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Sales Management: Shaping Future Sales Leaders

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-1Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

The Sales Function and Multi-Sales Channels

Chapter 2


Learning Objectives

Explain what the sales function consists of and how salespeople affect a firm’s supply chain

Identify the various channels in which the sales function can be carried out

Explain how effective sales management efforts can align a firm’s sales strategy in a multichannel environment


The Sales Function

Locating potential buyers

Persuading them

Consummating the transaction


The Supply Chain

Complete process of events and people needed to bring product to the customer

Key term Sales forecast: what the salesperson expects to sell in a particular period of time


Managing the Supply Chain: Active vs. Passive

Passive

Example: salesperson turns in sales forecast

Sales forecast influences what happens in supply chain, but salesperson is not taking active role in influencing chain’s activity

Active

Salesperson actively seeks to influence what supply chain does

Example: buyer that needs special payment terms will need the salesperson’s help in securing those terms from the company

Example: salesperson might need to arrange expedited delivery in order to meet a buyer’s needs


Multichannel Environment

Using a number of methods, or channels, to accomplish the selling function

S o u th A tlan tic O ce an S o u th P ac if ic O c ea n

N o rth P ac ific O c ea n

N o rth A tlan tic O ce an

In d ia n O c ean

A rc tic O ce an A rc tic O ce an A rc tic O ce an

N o rth P ac ific O c ea n

U n ite d S ta te s o f A m e ric a

U .S .A .

C an a d a

M e x ic o

B ra z il

U . S . A .

F re n c h P o ly n e s ia (F r.)

A rg e n tin a U ru g u a y

P a ra g u a y

C h ile

B o liv ia

P e ru

E c u a d o r

C o lo m b ia

Ve n e z u e la F re n c h G u ia n a (F r.)

S u rin a m e G u y a n a

T h e B ah am a s

C u b a D o m in ica n R e p u b lic

P a n am a C o s ta R ic a

N ica ra g u a

H o n d u ra s G u ate m a la

E l S a lv a d o r

T rin id ad a n d To b ag o

Ja m . H a iti P u e rto R ic o (U S )

G re e n la n d (D e n .)

Ic e la n d

M a d a g a sc a r

S o u th A fr ic a L e so th o

S w a z ila n d

M o z a m b iq u e

Ta n z a n ia

B o tsw a n a N a m ib ia Z im b a b w e

A n g o la

Z a ire

Z a m b ia

M a la w i

B u ru n d i

K e n y a R w a n d a

U g a n d a

C o n g o

G a b o n

S o m a lia

E th io p ia

S u d a n

D jib o u ti

B e liz e

E g y p t L ib y a

C h a d

N ig e r

A lg e r ia

M a li

T u n is ia

N ig e r ia

C a m e ro o n C . A . R .

B e n in

To g o G h an a

B u rk in a F a so B a rb a d o s

D o m in ica

C ô te D ’Iv o ire

L ib e r ia

S ie rra L e o n e

G u in e a G u in e a -B issa u

S e n eg a l T h e G a m b ia

M a u rita n ia

W este rn S ah a ra (M o r.)

M o ro c c o

F in la n d N o rw a y

S w e d e n E sto n ia L a tv ia

L ith u a n ia

P o lan d

R o m a n ia

B u lg a r ia

T u rk e y G re ec e

C z ec h .

H u n g .

I ta ly A lb an ia

P o rtu g a l

F ra n c e

S p a in

A u s. S w itz .

U n ite d K in g d o m

Ire la n d

D e n .

G e rm an y N e th .

B e l.

C y p .

Ye m e n

O m a n S a u d i A ra b ia U . A . E .

Q a ta r

I ra n I ra q

S y ria

Jo rd a n

Isra e l L e b . C h in a

M o n g o lia

R u ss ia

A fg h a n is ta n

P a k is ta n

In d ia

S ri L an k a M a ld iv e s

N e p a l B h u .

M y a n m a r (B u rm a ) B a n g .

A n d a m a n Is la n d s (In d ia )

T h a ila n d

In d o n e s ia

M a la y s ia

B ru n e i

P h ilip p in e s

Taiw an

C a m b o d ia

V ie tn am

L a o s

A u stra lia

P a p u a N ew G u in e a

N e w Z e ala n d

F iji

N e w C a led o n ia

S o lo m o n Is la n d s

K ir ib a ti

M a rs h a ll Is lan d s F e d e ra te d S ta te s o f M ic ro n es ia

G u am (U S A )

Ja p a n

N . K o rea

S . K o rea

K u ril Is la n d s

W ra n g e l Is la n d

A leu tian Is lan d s (U S A )

N e w S ib e ria n Is la n d s

S e v e rn ay a Z e m ly a

N o v a y a Z e m ly a

F ra n z Jo se f L a n d S v a lb a rd (N o r.)

Ja n M ay en (N o r.) B a n k s Is lan d

V ic to ria Is la n d B a ff in Is la n d

E lle sm ere Is la n d

Is lan d o f N ew fo u n d lan d

A n ta rc tic a

Î le s C ro ze t (F ra n ce )

Tas m an ia

S o u th G e o rg ia (a d m . b y U K , c la im e d b y A rg e n tin a )

F a lk la n d Is la n d s ( Is la s M a lv in a s) (a d m . b y U K , c la im e d b y A rg e n tin a )

K u w a it C a n a ry Is la n d s (S p .)

S a o To m e & P rin c ip e

S in g a p o re E q . G u in e a

F a ro e Is . (D en .)

K a z a k h s ta n

B e la ru s

U k ra in e

M o ld o v a

G e o rg ia A rm e n ia A z e rb a ija n

T u rk m e n is ta n

U z b e k is ta n K y rg y z sta n

Yu g o .

M a c.

S lo v. C ro .

B o s .

S lo v a k .

E ri tre a

Ta j ik is ta n

H aw aiian Island s

G a la p ag o s Is lan d s (E cu a d o r)

M a u ritiu s

S e y ch e lle s

6 0 °

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-7

Global Sales Management: Outsourcing to India

EDS manages some 500 call centers worldwide

Indian call center employees selling to US must Learn to speak with American accent Learn American slang

EDS must Set appropriate metrics Write scripts for salespeople Match its customer tracking system to the client’s


Global Sales Management: Why Outsource?

Lower cost

Willing and highly educated workforce availability


Strategies to Reduce Sales Force Costs Without Sacrificing Performance

Purifying Shifting non-selling activities to lower-cost alternatives

Outsourcing Hiring another company to carry out a task or set of

tasks


Advantages of Company-Employed vs. Outsourced Sales Force

Company-Employed

Company can exert greater control over their efforts

Greater control over who is hired

Focus on only the company’s products, whereas an outsourced representative might be free to sell many companies’ products

Outsourced

Firm’s selling costs can be shared with other manufacturers, reducing cost per sales call

Established relationships with customers from which the manufacturer can benefit

These can yield greater coverage of the market for the manufacturer


Types of Outsourced Salespeople

Mfg RepMfg AgentRep

Independent contractor who does not take ownership of product and does not maintain an inventory

Broker Represents either buyer or seller and sometimes

both, carries an inventory of products but does not take ownership of them

Distributor Sells for many manufacturers and take

ownership of products, sell them on consignment, or otherwise maintain an inventory


A Few Manufacturer’s Reps Organizations

Foodservice Sales & Marketing Association

Mfr. Rep’s Educational Research Foundation

United Association of Manufacturer’s Reps

Manufacturers’ Agents National Association

Association of Independent Manufacturers’ Reps

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

All offer certification to upgrade professionalism

Most specialize in industries


Types of Company-Employed Salespeople

Inside Salesperson

Sells at a company’s facilities, either by telephone or in person

Account Manager

Has responsibility for building sales within specific accounts or accounts within a specific area (geographic rep)

Field Representative

Sells at the customer’s location


Types of Company-Employed Salespeople (continued)

Vertical MarketRep

Accounts all operate in the same industry

Trade Rep Sells to organizations in the supply chain,

usually retailers

Retail SalesRep

Sells to consumers who come into stores

Missionary Salesperson(detail rep)

Sells to people who recommend or prescribe a product to others but do not personally use it


More on Outsourcing

Can outsource Call Centers

Can outsource parts of the sales cycle To different sales organizations

Often used to Enter new markets Keep costs variable (no overhead) Leverage market coverage costs (share with others)



Seamless Integration

Seamless integration: a firm’s customers can easily shift transactions across various channels

Goal: all areas have all the customer information they need so the customer is treated properly


Alignment

Getting all of functional areas of a firm to work together This includes the company’s various salespeople–its inside

reps, geographic reps, customer service reps, etc.


Alignment

Alignment occurs at 3 levels



Areas to Align

TechnologyProcessesand Goals

SalesMetrics

CRM system used by salespeople also supports marketing

Lead management

Marketing & sales have same sales targets for a new product


Self-Assessment Library

Go to http://www.prenhall.com/sal/ Access code came with your book

Click the following Assessments Life in Organizations Careers How Motivated Am I to Manage?


Ethics in Sales Management: Stuck in AOHell

Customer tried to cancel his AOL service 21 times Recorded the call and posted the conversation on the Web

Customer claimed moving to France, still had to talk to manager in order to cancel

AOL: “…every Member that calls in to cancel their account is a hot lead”

State of New York fined AOL $1.25 million for hassling customers who wanted to cancel and then billing them anyway

Source: Keith Dawson, “Your Call is Not Particularly Important to Us,” Call Center Magazine (Oct. 2006), p. 4; Anonymous, “Customers Complain of Cancellation Problems,” FinancialWire (July 2, 2006), p. 1.


Role Play: Mechanix Illustrated

Family-owned magazine serving diesel mechanic shops

5000 subscribers, 10% increase over past 2 yrs

Advertising sales stagnant

Bill North, editor Does advertising sales

Sandy Lake, Lake Sales Wants to sell advertising Wants to take over subscriber management


Role Play (continued): Action Steps

Bill List objectives List concerns regarding outsourcing advertising sales

Sandy Develop particular sales format (phone, field, etc.) List advantages for that format

Role play the sales call


Caselet 2.1: Hereford Promotions

Promotional products company with 3 sales people

In past year, sales up 8%, but customer complaints have doubled

In past quarter, 12 new customers, 15 lost

Company’s net income averaging ~$1000 / month


Caselet 2.1 (continued): Running the numbers

Salespeople paid 10% commission on each sale Earn an average of

$10,000 /month

Each rep earning $10,000 /month adds $5000 profit margin to the company

New salespeople won’t work for straight commission, they expect a salary ($3000) until sales are high enough to cover expenses

Company averages 40 large customers per salesperson Large customer bills

$20,000 / year

Small customers account for $20,000 /month for each rep Each rep might have 100 small

customers


Caselet 2.1 (continued): Making decisions

What alternatives for growth might Sandy consider?

What multichannel options might she pursue?


Caselet 2.2: Marchetti Machines, Problem 1

Salesperson Frank McCaslin is close to landing a large account, one of the biggest sales of the year

Account’s CFO plays golf with Marchetti service manager Louis Ruggieri

Ruggieri says the service team hates to work on the system Frank proposed

Account’s CFO emails, “…if that is the case, we’re going to have to open our search up to some other companies to try to find something more reliable”


Caselet 2.2 (continued): Marchetti Machines, Problem 2

Sales division is reorganizing Bottom 10% of accounts moving to inside sales Inside sales moving to new division with Web sales and

distributor sales Distributors are only allowed to sell to

Accounts under $100,000 in annual revenue Accounts that require engineering that Marchetti doesn’t do Accounts they find first Cannot sell to government or accounts already on Marchetti’s

customer list

Current issue: distributors sell to Marchetti accounts Company names are not obvious or divisions operate under different

names Difficult to know who owns the account



Caselet 2.2 (continued): Marchetti Machines, Questions

1. How should Frank’s boss, Emily, handle the problem with Louis Ruggieri? What should she do about the account? What should she tell Frank if the account is lost

completely?

2. What problems are likely to occur because of the reorganization? Did these issues exist before the reorganization? Will these issues be better or worse as a result of the

change in structure?

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