s & d management-bims-2 module

8/12/2019 S & D Management-BIMS-2 Module

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PLANNING THE SALES

TEAMS

EFFORTS


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T E

BUILDING RELATIONSHIPS THROUGH STRATEGIC PLANNING

Four key questions:1. Where are we?

2. Where do we want to be?

3. How should we get there?

4. Can we afford it?


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FIGURE 3.1 RELATIONSHIP BETWEEN THE ORGANIZATIONS STRATEGIC PLAN AND

OPERATIONAL PLANS

Organizations Strategic Plan

MissionObjectives

Strategies

Portfolio plan

Operational Plans

Objectives

ForecastBudgets

Strategies and

Policies

Objectives

ForecastBudgets

Strategies and

Policies

Objectives

ForecastBudgets

Strategies and

programs

Policies

Objectives

ForecastBudgets

Strategies and

programs

Policies

Human Resources

Plan

Financial PlanMarketing PlanProduction Plan


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WHAT ISMARKETING?

Production of goods or creation of services.Marketing those goods and services.

Businesses have two major functions:


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Marketing is defined as the process of

planning and executing the conception,

pricing, promotion, and distribution ofgoods, services, and ideas to create

exchanges that satisfy individual and

organizational objectives.


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Marketing Production Human

Resources

Top Management

Functional Departments

Salespeople

Customers ManufacturersServiceWholesalersRetailersConsumers

FIGURE 3.2 THE MARKETING GROUPTHE LINK BETWEEN CUSTOMERS AND THE

ORGANIZATION


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Marketing people typically have these four

basic objectives to accomplish:

1. Maximize sales of existing products in existing

markets.

2. Develop and sell new products.

3. Develop new markets for existing or new

products.

4. Provide the quality of service necessary forcustomers to be satisfied with their

transactions and to continue doing business

with the organization.


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RELATIONSHIP MARKETING

Relationship marketing is the creation of

customer loyalty.


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Transaction selling: Customers are sold to and not

contacted again.

Relationship selling: The seller contacts

customers after the purchase to determine if theyare satisfied and have future needs.

Partnering: The seller works continually to

improve its customers operations, sales, andprofits.

LEVELS OF RELATIONSHIP MARKETING


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TECHNOLOGY BUILDS RELATIONSHIPS AND PARTNERS

Most dramatic force shaping anorganizations marketing efforts today.

Helps salespeople increase the speed with

which they can find leads, gatherinformation, reduce paperwork, and

provide service.

Technology is expensive.


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RELATIONSHIPMARKETING AND THE SALES FORCE

These four basic questions are guidelines that define the role of

the sales force:

1. How much selling effort is necessary to gain and hold

customers?

2. Is the sales force the best marketing tool, compared to

advertising and other sales promotion methods, in terms

of cost and results?

3. What type of sales activitiesfor example, technicalassistance and frequent or infrequent sales callswill

be necessary?

4. Can the firm gain strength relative to its competition

with its sales force?


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Salespeople generate revenue.

Salespeople provide service.

Service quality is a subjective assessment that

customers arrive at by evaluating the service level that

they perceive being delivered.

Salespeople implement relationship marketing.

PERSONAL SELLING BUILDS RELATIONSHIPS

SALES OBJECTIVES DIRECT OTHER ACTIVITIES


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FIGURE 3.3 THE STRATEGIC SALES FORCE PLANNING PROCESS

Sales Force Objectives

Define Roles, Activities,

and Markets of Sales Force

Establish Organizational

Design and Structure

Staffing Training Directing

Sales Analysis andEvaluation of Sales Personnel


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THE MARKET-DRIVEN SALES ORGANIZATION


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FACTORS INFLUENCING

ORGANIZATIONAL DESIGN AND

STRUCTURE

Examine customers in each market.

Determine the types of sales jobs needed toserve a market.

Note the job activities salespeople must do.

Design sales jobs around customers. Set up the sales force organizational

structure, which includes the various salesjobs and geographic territories.


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Performance

Establish Sales

Organizational

Structure

Quality of

Work Life

Customersand Markets

Typesof Jobs

RequiredJobActivities

Designthe Job

FIGURE 3.4 THE RELATIONSHIPS AMONG MARKETS, JOBS, AND ACTIVITIES

INFLUENCE SALES JOB DESIGN AND ORGANIZTATIONAL STRUCTURE


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MARKETING ANDMARKETS

Marketing is the process of planning andexecuting the conception, pricing,promotions, and distribution of ideas,

goods, and services to create exchangesthat satisfy individual and organizationalobjectives.

SALESPEOPLE WORK IN TWO MARKETS

Consumer

Business


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THE SALESPERSONS JOB

ACTIVITIES AS A TERRITORIALMANAGER

1. Provides solutions to customers problems.

2. Provides services to customers.

3. Sells to current and new customers.

4. Helps customers resell products to their customers.

5. Helps customers use products after purchase.

6. Builds goodwill with customers.

7. Provides company with market information.


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SALES ORGANIZATIONAL DESIGN

Organizational design refers to the formal,

coordinated process of communication, authority,and responsibility for sales groups and individuals.

PURPOSES AND IMPORTANCE OF JOB DESIGN

Content

Qualifications required to perform

Returns and rewards for performance


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SALES ORGANIZATIONALSTRUCTURE

Organizational structure is the relativelyfixed, formally defined relationship

among jobs within the firm.


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THE LINEORGANIZATION

In the pure line organization, the chiefexecutiveusually the presidentdoes the

decision making for the firm. The president

has complete authority.


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Lewis StonerPresident-Owner

Jake Preston

Vice President of Sales

Two Salespeople

FIGURE 3.5 COMPUTE CORPORATIONS LINE ORGANIZATION


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SPECIALIZEDDESIGN

Functional organizational design is thegrouping of work according to its

characteristics.


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Staff

Charles Thompson

Sales Manager

John Friedman

Advertising/Promotion

Manager

Pete Likert

Market Research

Manager

FIGURE 3.6 ALARM SYSTEM CORPORATIONS FUNCTIONAL ORGANIZATIONAL

DESIGN

Line John Abbott

Vice President of Marketing

TenSalespeople


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Line authority means that people in

management positions have formal authority todirect and control immediate subordinates.

Staff authority is narrower and includes the right

to advise, recommend, and counsel in the staff

specialists areas of expertise.

Staff Positions with Line Authority


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Geographic Specialization

Many large corporations are organized bygeographic territory. This type of organization is

generally used by companies with more than

strictly local distribution of their products.

FIGURE 3 7 TEXTRON CHEMICAL CORPORATION GEOGRAPIC SPECIALIZATION


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FIGURE 3.7 TEXTRON CHEMICAL CORPORATION GEOGRAPIC SPECIALIZATION

Managerial

Level

Operating

Level

Vice President

of Marketing

National Sales

Manager

Central Divisional

Sales Manager

6 Regional Sales

30 District Sales

240 Salespeople

Eastern Divisional

Sales Manager

7 Regional Sales

Managers

35 District Sales

240 Salespeople

Western Divisional

Sales Manager

5 Regional Sales

25 District Sales

200 Salespeople

A

ManagersA Managers

A

ManagersB

ManagersB Managers

B

C CC


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Product Specialization

Another common type of organization in largecompanies is based on the firms product. The

entire company may be organized by product,

with separate sales, advertising, marketing, and

so on, along with staffs for each, or somefunctional units may remain centralized.

Customer Specialization

Companies with several separate and distinct

markets accounting for major portions of their

sales often organize based on these markets or

customers.


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Combination of Design Elements

Many companies organize on the basis of somecombination of functional, geographic, product,

or customer design.

FIGURE 3.8 MULTIPLE DESIGN FACTORS


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Functional

Geographic

Customer

Product

President

Vice PresidentMarketingVice PresidentProduction

U.S.MarketingManager

InternationalMarketingManager

ConsumerGoodsManagers

IndustrialGoodsManagers

InternationalSalesManager

EuropeanDivision

LatinAmericanDivision

Asian andAfricanDivision

Soap ProductsDivisionalManager

Paper ProductsDivisionalManager

Food ProductsDivisionalManager

EasternSalesDivision

CentralSalesDivision

WesternSalesDivision

Vice PresidentEngineering

FIGURE 3.8 MULTIPLE DESIGN FACTORS


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PLANNING FOR AND RECRUITING SUCCESSFULSALESPEOPLE


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WHAT IS SALES

HUMAN RESOURCE MANAGEMENT?

Sales human resource management (SHRM) refers to

activities undertaken to attract, develop, and maintain

effective sales force personnel within an organization.


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FIGURE 3.9 ACTIVITIES INVOLVED IN MANAGING A SALES FORCES HUMAN

RESOURCES

Sales

HumanResourceManagee

People Planning Employment Planning

How Many

to Hire?

Type of

People?

Recruitment Selection Socialization


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FIGURE 3.10 FROM INTERVIEW TO TERRITORY: A LONG TIME

Determine

How Many

to Hire

First

Interview

Graduation Begin

Work

Training

Ends

Assigned

Territory

Time Line


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Whats a salesperson worth?

A salespersons worth depends on what thesalesperson costs to the company and on the

profits from the products he or she sells.

Goal: Hire above-average performers.

Selecting someone who will become an above-

average performer improves the overall

performance of the sales group.

A successful hire is someone who performs

above average.


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WHO DOES THE PLANNING?

National sales manager.

Field sales managers.

Top management.


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FIGURE 3.11 SALES FORCE PEOPLE-FORECAST MODEL: FACTORS TO CONSIDER WHEN

DETERMINING HOW MANY TO HIRE

S a l e s F o r c e

O b j e c t i v e s

S t r a t e g i cP l a n s

T e r r i t o r i a l

D e s i g n

Current

Sales Force

Personnel+

Hiring,

Promotions,

Transfers In

Quits,

Terminations,

Promotions,

Transfers Out,

or Retirement

PeopleForecasts


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DETERMINING THE TYPE OF PERSON FOR THE JOB

A job analysis refers to the formal study of jobs todefine specific roles or activities to be performedin sales promotions.

The three steps in the job analysis are to:1. Examine the total sales force and each job, and

determine how each job relates to other jobs.

2. Select the jobs to be analyzed.

3. Collect the necessary information throughobservation of what people actually do in the jobs,interviews of people in the jobs, andquestionnaires completed by job holders.


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JOB DESCRIPTIONS AND SPECIFICATIONS FOR SUCCESSFUL PEOPLE

Job specifications convert job descriptions intothe qualifications.

TABLE 3.12 FORMAL JOB DESCRIPTION, TRANSTEX AUTOMOTIVE SUPPLY


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CORPORATION

Position: Sales Representive Reports to: District

Manager

Organizational

Unit:

replacement Parts

Date: ( When

Job WasDescribed)

NATURE OF JOB

Responsible for developing new accounts and reaching profitable sales goals in assigned territory.

PRINCIPAL RESPONSIBLITIES

Meeting total sales goals for product lines and individual products.

Maintaining an average of six daily sales calls.

Maintaining an average of one monthly product presentation to wholesalers.

DIMENSIONS

Develop strong promotional support from retail and wholesale customers.

Plan effective territorial coverage resulting in high sales/call ratio.

Inform management of activities by submitting daily and weekly call and sales reports to district manager.

SUPERVISION RECEIVED

General and specific tasks are assigned for each sales period. Every two months work with supervisor for aminimum of one day.

SUPERVISION EXERCISED

None


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WHAT ARE JOB SPECIFICATIONS FOR

SUCCESFUL SALESPEOPLE?

Intelligence

Education

Personality

Experience

Appearance


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TABLE 3.13 SELECTED CHARACTERISTICS OF SUCCESSFUL SALESPEOPLE

1. High energy level 8. Good physical appearance

2. High self-confidence 9. Likable

3. Need for material things 10. Self-disciplined

4. Hardworking 11. Intelligent

5. Requires little supervision 12. Achievement oriented

6. High perseverance 13. Good communication skills

7. Competitive


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RECRUITMENTS PURPOSE

Recruitment is the set of activities and processesused to legally obtain a sufficient number ofindividuals in such a manner that the recruits andthe sales forces best interests are taken intoconsideration.


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FIGURE 3.14 MAJOR INFLUENCES AND COMPONENTS OF SALES RECRUITMENT

Sales

HumanResource

Planning

Recruitmet

I n t e r n a l

S o u r c e s

E x t e r n a l

S o u r c e s

ApplicantPool

Qualified

Applicant

Pool

Evaluate

Recruitment

Results

Selection


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To be an effective recruiter, a sales managermust have the answer to several questions,

including: How many people do I need to recruit?

Who does the recruiting?

Where do I find recruits? How can I develop a qualified pool of

applicants?

How can recruiting programs be evaluated?

RECRUITMENT OF SALESPEOPLE


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2

3

3 0

1 2 0

Recruitment Pyramid Ratio Days

Report to Work

Offer/Hires

Interview/Offer

Leads/Interview

2:2

3:2

10:1

4:1

21

14

21

30

FIGURE3.15 RATIO AND DAYS FROM SALES JOB ANNOUNCEMENT TO REPORTING TO

WORK


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Current Employees.

Promotions.

Transfers.

SOURCES OF RECRUITS WHERE ARE THEY FOUND?

INTERNAL SOURCES

Internal recruitment sources come from insidethe company:


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EXTERNAL SOURCES

Walk-ins. The Internet.

Employment agencies. Internships.

Radio and television. Colleges and universities.

Newspaper advertisements. Competitors.

Telephone-in advertisements.


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SELECTION,PLACEMENT, AND SOCIALIZATION OF SUCCESSFUL

SALESPEOPLE


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SELECTION AND PLACEMENT OF SUCCESSFUL SALES PERSONNEL

Selection of sales personnel refers to the processof selecting the best available person for the job.

Placement is concerned with ensuring that job

demands match an individuals skills, knowledge,and abilities, along with preferences, interests,and personality.


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IS SELECTION THE MOST IMPORTANT ELEMENT

IN FIELDING A SALES FORCE?

The selection of the right people is, without a

doubt, extremely important to the success of the

sales district, the region, and the total sales force.


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PURPOSES AND IMPORTANCE OF SELECTION

AND PLACEMENT

Selection and placement procedures provide thefuel that runs the sales force.

Sales managers want to improve productivity.

The proper match between person and job can

improve productivity and reduce operating costs.


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FIGURE 4.1 MAJOR INFLUENCES AND COMPONENTS OF SALES FORCE

SELECTION


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SOURCES FOR COLLECTING INFORMATION

Skills, knowledge, and ability.

Preferences, interests, and personality.

Other category: employment tests,interviews, etc.

Other characteristics: physical examinations,reference checks, etc.

FIGURE 4.2 MAJOR STEPS IN SALES PERSONNEL SELECTION PROCESS


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1. Application

2. Initial

Interview

3. In-depth

Interviews

4. Testing

5. Reference

Checks

6. Physical

Examination

DecisionYes


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THE SELECTION PROCESS

THE JOB APPLICATION BLANK

An orderly, convenient method of collecting

necessary information for determining an

applicants minimum qualifications.


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Minimum job requirements.

All dates accounted for.

Number of jobs and length of time spent on

each job.

Reason given for leaving jobs. Pattern of growth.

When reviewing an application blank, the sales

manager should look for the following:


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THE PERSONAL INTERVIEW

A ONE-ON-ONE SELLING SITUATION

The personal interview usually involves the one-

on-one, face-to-face meeting of two strangers,

both seeking to sell themselves to the other.

TABLE 4.3 INTERVIEWS ARE IMPORTANT FOR THE SALES MANAGER AND THE

APPLICANT


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FOR THE SALES

MANAGER

FOR THE APPLICANT

Act as a screening device to create the

pool of qualified applicants.

Confirm application blanks, written

tests, and feedback from references

relative to SKAs, PIPs, the othercategory, and other characteristics

Judge if the applicant can be successful

in the short and long run

Meet the potential employee anddetermine if a match exists

Act as a screening device to create a pool of

qualified jobs

Determine skills, knowledge and

abilities required

Determine what will be received from

the job, such as training, compensation,

promotional opportunities

Meet the potential boss and determine if amatch exists


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In an unstructured interview, the recruiterasks few preplanned questions and oftenbegins with open-ended questions such as

Tell me about yourself or Why do youwant to sell for IBM?.

Types of Interviews

In a structured interview, the recruiter asksquestions, often from a standard form.


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The Stress InterviewAn interviewer mayplace the applicant in a stressful situation toascertain how the person might cope withstress when selling.


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Body movements.

Gestures.

Firmness of handshake.

Eye contact.

Physical appearance.

One of the reasons nonverbal cues are so powerful is that,in most cases, interviewers are not aware of them as

possible casual agents of impression formation.

Interpretation of nonverbal cues varies with each person.

Nonverbal cues in interviews:

FIGURE 4.4 FIVE PHASES OF THE SALES INTERVIEW


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1. Preparatio

2. Opening the Interview

3. The Interview Proper

4. Ending the Interview

5. Post-intervie

Activities


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TESTS

Employment test refers to a procedure, technique,or measurement instrument for ascertaining

characteristics such as aptitudes, capacities,

intelligence, knowledge, skills, or personality.

Sales managers may decide the following:


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Not to use tests.

To administer tests and interpret the resultsthemselves.

To administer tests and have someone else

interpret the results.

To turn the testing over to consulting

industrial psychologists.

The majority of sales managers use tests as only

one part of the selection process.

To be used successfully, tests must have

reliability and validity.

Sales managers may decide the following:

EMPLOYMENT REFERENCES


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EMPLOYMENT REFERENCES

References are the names of persons from whominformation can be obtained on an applicantsability and character.

PHYSICAL EXAMINATIONS

Almost all companies require their prospective

employees to undergo physical examinations. Asa general rule, if the applicant gets this far in theprocess, he or she has the job unless healthproblems are discovered.


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THE SOCIALIZATION OF SALES PERSONNEL

Socialization is the process by which salespeoplelearn the sales culture and behaviors appropriatefor their roles in the organization.


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TRAINING THESALES TEAM


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WHAT IS SALES TRAINING?

Sales training is the effort an employer puts forth

to provide sales people job-related culture, skills,

knowledge, and attitudes that should result in

improved performance in the selling

environments.


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REENGINEERING TRAINING

On-time training, one-on-one coaching, and

behavioral-change training are just some of the

strategies companies are applying to sales training

curricula across the country.


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PURPOSES OF SALES TRAINING

Increasing customer satisfaction.

Helping salespeople become managers.

Orienting new salespeople to the job.

Improving knowledge in areas such as product, company, competitors,or selling skills.

Lowering absenteeism and turnover.

Positively influencing attitudes in such areas as job satisfaction.

Lowering selling costs.

Informing salespeople.

Obtaining feedback from salespeople.

Increasing sales in a particular product or customer category.


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FIGURE 4.5 A SALES TRAINING MODELDETERMINE HOW TO EVALUATE TRAINING WHEN

PLANNING

PlanningPhase OrganizingPhase StaffingPhase DirectingPhase EvaluationPhase


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PHASE ONE: PLANNING FOR SALES TRAINING

The first step when developing or maintaining anongoing sales training program is assessing needs.

Needs assessment entails determining the trainingneeds of the sales force and setting objectives forsatisfying those needs.


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MAKING THE NEEDS ASSESSMENT

1. Identify the requirements of the position.

2. Determine the difference between performance

objectives and results.

3. Determine why a difference exists.

5. Revise the training program (if needed). Developtraining objectives.

6. Conduct the training program.

7. Evaluate the training program.

8. Revise the training program (if needed).

This requires the following sequence:


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FIGURE 5.1 REVISION OF TRAINING PROGRAM BASED ON NEEDS ASSESSMENT

JobDescriptio

JobObjectives

JobEvaluatio

TrainingRevisi

TrainingObjectiv

TrainingProgra

TrainingEvaluati


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SOURCES OF INFORMATION FOR DETERMINING

TRAINING NEEDS

Questionnaires.

Interviews.

Tests given during meetings for diagnosticpurposes.

Direct observation in the field.

Analyses of sales, profits, and activity reports.

Other ways to assess training needs:


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Failure analysis determines the reasons low-performing salespeople fail to achieve their

sales goals.

Success analysis is used to identify factors

that appear to make salespeople successful.

Other ways to assess training needs:

Exit interviews determine attitudes towardthe job.


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PHASE TWO: ORGANIZING FOR SALES TRAINING

Training objectives to be accomplished.

Number of trainees.

Trainers experience.

Each salespersons understanding of the subject matter.

Each trainees ability to learn and past

experience.

Training materials available.

The costs per trainee of each method.

Extent of presession assignments


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TECHNOLOGY-BASED TRAININGMETHODS

Interactive multimedia training.

Electronic performance support system.

High-tech customer service.

Distance learning.


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ROLE PLAYING

In role playing the trainee acts out an event such

as the sale of a good or service to a hypothetical

buyer.

ON-THE-JOB TRAINING

The best and most frequently used training takes

place on the job.

W D T T P ?


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Centralized training.

Decentralized training.

WHERE DOES TRAINING TAKE PLACE?

Training begins the first day of work.

It continues throughout the career.

Sales meetings serve as important training

methods.

WHEN DOES TRAINING OCCUR?


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PHASE THREE: STAFFING FOR SALES TRAINING

Corporate staff trainers.

Sales force personnel.

Outside training specialists.

WHO IS INVOLVED IN TRAINING?


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PHASE FOUR: DIRECTING THE SALES TRAINING EFFORT

Sales culture is the set of key values, ideas,

beliefs, attitudes, customs, and other capabilities

and habits shared or acquired as a sales groupmember.

TRAINING CULTURE

PHASE FIVE: SALES TRAINING EVALUATION


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PHASE FIVE: SALES TRAINING EVALUATION

1. Determine what should be measured.

2. Determine the information collection

method.

3. Determine the measurement methods.

4. Analyze the data, determine the results, and

draw conclusions for making

recommendations.

STEPS IN THE EVALUATION

WHAT SHOULD BE MEASURED?


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Components to measure:

Reactions Learning

Behavior

On-the-Job Training (OTJ)results

What should be the measurement methods?

1. After only

2. Before/after

3. Before/after with control group


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SALES SKILLS DEVELOPMENT

Involves two key elements:

1. Persuasive communications.

2. The selling process.

Several main persuasive communication


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Talking about product benefits to the prospectrather than theproductsfeatures and

advantages.

Nonverbal body languagelearning torecognize a buyers nonverbal signs and how

to send out positive nonverbal body signals.

Questioning or probing skills and courses in

listening.

Using visual aids, drama, and demonstrations

in the sales presentation.

Several main persuasive communication

skills are:


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THE SELLING PROCESS

Most sales trainers believe logical,

sequential steps do exist that, if followed,

can greatly improve the chance of making

a sale.

FIGURE 5.2 THE SALES PROCESS

Prospecting


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Prospecting

Preapproach

(Precall Planning)

Approach

Presentation

Participatio

Deonstrti

Draatizti

Persuasive

isli

Trial Close

DetermineObjectio

MeetObjectios

Trial Close

Close

Follow-upandServi


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Pre-sale

preparation Prospecting

Pre-approach

Before the

Interview

Approach the

Customer

Sale

Presentation

Handling the

Customer

Objections

Closing

The Sale

Follow up

Action

TABLE 5.3 POPULAR PROSPECTING METHODS


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Cold canvassing Public exhibitions and demonstrations

Endless chaincustomer referral Center of influence

Orphaned customers Direct mail

Sales lead clubs Telephone and telemarketing

Prospect lists Observation

Get published Networking

Referrals are Popular


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Referrals are Popular

1. Leads2. Referrals

3. Orphans

4. Customers

The prospect pool is a group of names gatheredfrom various sources. The prospect pool is

usually created from four main sources:

FIGURE 5.4 THE PROSPECT POOL


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Leads

Orphans

Custo

mers

Referrals

ProspectPool


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FIGURE 5.5 STEPS IN PLANNING THE SALES CALL

Determinationof

Call Objectives

Development of

Customer Profile

Determinationof

Customer Benefits

Determinationof

SalesPresentation


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The sales opener, or approach, is the first major

part of the sales presentation.

The first impression is critical to success.

THE APPROACH OPENING THE SALES PRESENTATION


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Introductory approach.

Product approach.Customer benefit approach.

Curiosity approach.

Approach Techniques are Numerous

FIGURE 5.6 THE SALESPERSONS PRESENTATION MIX IS TYPICALLY DEVELOPED BY SALES

MANAGERS AND TRAINERS


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Persuasive

Communication

Dramatization

Demonstration

Visual Aids

Proof

Participation

Salesperson

The Sales

Presentation

Mix


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Techniques for Meeting Questions:

Postponing objections

Boomerang

Asking questions

THE CLOSE


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Closing is the process of helping people make abeneficial decision.

Closing Techniques

The complimentThe summary

Minor decision

Assumptive

follow up action


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follow-up action

Objectives

Generate additional leads from satisfiedcustomers.

Cross-selling and upselling

Maintain goodwill

After sales service etc.


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DIRECTING THE

SALES TEAM


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Compensation and

Motivation of Sales Force


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Compensation Plans

Compensation plans for the sales force are designed to achieve several objectives.

Some of these are:

i. To assist the company in meeting its sales projections,

ii. To bring the earnings of the sales force to desired levels,

iii. To reward individual salespersons in direct proportion to their efforts and

performance.


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Formal Compensation Process

Establish Sales

Force Objectives

Appraisal and

Recycling

Measure Individual,Group

and OrganisationalPerformance

DetermineCompensation

Objectives, Strategies

and Tactics

Determine

CompensationFactors

Implement Long andShort-term Range

Programmes

CommunicateCompensation Policy

Relate Rewards

to Performance


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Various Modes ofCompensating the Sales Force

SalaryA straight salary payroll is by far the easiest for employers to handle. Deductions for

provident fund, income taxes and other fringe benefits are fixed and the work of

accounting is reduced. In many industries, this method of compensation is generally

used. There is always an overriding reason for choosing a salary plan. The followingindustries are using this method

Highly seasonal industries

High-tech industries

Trade salespeople

Route salespeople

Missionary and educational salesmen

Group selling


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Strengths of the Salary Compensation Plan

1. For the sales force

Simple to calculate

Fixed income

Job security2. For the company

Reduces turnover in sales force

Increases authority of sales manager in controlling sales force

An effective tool in case

Group efforts are required Of business that is technical in nature

Hiring new staff Of seasonal business


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Straight Commission

Paying a commission is a variable expense rather than a fixed one. If sales are made, a

commission is paidno sales, no commission. This keeps sales expenses strictly in line.

A straight commission pay plan has many advantages. It is desirable for a company

suffering from a severe cash shortage since the commission need not be paid untilproceeds are received from a sale. Flexible commission rates can be a strong incentive

and many organisations are successful because the sales force enjoys a liberal

commission schedule.


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Target Commission

A straight commission is paid on sales volume. On a fixed commission base, a fixed

percentage of sales volume is paid to the sales force. Other plans call for increase in rate

as volume increases. A fixed rate commission is easy to figure and administer. If the rate

is 2 per cent, it stays at that percentage whether the salesperson sells goods worth Rs

40,000 or Rs 4,00,000. A progressive commission rate accomplishes a major objective of

most companies: it provides a constant incentive to the sales force to do better. The

following example explains this:

Sales (Rs) Commission Rate

Up to 40,000 2%

From 40,000 to 1,00,000 3%Above 1,00,000 4%

If asalespersonsquota is Rs 80,000, he would earn Rs 2,000 if he achieved that

target exactlya composite rate of 2.5 per cent.

Bonus Profit Sharing Fringe Benefits


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Bonus, Profit Sharing, Fringe BenefitsPaying bonus is a method that a company adopts to reward special contribution and as an

incentive to superior performance.

Profit Sharing

Many experts in the field of sales management disapprove extending profit sharing to

salespeople. For once, companies agree with them. There may be an argument in favour

of such a payment if no bonus plan is established for excellence in sales performance.

Fringe Benefits

Fringe benefits have become a fascinating subject and an item of considerable expense to

organisations. The costs of fringes can be as high as 30 per cent of direct compensation

expense depending on what benefits are offered and whether a portion of the expense is

shared with the employee.


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Reimbursement of Expenses

Travelusually by car or scooter

Meals

Lodging

Entertainment

Miscellaneous

Proper Sales Compensation Plan

Provide a living wage

Have performance Based pay levels

Be adjustable to meet companysgoals and individual aspirations.

Such a plan not only helps in normal times but also takes care of special needs of

a company.


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Motivation refers to the arousal, intensity,

direction, and persistence of effort

directed toward job tasks over a period of

time.

Motivation to the Sales Force


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Motivation is the force within us that directs our behaviour..

MOTIVATION EFFORT PERFORMANCE REWARDS SATISFACTION

Low-Cost Ways to Motivate

A pat on the back.

A smile.


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Cont.

A simple, sincere, thank you.

A personal letter to the employee, with copies sent to your immediate supervisor and to the

employees supervisor.

Public recognition in front of peers. Public recognition in front of ones boss.

A letter of praise from a customer or vendor praising an employee, posted on the companys

bulletin board.

Listening to an employee who has an idea for improving efficiency and then acting

affirmatively on that suggestion.

Arranging employee discounts from your vendors or customers.

Allowing the employee to work on an especially exciting project that he or she would notusually work on.

Asking employees what non-monetary rewards they would like to have and, if possible,

providing them.

Issuing a You Were Mentioned certificate to employees whenever you hear something nice

about them, whether from a customer, co-worker, or superior.

Electing a high-achieving employee to a quality circle or to a company wide task force.

Providing free lunch for employees caught in the act of victory by an appointed group of

company wide catchers

Rotating the company flag or other symbols of excellence from one deserving unit to

another on a quarterly basis.

Source: Sam Deep, Lyle Sussman,Smart Moves Reading, Mass: Addison-Wesley, 1990

Importance of Motivation for Sales Force


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Importance of Motivation for Sales Force

i. Nature of Job:A salesrepresentativesjob is usually tiring with irregular working hours.

They do not often have the authority to do what is necessary to win an account and

they sometimes lose large orders that they have worked hard to obtain.

ii. Human Nature:Most people operate below capacity in the absence of special

incentives, such as financial gain or social recognition.iii. Personal Problems:They are occasionally preoccupied with personal problems, such

as sickness in the family, debt, etc.

High productivity in a sales force comes about neither naturally nor accidentally. It requires

motivation.

The problem of motivating sales representatives has been studied by Churchill, Ford & Walker.They propose the following way.


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Model of the Motivation Process

The motivation process consists of six steps :

1. Recognise need deficiency

2. Search for ways to satisfy needs

3. Establish goal-directed behaviour

4. Performance

5. Provide rewards or punishment

6. Process needs.

The Six Step Motivation Process


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The Six Step Motivation Process

Process beginsRecognise need

deficiency

Search for ways to

satisfy needs

Establish goaldirected behaviour

Performance

Provide punishmentor rewards

Needs reassessment

SALESPERSON

Non-financial Factors and their Impact on Sales Force


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Motivation

Meetings between Manager and Sales Force

Clarity of Job

Sales Contests

Sales Conferences and Conventions

Positive Feedback

Reward and Recognition

Persuasion

Observations and Future Directions

SalesContestsOne can devise different types of sales contests but their objective is always one and the


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One can devise different types of sales contests but their objective is always one and the

sameachieve higher sales and motivate the salesmen.

Following types of sales contests are common:

Daily productivity contests

Monthly productivity contests

Sales during a particular month contest

Sales during promotional period contest

Quarterly sales growth contest

Half-yearly sales growth contest

Annual sales target contest

Growth in retail universe contest

Level of distribution, width and depth contest

Reduction in selling expenditure contest.


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Monitoring andPerformance ppraisal


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Purpose of Performance Appraisal

1. Identify the specific job criteria on the basis of performance.

2. Measurement of performance.

3. Rewarding the individual of their high performance.

4. Define the development experience the employee needs to both enhance

performance in the current job and prepare for future responsibilities.


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Importance ofPerformance Appraisal

The following benefits of performance appraisal justify the designing of an effective

programme of performance appraisal

1. It gives us scientific base to with the help of which we can calculate the worth

of an employees.

2. It helps us in finding out worthy and unworthy workers.

3. It helps the supervisors to evaluate the performance of the subordinates.

4. The record of performance appraisal are available help to protect the

management against subsequent charges of discrimination.

Traditional Method ofPerformance Appraisal Ranking Method: It is the simplest method of rating system. In this method


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Ranking Method: It is the simplest method of rating system. In this method

we give the rank to every employee on the basis of their job performance.

Graphic Rating Scale:In this method the management places a checkmark on a

form next to the word or phase describing the degree of merit for each of several traits

such as quality of work, quantity of work, dependability, attitude and so worth. A major

drawback of Graphic rating is that the words likeexcellentandpoormean different

things to different people.

Forced distribution Method:In this method rated are distributed along the given

scale and fixed percentages of employees are assigned to the best and worst ends of the

scale and to the middle bracket.

Check List Method:In this method a list of statement is prepared which describe

the performance of an employee. Each statement have a definite scale rate.

Critical incident Method:Every supervisor prepare a record notebook in which all

the successful and poor performance of an employee is mentioned.

Field Review Method:In this method the supervisors are interviewed by an expert

belonging to the personnel department. The expert questions to the supervisor to obtain

information about each em lo ee

Essentials of Sales Force Monitoring Programme


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A sales manager must design the complexity and sophistication of the sales programme

based on the environment under which his company operates.

A sales evaluation programme comprises of three stages, viz.,

Establishing standards for performance appraisal.

Identifying and evaluating reasons for performance under or above the laid down

standards.

To adopt measures to correct deficiencies leading to the lower performance and

evaluate methods for further improvements.

Field Sales Reports

The field sales reports are prepared for obtaining control information


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The field sales reports are prepared for obtaining control information.

A good field sales report helps the sales force in their self-evaluation and self-

improvement.

It serves various purposes which are elaborated below.

Sales Planning

Data for Evaluation

Records

Market Information

Barometer of Market/Economic Conditions

Help Organise Logistics

A field sales report can be devised to serve various purposes. Some typical examples


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are:

Call Report or Progress Report

Expense Report

Sales Work Plan

New Business Report

Complaint Report

s & d management-bims-2 module

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