

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Organization structure

Horizontal structure. Specialised structure:

Geographical;

Product;

Market or customer;

Combination of specialised structures.

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Clear authority & ResponsibilityQuick response & Decision, Low CostWeak on marketing inputsSales manager controlled

Line Sales Organization structure

Area Sales Mgr Area Sales Mgr Area Sales Mgr Area Sales Mgr

Sales Force Sales Force Sales Force Sales Force

Sales Manager

Head –Marketing

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Administrative SimplicityAccess to SpecialistsMultiple reportingHOD is Pressures to co-ordinate

Functional Sales Organization

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Research & Design teamCustomer Research

Product / Service design

Research & Design teamCustomer Research

Product / Service design

Operations teamProduction

QAEngineering Systems

Operations teamProduction

QAEngineering Systems

Customer Support teamServiceTraining

Information

Customer Support teamServiceTraining

Information

Customer Satisfaction teamsSales & Marketing

Pricing & PromotionChannelsLogistics

Customer Satisfaction teamsSales & Marketing

Pricing & PromotionChannelsLogistics

Planning TeamStrategyFinance

HRC O O

Planning TeamStrategyFinance

HRC O O

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Sales relation with marketing activities Sales &Advertising: both stimulate

demand. They need to be blended. Salespersons can improve advertising effectiveness. Advertising needs to support sales where and when they need it most.

Sales & Marketing information: data is needed for analysis of sales problems, for determining sales potential. Raw data is collected by sales people.

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relationships

Sales and service: contributes to strategy success.

Sales and distribution: minimizes stock out situation; improves inventory control; helps sales to focus on demand generation.

Sales & Production: Sales and R&D Sales &Finance

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SALES PLANNINGa managerial function

EXISTING BUSINESSLONG RANGE PLAN 3 TO 5 YEAR PROJECTIONS

ANNUAL OPERATING PLAN REVISED YEAR TO YEAR

SEGMENTWISE PLAN PAST TREND

GEOGRAPHICAL PLAN PREVIOUS YEAR SALES

CUSTOMERWISE PLAN CURRENT YEAR ACHIEVEMENT

PLAN BY VALUE NEXT YEAR PLANS

PLAN BY VOLUME ASSUMPTIONS

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PLANNING FOCUS AREAS:

• PROFITABILITY IMPROVEMENT

A REGION OR TERRITORY CEASES TO CONTRIBUTE

DISCONTINUATION OF SALES TO AN ACCOUNT

DE-EMPHASISING PRODUCTS

ACCEPTING A PRIVATE BRAND ORDER

VARIANCE BETWEEN BUDGET AND ACTUAL SALES

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SALES PLANNING

NEW BUSINESS

VISION MISSION GOALS

STRATEGY

*ACTION PLANS

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Key Deliverables of the Sales function

Planning Organizing Training Motivating Controlling Leading

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Sales planning

Forecasting a key planning tool

PRODUCT LEVEL –

total sales -

industry sales

company sales

product line sales

product variant sales

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Time period forecast

Long Range Medium range Short term (range)

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Planning process

Sales plan

Capacity plan

Production plan

Cash flow plan

Procurement plan Human resource plan

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Sales forecast

Why forecast?

One of the keys to success in sales is knowing where customers are located and being able to predict how much they will buy.

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Sales forecasting; Industry estimates

• Objective definitionObjective definition

• Identifying critical factors (assumptions) Identifying critical factors (assumptions)

• Selecting method of forecastingSelecting method of forecasting

• Collecting, analysing, interpreting data.Collecting, analysing, interpreting data.

• Concluding predictions.Concluding predictions.

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Geographic Area forecast

Nation Region ( REGION OR ZONE ) Territory ( BRANCH / DISTRICT ) Customer

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Forecasting Approaches

Top - down / Break –down approach

An SBU level forecast broken down to region, district, territory, salesperson and individual customer sales quotas

Bottom –up / Build – up approach

Individual customer to branch to zone to company level forecast

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Methods of sales forecast

Qualitative methods:

Executive opinion

Delphi method – prediction by a panel

Sales force composite – ‘grass roots’ approach.

Test marketing –controlled or simulated

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Sales forecast methods

Quantitative methods:

Moving averages

Exponential smoothing

Regression analysis

Econometric analysis

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Selling situations

Customer’s intention and expectation are specific. (insurance, mobile service)

Customer is contacted over phone Customer is an organizational buyer Customer seeking service or solution Customer in a retail store Cold calling situation Pharmaceutical selling Creative selling ( ad.campaign)

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The sales budget

To the sales department, the budget is a blue print for making sales. It involves money invested in distribution facilities, promotion efforts, and sales personnel. It is the foundation on which to plan sales objectives and the means of achieving them during the coming year.

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Sales budget A budget is a quantitative expression of plans.

Most well managed enterprises use a budget which is a comprehensive and coordinated plan for the operations and resources of the enterprise.

It is a formal and intricate process Approaches are either incremental or zero based. In a volatile economic climate organizations

estimate optimistic, realistic and pessimistic scenarios.

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Sales budgetCritical factors considered:

1. past trends

2. Sales force estimates

3. Trade prospects

4. Present scenario

5. Customers: existing and potential

6. Government policies

7. Industry environment

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Number of sales people

Decision on the size of the sales force is very complicated because structure of the customers vary in each territory, the level of competition varies across territories, the connectivity for travel varies etc.

There are 3 generally accepted approaches: affordability, incremental and workload methods.

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Sales territories

Definition : A sales territory consists of existing and potential customers assigned to a sales person. The territory may or may not have geographic boundaries.

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Reasons for territories

Increase / improve customer coverage Control selling expenses Effective evaluation of salesman’s

performance. improve customer relations

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Territory design Main procedural steps:1. Selection of a basic geographical control

unit2. Determination of sales potential present in

each unit3. Combining the basic units into tentative

territories4. Adjust for differences in coverage difficulty

and readjust the tentative territories ( build up / break down method )

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Territory design

Build up method: Decide call frequency Calculate total no of calls in the unit Estimate workload capacity of salesman Make tentative territories Develop final territories

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Territory design

Break down method: Estimate company sales potential for total market. Forecast sales potential for each control unit. Estimate sales expected from each salesman. Make tentative territories. Develop final territories.

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Routing Scheduling and control

Reasons / advantages: Maintain lines of communication Improve territory coverage Minimize wasted time Closer scrutiny of sales force movement Journey plans for improving customer

satisfaction

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Quotas

Quotas are quantitative goals assigned to individual sales persons for a specified period of time.

One of the most widely used tools in sales management.

Should not be confused with sales potential or sales forecast.

Quotas may be set equal to ,above or below the sales forecast.

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Why Quotas ?

To help management motivate sales people.

To direct sales people where to put there efforts.

To provide standards of performance evaluation

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Types of Quotas

Sales volume Quotas : Rupee volume / Unit volume

Profit based Quotas: contribution / gross margin

Activity Quotas: calls per day; sales meetings; product demos; ( efforts = results.)

Expense Quotas

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QUOTA SETTING MECHANISM

S-specific M-measurable A-achievable R-realistic T-time bound

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What is Motivation??

Drive to initiate an action.

The intensity of effort in an action

The persistence of effort over

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Why motivation

Frequent rejection

Physical separation from company

support

Direct influence on quality of sales

presentation

Indirect influence on performance

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Sales force motivation

“the desire to make an effort to fulfill a need is motivation”

Motivation includes three dimensions: Direction, Intensity and persistence.

Motivation may also be Intrinsic or extrinsic

Maslow’s hierarchy of needs:

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Maslow’s theory SelfActualisation

Esteem needs

Social needs

Safety needs

Physiological needsFood, clothing, shelter, health care

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MASLOW’S HIERARCHY OF NEEDS

Intense job challenge, full potential, full Intense job challenge, full potential, full expression, creative expansion.expression, creative expansion.

Achievement, respect, recognition, Achievement, respect, recognition, responsi-responsi-bility, prestige, independence, attention, bility, prestige, independence, attention, importance, appreciation.importance, appreciation.

Belonging, acceptance, love, affection, Belonging, acceptance, love, affection, familyfamilyand group acceptance, friendships.and group acceptance, friendships.

Security, stability, dependency, protection, Security, stability, dependency, protection, need for structure, order, law, tenure, need for structure, order, law, tenure, pension, pension, insurance.insurance.

Hunger, thirst, reproduction, shelter, Hunger, thirst, reproduction, shelter, clothing,clothing,air, rest.air, rest.

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Frederick Herzberg theory

“Two factor theory” of motivation Hygiene ,maintenance, or job context

factors.( dis satisfiers ) Achievement, challenge, advancement,

growth in the job. (satisfiers )

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SELLING

THE WORD SELL IS DERIVED FROM A Norwegian WORD SELJE

WHICH MEANS TO SERVE

TO SERVE YOUR PROSPECTS YOU MUST UNDERSTAND THEIRNEEDS.

PEOPLE INVARIABLY BUY WHAT THEY WANT, EVEN ABOVE WHAT THEY NEED

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The sales process

Process: a sequential series of decisions and or actions.

BUYING PROCESS SELLING PROCESS

NEED PREPARESEARCH FOCUSIDENTIFY DEFINEISOLATE PROPOSE/PRESENT SELECT HANDLE OBJECTIONSBUY CLOSE THE SALECONSUME FOLLOW UP

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The sales process

1. Prospecting & Qualifying

2. Pre approach (pre call planning )

3. Approach

4. Presentation & Demonstration

5. Overcoming Objections

6. Trial close / Closing the sale

7. Follow –up and Service.

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SELLING PROCESSthe Ziglar method

Focus on Prospects NEEDS and WANTS.

Sell by design, not by chance.

Follow a proven 4 step formula:

NEED ANALYSIS

NEED AWARENESS

NEED SOLUTION

NEED SATISFACTION

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Prospecting

Process of identifying potential buyers. A prospect has a reasonable probability

of buying ,has sufficient need to justify a profitable sale ,has financial resources to buy and can be classified as ‘eligible to buy’

MONEY? AUTHORITY? DESIRE?

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Locating prospects

Lead generation – a three step process.1. Defining the target market :what it

wants; what it buys; where and when it buys; what it buys; how it buys;

2. Using communication tools to gather leads –Advertising, Direct mail, Telemarketing, Trade shows, buying data

3. Qualifying the Leads.

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Selling first time to Prospects(pre sale planning)

Adequate knowledge of the product to be sold, company being represented, the market competition ,category or segment of customers and selling techniques.

Product knowledge: Evolution-Features-Benefits-Uniqueness-Price

Company knowledge: History-Values-Achievements-Management-Policies

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Pre sale plan

Competitors knowledge :structure-share-strategy-systems.

Customer knowledge :attitudes-preferences- behavioural habits

Selling techniques :

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Pre approach planning

Focus on understanding customer needs and characteristics and preparing a proposal on how the product or service offered can satisfy the need.

Steps involved are:Determining call objectives.Development of customer profile.Determine customer benefits.Determine the flow and content of the

presentation.

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Understanding buyer’s needs

Situational questions: questions about prospect’s current situation. (who will decide? is it the first time ? Changing source ?

Problem identification question: Questions to uncover problems, difficulties or needs ( problems on quality, delivery ?)

Problem impact questions: questions to make the buyer realise the impact of the problem and the need to solve it.( what will be the impact on costs , on customer satisfaction ?)

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Solution value questions :questions to help the buyer asses the value or usefulness of the solution ( for x benefit how much would you save ?

Confirmation questions: (how would an error free system help?)

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Need awareness

At this stage you need to THINK Prospect and Salesperson should both

be aware of the need. (remove blind spots)

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Need solution

Present your product Time to stop asking questions and start

providing solutions. People don’t buy products, they buy

what the product does for them.

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Questions are the answer

Thinking vs. feeling questions. When you learn how the customer feels

you are more likely to find out what the person thinks.( the seat belt case)

Tying emotion to logic.

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The questioning process

Three basic types of questions enable us to discover the needs of our potential customers.

1st The Open Door Questions.-allows the prospect the freedom to go where ever they like. the “who, what where ,when, how and why” questions

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Questioning …

The closed door question: “would you tell me more”; “what do you mean by…Answers to these give you information to helping the prospect and building trust.

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Questioning…

“yes or no” questions demand a direct response. “do you agree..” “would my proposal..” “are we in agreement..”

They allow you to check on your progress on the sales process. “trial close”

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Presentation methods

Stimulus response method: also called a ‘canned approach’, a memorised sales presentation .It assumes that if a right stimuli is made it will get a favourable response.

Formula method: the AIDA process. Need-satisfaction method: an interactive

sales presentation. The most challenging and creative method. The FAB way.

Features, Advantages, Benefits.

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The presentation

Attracting Attention Creating Interest Building Desire and conviction Initiate Action to buy.

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Presentation methods

Team selling method: a multi person sales team deals with a multi person buying centre (or buying committees)

Sales team consists of Account executive, technical support engineer, logistics expert, IT or systems executive and Finance executive.

Buying committee consists of materials exec. manufacturing/operations exec. supply chain exec. Materials manager and Finance exec.

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Presentation methods

Consultative selling method: problem-solution method.

Requirements are:

Knowledge of the industry, clients company, awareness of key members needs,

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Objections

Objections , opposition , resistance to the presentation typically happens during the presentation or while asking for the order.

Objections should be welcomed. Objections indicate that the prospect is

involved and not indifferent. Objections reflect the prospect’s view.

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Objections

1. Psychological ( hidden ) – includes pre-determined ideas or beliefs, preference for established brands, dislike of making decisions , anxiety or resistance to spend money , suspect about quality etc.

2. Logical or practical or real –delivery schedule, high price , product availibility,

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Handling objections

Listen

Understand

Negotiate

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Methods of handling objections

Ask questions: listen, rephrase, reconfirm the objection and explain.

Turn objection into a benefit and trial close.

Deny objections tactfully. (arrogance and sarcasm to be strictly avoided)

Testimonials, referals Compensation for valid objections.

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Negotiation

Plan – pre determine ‘firm’ and ‘flexible’ factors; define limits.

Ensure an atmosphere of trust , understanding and respect.

Define purpose and objective.

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Negotiation styles

Win – loose

Win – Win

Loose - Loose

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Closing the sale

Summarize Advantage and disadvantage

comparison Opportunity benefit Emotional appeal Direct closure

A.A.F.T.O=Always Ask For The Order