PERSONAL SELLING AND SALES MANAGEMENT - … · -- recruiting, selecting, training, and compensating...

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21-1 ' 2000 McGraw-Hill Ryerson Limited C H A P T E R T W E N T Y - O N E PERSONAL SELLING AND SALES MANAGEMENT

Transcript of PERSONAL SELLING AND SALES MANAGEMENT - … · -- recruiting, selecting, training, and compensating...

21-1© 2000 McGraw-Hill Ryerson Limited

C H A P T E R T W E N T Y - O N E

PERSONAL SELLING ANDSALES MANAGEMENT

21-2© 2000 McGraw-Hill Ryerson Limited

AFTER READING THIS CHAPTER YOU SHOULDAFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO:BE ABLE TO:

� Recognize different types of personal selling.

� Describe the stages in the personal selling process.

� Specify the functions and tasks in the salesmanagement process.

� Determine whether a firm should use manufacturer�srepresentatives or a company salesforce and thenumber of people needed in a company�s salesforce.

� Understand how firms recruit, select, train, motivate,compensate, and evaluate salespeople.

� Describe recent applications of salesforce automation.

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Dun & Bradstreet: Selling Information in the Information AgeDun & Bradstreet: Selling Information in the Information Age

� Selling information is a demanding task, even forD&B, which is a master of database managementand marketing, with a database of companiesthat is unrivalled.

� However, D&B is finding that its market hasbecome more competitive, especially with somuch free data via the Internet.

� D&B�s field salespeople must demonstrate howmuch better off credit managers and marketingexecutives will be by using D&B�s information.

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Personal SellingPersonal Selling� Personal selling involves a two-way flow of

communication between a buyer and seller,often in a face-to-face encounter, designed toinfluence a person�s or group�s purchasedecision.

� With advances in telecommunications,however, personal selling takes place over thetelephone, through video teleconferencing andinteractive computer links between buyersand sellers.

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Sales ManagementSales Management� Sales management involves planning the selling

program and implementing and controlling the personalselling effort of the firm.

� Numerous tasks are involved in managing personalselling including:

-- setting objectives;

-- organizing the salesforce;

-- recruiting, selecting, training, and

compensating salespeople; and

-- evaluating the performance of individual

salespeople.

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PP21-1a Personal Selling and Sales Management QuizPP21-1a Personal Selling and Sales Management Quiz

1. About how much does it cost for a manufacturer�s sales

representative to make a single personal sales call? (check one)

$100 _____ $200 _____ $300 _____

$150 _____ $250 _____ $350 _____

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PP21-1b Personal Selling and Sales Management QuizPP21-1b Personal Selling and Sales Management Quiz

2.�A salesperson�s job is finished when a sale is made.�

True or False? (circle one)

True False

3. About what percent of companies include customer

satisfaction as a measure of salesperson performance?

(check one)

10% _____ 20% _____ 50% _____

20% _____ 40% _____ 60% _____

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Pervasiveness of Personal SellingPervasiveness of Personal Selling

� More than 1 million people are employed insales positions in Canada.

� Virtually every occupation that involvescustomer contact has an element of personalselling.

� Many executives in major companies haveheld sales positions at some time in theircareers.

� Selling often serves as a stepping-stone to topmanagement.

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How Salespeople Create Value for CustomersHow Salespeople Create Value for Customers

� Identify Creative Solutions To Customer Problems� Identify Creative Solutions To Customer Problems

� Ease The Customer Buying Process� Ease The Customer Buying Process

� Follow-up After The Sale Is Made� Follow-up After The Sale Is Made

Customer ValueCustomer ValueCustomer Value

+

+

=

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Relationship SellingRelationship Selling

Relationship selling is the practiceof building ties to customers basedon a salesperson�s attention andcommitment to customer needsover time.

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Partnership SellingPartnership Selling

With partnership selling, buyers and sellers

combine their expertise and resources to create

customized solutions; commit to joint planning;

and share customer, competitive, and company

information for their mutual benefit, and

ultimately the customer.

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Concept CheckConcept Check

1. What is personal selling?

2. What is involved in sales

management?

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Order Taking (Order Taking (order takerorder taker))

� An order taker processes routine orders or reordersfor products that were already sold by the company.

� The primary responsibility of order takers is topreserve an ongoing relationship with existingcustomers and maintain sales.

� Types of order takers include:

-- outside order takers

-- inside order takers

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OrderOrder Getter Getter� An order getter sells in a conventional sense and identifies

prospective customers, provides customers with information,persuades customers to buy, closes sales, and follows up onthe customers� use of a product or service.

� Order getters can also be inside (an auto salesperson) oroutside (a D&B salesperson).

� Order getting involves a high degree of creativity, customerempathy and is typically required for selling complex ortechnical products with many options, so considerableproduct knowledge and sales training are necessary.

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How Salespeople Spend Their Time

11%

31%

19%

25%

15%

PP21-2 How Outside Order-Getting Salespeople Spend Their PP21-2 How Outside Order-Getting Salespeople Spend Their Time Each Week Time Each Week

Service calls

Face-to-face-selling

Waiting/travel

Administrative tasks

Selling over the phone

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Comparing Order Takers and Order Comparing Order Takers and Order GettersGetters

Objective Handle routine product Identify new customersreorders and uncover customer needs

Purchase Focus on straight re-buy Focus on new buy andsituation or simple purchase situations modified re-buy purchase

situations

Activity Perform order processing Act as creative problemfunctions solvers

Training Require significant clerical Require significant sales,training product, and customer

training

Basis ofBasis ofComparison Comparison Order Takers Order Takers Order Order Getters Getters

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Concept CheckConcept Check

1. What is the principal differencebetween an order taker and anorder getter?

2. What is team selling?

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Stages in the Personal Selling ProcessStages in the Personal Selling Process

ProspectingProspecting

PreapproachPreapproach

ApproachApproach

PresentationPresentation

CloseClose

Follow-upFollow-up

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PP21-3a Stages and Objectives of the Personal Selling PP21-3a Stages and Objectives of the Personal Selling Process Process

1. Prospecting

2. Pre-approach

3. Approach

Search for and qualify prospects

Start of the selling process; prospects produced through advertising, referrals, and coldcanvassing.

Gather information and decide how to approach the prospect.

Information sources includepersonal observation, othercustomers, and own salespeople.

Gain prospect�s attention, stimulate interest, and make transition to the presentation.

First impression is critical;gain attention and interest through reference to commonacquaintances, a referral, orproduct demonstration.

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PP21-3b Stages and Objectives of the Personal Selling PP21-3b Stages and Objectives of the Personal Selling Process Process

4. Presentation

5. Close

6. Follow-up

Begin converting aprospect into a customerby creating a desire forthe product or service

Different presentation formats arepossible; however, involving thecustomer in the product or servicethrough attention to particular needsis critical; important to dealprofessionally and ethnically withprospect skepticism, indifference,or objections.

Obtain a purchasecommitment from theprospect and create acustomer.

Salesperson asks for the purchase; different approaches include the trial close and assumptive close.

Ensure that thecustomer is satisfiedwith the productor service.

Resolve any problems facedby the customer to ensurecustomer satisfaction andfuture sales possibilities.

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Presentation FormatsPresentation Formats

Stimulus-Response Format

Formula Selling Format

Need-Satisfaction Format

-- adaptive selling

-- consultative selling

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Techniques for Handling ObjectionsTechniques for Handling Objections

Accept theobjection

Accept theobjection

Acknowledge andconvert the objectionAcknowledge and

convert the objectionAgree andneutralize

Agree andneutralizePostponePostpone

DenialDenial Ignore theobjection

Ignore theobjection

Handling an objection

Handling anHandling an objection objection

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Techniques for ClosingTechniques for Closing

1.1. Trial closeTrial close

2.2. Assumptive closeAssumptive close

3.3. Urgency closeUrgency close

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Concept CheckConcept Check

1. What are the six stages in the personal

selling process?

2. What is the distinction between a lead

and a qualified prospect?

3. Which presentation format is most

consistent with the marketing

concept? Why?

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Sales Management ProcessSales Management Process

Sales management consists of

three interrelated functions:

1. Sales plan formulation

2. Sales plan implementation

3. Evaluation and control of the

salesforce

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PP21-4 The Sales Management ProcessPP21-4 The Sales Management Process

Sales planformulation

Setting objectivesOrganizing thesalesforceDeveloping accountmanagement policies

Sales Plan Implementation

Salesforce recruit-ment and selectionSalesforce trainingSalesforce motivation and compensation

Evaluation andcontrol of the salesforce

Quantitative assess-mentBehavioural evaluation

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Three Questions Related to Organizing the Three Questions Related to Organizing the SalesforceSalesforce

1. Should the company use its own salesforce

or should it use independent agents such as

manufacturer�s representatives?

2. If the decision is made to employ company

salespeople, then should they be organized

according to geography, customer type, or

product/service?

3. How many company salespeople should be

employed?

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PP21-5 Break-Even Chart for Comparing PP21-5 Break-Even Chart for Comparing Independent Agents and a Company Independent Agents and a Company SalesforceSalesforce

CompanyCompanysellingselling costcost($ ($ thousands))

Independent agentselling cost

500500

1,0001,000

1,5001,500

2,0002,000

2,5002,500

3,0003,000

3,5003,500

00 55 1010 1515 2020 2525 3030 3535 4040 4545 5050 5555 6060

Company sales-force selling cost

Independent agent and companysalesforce selling are equal at $25 million in sales

Company sales Company sales ($millions)($millions)

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PP21-6a Organizing the PP21-6a Organizing the SalesforceSalesforce by Customer, Product, and by Customer, Product, and Geography Geography

Customer Organization

Sales ManagerAuto Industry

DistrictSales Manager

Individual(salespeople)

DistrictSales Manager

DistrictSales Manager

Sales ManagerFarm and construction

equipment

Sales ManagerGovernment and

military

General SalesManager

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PP21-6b Organizing the PP21-6b Organizing the SalesforceSalesforce by Customer, Product, and by Customer, Product, and Geography Geography

Product organization

Eastern RegionalSales Manager

DistrictSales Manager

Individualsalespeople

DistrictSales Manager

DistrictSales Manager

Western RegionalSales Manager

Divisional SalesManager

Product A

Divisional SalesManagerProduct B

General SalesManager

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PP21-6c Organizing the PP21-6c Organizing the SalesforceSalesforce by Customer, Product, and by Customer, Product, and Geography Geography

Geographical Organization

DistrictSales Manager

Individual(salespeople)

DistrictSales Manager

DistrictSales Manager

Eastern RegionalSales Manager

Western RegionalSales Manager

General SalesManager

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Major Account ManagementMajor Account Management

� Major account management, or key accountmanagement is a variation of the customerorganizational structure. It involves the practice ofusing team selling to focus on important customers soas to build mutually beneficial, long-term,cooperative relationships.

� This approach, which often assigns companypersonnel to a customer account, results in �customerspecialists� who can provide exceptional service.

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Account Management PoliciesAccount Management Policies

� Account management policies specify:a. who salespeople should contact,

b. what kinds of selling and customer service activities should be

engaged in, and

c. how these activities should be carried out.

These policies might state:

a. which individuals in a buying organization should be contacted,

b. the amount of sales and service effort that different customers should

receive, and

c. the kind of information salespeople should collect before or during a

sales call.

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PP21-7 Account Management Policy GridPP21-7 Account Management Policy GridCOMPETITIVE POSITION OF SALES ORGANIZATION

HIGH LOW

AC

CO

UN

T O

PP

OR

TU

NIT

Y

HIGH

LOW

1Attractiveness. Accounts offer good opportunity because they have high potential and sales organi-zation has a strong position.Account management policy. Account should re-ceive high level of sales calls and service to retainand possibly build accounts.-

2Attractiveness. Accounts are somewhat attractivebecause sales organization has a strong position,but future opportunity is limited.Account management policy. Accounts should re-ceive moderate level of sales and service to main-tain current position of sales organization.

3Attractiveness. Accounts may offer good opportunityif sales organization can overcome its weak position.Account management policy. Emphasize a heavysales organization position or shift resources to other accounts if stronger sales organization position impossible.

4Attractiveness. Accounts offer little opportunity, and sales organization position is weak.Account management policy. Consider replacing personal calls with telephone sales or direct mail to service accounts. Consider dropping account.

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Sales Plan ImplementationSales Plan Implementation

The three tasks involved inimplementing a sales plan are:

1. Salesforce recruitment and selection,

2. Salesforce training, and

3. Salesforce motivation and compensation.

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Emotional IntelligenceEmotional Intelligence

Emotional intelligence is the ability tounderstand one�s own emotions andthe emotions of people with whom oneinteracts on a daily basis. Thequalities are important for adaptiveselling and may spell the differencebetween effective and ineffectiveorder-getting salespeople.

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SalesforceSalesforce Motivation & Compensation Motivation & Compensation

Research on salesperson motivationsuggests that:

1. a clear job description,

2. effective sales management practices,

3. a sense of achievement, and

4. proper compensation, incentives, or

rewards will produce a motivated

salesperson.

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Three Plans for Compensating SalespersonsThree Plans for Compensating Salespersons

Three Plans for Compensating Salespersons

1. Straight salary

2. Straight commission

3. Salary plus commission

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SalesforceSalesforce Evaluation and Control Evaluation and Control

Salesforce evaluation and controlinvolves determining whether or notsales objectives were met and whetheraccount management policies werefollowed. Two types of assessmentmeasures are used:

1. Quantitative measures

2. Behavioural measures

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SalesforceSalesforce Automation Automation� Salesforce automation is clearly changing how selling is

done and how salespeople are managed. The objectiveof salesforce automation is to increase productivity whilesimultaneously decreasing costs.

� Computer software and hardware are integral parts ofthe sales management process. Salesforce automationcost about $2,500-$5,000 or more per salesperson.

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Concept CheckConcept Check

1. What are the three types of selling

objectives?

2. What three factors are used to

structure sales organizations?

3. How does emotional intelligence

tie to adaptive selling?