MK 0001Sales, Distribution and Supply Chain ManagementContents
Unit 1 Personal Selling and Sales Management Overview Unit 2
Organizing the Sales Department Unit 3 Sales Force Management Unit
4 Directing and Controlling Sales Efforts Unit 5 Logistics of
Distribution Unit 6 Channel Management Unit 7 Recent Trends in
Channel Management Unit 8 Introduction to Supply Chain Management
Unit 9 Planning and Designing Supply Chain Unit 10 Co-ordination in
Supply Chain Unit 11 Issues Regarding Information Technology and
Supply Chain ReferencesEdition: Fall 2007 BKID B0773 8 Nov.
2007th
1 18 28 67 78 99 127 135 152 164
177 197
Brig. (Dr). R. S. Grewal VSM (Retd.) Pro Vice Chancellor Sikkim
Manipal University of Health, Medical & Technological Sciences
Board of Studies Mr. Rajen Padukone Member Academic Senate, Sikkim
Manipal University Ms. Vimala Parthasarathy Prof. K. V. Varambally
HOD Director Convener Manipal Institute of Management Department of
Management & Commerce Manipal Directorate of Distance Education
Sikkim Manipal University Prof. Raj Dorai Industry Consultant and
Visiting Faculty, IBA, IFIM and BIM, Bangalore Mr. Umesh Maiya
Assistant Professor Department of Management & Commerce
Directorate of Distance Education Sikkim Manipal University Content
preparation Team Content Writing and Compilation Dr. Tribhuvan J.
Professor, Garden City College Bangalore Format Editing Mr. Umesh
Maiya Assistant Professor Department of Management & Commerce
Directorate of Distance Education Sikkim Manipal University
Edition: Fall 2007 This book is a distance education module
comprising of written and compiled learning material for our
students. All rights reserved. No part of this work may be
reproduced in any form by any means without permission in writing
from Sikkim Manipal University of Health, Medical and Technological
Sciences, Gangtok, Sikkim. Printed and Published on behalf of
Sikkim Manipal University of Health, Medical and Technological
Sciences, Gangtok, Sikkim by Mr. Rajkumar Mascreen, GM, Manipal
Universal Learning Pvt. Ltd., Manipal 576 104. Printed at Manipal
Press Limited, Manipal. Mr. Jagadeesh Assistant Professor
Department of Management & Commerce, Directorate of Distance
Education, Sikkim Manipal University Mr. R. Ravindra Rao Senior
Faculty Manipal Institute of Management Manipal
Language Editing Mr. Sridhar Bhatt Lecturer in English
Government College, Udupi
SUBJECT INTRODUCTIONThe focus of management has changed over
time. Business thinking in the 70s was driven by strategic planning
and product portfolio approach. Success was dependent upon the
ability of an organization to meet the demand at the lowest cost,
leading to economies of scale approach. The 80s exposed the
weakness of this approach and saw an upsurge in quality
consciousness, leading to an increased emphasis on TQM, product
reliability and customer satisfaction. Flexibility and
responsiveness have become key business drivers for the 21st
century, forcing businesses to orient themselves along processes
instead of functions. Selling products to the customers has become
a challenging task amidst tough competition. In case of financial
services and commercial banking, any position that deals in sales
management, commercial and industrial sales will prove to be very
challenging. It is in this regard that good sales personnel must be
regarded as an asset to any organization. A sales executive
requires the ability to successfully prospect for new sales
opportunities in the mid-market sector across various vertical
markets. Additionally, one must be competent in developing and
executing a winning sales strategy. Businesses must be willing to
change their attitudes, routines and their ideas of how things need
to run. Supply chains can be tremendous assets to companies and
their vendors. A supply chain consists of all of the entities
necessary to transform ideas into delivered products and services.
Supply chain management directs and transforms a firm's resources
in order to design, purchase, produce, and deliver high-quality
goods and services. This courseware has been carefully designed to
incorporate all essential aspects of sales management and supply
chain management. This book comprises 11 units: Unit 1: Personal
Selling and Sales Management Overview Deals with the meaning and
objectives of personal selling. Also discusses methods to design
new sales and marketing process.
Unit 2: Organizing the Sales Department Discusses the essential
duties and responsibilities of a sales executive. Also deals with
sales department relations and distributive network relations. Unit
3: Sales Force Management Focusses on recruitment, selection and
training of sales personnel. Unit 4: Directing and Controlling
Sales Efforts Deals with the sales budget, sales territories, sales
control and cost analysis. Unit 5: Logistics of Distribution Deals
with the meaning, functions and the process of logistics. Unit 6:
Channel Management Deals with the policies of marketing channels,
designing channels, assessing channel performance and managing
channel relationships. Unit 7: Recent Trends in Channel Management
Discusses wholesaling and retailing, while dealing with the ethical
and social issues in sales and distribution management. Unit 8:
Introduction to Supply Chain Management Deals with the meaning and
definition of supply chain as well as the objectives and the
process of supply chain management. Unit 9: Planning and Designing
Supply Chain Throws light on supply chain integration, forecasting
in supply chain and managing demand and supply. Unit 10:
Co-ordination in Supply Chain Discusses the obstacles in supply
chain co-ordination. Also deals with managerial leverages to
achieve co-ordination while discussing the need for outsourcing in
supply chain management. Unit 11: Issues Regarding Information
Technology and Supply Chain Deals with the use of Information
Technology in supply chain management while throwing light on
e-business and supply chain.
Sales, Distribution and Supply Chain Management
Unit 1
Unit 1Structure: 1.1 Introduction Objectives 1.2
Personal Selling and Sales Management Overview
Sales Management, Personal Selling and Salesmanship Self
Assessment Questions I
1.3 1.4
Setting Personal Selling Objectives Determining Sales-related
Marketing Policies 1.4.1 Sales and Marketing Company Policy: Case
Study
1.4.2 Methods to Design New Sales and Marketing Process 1.4.3
Control of Sales and Marketing Policy and Procedures Self
Assessment Questions II 1.5 Formulating Personal Selling Strategy
Self Assessment Questions III 1.6 1.7 1.8 Summary Terminal
Questions Answers to SAQs and TQs
1.1 IntroductionWhen it comes to various positions in sales
management, it is possible to get them in various companies and
organizations including service-oriented institutions such as
insurance, consulting agencies, banking and financial services, and
even government institutions. In case of financial services and
commercial banking, any position that deals in sales management,
commercial and industrial sales will prove to be very challenging
and at the same time a very rewarding experience, as there are wide
opportunities such as technical training, broad management
practices and system selling.Sikkim Manipal University Page No.
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Due to the varied market requirements and market opportunities,
the engaged sales personnel will be in need of newer and
sophisticated techniques and that too at constant intervals to
match the market trends. The sales force will be required to be
imparted with the latest interpersonal training techniques by duly
taking into account their interests, background, academic training,
technical skills, and enthusiasm in accepting newer roles or
responsibilities. In any kind of sales and sales management
training programs, situation will be different and one cannot have
a standard set for time, format, length, etc. When it comes to the
career path in sales, different companies will have different
career paths and it is better to look into each and every system of
the company individually. Sales management and the business
enterprise: Sales management by itself is a very broad portfolio
and it includes all levels and positions such as new business
selling, technical selling, trade sales, and missionary sales. In
new business selling the personnel responsible for sales will not
be assigned any specific location or area and there is also no
designated account. The sales force formed for the technical
selling will have areas or specific geographical locations assigned
for them and specific accounts will also be designated. In trade
sales, the sales representatives are responsible for selling the
manufactured goods to the wholesale dealers as well as retail
traders to fulfill the manufacturers target or the companys target.
Missionary salespersons represent the manufacturing companies and
their responsibilities include contacting retail sellers and
decision makers of other companies and making them to understand
about the product and convince them to buy. The job of any
missionary sales representative will be in the
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form of training or preparing personnel to take on actual sales
work later on and there is no need for the representative to sell
or close the deal. Persons holding sales management positions are
required to show a very strong and favourable performance and track
record within a year or two, and such a target-oriented approach
will see them climbing the corporate ladder fast. It is a fact and
as realized by many persons engaged in sales line, sales management
is the most wonderful and challenging option for climbing up the
ladder of success and at the same time very rewarding one. The team
that is engaged in sales management will have the direct
opportunity to deal with the market and the personnel can make use
of their expertise and experiences to deal with the human factor
for clinching the deal in their favor, as other marketers hardly or
rarely meet or interact with customers for winning over. The
opportunities such as direct interaction with a variety of
customers including their own colleagues can make the sales
management people very confident and give them a sense of
achievement and they can do a high quality work by understanding
the feel of the market and make use of the information for
increasing the sales. There are various employment opportunities
and many sales management positions can be clinched or grasped from
various companies and when it comes to companies, there are
categories such as profit-oriented companies, non-profit
organizations, and service-oriented industries such as insurance,
financial and banking services, consulting, and even government
agencies. The training that is being imparted to the sales
management people will be very expanse in nature and as such people
are bound to know all details about the product they sell so as to
have and maintain a competitive edge over others in the market. Any
detailed knowledge about the product thatSikkim Manipal University
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they sell can certainly assist sales people in clarifying the
doubts and explaining things to the prospective buyers and thereby
show an increase in sales. At the first instance, the personnel who
sell the products should believe in the products they sell and
without this understanding it will be a difficult task for them to
sell. Few of other important factors that directly impact the sales
figures are the motivation levels, initiatives shown by the sales
team and effective supervision by the managerial group of the
organization. Further, a good analytical mind possessed by the
sales people can help in understanding the market situations
correctly in its real perspective and take corrective actions or
use alternate decisions to boost sales. Objectives: After studying
this unit, you will be able to: Explain personal selling. State the
five objectives of promotion that are met through personal selling
Explain how the objectives of personal selling are set. Explain
direct marketing.
1.2 Sales Management, Personal Selling and SalesmanshipPersonal
Selling: Personal selling has a vital role in service, because of
the large number of service businesses which involve personal
interaction between the service provider and the customer, the
service being provided by a person not a machine and people
becoming part of the service product. Many customers of service
firms have a close and on-going relationship with the service
providers. Under these circumstances, selling has a pivotal
roleSikkim Manipal University Page No. 4
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in the communication mix. In certain services, selling is the
preeminent element in the communication mix. Selling of services
include prospect identification, sales call planning, preparation
of presentations, handling objectives and closing a sale. George,
Kelly and Marshall suggest seven guidelines for selling services.
They are: a. Orchestration of the service purchase encounter b.
Facilitation of a quality assessment by customer c. Making the
service tangible d. Emphasis on organizations image e. Use of
reference from external sources f. Recognition of importance of
customer contact personnel, and
g. Recognition of customer involvement during the service design
process Lack of training and resistance to selling are two commonly
faced problems in many services businesses. A sales management
structure supported by a programme of sales training will help to
improve the capacity of the sales personnel. Market orientation
development programmes are helpful to overcome the problem of
resistance to selling. Sales Promotion: Sales promotion includes
any marketing activity designed to sell a product or service. It
involves many marketing tactics like price deals, bonus offers,
additional services and gifts. Traditionally, sales promotion was
used mainly in consumers goods market. Now many service firms also
adopt sales promotion programmers to a large extent. Sales
promotion tools can be aimed at three groups: 1. Customers: Free
offers, sample demonstrations, coupons cash refunds, prizes,
contests and warranties.Sikkim Manipal University Page No. 5
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2. Intermediaries: Free goods, discounts, advertising
allowances, cooperative advertising, distribution contents and
awards. 3. Sales Force: Bonuses, awards, contests and prizes for
best performer. Sales promotions are not always co-ordinated well
with marketing objectives and other components of the
communications mix. In order to help to develop, implement and test
a promotions programme, the following steps should be taken: 1.
Decide the objectives of sales promotion and how they will support
other communications and marketing mix elements. 2. Determine the
balance of promotions activity between customers intermediaries and
sales force. 3. Decide the sales promotion tools to be used. 4. For
each element of sales promotions programme, Determine the amount of
the incentive; Establish conditions for involvement; Decide on the
length of the promotions; Choose the distribution method for
promotions; and schedule the promotion time-table. 5. Decide on the
sales promotion budget. 6. Pretest the sales promotion budget. 7.
Launch the sales promotion programme. 8. Evaluate the sales
promotion programme. Public Relations: The institute of public
relations of England defines public relations practice as The
planned and sustained effort to establish and maintain goodwill and
mutual understanding between an organization and its publics.
Publics include all the groups of people and organizations which
have an interest inSikkim Manipal University Page No. 6
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the service company. So the employees also can be included. As
publics are more diverse, public relations is essential to
communicate with them. Public relations is concerned with many
marketing tasks like a. Building and maintaining image. b. Handling
problems and issues smoothly, c. Reinforcing positioning, d.
Influencing the public to a position favourable to the marketer and
e. Preparing the public favorably while launching new services. A
service organizations image is made up of the collective
experiences, views, attitudes and beliefs held about it. Public
relations can use a range of communication approaches to improve or
maintain the image of a service organisation. Overall objective
with image is to ensure that an organisation is viewed more
favourably, and is more familiar than competitors in the market
segments it serves. A wide range of tools can be used in the design
of a public relation programme. These include publications,
including press releases, annual reports, brochures, posters,
articles and employee reports, Events, including press conferences,
seminars, speeches, and conferences. Investor relations aimed at
gaining support of investors and analysts stories which create
media coverage exhibitions including exhibits, displays,
sponsorship of charitable causes and community projects.
Word-of-Mouth: One of the most distinctive features of promotion in
service businesses is the greater importance of referral and
word-of-mouth communications. It highlights the importance of the
people factor in service promotions. Customers utilizing a service,
talk to other potential customers about their experiences. Such an
endorsement has more reliability and impact than an advertisement
or other mass or personal communications mix elements.Sikkim
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The multiplier effect from word-of-mouth is not uniform to all
products. It varies from industry to industry and situation to
situation. But a service marketer should be careful about negative
referrals as they tend to have a greater impact than positive
experiences. Dissatisfied customers are likely to talk about their
experiences to more people and this can significantly reduce the
effectiveness of advertising and other elements of the
communications mix. Direct Marketing: Direct marketing is
recognized as a low cost and effective method for communicating
with corporate customers due to increasing cost in direct sales
force. Developments in electronic media, telecommunications,
internet etc. provide great opportunities for developing integrated
programmers for direct marketing activities. Consequently, many
service firms have begun to take advantage of the benefits of a
co-ordinated direct marketing program. Self Assessment Questions I
State whether the following statements are True or False: 1. The
multiplier effect from word-of-mouth is uniform to all products..
2. Direct marketing is recognized as a low cost and effective
method for communicating with corporate customers. 3. Sales
promotions are always co-ordinated well with marketing objectives
and other components of the communications mix.
1.3 Setting the Objectives of Personal SellingPersonal selling
is used to meet the five objectives of promotion in the following
ways:
Building Product Awareness A common task of salespeople,
especially when selling in business markets, is to educate
customers on new product offerings. But building awareness using
personal selling is
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also important in consumer markets. As we will discuss, the
advent of controlled word-of-mouth marketing is leading to personal
selling becoming a useful mechanism for introducing consumers to
new products.
Creating Interest The fact that personal selling involves
person-toperson communication makes it a natural method for getting
customers to experience a product for the first time. In fact,
creating interest goes hand-in-hand with building product awareness
as sales professionals can often accomplish both objectives during
the first encounter with a potential customer.
Providing Information When salespeople engage customers a large
part of the conversation focuses on product information. Marketing
organizations provide their sales staff with large amount of sales
support including brochures, research reports, computer programs
and many other forms of informational material.
Stimulating Demand By far, the most important objective of
personal selling is to convince customers to make a purchase. In
our next tutorial, we will see how salespeople accomplish this when
we offer detailed coverage of the selling process used to gain
customer orders.
Reinforcing the Brand Most personal selling is intended to build
longterm relationships with customers. A strong relationship can
only be built over time and requires regular communication with a
customer. Meeting with customers on a regular basis allows
salespeople to repeatedly discuss their companys products and by
doing so, help strengthen customers knowledge of what the company
has to offer.
1.4 Determining Sales-related Marketing PoliciesIf you are an
organization spending $500,000 or more on marketing expenses (e.g.
advertising, trade shows, print materials, direct mail, etc.)Sikkim
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then STOP! We found it again. Do you ask why? Because marketing
has the greatest potential of being very unproductive. In fact,
many marketing programs struggle to break even, and actually
frequently lose money. So, if we increase the overall
effectiveness, then we can eliminate 50% or more of your wasted
marketing efforts, which translates into $250,000 in cash. So now,
lets see how this actually works in a real-life scenario. 1.4.1
Sales and Marketing Company Policy: Case Study An organization with
$500,000 in marketing expenses needed assistance. We examined their
sales and marketing process to understand and quantify the lead
flow, follow-up, and demand forecasting issues. Then we designed
and implemented a process to improve their sales cycle efficiency
and tie it closer to their customers buying cycles. After the
marketing reductions, we then reinvested $100,000 back into new
processes for public relations and Customer Relationship Management
(CRM), both of which were suffering badly. The metrics we developed
reduced their marketing expenses by 60% overall and increased their
sales cycle efficiency from 40% to 60% within 6 months of
implementing the new procedures. With these new processes and
reports, the company now tracks sales cycle efficiency and
life-time value rather than just sales quota achievement, as the
measure of their sales & marketing effectiveness. The result:
an extra $300,000 in cash plus a 50% increase in process capability
(capacity). As we have seen time and time again, time can be our
best friend, if only we let it. 1.4.2 Methods to Design the New
Sales and Marketing Process Improve Follow-up: Only about two
percent (2%) of sales occur on the first contact. Eighty percent
(80%) of sales will require five to eightSikkim Manipal University
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contacts before the sale closes. This means that if you are
contacting the prospect less than five times or more than eight
times, then you could have a problem with follow up. Sales Cycle
Efficiency: Time kills deals. The speed at which a prospect is
converted into a customer and the number of prospects required to
make that conversion determines your sales cycle efficiency. So ask
yourself, are you taking the right steps to measure and reduce lost
sales? Life-time Value: How profitable a given customer is over
time defines your LTV or Life-time Value. Companies spend ten times
more to acquire a customer than to keep a customer. However,
existing customers are more likely to purchase again, spend more
money, and therefore become more profitable. If you dont know your
LTV, then how do you know how much money to spend and on which
customer segment? Demand Forecasting: Every customer buys on a
cycle. So this means that you should track cycle times and variance
to increase the accuracy of your forecasting and the loyalty of the
customer. Do you know when your customers need to reorder? Improve
Lead Quality: Do you have methods in place to measure the
conversion potential of each lead? Lead generation activities (i.e.
forms) should pre-qualify every new lead so that you can take the
right follow up actions for the marketing offer. Strong leads
produce strong sales. Increase Awareness: To keep the sales
pipeline full of good quality leads, you must continuously increase
the awareness of your company and the solutions that it provides.
Public relations is more efficient at building awareness than
advertising, yet many companies spend wildlySikkim Manipal
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on advertising and trade shows while neglecting to fund public
relations efforts much at all. Increase your name recognition, not
your budget. Reduce Discounting: Discounts represent deficiencies
in the sales and marketing processes, which means that you should
use them sparingly. Instead, determine the root cause and then fix
the process thats causing the need to discount. Show customers the
added value, and they wont focus on price. Train Personnel: Provide
your sales and marketing personnel regular formal training. This
will arm them with better product knowledge as well as
presentation, negotiating and selling skills that will improve
effectiveness. This will boost both employee morale and the bottom
line a win-win. 1.4.3 Control of Sales and Marketing Policy and
Procedures Improve your sales cycle efficiency. Reduce your
marketing expenses. Tie it closer to your customers buying cycles.
And take control of your sales and marketing program to let it work
for you. Improvement with Well-defined Policies and Procedures:
With well-defined processes and procedures in place, you will
increase efficiency by reducing ineffective sales and marketing
programs. And, again, we make such improvements to create more cash
on hand all toward that million dollar goal and to cross the finish
line. Self Assessment Questions II State whether the following
statements are True or False: 1. Discounts represent deficiencies
in the sales and marketing processes. 2. Many marketing programs
struggle to break even, and actually frequently lose money. 3.
Well-defined processes and procedures in place will increase
efficiency by reducing ineffective sales and marketing
programs.Sikkim Manipal University Page No. 12
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1.5 Formulating Personal Selling StrategyA personal selling
strategy works best for a complex, technical, unique, customized
product with a poorly informed client. Such products are so complex
and technical that you need a trained, informed person to explain
them to their highly specialized customers. It is likely to have to
be customized for each individual sale, and its client doesn't have
the time to read up on all the different ones on the market and why
yours is better (and is thus uninformed). To address all of these
unique needs, you have to design your personal selling strategy to
have three key elements: a knowledgeable salesperson or sales team,
an understanding of your client, and a sales structure designed to
give the salesperson enough power to make an irregular sale but
still get rewarded for it. The Salesperson The salesperson is the
key to your personal sales strategy. So when you're recruiting
salespeople, you should be willing to recruit the best and expect
to pay them a premium. There are two routes you can follow: You can
hire someone with a good sales background and teach them about the
science (or product); or you can hire someone with a good
scientific background and teach them about sales. Usually, the
choice you make will depend on how complicated your product is and
who your customers are. An electronic imaging product is likely to
be pretty technical, and your customer will likely be a doctor or a
scientist, so you'll want a scientist to be your salesperson, both
for credibility reasons and to give the customer what he is looking
for. If the person buying your product is a hospital administrator,
you might think about hiring someone with sales experience instead,
because the administrator will be used to buying from non-technical
people and will likely be more bottom-line oriented.Sikkim Manipal
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The salesperson is your only link to the client. This means that
they need to know the product inside and out, so that when the
customer has a question or an issue with the product, it can be
addressed immediately and not shuffled off to another staff person.
They also need to know the competitors' products, so they can give
accurate representations of why your imaging technology is better.
So to allow the salesperson to do their job well, you need to give
them lots of information. You also need to give your sales force
considerable power. Power to make a deal. Power to say "yes" to
needed product customizations. And, of course, the power to say
"no" to a deal that won't make the company money. Remember, also,
that the salesperson is more than just a sales agent: They're a
research and development tool. Their interactions with customers
give you more information about what modifications need to be done
to your product than any other source. They're market intelligence
(because they know what other products are being sold, and why) as
well as a way of making your own product more customer-oriented.
The Client Throughout the marketing section, we've used the phrase
"Know your client." It is just as important here as anywhere else.
By understanding what your client needs in a product, you can
better give the salesperson the tools they can use to fulfill that
need. By understanding what a customer wants in a salesperson, you
can tune your sales team to be just that. Do they want a half-hour
presentation or just a 12-second pitch? A customized product they
help to design or a ready-to-use product, in their lab, tomorrow?
Or maybe the purchaser isn't the user at all: A hospital
administrator makes the purchase decision, and a doctor uses the
machine. Understanding this will help keep you from wasting
salespersons time on selling the machine to the doctor, who's not
authorized to buy it anyway.Sikkim Manipal University Page No.
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The Sales Structure Remember: In a personal selling strategy,
your salesperson is your best friend. But, depending on the system
you've set up for them, that person can also be your worst enemy.
Determining an appropriate incentive system for a sales force can
be the most difficult job you'll have as a business person. The key
is to keep your sales force motivated, without any loopholes that
they can use to take advantage of the system. For example: By
giving quarterly sales quota-based bonuses but also giving the
salesperson the authority to make big discounts, chances are,
you're going to get a lot of sales late in the quarter (as the
salesperson desperately tries to make their quota). But you'll also
see a cost to those sales: Chances are, they'll be discounted quite
significantly, affecting your company's profits. Determining a good
incentive system for your sales force is very difficult and depends
very much on what you're trying to do and the product you're trying
to sell. You can reward the sales team based on short-term sales
goals, long-term sales, repeat sales, customer support, number of
new prospects, under-budgeted expense reports, or a whole lot of
other things, but chances are, you'll have to fine-tune this
structure as your business evolves, to emphasize what you want your
sales force to do. Above all else, remember that your sales force
isn't stupid and that they spend about as much time thinking about
their paycheck as they do trying to sell your product, so the
incentive structure you design will determine the behavior of your
customer.
Self Assessment Questions III 1. In a personal selling strategy,
_____________ is ones best friend. 2. A ___________ works best for
a complex, technical, unique, customized product with a poorly
informed client. 3. The salesperson is ones only link to
_______.
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1.6 Summary The sales management is the process of selling and
buying goods and services to the public with proper techniques.
Personal selling has a vital role in service, because of the
large number of service businesses which involve personal
interaction between the service provider and the customer.
Selling of services include prospect identification, sales call
planning, preparation of presentations, handling objectives and
closing a sale. Sales promotion includes any marketing activity
designed to sell a product or service. Sales promotions are not
always co-ordinated well with marketing objectives and other
components of the
communications mix. A service organizations image is made up of
the collective experiences, views, attitudes and beliefs held about
it. Direct marketing is recognized as a low cost and effective
method for communicating with corporate customers due to increasing
cost in direct sales force.
A personal selling strategy works best for a complex, technical,
unique, customized product with a poorly informed client.
1.7 Terminal Questions1. What is sales management? Explain. 2.
Explain how a personal selling strategy can be formulated? 3. What
is direct marketing? 4. State the five objectives of promotion that
are met through personal selling.
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1.8 Answers to SAQs and TQsSAQs I 1. False SAQs II 1. True SAQs
III 1. Salesperson 2. Personal selling strategy 3. The client
Answers to TQs: 1. Refer to 1.2 2. Refer to 1.5 3. Refer to 1.2 4.
Refer to 1.3 2. True 3. True 2. True 3. False
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Unit 2Structure: 2.1 Introduction Objectives 2.2 2.3
Organizing the Sales Department
Essential Duties and Responsibilities of a Sales Executive The
Sales Organization 2.3.1 Nine Steps to Building a Winning Sales
Organization Self Assessment Questions I
2.4 2.5
Sales Department Relations Distributive Network Relations Self
Assessment Questions II
2.6 2.7 2.8
Summary Terminal Questions Answers to SAQs and TQs
2.1 IntroductionA sales executive requires the ability to
successfully prospect for new sales opportunities in the mid-market
sector across various vertical markets. Additionally, one must be
competent in developing and executing a winning sales strategy.
This includes developing new prospect opportunities. The successful
candidate should be able to use consultative selling skills to
clearly understand customers business requirements. The steps to
building a winning sales organization have been described briefly
in this unit. Objectives: After studying this unit, you will be
able to: State the essential job duties and responsibilities of a
sales executive. Explain the steps involved in building a winning
sales organization.
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2.2 Essential Duties and Responsibilities of a Sales Executive
Conducts cold calls, prospects and qualifies account opportunities;
Develops pipeline of new opportunities while closing existing
opportunities; Identifies and creates business needs with senior
executive decision makers; Creates and communicates the value of
Kronos solution with prospects and clients; Builds relationships at
all levels within organizations; Develops a detailed territory
plan; Develops individual account strategies to effectively
penetrate accounts; Develops thorough understanding of each
account's industry and business; Acts as a resource for multiple
industries;
Uses understanding of internal processes and resources to
effectively execute the sale. Essential Knowledge, Skills and
Abilities: Communication: For all levels (executive, management,
and operational), Able to clearly present information through the
spoken or written word; Read and interpret complex information;
Probe customers to uncover hidden information; Listen well.
Influence & Persuasion: Able to convince others in both
positive or negative circumstances; Use tact when expressing ideas
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Adapt presentations to suit a particular audience; respond to
objections successfully.
Initiative: Able to bring about great results from ordinary
circumstances; Prepare for problems or opportunities in advance;
Transform leads into productive business outcomes; Undertake
additional responsibilities and respond to situations as they arise
without supervision. Negotiating: Able to obtain agreement from
multiple parties throughout all stages of the sales cycle; Earn
trust; Use good timing and carefully calculated strategies when
bargaining; Communicate high value of services over the
competition; Identify hidden agendas that might interfere with
resolution of terms.
Planning, Prioritizing, and Goal Setting: Able to prepare for
emerging customer needs; Manage and close existing deals while
cultivating new opportunities; Determine project urgency in a
meaningful and practical way; Use goals to guide actions and create
and execute detailed action plans.
Reading the System/Political Advantage: Able to identify key
people to bring about change; Understand underlying political
dynamics; Develop a network of contacts and target specific
influential people to reach goals; Be aware of significant
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Benefits: Competitive compensation and full benefit package,
including executive, incentive trip for high achievers that possess
the drive and ambition to surpass yearly quotas. Requirements:
Education and Experience: Bachelors degree or equivalent preferred.
Experience with Power Base Selling Methodology or similar program
desired. 5-7 years with proven experience selling software
solutions at the C level in the mid-market space. Experience of
selling HR and Payroll application-oriented software or systems
strongly preferred. Consistently exceeded a $1 Million + quota.
2.3 The Sales Organization2.3.1 Nine Steps to Build a Winning
Sales Organization Is your sales team performing far below
potential? Step 1: Do nothing Do nothing. When you first arrive on
the scene of a sales office in distress, don't do anything. Take
the time to understand your organization's situation, gather
information about the people involved, and. Step 2: Analyze your
problem(s) Analyze your problems. The example you set for your
people is not enough, because many salespeople emulate the actions
of their peers. Since many salespeople play "follow the leader,"
you've got to ask yourself which salespeople your less experienced
salespeople look up to. And, what kind of example are these
"leaders" setting? You can get peak performance out ofSikkim
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average producers if you can get average producers to emulate
the success habits demonstrated by a leading salesperson. Step 3:
Find your success role model In sports, when a player assumes more
of a leadership role on a team, it's called "stepping up."
Hopefully, you already have a few players capable of stepping up.
If so, talk to them. Help them see the importance of their success
example, and ask them to share more of their knowledge and
experience with less experienced salespeople. Step 4: Don't
tolerate mediocre sales performance You've got to decide you won't
tolerate mediocre sales performance. Far too often, poorly
performing salespeople are allowed to continue their lackluster
ways. A manager may not want to face the hassle of recruiting a
replacement, or the manager may want to avoid confrontation. This
is a big mistake. A successful sales manager doesn't tie the ship
to a poor performer's anchor. Instead, successful managers take a
"hands-on" role with more performers by providing the coaching and
training the poor performer needs to improve performance. Your
objective is to bring those that are lagging behind to "the
intersection of choice." i.e. poor performers must make a decision
themselves to either a) recommit themselves to perform the
necessary behaviours and activities, or b) leave the company
immediately. There is a saying, "There's only one thing worse than
somebody who quits and leaves and that's somebody who quits and
stays." The key question is this: if you knew then what you know
now, is there anybody on your team you would not have hired? If so,
get "hands-on" and escort that individual to his or her
intersection of choice.
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Step 5: Install performance standards Install performance
standards. You've got to communicate your
expectations. So raise the BAR on everybody with standards that
consist of Behavior, Activity and Results. A behavior standard, for
example, could be to arrive in the office every morning before 8
a.m. An activity standard could be to make a minimum of 25
telephone prospecting calls every day. A result standard could be
that a sales rep with seven to nine months sales experience must
sell a minimum of $50,000 per month. On results standards, set two
standards. One, a lower "keep your job" standard. Salespeople who
fall below the minimum standard for a three-month period are placed
on probation. If sales don't pick up in the next quarter, that
person must be "desired." Another standard performance is of
course, a higher sales quota. Step 6: Desire those below minimum
standards Desire those below minimum standards. Your salespeople
will be wondering, "Do you really mean it?" The first person you
desire will send a loud and clear message performance standards
will be enforced. If you don't enforce them, your standards are
meaningless. Step 7: Coach, coach, and coach some more Coach,
coach, and coach some more. Don't be a "desk jockey". Get out and
work with your salespeople. If the only way to grow your people and
your business. Step 8: Cultivate a better "quality of life"
Cultivate a better "Quality of Life." Have more fun. Step 9: Know
what each salesperson wants Know what each salesperson wants. Every
person has his or her own personal motivators. Your job is to find
out what they are and help theSikkim Manipal University Page No.
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salesperson toward achievement. Sit down with each salesperson
one-onone. Try to learn something about each of them: what are
their goals with your company and beyond? What is their past like?
How can you help them be, having, and do more?
Sidebar: The five biggest mistakes a sales manager can make 1.
Too focused on closing deals instead of developing salespeople. 2.
Focused salespeople on "more calls" instead of "better calls." 3.
Spend too much time sequestered in their office, instead of working
and interacting with salespeople. 4. Assume that because someone
has been trained, they know how to sell. No common "language" of
selling for diagnosing opportunities.
2.4 Sales Department Relations Providing professional and
personalized support to customers. Providing accurate and complete
information such as quotations, invoices and reports to customers
and to the management. Creative and effective communication skills
to establish presentation opportunities. Creating, updating and
maintaining our Customers Database System.
2.5 Distributive Network Relations-A case StudyFor instance, in
the health group company the Distributive Network Relations are
stated.
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Description United Health Group is an innovative leader in the
health and well-being industry, serving more than 55 million
Americans. The industry has outstanding clinical insight with
consumer-friendly services and advanced technology to help people
achieve optimal health. Secure Horizons is a division of Ovations,
the segment within United Health Group exclusively focused on
health and well-being for individuals age 50+. Secure Horizons
provides a portfolio of health care products and services to
individuals eligible for Medicare. Secure Horizons is the largest
and longest tenured Medicare Advantage business in the United
States, with 2006 membership of 1.4 million and revenues exceeding
$14 Billion. Secure Horizons is comprised of over 2500 employees
located across the U.S. who pledge to help every senior Live Secure
& Be Secure. This key position within Ovations is responsible
for leading the organization's Network Relations function. Ovations
is a complex enterprise serving nearly 1.5 million Medicare and
Medicaid-eligible customers through a variety of products, programs
and services that depend on supportive and high performing networks
of healthcare providers. Working closely with the Ovations Network
Operations Group, and counterparts throughout United Health Group,
the Director of Network Relations and his team will: Direct
Ovations Provider Relations activity, in conjunction with Provider
Customer Service areas. Collaborate with United Healthcares
emerging Provider Experience agenda. Co-ordinate Legacy Provider
Relations/United Health Networks team activity, including
capitation and gain-share related support where appropriate. Drive
national Ovations provider engagement standards.Page No. 25
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Support Ovations annual event planning calendar with
Provider-oriented materials, information, and education.
Ensure regulatory and contractual provider notification
requirements are met.
Drive improved UHG service channel use and quality metrics.
The success of this role will be determined by a well-organized
and thoughtfully executed network relations engagement plan,
data-driven evidence of favorable provider response to interactions
with Ovations customers, and progressively streamlined and
effective internal processes dedicated to serving network providers
in their transactions with Ovations administrative and service
capabilities. Self Assessment Questions I State whether the
following statements are True or False: 1. Poor performers must
make a decision themselves either to recommit themselves to perform
the necessary behaviours and activities, or to leave the company
immediately. 2. In sports, when a player assumes more of a
leadership role on a team, it's called "stepping up."
2.6 SummaryThe sales executives play a major role in selling
goods and services to the consumers. They are the direct sellers of
the products of the company to the consumers. The network relations
are very important to them. The sales department has a larger role
in retaining the sales volume of the products. The steps to
building a winning sales organization have been described briefly
in this unit.
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2.7 Terminal Questions1. Explain in detail the duties of sales
executives. 2. The network relations are very important for a
company. Explain. 3. Write a short note on sales department
relations. 4. State the nine steps involved in building a winning
sales organization.
2.8 Answers to SAQs and TQsSAQs I 1. True 2. True Answers to
TQs: 1. Refer to 2.2 2. Refer to 2.5 3. Refer to 2.4 4. Refer to
2.3
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Unit 3Structure: 3.1 Introduction Objectives 3.2 3.3
Sales Force Management
Principles of Personal Management Recruiting Sales Personnel
Self Assessment Questions I
3.4 3.5 3.6
Selecting Sales Personnel Sales Personnel Training Programs
Motivating Sales Personnel Self Assessment Questions II
3.7 3.8
Compensating Sales Personnel Managing Sales Expenses Self
Assessment Questions III
3.9
Sales Meeting and Sales Contests 3.9.1 Sales Contest Psychology
3.9.2 Ten Sales Psychology Factors Self Assessment Questions IV
3.10 Summary 3.11 Terminal Questions 3.12 Answers to SAQs and
TQs
3.1 IntroductionProviding knowledgeable and responsive customer
service is a priority of every organisation. Hence selection and
training of sales personnel towards achievement of this goal gains
a lot of importance in any organization. Time management is an
essential skill for personal management. The essence of time
management is to organize and execute around priorities. This
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focuses on this aspect while dealing with recruitment, selection
and training of sales personnel, in detail. Objectives: After
studying this unit, you will be able to: Explain the meaning of
personal management. Explain how to recruit sales personnel.
Explain various sales personnel training programs. State why sales
personnel need to be motivated. Explain the need for sales meeting
and sales contests.
3.2 Principles of Personal ManagementPut First Things First
Habit 1 I am the Programmer. Habit 2 Write the Program. Habit 3
Execute the Program. Habit 3 is Personal Management, the exercise
of independent will to create a life congruent with your values,
goals and mission. The fourth human endowment, Independent Will, is
the ability to make decisions and choices and act upon them.
Integrity is our ability to make and keep commitments to ourselves.
Management involves developing the specific application of the
ideas. We should lead from the right brain (creatively) and manage
from the left brain (analytically). In order to subordinate the
feelings, impulses and moods to your values, you must have a
burning "YES!" inside, making it possible to say "No" to other
things. The "Yes" is our purpose, passion, clear sense of direction
and value.
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Personal Management Time management is an essential skill for
personal management. The essence of time management is to organize
and execute around priorities. Methods of time management have
developed in these stages: 1) notes and checklists - recognizing
multiple demands on our time; 2) calendars and appointment books -
scheduling events and activities; 3) prioritizing, clarifying
values - integrating our daily planning with goal setting (The
downside of this approach is increasing efficiency can reduce the
spontaneity and relationships of life.); 4) managing ourselves
rather than managing time - focusing in preserving and enhancing
relationships and accomplishing results, thus maintaining the P/PC
balance (production versus building production capacity). A matrix
can be made of the characteristics of activities, classifying them
as urgent or not urgent, important or not important. List the
activities screaming for action as "Urgent." List the activities
contributing to your mission, value or high priority goals as
"Important." Quadrant I activities are urgent and important -
called problems or crises. Focusing on Quadrant I results in it
getting bigger and bigger until it dominates you. Quadrant III
activities are urgent and not important, and often misclassified as
Quadrant I. Quadrant IV is the escape Quadrant - activities that
are not urgent and not important. Effective people stay out of
Quadrants III and IV because they aren't important. They shrink
Quadrant I down to size by spending more time in Quadrant II.
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Quadrant II activities are important, but not urgent. Working on
this Quadrant is the heart of personal time management. These are
PC activities. Quadrant II activities are high impact - activities
that when done regularly would make a tremendous difference in your
life. (Including implementing the Seven Habits.) Initially, the
time for Quadrant II activities must come from Quadrants III and
IV. Quadrant I can't be ignored, but should eventually shrink with
attention to Quadrant II. 1) Prioritize 2) Organize around
Priorities 3) Discipline yourself
Self-discipline isn't enough. Without a principle center and a
personal mission statement, we don't have the necessary foundation
to sustain our efforts. Covey has developed a Quadrant II organizer
meeting six criteria: 1. Coherence Integrates roles, goals, and
priorities. 2. Balance Keeps various roles before you so they're
not neglected. 3. Quadrant II Focus Weekly - the key is not to
prioritize what's in your schedule, but to schedule your
priorities. 4. A People Dimension Think of efficiency when dealing
with things, but effectiveness when dealing with people. The first
person to consider in terms of effectiveness is yourself. Schedules
are subordinated to people. 5. Flexibility The organizer is your
servant, not your master. 6. Portability There are four key
activities in Quadrant II organizing, focusing on what you want to
accomplish for the next 7 days: 1) Identify Roles 2) Select Goals
two or three items to accomplish for each role for the next week,
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some of your longer term goals and personal mission statement 3)
Scheduling/Delegating including the freedom and flexibility to
handle unanticipated events and the ability to be spontaneous 4)
Daily Adapting each day respond to unanticipated events,
relationships and experiences in a meaningful way. Here are five
advantages of this organizer: 1) It is principle-centered it
enables you to see your time in the context of what's important and
what's effective. 2) It is conscience-directed it enables you to
organize your life around your deepest values. 3) It defines your
unique mission, including values and long-term goals. 4) It helps
you balance your life by identifying roles. 5) It gives greater
perspective through weekly organizing. The practical thread is a
primary focus on relationships and a secondary focus on time,
because people are more important than things. The second critical
skill for personal management is delegation. Effectively delegating
to others is perhaps the single most powerful high-leverage
activity there is. Delegation enables you to devote your energies
to high level activities in addition to enabling personal growth
for individuals and organizations. Using delegation enables the
managers to leverage the results of their efforts as compared to
functioning as a "producer." There are two types of delegation:
Gofer Delegation and Supervision of Efforts (Stewardship). Using
Gofer Delegation requires dictating not only what to do, but how to
do it. The supervisor then must function as a "boss," micromanaging
the progress of the "subordinate." The supervisor thus loses a lot
of the leveraging benefits of delegation because of the demands on
his time for follow up. An adversarial relationship may also
develop between the supervisors and subordinate.
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More effective managers use Stewardship Delegation, which
focuses on results instead of methods. People are able to choose
the method to achieve the results. It takes more time up front, but
has greater benefits. Stewardship Delegation depends on trust, but
it takes time and patience. The people may need training and
development to acquire the competence to rise to the level of that
trust. Stewardship Delegation requires a clear, up-front mutual
understanding of and commitment to expectations in five areas: 1.
Desired Results Have the person see it, describe it, make a quality
statement of what the results will look like and by when they will
be accomplished. 2. Guidelines Identify the parameters within which
the individual should operate, and what potential "failure paths"
might be. Keep the responsibility for results with the person
delegated to. 3. Resources Identify the resources available to
accomplish the required results. 4. Accountability Set standards of
performance to be used in evaluating the results and specific times
when reporting and evaluation will take place. 5. Consequences
Specify what will happen as a result of the evaluation, including
psychic or financial rewards and penalties. Using Stewardship
Delegation, we are developing a goose (to produce golden eggs)
based on internal commitment. We must avoid Gofer Delegation to get
the golden egg or we kill the goose - the worker reverts to the
gofer's credo: "Just tell me what to do and I'll do it." This
approach is a new paradigm of delegation. The steward becomes his
own boss governed by his own conscience, including the commitment
to agreed upon desired results. It also releases his creative
energies towardSikkim Manipal University Page No. 33
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doing whatever is necessary in harmony with correct principles
to achieve those desired results. Immature people can handle fewer
results and need more guidelines and more accountability
interviews. Mature people can handle more challenging desired
results with fewer guidelines and accountability interviews.
3.4 Selecting Sales PersonnelStore Operations & Human
Resources A retail jewellery sale normally requires face-to-face
interaction between the customer and the sales associate, during
which the items being considered for purchase are removed from the
display cases and presented one at a time with their respective
qualities explained to the customer. Consumer surveys indicate that
a key factor in the retail purchase of jewellery is the customers
confidence in the sales associate. Customer Satisfaction A customer
satisfaction index covering 12 criteria was introduced during
2005/06 in certain trial stores and was expanded to all stores
during 2006/07. Each store is benchmarked against others in its
district, region and across the division based on customer
feedback. The scores are reported on a monthly basis, highlighting
areas of good performance and those for improvement.
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Training Providing knowledgeable and responsive customer service
is a priority, and is regarded by management as a key point of
differentiation. It is believed that highly trained store sales
staff, with the necessary product knowledge to communicate the
quality, attributes and competitive value of the merchandise, is
critical to the success of the business. The development of the
customer satisfaction index has improved the divisions ability to
design and implement its training programmes by identifying areas
of strength and opportunity. The US divisions substantial training
and incentive programmes, for all levels of store staff, are
designed to play an important role in recruiting, educating and
retaining qualified store staff. The preferred practice is to
promote managers at all levels from within the business in order to
maintain continuity and familiarity with the divisions procedures.
Retail sales personnel are encouraged to become certified
demonologists by graduating from comprehensive demonologists by
graduating from a comprehensive correspondence course provided by
the Diamond Council of America. Over 50% of the divisions full time
sales staff who have completed their probationary period are
certified demonologists or are training to become certified. All
store managers are required to be thus qualified. The number of
certified demonologists employed by the US division increased by 9%
in 2006/07. Employees often continue their professional development
through completion of further courses on gemstones. Goals and
Incentives All store employees are set daily performance standards
and commit to goals. Sales contests and incentive programs also
reward the achievement of specific targets with travel or
additional cash awards. In addition to salesbased incentives,
bonuses are paid to store managers based on storeSikkim Manipal
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contribution and to district managers based on the achievement
of key performance objectives. In 2006/07 approximately 23%
(2005/06: 24%) of store personnel remuneration was commission and
incentive-based. US head office bonuses are based on the
performance of the division against predetermined annual profit
targets. Promotion and salary decisions for principally
non-management head office personnel are based on
performance against service level and production goals; for
managers they are based on annual objectives and performance
against individual job requirements. Store Manager Each store is
led by a store manager who is responsible for various store level
operations including overall store sales and branch level variable
costs; certain personnel matters such as recruitment and training;
and customer service. Administrative matters, including
purchasing,
merchandising, payroll, preparation of training materials,
credit operations and divisional operating procedures are
consolidated at divisional level. This allows the store manager to
focus on those tasks that can be best executed at a store level,
while enabling the business to benefit from economies of scale in
administration and to help ensure consistency of execution across
all the stores. Recruitment, Retention and Promotion Although staff
recruitment is primarily the responsibility of store and district
managers, a central recruitment function supplies field recruiters
from its US head office in Akron, Ohio. Methods such as internet
recruitment are used to provide stores with a larger number of
better-qualified candidates from which to select new staff.
Management believes that the retention and recruitment of
highly-qualified and well-trained staff in the US head office is
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A comprehensive in-house curriculum supplements specific job
training and emphasizes the importance of the working partnership
between stores and the head office. A key motivator for all staff,
and in particular for store based employees, is the divisions
practice of internal promotion. All District Managers and Vice
Presidents of Regional Operations have been a Store Manager within
the division. UK Training Management regards customer service as an
essential element in the success of its business. The Signet
Jewellery Academy, a multi-year programme and framework for
training and measuring standards of capability, is operated for all
store staff. As part of this programme, 1,000 sales associates and
1,100 store managers and assistant store managers (representing 81%
of store management) have now passed the Jewellery Education &
Training Level 1 qualification accredited by the National
Association of Goldsmiths. Upon completion of each of the four
levels, staff are better able to deal with customer requirements.
The programme was enhanced during 2006/07 to improve basic product
knowledge and jewellery repair skills and further developments are
planned for 2007/08.
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ACE, an improved customer service and training programme was
introduced in 2006/07 and will be developed further in 2007/08. ACE
is a flexible programme consisting of six elements that better
enable store staff to meet the needs of customers. In conjunction
with the Signet Jewellery Academy, training in management skills
for all tiers of store operations management was developed further
last year to support the enhanced store associate training
programme and to build general management skills. All store
personnel have daily performance targets. They are given training
and weekly feedback on their performance from store and field
management to help them achieve these targets. Recruitment and
retention Recruitment procedures, including online facilities,
continue to improve the suitability of new store personnel, helping
to ensure that they meet key basic requirements and are motivated
to work within a jewellery store environment. Field and human
resources management are responsible for the recruitment, review,
training and development of sales staff, thereby ensuring
consistency in operating standards and procedures throughout the
business. All new store staff receive a structured induction
programme that covers all aspects of store operations, product
knowledge and customer service. A financial reward is received upon
completion. The division-wide commission-based remuneration
programme was in operation for the whole year in 2006/07 for the
first time. The level of commission paid is dependent on a
combination of store and individual performance. To continue to
improve the recruitment and retention of top quality staff, a three
year programme to enhance the employee benefits package was begun
in 2006/07.
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Promotion The divisions preferred policy is to promote store
management from within the business; approximately 80% of store
management appointed in 2006/07 was so promoted. Each chain always
has a number of sales staff who is qualified to advance to store
management level, thus assuring the availability of newly trained
managers familiar with the divisions operating standards and
procedures. Store support In order to increase staff selling time
and to improve efficiency, operating procedures are routinely
reviewed to identify opportunities to enhance customer service and
reduce in-store administrative tasks. The Signet intranet provides
a computer-based platform for improved communication between stores
and head office, with sales floor and back office administrative
functions being simplified and standardized through this medium.
Opportunities for better store procedures and employment practices
were identified through a staff opinion survey. It is believed that
the results provide a basis for further improvement in the
motivation and retention of staff. Head Office Management believes
that successful recruitment, training and retention of head office
staff are important. Accordingly, structured recruitment, training
and performance management systems are in place. Internal career
advancement is encouraged and is supported by succession planning.
Teamwork and service to the stores are encouraged through a
performance bonus plan for head office staff, which is based on the
divisions results. In the first quarter of 2006/07 part of the
divisional head office function was
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relocated in order to enhance efficiency. The implementation of
a three year programme to improve training in head office will
commence in 2007/08. Self Assessment Questions I State whether the
following statements are True or False: 1. Teamwork and service to
the stores are encouraged through a performance bonus plan. 2.
Opportunities for better store procedures and employment practices
are identified through a staff opinion survey. 3. All store
personnel have daily performance targets.
3.5 Sales Personnel Training ProgramsSystem provides clients
with extraordinary information about their customers, competition,
sales representatives, other front-line personnel and sales
managers. By "extraordinary information" we mean information you
can't get any other way, along with tools you need to use it
productively. We bring together skills from a number of different
disciplines and focus them, single-mindedly, on the goal of
improving your company's sales performance. System has helped
companies to:
Increase sales; Reduce turnover of personnel ; Expand more
efficiently ; Develop people faster and with less down time; Reduce
training and development costs; Generate a significant return on
investment ; Improve selection of sales people and sales
managers;
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Client Testimonials Systems clients are continuously growing and
reaping the benefits of the System on Track system: "This System
program is really helping and working for me by putting my
priorities in order. My New Years resolution was to focus on my
team and this personal development program is helping me fulfill
this commitment." "I am more aware of things I need to work on.
"This process has helped focus my own development activity. "The
program has basically called my attention to the necessary detail
required to be successful as a leader of sales reps." "I like the
participant materials I received, particularly the Action Planner
and Resources booklets. Since our corporate personal development
plans are due soon this is going to help me greatly. It would be
good for the District Sales Managers to get profiled as well!
Regional Pharmaceutical Sales Manager going through Systema onTrack
"After being profiled and getting my plan and goals set on Systema
CoachLink, and working with my accountability coach I have seen
incredible results. I have met with 2 new satellite managed care
centers to take our product on formulary and I've been coaching my
reps which has increased their motivation to sell more product!"
Attendees at Systema Advanced Sales Management Workshop (part of
Systema onTrack): "Love the fact that all material is specific and
definite and written down for future reference." "Great discussion
because it leverages all the experience in the room." "Excellent
models illustrated."Sikkim Manipal University Page No. 41
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3.6 Motivating Sales PersonnelMotivating Sales People to Sell,
What makes a good sales person tick? What combination of rewards
and incentives will bring out their best performance? What can
companies effectively do to motivate their sales people to sell,
while avoiding the peaks and valleys that so often accompany sales
achievement? Every sales organization asks these kinds of questions
and when production levels are down, revisits these issues over and
over again. We re-examine what we're doing, and try to fine tune
our "systems" to extract a little more horsepower. By the time
we're finished tweaking and tinkering, we often end up right back
where we began! What's wrong with this picture? To find out I spoke
with some of Gallatin Valley Montanas' most progressive companies,
and asked them to share with us their formulae for success. Some of
their answers may surprise you. But first, I looked within my own
organization, and asked my client services manager, Rich Powell,
for some words of wisdom. Rich joined my staff in April, after a
successful career in sales and business management in the highly
competitive environments of Seattle and Honolulu. While Rich isn't
opposed to commissions and profit shares, he made an important
point. In the long run, professional sales people are far more
motivated by their "belief" in the work they do, than in any
particular combination of bonuses, commissions and other
incentives. Ultimately, sales people sell because they love to sell
- and love what they sell. They see themselves as part of a
dynamic, upward process. They identify strongly with their
customer, and with the product or service they provide. They
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A now-retired sales consultant for a daily newspaper trips to
mind. Fred was a delight to work with a real "pro". He instilled in
his customers, the confidence that he truly cared about their
interests, and would go the extra mile to serve their needs. No
hype. No pressure. Just excellent service, built around integrity
and credibility. In my opinion, he was the consummate professional
sales person. And guess what? Fred earned no commissions; we worked
on a salary basis only. What motivated Fred was not "turning that
next deal" or adding more commissions to his monthly tally. He was
driven by his professional attitude, his love for his work, and an
intense desire to serve his customers well. Commissions: The good,
the bad, the ugly This is not an argument against paying sales
commissions, but it is an acknowledgement that for most forms of
sales, commissions are an option, not a necessity. The bottom line:
if the employee you hired is not a true salesperson, no amount of
commissions will make them into one. Techniques can be trained, but
basic personality factors are essentially unalterable. These
personality traits are the single strongest prediction of one's
likelihood of success in the field of sales. What makes commissions
and performance bonuses so tricky, are the unintended consequences
associated with poorly thought out policies. One of the biggest
pitfalls is the tendency of individual sales commissions to create
negative competition within a sales organization, leading to
resentment, secrecy and plummeting morale. These side effects are
even more pronounced when contests are added to the equation.
Employers want to foster teamwork and open communication. Instead,
they may end up with sales people who are disgruntled and
de-motivated, fighting over customers and devising subtle methods
of cheating the system.
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Some creative ways successful companies do it Successful
companies have found creative ways to harness the competitive,
incentive-driven nature of good sales people, with a minimum of
negative backfires. For Mary Brown, Director of Western Region
Sales Operations for Right Now Technologies, this includes
ingenious approaches that reward individual performance while
building camaraderie and teamwork. For example, the company will
sometimes sponsor raffles for trips or special merchandise. The
more a sales person achieves, the more "chances" they get in the
raffle yet everyone who produces has a shot at winning. Often, Mary
provides non-monetary incentives that are fun for employees and
their families. A video camera. A mountain bike. A week-end at Big
Sky (a local resort). Or she may provide extra days off if sales
quotas are met - to be used at the employees discretion. The point
is, great companies like Right now use innovation and creativity to
stay ahead of the employee motivation curve. By developing
incentive programs that are exciting and unifying, the company and
the employees both win. What can a small business do? To the
century-old Owen House Hardware (an institution in downtown
Bozeman, Montana, a different creative approach is taken. As
manager Larry Bowman explains, the key to retailing is to serve
with excellence, every customer who walks through the door whether
they are buying a riding lawn mower or a package of thumb tacks.
Commissions and bonuses based on individual sales numbers tend to
counteract the Owen House philosophy, and prompt sales personnel to
"push" large ticket items and compete over customers. Larry has
tried a number of things over the years, but is convinced that for
his type of business, incentives should be provided to all
personnel (both full and part time), based on store-wide
performance parameters. Currently, theSikkim Manipal University
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company is giving to each employee, credit toward in-store
purchases based on monthly improvement in average ticket sales. The
credit is computed daily, and entered on a calendar where everyone
can see their collective progress. As with most incentive programs,
it's difficult to objectively measure its success. Larry isn't sure
how many employees are knowingly motivated to boost average sales,
but at the very least, the program focuses everyone's attention on
the worthy goal. Another Approach Alan "Fish" Fishburn, manager of
the Mini-Nickel, has his own philosophy about employee incentives.
Fish strives to build a sense of family among his staff,
recognizing that "there's more to a job than a paycheck." Failure
isn't part of Fish's vocabulary, and when the office has a poor
month, there's no finger pointing or blame-taking. But in the good
months, he likes to reward the whole staff, by taking them and
their families out to dinner, bowling on Saturday night or some
other enjoyable, bonding activity. Individual rewards are certainly
part of Fish's program, too. But very often these bonuses are given
spontaneously, when the person least expects it, rather than being
a routine and predictable thing. He also believes that sales people
respond better to targets that frequently change, rather than
settling in on a regular system of rewards and bonuses that become
a standard part of their pay. Most importantly, Fish believes in
the concept of mutual trust. He doesn't sweat the little things or
keep his sales force on a time clock. He's strictly
results-oriented, building maximum flexibility into his company
policies from minding kids (and occasional pets) at the office, to
cheerfully giving time off when it's needed. In the end, it's not
about money, says Fish (although he pays significantly higher than
most others in his industry). "If you need to continually bribe a
person to sell, you've probably hired theSikkim Manipal University
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wrong person. What motivates the true sales person the most is
pride in their work and the positive feedback they get from their
customers. And feeling empowered and valued by the company for
which they work." The last word on motivating sales people
Obviously, employee incentive programs are not a one-size fits all
proposition. As these successful companies demonstrate,
different
approaches work best in differing situations. But the conclusion
is that "motivating sales people" is a contradiction in terms.
Sales people - if they ARE sales people are already motivated. The
challenge employers face is channeling that motivation, and
maintaining it at peak levels, week in and week out. Creative,
well-conceived commission programs and bonus plans can certainly
help in this regard. But ultimately, the most important factor lies
within the heart and soul of your business itself. If a sales
person identifies with the culture and mission of your company, and
feels a sense of ownership in your company's future, then you will
most likely have a loyal, motivated employee whose consistent
performance levels will help you reach for the top. Self Assessment
Questions II State whether the following statements are True or
False: 1. Employee incentive programs are a one-size fits all
proposition. 2. If you need to continually bribe a person to sell,
you've probably hired the wrong person. 3. By "extraordinary
information" we mean information one can't get any other way.
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3.7 Compensating Sales PersonnelSales Compensation and the
E-world With more customers ordering goods and services from the
Web, questions are being raised regarding sales commissions,
account ownership and quota allocation. Will sales compensation
become an e-relic of the 20th century? With the rise of e-commerce,
the sales department looks slated for decommissioning. Why employ a
salesperson when customers can use a mouse to point and click their
way to purchases? While the volume of business that is sold through
the Internet will soar to almost incomprehensible levels, the death
of the sales department is a premature assumption. Even dot.com
companies are finding they need to hire salespeople to help promote
their products. In fact, one of the fastest growing sales
employment segments is advertising sales representatives for
Web-portal companies. These companies have learned that when choice
is available, uncertainty is present and risk is inherent, a
salesperson can help guide customer decision making. Thus, the two
criteria for sales compensation use are customer contact and
customer persuasion. Therefore, selling will continue into the 21st
century, as well as the use of sales compensation. However,
employers need to be prepared for major challenges to sales pay
programs. Consider these issues:
Should the salesperson receive sales credit and thus incentive
payment for orders put through the Web?
Who owns the customer the salesperson or the Webmaster? Should
salespeople encourage their customers to use the Web to order
products?
What sales compensation practices should be avoided in a
Webenabled environment?
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These questions currently are being debated within sales
departments. Compensation managers can expect to have some of these
issues land on their desks. What follows are key concepts and
suggested perspectives to assist the sales team in sorting through
these issues. The Mysterious World of Sales Management Subsystems:
As a pay program, sales compensation is connected to several and
sometimes mysterious sales management subsystems such as account
assignment, sales crediting and quota allocation. Evaluation of the
sales compensation program cannot proceed without concurrent
examination of these complimentary supporting systems. While most
of us are very familiar with the typical features of a sales
compensation plan target compensation, mix, leverage and incentive
formula it is the operation of these sub-systems that dramatically
affects payouts. The rise of ecommerce, generically known as a
sales channel, will require significant revisions to these
subsystems. Make these changes correctly and the sales compensation
pay system will continue to operate successfully; make a mistake
and the pay plan will fail.
A Web Site Held Hostage: Point and Click Meets Brick and Mortar
The president of a major furniture retailer explained her
predicament. Look, I know the Web site can give me access to new
customers, but 20 percent of my customers account for 80 percent of
my revenue. And, my in-store decorating sales counselors own those
relationships. She added: If I don't give them sales credit from
Web sales, my best sales producers will quit. Should salespeople
get sales credit for Web sales for out-of-region sales? What about
sales from first-time customers? Should salespeople get full credit
for these non-store new Web customers? How can the Web support
itself, if it must bear the burden of commission credits back to
the sales counselors?
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The president was adamant. She will not risk the ire of her best
salespeople. Unless, I give the credit for sales over the Web, they
will complain that I am taking money out of their pockets. Yet,
still unresolved are the following questions: Which salespeople get
what Web credit?
These and many related questions need immediate attention.
Ultimately, she will have to decide if the Web site is a sales
counselor tool, or a separate sales channel. Perhaps she needs two
separate Web locations: one for value-added services provided by
sales counselors and a second Web site for unassisted
purchases.
Start with the Role of the Salesperson To investigate all of
these issues, begin with a reconfirmation of the sellers role.
Answer this question: What is the salesperson expected to do?
Get new customers. Sell new products to existing customers. Keep
existing customers happy with their on-going purchases. Provide
customer support and order fulfillment help.
What about the salespeople? Are they expected to do one, some or
all of these activities? Sales compensation plan design is related
directly to the content of the sales job. For sales jobs with more
individual initiative and persuasion, more at-risk/high upside
variable pay should be used. Conversely, jobs that focus on more
reactive duties such as customer service and order fulfillment
should have less variable pay. A Simple Rule: Pay for the Point of
Persuasion In sales compensation design, the rule of thumb is pay
for the point of persuasion. In other words, pay a salesperson for
the job of persuading the customer to act. This is where sales
compensation fits. Not following this rule gets many sales
compensation plans into trouble. Such sales compensation plans have
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influencing scope of the salesperson. Finally, many sales
compensation plans simply become obsolete over the passage of time.
For example, in a start-up company where the selling role is 100
percent persuasion, the pay system features a high risk/high reward
design. As time passes and the sales rep develops a large embedded
base of business, the pay program needs to migrate to an account
management model with a higher base salary component. The mistake
is to leave the high risk/high reward pay plan in place an all too
common occurrence. How will E-commerce affect the Sales Force? The
primary role of the salesperson is to persuade. If other resources
such as the Web site can handle re-orders, then a salesperson
should not be distracted by these duties. If a customer already
knows what he or she wants to buy (a standard product with little
uncertainty), then there is no need to involve and reward a
salesperson. In such cases, it is appropriate for the customer to
order the product via the Web, without the involvement and reward
of a salesperson. Now comes the challenge: How should account
ownership, sales crediting and quota allocation be handled? Making
Adjustments to the Sales Management Subsystems: As noted above, the
sales compensation program is more than just a payout formula, it
depends on the effective application of critical subsystems such as
account assignment, sales crediting and quota allocation. Note how
sales management must augment these subsystems under the following
ecommerce conditions:
E-commerce is primarily for order fulfillment of products sold
by the salesperson. In such cases, the salesperson is acting as the
persuading influence; therefore, the account belongs to the
salesperson, and all sales placed through the e-commerce site
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credited to the salesperson for compensation purposes. Quota
objectives include all sales volume placed through the Web and
contribute to quota performance accomplishment.
E-commerce is used primarily by buyers who do not need sales
advice. These accounts should not belong to the salesperson, nor
should such volume contribute to retiring quota and, of course, no
compensation credit is given for such sales.
E-commerce is the primary sales link with the customer, but
customers must be convinced to sign-up. This is known as
matriculation selling and the compensation program needs to reward
sales representatives for getting customers to use the Web site.
These accounts belong to the company and the salesperson