Special Topics 2

8/3/2019 Special Topics 2

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Sales ManagementSales Management

Second semester AY 2011-2012

University of St. La Salle Bacolod


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The Sales Force

Sales Management- is the attainment of sales forcegoals in an effective and efficient manner through

planning, staffing, training, leading, and controlling

organizational resources (Futrell1998)

Managing a sales force involves recruiting, hiring,training, supervising, compensating salespeople,

motivating them to become problem solvers, and

providing the proper planning and backup support so

they can perform their jobs properly.


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Sales Management


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Sales Representatives Robert McMurrays Sales Representative types:

1. Deliverer a salesperson whose major task is the delivery of aproduct (e.g. Water, fuel, oil, etc.)

2. Order Taker an inside order taker ( standing behind the counter)or outside order taker (calling on the supermarket manager).

3. Missionary a salesperson not expected or permitted to take an

order but rath

er to build goodwill or educate th

e actual orpotential user. (the medical detailer representing an ethicalpharmaceutical house).

4. Technician a salesperson with a high level of technicalknowledge (the engineering salesperson who is primarily aconsultant to client companies).

5. Demand creator a salesperson who relies on creative methodsfor selling tangible products (vacuum, cleaners, brushes) orintangibles (insurance, advertising services or education).

6. Solution vendor a sales person whose expertise is solving acustomers problem, often with a system of the companysproducts and services (computer & communications systems)


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Sales Representatives

Sales personnel serve as the companys personallink to the customers.

Active representatives of the company can influencepeoples perception of it through their ability to interact,to customize3 and to build relationships with thecustomers

-- Fred Hasaan, CEO ScheringFred Hasaan, CEO Schering--PloughPloughIn designing the sales force, the company must consider the

development of sales force objectives , strategy, structure, size and

compensation.


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Designing the Sales Force

Sales Force Design

Sales Force Objectives

Sales Force Strategy

Sales Force Structure

Sales Force Size

Sales Force

Compensation


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Leaders must secure that personalgoals and objectives of the salespeopleare consistent with those of the

organization. Sales managers strive to seek balance

and consistency between

organizational goals and theirsalespeoples goals.


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Direct Sales Force - consists of full or part timepaid employees who work exclusively for thecompany.

Contractual Sales Force consists ofmanufacturers reps, sales agents and brokerswho earn a commission based on sales.


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Designing the Sales ForceCommon Tasks for Sales People

Prospecting searching for prospects or leads Targeting Deciding how to allocate their time among

prospects and customers

Communicating disseminating information about the

companys products and services Selling approaching, presenting, answering questions,

overcoming 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.

Allocating deciding which customers will get scarceproducts during product shortages


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SALES FORCE STRUCTURE

A sales force strategy has implications for itsstructure.A company that sells one product lineto one end-using industry with customers in manylocations would use a territorial structure.


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Designing the Sales ForceSales-Force Structures

Territorial: Each sales representative is assigned an exclusive territory.This sales structure results in a clear definition of responsibilities. Itincreases the reps incentive to cultivate local business and personal ties.Travel expenses are relatively low because each rep travels within a smallarea.

Territory size: Territories can be designed to provide equal sales potentialor equal workload. Territories of equal potential provide each rep with thesame income opportunities and provide the company with a means toevaluate performance. Territories can also be designed to equalize thesales workload so that each rep can cover the territory adequately.

Territory shape: Territories are formed by combining smaller units, suchas counties or states, until they add up to a territory of a given potential orworkload. Companies can use computer programs to design territoriesthat optimize such criteria as compactness, equalization of workload or

sales potential, and minimal travel time.


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Sales-Force SizeWorkload approach:1. Customers are grouped into size classes2. Desirable call frequencies are established for

each class3. The number of accounts in each size class ismultiplied by the corresponding call frequency4. The average number of calls a sales

representative can make per year is determined5. The total number of sales representativesneeded is determined


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Sales-Force Siz

e

Suppose the company estimates that there are 1,000 Aaccounts, and 2,000 B accounts in an area. A accountsrequires 36 calls a year, and B accounts require 12 calls ayear. Thus the company needs a sales force that can make60,000 sales calls a year. Suppose the average rep can make1,000 calls a year.

Thus the company would need 60-full time salesrepresentatives.


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Product Sales Force Structure

-A sales force organization under whichsalespeople specialize in selling only a portionof the companys products or lines.

Customer Sales Force Structure

- A sales force organization under whichsalespeople specialize in selling only tocertain customers or industries.


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Sales Force CompensationFour Components:

Fixed amount a salary, is intended to satisfy theneed for income stability.

Variable amount which might be commissions,bonus or profit sharing, is intended to stimulate andreward effort.Expense allowances enable sales reps to meet

the expenses involved in travel and entertaining.Benefits- such as paid vacations, sickness oraccident benefits pensions and life insurance,intended to provide security and job satisfaction


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Sales Force Management

Managing the

Sales ForceRecruiting and

selecting sales

representatives

Training

Supervising

MotivatingEvaluating


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Training

Programs Have Several GoalsSales Representatives Need to:

Know and identify with the company

Know the companys products Know customers and competitorscharacteristics

Know how to make effective salespresentations Understand field procedures andresponsibilities


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Supervising Sales Reps

Reps paid mostly on commission generally receive

less supervision.Those who are salaried and must cover definite

accounts are likely to receive substantial supervision.Norms for Customer Calls

Norms forProspect Calls (n% of daily timespent on prospecting &stop calling after 3 unsuccessful calls)

Using Sales Time EfficientlyCompanies took advantage of telecom innovations.Inside sales people: Technical Support, Salesassistants, & Telemarketers


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In order to maximize and use time efficientlySales Force needs to:

Time-and-duty analysis

Preparation Travel Food and breaks

Waiting Selling Administration


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Motivat

ing Sales Reps

1. Churchill, Ford, & WalkerMotivationModel:

Sales managers must be able to:convince salespeople that they can sell

more by working harder or beingtrained to work smarter.Sales managers must be able to:

convince salespeople that the rewardsfor better performance are worth the

extra effort.


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Motivat

ing Sales Reps

2. Sales Quotas (Forecast vs. Actual Sales)3. SupplementaryMotivators Sales meetings Sales contests


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Evaluating Sales Representatives1. Sources of Information

- Sales Reports ( Activity plans vs. Activity results)- Addtl: customer letters & complaints, surveys,

conversations with other sales reps & Actualobservation

2. Formal Evaluation

- a type of evaluation where currentperformance is compared to past performance


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Evaluating Sales Representatives1. Form forEvaluating SalesRepresentatives PerformanceTerritory: Midland SalesRepresentative: John Smith

1999 2000 2001 2002

1. Net sales product A $251,300 $253,200 $270,000 $263,1002. Net sales product B 423,200 439,200 553,900 561,9003. Net sales total 674,500 692,400 823,900 825,0004. % of quota product A 95.6 92.0 88.0 84.75. % of quota product B 120.4 122.3 134.9 130.86. Gross profits PA $50,260 $50,640 $54,000 $52,620

7. Gross profits PB 42,320 43,920 55,390 56,1908. Gross profits total 92,580 94,560 109,390 108,810

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