Sales Management

Meaning:
Sales management meant for sales force personnel including marketing activities such as advertising, sales promotion, market research, physical distribution and pricing. Again it is related with recruiting, selecting, equipping, assessing, supervising and motivating sales force. Sales managers are in charge of personal selling activity and their primary assignment is management of sales force. Sales management also organizes the selling effort. To do so, it creates a suitable organization structure, with appropriate communication system. Sales management provides critical inputs for the key marketing decision like budgeting, quota and territory management.. Sales manager according to the above definitions has four major functions: (1) Selections of sales force (2) Training the sales force (3) Motivating the sales force (4) Controlling the sales force.

Objectives of Selling:
Short Term Objectives: 1234To retain and capture market To determine sales volume To obtain new customers To keep personal expenses of sales person within specified limits to target the customers.

Long Term Objectives: 123456To do entire selling job To service existing customers To maintain co-operation with customers To assist the training of middle men sales force To provide technical advise whenever necessary. To assist the dealer in selling the product

Steps in Selling OR Selling Functions:

1- Prospecting and Qualifying:

The salesman should prepare himself before prospecting to the customer. He should be updated with the product knowledge, market conditions, competition, and master of techniques of selling. He should locate the customers for this he needs to decide the profile of ideal prospect. He should get referrals from his existing customers, suppliers, distributors and dealers, other sales people and trade unions. After the whole preparation the salesman should also spot the qualified prospects for selling. These prospects are qualified on the basis of some factors: their employment, marital status, number of dependents, product they use now. The prospect techniques generally used are telephone prospect. 2- Pre Approach and Approach: Before visiting the sales salesman must know the present consumption pattern and usage of the prospects. They should carefully choose between several methods of approaching written communication, telephone call or personal call. Sales man should also know how to greet customer, opening remark and follow-up conversation. The sales strategy is decided as part of pre-approach. 3- Presentation and Demonstration: The salesman should always be ready with his planned talk with the customer. He should appropriately use AIDA Approach (Attention, Interest, Desire and Action). Different demonstration aids should be used for the effective selling. He should also involve buyer into demonstration by handling the product by his own which helps in full participation from the buyer. The salesman should also keep in mind while presenting that he make the buyer participate in the presentation by asking him some questions or his views. It ensures the fullest involvement from the customer. 4- Handling Objections: Sales manager may encounter objections from the prospect during the course of a sales presentation or at the time of closing the sales. The salesman shouldnt become disturbed because of objections of prospects. The salesman needs to understand the difference between conditions and objections. Objections can be overcome but the condition is block to the sales. The salesman also has to be positive while handling the objections. After answering the objections a salesman has to confirm whether the prospect has got the satisfactory clarification. The sales move on after meeting the objections. 5- Closing the Sales: This is the most important step in selling process. Closing the sales results into an order for the product or service. A salesman must have his closing material ready at all times and at all places. Before the close the salesman can have trial closes which are

some particular questions. The answers to these questions reflect the level of interest in the product. 6- Follow-Up and Maintenance: Even after the sales of the product the duty of the salesman doesnt end. He has to keep in contact with the buyer in the future also. In the case of any problem with product sold to buyer the salesman is expected to check the whole situation and provide him the after sales services of the product also. The after sales service is also the kind of strategy with which the salesman can get the positive mouth for his product and referral from the existing customers. Follow-Up and Maintenance accomplishes four objectives:
o o o o

customer gain short term satisfaction referrals are stimulated in the long run, repurchase prevent cognitive dissonance

Personal Selling
Personal selling the part of communication mix. The elements of this communication mix are advertising, sales promotion, public relations, direct mail & exhibitions. A sales person in personal selling tries to convince the customer so that he can take a decision to acquire the product which the sales person is talking about. It is a major factor in creating sales volume. The oral presentation of a companys products or services to one or more prospective purchasers for the purpose of making a sell a sell. The term personal selling and salesmanship have different meaning. Salesmanship is a seller initiated effort that provides perspective buyer with information and motivates them to make favorable decision concerning the sellers product or services. A personal selling on the other hand is two ways communication involving individual and social factors. It aims at bringing the right product to the right customer. It is used for creating product awareness, stimulating interest in product, developing brand preference and negotiating price. Personal selling is used extensively in complex & highly technical products like computers, electronic typewriters, digital phones, microwave, water purifiers and remote controlled appliances. It is used for selling to industrial customers. It is used during product launching stage when firm cannot afford a large expenditure for advertising. The role of the personal selling is decided by the marketing department in consultation with sales department.

Situations Regarding Personal Selling:

1) Product Situation: When the product is having high unit volume When the product is at introductory stage of product cycle. To match the specific consumer needs. Product selling which requires demonstration Product requires the after sales service. 2) Marketing Situation: Number of buyers buying a product of high volume is very small. Company sales its product in small local market. When the required middleman or agent is not available. 3) Company Situation: The situation where the company is not in position to identify or use any communication media The does not have high advertising budget.

Conceptual Selling & Strategic Selling

Conceptual Selling refers to selling a highly customized solution or a concept that cant be easily measured its worth. Conceptual Selling requires salespeople to first understand their customers' issues what they are trying to accomplish, fix or avoid and then apply their expertise to jointly develop solutions. This consultative approach builds credibility and trust, and solutions that are difficult for competitors to replicate. Conceptual Selling shifts the focus from seller to buyer and helps salespeople connect the way they sell to the way their customers buy. The program clearly defines how to unearth a customers key issues and concerns in order to better focus selling efforts on what the buyer needs to accomplish. Conceptual Selling gives the salesperson a framework to view the sale from the customers perspective, build credibility, and create collaborative win-win solutions. From the sellers point of view, the Strategic Selling process provides visibility into the sales opportunity. This involves first identifying all key players in the customers organization, understanding each players degree of influence and their reasons for buying, and uncovering essential information. Sales person need to learn to evaluate their competitive position, differentiate their company by leveraging its unique strengths, and develop comprehensive action plans to address the business and personal motives of each decision maker in the client organization. The combined Strategic Selling and Conceptual Selling program may be the right solution if your company is trying to:

Secure approval from multiple decision makers Navigate the internal bureaucracy of customers and prospects Gain more visibility into the status of important sales opportunities Forecast revenue with greater accuracy Increase close rates for opportunities with long sales cycles Transition from a product-led sale to a solution-led sale Differentiate your products and services from your competitors Implement a consistent process to plan customer interactions

Selling Styles (Refer: Chunawalla)

1) Trade selling:
Trade selling tries to establish long term relationships with the customers. The market of such products is well- established. A trade salesman assists his customers in his selling exercise. He counts the stocks, sees the stocks get replenished, suggests re-orders for replenishments and helps in sales display.

2) Technical Selling:
Technical selling aims at improving sales volume of established products by offering sound technical advice and the other assistance. He is an advisor in industrial marketing. He acquaints buyer with the product and its applications. His major is to solve the problems of the customers. These sales persons can be specialized either by market or by product.

3) Missionary Selling:
Missionary selling assist the customers in their selling efforts. Missionary sales people also work low- profile.

4) New- Business Selling:

New- business selling tries to identify new customers and secure orders from them. He converts prospects into customers. The regular sales persons are expected to do new business selling too.

Sales Forecasting
Sales forecast is the prediction of sales that are accepted in a specific future period. Forecasts help managers in decision making. It is the effort of number of individuals and various departments of the organizations. Forecasting is a starting point for assumption of various planning activities. A sales forecast is an estimate sale in rupee or in units in a future period of time under certain marketing conditions. A forecast can be for single product, product line or product mix. A forecast can be for short term or for medium term or for long term. A time period of forecast depends on products and characteristics of market features. As well as on the forecast for which it is develop and hence it varies from company to company. Questions generally need to answered are who buys the product? Who are its users? Who could become buyer?

Five steps in Sales Forecasting

a) b) c) d) e) Determine the objectives of the forecast Select the period over which the forecast will be made Select the forecasting approach you will use Gather the information to be used in the forecast Make the forecast.

Types of Forecast: (Refer: Chunawalla)

There are three basic types of forecast; Judgmental Forecast: Forecasts when the good data is available. Sales people change the subjective opinion into a quantitative forecast that they can use. In each case the sales person relies primarily on human judgment to interpret past data and projections about the future. Surveying Composites of sales force opinion Delphi technique Panel of experts Market Testing: In case buyers behavior is unpredictable and reliable judgmental forecast is not possible, a direct market test may be useful. It is also useful to forecast sales of a new product or for an existing product in a new market or new channel.

Casual Forecasting Method: Forecasts which relate to several variables: if considerable historical data are available and if the sales person knows the relationship between the variable they want to forecast and other variables that he can observe, it is possible to construct the casual forecast.

Sales Quota
A sales quota is quantitative goal assigned to a sales unit relating to a particular time. A sales unit may be a territory, a branch office, a region, a distributor or a sales person. Sales quota plans, directs, controls and evaluates the activities of a company and their effectiveness depends upon the kind, quantity and accuracy of marketing information used in setting them. Sales quotas provide a source of motivation: basis for incentives, compensation and increasing standards of performance of sales person and finds out the strength and weakness in the selling structure of the firm.

Principles of Quota:
1) Providing goals and incentives to achieve certain performance level if performance level exceeds more incentives are given. Quota should be specific, measurable, attainable, realistic and time bound. 2) Controlling sales person activity: To direct and control the selling activities of the sales persons. To control calls per day To gain a new customer To plan demonstration of the product To take corrective actions if salesman fails to achieve the target. 3) Evaluating Performance: Performance against quota also helps in identifying strong and big point of sales representatives. The performance can be judge for various products in various territories. If sales units fail to achieve the target some actions are required by executives. 4) Controlling Selling Expenses: It is the duty of the sales person to keep the sales expenses within the given budget. Usually the limit is fixed for the external factors. These are types of city, types of territories, type of work and types of products. This is set by sales manager and fixed only after the discussion with the sales person.

Types of Quotas
I. Sales Volume Quota: These are set for a sales representative, or a product line, or for geographical area or for distributor. These quotas may be combination of any above mentioned units. Sales unit quotas may be: Units of products to be sold Rupee sales Or both Sales volume quotas are set on an overall basis or on the basis of the product. The combination of these two enables the companies to set quotas on point basis. Sales volume quotas are measured by: Volume of sales made by an individual A volume of sales made in geographical area Volume of sale made in distribution outlet A unit sales volume quota is found useful in market situation where prices of products fluctuate constantly or it is useful if a unit price of the product is high. II. Financial Quotas: These are determined to attain desired net profit by controlling increased sales expenses. The intention of financial quota is to make clear to sales person that their job consists of important things related with finance. Financial quota makes person more conscious that the company is in profit. III. Net Profit Quota: This type of quota is used in multi product company where different products contribute to different levels of profit. Sales persons have to balance their type between high profit & low profit type of product. More time should not be spending on less profitable products. The objective can be achieved by setting a quota or net profit for its sales force and encouraging them to sell high margin products. IV. Expense Quota: It is the amount of expense that can be incurred by sales man in carrying out his duties in a particular region over a period of time the cost should be reasonable and within reasonable limit also. Very strict conformation of expenses relating to quota leads to demotivation of sales force. V. Activity Quota: It refers to number of selling activities a salesman have to perform. These activities are: Number of customers called upon or contracted Number of new customers find out Number of service call made

Number of demonstrations made

A salesman should be able to send proper report and supply feedback to the company regularly. VI. Combination Quota: Quota can be set in combinations of two or three types of quotas like rupee sales volume quota and net profit quota or unique sales volume quota and activity quota. Combination quotas control performance of selling and non selling activities. These quotas overcome the difficulty of using different measurement units to find out different aspects of performance. This method is common in large numbers of consumer and industrial product company.

Sales Territory
A sales territory represents a group of customers or markets or geographical areas. Territories can be form on the basis of geographical locations, industry product use, methods of buying, channel of distribution. It permits better planning, proper coverage of potential market, an efficient call pattern better customer service. Considered operationally, territory represents a customer grouping. Majority of companies, however, have adopted geographical territorial division. While assigning a territory, the strategists need to consider the service requirement and cost of providing the service to the customers. Sales territories are established to achieve the following goals: - To cover the market properly - To deploy the sales people effectively - To service the customer grouping efficiently - To facilitate higher productivity in selling and marketing effort. - To control selling expenses - To co-ordinate personal selling and advertising

Sales Territory Shape

Sales territorial shape affects both its coverage and selling expenses. 1) Wedge- Shaped: Wedge shaped territories are suitable for urban as well as no-urban areas. It starts quickly from the thickly populated urban centre. Many sizes of the wedges are possible. 2) Circle Shaped Territory: Scattered customers are called for circle shaped territory. The sales remain at the centre of the circle or near to it. It makes possible optimization in frequency of calls.

3) Clover- Leaf: Randomly located call for clover-leaf type of arrangement. Each cloverleaf represents a weeks work. A salesman is at home every weekend. Such arrangement is common in industrial marketing. It is also suitable for extensive marketing.

Management of Sales force

Sales force is directly responsible for generating sales revenue. Eight general management areas:

Establish Sales force objectives

Similar to other promotional objectives. Demand oriented or image oriented. Major objective is persuasion, converting consumer interest into sales. Sales objectives; expected to accomplish within a certain period of time. Give direction and purpose and act as a standard for evaluation. Set for total salesforce and each individual salesperson. Can be $s, units sold, market share to achieve, for individual salespersons, also include ave. order size, ave. # of sales/time period, and ratio orders/calls. Organizing the Sales force

In-house vs. independent agents (manufacturer's sales agents). Organize by: Geography (simplest, but not suitable if product(s) are complex or customers require specialized knowledge) Customer: Different buyers have different needs Product: Specific knowledge re: products is needed Size. Marginal analysis, or determine how many sales calls/year are needed for an organization to effectively serve its customers and divide this total by the average # of sales calls that a person makes annually. Also use subjective judgment. MBNA estimates how many calls to expect, one year in advance, and then determines the size of the salesforce at any given time.

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Recruiting and Selecting Salespeople

Need to establish a set of required qualifications before beginning to recruit. Prepare a job description that lists specific tasks the salesperson should perform and analyze traits of the successful salespeople within the organization. May use assessment centers--intense training environment that places candidates in realistic problem settings in which they give priorities to their activities, make and act on decisions.

Recruitment should be a continual activity aimed at reaching the best applicants. Applicants that most match the demographics of the target market. Changing demographics, may be wise to hire hispanic sales people if your territory is in Florida!! Return to Contents

Training Sales Personnel

Use formal programs, or Informal on-the-job training. Can be complex or simple. Training should focus on:

the company products selling techniques.

Aimed at new hires and experienced personnel. Can be held in the field, educational institutions or company facilities. Oldsmobile spent $25 million last year to teach its dealers how to better treat its customers. Return to Contents

Compensating Sales People

To attract, motivate and retain sales people, that facilitate and encourage good treatment of the customers. Need to understand personalities of sales people. Strive for proper balance of freedom, income and incentives. Need to determine the best level of compensation required, and the best method of calculating it.

Straight salary straight commission (selling insurance)--single percentage of sales or sliding rate Combination plan

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Motivating Sales People

Need a systematic approach, must also satisfy non-financial needs:

Job security Working Conditions Opportunities to succeed

Sales contests increase sales. Symbolic awards--plaques, rings etc. Can also use negative motivational methods for under performers. Due to burn out--even the best need motivating!! Ongoing process...keep reps. hungry Need a motivational program. Spend time with reps, personal attention!! Take interest in them and the sales goals Compensation packet that rewards quality salesmanship and extra effort 1 1 Recognition of extra effort of sales force 1 1 Make sure SR feel important 1 1 Keep SR informed of company activities 1 1 Make certain reps. believe in the company 1 1 Goals must be realistic and achievable and changeable 1 1 Determine what they want and give it to them 1 1 Controlling and Evaluating Salesforce performance
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Rely on information from call reports, customer feedback and invoices. Performance is determined by objectives. May compare with predetermined performance standards or with other sales people working under similar conditions.