Churchill/Ford/Walker's

Sales Force
Management
Ninth Edition

Mark W. Johnston
Crummer Graduate School
of Business
Rollins College

Greg W. Marshall
Crummer Graduate School
of Business
Rollins College

McGraw-Hill
Irwin
Boston Burr Ridge, IL Dubuque, IA New York San Francisco St. Louis
Bangkok Bogota Caracas Kuala Lumpur Lisbon London Madrid Mexico City
Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto
Contents
Chapter One
Introduction to Sales Management in the
Twenty-First Century 1
Change is the Central Theme in Sales Management
Today 1
Learning Objectives 3
Sales Management in the Twenty-First
Century 3
Innovation Fuels Success in Selling Today 4
Sales Effectiveness Is Enhanced through
Technology 5
Leadership Is a Key Component in Sales Management
Success 6
Sales Management Is a Global Endeavor 7
Ethics Underlies All Selling and Sales Management
Activities 8
What Is Involved In Sales Management 10
Selling Process 10
Sales Management Process II
Environmental Factors Impact Success in
Selling 12
External Environment 13
Economic Environment 14
Legal and Political Environment 14
Technological Environment 16
Social and Cultural Environment: Ethics 17
Natural Environment 18
Summary: Impact of the External Environment 20
Internal (Organizational) Environment 20
Goals, Objectives, and Culture 20
Human Resources 21
Financial Resources 22
Production and Supply Chain Capabilities 22
Service Capabilities 22
Research and Development and Technological
Capabilities 22
Impact of the Environment: The HP Experience 23
Summary 24
PART ONE
FORMULATION OF A SALES
PROGRAM 30
Chapter Two
The Process of Selling and Buying 32
The Case for a Focus on the Sales Process 32
Learning Objectives 33
Drivers of Change in Selling and Sales
Management 34
Overview of Selling as a Career 35
Why Sales Jobs Are So Rewarding 36
Key Success Factors in Selling 42
Selling Activities 46
Types of Selling Jobs 49
Selling in Business-to-Consumer versus
Business-to-Business Markets 49
Classifying Types ofB2B Sales Jobs 50
Stages in the Selling Process 50
Prospecting for Customers 51
Opening the Relationship 52
Qualifying the Prospect 53
Presenting the Sales Message 53
Closing the Sale 54
Servicing the Account 55
Participants in the Organizational Buying
ProcessThe Buying Center 55
Selling Centers and Buying Centers 57
Organizational Buying Decision Stages 58
Stage One: Anticipation or Recognition of a
Problem or Need 58
Stage Two: Determination and Description of the
Characteristics and Quantity of the Needed Item(s) 59
Stage Three: Search for and Qualification
of Potential Suppliers 60
Stage Four: Acquisition of Proposals or Bids 60
Stage Five: Evaluation of Offerings and Selection of
Suppliers 60
Stage Six: Selection of an Order Routine 61
xvi Contents
Stage Seven: Performance Evaluation and
Feedback 61
The Nature of Organizational Buying
Situations 62
Summary 63
Chapter Three
Linking Strategies and the Sales Role
in the Era of Customer Relationship
Management 68
The Importance of Integrating Sales with Other
Functions 68
Learning Objectives 70
What Is Customer Relationship
Management? 70
From Mass Marketing to One-to-One Marketing
CRM Process Cycle 74
Toward a Relationship-Based Enterprise 76
The Importance of Market Orientation 77
How Market Orientation Affects Performance
Internal Partnering to Create a Market
Orientation 80
The Process of Strategy Development 80
Company Mission and Goals 80
SBV Strategy 82
Personal Selling's Role in Marketing Strategy
Role of the Relationship 87
Personal Selling in the Relationship Era
Stage One: Exploration 89
Stage Two: Expansion 90
Stage Three: Commitment 91
Personal Selling's Role in the Marketing
Communication Mix 92
Company Resources, Goals, and Marketing
Strategy 93
Characteristics of the Target Market 94
Product Characteristics 94
Distribution Practices 95
Pricing Policies 96
Computerized Ordering and Customer
Alliances 96
Improving Customer Satisfaction and Loyalty
through Feedback 97
Major Account Teams 97
Summary 99
Chapter Four
Organizing the Sales Effort 105
Organize the Sales Force around Customers,
not Products 105
Learning Objectives 106
The Increasing Importance of Sales Organization
Decisions 106
Purposes of Sales Organization 107
Division and Specialization of Labor 107
Stability and Continuity of Organizational
Performance 108
Coordination and Integration 108
Horizontal Structure of the Sales Force 109
Deciding on a Company Sales Force or Independent
Agents 109
Geographic Organization 113
72
Product Organization 115
Organization by Customer Types or Markets 116
Organization by Selling Function 117
The Role of Telemarketing 117
79
Organizing to Service National and Key
Accounts 119
Team Selling 121
Multilevel Selling 122
Co-Marketing A lliances 123
Logistical Alliances and Computerized Ordering 124
87
Vertical Structure of the Sales Organization 125
Selling Responsibilities 126
89
Sales-Related Functions 126
The Impact of New Technologies 127
Staff Support and Outsourcing 127
Additional Sales Organizational Issues 128
Summary 129
Chapter Five
The Strategic Role of Information in Sales
Management 135
Putting Information Technology into
Perspective 135
Learning Objectives 136
Using Information in Managerial Decision Making
and Planning 137
Introduction to Market Opportunity
Analysis 137
 Contents xvii

Methods of Sales Forecasting 13 8 The Model 201

Subjective Methods of Forecasting 139 The Role Perceptions Component 201
Objective Methods of Forecasting 142 The Aptitude Component 202
Choosing a Forecasting Method 146 The Skill-Level Component 202
Developing Territory Estimates 146 The Motivation Component 203
Purposes and Characteristics of Sales Quotas 148 The Personal, Organizational, and Environmental
Purposes of Quotas 148 Variables Component 204
Characteristics of a Good Quota 148 Rewards 207
Setting Quotas 149 Satisfaction 207
Types of Quotas 149 The Salesperson's Role Perceptions 209
Quota Level 150 Stages in Developing the Salesperson's Role 209
Determining Sales Force Size 152 Stage 1: Role Partners Communicate Expectations 209
Breakdown Method 152 Stage 2: Salespeople Develop Perceptions 209
Workload Method 153 Stage 3: Salespeople Convert Perceptions into
Incremental Method 155 Behaviors 210
Designing Sales Territories 156 The Salesperson's Role is Vulnerable 211
Stages in Sales Territory Design 156 Boundary Position 211
Sales Analysis for Managerial Decision Making 163 Large Role Set 212
Type of Evaluation System 164 Innovative Role 212
Sources of Information for Sales A nalysis 165 Role Conflict and Ambiguity 214
Type of Aggregation of Information to Be Used in Sales Common Expectations and Key Areas of Conflict and
Analysis 166 Ambiguity 214
Illustration of a Hierarchical Sales Analysis 170 Consequences of Conflict and Ambiguity 216
Summary 175 Managing Conflict and Ambiguity in a Salesperson 218
Role Accuracy 218
Nature of Role Accuracy 219
Comprehensive Cases for Part One Summary 221
Case 1.1
The Valley Winery 184 Chapter Seven
Case 1.2 Salesperson Performance: Motivating
Health Care Office Solutions, Inc. 189 the Sales Force 228
Case 1.3
Microsoft Canada: Sales and Product Management Salesperson Motivators 228
Working Together 192 Learning Objectives 230
The Psychological Process of Motivation 230
Major Components of the Model 231
ExpectanciesPerceived Links between Effort and
IMPLEMENTATION OF THE SALES Performance 231
PROGRAM 196 InstrumentalitiesPerceived Links between
Performance and Rewards 232
Chapter Six Valences for Rewards 236
Can the Motivation Model Predict Salesperson
Salesperson Performance: Behavior, Role
Effort and Performance? 237
Perceptions, and Satisfaction 198 The Impact of a Salesperson's Personal
The Changing Role of the Sellers 198 Characteristics on Motivation 239
Learning Objectives 199 Satisfaction 239
Understanding Salesperson PerformanceWhy Demographic Characteristics 239
Is It Important for Sales Management? 200 Job Experience 239
xviii Contents

Psychological Traits 240 Content of the Job Description 290

Performance Attributions 242 Determining Job Qualifications and Selection
Management Implications 242 Criteria 292
Career Stages and Salesperson Motivation 242 Methods for Deciding on Selection Criteria 292
Career Stages 242 Recruiting Applicants 293
The Problem of the Plateaued Salesperson 246 External Sources 297
The Impact of Environmental Conditions on Selection Procedures 299
Motivation 248 Application Blanks 300
The Impact of Organizational Variables on Personal Interviews 301
Motivation 249 Physical Examinations 303
Supervisory Variables and Leadership 250 Tests 303
Incentive and Compensation Policies 251 Concerns about the Use of Tests 304
Summary 252 Guidelines for the Appropriate Use of Tests 305
Equal Employment Opportunity Requirements in
Chapter Eight Selecting Salespeople 305
Requirements for Tests 306
Personal Characteristics and Sales Aptitude:
Requirements for Interviews and Application
Criteria for Selecting Salespeople 258 Blanks 306
The War for Talent 258 Summary 307
Learning Objectives 259
Are Good Salespeople Born or Made? The Chapter Ten
Determinants of Successful Sales Performance 260 Sales Training: Objectives, Techniques,
A Review of Past Research 261
and Evaluation 313
The Costs of Inappropriate Selection Standards 262
Characteristics of Successful Salespeople 263 Military Training and Sales Success 313
Characteristics Sales Managers Look For 263 Learning Objectives 314
Research Concerning the Personal Characteristics of Issues in Sales Training 315
Successful Salespeople 264 Objectives of Sales Training 316
Overview of Findings 265 Increase Productivity 316
Job-Specific Determinants of Good Sales Improve Morale 316
Performance 274 Lower Turnover 316
Selling Different Types of Products and Services 2 75 Improve Customer Relations 317
Different Types of Sales Jobs 276 Improve Selling Skills 318
Implications for Sales Management 276 The Development of Sales Training
Summary 277 Programs 318
Creating Credibility in Sales Training 320
Chapter Nine Training New Sales Recruits 322
Training Experienced Sales Personnel 323
Sales Force Recruitment and Selection 284 Sales Training Topics 325
The Real Value of Hiring Good Employees 284 Product Knowledge 325
Learning Objectives 285 Market/Industry Orientation 326
Recruitment and Selection Issues 285 Company Orientation 326
Who Is Responsible for Recruiting and Selecting Time and Territory Management 326
Salespeople? 288 Legal/Ethical Issues 327
Job Analysis and Determination of Selection Technology 328
Criteria 289 Specialized Training Topics 328
Who Conducts the Analysis and Prepares the Sales Training Methods 329
Description? 289 On-the-Job Training 330
 Contents xix

Classroom Training 332 Comprehensive Cases for Part Two 377

Electronic Training Methods 332
Measuring the Costs and Benefits of Sales Case 2.1
Training 333 California Credit Life Insurance Group 378
Sales Training Costs 333 Case 2.2
Measurement Criteria 334 On-Time Package Delivery 386
Measuring Broad Benefits 335 Case 2.3
Measuring Specific Benefits 336 Spectrum Brands Inc.The Sales Force Dilemma 391
Recent Trends in Sales Training Evaluation 336
Summary 337
PART THREE
Chapter Eleven EVALUATION AND CONTROL
Salesperson Compensation OF THE SALES PROGRAM 406
and Incentives 343
Chapter Twelve
Characteristics of Great Sales Compensation
Cost Analysis 408
Plans 343
Learning Objectives 345 Real Cost Analysis Leads to Real Benefits 408
Overview of Compensation and Incentives 345 Learning Objectives 409
Straight Salary, Straight Commission, and Cost Analysis Development 411
Combination Plans 348 Full Cost versus Contribution Margin 411
Straight Salary 348 ABC Accounting 415
Straight Commission 349 Procedure 416
Combination Plans 350 The Process Illustrated 420
Sales Contests 354 Direct Selling 423
Contest Objectives 354 Advertising 423
Contest Themes 354 Warehousing and Shipping 425
Probability of Winning 354 Order Processing 425
Types of Contest Rewards 355 Transportation 425
Contest Promotion and Follow-through 356 Promise and Problems 42 7
Criticism of Sales Contests 356 Return of Assets Managed 427
Nonfinancial Rewards 356 Summary 430
Recognition Programs 357
Expense Accounts 358 Chapter Thirteen
Direct Reimbursement Plans 358
Evaluating Salesperson Performance 439
Limited Reimbursement Plans 359
No Reimbursement Plans 359 The Case for a Focus on Sales Force Performance
Making Compensation and Incentive Programs Management Systems 439
Work 359 Learning Objectives 440
Assessing the Relationship Selling Objectives 361 Performance versus Effectiveness 441
Determining Which Aspects of Job Performance to Objective Measures 443
Reward 363 Output Measures 444
Deciding on the Most Appropriate Mix and Level of Input Measures 444
Compensation 365 Ratio Measures 446
Dangers of Paying Salespeople Too Much 368 Summary of Objective Measures 448
Dangers of Paying Salespeople Too Little 368 Subjective Measures 449
Summary 369 Forms Used for Subjective Measurement 450
xx Contents

Avoiding Errors in Performance Evaluation 455 Case 3.3

Using a BARS System 457 Biomed Co., Ltd.: Designing a New Sales Compensation
360-Degree Feedback in Performance Plan 485
Evaluation 458
Summary 460
Notes 493
Comprehensive Cases for Part Three Case Index 509
Case 3.1 Name Index 510
Wentworth Industrial Cleaning Supplies 468
Case 3.2
Subject Index 515
Hanover-Bates Chemical Corporation 480