CONCEPT OF SALES MANAGEMENT

Sales Management

Sales management is a business discipline which is focussed on the practical application of sales
techniques and management of a firm’s sales operations. It is an important business function as net
sales through sale of products and services and resulting profit drives most commercial business.

Marketing Approaches

Marketing Strategy deals with company orientation towards market place. It deals with mainly 4
concepts.

Marketing
Strategy

Production Product Selling Marketing

Concepts Concept Concept Concept

1. Production Concept: The idea that the consumers will favour products those are available
and highly affordable. Example Lenovo
2. Product Concept: The idea that the consumers will favour products that offers most in
quality performance and innovative features.
3. Selling Concept: The idea that the consumers will not buy enough of the firm’s products
unless it undertakes a large scale selling and promotion effort. Example insurance
4. Marketing Concept: The marketing concept holds that achieving organizational goals
depends on knowing the needs and wants of target markets and delivering the desired
satisfactions better than the competitors do.

Marketing Vs Sales

Sales as a process implies exchanging the products or services in exchange for money in such a
manner that what you get from it is more than what you put into it. In other words, difference
between the realized sales price and the cost of manufacturing is the profit for the organisation from
sales.

Marketing on the other hand includes understanding the value proposition in the minds of the
customer and designing products and services accordingly.

Coordinating Marketing and Sales

Ideally the sales force and the firm’s other marketing functions should work together closely to
jointly create value for both customers and the company.

Unfortunately however some companies still treat marketing and sales as separate functions. When
this happens often the two separated functions don’t get along well.

When things go wrong, the marketers (marketing planners, brand managers and researchers) blame
the sales force for its poor execution of an otherwise splendid strategy. In return the sales team

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blames the marketers for being out of touch for what really going on with the customers. The
marketers sometimes fee that the sales people have their “feet stuck in the mud”, whereas
salespeople feel that the marketers have their “heads stuck in the clouds”.

A company can take several actions to help brings its marketing and sales functions closer together.
At the most basic level it can increase communication between the two groups by arranging joint
meetings and creating joint assignment.

Starting Ends
Point Focus Means

Profits through
The marketing Market Customer Needs
Integrated
customer
Marketing
satisfaction
concept

Profits
Existing Selling and
The selling concept Factory through sales
Products Promoting
volume

Fig: 2.1

Components of Marketing Mix

Marketing
Mix

Product Price Promotion Place

Public
Advertising
Relations

Personal Sales
SALES MANAGEMENT
Selling Promotion

Fig: 2.2

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Personal Selling

Personal Selling consists of interpersonal interactions with customers and prospects to make sales
and maintain customer relationships. Personal selling is the interpersonal arm of the promotion mix.
A company’s sales people create and communicate customer value
through personal interaction with customers.

Example:

 One of the oldest examples of personal selling is LIC.

NATURE OF PERSONAL SELLING

Personal Selling is one of the oldest professions in the world. The people who do the selling go by
many names: salespeople, sales representatives, agents, sales engineers, sales consultants etc.

People may hold many stereotypes of sales people – including some unfavourable one. However
modern salespeople are a far cry from these unfortunate
stereotypes. Today most sales people are well educated, well
trained professionals who add value for customers and maintain
long term customer relationships. They listen to their customers,
assess customer needs, and organize the company’s efforts to
solve the customer problems.

Robert Louis Stevenson once noted that “everyone lives by selling

something”. Sales are longer the avenue of choice for washouts. In
today’s hypermarkets, “buying is not about transactions
anymore”.

The term salesperson covers a wide range of positions. At one

extreme a salesperson might be largely an order taker, (ex: retail
store person standing behind the counter) at the other extreme
are order getters, whose positions demand creative selling and
relationship building.

ROLE OF SALES FORCE

The sales force serves as a critical link between a company and its customers. In many cases the
salespeople serves both masters – the seller and the buyer. First, they represent the company to the
customers at the same time they represent customers to the company.

In fact to many customers the salesperson is the company – the only tangible manifestation of the
company they see. Hence customers become loyal to sales people as well as to the company and the
product they represent. This concept of “salesperson owned loyalty” lends even more importance to
the salesperson’s customer relationship building abilities.

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Managing Sales Force

The definition of sales force management is the analysis, planning, implementation and control of
sales force activities.

There are broadly 6 sales force activities …

Designing Recruiting and

Training Compensating Sueprvising Evaluating
sales force selecting
Salespeople Salespeople Salespeople Salespeople
strategy salespeople

Major Steps in Sales Force Management

Fig: 2.3

Sales Force Structure

A company can divide sales responsibilities along any of several lines. There are broadly 4 sales force
structures

 Territorial Sales Force Structure: A sales force organization that assigns each salesperson to
an exclusive geographic territory in which the salesperson sales the company’s full line.
 Product Sales Force Structure: A sales force organization under which the salespeople
specialize in selling only a portion of the company’s product lines. Ex: GE
 Customer Sales Force Structure: A sales force organization under which salespeople
specialize in selling only to certain customers or industries. Ex: Sony has a separate sales
force structure to handle large organized retailers like E-Zone and Croma
 Complex Sales Force Structure: When a company sells a wide variety of products to many
types of customers over a broad geographic area, it often combines several types of sales
force structure. Salespeople can be specialized by customer and territory, by product and
territory, by product and customer, or by territory, product and customer. No single
structure is best for all companies and situations. Each company select a sales force
structure that best serves the needs of its customers and fits its overall marketing strategy.

Sales management must also decide who will be involved in the selling effort and how various sales
support people will work together.

The company may have an outside sales force (or field sales force), an inside sales force, or both.
Outside Salespeople travel to call on customers in field. Inside Salespeople conduct business from
their offices via telephone, internet, or visits from buyers.

As products become more complex, and as customers grow larger and more demanding, a single
salesperson simply can’t handle all of a large customer’s needs. Instead most companies now use
team selling to service large, complex accounts. Such teams might include experts from any area or
level of the selling firm – sales, marketing, technical and support services, R&D, engineering,
operations, finance and others.

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Example: IBM, Xerox, P&G have used the team selling concept for a long time. P&G sales rep are
organized into “customer business development (CBD) teams”. Each CBD team is assigned to a major
P&G customer, such as Wal-Mart, Safeway, or CVS Pharmacy. These teams
consists of customer business development manager, several account
executives (each responsible for specific category of P&G products), and
specialist in marketing strategy, operations, information systems, logistics,
and finance. This organization places the focus on serving the complete
needs of each important customer.

Recruiting and selecting Salespeople

At the heart of any successful sales force operation is the recruitment and selection of good
salespeople. In typical sales force, the top 30% of the salespeople might bring in 60% of the sales.

What sets great salespeople apart from the rest?

In an effort to profile top sales performers, Gallup

Management Consulting Group, interviewed hundreds
and thousands of salespeople. Its research suggests that
the best salespeople possess four key talents: intrinsic
motivation, disciplined work style, the ability to close
sale, and perhaps the most important, the ability to build
relationships with customers.

Training Salespeople

New salespeople may spend anywhere from a week or months to a year or more in training. Then
most companies provide continuing sales training via seminars, sales meetings, and Web e-learning
throughout the sales person’s career. In all U.S. companies spend more than $ 7 billion annually on
training salespeople.

Training programs have several goals. First the salespeople need to know about customers and how
to build relationships with them. So the training program must teach them about different types of
customers and their needs, buying motives, and buying habits. And it must teach them how to sell
effectively and train them in the basics of the selling process. Salespeople also need to know and
identify with the company, its products and its competitors. So an effective training program teaches
them about the company’s objectives, organization, and chief products and markets, and about the
strategies of major competitors.

Compensating Salespeople

To attract good salespeople, a company must have an appealing compensation plan. Compensation
is made up of several elements – a fixed amount, a variable amount, expenses, and fringe benefits.
The fixed amount, usually a salary, gives the salesperson some stable income. The variable amount,
which might be commissions or bonuses based on sales performance, rewards the salesperson for
greater effort and success.

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Management must decide what mix of these compensation elements makes the most sense for each
sales job. An American study of sales force compensation showed that the average salesperson’s pay
consists of about 67% salary and 33% incentive pay.

Fixed
Component

Variable
Component

Fig: 2.4

Supervising and Motivating Salespeople

The goal of supervision is to help salespeople “work smart” by doing the right things in the right
ways. The goal of motivation is to encourage salespeople to “work hard” and energetically towards
sales force goals. Active
Selling Prospectin
Companies vary in how closely they supervise Administra 10% g
their salespeople. Many help their salespeople tion 10%
to identify their target customers and set call 31%
Problem
norms. Some may also specify how much time Travel Time Solving
the sale force should spend prospecting for 18% 14%
Personal
new accounts and set other time management Downtime
priorities. 17%

One tool is weekly, monthly, annual Call Plan that shows How salespeople spend their time
which customers and prospects to call on and which
activities to carry out. Another tool is time and duty analysis. Fig: 2.5

On an average the active selling time accounts for only 10% of the total working time.

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Beyond directing salespeople, sales manager must also motivate them. Selling can also be
frustrating. Salespeople often work alone and they must sometimes travel away from home. They
may face aggressive competing salespeople and difficult customers. Therefore salespeople often
need special encouragement to do their best.

Management can boost sales force morale and performance

through its Organizational Climate, Sales Quotas, and Positive
Incentives. Organizational Climate describes the feeling that
salespeople have about their opportunities, value, and rewards for a
good performance. Sales quota is a standard that states the amount
a salesperson should sell and how sales should be divided among the
company’s products. Companies also sponsor sales contests to spur
sales force to make a selling effort above what would normally be
expected.

Evaluating sales force and salespeople performance

Management gets information about its salespeople in several ways. The most important source is
sales report, including weekly or monthly work plans and longer term territory marketing plans.

Using various sales force reports and other information, sales

management evaluates members of the sales force. It evaluates
salespeople on their ability to “Plan their work and work their
plan”. Formal evaluation forces management to develop and
communicate clear standards for judging performance. It also
provides salespeople with constructive feedback and motivates
them to perform well.

On a broader level, management should evaluate the

performance of the sales force as a whole. Is the sales force accomplishing its customer relationship,
sales, and profit objectives? Is it working well with other areas of marketing? Are sales force costs in
line with the outcomes? As with other marketing activities, the company wants to measure its return
on sales investment.

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The Personal Selling Process

The selling process consists of several steps that the salesperson must master. These steps focus on
the goal of getting new customers and getting orders from them.

STEPS IN THE SELLING PROCESS

The selling process consists of 7 steps: Prospecting and qualifying, pre-approach, approach,
presentation and demonstration, handling objections, closing and follow-up.

Presentati
Prospecti
Pre on and Handling
ng and Approach Closing Follow-up
approach demonstr objections
qualifying
ation

Fig: 2.6

 Prospecting and qualifying: The first step in the selling process is prospecting - Identifying
qualified potential customers. The salesperson often approach many prospects to get just a
few sales. The best source is referrals. Salespeople can ask the current customer for referrals
and cultivate other referral sources, such as noncompeting salespeople, bankers, dealers
etc. They can also search for prospects in directories or on the Web and track down these
leads using the telephone and direct mails. Salespeople also need to know how to qualify
leads – that is, how to identify the good ones and screen out the poor ones. This can be
done by looking at their financial ability, volume of business, special needs, location, and
possibility of growth.
 Preapproach: Before calling on a prospect, the salesperson should learn as much as possible
about the prospective customer. Preapproach begins with good research. The salesperson
can consult standard industry and online sources, acquaintances, and others to learn about
the prospective customer. Then the salesperson must apply research to develop a customer
strategy. “You need to translate data into something useful for your clients”.
 Approach: During the approach step the salesperson should know how to meet and greet
the buyer and get the relationship off to a good start. The steps involve the salesperson’s
appearance, the opening lines and the follow-up remarks.
 Presentation and demonstration: During this stage the salesperson
tells the “value story” to the buyer, showing how the company’s offer
solves the customer’s problem. The customer-solution approach fits
best with today’s relationship marketing focus. The solution approach
calls for a good listening and problem solving skills. “God gave us two

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ears and one mouth, to use in that proportion”.

The quality that the buyer dislike most in salespeople include being pushy, late, deceitful,
and unprepared and disorganized. The qualities that they value the most include good
listening, empathy, honesty, dependability, thoroughness, and follow-through.
The goal of a sales presentation is to deliver a clear, concise, and consistent message to your
prospects about your product and your brand, as well as why you are better than the
competitors.
 Handling Objections: The step in the sales process in which the salesperson seeks out,
clarifies, and overcome customer objections to buying.
 Closing: The step in the selling process in which the
salesperson asks the customer for an order. Some
salesperson may lack confidence, feel guilty about asking
for the order, or fail to recognize the right moment to
close the sale. Salesperson should know how to recognize
the closing signals from the buyer, including physical
actions, comments and questions. Ex: The customer might
sit forward and nod approvingly or ask about prices and credit terms.
 Follow-up: The last step in sales process in which the salesperson follows up after the sale to
ensure customer satisfaction and repeat business.

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Some Related Topics

Sales Force Automation

In today’s competitive world managing salespeople is as challenging as managing customers.

Companies face high attrition rate due to more opportunities for salespeople in the industry. Some
companies have 100% attrition within a year. What would happen with the customer if the sales
representative leaves the company and the customer is handled by other sales representatives?

Many problems arise when the customer faces a new sales team. Customers will have to state all the
requirements, budgets, features, and payment details to the new sales team, a process which can be
time consuming and creates dissatisfaction among customers.

This scenario demands a computer application which will not just maintain the customer
information in the sales representative computer, but can also report the latest information to the
sales manager in the company. This is where the implementation of sales force automation (SFA)
software is required.

Fig: 2.7

Various advantages of SFA include:

 Centralized database for retrieval and updating customer information

 Information sharing
 Company has access to all latest information about customers
 Sales team can be more responsible in entering right data, as company can track when the
data was updated and by whom.
 Data can be accessed anywhere irrespective of the location either using wired networks like
LAN, WAN or wireless networks like WiFi.
 Sales team can work from home as the data can be accessed anywhere

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 Since all customers’ data is stored in one place, it would be easy to know the efficiency of
the sales teams, status of the targets etc.
 Due to centralized data, many departments can access the customer data so multiple sales
to the same customer by different teams can be avoided thereby using the time more
efficiently.

Some disadvantages

 Complex scree may not be user friendly for all sales representative
 Require continuous management and back-up facilities if data crashes.
 SFA applications may be costly for the company where investments need to be justified
implementing one.

Customer Relationship Management (CRM)

CRM deals with automating all customer related data related to the sales, marketing, customer care,
technical, finance, and human resource departments. CRM is defined in the book “Sales Force
Management” by Johnston and Marshall (2009) as “any application or initiative designed to help
your company optimize interactions with customers, suppliers, or prospects via one or more touch
points such as call centre, sales person, distributor, store, branch office, web or e-mail for the
purpose of acquiring, retaining, or cross selling”.

CRM aims at putting the customer at the centre of the business process. In a client meeting you see
not only the sales representative but also may see members from marketing, finance, technical
departments participating. A system is required to be in place where all these business operations
need to be aligned. This is where the CRM applications come into picture.

CRM application for the sales department provides the following benefits:

 Improved sales planning and management

 Automating the lead system
 Managing sales opportunities effectively
 Streamlining account management
 Boosting sales productivity
 Enhancing sales pipeline management
 Simplifying workflow management
 Analytics for improved decision making

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Value Merchants versus Value Spendthrifts

It’s the company’s job to create a compelling value proposition for customers. Then, it’s the
salesperson’s job to build profitable customer relationships based on that value proposition.
Unfortunately in the heat of closing sales, salespeople too often take the easy way out by cutting
prices rather than selling value. It’s usually much easier to win a sale by matching competitor’s lower
prices than by working to convince a customer that your product’s greater value justifies its higher
price.

Value Spendthrifts Value Merchants

 Prefer to give quick price concessions to
close deals and move on to other
business
 Give price concessions without changes
in the market offerings
 Routinely trade more business for lower
prices.
 Give services away for free to close a
deal
 Sell primarily on price comparisons with
competitors
 Complain to the company that its prices
are too high
 Believe management pursues a volume
driven strategy.
 Tell the company that customers are
only interested in price.
 Make token unsupported claims about
superior value to the customers
 Focus on revenue and volume
components of their compensation plan.
 “Hang Tough” in the negotiations to gain
better profitability out of each deal
based on customer value
 Only give price concessions in exchange
for cost-saving reductions in the market
offering
 Routinely gain more business at the
same price.
 Strategically employ services to generate
additional business
 Sell primarily on cost of ownership
comparisons versus competitors
 Explain to the company that they need
more proof of superior value
 Believe management pursues a value
driven strategy
 Provide customer’s insights to improve
the value of company’s offerings
 Demonstrate and document claims
about superior value in monetary terms
to customers
 Concentrate on gross margins and
profitability component of their
compensation plan.

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WORKBOOK

1. Briefly describe the activities involved in the sales force management

2. List the 10 most important qualities of a professional sales person
3. Discuss the personal selling process
4. Describe with example how can Sales Force Automation and Customer Relationship
Management help companies?
5. Difference between Value Spendthrifts and Value Merchants

GROUP ACTIVITY

Work in a group of 5 to describe the stages in the selling process for a wealth management firm
selling Financial Plans to the IT professionals of a MNC. Role play the actual selling process, from
approach to close, with 3 team members acting as a sales team (Relationship Manager, Investment
Advisor and Service Manager). The other 2 member of the team should act as a customer and raise
at least 3 objections.

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