PRINCIPLES OF MARKETING
Dr. Paul Merenski
Chapter 21:
Personal Selling and Sales Management
I. Scope And Significance Of Personal Selling And Sales Management
A. Nature of Personal Selling and Sales Management. Personal selling involves the two-way flow of communication between buyer and seller, often in a face-to-face encounter designed to influence a person's or group's purchase decision, but also over highly advanced telecommunication lines. The highly human-intensive nature of personal selling necessitates that people be managed. Sales management involves planning the selling program, as well as implementing and controlling the personal selling effort of the firm.
B. Pervasiveness of Selling.The pervasiveness of selling is evident in the fact that virtually every occupation that involves customer contact has an element of personal selling. Many executives in major companies have held sales positions at some time in their careers. The president of ibm has historically come from sales, and Victor Kiam, the president and ceo of Remington Products, held sales positions at Lever Brothers.
C. Personal Selling in Marketing. Personal selling serves three major roles in a firm's overall marketing effort:
1. Salespeople occupy a boundary position between buyer and seller.
2. Salespeople represent what a company is or attempts to be.
3. Personal selling often plays a dominant role in a firm's marketing program.
D. Creating Customer Value through Salespeople: Relationship Selling. Customer value creation is made possible by relationship selling, the practice of building ties to customers based on a salesperson's attention and commitment to customer needs over time. Relationship selling involves mutual respect and trust that focuses on creating long-term customers, not a one-time sale.
II. The Many Forms Of Personal Selling.
Personal selling assumes many forms based on the amount of selling done and the amount of creativity required to perform the sales task.A. An Order-taker typically processes routine orders or reorders for products that were already sold by the company. Outside order takers visit customers and replenish inventory. Inside order takers answer simple questions, take orders, and complete transactions with customers.
B. An order-getter sells in a conventional sense and identifies prospective customers, provides customers with information, persuades customers to buy, closes sales, and follows-up on customer experience with a product or service.
C. Sales support personnel augment the selling effort of order-getters by performing a variety of services. They do not sell products or services in a conventional sense.
1. Missionary salespeople do not strictly solicit orders but rather concentrate on performing promotional activities and introducing new products.
2. Sales engineers specialize in identifying, analyzing, and solving customer problems and bring technical expertise to the selling situation.
3. Team selling is the practice of using an entire team of professionals in selling to and servicing major customers. Conference selling involves a salesperson and other company resource people meeting with buyers to discuss problems and opportunities. In seminar selling , a company team conducts an educational program for a customer's technical staff. IBM and Xerox pioneered cross-functional team selling.
III. The Personal Selling Process: Building Relationships.
The personal selling process consists of six stages: (1)Prospecting, (2) preapproach, (3) approach, (4) presentation, (5) close, and (6)follow-up.A. Prospecting .The first stage in this process is prospecting, the search for and qualification of potential customers. There are three types of prospects:
1. A lead is the name of a person who may be a possible customer.
2. A prospect is a customer who wants or needs the product.
3. A qualified prospect is an individual who wants the product, can afford to buy it, and is the decision maker.
B. Preapproach. The preapproach stage involves obtaining further information on the prospect and deciding on the best method of approach. Activities in this stage include finding information on who the prospect is, how the prospect prefers to be approached, and what the prospect is looking for in a product or service.
C. Approach. The approach stage involves the initial meeting between the salesperson and prospect where the objectives are to gain the prospect's attention, stimulate interest, and build the foundation for the sales presentation itself.
D. Presentation. The objective of the presentation stage is to convert a qualified prospect into a customer by creating a desire for the product or service. Three major presentation formats exist:
1. Stimulus Response Format. The stimulus-response presentation format assumes that given the appropriate stimulus by a salesperson, the prospect will buy. With this format the salesperson tries one appeal after another, hoping to "hit the right button."
2. Formula Selling format. The formula selling presentation format is based on the view that a presentation consists of information that must be provided in an accurate, thorough, and step-by-step manner to persuade the prospect to buy. A popular version of this format is the canned sales presentation, where a memorized, standardized message is conveyed to every prospect.
3. Need-satisfaction format. The need satisfaction presentation format emphasizes probing and listening by the salesperson to identify needs and interests of prospective buyers. Once identified, the salesperson tailors the presentation to the prospect and highlights product benefits that satisfy the prospect. Adaptive selling and consultative selling approaches are commonly applied.
4. Handling Objections. Objections are excuses for not making a purchase commitment or decision. Objections should be handled ethically without lying to or misleading the prospect. The six most common techniques for handling objections are:
a. Ignore the objection
b. Acknowledge and convert the objection
c. Postpone
d. Agree and neutralize
e. Accept the objection
f. Denial
E. Close. The closing stage involves obtaining a purchase commitment from the prospect. Often it is unclear when the prospect is ready to buy. To assess this, salespeople often use a trial close where they ask prospects to make a decision on some aspect of the purchase. The final close can take three forms: (1) a trial close asking for a decision on some aspect of the purchase, (2) using an assumptive close, which entails asking the prospect to make choices concerning the product under the assumption that a sale has been finalized, and (3) an urgency close, which refers to the timeliness of the purchase in order to commit the prospect quickly.
F. Follow-Up. The follow-up stage includes making certain that the customer's purchase has been properly delivered and installed and that any difficulties experienced with the use of the item are addressed.
IV. The Sales Management Process.
Selling must be managed if it is going to contribute to a firm's overall objectives. Sales management consists of three interrelated functions: (1) sales plan formulation, (2) sales plan implementation, and (3) evaluation of the sales force.A. Sales Plan Formulation. The sales plan is a statement describing what is to be achieved and where and how the selling effort of salespeople is to be deployed. Formulating the sales plan involves three tasks:
1. Setting objectives is the task of specifying what is to be achieved. Selling objectives can be output-related, input-related, or behavioral related. Once established, these objectives serve as performance standards for sales force evaluation - the third function of sales management.
2. Organizing the Salesforce. The task of organizing the sales force revolves around three questions.
a. Should the company use its own sales force or should it use independent agents? Here, both economic and behavioral considerations must be weighed before making this decision. Control, flexibility, effort, and availability are important criteria to be considered. Figure 21-5 shows the arguments for a company sales force and independent agents.
b. If the decision is made to employ company sales people, then how should they be organized? Typically, an organizational structure is bBased on geography, customer, or product.
c. A recent innovation in organizational structure is major account management. This structure is similar to a customer organizational structure and employs a team selling approach.
d. How many salespeople should be employed? The answer to this question lies in terms of the number of accounts served, the frequency of calls on accounts, the length of an average call, and the amount of time a salesperson can devote to selling. The work load method formula can be used to arrive at a sales force figure:
NC X CF X CL
NS = ----------------------
AST
where: NS = number of salespeople
NC = number of customers
CF = calls frequency necessary to service a customer each year
CL = length of an average call
AST = average amount of selling time available per year
The Frito-Lay example in the text highlights how this method is used.
3. Developing account management policies. The task of developing account management policies specifies who salespeople should contact, what kinds of selling and customer service activities should be engaged in, and how these activities should be carried out. Figure 21-8 in the text illustrates an example of how account management policies can be developed.
B. Sales Plan Implementation. Sales plan implementation involves three major tasks:
1. Sales force recruitment and selection entails finding people who match the type of sales position required by the firm. This task often begins with creating a job analysis, a written description of relationships and job requirements that detail what a salesperson is expected to do.
2. Sales force training typically focuses on two issues: selling skills and product knowledge. Both are important for successful selling. On-the-job training is the most popular type of training.
3. Sales force motivation and compensation research suggests that (1) a clear job description, (2) effective sales management practices, (3) a sense of achievement, and (4) proper incentives and rewards will produce a motivated salesperson. Pay is generally the most important motivating factor, and salespeople are generally paid using one of three plans:
a. Straight salary compensation plan: salesperson is paid a fixed fee per week, month, or year.
b. Straight commission compensation plan: salesperson's earnings are tied directly to the sales or profits generated.
c. Combination compensation plan: salesperson's income comes from a specified salary plus a commission on sales or profit generated.
C. Salesforce Evaluation and Control. Sales force evaluation involves the assessment of whether sales objectives were met and account management policies were followed. Both quantitative and behavioral measures are used.
1. Quantitative assessments are based on input- and output-related objectives set forth in the sales plan. The most frequently used input-related objective is the number of calls made. Dollar sales volume is the major output-related objective.
2. Behavioral evaluation typically includes subjective and often informal assessments of a salesperson's attitude, product knowledge, selling and communication skills, appearance, and demeanor. However, these subjective factors often do determine whether quantitative input- related and output-related objectives are met.
D. Salesforce Automation. Salesforce automation is the use of technology designed to make the sales function more effecrtive and efficient. Computer and communication technologies have and will continue to play a central role in salesforce automation.
1. Salesforce computerization. Computer technology has become an integral part of field selling through innovations such as laptop, notebook, palmtop, pad, and tablet computers.
2. Salesforc communication. Technology has changed the way salespeople communicate with customers, other salespeople and sales support personnel, and management. Facsimile, electronic mail, voice mail, and cellular phones have made possible the mobile sales office.