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TM 1-2 (Fig. 1-2). Types of Sales Jobs. Driver sales person. Sales maintenance. Inside order-taker. Outside order-taker. Missionary sales person. Sales support. Sales engineer/consultant. Consultative sales person: tangible products. Sales development.

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Sales force goes to the customer

TM 1-2 (Fig. 1-2)

Types of Sales Jobs

Driver sales person

Sales maintenance

Inside order-taker

Outside order-taker

Missionary sales person

Sales support

Sales engineer/consultant

Consultative sales person: tangible products

Sales development

Consultative sales person: services and other intangible products


Sales force goes to the customer

Selected Activities of Salespeople

TM 1-3 (Fig. 1-3)


Sales jobs are different than other jobs

TM 1-4

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.


Sales force goes to the customer

TM 1-6a

Managing is a distinct activity which requires a unique set of skills, knowledge, and attitudes


Sales force goes to the customer

TM 1-6b

Some skills are the same; many are different

  • motivating

  • planning

  • training

  • delegating

  • recruiting

  • administration


Sales force goes to the customer

The Executive Ladder in Personal Selling

TM 1-7

(FIG. 1-6)

President

Vice president of sales

National sales manager

Regional/divisional sales manager

Districtsales manager

Sales supervisor

Staff assistants available for advice and support at any step along the ladder

Sales person


Sales force goes to the customer

TM 1-8

FIG. 1-7

The Executive Ladder in Team Selling

President

Vice president of marketing

Distribution logistics specialist

Client-team leader

Product engineer

Customer sales/service representative


Sales force goes to the customer

TM 1-9

Promotional Mix: Product Life Cycle, Type of Business and Product

Product Manufacturers Wholesalers Retailers

Life-Cycle Industrial Consumer All Products Durable Nondurable

Introduction

Personal selling Advertising Personal selling Personal selling Advertising

Personal selling Advertising Sales promotion

Personal selling Advertising Personal selling Personal selling Advertising

Personal selling Sales promotion Sales promotion

Growth

Sales promotion

Advertising

Personal selling Sales promotion Personal selling Personal selling Advertising

Advertising Sales promotion Sales promotion Sales promotion

Maturity

Personal selling Sales promotion Personal selling Personal selling Sales promotion

Sales promotion Sales promotion

Decline


Sales force goes to the customer

A Company’s Complete Marketing System:

A Framework of Internal Sources

TM 2-1 (Fig. 2-1)

Operating 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

Marketing inter-mediaries

Suppliers

The market

Nonmarketing resources in the firm:

Production Financial Personnel

Public image Research and Development Location


Sales force goes to the customer

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

Management of field

Advertising

Sales promotion

Marketing research

Sales training

Sales analysis and

control (sales statistics)

Sales budgeting

Sales forecasting

Planning for channels,

territories, and quotas

Product planning

Inventory control

Production scheduling

Physical distribution

sales organization

activities including customer service and product service

Management of sales office


Sales force goes to the customer

Strategic Planning for the Total Company

TM 2-3

Organization’s mission

top

Broad goals

down

Strategy and tactics to achieve goals


Sales force goes to the customer

Relationship Between Objectives, Strategies and Tactics

TM 2-4 (Fig. 2-4)

Set Goals

Formulate

Strategies

Develop Tactics


Sales force goes to the customer

TM 2-5

Relationship Marketing

  • Long-term commitment

  • Understanding customer expectations

  • Building service partnerships

  • Empowering employees

  • Total quality management


Sales force goes to the customer

TM 2-6

Company Strategy-Marketing Goals and Strategy

Company

Marketing

Goals

Earn 20% ROI

Strategy

Goals

Increase market

Increase marketing share 10%

share 10%

Strategy

Increase share of customer business


Sales force goes to the customer

TM 2-7

Marketing Strategy-Sales Force Goals, Strategy and Tactics

Marketing

share 10%

Goals

Increase market

Sales Force

Strategy

Goals

Increase share of customer business

Increase share of customer business

Strategy

Build long-term

customer relations

Tactics

Develop sales teams

Provide bonuses for greater customer share


Sales force goes to the customer

Multiple relationship strategies

TM 2-8 (FIG. 2-5)

High

Partnership

Commitment to the customer

Relationship oriented

Transaction oriented

Low

High

Low

Cost of serving the customer


Sales force goes to the customer

TM 3-1 FIG. 3-1

Salesperson’s Average Time Allocation*

(5.3 hrs) 18%

(8.5 hrs) 18%

(7.2 hrs) 15%

(11.6 hrs) 25%

(14.3 hrs) 31%

*SOURCE: Christem P. Herde, Dartnell’s 29th Sales Force Compensation Survey 1996-1997, (The Dartnell Press: Chicago, IL), p. 177.


Sales force goes to the customer

TM 3-2

THE EIGHT STEPS OF THE SALES PROCESS

Follow-up

Gaining Commitment

Meeting objections

Presentation

Need Assessment

Approach

Preapproach

Prospecting


Sales force goes to the customer

TM 3-3 FIG. 3-2

Lead Conversion Ratio: Inquiry to Decision 12 Months After Inquiring

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.


Sales force goes to the customer

TM 3-4 (FIG. 3-3)

The Value of Inquiry Follow-Up

Share of buyer’s business if not followed up 40%

Share of buyer’s business if followed up 83%

Source: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994


Sales force goes to the customer

Buying Center Members

TM 3-5

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


Sales force goes to the customer

NEED ASSESSMENT

TM 3-6

  • 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?


Sales force goes to the customer

Presentation of Product, Features, Benefits, Advantages

TM 3-7

Product FeaturesBenefits Advantages

Camera Telephoto lensTake pictures Able to capturefrom longer images of animals distances. or people from a distance.

Bicycle Attached waterCan hold a water Don’t get dehydrated. bottle holderbottle. Don’t have to stop for water. Feel more refreshed.

Drill Press Multiple drillCan change bits Saves time. bits attachedwithout shutting Saves money.down the machine.

Motor Oil Rust inhibitorOil and engine Saves money.have longer life.


Sales force goes to the customer

TM 4-1

Characteristics of a Good Organizational Design

Market orientation

Effective informal organization

Activities organized

Organizational Design

Balanced and coordinated activities

Authority and responsibility aligned

Stable, but flexible

Responsible span of control


Sales force goes to the customer

Geographical Organization

TM 4-2 (Fig. 4-5)

Chief Marketing Executive

Sales Promotion Manager

General Sales Manager

Marketing Research Manager

Advertising Manager

Sales Analyst

Western Regional Sales Manager

Eastern Regional Sales Manager

4 District Sales Managers

4 District Sales Managers

Salespeople each with own territory

Salespeople each with own territory


Sales force goes to the customer

Sales Organization with Product Specialized Sales Force

TM 4-3 (Fig. 4-6)

Chief Marketing Executive

Marketing Research Manager

General Sales Manager

Sales Promotion Manager

Customer Relations Manager

Advertising Manager

Sales Manager Product A

Sales Manager Product B

Sales Manager Product C

Salespeople Product A

Salespeople Product B

Salespeople Product C


Sales force goes to the customer

Sales Organization Specialized by Type of Customers

TM 4-4 (Fig. 4-8)

Chief Marketing Executive

Sales Promotion Manager

General Sales Manager

Director of Marketing Research

Advertising Manager

Sales Manager Transportation Industry

Sales Manager Petroleum Industry

Sales Manager Steel Industry

Salespeople

Salespeople

Salespeople


Sales force goes to the customer

TM 4-5

The Relationship Between a Sales Team and a Buying Center

Selling firm

Buying firm

Sales Team

Exchange processes

Purchasing agent

Organizational buying center

Salesperson

Marketing

Sales

Manufacturing

R&D

Engineering

Physical distribution

Purchasing

Manufacturing

R&D

Engineering

Marketing

Information

Problem Solving

Negotiation

Friendship,trust

Product/services

Payment

Reciprocity


Sales force goes to the customer

TM 4-6

  • Uses of Telemarketing

  • Identify prospective customers

  • Screening, qualifying leads

  • Sales solicitation: small customers, re-orders

  • Order processing

  • Product service support

  • Account management

  • Customer relations


Sales force goes to the customer

TM 5-1

RECRUITING AND SELECTION PROBLEMS

  • Lack of resources

  • Lack of job specification and qualifications

  • Qualifications not objectively established

  • Lack of managerial training

  • Personal prejudices

  • Search for managerial talent


Sales force goes to the customer

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)


Sales force goes to the customer

TM 5-3 (Fig. 5.2)

Sales Force Staffing Process

Plan for Recruiting & Selection

Determine Number of People Wanted

Establish Responsibility for Recruiting, Selection and Assimilation

Conduct Job Analysis

Prepare Job Description

Determine Hiring Qualifications

Recruit Applicants

Select Applicants

Design a System For Measuring Applicants

Measure Applicants Against Hiring Qualifications

Make Selection Decisions

Hire The People

Assimilate New People

Into Sales Force


Sales force goes to the customer

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

x

=

class accounts per year calls

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

14,000

1250

= = 112 reps


Sales force goes to the customer

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

Total new

4 - 1 + 2 + 2 + 1 = 8


Sales force goes to the customer

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


Sales force goes to the customer

TM 5-7

RECRUITING FOR THE TEAM

  • Willingness to share

  • Cooperative

  • Trusting

  • Empathetic

  • Accepting of others

  • Receptive to others ideas

  • Selflessness

  • Leadership skills


Sales force goes to the customer

RECRUITING SOURCES OF SALES REPRESENTATIVES

TM 5-8

SourceComment

Referrals:Candidates and position are known to person making referral.

Within company:

Office and factory employeesCompany employees know the company and its products.

Sales force leadsCurrent salespeople know their job requirements and can possibly identify candidates who could be a good job match.

Other Companies:

CompetitorsCompetitors know the customers and are familiar with your products.

CustomersCustomers know your products and your company.

SuppliersSuppliers know your company and your products.

Educational institutionsPrimarily 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.

AdvertisementsProduces the greatest number of candidates, but the average quality is sometimes lower.

Employment agenciesThe agency is often more costly than other methods, but it will do a large part of the initial screening.

Voluntary applicantsThese applicants are interested in your firm and probably possess a high degree of self-confidence, self-reliance, and initiative.

Part-time workersThese workers are easy to contact, readily available, and can work flexible hours. This is a good source for in-home selling.


Sales force goes to the customer

TM 5-9 (Fig. 5-8)

Recruiting Evaluation Matrix

Evaluation Criteria

Consistent with strategic planning?

Percent retained after 3 years

Rep’s per-formance after 2 yrs.

Recruiting sources

Number recruits

Number hired

Cost

Frequency of use

Within company:

Sales force Other departments

Other companies:

Competitors Customers Noncompetitors

Educational institutions

Advertisements

Employment agencies

Voluntary applicants

Women

Minorities


Sales force goes to the customer

TM 6-1

Salesperson Selection Tools

References and credit reports

Application blanks

Psychological tests

Organizational Design

Personal interviews

Assessment Centers


Sales force goes to the customer

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


Sales force goes to the customer

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


Sales force goes to the customer

TM 7-1

Selection and Hiring are Not Synonymous

COMPANY A DISLIKES ANN

ANN DISLIKES COMPANY A

NO OFFER EXTENDED

COMPANY B LIKES ANN

ANN DISLIKES COMPANY B

OFFER EXTENDED, BUT NOT ACCEPTED

COMPANY A LIKES ANN

ANN LIKES COMPANY C

OFFER EXTENDED & ACCEPTED


Sales force goes to the customer

Details of the Job

TM 7-2 (Fig. 7-2)

Office practices

Paycheck

Company eating facilities

Expense account

For the new sales representative: Details of the job


Sales force goes to the customer

TM 8-1

Phases of Developing and Conducting Sales Force Training

Establish program objectives

Identify who should be trained

Training assessment

Identify training needs and specific goals

How much training is needed?

Who should do the training?

When should the training take place?

Program design

Where should training be done?

Content of training

Teaching methods used in training program

Reinforcement

Determine how training will be reinforced

What outcomes will be evaluated?

Evaluation

What measures will be used?


Sales force goes to the customer

Objectives of Sales Training Programs

Increased Sales Productivity

TM 8-2 (Fig. 8-3)

Improved Self-Management

Lower turnover

Sales training program objectives

Improve customer relations

Improve morale

Improved communica-tion


Sales force goes to the customer

Examples of Specific Training Objectives

Company orientation andUnderstand company goals and objectivesadministrative skills:Understand company selling philosophyUnderstand 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 applicationsIndustry trendsCompetitive products - features, benefits, and applicationsSpecific 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


Sales force goes to the customer

TM 8-4

Who Should Train Sales People?

SourceAdvantagesDisadvantages

Line executiveGreater credibilityLack of time

Clearer expectationsLack of teachingabilityMore thoroughevaluation of candidates

Staff trainerGreater timeAdditional expense

More resourcesLack of authority

Better training skillsLess credibility

Outside specialistGreater specializationAdditional expenseand expertise

Program content isnot specific to company’s needs


Sales force goes to the customer

TM 8-5

Training Content and Methods Matrix

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

* * * *

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

*

* * * * * *


Sales force goes to the customer

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.


Sales force goes to the customer

TM 9-2 (Fig. 9-2)

Motivational Conditions

Does better performance lead to greater rewards?

Are the rewards worth the effort?

YES

YES

Does more effort lead to better performance?

YES

GREATER EFFORT

NO

NO

NO

The same or less effort


Sales force goes to the customer

Maslow’s Hierarchy of Needs and Possible Sales Managers’ Actions

TM 9-3 (Fig. 9-3)

Fulfilledthrough:

Self-actualization needs

Self-development,

challenge.

Managerial actions:

Provide/offer advanced

training, assignments to special

projects, more responsibility and

authority.

Esteem needs

Fulfilled through: Status, recognition.

Managerial actions: Recognize sales rep achievements

personally and publicly through title changes, commendation

Social needs

letters, promotions.

Fulfilled through: Affiliation, friendship, acceptance.

Managerial actions: Use team selling, hold social functions, distribute

employee newsletters, hold sales meetings, mentoring.

Safety needs

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.

Physiological needs

Fulfilled through: Food, shelter, clothing, health care.

Managerial actions: Provide/offer adequate income and good benefits package.


Sales force goes to the customer

TM 9-4

Herzberg’s Motivation-Hygiene Theory

HYGIENE FACTORS

MOTIVATION FACTORS

  • pay

  • company policies

  • supervision conditions

  • work

  • recognition

  • responsibility

  • challenge

  • growth opportunities


Sales force goes to the customer

TM 9-5 (Fig. 9-5)

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


Sales force goes to the customer

CAREER STAGES

TM 9-6

EXPLORATION

  • 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

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 forpromotion and pay

MAINTENANCE

  • 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 promotion

DISENGAGEMENT

  • Primary concern is preparing for retirement and/or developing outside interest

  • Low valence for higher order and lower order rewards

  • Low instrumentality


Sales force goes to the customer

Sales Contest Design Elements

TM 9-7

Promote & Publicize

Sales Contest Design

Attractive Variety of Prizes

Equally Attainable Goals


Sales force goes to the customer

CAUSES OF PLATEAUING

TM 9-8

  • 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


Sales force goes to the customer

TM 10-1 (Fig. 10-1)

What a Good Sales Compensation Plan should Do

Efforts +

Results =

Rewards

Control

Treat customers properly

Attract and keep good people

Sales representatives’

activities

Good sales compensation plan

Motivate the sales person

Economical yet competitive

Flexible and Stable

Security and incentive

Fair

Simple


Sales force goes to the customer

Potential Conflicts in Compensation Plan Design

TM 10-2

Characteristics of Plan

Characteristics of Plan 1 2 3 4 5 6 7 8 9 10 11 12

1. Reward results__

2. Reward effortsC __

3. Provide steady incomeC __ __

4. Provide incentive__ C C __

5. FairC C C C __

6. Flexible__ C C __ __ __

7. SimpleC __ __ C C C __

8. Economical__ C C __ C __ C __

9. Competitive__ C C __ __ __ C C __

10. Controls and directsC __ __ C C C __ __ __ __

11. Consistent with company objectivesC C C C __ __ C __ __ __ __

12. StableC C __ C C C __ C __ C C __

C = Potential for conflict


Sales force goes to the customer

TM 10-3

Steps in designing a sales compensation plan

Include job elements controllable by sales force and measurable

Review job description

Identify plan’s objectives

Decide on indirect monetary compensation

Develop the method of compensation

Establish level of compensation

Pretest and install plan


Sales force goes to the customer

TM 10-4 Fig. 10-4

Building Blocks for a Sales Compensation Plan

Others

Company Car

Profit Sharing

Pension

Moving Expenses

Bonus

Other Business Expenses

Drawing Account

Insurance

Salary

Commission

PaidVacation

Travel

SECURITY

INCENTIVES

BENEFITS

EXPENSES


Sales force goes to the customer

Methods of Compensation

TM 10-5

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

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

Provides a strong incentive

Sales people have more freedom

Acts as a screening method

Difficult to direct and supervise sales people

Customers’ best interests may be ignored

Sales people’s earnings may fluctuate widely

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

Bonus

Added incentive

Can be used for specific activities - flexible

To encourage above-normal performance of specific activities

Added cost

May be seen as inequitable if not administered properly


Sales force goes to the customer

TM 10-6

Possible Combination Compensation Plans

COMMISSION

BONUS

SALARY


Sales force goes to the customer

Drawing Account Examples

TM 10-7

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)


Sales force goes to the customer

TM 10-8

COMPENSATING

CROSS-FUNCTIONAL TEAMS

  • Shared reward

  • Role-reward congruence

  • Team-member input

  • Peer evaluations


Sales force goes to the customer

TM 11-1

Factors Influencing Sales Force Expenses

Office supplies

Transportation

Entertainment

Expenses

Meals

Gifts

Communication

Lodging


Sales force goes to the customer

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


Sales force goes to the customer

TM 11-3

Salesperson Expense Options

Method Reimbursement Advantages Disadvantages

Salespeople pay None Simple, no costsReps may not spend

Unlimited All legitimate Flexible and fair,Encourages excessive

their own expenses enough on customers

payment plan business expenses allows for territory spending

differences

LimitedSpecific amounts Limited and predictable Inflexible

Possibility for$80/day - lodging switching expenses $45/day - food between categories $0.26/mile - transportation

Sales may resent

payment plan allowed expenses

e.g.

Flat allowance $700 per week Limited and predictable Inflexible expenses Sales may resent


Sales force goes to the customer

TM 11-4

Factors Influencing Automobile Ownership Decision: Company Owned, Company Leased, or Salesperson Owned

Maintenance

Special design

Size of sales force

Control

Mileage

Operating

Personal preference

Investment

Administrative problems


Sales force goes to the customer

TM 11-5

Automobile Allowance Plans

MethodExample

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


Sales force goes to the customer

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


Sales force goes to the customer

TM 12-1 (Fig. 12-1)

Leadership Effectiveness

Personal characteristics

Managerial behaviors

Leadership

effectiveness

Managerial skills

S I T U A T I O N


Sales force goes to the customer

TM 12-2 (Fig. 12-2)

Leadership Behaviors and Styles

RELATIONSHIP-ORIENTED

TASK-ORIENTED

Planning

Problem solving

Informing

Delegating

Clarifying

Monitoring

Supporting

Coaching

Mentoring

Team building

Representing

Persuading

Recognizing

Rewarding

Conflict management


Sales force goes to the customer

TM 12-3 (Fig. 12-3)

Basic Leadership Styles

High

low task and

high task and

high relationship

high relationship

Relationship behavior

low task and

high task and

low relationship

low relationship

Low

Low

Task behavior

High


Sales force goes to the customer

TM 12-4

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


Sales force goes to the customer

Reasons for Supervision

TM 12-5

Training

Sales assistance

Improved morale

Reasons for Supervision

Better performance

Enforcement


Sales force goes to the customer

Amount of Supervision Needed

TM 12-6

High

Optimal

Performance

Under

Over

Low

Low

High

Amount of Supervision


Sales force goes to the customer

(Fig. 13-1)

Factors Shaping Sales Force Morale

Personal characteristics

Corporate

Culture

Individual

perceptions

and beliefs

Satisfaction with

The job/individual

morale

Effects

of

morale

Organizational

and work

climate

SOCIAL INTERACTION

Sales force morale


Sales force goes to the customer

Dimensions of Job Satisfaction

(Fig. 13-2)

Nature of the job

Performance

Pay

Promotions

Company

and

management

Dimensions

of

job

satisfaction

Recognition

and status

Co-workers

Security

and benefits

Working

conditions

Supervision


Sales force goes to the customer

TM 13-3

Effects of Sales Force Morale

Low MoraleHigh Morale

Excessive turnoverOrganizational commitment

Unsatisfactory performanceCitizenship behavior

Increased expensesImproved performance

Increased complaint behavior

Development of outside interest

Disloyalty

Unionization


Sales force goes to the customer

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 force goes to the customer

Sales Forecasting Methods

TM 14-1

Forecasting AdvantagesDisadvantages Best Used

Executive opinion Quick, easy, and simpleSubjective For new productsLacks analytical rigor

Sales force composite Relatively simpleSales 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 resultslook better customersTime consuming

Survey of buyers Forecast is done by those whoTime consuming For new products intentions will buy the product, so accuracy is goodCost When there are a small number of customers

Customer may not be cooperative

Trend projections: moving Objective and inexpensiveNo 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 ObjectiveUnforeseen changes When market factors are stable and predictable Fairly accurate Fairly simple

Test markets Very accurateTime consuming For new products which do not require large Cost investments


Sales force goes to the customer

Sales Forecast Trend Projection Using Least Squares Method

TM 14-2 (Fig. 14-8)

Time PeriodSales ($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

N x y - x y

N(x2 ) - (x)2

10(1452.7) - (55)(217.1)

b =

=

=

3.13

10(385) - 3025

=

a = y - bx 21.7 - 3.13(5.5) 4.48

y = a + bx 4.48 + 3.13(x)

=

=

=

Forecasted Sales

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)


Sales force goes to the customer

TM 14-3 (Fig. 14-7)

Projection of Sales Trend by Least Squares Method

40

35

30

25

20

15

10

5

2006 forecast 10-year base

Y

2006 forecast 4-year base

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006


Sales force goes to the customer

Market Factor Forecast: Dryever Diapers

TM 14-4

Next YearSecond Year

Projected population, ages 0-18 months4,850,0004,800,000Percentage using diapers100 100Number using diapers4,850,0004,800,000Average daily diapers per child2.55 2.55Diapers daily, ages 0-18 months12,367,500 12,240,000

Projected population, ages 19-30 months3,300,0003,200,000Percentage using diapers 80 80Number using diapers2,640,0002,560,000Average daily diapers per child 2.19 2.19Diapers daily, ages 19-30 months5,781,6005,606,400

Projected population, ages 31-42 months3,500,0003,300,000Percentage using diapers 40 40Number using diapers1,400,0001,320,000Average daily diapers per child 1.10 1.10Diapers daily, ages 31-42 months1,540,0001,452,000

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


Sales force goes to the customer

Procedure for Designing Sales Territories

TM 15-1 (Fig. 15-1)

Determine Basic Territories

Select a Control Unit

Determine Location and Potential of Customers

Assign Salespeople to Territories

Set Up Territorial Coverage Plans

Evaluate Effectiveness of Design


Sales force goes to the customer

Territory Size and Workload Factors

TM 15-2

Workload FactorTerritory Size Increase/Decrease

Nature of Job:Lots of presale and post-sale activityDecreases

Nature of product:A frequently purchased productDecreasesA limited repeat-saleIncreases

Market development stage:New market--fewer accountsIncreasesEstablished market--more accountsDecreases

Market coverageSelective coverageIncreasesExtensive coverageDecreases

Competition:IntensiveDecreases (unless market is oversaturated:LimitedIncreases


Sales force goes to the customer

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


Sales force goes to the customer

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 20410 120

C 1 every 2 months 68408 5533027162

108 1,008 79 70234 402

Distribution of one rep’s calls 1,008 + 491or 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


Sales force goes to the customer

Breakdown Method of Territorial Design

TM 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


Sales force goes to the customer

TM 15-6

Territory Design: Break-Down Method Worksheet

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

= = =

20

= =

=

5%

Each territory should comprise 5% of sales potential or $10,000,000

Combine adjacent control units until each sales potential of $10,000,000


Sales force goes to the customer

TM 16-1

Functions of Budgeting

Sales budget

Planning of performance

Coordination of performance

Evaluation of performance


Sales force goes to the customer

TM 16-2a

Sales Budget, 1998 Colorado Ski Company


Sales force goes to the customer

Sales Budget, 1998 Colorado Ski Company

TM 16-2b


Sales force goes to the customer

TM 16-3 (Fig. 16-1)

Flow of Information from Sales Budget to Other Budgets

Sales budget

Sales department expense budgets (advertising, selling costs, administration)

Administrative expense budgets

Production department budgets

Profit and loss budget

Cash budget

Revenues

Revenues

Expenses

Expenses


Sales force goes to the customer

Purposes of Sales Quotas

TM 16-4 (Fig. 16-2)

Indicate strong/weak spots in selling structure

Evaluate sales contest results

Furnish sales force goals/ incentives

Sales quotas are used ...

Control selling expenses

Control sales force activities

Improve compensation plan effectiveness

Evaluate sales force productivity


Sales force goes to the customer

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.


Sales force goes to the customer

TM 17-1

Bases for Analyzing Sales Volume and Profit

Total gross margin

Total sales volume

District sales volume

District gross margin

Territory volume

Territory gross margin

By customer group

By product

By customer group

By product


Sales force goes to the customer

TM 18-1 (Fig. 18-5)

Income and Expense Statement, by Sales Region, Colorado Ski Company, 1998 ($000).

Mid-Total Easternwestern Western

Net sales$27,000 $9,000$4,500 $13,500Less cost of goods sold 18,9006,3003,1509,450Gross margin 8,100 2,700 1,350 4,050Less operating expenses: Personal selling 3,847 1,070 802 1,975Advertising 1,220 420 220 580 Warehouse/shipping 480 190 125 165Order processing 240 79 56 105Administration 513 171 171 171Total 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 sales6.7% 8.6% (0.53%) 7.8%


Sales force goes to the customer

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 18,9006,3003,1509,450 Gross margin 8,100 2,700 1,350 4,050 Less direct operating expenses: Personal selling 3,082 845 5951,642 Advertising 732 254 127 351Warehouse/shipping 160 64 42 54Order processing 130 4330 57 Total direct operating expenses 4,104 1,206 7942,104 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


Sales force goes to the customer

Ways to Increase Order Size and Reduce Small Order Marketing Costs

TM 18-3 (Fig. 18-8)


Sales force goes to the customer

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

Profit on sales % = = x 100

= 14.5%

Sales volume Accounts receivable + Inventories

$10,000,000 $ 4,200,000

Asset turnover = =

= 2.38

ROAM = Profit on sales % x Asset turnover

1,450,000 10,000,000

10,000,000 4,200,000

= x

= 14.5% x 2.38 = 34.5%


Sales force goes to the customer

TM 19-1 (Fig. 19-1)

Procedures for Evaluating Sales People

1. Establish basic policies

2. Select evaluation bases

3. Set performance standards

4. Compare performances to standards

5. Discuss results with sales people


Sales force goes to the customer

Output Factors Used as Evaluation Bases

TM 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)

  • Gross margin by product line, customer group, and order size

  • Number of orders Average size (dollar volume) of order Batting average of canceled orders

  • Accounts

Percentage of accounts sold Number of new accountsNumber of lost accountsNumber of accounts with overdue payment


Sales force goes to the customer

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


Sales force goes to the customer

Evaluation Bases

TM 19-4

Base OUTPUT INPUT Historical Goal Share Others Source

Possible Bases of Comparisons

To Target/ Market To

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


Sales force goes to the customer

TM 19-5

Basic Performance Equations

Sales

Orders

Calls

Days worked

Orders

Call

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


Sales force goes to the customer

TM 20-1

Illegal Sales Practices

  • 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


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