CHAPTERS 13-17 LECTURE OUTLINES FOR

FUTRELL (2014) FUNDAMENTALS OF SELLING

 

CHAPTER 13

Closing Begins the Relationship

LECTURE OUTLINE

I.               THE GOLDEN RULE CLOSING

A.             Remember to do what's best for the customer.

B.             Ask yourself, "Should they buy this?"  If the answer is no, tell them you don't think they really need the product.

C.             If the buyer still wants to buy, let the Golden Rule be your guide.

II.             WHEN SHOULD I POP THE QUESTION?

A.             Closing - the process of helping people make a decision that will benefit them. You help them make that decision by asking them to buy.

B.             Attempt to close the sale when the prospect is ready. More specifically, when the prospect is in the “conviction stage” of the mental buying process.

III.           READING BUYING SIGNALS

A.             Buying Signals - refer to anything prospects say or do to indicate that they are ready to buy.

B.             Several ways prospects signal that they are ready to buy:

1.     Asks questions.

2.     Asks another person’s opinion.

3.     Relaxes and becomes friendly.

4.     Pulls out an order form.

5.     Carefully examines merchandise.

C.             A buyer may send verbal and non-verbal signals at any time before and during your sales presentation.

IV.           WHAT MAKES A GOOD CLOSER?

A.             Good closers have a strong desire to close each sale - they have a positive attitude, know their customers, and tailor their presentations to meet each one’s specific needs.

B.             Good closers spend time preparing.

C.             Successful salespeople do not stop on the prospect’s first no.

D.             Ask for the order, and be quiet.  You must put the prospect in the position of having to:

1.     Make a decision.

2.     Speak first.

3.     Respond to the close.

E.             Get the order then move on! - In continuing to talk, you may give information that changes the buyer’s mind.

V.             HOW MANY TIMES SHOULD YOU CLOSE? - Three to five well-executed closes is a minimum for successful salespeople.

A.             Example of using more than one close.

VI.           CLOSING UNDER FIRE - You must be able to ask a prospect, who may be in a bad mood or may even appear hostile toward you, to buy.

VII.         DIFFICULTIES WHEN CLOSING

A.             One reason salespeople may fail to close a sale and get an order is that they are not confident in their ability to close.

B.             Salespeople often determine on their own that the prospect does not need the quantity or type of merchandise, or that the prospect simply should not buy.

C.             The salesperson may not have worked hard enough in developing a customer profile and benefit plan, resulting in a poor presentation.

VIII.       ESSENTIALS OF CLOSING SALES

A.             Be sure your prospect understands what you are saying in your presentation.

B.             Always present a complete story to ensure understanding.

C.             Tailor your close to each presentation.

D.             Everything you do and say should take into consideration the customer’s point of view.

E.             Never stop at the first “no.”

F.              Learn to recognize buying signals.

G.             Before you close, attempt a trial close.

H.             After asking for the order, shut up.

I.               Set high goals for yourself and develop a personal commitment to reach your goals.

J.              Develop and maintain a positive, confident and enthusiastic attitude toward yourself, your products, your prospects, and your close.

IX.           TWELVE KEYS TO A SUCCESSFUL CLOSING

A.             These keys are:

1.     Think success.

2.     Plan your sales call.

3.     Confirm your prospect’s needs in the approach.

4.     Give a great presentation.

5.     Use trial closes during and before your presentation.

6.     Smoke out your prospect’s real objections.

7.     Overcome these real objections.

8.     Use a trial close after overcoming each objection.

9.     Summarize benefits as related to buyer’s needs.

10.  Use trial close to confirm step 9.

11.  Ask for the order and then be quiet.

12.  Leave the door open! Act as a professional.

B.           If salespeople understand how each of the 12 keys applies to them and their customers, and if they are capable of performing each key, they will earn the right to close.

X.             PREPARE SEVERAL CLOSING TECHNIQUES

A.             Successful salespeople should be able to adapt their planned presentation to any prospect or situation that may arise.

B.             Eleven of the more commonly used closing techniques.

1.     Alternative choice close is an old favorite; it provides a choice between something and something; never between something and nothing. - Example: “Which do you prefer?” or “Would you prefer A or B?” (I like the second example.)

2.     Assumptive close - the salesperson assumes the prospect will buy. - Example: “I’ll call your order in tonight.” or “I’ll have this shipped to you tomorrow.”

3.     Compliment close - by complimenting them, you get them to listen and respond favorably to your presentation.

4.     Summary of Benefits close - summarize the product’s benefits in a positive manner so that the prospect agrees with what you are saying; then ask for the order.  You can easily adapt FAB statements, discussed in Chapter 3, for your “summary” close.

5.     Continuous-yes close - like the summary close; however, instead of summarizing product benefits, the salesperson develops a series of benefits questions which the prospect must answer.

6.     Minor-points close - similar to the alternative-choice close, but the minor-points close asks the prospect to make a low-risk decision on a minor, usually low-cost element of a single product such as delivery dates, optimal features, etc.

7.     T-account or Balance Sheet Close — is based on the process people go through when they make a decision, weighing the cons against the pros. The same as debits and credits, act or not act, etc.  The Modified T-Account or Balance Sheet Close — only list the reasons to buy. Some salespeople do not remind the prospect of any of the reasons not to buy as they attempt to close the sale.

8.     Standing Room Only close - indicates that if they do not act now, they may not be able to buy in the future. It should only be used in complete honesty.

9.     Probability close - ask prospects, who are delaying, what the probability of doing business at a later time is. This permits prospects to focus in on and discover their own hidden objectives.

10.  Negotiation close - finds ways for everyone to have a fair share.

11.  Technology close - incorporates appropriate technology to close the sale.

XI.           PREPARE A MULTIPLE CLOSE SEQUENCE - By keeping several difficult closes ready to aid you in any situation, you will put yourself in a better position to close more sales.

XII.         CLOSE BASED ON THE SITUATION - Since different closing techniques work best for certain situations, salespeople often identify the common objections they encounter and develop specific approaches to closing designed to overcome these objections.

XIII.       RESEARCH REINFORCES THESE SALES SUCCESS STRATEGIES

A.             One research report reinforces several of the key procedures that will improve your sales performance.

B.             Six common mistakes that researchers found which prevented successful sales calls:

1.     Tells instead of sells; doesn’t ask enough questions.

2.     Over-controls the call; asks too many closed-ended questions.

3.     Doesn’t respond to customer needs with benefits.

4.     Doesn’t recognize needs; gives benefits prematurely

5.     Doesn’t recognize or handle negative attitudes effectively.

6.     Makes weak closing statements; doesn’t recognize when or how to close.

XIV.      KEYS TO IMPROVED SELLING

A.             Ask questions to gather information and uncover needs.

B.             Recognize when a customer has a real need and how the benefits of the product or service can satisfy it.

C.             Establish a balanced dialogue with customers.

D.             Recognize and handle negative customer attitudes promptly and directly.

E.             Use a benefits summary and an action plan requiring commitment when closing.

XV.        THE BUSINESS PROPOSITION AND THE CLOSE

A.             The business proposition is the discussion of costs. Markups, value analysis, or a Return-On-Investment (ROI) profit forecast.

B.             Follows discussion of a product’s FABs and marketing plan.

C.             The marketing plan explains:

1.     For wholesalers or retailers, how they should resell the product.

2.     For end users, how they can use the product.

D.             Use a visual aid to close.  A visual aid works well in discussing the business proposition when closing.

E.             Closing begins the relationship.

1.     When you make a sale for the first time, a prospect becomes a customer.

2.     Earn the right to sell to the customer again.

a.     Follow the Golden Rule of Personal Selling.

b.     Provide exceptional service after the sale.

XVI.      WHEN YOU DO NOT MAKE THE SALE

A.             Act as a professional, adult salesperson, and do not take the buyer’s denial personally, but recognize it as a business decision that the buyer must make given the circumstances.

B.             The proper handling of a no-sale situation actually helps build a sound business relationship with your customers.

C.             Ask why you lost out - learn from your no-sales as well as your successes.

 

CHAPTER 14

Service and Follow-up for Customer Retention

LECTURE OUTLINE

I.               THE GOLDEN RULE: SERVICE

A.             Service and follow-up after the sale shows you truly care.

B.             Selling guided by the Golden Rule leads to ethical actions, then to ethical habits, then to character, and finally to your destiny.

II.             THE IMPORTANCE OF SERVICE AND FOLLOW-UP

A.             A salesperson helps customers through follow-up by maintaining contact with a customer (or prospect) in order to evaluate the effectiveness of the product and the satisfaction of the customer.

B.             Words of sales wisdom: Caring for people is the beginning of wise sales knowledge which can be referred to as wisdom.

C.             Sales proverbs:

1.     Customer choice between suppliers has never been greater.

2.     You lose “X” percent of sales or customers per year.

3.     People do not care how much you know until they know how much you care.

4.     You do business with the one you trust, and you trust the one you know.

5.     80 percent of your profits come from about 20 percent of your customers.

6.     Obtaining new customers and selling more products to current customers are the ways to increase sales.

7.     For some types of selling, customer referrals are the best way to find new prospects. Having a satisfied customer tell a prospect how great a product is and that the salesperson can be trusted is a wonderful way to obtain new customers.

8.     It is always easier to sell to a satisfied customer or prospect than an unsatisfied one.

9.     The cost of acquiring a new customer is much higher than keeping a current customer.

D.             Knowledge versus wisdom.

1.     We may amass knowledge, but without wisdom, our knowledge is useless.

2.     In this age of information, knowledge is plentiful, but wisdom is scarce.

E.             Wisdom is learned.

1.     We must trust and honor people.

2.     We must realize that our purpose is to help people.

3.     We must make a life-long series of right choices and avoid moral pitfalls.

4.     We must learn from our errors and recover.

III.           TRUE CARING BUILDS RELATIONSHIPS AND SALES

A.             What is the purpose of the sales call?

1.     Analyze the customer’s needs.

2.     Present product benefits.

3.     Gain commitment.

4.     Provide excellent service.

B.             Caring is seen.  Caring about the customer is more than simply warm feelings; it is an attitude that reveals itself in action.

C.             Caring is hard to do!  This is why people notice when the seller cares.

IV.           BUILDING A LONG-TERM BUSINESS FRIENDSHIP

A.             Business friendship - the relationship formed between a salesperson and a client that revolves around business-related issues.

B.             Build a business relationship in much the same way you build regular friendships.

1.     Level 1 - Acquaintances - people whose names you know, you see occasionally, and of whom you know little about.

2.     Level 2 - Friends - people whom we spend more time with and with whom we share common interests and hobbies.

3.     Level 3 - Intimate friends - often called “best friends,” these are the people we know on a deeper level.

C.             Several things happen between people before they become friends.

1.     Self disclosure - sharing a few things about yourself and allowing your client to share a few things about him or herself.

2.     Acknowledgement - everyone has a desire to be heard, acknowledged, and understood; take time to listen to your client.

a.     Step 1 - Repeat back - repeat what your client tells you in a summarized fashion.

b.     Step 2 - Don’t invalidate - avoid telling or making your client feel that they are wrong.

c.     Step 3 - Don’t try to change - do not attempt to change your client’s mind on an issue; simply listen to what is said and formulate a solution based on their perceived problems.

3.     Attending - pay attention, or attend to your client.  Use body language to show that you’re paying attention.

4.     Talking - the foundation of any good relationship is good communication; be a great listener, share information, and allow information to be shared.

D.             Structure for survival - A good relationship needs structure to survive; this structure must be established at the beginning and reaffirmed to avoid confusion.

E.             Avoid control and one-ups.  Do not try to control your client, and do not allow yourself to be controlled.

F.              Do you pressure a true friend?  To have a lasting, wonderful relationship your self-interest must come last.

G.             What is most important?  If you make decisions based on your own needs, at times you will take advantage of your “friends.”

H.             How many friends? - “A person with too many friends comes to ruin.”

V.             RELATIONSHIP MARKETING AND CUSTOMER RETENTION

A.             Three levels of customer relationship marketing:

1.     Transaction selling - a customer is sold and not contacted again.

2.     Relationship selling - after the purchase, the seller finds out if the customer is satisfied and has future needs.

3.     Partnering - the seller works continually to improve the customer’s operations, sales, and profits.

B.             Relationship marketing builds friendships.

1.     Relationship marketing - the creation of customer loyalty and retention.

2.     An organization using relationship marketing is not seeking simply a sale or a transaction; the goal is to retain customers.

VI.           THE PRODUCT AND ITS SERVICE COMPONENT

A.             A person buying a product is buying a bundle of tangible and intangible attributes, including packaging, color, and brand, plus the services and even the reputation of the seller.

B.             Buyers have expectations of what an organization should deliver:

1.     Product - the product purchased has no defects.

2.     Price - fair value for the price.

3.     Place - the product is available when and where needed and promised.

4.     Promotion - correct, honest information and advertisements, from salespeople, and on product labels.

5.     Exchange transaction - handled correctly, quickly and professionally the first time.

6.     After the sale - warranty honored, repairs or exchanges made cheerfully; written information or company representative available to discuss how to put together, hook-up, or use the product.

C.             Customer service - the activities and programs provided by the seller to make the relationship a satisfying one for the customer.

D.             Service quality is a customer’s perception of how well service provided by a seller meets their expectations.

VII.         CUSTOMER SATISFACTION AND RETENTION

A.             Customer satisfaction - a customer’s feelings toward a purchase.

B.             Continued customer satisfaction leads to customer retention which is critical to the long-run success of a salesperson.

VIII.       EXCELLENT CUSTOMER SERVICE AND SATISFACTION REQUIRES TECHNOLOGY - Providing good service to customers in today’s competitive marketplace is not enough; service must be excellent.

IX.           SO, HOW DOES SERVICE INCREASE YOUR SALES? - High-performance salespeople can convert follow-up and service situations into sales.

X.             ACCOUNT PENETRATION IS A SECRET TO SUCCESS

A.             Account penetration - the ability to work and contact people throughout the account discussing your products.

B.             Penetration can be determined by:

1.     Your total and major brand sales growth in an account.

2.     Distribution of the number of products in a product line, including sizes, used or merchandized by an account.

3.     Level of cooperation you obtain, such as reduced resale prices, shelf space, advertising and display activity, discussion with their salespeople, and freedom to visit with various people in the account.

4.     Your reputation as the authority on your type of merchandise for the buyer.

C.             General rule - the greater your account penetration the greater your chances of maximizing sales within the account.

XI.           SERVICE CAN KEEP YOUR CUSTOMERS

A.             First: concentrate on improving account penetration.

B.             Second: contact new accounts on a frequent and regular schedule.

C.             Third: handle your customer’s complaints promptly.

D.             Fourth: always do what you say you will do.

E.             Fifth: provide service as you would to royalty.

F.              Sixth: practical suggestions to show your appreciation:

1.     Phone immediately when a solution to a customer’s problem arises.

2.     Mail your prospect interesting clippings.

3.     Write congratulatory notes.

4.     Send clippings about customers’ families.

5.     Send holiday cards.

6.     Send birthday cards.

7.     Prepare a brief, informative newsletter.

XII.         YOU LOSE A CUSTOMER - KEEP ON TRUCKING! - Four things can be done to win back a customer:

A.             Visit and investigate.

B.             Be professional.

C.             Never criticize a competing product your customer has purchased.

D.             Keep calling.

XIII.       INCREASING YOUR CUSTOMERS’ SALES

A.             Two methods:

1.     Have current customers buy more of a product than they are currently using.

2.     Have current customers buy the same products to use for a different purpose.

B.             To increase sales:

Step 1:  Develop an account penetration program.

Step 2:  Examine your distribution.

Step 3:  Keep merchandise in the warehouse on a shelf.

Step 4:  Fight for shelf space and positioning.

Step 5:  Assist the product’s users.

Step 6:  Assist the reseller’s salespeople.

Step 7:  Demonstrate your willingness to help.

Step 8:  Obtain customer support.

XIV.      RETURNED GOODS MAKE YOU A HERO - The salesperson should examine the merchandise carefully.

XV.        HANDLE COMPLAINTS FAIRLY - Customers may be dissatisfied with products for a number of reasons.

A.             The product delivered is a different size, color, or model than the one ordered.

B.             The quantity delivered is less than the quantity ordered.

C.             The product does not arrive by the specified date.

D.             Agreed on discounts are not rendered by the manufacturer.

E.             The product does not have a feature or perform a function that the customer believed it would.

F.              The product is not of the specified grade or quality.

XVI.      IS THE CUSTOMER ALWAYS RIGHT?

A.             Some academics believe the answer is “yes,” but what if the customer asks you to do something unethical or illegal?

B.             Occasionally a dishonest customer may require you and your company not to honor a request; always have a plan for problem solving.

1.     Obtain as much relevant information from your customer as possible.

2.     Express sincere regret for the problem.

3.     Display a service attitude.

4.     Review your sales records to ensure the customer purchased the merchandise.

5.     If the customer is right, quickly and cheerfully handle the complaint.

6.     Follow up to make sure the customer is satisfied.

C.             Dress in your armor; be prepared to meet a dishonest customer.

XVII.    BUILD A PROFESSIONAL REPUTATION - Eight considerations:

A.             Be truthful, and follow through on what you tell your customer.

B.             Maintain an intimate knowledge of your firm, its products, and your industry.

C.             Speak well of others, including your company and your competitors.

D.             Keep customer information confidential; maintain a professional relationship with each of your accounts.

E.             Never take advantage of a customer by using unfair, high-pressure techniques.

F.              Be active in community affairs by helping to better your company.

G.             Think of yourself as a professional, and always act as a professional.

H.             Provide service “above and beyond the call of duty.”

XVIII.  DO’S AND DON’TS FOR BUSINESS SALESPEOPLE

A.             Most important traits are:

1.     Willingness to “go to bat” for the buyer within the supplier’s firm.

2.     Thoroughness and follow-through after the sale.

3.     Knowledge of his or her firm’s product line.

4.     Market knowledge and willingness to “keep the buyer posted.”

5.     Imagination in applying one’s products to the buyer’s needs.

6.     Knowledge of the buyer’s product line.

7.     Preparation for sales calls.

8.     Regularity of sales calls.

9.     Diplomacy in dealing with operating departments.

10.  Technical education (knowledge of specifications and applications).

B.             “Seven Deadly Sins of Business Selling” are:

1.     Lack of product knowledge.

2.     Time-wasting.

3.     Poor planning.

4.     Pushiness.

5.     Lack of dependability.

6.     Unladylike or ungentlemanly conduct.

7.     Unlimited optimism.

XIX     THE PATH TO SALES SUCCESS: SEEK, KNOCK, ASK, SERVE

A.             Seek customers to serve and you will find them.

B.             Knock and people will open their doors.

C.             Ask and people will buy.

D.             Provide service after the sale and customers will buy again.

E.             Selling requires:

1.     Faith

2.     Focus

3.     Follow-up

 

CHAPTER 15

Time, Territory, and Self-Management: Keys to Success

LECTURE OUTLINE

I.               THE GOLDEN RULE TIME

A.             People spend time doing what is most important in their lives.

B.             Using your time in a career to help others results in a wonderful life.

II.             CUSTOMERS FORM SALES TERRITORIES

A.             Sales territory - comprises a group of customers or a geographical area assigned to a salesperson.

B.             Why establish sales territories?

1.     To obtain thorough coverage of the market.

2.     To establish a salesperson’s responsibility.

3.     To evaluate performance.

4.     To improve customer relations.

5.     To reduce sales expense.

6.     To allow better matching of salespeople to customer needs.

7.     To benefit salespeople and the company.

C.             Why sales territories may not be developed.

1.     Restriction by a territory.

2.     Company may be too small.

3.     Not enough time or knowledge.

4.     Personal friendship may be the basis for attracting customers.

III.           ELEMENTS OF TIME AND TERRITORY MANAGEMENT (TTM)

A.             Salesperson’s sales quota.

B.             Account analysis.

1.     Identification and estimate of sales potential.

a.     The undifferentiated selling approach - use the same approach on accounts which are basically the same.

b.     The account segmentation approach - accounts that have heterogeneous needs and differing characteristics require different selling strategies.

(1)  Key account.

(2)  Unprofitable account.

(3)  Regular account.

2.     Multiple selling strategies.

3.     Multivariable account segmentation.

C.             Develop account objectives and sales quotas.

D.             Territory-time allocation.

1.     Number of accounts in the territory.

2.     Number of sales calls made to customers.

3.     Time required for each sales call.

4.     Frequency of customer sales calls.

5.     Travel time around territory.

6.     Non-selling time.

7.     Return on time invested.

a.     Sales time should be in direct proportion to potential sales for each account.

b.     Break-even analysis may be used to analyze cost.

Break-even point in dollars=

Salesperson’s fixed costs

Percentage of gross profit

c.   The management of time.

(1)  Plan by the day, week, and month.

(2)  Qualify the prospect.

(3)  Use waiting time.

(4)  Have a productive lunch time; invite prospects.

(5)  Keep records and reports.

E.             Customer sales planning - developing a sales call objective, a customer profile, customer benefit program, and selling strategies for individual customers.

F.              Scheduling and routing.

1.     Scheduling - refers to establishing a fixed time (day and hour) when the salesperson will be at a customer’s place of business.

2.     Routing - the travel pattern that he/she uses in working the sales territory. They enable the company to:

(1)  Improve territory coverage.

(2)  Minimize waste time.

(3)  Establish communications between management and the sales force in terms of location and activities.

G.             Using the telephone for territorial coverage.

1.     Sales generating.

2.     Order processing.

3.     Customer servicing.

H.             Territory and customer evaluation.

1.     Territorial control is the establishment of standards of performance for the individual territory in the form of qualitative and quantitative quotas or goals.

2.     Actual performance is then compared to these goals.


CHAPTER 16

Planning, Staffing, and Training Successful Salespeople

LECTURE OUTLINE

I.               THE TREE OF BUSINESS LIFE: MANAGEMENT

A.             The same characteristics needed in sales people are needed in sales managers.

B.             Just as there is a Golden Rule of Sales, there is a Golden Rule of Sales Management.

II.             TRANSITION FROM SALESPERSON TO SALES MANAGER

A.             Major changes that occur when a person becomes a new manager:

1.     Perspectives change.

2.     Goals change.

3.     Responsibilities change.

4.     Satisfaction changes.

5.     Job skill requirements change.

6.     Relationships change.

B.             The experience of being promoted.

Phase 1:  Immobilization.

Phase 2:  Minimization or denial of change.

Phase 3:  Depression.

Phase 4:  Acceptance of reality.

Phase 5:  Testing.

Phase 6:  Searching for meaning.

Phase 7:  Internalization.

C.             Problems experienced by new managers:

1.     Lack of preparation for the job.

2.     Companies generally expect them to step into the job and function effectively immediately.

3.     New manager lacks an immediate peer group.

D.             The keys to making a successful transition:

1.     Have a learning attitude.

2.     Have realistic expectations.

3.     Learn what responsibilities go with the job and how to avoid making too many changes.

4.     Make initial adjustments.

III.           TECHNOLOGY IS NEEDED IN THE JOB - Computers have many benefits:

A.             Increased communication.

B.             Enhanced convincing power.

C.             Greater ability to compete.

IV.           BEING A FIRST-LINE SALES MANAGER IS A CHALLENGING JOB - Managers must be effective in managing salespeople and influencing the boss.

V.             WHAT IS THE SALARY FOR MANAGEMENT?

A.             The assumption is that the larger a company’s revenues, the heavier the responsibility of the chief executive, and thus, the larger his compensation.

B.             Salary is usually related to:

1.     Annual sales volume of units managed.

2.     Number of salespeople supervised.

3.     Length of experience in sales.

4.     Annual sales volume of the firm.

C.             Salary is just one part of compensation (e.g. vacation, pension, health, and other programs offered by the company).

VI.           OVERVIEW OF THE JOB

A.             The sales manager’s main goal is to achieve the level of sales volume, profits, and sales growth desired by high levels of management.

B.             Sales managers are performance oriented. The look for ways to create more efficient and effective salespeople.

VII.         SALES MANAGEMENT FUNCTIONS

A.             Planning.

B.             Staffing.

C.             Training.

D.             Directing.

E.             Evaluating.

VIII.       SALES FORCE PLANNING.

A.             Planning has two important functions:

1.     Sales forecasting.

a.     Used to predict a firm’s future revenues when planning activities.

b.     Forecasts are made in terms of short, medium, and long-range demand.

2.     The sales manager’s budget.

a.     The amount of money available or assigned for a definite period of time.

b.     Depends on the sales forecast.

c.     Methods of developing sales force budgets.

(1)  Arbitrary percentage of sales.

(2)  Executive judgment.

(3)  Estimated cost of operating each sales force unit along with their program costs over a specified time period.

B.             Organizing the sales force.

1.     In deciding on the organizational design and structure of a sales force, we:

a.     Examine our customers in each market.

b.     Determine the types of sales jobs needed to serve a market.

c.     Note the job activities salespeople must do in each job.

d.     Design sales jobs around customers.

e.     Set up the sales force organizational structure, which includes the various sales jobs and geographic territories.

2.     Organizational design - the formal, coordinated process of communication, authority, and responsibility for sales groups and individuals.

3.     Organizational structure - the relatively fixed, formally defined relationships among jobs within the organization.

4.     Organizational chart.

IX.           STAFFING: HAVING THE RIGHT PEOPLE TO SELL

A.             Staffing - activities undertaken to attract, hire, and maintain effective sales force personnel within an organization.

B.             People planning - how many and the type of people to hire.

1.     Sales force size - depends on several factors such as nature of the job, intensity of market coverage (e.g. intensive, selective, or exclusive distribution), and type of products sold.

a.     Breakdown approach - three steps for determining sales force size:

Step 1:  Forecast sales and determine sales potential.

Step 2:  Determine sales volume needed for each territory.

Step 3:  Determine number of sales territories.

2.     Type of people.

a.     Job analysis and descriptions.

(1)  Job analysis - sales position in terms of specific roles and determination of qualifications suitable for the job.

(2)  Job descriptions - formal, written statements describing the nature, requirements, and responsibilities of a specific sales position.

b.     Job specifications.

(1)  Convert job descriptions into the people qualifications necessary for successful performance of the job.

(2)  Job Specifications for successful salespeople:

(a)   Education.

(b)  Personality.

(c)   Experience.

(d)  Physical attributes.

C.             Employment planning.

1.     The recruitment and selection of applicants for sales jobs.

2.     Major steps in the sales personnel selection process.

a.     Application.

b.     Initial interview.

c.     In-depth interview.

d.     Testing.

e.     Reference checks.

f.      Physical examination.

3.     Legal framework for employment.

a.     Equal Employment Opportunity Commission (EEOC) - principal government agency responsible for monitoring discriminatory practices.

b.     Equal Pay Act of 1963 - prohibits gender discrimination.

c.     Education Amendments Act of 1972 - equal pay.

d.     Civil Rights Act of 1964 amended by the Equal Employment Opportunity Act of 1974 - prohibits discrimination on the basis of race, gender, religion, or national origin.

e.     Americans with Disabilities Act (ADA) - prohibits discrimination based on disabilities if the person is able to do the job.

f.      Discrimination is allowed if an employer can show that a given action is “reasonably necessary to the operation of that particular business or enterprise.”

4.     Diversity of the sales force.

a.     Diversity refers to all kinds of differences in people including: age, disability status, military experience, sexual orientation, economic class, educational level, and lifestyle in addition to gender, race, ethnicity, and nationality.

b.     Differences within each member of every group exist as well.

5.     The multicultural sales organization.

a.     Multicultural refers to the degree to which an organization values cultural diversity and is willing to utilize and encourage it.

b.     A multicultural organization fully integrates racial and minority group members both formally and informally while maintaining low levels of prejudice and discrimination.

6.     Recruitment - finding the right people.

a.     Recruitment involves searching for, finding, and interviewing people for the job.

b.     Applicants are attracted by the type of sales job, the company’s image, word-of-mouth, and salaries.

7.     Selection - choose the best available!

a.     Selection refers to the process of selecting the best available person for the job.

b.     Steps to test whether a person is right for a company and vise versa.

(1)  Application.

(2)  Personal interview.

(3)  In-depth interview.

(4)  Employment tests.

(5)  Reference checks.

(6)  Physical examination.

D.             A sales manager’s view of the recruit:

1.     The search for a sales job begins with the applicant.

2.     The key to obtaining the job is the applicant selling himself.

3.     The applicant should be aware of what recruiters look for.

4.     The applicant should submit an application letter which introduces himself/herself to the prospective employer.

5.     A resume should also be submitted containing personal data, job objective, education, work experience, activities, and a reference section.

6.     The applicant should be prepared for an interview.

7.     An interview follow-up letter may be used.

8.     The second interview is used if the applicant has passed the other major steps.

9.     Finally, a job offer or no job offer is made.

X.             TRAINING THE SALES FORCE

A.             Sales training - the effort put forth by an employer to provide the opportunity for the salesperson to receive job-related attitudes, concepts, and skills that result in improved performance in the selling environment.

B.             Training is designed to change or reinforce behavior to make salespeople more efficient in achieving their sales goals.

C.             Purposes of training:

1.     Primarily, to increase sales, productivity, and profits.

2.     However, the primary purpose of training is as an investment in the sales organization’s most valuable resource, its salespeople.

D.             Training methods:

1.     Discussion - case studies and small or large discussion groups.

2.     Role playing - trainee acts through the sale of a product or service to a hypothetical buyer. Usually includes the following steps:

a.     Define the sales problem.

b.     Establish the situation.

c.     Cast the characters.

d.     Brief the participants.

e.     Act out the buyer-seller situation.

f.      Discuss, analyze, and critique the role playing.

3.     On-the-job training.

a.     New salespeople may accompany and observe on sales calls.

b.     Experienced salespeople get observed by the sales trainer and curbside counseling by the sales manager.

E.             Where does training take place?

1.     Sales training is continuous.

2.     Training occurs any time the superior does things such as commenting on a salesperson’s reports, talking, working, or meeting with him or her.

3.     Centralized training - for instruction of salespeople from all geographical areas served by the company.

4.     Decentralized training - conducted anywhere; it is the main form of sales force instruction.

5.     There are advantages and disadvantages to both types of training.

F.              When does training occur?

1.     For new sales personnel, the first day they report to work.

2.     Training continues throughout the professional salesperson’s career.

3.     Experienced salespeople are provided with periodic sales meetings for continued training.

G.             Who is involved in training?

1.     Corporate staff personnel - responsible for creation, administration, and coordination of a firm’s sales management and sales force training and development programs.

2.     Sales force personnel –bring years of sales force experience to the training program.

3.     Outside training specialists - for example, university courses and others.

4.     Combination of training sources - consultants, newsletters, programs, libraries, etc.

 

CHAPTER 17

Motivation, Compensation, Leadership, and Evaluation of Salespeople

LECTURE OUTLINE

I.               THE TREE OF BUSINESS LIFE: MANAGEMENT

A.             Sales managers impact the lives of their salespeople and their families.

B.             Sales managers should do all they can to make their salespeople successful by putting their salespeople's interests above their own.

II.             MOTIVATION OF THE SALES FORCE

A.             Two levels of motivation:

1.     Individual.

2.     Entire sales force.

B.             Motivation - the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period.

III.           THE MOTIVATION MIX: CHOOSE YOUR INGREDIENTS CAREFULLY

A.             The basic compensation plan.

B.             Special financial incentives.

C.             Non-financial rewards.

D.             Leadership techniques.

E.             Management control procedures.

IV.           COMPENSATION IS MORE THAN MONEY

A.             Sales performance can be rewarded in three ways:

1.     Direct financial rewards.

2.     Career advancement.

3.     Non-financial compensation.

B.             Straight salary plan.

1.     The simplest.

2.     Paid a specific dollar amount at regular intervals, usually weekly, semi-monthly, or monthly.

3.     Advantages to the salesperson.

a.     Security.

b.     Independent of performance in the short run.

c.     Known income.

4.     Advantages to management:

a.     Simple and economical to administer.

b.     Tasks are easier to assign.

c.     Less resistance to assignments and transfers.

d.     Managers can project compensation expenses.

5.     Disadvantages of the straight salary plan.

a.     Major disadvantage is lack of direct monetary incentive.

b.     Lowering of work norms within sales groups.

c.     Salary is not proportional to sales made.

6.     When to use straight salary plans:

a.     Best when a high percentage of the work day is devoted to non-selling activities.

b.     Also, when management cannot effectively evaluate performance.

C.             Straight commission plans.

1.     Complete incentive compensation; if you do not sell anything, you do not earn anything.

2.     Straight commission.

a.     Pay related directly to performance.

b.     Percentage of commission is attached to the unit.

c.     Level at which commissions begin or change is established.

3.     Drawing accounts - one version combines the incentive of a commission plan with the security of a fixed income.

4.     Advantages to straight commission plans:

a.     Maximum incentive for salespeople.

b.     Salespeople feel productive and independent.

c.     It is simple to administer.

d.     Selling costs are in direct proportion to sales.

e.     Payment is received upon sale, shipment, or when the order is made.

5.     Disadvantages of the commission plan:

a.     Uncertainty and insecurity.

b.     Often little loyalty is developed from the company.

c.     Salespeople are reluctant to split or change territories.

d.     Cost of sales.

6.     Administrative problems with the commission plan:

a.     Policies must be provided for each circumstance to provide proper compensation and prevent moral problems.

b.     How to handle bad customer debts.

c.     How to handle returns.

D.             Combination plans - A proportion of the salesperson’s total pay is guaranteed while some of it can come from commissions.

E.             Bonus: individual or group?

1.     Something given in addition to what is usually earned by the salesperson.

2.     Across-the-board bonus - money is given to all salespeople regardless of productivity.

3.     Performance bonus - related to performance.

4.     Sales contest - special sales programs offering salespeople incentives to achieve short-term sales goals; they can increase team spirit, interest in the job, job satisfaction, and decrease absenteeism and turnover.

V.             THE TOTAL COMPENSATION PACKAGE - The salesperson receives numerous forms of financial compensation.

VI.           NON-FINANCIAL REWARDS ARE MANY - Can be a sales award, transfer, praise or a certificate.

VII.         LEADERSHIP IS IMPORTANT TO SUCCESS

A.             Leadership is the process by which sales managers attempt to influence the activities of salespeople.

B.             The leader’s task and relationship behavior:

1.     Two forms of behavior that leaders can use to influence their salespeople:

a.     Task behavior - involves the leader in describing the duties and responsibilities of an individual or group.

b.     Relationship behavior is:

(1)  People oriented.

(2)  Involves the extent to which the leader uses two-way communication.

2.     Four different styles of leadership were developed for different situations.

Style 1:  Tells - tells salespeople what to do.

Style 2:  Persuades - sales manager makes the decision, but cooperation is sought.

Style 3:  Participates - sales manager and salesperson decide together.

Style 4:  Delegates - salesperson makes the decision.

3.     Choosing a leadership style.

a.     There is no one best way, but various techniques may be used to improve effectiveness of leadership.

b.     On-the-job coaching - training someone intensively through instruction, demonstration, and practice. The main element of a coaching session is the joint sales call.

VIII.       PERFORMANCE EVALUATIONS LET PEOPLE KNOW WHERE THEY STAND

A.             Management control system - establishes performance goals, evaluates goals compared to the salesperson’s accomplishments, then rewards or penalizes the individual based on performance level.

B.             Performance evaluation - a formal, structured system of measuring and evaluating a salesperson’s activities and performance.

C.             Reasons for performance evaluations:

1.     To obtain an appraisal of a salesperson’s past performance.

2.     Develop a sales plan to increase performance.

3.     To motivate salespeople to improve their performance.

D.             Who should evaluate salespeople?

1.     Primary evaluator should be the immediate supervisor.

2.     In most organizations, several managers evaluate each salesperson.

E.             When should salespeople be evaluated?

1.     At the end of each performance cycle.

2.     A minimum of one formal evaluation should be completed yearly for each salesperson.

F.              Performance criteria – the basis for evaluating a salesperson’s performance. Two types:

1.     Quantitative Performance Criteria - best for evaluating performance; helps to give objective sales and operation data; examples are:

a.     Sales volume.

b.     Market share.

c.     New customers obtained.

d.     Sales orders.

2.     Qualitative Performance Criteria - represent the salesperson’s major job activities and indicate why quantitative measures look as they do. Examples are:

a.     Sales skills.

b.     Territory management.

c.     Personal traits.

G.             Conducting the evaluation session.

1.     Both manager and salesperson should be prepared for the interview.

2.     Be positive - extremely important for both manager and salesperson.

3.     Actually reviewing performance.

4.     Finalizing the performance evaluation.

5.     Summarize the total performance evaluation.

6.     Develop mutually agreed on objectives.

7.     Formalize evaluation and objectives.

H.             Sales managers use technology to manage customers’ accounts.