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Sales managementThe only business function that generates

revenue.

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Planning, direction and control of personal selling including recruiting, selecting, training, equipping, assigning, supervising, compensating and motivating as these tasks apply to the personal sales force.

sales management

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Management of the personal selling task. Is there anything like ‘impersonal selling’ or

‘non-personal’ selling? Selling is an exchange transaction. Exchange

of Product or service for money Money is the revenue or the earnings of an

enterprise often called ‘turnover’ or ‘top line’ Sales therefore is the only revenue

generating function in an enterprise.

Sales management

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3 general underlying objectives:1. SALES VOLUME2. PROFITS3. GROWTHSales – cost of sales = gross margin.

Gross margin – expenses =net profit.

Objectives of sales management

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Industrial Revolution – 1760 Small home industries – Large scale

manufacturing –marketing – sales and sales support

Concept of hunters and farmers The modern day sales manager is

both an administrator in-charge of personal selling activity and a member of the group that makes marketing decisions of all types.

Sales management: evolution

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…..they make more noise and more mistakes, create more cheer, correct more errors, adjust more differences, spread more gossip, hear more grievances, pacify more belligerence and waste more time under pressure, all without loosing their temper, than any other class of professionals –including politicians.

The salesman

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…they live in hotels, cabs and tents on trains, buses, eat all kinds of food, drink all kinds of liquids –good and bad- sleep before, during and after business, with no sympathy from the office.

They draw and spend more money with less effort, they come at the most inopportune time, under the slightest pretext, ask more personal questions.

Yet they are a power in society…

The salesman

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With all their faults, they keep the wheels of commerce turning, and the currents of human emotions running. More cannot be said any man. Be careful whom you call a salesman, lest you flatter him.

-Donald Benenson in Ziglar on Selling

The salesman

Sales Management

“QUALITIES THAT LEAD TO EFFECTIVE SALES MANAGEMENT

ARE OFTEN OPPOSITE THE ATTRIBUTES OF A SUCCESSFUL

SALES PERSON”

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With various tasks required to be performed the enterprise had to create a structure to ensure that work is done.

Principles of structure: authority, responsibility, performance, support/co-ordinate.

Sales organization

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Concept of organization: Group of individuals working jointly to achieve a defined goal and bearing formal and informal relations with one another. An organization is oriented towards and a co-operative endeavor and a structure of human relationships.

Sales organization

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Eliminate waste of effort Minimize friction Maximize co-operation Permit development of specialists Ensure that all activities get done Define authority Fix responsibility

Purpose of organization

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Define the objective Delineating the necessary activities Grouping activities in the ‘jobs’ or

‘positions’ Assigning personnel to positions Providing for coordination and control

Setting up a sales organization

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Line organization: line managers perform sales and sales management activities.

The chain of command runs from top sales executives down through subordinates

Types of organization structures

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Suitable for large and medium sized firms, having substantial number of employees and diversified product line.

It provides top sales executive with a group of specialist.

Staff managers have advisory or support responsibility. e.g. Market research manager, Training manager.

They are not directly responsible for achieving sales targets.

Line and staff organization:

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Functional organization: focus is on the principle of specialization. Each specialist has a functional responsibility and are permitted to direct and control the salesperson thru their immediate superior.

Organization structures

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Horizontal structure. Specialised structure: Geographical; Product; Market or customer; Combination of specialised

structures.

Organization structure

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Clear authority & ResponsibilityQuick response & Decision, Low CostWeak on marketing inputsSales manager controlled

Line Sales Organization structure

Area Sales Mgr

Area Sales Mgr

Area Sales Mgr

Area Sales Mgr

Sales Force Sales Force Sales Force Sales Force

Sales Manager

Head –Marketing

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Head -Marketing

Marketing Services Sales Promotion

BrandMarket

Research

Area Sales Managers

Sales Force

Administrative SimplicityAccess to SpecialistsMultiple reportingHOD is Pressures to co-ordinate

Functional Sales Organization

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Research & Design team

Customer ResearchProduct / Service

design

Operations teamProduction

QAEngineering Systems

Customer Support teamServiceTraining

Information

Customer Satisfaction teams

Sales & MarketingPricing & Promotion

ChannelsLogistics

Planning TeamStrategyFinance

HRC O O

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Sales &Advertising: both stimulate demand. They need to be blended. Salespersons can improve advertising effectiveness. Advertising needs to support sales where and when they need it most.

Sales & Marketing information: data is needed for analysis of sales problems, for determining sales potential. Raw data is collected by sales people.

Sales relation with marketing activities

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Sales and service: contributes to strategy success.

Sales and distribution: minimizes stock out situation; improves inventory control; helps sales to focus on demand generation.

Sales & Production: Sales and R&D Sales &Finance

Relationships

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All Managerial functions Forecasting Analysis of cost and profit

Role Sales Manager

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Hiring right people and giving right job description

Training and motivating Setting targets and tracking results Providing leads and sales support Conducting sales meeting Allocation of scarce resources

Responsibilities of Sales Manager

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Identify potential customers from existing database

Deciding on priority and frequency Deciding on selling approach Administering the sales order

Roles of sales executive

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Information gathering and reporting relevant data

Skill up gradation by attending training Attending sales meetings and conferences Fill in call and expense reports.

Responsibilities of sales executive

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EXISTING BUSINESS

SALES PLANNINGa managerial function

LONG RANGE PLAN 3 TO 5 YEAR PROJECTIONS

ANNUAL OPERATING PLAN REVISED YEAR TO YEAR

SEGMENTWISE PLAN PAST TREND

GEOGRAPHICAL PLAN PREVIOUS YEAR SALES

CUSTOMERWISE PLAN CURRENT YEAR ACHIEVEMENT

PLAN BY VALUE NEXT YEAR PLANS

PLAN BY VOLUME ASSUMPTIONS

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• PROFITABILITY IMPROVEMENT

A REGION OR TERRITORY CEASES TO CONTRIBUTE

DISCONTINUATION OF SALES TO AN ACCOUNT

DE-EMPHASISING PRODUCTS

ACCEPTING A PRIVATE BRAND ORDER

VARIANCE BETWEEN BUDGET AND ACTUAL SALES

PLANNING FOCUS AREAS:

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NEW BUSINESS

VISION MISSION GOALS

STRATEGY

*ACTION PLANS

SALES PLANNING

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Planning Organizing Training Motivating Controlling Leading

Key Deliverables of the Sales function

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Forecasting a key planning toolPRODUCT LEVEL –total sales -industry salescompany salesproduct line salesproduct variant sales

Sales planning

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Long Range Medium range Short term (range)

Time period forecast

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Sales plan

Capacity plan

Production plan

Cash flow plan

Procurement plan

Planning process

Human resource plan

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Why forecast? One of the keys to success in sales is

knowing where customers are located and being able to predict how much they will buy.

Sales forecast

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Sales forecasting; Industry estimates

• Objective definition

• Identifying critical factors (assumptions)

• Selecting method of forecasting

• Collecting, analysing, interpreting data.

• Concluding predictions.

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Nation Region ( REGION OR ZONE ) Territory ( BRANCH / DISTRICT ) Customer

Geographic Area forecast

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Top - down / Break –down approachAn SBU level forecast broken down to region,

district, territory, salesperson and individual customer sales quotas

Bottom –up / Build – up approachIndividual customer to branch to zone to

company level forecast

Forecasting Approaches

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Qualitative methods:Executive opinionDelphi method – prediction by a panelSales force composite – ‘grass roots’

approach. Test marketing –controlled or simulated

Methods of sales forecast

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Quantitative methods: Moving averages Exponential smoothing Regression analysis Econometric analysis

Sales forecast methods

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Customer’s intention and expectation are specific. (insurance, mobile service)

Customer is contacted over phone Customer is an organizational buyer Customer seeking service or solution Customer in a retail store Cold calling situation Pharmaceutical selling Creative selling ( ad.campaign)

Selling situations

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To the sales department, the budget is a blue print for making sales. It involves money invested in distribution facilities, promotion efforts, and sales personnel. It is the foundation on which to plan sales objectives and the means of achieving them during the coming year.

The sales budget

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A budget is a quantitative expression of plans. Most well managed enterprises use a budget which is a comprehensive and coordinated plan for the operations and resources of the enterprise.

It is a formal and intricate process Approaches are either incremental or zero

based. In a volatile economic climate

organizations estimate optimistic, realistic and pessimistic scenarios.

Sales budget

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Critical factors considered:1. past trends2. Sales force estimates3. Trade prospects4. Present scenario5. Customers: existing and potential6. Government policies7. Industry environment

Sales budget

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Decision on the size of the sales force is very complicated because structure of the customers vary in each territory, the level of competition varies across territories, the connectivity for travel varies etc.

There are 3 generally accepted approaches: affordability, incremental and workload methods.

Number of sales people

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Definition : A sales territory consists of existing and potential customers assigned to a sales person. The territory may or may not have geographic boundaries.

Sales territories

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Increase / improve customer coverage Control selling expenses Effective evaluation of salesman’s

performance. improve customer relations

Reasons for territories

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Main procedural steps:1. Selection of a basic geographical

control unit2. Determination of sales potential

present in each unit3. Combining the basic units into

tentative territories4. Adjust for differences in coverage

difficulty and readjust the tentative territories ( build up / break down method )

Territory design

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Build up method: Decide call frequency Calculate total no of calls in the unit Estimate workload capacity of salesman Make tentative territories

Develop final territories

Territory design

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Break down method: Estimate company sales potential for total market. Forecast sales potential for each control unit. Estimate sales expected from each salesman. Make tentative territories. Develop final territories.

Territory design

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Reasons / advantages: Maintain lines of communication Improve territory coverage Minimize wasted time Closer scrutiny of sales force movement Journey plans for improving customer

satisfaction

Routing Scheduling and control

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Quotas are quantitative goals assigned to individual sales persons for a specified period of time.

One of the most widely used tools in sales management.

Should not be confused with sales potential or sales forecast.

Quotas may be set equal to ,above or below the sales forecast.

Quotas

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To help management motivate sales people. To direct sales people where to put there

efforts. To provide standards of performance

evaluation

Why Quotas ?

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Sales volume Quotas : Rupee volume / Unit volume

Profit based Quotas: contribution / gross margin

Activity Quotas: calls per day; sales meetings; product demos; ( efforts = results.)

Expense Quotas

Types of Quotas

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S-specific M-measurable A-achievable R-realistic T-time bound

QUOTA SETTING MECHANISM

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What is Motivation?? Drive to initiate an action.

The intensity of effort in an action

The persistence of effort over

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Frequent rejection Physical separation from company support

Direct influence on quality of sales presentation

Indirect influence on performance

Why motivation

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“the desire to make an effort to fulfill a need is motivation”

Motivation includes three dimensions: Direction, Intensity and persistence.

Motivation may also be Intrinsic or extrinsic Maslow’s hierarchy of needs:

Sales force motivation

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Maslow’s theory SelfActualisation

Esteem needs

Social needs

Safety needs

Physiological needsFood, clothing, shelter, health care

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MASLOW’S HIERARCHY OF NEEDS

Intense job challenge, full potential, full expression, creative expansion.

Achievement, respect, recognition, responsi-bility, prestige, independence, attention, importance, appreciation.

Belonging, acceptance, love, affection, familyand group acceptance, friendships.

Security, stability, dependency, protection, need for structure, order, law, tenure, pension, insurance.

Hunger, thirst, reproduction, shelter, clothing,air, rest.

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“Two factor theory” of motivation Hygiene ,maintenance, or job context

factors.( dis satisfiers ) Achievement, challenge, advancement,

growth in the job. (satisfiers )

Frederick Herzberg theory

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SELLING

THE WORD SELL IS DERIVED FROM A Norwegian WORD SELJE

WHICH MEANS TO SERVE

TO SERVE YOUR PROSPECTS YOU MUST UNDERSTAND THEIRNEEDS.

PEOPLE INVARIABLY BUY WHAT THEY WANT, EVEN ABOVE WHAT THEY NEED

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Process: a sequential series of decisions and or actions.

The sales process

BUYING PROCESS SELLING PROCESS

NEED PREPARESEARCH FOCUSIDENTIFY DEFINEISOLATE PROPOSE/PRESENT SELECT HANDLE OBJECTIONSBUY CLOSE THE SALECONSUME FOLLOW UP

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1. Prospecting & Qualifying2. Pre approach (pre call planning )3. Approach4. Presentation & Demonstration5. Overcoming Objections6. Trial close / Closing the sale7. Follow –up and Service.

The sales process

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Focus on Prospects NEEDS and WANTS. Sell by design, not by chance.Follow a proven 4 step formula:NEED ANALYSISNEED AWARENESSNEED SOLUTIONNEED SATISFACTION

SELLING PROCESSthe Ziglar method

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Process of identifying potential buyers. A prospect has a reasonable probability of

buying ,has sufficient need to justify a profitable sale ,has financial resources to buy and can be classified as ‘eligible to buy’

MONEY? AUTHORITY? DESIRE?

Prospecting

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Lead generation – a three step process.1. Defining the target market :what it wants;

what it buys; where and when it buys; what it buys; how it buys;

2. Using communication tools to gather leads –Advertising, Direct mail, Telemarketing, Trade shows, buying data

3. Qualifying the Leads.

Locating prospects

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Adequate knowledge of the product to be sold, company being represented, the market competition ,category or segment of customers and selling techniques.

Product knowledge: Evolution-Features-Benefits-Uniqueness-Price

Company knowledge: History-Values-Achievements-Management-Policies

Selling first time to Prospects(pre sale planning)

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Competitors knowledge :structure-share-strategy-systems.

Customer knowledge :attitudes-preferences- behavioural habits

Selling techniques :

Pre sale plan

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Focus on understanding customer needs and characteristics and preparing a proposal on how the product or service offered can satisfy the need.

Steps involved are:Determining call objectives.Development of customer profile.Determine customer benefits.Determine the flow and content of the

presentation.

Pre approach planning

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Situational questions: questions about prospect’s current situation. (who will decide? is it the first time ? Changing source ?

Problem identification question: Questions to uncover problems, difficulties or needs ( problems on quality, delivery ?)

Problem impact questions: questions to make the buyer realise the impact of the problem and the need to solve it.( what will be the impact on costs , on customer satisfaction ?)

Understanding buyer’s needs

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Solution value questions :questions to help the buyer asses the value or usefulness of the solution ( for x benefit how much would you save ?

Confirmation questions: (how would an error free system help?)

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At this stage you need to THINK Prospect and Salesperson should both be

aware of the need. (remove blind spots)

Need awareness

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Present your product Time to stop asking questions and start

providing solutions. People don’t buy products, they buy what

the product does for them.

Need solution

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Thinking vs. feeling questions. When you learn how the customer feels you

are more likely to find out what the person thinks.( the seat belt case)

Tying emotion to logic.

Questions are the answer

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Three basic types of questions enable us to discover the needs of our potential customers.

1st The Open Door Questions.-allows the prospect the freedom to go where ever they like. the “who, what where ,when, how and why” questions

The questioning process

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The closed door question: “would you tell me more”; “what do you mean by…Answers to these give you information to helping the prospect and building trust.

Questioning …

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“yes or no” questions demand a direct response. “do you agree..” “would my proposal..” “are we in agreement..”

They allow you to check on your progress on the sales process. “trial close”

Questioning…

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Stimulus response method: also called a ‘canned approach’, a memorised sales presentation .It assumes that if a right stimuli is made it will get a favourable response.

Formula method: the AIDA process. Need-satisfaction method: an interactive sales

presentation. The most challenging and creative method. The FAB way.

Features, Advantages, Benefits.

Presentation methods

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Attracting Attention Creating Interest Building Desire and conviction Initiate Action to buy.

The presentation

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Team selling method: a multi person sales team deals with a multi person buying centre (or buying committees)

Sales team consists of Account executive, technical support engineer, logistics expert, IT or systems executive and Finance executive.

Buying committee consists of materials exec. manufacturing/operations exec. supply chain exec. Materials manager and Finance exec.

Presentation methods

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Consultative selling method: problem-solution method.

Requirements are:Knowledge of the industry, clients company,

awareness of key members needs,

Presentation methods

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Objections , opposition , resistance to the presentation typically happens during the presentation or while asking for the order.

Objections should be welcomed. Objections indicate that the prospect is

involved and not indifferent. Objections reflect the prospect’s view.

Objections

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1. Psychological ( hidden ) – includes pre-determined ideas or beliefs, preference for established brands, dislike of making decisions , anxiety or resistance to spend money , suspect about quality etc.

2. Logical or practical or real –delivery schedule, high price , product availibility,

Objections

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Listen

Understand

Negotiate

Handling objections

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Ask questions: listen, rephrase, reconfirm the objection and explain.

Turn objection into a benefit and trial close. Deny objections tactfully. (arrogance and

sarcasm to be strictly avoided) Testimonials, referals Compensation for valid objections.

Methods of handling objections

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Plan – pre determine ‘firm’ and ‘flexible’ factors; define limits.

Ensure an atmosphere of trust , understanding and respect.

Define purpose and objective.

Negotiation

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Win – loose

Win – Win

Loose - Loose

Negotiation styles

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Summarize Advantage and disadvantage comparison Opportunity benefit Emotional appeal Direct closure A.A.F.T.O=Always Ask For The Order

Closing the sale