Types of Sales Jobs
-
Upload
ulysses-miller -
Category
Documents
-
view
57 -
download
0
description
Transcript of Types of Sales Jobs
Types of Sales Jobs
Driver sales person
Sales support
Sales development
Inside order-taker
Outside order-taker
Missionary sales person
Sales engineer/consultant
Consultative sales person: tangible products
Consultative sales person: services and other intangible products
Sales maintenance
TM 1-2 (Fig. 1-2)
Generate Sales: Provide service tocustomers:
Territorymanagement:
Professionaldevelopment:
Companyservice:
Precall planning Prospecting Make sales
presentations Overcome
objections Close by asking
for the orders Arrange for
delivery Entertain Arrange for
credit/financing Collect
payments Participate in
trade shows
Providemanagement/technicalconsulting
Overseeinstallations andrepairs
Check inventorylevels
Stock shelves Provide
merchandisingassistance: Co-op
advertising,point-of-purchase
Displays,brochures
Oversee productand equipmenttesting
Train wholesalers'and retailer'ssalespeople
Gather andanalyzeinformationon customers,competitors'generalmarketdevelopments
Disseminateinformation toappropriatepersonnelwithinsalespersons'company
Develop salesstrategies andplans,forecasts, andbudgets
Participate in: Sales
meetings Profes-
sionalsassociations
Trainingprograms
Train newsales-people
Performcivicduties
Selected Activities of Salespeople
TM 1-3 (Fig. 1-3)
Sales Jobs are Different than Other Jobs
• Salespeople are largely responsible for implementing a firm’s marketing
strategies in the field.
• Salespeople represent their company to customers.
• Salespeople represent their customers to their company.
• Salespeople operate with little or no direct supervision.
• Salespeople are alone a large part of the time.
• A sales person needs more tact and social intelligence than other
employees on the same level in the organization.
• Sales people are among the few employees authorized to spend company
funds.
• Sales jobs frequently require considerable travel and time away from
home and family.
• Salespeople are responsible for revenue generation.
TM 1-4
2
Sales Management Responsibilities(Figure 1-5)
TM 1-5
CommunicationCoordinationIntegration
Strategicplanning
Organizing thesales force
RecruitingSelection
AssimilationTraining anddevelopment
Motivation andsupervision
Performanceevaluation
Sales Management Responsibilities TM 1-5(Fig. 1-5)
Managing is a distinct activity which requires a unique set of skills, knowledge, and attitudes
TM 1-6a
Some skills are the same; many are different
• motivating
• planning
• training
• delegating
• recruiting
• administration
TM 1-6b
President
Vice president of sales
National sales manager
Regional/divisional sales manager
District sales manager
Sales supervisor
Sales person
Staff assistants available for advice and support at any step along the ladder
TM 1-7
(FIG. 1-6)
The Executive Ladder in Personal Selling
TM 1-8
FIG. 1-7
Vice president of marketing
President
Product engineer
Client-team leader
Distribution logistics specialist
Customer sales/service representative
The Executive Ladder in Team Selling
TM 1-9
Product Manufacturers Wholesalers Retailers
Life-Cycle Industrial Consumer All Products Durable Nondurable
Introduction
Maturity
Decline
Growth
Promotional Mix: Product Life Cycle, Type of Business and Product
Personal selling Advertising Personal selling Personal selling Advertising
Personal selling Advertising Sales promotion
Personal selling Sales promotion Personal selling Personal selling Advertising
Advertising Sales promotion Sales promotion Sales promotion
Personal selling Sales promotion Personal selling Personal selling Sales promotion
Sales promotion Sales promotion
Personal selling Advertising Personal selling Personal selling Advertising
Personal selling Sales promotion Sales promotionSales promotion Advertising
A Company’s Complete Marketing System:A Framework of Internal SourcesOperating within a Set of External Forces
Macroenvironmental forces:
Demography Economic conditions Sociocultural factors Political-legal factors Technology Competition
Company’s marketing mix:
Product planning Price structure Distribution system Promotional activities
Marketing inter-mediaries Suppliers The market
Nonmarketing resources in the firm:
Production Financial Personnel
Public image Research and Development Location
TM 2-1 (Fig. 2-1)
Marketing inter-mediaries
Company Organization Chart Embracing the Concept of Marketing Management
TM 2-2 (Fig. 2-3)
President
Production Manager
Marketing Manager
Financial Manager
Personnel Manager
Manager of Marketing Planning and Facilitating Staff Services
Chief Sales Force Manager
AdvertisingSales promotionMarketing researchSales trainingSales analysis and control (sales statistics)
Management of field
Management of sales office
activities including customer service and product service
Sales budgetingSales forecastingPlanning for channels, territories, and quotasProduct planningInventory controlProduction schedulingPhysical distribution
sales organization
Organization’s mission
Strategy and tactics to achieve goals
TM 2-3
Strategic Planning for the Total Company
Broad goals
top
down
Relationship Between Objectives, Strategies and Tactics
Set Goals
Formulate
Strategies
Develop Tactics
TM 2-4 (Fig. 2-4)
TM 2-5
Relationship Marketing
• Long-term commitment
• Understanding customer expectations
• Building service partnerships
• Empowering employees
• Total quality management
Company
Marketing Goals
Strategy
Increase marketing share 10%
TM 2-6
Company Strategy-Marketing Goals and Strategy
Earn 20% ROI
StrategyIncrease share of customer business
GoalsIncrease market
share 10%
Marketing
Sales Force Goals
Strategy Increase share of customer business
TM 2-7
Marketing Strategy-Sales Force Goals, Strategy and Tactics
share 10%
GoalsIncrease share of customer business
StrategyBuild long-term
customer relations
TacticsDevelop sales teams
Provide bonuses for greater customer share
Increase market
Transaction oriented
Relationship oriented
Partnership
Low HighLow
High
TM 2-8 (FIG. 2-5)Multiple relationship strategies
Cost of serving the customer
Commitment to the customer
TM 3-1 FIG. 3-1 Salesperson’s Average Time Allocation*
Waiting/Travel
AdministrativeTasks Selling Over thePhone Selling Face-to-Face Service Calls
(8.5 hrs) 18%
(5.3 hrs) 18%
(7.2 hrs) 15%
(14.3 hrs) 31%
(11.6 hrs) 25%
*SOURCE: Christem P. Herde, Dartnell’s 29th Sales Force Compensation Survey 1996-1997, (The Dartnell Press: Chicago, IL), p. 177.
THE EIGHT STEPS OF THE SALES PROCESS
Follow-up
Gaining Commitment
Meeting objections
Presentation
Need Assessment
Approach
Preapproach
Prospecting
TM 3-2
TM 3-3 FIG. 3-2Lead Conversion Ratio: Inquiry to
Decision 12 Months After Inquiring
Purchased
No longer inmarketPlan to buy
Plan to buy 25% Purchased
45%No longer in market
30%
*SOURCE: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994.
TM 3-4 (FIG. 3-3)
The Value of Inquiry Follow-Up
Source: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994
Share of buyer’s
business if not followed
up 40%Share of buyer’s
business if followed up 83%
TM 3-5Buying Center Members
Type of influence Job position Influence description
User Production line workers and Use the product in the their supervisors production process
Influencer Engineers, research & Write specifications; supply development specialists information
Gatekeepers Purchasing agents, reception- Limit access to others and ists, secretaries, research control the flow of assistants information to others
Deciders Purchasing agents (small or Make actual choice between reorder items), management suppliers
Buyers Purchasing agents Formally give the order to a supplier; arrange terms of sale
TM 3-6NEED ASSESSMENT
• Situational questions
How often do you change the cutting oil in your drill presses?
In addition to the hospital administrator, who else has an influence on the decision?
• Problem discovery questions
Have you experienced any delays in getting repair parts?
In which part of the production process is quality control the most important.
• Problem Impact questions
How do these delays in getting parts affect your production costs?
What impact do the quality consistency problems have on your production costs?
• Solution value question
If your inventories could be reduced by 20%, how much would that save you?
If your rejection rate on final inspection was reduced to under one percent, how much would
• Confirmatory questions
So, you wold be interested in an inventory control system that reduced your inventories by 20%?
If I can provide evidence to you that our products would lower your rejection rate to under one
percent, would you be interested?
that save you?
Presentation of Product, Features, Benefits, Advantages
Product Features Benefits Advantages
Camera Telephoto lens Take pictures Able to capturefrom longer images of animals
distances. or people from a distance.
Bicycle Attached water Can hold a water Don’t get dehydrated. bottle holder bottle. Don’t have to stop
for water. Feel more refreshed.
Drill Press Multiple drill Can change bits Saves time. bits attached without shutting Saves money.
down the machine.
Motor Oil Rust inhibitor Oil and engine Saves money.have longer life.
TM 3-7
TM 4-1
Organizational Design
Characteristics of a Good Organizational Design
Effective informal
organization
Market orientation
Activities organized
Balanced and coordinated
activities
Stable, but flexible
Responsible span of control
Authority and responsibility
aligned
Advertising Manager
Sales Promotion Manager
General Sales Manager
Marketing Research Manager
Sales Analyst
Western Regional Sales Manager
Eastern Regional Sales Manager
4 District Sales Managers
Salespeople each with own territory
4 District Sales Managers
Salespeople each with own territory
Geographical OrganizationTM 4-2 (Fig. 4-5)
Chief Marketing Executive
Chief Marketing Executive
Advertising Manager
Sales Promotion Manager
General Sales Manager
Marketing Research Manager
Customer Relations Manager
Sales Manager Product A
Sales Manager Product B
Sales Manager Product C
Salespeople Product A
Salespeople Product B
Salespeople Product C
Sales Organization with Product Specialized Sales Force TM 4-3
(Fig. 4-6)
Chief Marketing Executive
Advertising Manager
Sales Promotion Manager
General Sales Manager
Director of Marketing Research
Sales Organization Specialized by Type of Customers
Salespeople
Sales Manager Transportation Industry
Sales Manager Steel Industry
Sales Manager Petroleum Industry
Salespeople Salespeople
TM 4-4 (Fig. 4-8)
TM 4-5
Selling firm Buying firm
Salesperson Exchange processes
Purchasing agent
Sales Team
Information
Problem Solving
Negotiation
Friendship,trust
Product/services
Payment
Reciprocity
Organizational buying center
Marketing
Sales
Manufacturing
R&D
Engineering
Physical distribution
Purchasing
Manufacturing
R&D
Engineering
Marketing
The Relationship Between a Sales Team and a Buying Center
Uses of Telemarketing
• Identify prospective customers
• Screening, qualifying leads
• Sales solicitation: small customers, re-orders
• Order processing
• Product service support
• Account management
• Customer relations
TM 4-6
RECRUITING AND SELECTION PROBLEMS
TM 5-1
• Lack of resources
• Lack of job specification and qualifications
• Qualifications not objectively established
• Lack of managerial training
• Personal prejudices
• Search for managerial talent
TM 5-2
KEY LAWS AND REGULATIONS AFFECTING A SALES FORCE
• Civil Rights Act of 1964
• Federal Contract Compliance, Executive Orders
• Age Discrimination in Employment Act (1967)
• Fair Employment Opportunity Act (1972)
• Rehabilitation Act of 1973
• Vietnam Era Veterans Readjustment Act (1974)
• Uniform Guidelines on Employment Selection Procedures (1978)
• Americans with Disabilities Act (1990)
TM 5-3 (Fig. 5.2)Sales Force Staffing Process
Plan for Recruiting & Selection
Establish Responsibility for Recruiting, Selection
and Assimilation
Determine Number of
People Wanted
Conduct Job Analysis
Prepare Job Description
Recruit Applicants
Select ApplicantsDesign a System
For Measuring Applicants
Hire The People
Assimilate New People Into Sales Force
Determine Hiring Qualifications
Measure Applicants Against Hiring Qualifications
Make Selection Decisions
TM 5-4
Workload Analysis
Number of reps needed Total workload in market
Workload one rep can handle Market workload:
Customer Number of Calls Total class accounts per year calls
x =
A 400 20 8,000
B 600 10 6,000
14,000
One rep’s workload:
Calls/day x Selling days/week x Working weeks/year = Annual workload 5 x 5 x 50 = 1250
Number of reps needed = = 112 reps
=
14,000
1250
TM 5-5 (Fig. 4-3)
Determining the Number of Salespeople Needed
Strategic Plans
New - Eliminated/ + Promotions + Retirements + Terminations/ = Total new territories combined resignations reps needed territories
Expansion MN and RI 2 promotions 2 retirements 1 termination into Texas. Territories expected expected expected reps needed
4 - 1 + 2 + 2 + 1 = 8
Total new
TM 5-6
CONTENT OF THE JOB DESCRIPTION
• Title
• The nature of the product or service to be sold
• Type of customers to be called on,
frequency of calls, and types of personnel to be contacted
• Specific tasks and responsibilities to be
carried out
• Organizational relationships
• Mental and physical demands of the job
• Environmental pressures and constraints
that might affect the job
TM 5-7
RECRUITING FOR THE TEAM
• Willingness to share
• Cooperative
• Trusting
• Empathetic
• Accepting of others
• Receptive to others ideas
• Selflessness
• Leadership skills
TM 5-8RECRUITING SOURCES OF SALES REPRESENTATIVES
Source Comment
Referrals: Candidates and position are known to person making referral.
Within company:
Office and factory employees Company employees know the company and its products.
Sales force leads Current salespeople know their job requirements and can possibly identify candidates who could be a good job match.
Other Companies:
Competitors Competitors know the customers and are familiar with your products.
Customers Customers know your products and your company.
Suppliers Suppliers know your company and your products.
Educational institutions Primarily used when recruiting inexperienced people. Students are usually actively involved in a job search, and this provides an efficient place to screen large numbers of available candidates.
Advertisements Produces the greatest number of candidates, but the average quality is sometimes lower.
Employment agencies The agency is often more costly than other methods, but it will do a large part of the initial screening.
Voluntary applicants These applicants are interested in your firm and probably possess a high degree of self-confidence, self-reliance, and initiative.
Part-time workers These workers are easy to contact, readily available, and can work flexible hours. This is a good source for in-home selling.
TM 5-9 (Fig. 5-8)Recruiting Evaluation Matrix
Evaluation Criteria
Consistent with strategic planning?
Number recruits
Number hired
Percent retained after 3 years
Cost Frequency of use
Rep’s per-formance after 2 yrs.
Recruiting sources
Within company: Sales force Other departments
Competitors Customers Noncompetitors
Educational institutions
Advertisements
Employment agencies
Voluntary applicants
Women
Minorities
Other companies:
TM 6-1
References and credit reports
Psychological tests
Application blanks
Personal interviews
Assessment Centers
Organizational Design
Salesperson Selection Tools
TM 6-2
Application Blank Information
Personal Experience Physical Environmental
Name Work Ability to perform Membership in job-related social and
service Address & Phone Education physical activities organizations
Health Outside interests
Reason for seeking particular job
Personal goals
References
TM 6-4
Suggestions for Improving Interviewing Effectiveness
• Have specific job specifications and qualifications clearly in mind
• Establish specific interviewing objectives
• Provide some degree of structure (guidelines, probing questions)
• Allow adequate time
• Be very familiar with application or resume information
• Use standardized rating sheets after each interview
• Use multiple interviews
• Provide training and practice for the interviewers
• Remember, the interview is an opportunity to learn more about the candidate as well as to sell your company
Selection and Hiring are Not SynonymousTM 7-1
COMPANY A DISLIKES ANN ANN DISLIKES COMPANY A
NO OFFER EXTENDED
COMPANY B LIKES ANN ANN DISLIKES COMPANY B
OFFER EXTENDED, BUT NOT ACCEPTED
ANN LIKES COMPANY C
OFFER EXTENDED & ACCEPTED
COMPANY A LIKES ANN
TM 7-2 (Fig. 7-2)
Details of the Job
Company eating facilities
Office practices
Paycheck
Expense account
For the new sales representative:
Details of the job
Phases of Developing and Conducting Sales Force Training
TM 8-1
Training assessment
Program design
Reinforcement
Evaluation
Establish program objectives
Identify who should be trained
Identify training needs and specific goals
How much training is needed?
Who should do the training?
When should the training take place?
Where should training be done?
Content of training
Teaching methods used in training program
Determine how training will be reinforced
What outcomes will be evaluated?
What measures will be used?
Objectives of Sales Training Programs
TM 8-2 (Fig. 8-3)
Increased Sales
Productivity
Improved Self-
Management
Lower turnover
Improve customer relations
Improve morale
Improved communica-
tion
Sales training program
objectives
Examples of Specific Training Objectives
Company orientation and Understand company goals and objectivesadministrative skills: Understand company selling philosophy
Understand organizational structure Understand company policies and procedures
Improve call reports Improve call patterns Improve time management
Knowledge: Existing products - features, benefits, and applications New products - features, benefits, and applications
Industry trendsCompetitive products - features, benefits, and
applications Specific customer applications and problems Promotional programs
Selling skills: Improve pre-call planningImprove prospecting methodsImprove strategy selectionImprove presentation skills Improve closing techniquesImprove understanding of and handling objectivesImprove customer sensitivity
TM 8-3
Who Should Train Sales People?TM 8-4
Source Advantages Disadvantages
Line executive Greater credibility Lack of time
Clearer expectations Lack of teachingability
More thoroughevaluation of candidates
Staff trainer Greater time Additional expense
More resources Lack of authority
Better training skills Less credibility
Outside specialist Greater specialization Additional expenseand expertise
Program content isnot specific to company’s needs
Training Content and Methods Matrix
TM 8-5
Lectures Discussion Demonstra- Programmed Interactive Audio On-the-Job Videos Bus. T.V. Role
tion learning simulation cassettes Playing
Company knowledge
Product knowledge
Market/Indus-try knowledge
Selling skills
Time Manage-ment
* * * *
* * * * * *
* * * * * * * * * *
* * * * * * * *
* * * * * * * * *
TM 9-1
MOTIVATION IS THE CHOICE OF AN INDIVIDUAL TO
1. Initiate action on a certain task … choice;
2. Expend a certain amount of effort on that
task … intensity;
3. Persist in expending effort over a period of
time … persistence.
The amount of effort the sales person desires to expend on each activity associated with the job.
TM 9-2 (Fig. 9-2)
Motivational Conditions
Are the rewards
worth the effort?
Does more effort lead to better performance?
GREATER EFFORT
The same or less effort
NO NONO
YES YESYESDoes better performance lead to greater rewards?
Maslow’s Hierarchy of Needs and Possible Sales Managers’ Actions
TM 9-3 (Fig. 9-3)
Fulfilled through:Self-development,
Managerial actions:Provide/offer advanced
training, assignments to special projects, more responsibility and
authority.
Fulfilled through: Status, recognition.Managerial actions: Recognize sales rep achievements
personally and publicly through title changes, commendation letters, promotions.
Fulfilled through: Affiliation, friendship, acceptance.Managerial actions: Use team selling, hold social functions, distribute
employee newsletters, hold sales meetings, mentoring.
Fulfilled through: Job security, safety, income security.Managerial actions: Provide safe work environment, set mutually agreed-upon
performance standards, communicate job performance expectations and consequences
of failure to perform.
Fulfilled through: Food, shelter, clothing, health care.Managerial actions: Provide/offer adequate income and good benefits package.
Safe
ty
need
s
Social
needs
Physiol
ogica
l
needs
Esteem
nee
ds
Self-a
ctual
izatio
n
needs
challenge.
Herzberg’s Motivation-Hygiene Theory
TM 9-4
HYGIENE FACTORS MOTIVATION FACTORS
• pay
• company policies
• supervision conditions
• work
• recognition
• responsibility
• challenge
• growth opportunities
Salespeople’s Perceived Reasons for Failure and Their Motivational Impact
Motivational impact
Perceived reasons Positive Negative
Ability Seek help; get Become frustrated additional training; and discouraged; ask for supervisor’s give up assistance; increase effort
Effort Work harder; make No change in behavior more calls; work
longer hours
Strategy Change selling No change in behavior strategy; adapt the
presentation
Task difficulty Work harder; Become frustrated change strategies; and discouraged; or seek help give up
Luck No change in behavior Avoid the situation
TM 9-5 (Fig. 9-5)
TM 9-6CAREER STAGES
• Primary concern is finding a suitable occupation
• Underdeveloped skills and knowledge
• Many drop out or are terminated
• Low expectancy instrumentality, high valence for personal growth
EXPLORATION
ESTABLISHMENT
• Primary concern is improving skills and performance
• Lack of promotion may cause disengagement or quitting
• New commitments make pay important
• High expectancy instrumentality, high valence for promotion and payMAINTENANCE
• Primary concern is maintaining position, status, and performance
• Have highest sales volumes and percentage of quota and pay
• High valence for recognitions, respect, and pay
• Low valence for promotionDISENGAGEMENT
• Primary concern is preparing for retirement and/or developing outside interest
• Low valence for higher order and lower order rewards
• Low instrumentality
TM 9-7
Sales Contest Design Elements
Equally Attainable
Goals
Attractive Variety of
Prizes
Sales Contest Design
Promote & Publicize
TM 9-8
CAUSES OF PLATEAUING
• No clear career path
• Not managed adequately
• Bored
• Burned out
• Economic needs met
• Discouraged with company
• Overlooked for promotion
• Lack of ability
• Avoiding risk of management job
• Reluctance to be transferred
What a Good Sales Compensation Plan should Do
TM 10-1 (Fig. 10-1)
Efforts +
Results =
Rewards
Control Sales representatives’activities
Treat customers properly
Attract and keep good people
Motivate the sales person Good sales compensation plan
Economical yet competitive
Security and incentive Fair Simple
Flexible and Stable
TM 10-2Potential Conflicts in Compensation Plan Design
Characteristics of Plan 1 2 3 4 5 6 7 8 9 10 11 12
Characteristics of Plan
1. Reward results __
2. Reward efforts C __
3. Provide steady income C __ __
4. Provide incentive __ C C __
5. Fair C C C C __
6. Flexible __ C C __ __ __
7. Simple C __ __ C C C __
8. Economical __ C C __ C __ C __
9. Competitive __ C C __ __ __ C C __
10. Controls and directs C __ __ C C C __ __ __ __
11. Consistent with company objectives C C C C __ __ C __ __ __ __
12. Stable C C __ C C C __ C __ C C __
C = Potential for conflict
Review job description
Identify plan’s objectives
Include job elements controllable by sales force and measurable
Establish level of compensation
Develop the method of compensation
Decide on indirect monetary compensation
Pretest and install plan
Steps in designing a sales compensation plan
TM 10-3
Others
Company Car
Pension
Moving Expenses
Insurance
Profit Sharing
Bonus
Drawing Account
Commission Paid Vacation
Other Business Expenses
TravelSalary
SECURITY INCENTIVES BENEFITS EXPENSES
Building Blocks for a Sales Compensation Plan
TM 10-4 Fig. 10-4
TM 10-5Methods of Compensation
Method Advantage Disadvantage Best Used
Straight salary
Provides security and stability for reps
Better for directing and controlling sales activities
Ensures proper treatment of customers
Direct incentive is easily lost if not administered properly
Represents a fixed cost
Requires supervision to direct, control, and evaluate
Difficult to direct and supervise sales people
Customers’ best interests may be ignored
Sales people’s earnings may fluctuate widely
Added cost
May be seen as inequitable if not administered properly
For products that require a lot of presale and/or post-sale service
For building long-term customer relationships
When supervision is available for new recruits
For new territories
For missionary sales
Straight commission
Bonus
When a strong incentive is needed to attain sales
For products that require little presale and/or post-sale service
The sale is a one-time sale
Adequate field supervision is not available
Company is in a weak financial position
Company uses part-time or independent sales people
Provides a strong incentive
Sales people have more freedom
Acts as a screening method
Added incentive
Can be used for specific activities - flexible
To encourage above-normal performance of specific activities
COMMISSION
BONUSSALARY
Possible Combination Compensation Plans
TM 10-6
TM 10-7Drawing Account Examples
Non-Guaranteed Plan
Month Draw Sales Volume Commission Earned End-of-Month Payment to Rep
January $1,800 $40,000 $4,000 $2,200 ($4,000 - $1,800 = $2,200)
February $1,800 $15,000 $1,500 $0 (rep owes $300)
March $1,800 $30,000 $3,000 $900 (computed as follows)
Commission = $3,000
Less draw - 1,800
Less February debt - 300
Net $ 900
Guaranteed Plan
Month Draw Sales Volume Commission Earned End-of-Month Payment to Rep
January $1,800 $40,000 $4,000 $2,200 ($4,000 - $1,800 = $2,200)
February $1,800 $15,000 $1,500 $0 (rep owes $0)
March $1,800 $30,000 $3,000 $1,200 ($3,000 - $1,800 = $1,200)
TM 10-8
COMPENSATING
• Shared reward
• Role-reward congruence
• Team-member input
• Peer evaluations
CROSS-FUNCTIONAL TEAMS
Factors Influencing Sales Force ExpensesTM 11-1
Communication
Expenses Gifts
Lodging
Meals
Office supplies
Transportation Entertainment
TM 11-2
Characteristics of a Sound Expense Plan
• No net gain or loss
• Equitable treatment
• No curtailment of beneficial activities
• Simple and economical
• Avoidance of disputes
• Company control of expenses and elimination of padding
Salesperson Expense Options
Method Reimbursement Advantages Disadvantages
Salespeople pay None Simple, no costs Reps may not spend
Unlimited All legitimate Flexible and fair, Encourages excessive
TM 11-3
their own expenses enough on customers
payment plan business expenses allows for territory spendingdifferences
Limited Specific amounts Limited and predictable Inflexible payment plan allowed expenses
Possibility for$80/day - lodging switching expenses
$45/day - food between categories $0.26/mile - transportation
Sales may resent
Flat allowance $700 per week Limited and predictable Inflexible expenses
Sales may resent
e.g.
TM 11-4
Factors Influencing Automobile Ownership Decision: Company Owned, Company Leased, or Salesperson Owned
Maintenance Special design
Size of sales force
Operating
Control
Mileage
Investment
Administrative problems
Personal preference
TM 11-5
Automobile Allowance Plans
Method Example
Flat amount $400 /month
Fixed mileage rate $.28/mile
Graduate mileage rate $.25/mile, first 15,000 miles$.15/mile, second 15,000 miles
Combination flat and $200/month + $.16/mile mileage rate
TM 11-6
Other Methods of Expense Control
• Training and enforcement
• Credit cards
• Expense bank account
• Change in nature of entertainment
• Telemarketing
• Careful travel planning
TM 12-1 (Fig. 12-1)
Leadership Effectiveness
Personal characteristics
Managerial skills
Leadership
effectiveness
Managerial behaviors
S I T U A T I O N
SupportingCoachingMentoringTeam buildingRepresenting
Persuading Recognizing Rewarding Conflict management
PlanningProblem solvingInformingDelegatingClarifyingMonitoring
TM 12-2 (Fig. 12-2)
Leadership Behaviors and Styles
RELATIONSHIP-ORIENTED TASK-ORIENTED
TM 12-3 (Fig. 12-3)Basic Leadership Styles
low task and
high relationship
high task and
high relationship
low task and
low relationship
high task and
low relationship
High
Hig
h
Low
Lo
wR
elat
ion
ship
beh
avio
r
Task behavior
Charismatic Leadership
Words and actions which transform the basic values, beliefs, and attitudes of employees in such a way that they are willing to perform beyond the standards levels expected by the organization.
• Articulate a vision
• Challenge the status quo
• Provide a role model
TM 12-4
TM 12-5Reasons for Supervision
Reasons for Supervision
Training
Improved morale
Better performance
Sales assistance
Enforcement
Amount of Supervision Needed
Optimal
Amount of Supervision HighLow
High
Low
Per
form
ance
Under Over
TM 12-6
Personal characteristics
CorporateCulture
Organizationaland workclimate
Individualperceptionsand beliefs
Satisfaction withThe job/individual
morale
Effectsof
morale
Sales force morale
SOCIAL INTERACTION
Factors Shaping Sales Force Morale
(Fig. 13-1)
Dimensions of Job Satisfaction (Fig. 13-2)
Co-workers
Companyand
management
PerformanceNature of
the job Pay
Promotions
Recognitionand status
Securityand benefits
SupervisionWorking
conditions
Dimensionsofjob
satisfaction
Effects of Sales Force MoraleTM 13-3
Low Morale High Morale
Excessive turnover Organizational commitment
Unsatisfactory performance Citizenship behavior
Increased expenses Improved performance
Increased complaint behavior
Development of outside interest
Disloyalty
Unionization
Morale Building Process TM 13-4
Integrate interests: match the
person with the job
Foster open and frequent communica-tion
Develop a strong corporate culture and
a supportive organizational
climate
Sales Forecasting Methods TM 14-1
Forecasting Advantages Disadvantages Best UsedExecutive opinion Quick, easy, and simple Subjective For new products
Lacks analytical rigor
Sales force composite Relatively simple Sales people are sometimes When reps are of a overly optimistic high caliber
Usually fairly accurate Sales people may sandbag When each rep has a
Involves those people who (estimate low) in order to small number of are responsible for the results look better customers
Time consuming
Survey of buyers Forecast is done by those who Time consuming For new products intentions will buy the product, so
accuracy is good Cost When there are a small number of customers
Customer may not be cooperative
Trend projections: moving Objective and inexpensive No consideration for major For established products average exponential product or market changes regression analysis Use smoothing historical data When market factors are
Require some statistical predictableanalysis For aggregate company
forecasts
Analysis of market factors Objective Unforeseen changes When market factors are stable and predictable
Fairly accurate Fairly simple
Test markets Very accurate Time consuming For new products which do not require large
Cost investments
TM 14-2 (Fig. 14-8)Sales Forecast Trend Projection Using Least Squares Method
Time Period Sales ($millions)
Year (x) (y)1996 1 7.2
1997 2 9.6
1998 3 12.8
1999 4 16.3
2000 5 21.9
2001 6 26.0
2002 7 27.9
2003 8 30.0
2004 9 32.1
2005 10 33.3 N = 10 x = 55 y = 217.1
x = 5.5 y = 21.7 (x) 2 = 3025 xy = 1452.7
b = N x y - x y
N(x2 ) - (x)2 = 10(1452.7) - (55)(217.1)
=10(385) - 3025
a = y - bx 21.7 - 3.13(5.5) 4.48
y = a + bx 4.48 + 3.13(x) =
= =
=
Forecast for 2006 (10-yr base) would be 4.48 + 3.13(11) = $38.9 million
Forecast for 2006 (4-year base) would be $35.4 million (calculation not shown)
_ _
3.13
Forecasted Sales
TM 14-3 (Fig. 14-7)
Projection of Sales Trend by Least Squares Method
40
35
30
25
20
15
10
5
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
• •
•
•
•
•
Y
2006 forecast 10-year base
2006 forecast 4-year base
•
•
•
•
• •
Market Factor Forecast: Dryever Diapers TM 14-4
Next Year Second Year
Projected population, ages 0-18 months 4,850,000 4,800,000 Percentage using diapers 100 100Number using diapers 4,850,000 4,800,000Average daily diapers per child 2.55 2.55Diapers daily, ages 0-18 months 12,367,500 12,240,000
Projected population, ages 19-30 months 3,300,000 3,200,000Percentage using diapers 80 80Number using diapers 2,640,000 2,560,000Average daily diapers per child 2.19 2.19Diapers daily, ages 19-30 months 5,781,600 5,606,400
Projected population, ages 31-42 months 3,500,000 3,300,000Percentage using diapers 40 40Number using diapers 1,400,000 1,320,000Average daily diapers per child 1.10 1.10Diapers daily, ages 31-42 months 1,540,000 1,452,000
Total daily diapers, all ages 19,689,100 19,298,400Percentage disposable diapers 95 95Number disposables daily 18,704,645 18,298,400Dryever market share percentage 20 20Expected daily sales (units) 3,740,929 3,666,696Wholesale price per diaper 0.07 0.07Annual sales forecast in dollars 95,580,736 93,684,083
Procedure for Designing Sales Territories TM 15-1 (Fig. 15-1)
Select a Control Unit
Determine Location and Potential of
Customers
Determine Basic
Territories
Assign Salespeople to
Territories
Set Up Territorial Coverage
Plans
Evaluate Effectiveness
of Design
Territory Size and Workload Factors TM 15-2
Workload Factor Territory Size Increase/Decrease
Nature of Job:Lots of presale and post-sale activity Decreases
Nature of product:A frequently purchased product DecreasesA limited repeat-sale Increases
Market development stage:New market--fewer accounts IncreasesEstablished market--more accounts Decreases
Market coverageSelective coverage IncreasesExtensive coverage Decreases
Competition:Intensive Decreases
(unless market is oversaturated:
Limited Increases
Buildup Method of Territorial Design TM 15-3 (Fig. 15-3)
Management must determine:
Desirable call patterns:Call frequency per account per year
Total calls needed in each control group
Workload capacity:Total calls possible per rep per year = number of daily calls x days selling
Tentatively set territorial boundary lines by combining control units until total calls needed = total calls possible
Modify territories as needed
Territory Design: Build-Up Method Worksheet TM 15-4
Control Units
Illinois Iowa Kentucky
Customer Call Calls Calls Calls
class frequency Accounts per year Accounts per year Accounts per year
A 2 per month 10 240 7 168 5 120
B 1 per month 30 360 17 204 10 120
C 1 every 2 months 68 408 55 330 27 162
108 1,008 79 702 34 402
Distribution of one rep’s calls 1,008 + 491 or 402
year (1,500)*
Possible control combinations 100% 70% or 100% Illinois Iowa Kentucky
Alternative territories 100% Illinois + 100% Kentucky 100% Illinois + 70% Iowa
*6 calls/day x 5 = 30 calls/week x 50 = 1,500 calls/year
Breakdown Method of Territorial DesignTM 15-5
(Fig. 15-5)
Management must determine
Company sales potential
Sales potential in each control unit
Sales volume expected from each sales person
Tentatively set territorial boundary lines by combining control units total sales potential = total sales volume expected
Modify territories as needed
Territory Design: Break-Down Method Worksheet
TM 15-6
Company sales potential = $200,000,000
Targeted volume rep = $ 10,000,000
Number of reps needed Company sales potential $200,000,000 Targeted volume/rep $ 10,000,000
Territory volume as Targeted volume/rep $ 10,000,000 Company sales potential $200,000,000
Each territory should comprise 5% of sales potential or $10,000,000
Combine adjacent control units until each sales potential of $10,000,000
= = = 20
5% == =
Functions of Budgeting
TM 16-1
Sales budget
Planning of performance
Coordination of performance
Evaluation of performance
Sales Rep Joe Joe Joe Gus Gus PRODUCTS Customer A. Customer B1 TOTAL Customer A Customer B
Skis: Ski $45 1 400 1 140 2 540 1 360 1 120 Ski $60 390 260 650 240 210 Ski $80 210 420 630 190 290 Total skis 2 000 1 820 3 820 1 790 1 620 Ski Accessories Ski Poles $100 400 600 1 000 300 400 Ski Poles $200 300 400 700 200 300 Boots $30 80 180 260 10 40 Boots $50 50 140 190 20 50 Boots $70 30 100 130 20 70 Laces 1 200 3 200 4 400 1 750 2 000 Bindings 250 300 550 200 270 Safety Straps 300 900 1 200 100 500 Wax 4 800 7 500 12 300 4 600 5 600 Mittens $3 1 200 2 400 3 600 800 1 400 Mittens $5 1 400 1 800 3 200 900 1 000 Goggles $1 1 500 2 800 4 300 750 1 500 Ski Pants: Pants $10Men's 1 100 800 1 900 800 600 Pants $10Women's 1 400 1 500 2 900 950 800 Pants $20 Men's 900 1 100 2 000 610 750 Pants $20 Women's 1 500 1 100 2 600 800 970 Total Pants 4 900 4 500 9 400 3 160 3 120 Parkas: Parkas $8 2 500 1 700 4 200 1 800 1 200 Parkas $15 3 200 2 200 5 400 900 1 000 Total Parkas 5 700 3 900 9 600 2 700 2 200
Sales Budget, 1998 Colorado Ski CompanyTM 16-2a
Sales Budget, 1998 Colorado Ski Company TM 16-2b
Joe Paula Paula Paula Totals Totals DollarsTotal Customer
A.Customer
B TOTALCustomer A Customer B Total
Volume
480 1 290 1 080 2 370 4 050 3 340 7 390 339 940450 260 140 400 890 610 1 500 90 000480 220 180 400 620 890 1 510 121 200
3 410 1 770 1 400 3 170 5 560 4 840 10 400 551 400
700 150 250 400 850 1 250 2 100 816 800
500 100 200 300 600 900 1 500 15 000 50 20 30 50 110 250 360 10 800 70 20 50 70 90 240 330 16 500 90 20 50 70 70 220 290 20 300
3 750 800 1 200 2 000 3 750 6 400 10 150 6 280470 75 110 185 525 680 1 205 19 280600 50 300 350 450 1 700 2 150 1 400
10 200 3 000 3 700 6 700 12 400 16 800 29 200 29 880 2 200 700 1 300 2 000 2 700 5 100 7 800 23 400 1 200 600 800 1 400 2 900 3 600 6 500 32 500 2 250 650 1 500 2 150 2 900 5 800 8 700 34 800
226 940
1 400 500 400 900 21 400 1 800 4 200 84 000 1 750 700 600 1 300 3 050 2 900 5 950 119 000 1 360 450 500 950 1 960 2 350 4 310 172 400 1 770 540 600 1 140 2 840 2 670 5 510 220 400 6 280 2 190 2 100 4 290 10 250 9 720 19 970 595 800
3 000 1 200 800 2 000 5 500 3 700 9 200 147 200 3 750 1 600 1 000 2 600 7 100 4 650 11 750 352 500 6 750 2 800 1 800 4 600 12 800 8 350 20 950 499 700
1 873 580TOTAL DOLLAR VOLUME
Flow of Information from Sales Budget to Other BudgetsTM 16-3 (Fig.
16-1)
Sales budget
Sales department expense budgets (advertising, selling costs, administration)
Administrative expense budgets
Production department budgets
Revenues Revenues
Expenses Expenses
Profit and loss budget
Cash budget
Purposes of Sales Quotas TM 16-4 (Fig. 16-2)
Indicate strong/weak
spots in selling structure
Evaluate sales
contest results
Control selling
expenses
Improve compensation
plan effectiveness
Control sales force activities
Evaluate sales force productivity
Sales quotas
are used ...
Furnish sales force goals/ incentives
Examples of Various Quota Bases TM 16-5
Quota Base Quota Actual Percent of Quota Attained
Sales volume, product line A $200,000 $200,000 110
Gross margin, product line B 30,000 25,000 83
Productdemonstrations 120 135 117
Orders from new accounts 15 17 113
Expense quota 50,000 45,000 -10 or 110
Combination of all the above using equal weights 106.6
For the expense based quota, the objective is to come in below quota rather than above, or 10% below quota can be interpreted as attaining 110% of the goal.
Territory volume
District sales volume
Total gross margin Total sales volume
District gross margin
Territory gross margin
By customer group By product By customer group By product
Bases for Analyzing Sales Volume and ProfitTM 17-1
Income and Expense Statement, by Sales Region, Colorado Ski Company, 1998 ($000).
TM 18-1 (Fig. 18-5)
Mid-Total Eastern western Western
Net sales $27,000 $9,000 $4,500 $13,500 Less cost of goods sold 18,900 6,300 3,150 9,450 Gross margin 8,100 2,700 1,350 4,050 Less operating expenses:
Personal selling 3,847 1,070 802 1,975 Advertising 1,220 420 220 580 Warehouse/shipping 480 190 125 165Order processing 240 79 56 105Administration 513 171 171 171
Total operating expenses 6,300 1,930 1,374 2,996
Net profit (loss) $1,800 $ 770 ($ 24) $ 1,054
Net profit (loss) as percentage of sales 6.7% 8.6% (0.53%) 7.8%
Income and Expense Statement, by Sales Region, Colorado Ski Company, 1998 ($000), using contribution-margin approach
TM 18-2
Mid- Total Eastern western Western
Net sales $27,000 $9,000 $4,500 $13,500 Less cost of goods sold 18,900 6,300 3,150 9,450 Gross margin 8,100 2,700 1,350 4,050 Less direct operating expenses:
Personal selling 3,082 845 595 1,642 Advertising 732 254 127 351Warehouse/shipping 160 64 42 54Order processing 130 43 30 57
Total direct operating expenses 4,104 1,206 794 2,104 Contribution margin $ 3,996 $1,494 $ 556 $1,946 Less indirect operating expenses:
Personal selling 765Advertising 488Warehouse/shipping 320Order processing 110Administration 513
Total indirect expenses $ 2,196 Net profit (loss) $ 1,800
Educate customers who buy from several different suppliers. Stress theadvantages of purchasing from one supplier.
For customers who purchase large total quantities in frequent small orders, stressthe advantages of ordering once a month instead of once a week. Point out that thebuyer eliminates all handling, billing, and accounting expenses connected withthree of the four orders. Note further that the buyer writes only one check and onepurchase order. In addition, stress that there will be only one bill to process andone shipment to put into inventory instead of three or four.
Educate the sales force as well as customers. In fact, it may be necessary tochange the compensation plan to discourage acceptance of smaller orders.
Substitute direct mail or telephone selling for sales calls or unprofitable or small-order accounts; or continue to call on these accounts, but less frequently.
Shift an account to a wholesaler or some other type of middleman rather thandealing directly, even by mail or telephone.
Drop a mass-distribution policy and adopt a selective one. This new policy mayactually increase sales because sales reps can spend more time with profitableaccounts.
Establish a minimum-order size.
Establish a minimum charge or a service charge to combat small orders.
Ways to Increase Order Size and Reduce Small Order Marketing Costs TM 18-3 (Fig. 18-8)
Return on Assets Managed (ROAM) TM 18-4
Sales $ 10,000,000 Cost of goods sold 7,000,000 Gross margin 3,000,000 Salaries 150,000Commission 850,000 Travel 150,000 District office expense 400,000
Total direct expenses 150,000 Contribution margin $ 1,450,000
Accounts receivable 2,200,000 Inventories 2,000,000
Total assets $ 4,200,000
Contribution margin Sales volume
1,450,000 10,000,000
Asset turnover = = Sales volume Accounts
receivable + Inventories
Profit on sales % = = x 100
$10,000,000 $ 4,200,000
= 14.5%
= 2.38 ROAM = Profit on sales % x Asset turnover
1,450,000 10,000,000
= x 10,000,000 4,200,000
= 14.5% x 2.38 = 34.5%
Procedures for Evaluating Sales PeopleTM 19-1 (Fig. 19-1)
1. Establish basic policies
2. Select evaluation bases
3. Set performance standards
4. Compare performances to standards
5. Discuss results with sales people
Output Factors Used as Evaluation BasesTM 19-2 (Fig. 19-2)
• Sales volume
• Sales volume as a percentage of:
• Orders
In dollars and in unitsBy products and customers (or customer groups)By mail, telephone, and personal sales calls
QuotaMarket potential (that is market share)
Number of orders Average size (dollar volume) of order Batting average of canceled orders
• Accounts
• Gross margin by product line, customer group, and order size
Percentage of accounts sold Number of new accountsNumber of lost accounts
Number of accounts with overdue payment
Input Factors Used as Evaluation Bases TM 19-3 (Fig. 19-3)
• Calls per day (call rate)
• Days worked
• Direct selling expense
• As percentage of sales volume As percentage of quota
• Nonselling activities
Advertising displays set up Letters written to prospects Telephone calls made to prospectsNumber of meetings held with dealers and/or distributors Number of service calls madeCollections made Number of customer complaints received
Evaluation Bases TM 19-4
Base OUTPUT INPUT Historical Goal Share Others Source
To Target/ Market To
Possible Bases of Comparisons
Sales volume * * * * * Company records
Gross margin * * * * Company records
Orders * * * * Company records
Calls/day * * * * Sales force call reports
Days worked * * * * Sales force call reports
Selling time * * * * Sales force call reports
Selling expense * * Company records
Activities * * Sales force call reports
Knowledge * * Sales manager
Sales presentation * * Sales manager
skills
Resourcefulness * * Sales manager
Customer relations * * Sales manager/customer
Attitude * * Sales manager/customer
Basic Performance Equations
TM 19-5
Sales = Days worked x x x
Sales = Days worked x Call rate x Batting average x Average order
Example:
Sales = 250 x 4 x .5 x 1000
Sales = 1000 x .5 x 1000
Sales = $50,000
Calls
Days worked
Orders
Call
Sales
Orders
Illegal Sales Practices
TM 20-1
• Granting price concessions that are not justified or that
• Making false claims about your product and the services
• Representing a product to be new when it is rebuilt or
• Misleading customers into thinking they are getting a
• Bribing customers’ employees in order to acquire or hold
• Using bribery or espionage to learn a competitor’s trade
are not necessary to meet competition
that accompany your product
second-hand
bargain when this is not the case
an account
secrets