Ch14 Personal Selling

8/12/2019 Ch14 Personal Selling

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Personal selling is the most important demand-stimulatingforce in the business marketer's promotional mix. In thischapter youll understand:

The methods for organizing the sales force.

The skills and characteristics of high-performing accountmanagers.

The nature of the sales management function.

Selected managerial tools that can be applied to major

sales force decision areas.


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Stay Close to the Customer

The sales force has a central role in the firmsstrategy: managing customer relationships.

In B2B business, personal selling is thedominant component and a major determinantof overall company success.


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Dominance of Personal Selling

Personal selling is dominant because:

1. Compared to consumers, there arent as many

potential business customers.2. The dollar purchases are much larger.

3. The products and services are more technical.

4. Salespeople need to know about their customersbusinesses and about their customers customersbusinesses, too!


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Cost of Personal Selling

Across all industries the average cost of making a salescall is $200+, although it can cost more in someindustries, less in others.

There is a significant investment in utilizing personalselling.

To maximize effectiveness and efficiency, the personalselling function must be carefully managed andintegrated into the marketing mix.


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Selling is Where the

Tire Meets the Road The salesperson is the initial link between the

company and the customer.

Personal selling consists of complex tasks

and is a challenging career.

Successful salespeople must have broadknowledge over and above their product.

They must talk intelligently, know theircompetition, understand industry trends, andbe interesting in a worldly and charming way.


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SALESFORCEMANAGEMENT

Effective sales force management is

fundamental to the firms success!

Sales management means:1. Planning

2. Organizing

3. Directing &

4. Controlling the Personal Selling Efforts


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SALESFORCEMANAGEMENT

Involves (though not inclusively):

a. Estimating the forecasts

b. Determining size of sales force

and

Selecting

Training

Deploying Establishing activity & financial goals

Motivating, and

Monitoring sales peoples efforts


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Sales operations MUST be monitored to:

1. Identify problems.

2. Assess the efficiency, effectiveness and

profitability of the salesperson.


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Organize the sales force

Manage key accounts

Select high-performing accountmanagers (salespeople)


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Organizing the Personal Selling Effort

Geographical Organization

Advantages:1. Most common form

2. Reduces travel distance and time between

customers

3. Usually minimizes costs

Major disadvantages:1. Each salesperson must perform all selling tasks

for all firms products and for all customers in

territory.

2. Salesperson may not know about all products or

only emphasize certain (high commission)

products.


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Product Oriented Sales Organizations Salespersons specialize in relatively narrowcomponents of total product line. Appropriate with

huge product offerings (e.g., General Electric). Prime benefit: Enables sales force to developdeeper product knowledge level--enhances valueof firms total offering to customers Disadvantage: Expensive and sometimes confusingfor customers.


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Organizing the Personal Selling Effort

Market-Centered Organizations

Salespeople learn specific

requirements of industry or customertype (e.g., specializing in the banking

industry)

Salespeople are better prepared to

identify and respond to buying

influentials


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Large Accounts are referred to as:

Key Accounts

Major Accounts

National Accounts

Strategic Accounts


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Key Account Management

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A Key Account:

1. Purchases a significant volume as a % of

sales

2. Involves several organizational members inthe purchasing decision

3. Buys for a geographically dispersed

organization

4. Expects carefully coordinated response

and specialized services from suppliers

such as:

1. Logistical support2. Inventor mana ement


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Research suggest that companies can gethigher returns & profitability by:

Segmenting their customers into tiered groups

from high to low

Developing different value propositions foreach tier

Effects:

This had a positive effect on sales and profits

from top-tier customers, and no adverseeffect

on lower-tiered customer relationships.

Reduces sales and marketing costs.


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Many companies find that 80% or their business or profitscomes from 20% of their accounts.

Large firms have central procurement offices.

Often, selling firms have offices located inside the buyingfirms facilities.

Large firms expect their suppliers to provide coordinated anduniform services for all its geographically dispersed divisions.

In exchange for large orders, they expect additional services& support (e.g., JIT).


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Key Account Management

Consists of a Key Account Managerand a teamcomposed of Sales,

Marketing, Finance, Logistics,

Engineering and other FunctionalAreas.

Key Account Managers may work onseveralaccounts, or on ONE

account, and will report to a senior

executive.


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Traditional Selling vs. Key Account Selling

Traditional selling emphasizes

maximizing revenues.

Key account selling is multi-faceted,

emphasizing:

1. Closer long term relationships

2. Partnerships to reduce overall costs or

advance performance for the customer


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Traditional Selling Focus Key Account Selling Focus

Sales Volume Varies Large volume of purchases by the customer often

across multiple business of the seller

Nature of Product/

Service Offering

Core product/service Core product/service plus customized applications

and value-added services

Time Horizon Short-Term Long-Term

Benefits to Customer Lower prices & higher quality Lower total costs; Broader set of strategic benefits

Information Sharing Limited: Narrow focus on

price

and product features

Extensive: Broader focus as firms share strategic

goals

Sales Force

Objectives

Maximize revenue

Satisfied customers

Become preferred supplier; Lower customer firms

total costs; Enhance learning in the relationship

Structure of Selling

Center

Individual salesperson is

primary

link to customer organization

Many individuals from multiple functional areas on

the selling side interact with counterparts in the

customer organization

Structure of Buying

Center

Purchasing Manager and a

few other individuals are

involved in buying decisions

Many individuals within the customer organization

interact in making decisions and evaluating the

relationship

Table 14.1 Traditional Selling vs. Key Account Selling

Source: Adapted with modifications from Joseph P. Cannon and Narakesari Narayandas,

Relationship Marketing and Key Account Management, in Handbook of Relationship Marketing,

Jagdish N. Sheth and Atul Parvatiyar, eds. (Thousand Oaks, Ca.; Sage Publications, 2000), p. 409; and

Frank V. Cespedes, Concurrent Marketing: Integrating Products, Sales and Service (Boston: Harvard

Business School Press, 1995,) pp. 186-202


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Joint Efforts

If uncertainty is high, or

If product adaptation's are required, then

Customerorganization should initiatea jointeffortwiththe sellingorganization

to create the desired solution.


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Because key accounts

1. Possess buying power

2. Demand special services3. Are more costly to serve

companies need to consider sales and

profit potential, as well as long-term

resource commitments.

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1. Centers on:a. Profit potentialb. Degree customer is willing to pay for extra services2. Select customers from requiring a unique supportfunction that is marketable to other customers.3. Consider transactionswith the customer thatcomplements the economics of the sellers business Considering these points first allows the seller theopportunity to consider whether or not to take on aparticular key account.


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Successful programs occur when:

1. There is senior management support.

2. Objectives, assignments and implementationprocedures are well defined.

3. They are staffed by experienced people knowledgeable

about companys capabilities.4. Staff know how to create customer solutions.


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High Performing Account Managers:

Assemble the right people and gather the rightinformation to solve their customers uniqueproblems.

Excel at building and maintaining strongrelationships.

Use these relationships to design and alignproposals that meet the selling firms capabilities(solutions) to the buying firms needs (problems).


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Building internal relationships

Aligning resources to client needs

Forging relationships with the customerorganization

Managing the customer engagement process

Knowing the customer

Build strong relationships within the sellingfirm and customer organization


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Recruitment and Selection

Training

Supervision and Motivation

Evaluation and Control


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Recruitment & Selection

Q: Should the company hire experiencedsalespeople or hire and train inexperiencedpeople?

A: It depends upon:

a. Size of firm

b. Nature of selling task

c. Firms training capability

d. Market experience


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Recruiting

Recruiting is a negotiation between two parties.

A successful process should include

procedures to weed out unqualified people and

assure that good candidates are considered.

Most selection is done by the 1stline manager

in conjunction with 2ndline manager.

In larger corporations, the personal selling

function is often used as a training ground for

higher level marketing and management

functions.


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Sales Training Skills:

Effective Interpersonal Communication Skills

Includes:

A. Communication skills

B. Listening skillsC. Influencing skills

D. Complaint handling skills

E. Cultural diversity skills

Many companies have found that as training increases,productivity increases and turnover decreases.


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Supervisions functions include:

continued training

counseling

assistance

time management verification

setting financial & activity quotas, etc.

Supervision also integrates sales activities withupper management.


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Motivation

Orville Walker Jr., Gilbert Churchill Jr., and NeilFord define motivation as:

The amount of effort the salesperson desiresto expend on each of the activities or tasksassociated with his (her) job such as:

1. calling on potential new accounts,

2. planning sales presentations, and

3. filling out reports.


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Motivation

Walker, Churchill & Fords model (fig. 16.3)hypothesizes that a salespersons performance is a

function of three factors:1. Level of motivation

2. Aptitude or ability

3. Perception about how to perform the role


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Motivation is strongly related to:

A. Individuals perception of the types andamounts of rewards from various degrees

of job performance.

B. The value the salesperson places on thoserewards.


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Rewards can be:

Internal: Personal feelings of accomplishment or

self-worth

External: Financial incentives and/or recognition

See Fig. 16.3 (next frame)


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Incentives Usually consist of:

Recognition Financial rewards

Recognition is usually competitive innature and often coupled to a sports themesuch as: Big Hitter of the Month

Financial incentives may include: Salary

Commission Bonus

Expenses

Contest winnings

Other perks


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Job dissatisfactionoccurs when thesalesperson does not know:

1. What is reasonably expected

2. Is subject to conflicting demands that

s/he cannot possibly resolve

3. Surrounded by uncertainty due to lack of

information concerning expectations


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TURNOVER

Turnover is an important issue becausethe cost for it is extensive:

A. Cost to hire and train new people

B. Cost due to loss of customer

C. Cost due to non-performance

To reduce turnover, management will trymany things to satisfy, motivate andreward good people.


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Job Satisfaction Increases When:

1. Salespeople perceive that 1stline supervisorsclosely direct and monitor performance.

2. Management provides assistance to resolveunusual problems.

3. Salespeople feel they have an active part indetermining company policies and standards.

4. There is a good relationship betweensalesperson and manager.

Customer satisfaction increased as salespersonsjob satisfaction increased.


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Job Satisfaction

Relationship between job satisfaction andcustomer satisfaction is strong when:

a. Customer interactions are frequentb. Customer assumes a central role in

the value-creation process

c. When innovative products or servicesare involved


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Management needs to:

a. Determine if objectives are being achieved

b. Identify problemsc. Recommend corrective action

d. Keep salespeople informed about changes

(internally) such as new products or

(externally) such as competitive or market

conditions


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PERFORMANCE MEASURES

Sales managers use both

1. Behavior-based tools

2. Performance-based tools

To measure performance.


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Behavior-Based Performance Measures (cont)

Is good for:

A. Salespeople who lack experience

B. Companies that need to control how theirproducts\services are presented

C. When salespeople are asked to performnon-sales activities


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It is good for:

A. When sales efforts are a major determinate oforganizational sales success.

Erin Anderson & Vincent Onyemah state, Whensales reps make that big of a difference to thebottom line, it is worth it to give them autonomy

and to pay them handsomely to do what they do.


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C S


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Critical Sales Management Task:Deployment Decisions Facing Sales Organizations

Table 14.2


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By understanding where PCU potentials exists onthe opportunity grid, marketing and salesmanagers can make better decision on:a. Size of territoryb. Allocation of salespeople to customersegments

This method helps isolate deployment problemsor opportunities worthy of management attention.


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Ch14 Personal Selling

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