Chapter 20, Personal Selling and Sales Management, Class Notes

Content List

Scope and Importance of Personal Selling Nature of Personal Selling Types of Sales People Elements of the Personal Selling Process Prospecting and Evaluating Preapproach Approaching the Customer Making the Presentation Closing the Sale Following Up Management of the Salesforce Establishing Salesforce Objectives Organizing the Salesforce Recruiting and Selecting the Salesforce Training the Salesforce Compensating Sales People Motivating Sales People Please Email alex@udel.edu any comments Return to Syllabus Return to Homepage

Scope and Importance of Personal Selling

In the US, 14 million people are employed in sales positions, according to the department of labor. Sales personnel include stockbrokers, manufacturing sales representatives, real estate brokers etc. Most students in this class will have been employed as a sales person. Return to Contents

Nature of Personal Selling

Gives marketers:

The greatest freedom to adjust a message to satisfy customers informational needs, dynamic. Most precision, enabling marketers to focus on most promising leads. vs. advertising, publicity and sales promotion Give more information Two way flow of information, interactivity.

Discover the strengths and weaknesses of new products and pass this information on to the marketing department. Highest cost. Businesses spend more on personal selling than on any other form of promotional mix. Goals range from o finding prospects o convincing prospects to buy o keeping customers satisfied--help them pass the word along.

Return to Contents

Types of Sales Persons

Order Takers
Seek repeat sales, make certain that customers have sufficient product quantities where and when they need it. Do not require extensive sales effort. Arrange displays, restocks them, answer phone calls. Low compensation, little training required. High turnover of personnel. 2 types:
o o

Inside Order Takers receive orders by mail/phone, sales person in a retail store. Field Order Takers travel to customers. Use laptop computers to improve tracking of inventory and orders etc.

Order Getters
Sell to new customers and increase sales to present customers, sometimes called creative selling. Generate customer leads, provide information, persuading customers and closing sales. Required for high priced, complex and/or new products. High pressure, requires expensive, time consuming training.

Support Personnel
Facilitate the selling function. Primarily business to business products.
o

Missionary Salespeople Distribute information regarding new goods or services, describes attributes and leaves materials, does not close sales. Assist producers' customers in selling to their own customers. IE call on retailers and persuade them to carry the product. Pharmaceuticals may go to doctors offices and persuade them to carry their products. Trade Salespeople May perform order taking function as well. Spend much time helping customers, especially retail stores, to promote the product. Restock the shelves, set up displays. Technical Salespersons Offer technical assistance to current customers. Usually trained engineers etc. Service Salespeople interacts with customers after sale is complete.

Team selling...entire team of selling professionals in selling to and servicing major customers, especially when specialized knowledge is needed to satisfy different interests in customers' buying centers. Return to Contents

Elements of the Personal Selling Process

No 2 salespersons use exactly the same sales method, but it is generally a seven step process:

Prospecting and Evaluating

Seek names of prospects through sales records, referrals etc., also responses to advertisements. Need to evaluate if the person is able (Undergraduate degree to attend a graduate program), willing and authorized to buy. Blind prospecting-rely on phone directory etc. Return to Contents

Preapproach (Preparing)
Review key decision makers esp. for business to business, but also family
o o o

assess credit histories prepare sales presentations identify product needs.

Helps present the presentation to meet the prospects needs.

Approaching the Customer

Manner in which the sales person contacts the potential customer. First impression of the sales person is Lasting and therefore important. Strive to develop a relationship rather than just push the product. Can be based on referrals, cold calling or repeat contact. Return to Contents

Making the Presentation

Need to attract and hold the prospects Attention to stimulate Interest and stir up Desire in the product so the potential customer takes the appropriate Action. AIDA Try to get the prospect to touch, hold or try the product. Must be able to change the presentation to meet the prospect needs. Three types of presentations:
o

Stimulus Response Format: Appropriate stimulus will initiate a buy decision, use one appeal after another hoping to hit the right

button...Counter Clerk @ McDonald's "Would you like fries with your burger?" Formula Selling Format: (Canned Sales Presentation) memorized, repetitive, given to all customers interested in a specific product. Good for inexperienced sales people. Better with heavily advertised items that are presold. Telemarketing a credit card!! Need Satisfaction Format: Based on the principal that each customer has a different set of needs/desires., therefore the sales presentation should be adapted to the individual customer's needs, this is a key advantage of personal selling vs. advertising. Sales person asks questions first, then makes the presentation accordingly. Need to do homework, listen well and allow customers to talk etc. Must answer two types of questions: for more information overcome objections.

Overcoming Objections

Seek out objections and address them. Anticipate and counter them before the prospect can raise them. Try to avoid bringing up objections that the prospect would not have raised. Price objection is the most common Need to provide customers with reasons for the $s, build up the value before price is mentioned Must be convinced of price in own mind before you can sell to customer. Get budget info. on buyer before you try to sell, and must know what they want, must sell service on top of product augmented product--to create value!! Must know value of product, provide warranties etc.!! Return to Contents

Closing
Ask prospect to buy product/products. Use trial closes, IE ask about financial terms, preferred method of delivery. 20% sales people generally close 80% sales., Avon, over 1/2 US $1.4 bn business from 17% of 415,000 SRs. Need to be prepared to close at any time. The following are popular closing techniques:
o o o o

Trial Close (Minor decision close) Assumptive close (Implied consent close) Urgency close Ask for the sale close

If prospect says no, they may just need more reasons to buy!! Return to Contents

Following Up

Must follow up sale, determine if the order was delivered on time, installation OK etc. Also helps determine the prospects future needs. Accomplishes four objectives:
o o o o

customer gain short term satisfaction referrals are stimulated in the long run, repurchase prevent cognitive dissonance

Old school, sell and leave!!--Quickly before customer changes her mind!! Now:
o o

Stay a few minutes after sale--reinforce, make them feel good, made wise choice, leave small gift (with co. name on it!!), call office at any time etc!! Follow up, reinforce, know birthdays, new year etc, friendly correspondence...relationship building!!

Handout...Toyota Calling In Japan's Car Market

Half of cars are sold door-to-door. This is shrinking due to environmental changes. Toyota has more than 100,000 door-to-door sales people. Developing Long-term relationships is key, Keiretsu, do business with only those you know and trust. Face-to-face meetings before business to establish trust, the approach stage. Follow up is key to relationship: After sales:
o o o

call inquiring on car's immediate performance hand written greeting cards written invitations for low cost oil changes

Prospecting includes:
o o o

Driving schools for people to obtain licenses = prospects Also referrals from existing customers is very important Curtesy calls to clients who referred new customers.

Timing of presentation:
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To housewife in the middle of the day Just before 3 year "Shaken", following 2 years

"At first I had no intention of buying a new car, but Mr. Saito is very good at proposing reasons why I should change" = $1,600 shaken. Return to Contents

Management of Salesforce

Sales force is directly responsible for generating sales revenue. Eight general management areas:

Establish Salesforce objectives

Similar to other promotional objectives Demand oriented or image oriented. Major objective is persuasion, converting consumer interest into sales. Sales objectives; expected to accomplish within a certain period of time. Give direction and purpose and act as a standard for evaluation. Set for total salesforce and each individual salesperson. Can be $s, units sold, market share to achieve, for individual salespersons, also include ave. order size, ave. # of sales/time period, and ratio orders/calls. Return to Contents

Organizing the Salesforce

In-house vs. independent agents (manufacturer's sales agents). Organize by: Geography (simplest, but not suitable if product(s) are complex or customers require specialized knowledge) Customer: Different buyers have different needs Product: Specific knowledge re: products is needed Size. Marginal analysis, or determine how many sales calls/year are needed for an organization to effectively serve its customers and divide this total by the average # of sales calls that a person makes annually. Also use subjective judgement. MBNA estimates how many calls to expect, one year in advance, and then determines the size of the salesforce at any given time.

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Recruiting and Selecting Salespeople

Need to establish a set of required qualifications before beginning to recruit. Prepare a job description that lists specific tasks the salesperson should perform and analyze traits of the successful salespeople within the organization. May use assessment centers--intense training environment that places candidates in realistic problem settings in which they give priorities to their activities, make and act on decisions. Recruitment should be a continual activity aimed at reaching the best applicants. Applicants that most match the demographics of the target market. Changing demographics, may be wise to hire hispanic sales people if your territory is in Florida!! Return to Contents

Training Sales Personnel

Use formal programs, or Informal on-the-job training. Can be complex or simple. Training should focus on:

the company products selling techniques.

Aimed at new hires and experienced personnel. Can be held in the field, educational institutions or company facilities. Oldsmobile spent $25 million last year to teach its dealers how to better treat its customers. Return to Contents

Compensating Sales People

To attract, motivate and retain sales people, that facilitate and encourage good treatment of the customers. Need to understand personalities of sales people. Strive for proper balance of freedom, income and incentives. Need to determine the best level of compensation required, and the best method of calculating it.

Straight salary straight commission (selling insurance)--single percentage of sales or sliding rate Combination plan

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Motivating Sales People

Need a systematic approach, must also satisfy non-financial needs:

Job security Working Conditions Opportunities to succeed

Sales contests increase sales. Symbolic awards--plaques, rings etc. Can also use negative motivational methods for under performers. Due to burn out--even the best need motivating!! Ongoing process...keep reps. hungry Need a motivational program. Spend time with reps, personal attention!! Take interest in them and the sales goals

Compensation packet that rewards quality salesmanship and extra effort 1 1 Recognition of extra effort of sales force 1 1 Make sure SR feel important 1 1 Keep SR informed of company activities 1 1 Make certain reps. believe in the company 1 1 Goals must be realistic and achievable and changeable 1 1 Determine what they want and give it to them 1 1 Controlling and Evaluating Salesforce performance
1 1

Rely on information from call reports, customer feedback and invoices. Performance is determined by objectives. May compare with predetermined performance standards or with other sales people working under similar conditions.

Handout Avon....
$4 billion business, relied solely on personal selling until recently, environmental changes have changed this...no longer is the wife expected to be at home...model is dual income earning parents with children in day care. Need to develop more efficient ways to reach customers. Salespeople earn pure commission, 10%...50% for top sellers (over $32,750) Strategies tried:

Avon Select. Direct mail catalog and toll free number, attract those that didn't know an "Avon Lady", or didn't want to deal with one. Also used national TV and print campaign in conjunction. Problems = Salesperson creates confidence in the brand, delivering much more than advertising is able to do. When you take away the selling relationship, you're left with a brand that's relatively naked. Key is not to undercut the field salesforce, similar to dual distribution creating channel conflict. Mary Kay Corp has also tried this strategy but differently and more successfully:

Catalogs carry different merchandise Forward commission to sales rep. in customer's area "Never have a grey area regarding competing with sales force."

Other demotivational concerns:

Restructured commissions Dropped awards, trips and other incentives

Leadership Program. A Multi-level marketing (MLM) concept. Rewarded for products sold as well as people you recruit as a sales rep....by getting some of their commission and a portion of the commission of reps. they recruit etc. Created a hard sell environment and was consequently scrapped.

To remotivate: New CEO

Reinstate Birthday presents Anniversary plates Annual Pins Phone Blitzs to indicate appreciation

"Gifts [and recognition] are part of the magic"

PERSONAL SELLING
PERSONAL SELLING directly paid, personal communication that attempts to inform and persuade prospects and customers

CANNED APPROACHES STIMULUS-RESPONSE and FORMULA SELLING: AIDA

====>attention ====>interest ====>desire ====>action

The AIDA approach could be effective when prospects are in similar situations and can be sold using the same basic presentation. This would be aprpropriate, for example, in route sales, where the salesperson calls on the same customers each and every week. In some situations, however, canned sorts of approaches can be seen by a prospect as pushy. Focus in such an approach is in making a presentation that results in a sale, rather than focusing on the special needs on the prospect. NEEDS BASED SELLING: SEVEN-STEP SELLING PROCESS

====>prospecting ====>preapproach/approach ====>needs assessment ====>presentation ====>questions/objections ====>close ====>followup

The focus of this approach is in finding organizations or people who need what you have for sale and in finding solutions to a prospect's needs.

SEVEN-STEP SELLING PROCESS

prospecting developing a list of potential buyers preapproach initial preapproach letter, telephone call, etc. approach initial face-to-face contact with prospect during which first impressions are formed needs analysis discovery and assessment of prospects needs presentation presentation/demonstration of how the product fills a need or solves a problem for the prospect answering questions and overcoming objections prospect provides feedback and salesperson attempts to further tailor the presentation for the prospect's needs close salesperson asks the prospect to buy followup delivery, customer service, referrals

how to print notes

Chapter 20 Personal Selling & Sales Management

I.Scope & Significance Of P Selling & Sales Managem

Two-way flow of communication between buyer & seller o Often face-to-face
o

A. Scope & Significance Of Personal Selling & Sa

Personal selling Other Personal Se

o o o

telephone video teleconferenc

Can influence a purchase decision. 377 Definition

o

Internet/Web-enable

Seeking out people particular need. o Assisting them reco of needs they have that buying your product. o Demonstrating how satisfies a prospects ne
o

Persuading qualifie your product will fill the

o

Sales management
o o

Managing a Sales Force Involves

o o o o o

Setting Objectives recruiting, hiring, training, supervising compensating motivating

B. Pervasiveness of Selling
o o o

Every job with customer contact has a selling elem Almost 16 million work in sales positions (U.S.)

About 20% of the chief executive officers in the to corporations have significant sales experience.

C. Personal Selling in Marketing

o o

Salespeople are the critical link between the firm Salespeople are the company in a consumer's eye They represent what the company is or attem Often the only personal contact a customer h

Selling may be dominant in marketing program, e strategy

o

D. Creating Customer Value through Sale Relationship and Partnership Selli

o o

Salespeople can create customer value

Identifying creative solutions to customer problem Easing the customer buying process

Following through after the sale is made.

Relationship Selling
o

Building ties to customers based on a salesperso attention to customer needs commitment to customer needs over time.

II. The Many Forms Of Person

A. Order Taking
visit customers

Preserve an ongoing relationship with existing custo sales.

Outside order takers
o o o o

Inside order takers

o o

replenish inventory Answer questions Take orders Complete transactio

Often employed in i telemarketing

B. Order Getting
Tasks
identifies prospective customers o provides information o presents persuasively
o o o o o

Involve

a high degree of cre and customer empa product knowledge sales training

o o o o

closes sales

follows up . Time-consuming (outside order getters work abou

Expensive. Sales call costs about $170, (compens expenses.)

C. Customer Sales Support Person

Missionary salespeople
o o o

do not strictly solicit orders Perform promotional activities Introduce new products.

Sales engineers
o o o

Specializes in identifying, analyzing, and solving Brings know-how and technical expertise to the s

Often does not actually sell products and services

D. Cross-Functional Team Sellin

o o

Team of professionals selling to and servicing ma

Specialized knowledge used to satisfy different in in a buying center.

Some Types of Team Selling

Conference selling Seminar selling
o

Team meets with bu problems and opportun o Team conducts edu a customer's technical

III. The Personal Selling Proces Relationships

A. Prospecting

Three types of prospects

Lead Prospect Qualified prospect
o o o o o o o o

Name of a person who may be a po Person who wants or needs the pro Person who Wants or needs the product Can afford to buy it Is the decision maker. Advertising Coupon Toll-free Trade shows Professional meetings Conferences Lists and directories. Cold canvassing in person Telephone canvassing Networking Referrals

Lead sources

o o o o o o o

Center of influence

B. Preapproach

o o o o

Obtaining further information on the prospect Deciding on the best method of approach. Important in international selling (customs dictate

Failure to learn as much as possible about the pro unprofessional and can ruin a sales call.

C. Approach

The approach stage involves the initial meeting between t prospect, where the objectives are to gain the prospect's a interest, and build the foundation for the sales presentatio for a working relationship. First impressions are critical.

The approach stage is very important in international setti societies, considerable time is spent establishing a rappo sellers. Besides a different pace, different actions may be it is important to know how to exchange business cards a hands-as well as when not to.

D. Need Discovery E. Presentation

Stimulus Response Format

Assumes that the appropriate stim the prospect will buy. o Salesperson tries one appeal after
o o o

Formula Selling Format

o o o

Often for simple situations Information must be provided in a accurate thorough step-by-step Canned sales presentation Memorized, standardized mess Conveyed to every prospect. Lacks flexibility Lacks spontaneity

Need Satisfaction Format Adaptive Selling

Does not provide much feedback o Emphasizes probing and listening interests of prospective buyers. o Presentation is then tailored to the
o o

Product benefits valued by the pro Adjusting the presentation to fit th

Consultative Selling

Knowing when to offer solutions a more information. o Focuses on problem identification o Salesperson serves as an expert o and resolution. o Novel solutions often arise
o o

Creating unique value for the custo

E. Handling Objections
o

Acknowledge and convert the objection. o Postpone, when the objection will be addressed la presentation. o Agree and neutralize. o Accept the objection. Probe for the reasons behin stimulate further discussion on the objection. o Denial. When an objection is clearly untrue, it is w with a firm denial.
o

Ignore the objection when it is a stalling mechanis important to the prospect.

F. Closing

Trial Close Assumptive Close

Asking the prospect to make a dec of the purchase o Asking the prospect to consider ch delivery, warranty, or financing terms u
o

Urgency Close Buying Signals

that a sale has been finalized. o Used to commit the prospect quick reference to the timeliness of the purch o Knowing when the prospect is read
o

More difficult in cross-cultural buy where societal customs and language p

G. Follow-up

o o

Making certain that the purchase has been delivered installed any difficulties are addressed. Solidifies the buyer-seller relationship.

Cost and effort to obtain repeat sales from a satis of obtaining a new sale.

IV. The Sales Management P

A. Sales Plan Formulation

1. Setting Objectives
o o

Specifies what is to be achieved. Objectives can be output related input related behaviorally related. Objectives must be precise measurable time specific

Objectives serve as performance standards for sa

2. Organizing the Salesforce

o

Should the company use its own salesforce, or sh independent agents such as manufacturer's represen o Should they be organized according to geography product or service?
o

How many company salespeople should be emplo

In-House or Independent?
o

Economic analysis examines the costs of using b

salespeople in a form of break-even analysis. o Behavioral analysis should focus on issues relate control flexibility effort

availability

Types of Structures
Geographical Structure
o o

Simplest organization Country or the world is fir

regions o Region is divided into dis o Salespeople are assigned to each call on all customers represent all products o Minimizes travel time expense

duplication of efforts

Customer Structure

Different types of buyers o Different salesforce calls type of buyer or marketing ch o Higher administrative cos o Some duplication of sellin
o o

Major (key) account m

o o o o

Variation of customer org Using team selling on imp Build long-term, cooperat

"customer specialists" pr service.

Products Structure

When specific knowledge certain types of products o Salespeople develop spec expertise with technical characterist applications
o

o o

selling methods High administrative costs

Duplication of selling effo

How many salespeople should be empl

workload method

NS = NC * CF * CL

NS = number of salespeople NC = number of customers CF = call frequency necessary to s each year

CL = length of an average call AST = average amount of selling t year

Developing Account Management Polic

o o o

Whom salespeople should contact Kinds of selling and service activities to conduct How these activities should be carried out

C. Sales Plan Implementation

o o o

1. Salesforce Recruitment and Select

Create a job analysis Write a clear job description Develop job qualifications

2. Salesforce Training
o o o o

Ongoing process for new and seasoned salespeo Covers more than selling practices On-the-job training is the most popular

Individual instruction taught by experienced sales

3. Salesforce Motivation and Compensa

Straight salary a salesperson is paid a fixed fee p compensation plan, year. Straight commission a salesperson's earnings are tied compensation plan, or profit generated. Combination a specified salary plus a commiss compensation plan generated. contains

D. Salesforce Evaluation and Cont

Quantitative Assessments
Typical Quota Bases
o o o

Number of calls made Selling expenses per sale Reports submitted

o o o o

Dollar sales volume Last year/current year sal Number of new accounts

Sales of specific products

Behavioral Evaluation
o o o

Subjective & often informal assessments

o o o o

Attitude Attention to customers Product knowledge Selling and communicatio Appearance Professional demeanor

About 60 U.S. companies customer satisfaction as a be salesperson performance.

E. Salesforce Automation and Customer Relation

o

Salesforce Automation (SFA)

Use of technology to mak more effective and efficient. o SFA applies to a wide ran Each stage in the per
o o o

Salesforce Computerization

Management of the sa Valuable in sales presenta Used in sales training Allows salespeople to process orders plan time allocations forecast sales communicate with cu

Salesforce

communicate with co Facsimile, electronic mail

Communication

the three most common comm technologies used by salespe o Growth of Home Offices Advances in commun possible the mobile and h Savings from closed and staff salaries often m setting up home offices.
o

Salesforce communicatio the availability of Internet/Web o Sales force automation (SFA) has become a comp Changing how selling is done Changing how salespeople are managed Applications promise to boost productivity improve customer relationships decrease selling cost. o SFA combines automated sales support integration of sales data o SFA encompasses technologies, both hardware a to the sales function
o

CRM is the next step up from SFA