Chapter01 Managing The Sales Force

Managing the Sales ForceManaging the Sales ForceChapter 01Chapter 01

Chapter 01–2

Sales Representative• McMurry distinguished six sales positions

– Deliverer : whose major task is the delivery of product (milk, fuel, oil, bread)– Order taker : who act predominantly as an inside order taker (the

salesperson standing behind the counter) or outside order taker (the soap sales person calling on the supermarket manager)

– Missionary : who is expected or permitted to take an order but whose major task is to build goodwill or to educate the actual or potential user (the medical “detailer” representing an ethical pharmaceutical companies)

– Technician : with a high level of technical knowledge (the engineering salesperson who is primarily a consultant to the client companies)

– Demand creator : who relies on creative methods for selling tangible products (vacuum cleaners, refrigerators, siding, encyclopedias) or intangibles (insurance, advertising services, or education)

– Solution vendor : whose expertise is in the solving of a customer’s problem, often with a system of the company’s products and services (computer and communication system)

Designing The Sales Force

Chapter 01–4

Designing the sales force

Sales forceobjectives

Sales forcestrategy

Sales forcestructure

Sales forcesize

Sales forcecompensation

Figure Figure 20.120.1

Chapter 01–5

Sales Force Objectives and Strategy

• Companies must define the specific objectives they expect their sales force to achieve– The old idea : “sell, sell, and sell”– Later, the idea : should know how to diagnose a customer’s

problem and propose a solution– Salespeople don’t try sell a specific product initially

• They show a customer-prospect how their company can help the customer improve its profitability

• They seek to join their company with the customer’s company as “partners for profit”

Chapter 01–6


• Salespeople will have one or more of the following specific tasks to perform :– Prospecting : Searching for prospects, or leads– Targeting : Deciding how to allocate their time among prospect and

customers– Communicating : Communicating information about the company’s

products and services– Selling : Approaching, presenting, answering objections, and closing sales– Servicing : Providing various services to the customers-consulting on

problems, rendering technical assistance, arranging financing, expediting delivery

– Information gathering : Conducting market research and doing intelligence work

– Allocations : Deciding which customers will get scarce product during product shortages

Chapter 01–7


• Companies must deploy sales force startegically– They call on the right customers at the right time and in the right way

• Sales representatives work with customers in several ways :– Sales representative to buyer : discusses issues with prospect or

customer in person or over the phone – Sales representative to buyer group : gets to know as many members of

the buyer group as possible– Sales team to buyer group : a company sales team works closely with the

members of the customer’s buying group – Conference selling : brings company resource people to discuss a major

problem or opportunity– Seminar selling : a company team conducts an educational seminar for

the customer company about state-of-the-art development

Chapter 01–8


• Today’s sales representative act as “ account managers”– Arrange fruitful contact between various people in the buying and selling

organizations• To maintain a market focus, salespeople should know how :

– Analyze sales data– Measure market potential– Gather market intelligence– Develop marketing strategies and plans

• Sales forces will be more effective in the long run if they understand marketing as well as selling

Chapter 01–9

Sales Force Structure

• The sales force strategy has implications for the sales force structure

• If the company sells one product line to one end-using industry with customers in many locations → territorial sales force structure

• If the company sell many products to many types of customers → product or market sales force structure

Chapter 01–10


• Territorial : – Each sales representative is assigned an exclusive territory

• Clear definition responsibilities• Increase incentive to cultivate local business and personal

ties• Travel expenses are relatively small

Chapter 01–11


• Territory size– Designed to provide either equal sales potential or equal

work-load• Equal potential provide :

– The same income opportunities– Evaluate performance– Vary widely in size (because customer density varies)

• Equal work-load :– Each sales rep can cover his or her territory adequately

Chapter 01–12


• Territory shape– Formed by combining smaller units (countries , states)– Design must take into

• Account the location of natural barriers• The compatibility of adjacent areas• The adequacy of transportation

– Can influence • The cost and ease of coverage• The sales rep’s job satisfaction

Chapter 01–13


• Product– The importance of sales reps’ knowing their products– Together with the development of product divisions and

product management, – Has led many companies to structure their sales forces along

product lines– Product specialization is particularly useful for product lines

that are technically complex, highly unrelated, or very numerous.

Chapter 01–14


• Market– Companies often specialize their sales forces along industry

or customer lines. • Complex

– When a company sells a diverse product line to many types of customers over a broad geographical area

• It often combines several structures, with sales forces specialized by territory-product, territory-market, product-market, and so on.

• A sales representative might then report to one or more line and staff managers.

Chapter 01–15

Sales Force Size and Compensation• The company clarifies its strategy and structure = consider sales force

size• The company establishes the number of customers it wants to reach =

workload approach to establish sales force size• Following 5 steps :

1. Group customers into size classes by annual sales volume2. Establish call frequencies, the number of calls to be made per year on each

account in a size class3. Multiply the number of accounts in each size class by the call frequency to

arrive at the total yearly sales call workload; 4. Determine the average number of calls a sales rep can make per year5. Divide the total annual calls (calculated in step 3) required by the average annual

calls made by a rep (calculated in step 4) to see how many reps are needed.

Chapter 01–16

Sales Force Size and Compensation

• The company must next determine the four components of sales force compensation :

– Fixed amount– Variable amount– Expense allowances– Benefits

• 70 % total income sales reps is fixed and 30 % other elements• 3 basic types of fixed and variable compensation plans :

– Straight salary– Straight commission– Combination salary and commission.

• ¼ use either and ¾ firms use combination

Chapter 01–17

Sales Force Size and Compensation• Straight-salary plans :

– Provide sales reps with a secure income– Make them more willing to perform nonselling activities– Give them less incentive to overstock customers.– From the company’s perspective they provide administrative simplicity

and lower turnover• Straight-commission plans :

– Attract higher sales performers– Provide more motivation– Require less supervision– Control selling costs.

• Combination plans offer the benefits of both plans :– While reducing their disadvantages.

Chapter 01–18

Sales Force Size and Compensation

• The fixed amount : a salary, is intended to satisfy the sales reps’ need for income stability.

• The variable amount : which might be commissions, a bonus or profit sharing is intended to stimulate and reward greater effort)

• Expense allowances : enable sales reps to meet the expenses involved in travel, lodging, dining, and entertaining

• Benefits : such as paid vacations, sickness or accident benefits, pensions, and life insurance, are intended to provide security and job satisfaction.

Managing The Sales Force

Chapter 01–20

Managing the sales force

Recruiting and selecting sales representatives

TrainingSales

representative

Figure Figure 20.220.2

SupervisingSales

representative

MotivatingSales

representative

EvaluatingSales

representative

Chapter 01–21

Recruiting and Selecting Sales Representative• A successful sales force is the selection of effective representatives• One survey revealed that the top 27 percent of the sales force brought in over 52

percent of the sales• Most customers want honest, reliable, knowledgeable, and helpful reps • Charles Garfield concluded that super sales performers :

– Exhibit risk taking– Powerful sense of mission– Problem-solving bent– Care for the customer– Careful planning

• Mayer and Greenberg noted that the effective salesperson has :– Empathy– The ability to feel as the customer does– Ego drive– Strong personal need to make the sale.

Chapter 01–22

Training Sales Representative

• Today’s customers expect salespeople :– to have deep product knowledge– offer ideas to improve customer operations– be efficient and reliable

• Companies use training to help sales reps : – Know and identify with the company– Learn about the company’s products– Know customers’ and competitors’ characteristics– Make effective sales presentations– Understand sales procedures and responsibilities.

Chapter 01–23

Supervising Sales Representative

• Sales representatives need more than a territory, a compensation package → proper supervision

• Successful firms have procedures to aid in evaluating the sales force:– Norms for customer calls– Norms for prospect calls– Using sales time efficiently

• Tools include configuration software, time-and-duty analysis, greater emphasis on phone and Internet usage, greater reliance on inside sales force

Chapter 01–24


• Time-and-duty analysis– How spend your time and how might increase your productivity

• In general, sales reps spend time in – Preparation (getting information and planning call strategy)– Travel (50 percent of total time)– Food and breaks – Waiting (to see buyers)– Selling (time spent with the buyer)– Administration (writing reports, billing, attending sales meetings and etc)

Chapter 01–25


• 3 types to increased the size and responsibilities of their inside sales force :– Technical support people : provide technical information and answers to

customers’ questions– Sales assistants : provide clerical backup for the outside reps

• confirming appointments• carrying out credit checks• following up on deliveries• answering customers’ questions

– Telemarketers : use the phone • find new leads• qualify and sell to them• reactivate former accounts• give more attention to neglected accounts.

Chapter 01–26

Motivating Sales Representative

• Some ambitious sales representatives are self-starters• Most people ,moreover, require incentives, such as financial gain

or social recognition, to operate at full capacity– Greater effort will lead to greater performance– Greater performance will lead to greater rewards– Greater rewards will lead to greater satisfaction– Greater satisfaction will reinforce motivation

• That sales managers must be able to convince salespeople that : – They can sell more by working harder or by being trained to work smarter– The rewards for better performance are worth the extra effort

Chapter 01–27

Motivating Sales Representative

• Most valued rewards– Pay, promotion, personal growth, sense of accomplishment

• Least valued rewards– Liking and respect, security, recognition

• Sales quotas as motivation tools• Supplementary motivators

Chapter 01–28

Evaluating Sales Representative• The feed-forward aspects of sales supervision— how management

communicates what sales reps should be doing and motivates them to do it– Source of Information– Formal evaluation

• Sources of information– Sales reports– Personal observation – Customer letters and complaints– Customer surveys– Conversations with other sales representatives– Many Companies require their representatives to develop an annual

territory marketing plan • Program for developing new accounts and increasing business from

existing accounts• This report casts sales reps into the role of market managers and

profit centers

Chapter 01–29

Evaluating Sales Representative• Sales reps write up completed activities :

– Call reports – Expense reports– New-business reports– Lost-business reports– Reports on local business and economic conditions

• Sales managers can extract key indicators of sales performance : – Average number of sales calls per rep per day– Average sales call time per contact– Average revenue per sales call– Average cost per sales call– Entertainment cost per sales call– Percentage of orders per hundred sales calls– Number of new customers per period– Number of lost customers per period– Sales force cost as a percentage of total sales

Chapter 01–30

– Formal evaluation• Performance comparisons• Knowledge assessments

Chapter 01–31

Chapter01 Managing The Sales Force

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