Chapter 15: Personal Selling
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Transcript of Chapter 15: Personal Selling
For use only with Perreault and McCarthy texts.© The McGraw-Hill Companies, Inc., 1999
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Chapter 15: Personal Selling
For use only with Perreault and McCarthy texts.© The McGraw-Hill Companies, Inc., 1999
Irwin/McGraw-Hill
Sales Is Important!
Weak Revenues = No FirmSales is often the largest marketing expenseSelling mistakes increase costs and lose
revenues1 in 10 workers are in salesSales is the #1 job of AU gradsSalespeople can earn very high incomes
Pay is often a function of risk-return
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Personal Sales works better than Ads
Salespeople get more attention than adsSalespeople can adjust to cultural or
situational factorsSalespeople can ask questionsSalespeople can adjust to customer
questionsSalespeople can take the order - now!Salespeople can act to make sure the
customer is satisfied - fix problems
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Salespeople are marketing managers for their territory
Identify which customers to aim atWhich products to emphasizeWhich customers to call on and work
hardestHow to use promotions/sales support
moneyWhen and how to adjust prices
Good salespeople help the customer buy.
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Critical Selling Skills
Product/marketing knowledgeListeningAsking good questionsAsking for the orderBeing OrganizedBeing able to handle failureKeeping promises and being dependable
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SupportingSupporting
Order-TakingOrder-Taking
Order-GettingOrder-Getting????????????????????????????????????????????????????????????
15-4
Basic Sales Tasks
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Supporting Salespeople
MISSIONARY SALESPEOPLESupporting salespeople who work for
producers—calling on their middlemen and the middlemen's customers
TECHNICAL SPECIALISTSSupporting salespeople who provide
technical assistance to order-oriented salespeople
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Business Telemarketing
Growing fast because of cost per contact ($250 vs $1 - $20 per contact).
Very helpful to identify prospects who are ready to buy
Calls & letters can often handle routine tasks without the cost of a face to face call
Remember, time is a critical resource for salespeople!
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Consumer Telemarketing
Outbound Calling Industry Killed by “Do Not Call” legislation
Only exceptions are for charities & politicians
Inbound calls still very important to many companies
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Limitations of Telemarketing
1] Very difficult to sell complex products2] Very difficult to sell when there are
multiple decision makers3] Very difficult to sell when customer
needs are complexHowever, telemarketing can often cover the
basics and a face to face call can close the deal.
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Effective Telephone Communication
1. Keep mouth clear and voice wet2. Smile!3. Have a long cord so you can use your
normal gestures4. Eliminate distractions. Clear desk.5. Chose effective words. No jargon.6. Confirm any action by reading it back.
Also read back critical information7. Be an active listener
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Some Ways to Set Sales Territories
Geographic areasCustomer typesAccount sizeProduct to be soldAny combination of the above
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Salesforce Turnover
Salesforce Turnover =(# of salespeople who leave the company in
a time period) / (Total Number of Salespeople)
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Salesforce Turnover Example
A company starts the year with 100 salespeople
During the year, 5 are fired, 6 leave the company and 1 dies. Another salesperson has a heart attack and is on medical leave for 90 days.
12 people are hired during the year.What is the salesforce turnover?
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Turnover Answer
5 Fired + 6 Leave + 1 death / 100 =12% turnover
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Salesforce Turnover is Costly
Not covering customersNot covering them well (stretching)Hiring Costs
Most firms underspend on hiring costs or just “make do” with weak people. This is very costly in the long term.
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Very Low Turnover May Indicate
Salesforce is over paidSalesforce is not challenged
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Sales Recruiting
A written job description lays the groundwork—by specifying what tasks the salesperson needs to be able to do
Commonly used selection tools are best when used in combinationmultiple interviews—with several different peoplepersonnel and psychological testsbackground checks
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Training
Initial and ongoing training can help both experienced and inexperienced salespeoplecompany policies and practicesproduct informationselling techniques (and customer
knowledge)
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Sales Compensation
3 Main TypesStraight SalaryStraight CommissionCombination Plan
They differ in: Degree of fixed costsMotivationControl over salesperson activities
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Sales Compensation Example
Company 1, 2 & 3 each have 10 salespeopleCompany 1 pays each salesperson $80,000 in
salary and benefits annuallyCompany 2 pays salespeople a flat 4%
commission on salesCompany 3 pays their salespeople $30,000 in
salary and a 2% commissionWhat is total salesforce compensation for
each company at sales of $10, $20 and $40 million?
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$10 Million in Sales
Company 1 = 10 salespeople x $80,000 each = $800,000
Company 2 = $10 million in sales x .04 = $400,000
Company 3 = 10 salespeople x $30,000 and $10 million in sales x .02 = $500,000
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$20 million in Sales
Company 1 = $800,000Company 2 = $20 million x .04 = $800,000Company 3 = $300,000 + ($20 million
x .02) = $700,000
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$40 million in Sales
Company 1 = $800,000Company 2 = $1,600,000Company 3 = $1,100,000
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Prospecting
Prospecting = following all the leads in the target market to identify potential clients (415)
Salespeople who are effective at prospecting:Follow up on inquiries quickly (when customer
is “Ready to buy”Rapidly Identify: buying center, decision
makers, ability to pay, customer needs