YOU ARE DOWNLOADING DOCUMENT

Please tick the box to continue:

Transcript

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. 1

Sales, Distribution and Supply Chain Management

Unit 1

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

Sikkim Manipal University

Page No. 2

Sales, Distribution and Supply Chain Management

Unit 1

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 Page No. 3

Sales, Distribution and Supply Chain Management

Unit 1

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

Sales, Distribution and Supply Chain Management

Unit 1

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

Sales, Distribution and Supply Chain Management

Unit 1

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

Sales, Distribution and Supply Chain Management

Unit 1

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 Manipal University Page No. 7

Sales, Distribution and Supply Chain Management

Unit 1

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

Sikkim Manipal University

Page No. 8

Sales, Distribution and Supply Chain Management

Unit 1

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 Manipal University Page No. 9

Sales, Distribution and Supply Chain Management

Unit 1

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 Page No. 10

Sales, Distribution and Supply Chain Management

Unit 1

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 University Page No. 11

Sales, Distribution and Supply Chain Management

Unit 1

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

Sales, Distribution and Supply Chain Management

Unit 1

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 University Page No. 13

Sales, Distribution and Supply Chain Management

Unit 1

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. 14

Sales, Distribution and Supply Chain Management

Unit 1

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 _______.

Sikkim Manipal University

Page No. 15

Sales, Distribution and Supply Chain Management

Unit 1

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.

Sikkim Manipal University

Page No. 16

Sales, Distribution and Supply Chain Management

Unit 1

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

Sikkim Manipal University

Page No. 17

Sales, Distribution and Supply Chain Management

Unit 2

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.

Sikkim Manipal University

Page No. 18

Sales, Distribution and Supply Chain Management

Unit 2

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 or opinions; Present new ideas to decision makers;Page No. 19

Sikkim Manipal University

Sales, Distribution and Supply Chain Management

Unit 2

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 contributing factors to manage change.Page No. 20

Sikkim Manipal University

Sales, Distribution and Supply Chain Management

Unit 2

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 Manipal University Page No. 21

Sales, Distribution and Supply Chain Management

Unit 2

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.

Sikkim Manipal University

Page No. 22

Sales, Distribution and Supply Chain Management

Unit 2

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. 23

Sales, Distribution and Supply Chain Management

Unit 2

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.

Sikkim Manipal University

Page No. 24

Sales, Distribution and Supply Chain Management

Unit 2

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

Sikkim Manipal University

Sales, Distribution and Supply Chain Management

Unit 2

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.

Sikkim Manipal University

Page No. 26

Sales, Distribution and Supply Chain Management

Unit 2

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

Sikkim Manipal University

Page No. 27

Sales, Distribution and Supply Chain Management

Unit 3

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 unitSikkim Manipal University Page No. 28

Sales, Distribution and Supply Chain Management

Unit 3

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.

Sikkim Manipal University

Page No. 29

Sales, Distribution and Supply Chain Management

Unit 3

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.

Sikkim Manipal University

Page No. 30

Sales, Distribution and Supply Chain Management

Unit 3

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, includingSikkim Manipal University Page No. 31

Sales, Distribution and Supply Chain Management

Unit 3

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.

Sikkim Manipal University

Page No. 32

Sales, Distribution and Supply Chain Management

Unit 3

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

Sales, Distribution and Supply Chain Management

Unit 3

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.

Sikkim Manipal University

Page No. 34

Sales, Distribution and Supply Chain Management

Unit 3

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 University Page No. 35

Sales, Distribution and Supply Chain Management

Unit 3

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 essential to support the stores.Sikkim Manipal University Page No. 36

Sales, Distribution and Supply Chain Management

Unit 3

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.

Sikkim Manipal University

Page No. 37

Sales, Distribution and Supply Chain Management

Unit 3

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.

Sikkim Manipal University

Page No. 38

Sales, Distribution and Supply Chain Management

Unit 3

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

Sikkim Manipal University

Page No. 39

Sales, Distribution and Supply Chain Management

Unit 3

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;

Sikkim Manipal University

Page No. 40

Sales, Distribution and Supply Chain Management

Unit 3

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

Sales, Distribution and Supply Chain Management

Unit 3

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 believe in the importance of what they are doing, and see their jobs as having value and purpose.Sikkim Manipal University Page No. 42

Sales, Distribution and Supply Chain Management

Unit 3

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.

Sikkim Manipal University

Page No. 43

Sales, Distribution and Supply Chain Management

Unit 3

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 Page No. 44

Sales, Distribution and Supply Chain Management

Unit 3

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 Page No. 45

Sales, Distribution and Supply Chain Management

Unit 3

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.

Sikkim Manipal University

Page No. 46

Sales, Distribution and Supply Chain Management

Unit 3

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?

Sikkim Manipal University

Page No. 47

Sales, Distribution and Supply Chain Management

Unit 3

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?

Sikkim Manipal University

Page No. 48

Sales, Distribution and Supply Chain Management

Unit 3

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 too many performance measures, incorrect measures, or provide rewards or punishment for results outside theSikkim Manipal University Page No. 49

Sales, Distribution and Supply Chain Management

Unit 3

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 areSikkim Manipal University Page No. 50

Sales, Distribution and Supply Chain Management

Unit 3

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


Related Documents