The Personal Selling Process The sales process itself plays an increasing role in creating customer value. Neil Rackham
The Personal Selling Process
The sales process itself plays an increasing role in creating customer value.
Neil Rackham
Principles of Personal Selling
• Personal Selling is an ancient art.• Effective salespersons have more than instinct;
they are trained in methods of analysis and customer management.
• Dale Carneige’s book “How to win friends and influence people”
Sales Training Approaches
Order Taker• Operate on the assumption
that customers know their own needs,resent attempts to influence them, and prefer courteous and self effacing salespersons.
Order Getter• Sales Oriented Approach• Customer oriented Approach
Sales Oriented Approach
• Trains the person in the stereotyped high pressure techniques used in selling encyclopedias or automobiles.
• This form of selling assumes that customers are not likely to buy except under pressure,that they are influenced by a slick presentation, and that they will not be sorry after signing the order.
Customer Oriented Approach
• Trains salespeople in customer problem solving.
• The salesperson learns how to listen and question in order to identify customer needs and come up with sound product solutions.
• Presentation skills are secondary to customer need analysis skills.
THE EIGHT STEPS OF THE SALES PROCESS
8. Follow-up
7. Gaining Commitment
6. Meeting objections
5. Presentation
4. Need Assessment
3. Approach
2. Preapproach
1. Prospecting
Challenges in Personal Selling
• Inability to hard-sell• Manager resistance• Priority dilution• Irregular reporting• Poor data quality • Employee turnover• Loss of interest over a period
1) Prospecting
• Leads can be identified through…– Referrals from customers– Referrals from internal company sources
• Sales manager; Marketing dept.; Telemarketing dept.
– Referrals from external agencies• Trade Associations,Industry Associations,Internet,Online Information
services
– Published directories• Yellow Pages
– Networking by the Salesperson– Cold canvassing
The method or system by which sales-people learn the names of people who need the product and can afford it.
Prospecting Activities for Residential Real Estate
• Property Exhibitions• Customer References• Corporate Tie Ups (Discount
of Rs 25-50/sft)
Prospecting Activities for Commercial Vehicles
• Financier• Demo Caravans• Advertisements in local
newspapers• Visit to Competition
customers• Tenders/Contracts• Brokers• Vehicle Clinic• Promotional Offers/Schemes
Prospecting (Mutual Funds)Existing Sources
• Bank Customers,mostly salary account holders
• Customer Referrals• Directories of Industrial zones • NASSCOM,CII,FICCI,ASSOCHM
Activities
• Local Advertisements(Leaflets)• Kiosks in Apartment Complex• Corporate PPT • Financial Trade Fairs• Retailers of High end goods
(Cold Canvassing)• Spreading Financial literacy in
Kitty parties• Meeting Celebrities in
Bangalore– Rahul Dravid– Puneet Rajkumar
Lead Management Tools
Activity Prospect Stack Up Tracker
Prospect Customer Form• Name of the Customer along with address & contact details.• End use application of the product for each segment.• Product/Brand currently used• Type of customer• Standardised or Customised• Mode of Enquiry• Model Description & Quantity• Enquiry Status• Follow up Details• Reason for loss of sale
Qualifying Leads
• A qualified prospect…–Has a need for the products being sold.–Can afford to buy the products.–Is receptive to being called on by the
salesperson.
Prospect Management Puzzle
Cold Prospect?
Cold Prospect?
Prospect?Prospect?
Warm Prospect?
Warm Prospect?
Hot Prospect?Hot Prospect?
The Answer!
To improve availability and predictability of prospect data and complete control over prospect management cycle
Defining prospect categories
Months
0 1 2 3
Hot ProspectHot Prospect
Warm ProspectWarm Prospect
Cold ProspectCold Prospect
Point of
Contact
Intension to purchase
Our Prospects
Retailed:•Goods delivered after invoicing
Retailed:•Goods delivered after invoicing
Full Payment:•DO / Payment Received•Commercial transaction complete•Can be skipped if credit offered
Full Payment:•DO / Payment Received•Commercial transaction complete•Can be skipped if credit offered
Cold Prospect:•Expected Purchase < 3 months•Suspect contacted from CDB
Cold Prospect:•Expected Purchase < 3 months•Suspect contacted from CDB
Warm Prospect:•Expected Purchase <2 months•Taken quotation
Warm Prospect:•Expected Purchase <2 months•Taken quotation Hot Prospect:
•Expected Purchase- within the month•PO / Token money taken
Hot Prospect:•Expected Purchase- within the month•PO / Token money taken
Checklist to Qualify Hot Prospects
• Check Compliance to the following activities when Qualifying Hot Prospects– 1. SE aware of the specific requirements of prospect.– 2. Product related discussion (demo) has happened.– 3. Quotation given to prospect.– 4. Price agreement reached.– 5. Applied for loan from a financier.– 6. Indicated a specific date by which prospect needs to have
the vehicle.– 7. Prospect gives positive & assuring reply to SE on every call.
• Out of 7 points mentioned above, minimum of 5 points should be applicable for a prospect to be categorized as “Hot”.
Hot Prospect Tracking Sheet
Prospect Funnel
Understanding prospect funnel is essential for
effective Prospect Management
How is a prospect funnel different from a prospect pipeline or are
they the same?
Prospect Funnel vs. Pipeline
Prospects
Cold
Warm
Hot
FP
RFP Full Payment
R Retailed
Conversion Ratios
Hot to Retailed = R Hot + FP + R
100
54
7
2
1973%
Cold
Warm
Hot
FP
R
Measure of :• Deal closing skills• Financier relationships
Conversion Ratios
Warm to Hot = R + FP + Hot R + FP + Hot + Warm
Measure of :• Quality of coverage in previous and this month• Selling skills and product / market knowledge
100
54
7
2
19
32%
Cold
Warm
Hot
FP
R
Conversion Ratios
Warm to Retailed = R R + FP + Hot + Warm
Measure of :• Quality of coverage in previous and this month• Selling skills and product / market knowledge
100
54
7
2
19
23%
Cold
Warm
Hot
FP
R
Conversion Ratios
Cold to Warm = R + FP + Hot + Warm R + FP +Hot + Warm + Cold
Measure of :• Quality of coverage in previous and this month• Quality of prospect, segment selection• Availability of a comprehensive CDB• Competition knowledge
100
54
7
2
19
40%
Cold
Warm
Hot
FP
R
Conversion Ratios
Cold to Retailed = R R + H + FP+ W + C
100
54
7
2
19
10.5%
Cold
Warm
Hot
FP
R
Measure of :• Quality of coverage in previous and this month• Quality of prospect, segment selection• Availability of a comprehensive CDB• Competition knowledge
Month Closing Funnel
Cold
Warm
Hot
FP
R
Conversion Ratios
Cold to warm=(W+H+FP+R)/(C+W+H+FP+R))×100 =
Warm to Hot = ((H+F+P+R)/(W+H+FP+R))× 100 =
Warm to Retailed = (R/(W+H+FP+R)) × 100 =
Hot to Retailed = (R/(H+FP+R)) × 100 =
• Cold = 600• Warm = 250• Hot = 50
• Out of 600 cold prospects, suppose 500 become suspects or they do not meet the criteria for cold prospect classification, then these 500 people will go to back end master database.
• Out of 250 Warm prospects, 150 shift to cold status.• Out of 50 Hot prospects, 25 shift to warm status.
Then the final classification would be:• Cold = 600-500+150 = 250• Warm = 250-150+25 = 125• Hot = 50-25 = 25
Estimating Prospect Funnel
Sales target: 50
Conversion factors are as:Cold to Warm 40%Warm to Retailed 23%Hot to Retailed73%
Calculate: Target Cold, Warm, Hot prospects for the month (Cp, Wp, Hp)
Cold
Warm
Hot
FP
R
• Hot to Retailed = Retail/(Hot + FP+ Retail)(0.27/0.73) x 50 = 18
• Warm to Retailed = Retail/(Warm + Hot + FP+ Retail)0.23 x 18 + 0.23 x W + 0.23 x 50 = 50
= 149• Cold to Warm = (Warm+Hot+FP+Retail)/(Cold+Warm+Hot+FP+Retail)
(50+149+18)/ (50+149+18+C) = 0.4= 326
• Balance Hot for the Month = 18 - 8 = 10• Balance Warm for the Month = 149 - 75 = 74• Balance Cold for the Month = 326 - 150 = 176
• This gives a visibility in the system in terms of the number of prospects you need to generate to achieve the planned results.
• Now you have to make an action plan to generate the required number of prospects.
• At the end of the month, you need to calculate these ratios to see your performance vis-à-vis industry benchmarks.
• If the ratios are lower than the industry benchmarks, then take the ratios achieved in previous month as the benchmark. i.e.If IB>CR,then use CR of the previous month
• If they are higher than the industry benchmarks then use the industry benchmarks for the next month.If IB<CR,then use IB
TARGET FUNNELSALES TARGET =50
MONTH OPENING FUNNEL
SHORTFALL FUNNEL
Conversion Ratios
Prospect Target
Cold
Warm
HotFPR
Prospect Target
Cold
Warm
HotFPR
Prospect Target
Cold
Warm
HotFPR
C TO W =
W TO H =
W TO R =
H TO R =
Use conversion ratios to calculate the prospect targets required to achieve the given vehicle target
Use fig. from previous month closing funnel and update the
status of the prospects
Calculate shortfall by subtracting balance prospect requirement from target no of prospects
= 326
= 149
= 18
= 0
= 50
= 150
= 75
= 8
= 0
= 0
=176
=74
=10
=
=
(A) (B) (C)= (A) – (B)
Sales Executive
• Tap new prospects and build pipeline/Funnel.• Keep feeding the sales funnel at the top• Classify prospects• Fill Prospect Forms• Update prospect status• Implement Activity plan finalized with DSM.• Daily reporting to SM/ MIS Operator.
Daily Prospect Call Tracker Format
MIS Operator
• Receive daily prospect report from all DSE• Compile daily reports from DSE in the given
format/ tool• Submit the report to DSM• Send a daily status of reports received from SE to
SM
Daily Prospect Monitoring Sheet
Area Sales Manager• Month Planning• Prospect target calculation• Activity Planning• Review Meetings• Prospect position analysis• Review & corrective action for each SE• Inventory Planning• Analyze daily compiled report from MIS operator and
highlight problem areas• Daily reporting to RSM
Lead Conversion Ratio: Inquiry to Decision 12 Months After Inquiring
Purchased
No longer inmarket
Plan to buy
Plan to buy 25% Purchased
45%No longer in market 30%
*SOURCE: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994.
The Value of Inquiry Follow-Up
Share of buyer’s
business if not followed up
40%
Share of buyer’s business if followed up
83%
*SOURCE: Bob Donath, James K. Obermayer, Carolyn K. Dixon, and Richard A. Crocker, “When Your Prospect Calls,” Marketing Management, Vol. 3, No. 2, 1994.
2) Preapproach: Planning the Sale
• Includes all the information-gathering activities salespeople perform to learn relevant facts about the prospects, their needs, and their overall situation.
• Adaptive selling: – When a salesperson alters the initial objectives or
plans of the sales process because of new information gained from the customer during the actual call.
Customer Research• Size• Present purchasing practices• The location of its HQ,Branch offices & location of
manufacturing plants• The names of people who make the buying decisions as
well as those who influence the purchase.• Buyer’s background – Education,social affiliations &
personalities.• Become familiar with the problems of prospective buyers.• Read the company files from customer database-sales
records,correspondence,past sales calls.
Planning the Sales Presentation
• It takes 4-5 calls to close a sale.• The salesperson must obtain from the buyer
some type of commitment for action that moves the sales process forward.e.g.– Vendor Selection Criteria– Meeting with other decision makers
• Salespeople recognize differences across selling situations & adapt their presentations accordingly.
3) The Approach: The first minute or so of the call.(Icebreak)
• A good approach makes a favorable impression and establishes some degree of rapport between the salesperson and the buyer.
• Salespeople can draw attention of the buyer by– Handing over a sample– Highlighting some benefit in which the buyer will likely be interested
• Expectations in India:– Greeting in the local language– Professional attire– Body Gestures & eye contact.
4) Need Assessment
• The stage in which the salesperson must discover, clarify, and understand the buyer’s needs.• The best way to uncover and
understand needs is by asking questions.
NEED ASSESSMENT• Situational questions
How often do you change the cutting oil in your drill presses?
In addition to the hospital administrator, who else has an influence on the decision?
• Problem discovery questions
Have you experienced any delays in getting repair parts?
In which part of the production process is quality control the most important?
• Problem Impact questions
How do these delays in getting parts affect your production costs?
What impact do the quality consistency problems have on your production costs?
• Solution value question
If your inventories could be reduced by 20%, how much would that save you?
If your rejection rate on final inspection was reduced to under one percent, how much would that save you?
• Confirmatory questions
So, you would be interested in an inventory control system that reduced your inventories by 20%?
If I can provide evidence to you that our products would lower your rejection rate to under one
percent, would you be interested?
Situations to Sell Hand Sanitizer
5) The Presentation
• A discussion of those product and/or service features, advantages, and benefits that the customer has indicated are important.
• Built around a forceful product demonstration
• Prepared presentation vs. Adaptive selling
• Tips for effective presentations– Keep it simple– Talk the prospects language– Stress the application of the product/service to the
prospects situation– Seek credibility at every turn.
Presentation of Product, Features, Benefits, Advantages
Product Features Benefits Advantages
Camera Telephoto lens Take pictures Able to capturefrom longer images of animals
distances. or people from a distance.
Bicycle Attached water Can hold a water Don’t get dehydrated. bottle. bottle holder Don’t have to stop
for water. Feel more refreshed.
Drill Press Multiple drill Can change bits Saves time. bits attached without shutting Saves money.
down the machine.
Motor Oil Rust inhibitor Oil and engine Saves money.have longer life.
PEN ELECTRIC SWITCH POTATO OB BOOKWATCH CELLO TAPE SHOE TISSUE PAPERLIGHTER SCISSOR VISION SPECTACLES PERFUMEPEN DRIVE STAPLER SOAP TILELAPTOP PUNCH DUSTBIN WALLETMOBILE PHONE CHOCLATE MINERAL WATER BELTRING CHEWING GUM BRACELET PAPER WEIGHTNECKLACE TIE MOUSECHAIR SHIRT EGGSFAN KPL STEEL GLASS
Use the FAB Model to sell following Products
6) Meeting Objections
• Objections should be welcomed because they indicate that the prospect has some interest in the proposition.
• In responding to an objection…– Listen to the buyer– Clarify the objection– Respect the buyer’s concern– Respond to the objection
• Common types of objections– Price or value objections– Product/service objections– Procastinating objections– Hidden objections
7) Gaining Commitment
• Asking the buyer to commit to some action that moves the sale forward.
• Common Sales Closes– The Assumptive Close
• “Now what size do you want?”– Special Offer Close
• “If you buy this product today, we’ll double the length of the warranty.”– Summary Close
• “You have agreed that our product is the best on the market. Correct? Then I suggest that you place your first order today so we can have it to you by the end of the week.”
8) Follow-Up
• Reps must learn that the sale is not over when they get the order.
• It is much more expensive to acquire new customers than it is to retain existing customers.
• Following up to ensure that the customer is fully satisfied builds trust and is consistent with the concepts of Relationship Marketing.
Benefits to Company
• Higher internal efficiency
• Lower and active inventory
• Higher productivity of working capital
• Higher productivity of manpower
• Prediction accuracy of monthly retail
• Lesser product shortages
• Reduced seasonality effect on retail
• Higher retails and market shares
• Financiers performance measures