Sales Management

Sales Force Management

Subhas C Baral

Role & Responsibilities of Sales

Manager

Determining sales force objectives and goals

Finalizing sales organization, territory and targets
Sales forecasting
Selecting, recruiting, inducting ,and training of
the sales force
Leading and motivating the sales team
Designing compensation package
Controlling and coaching
Performance management and career
enhancement
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Understand the Sales Management

Process
Three step process:
Formulation of strategic sales management
program
Planning and goal setting at all levels
Formulating and cascading strategy to achieve those goals

Implementation of sales management program

Designing policy and process
Arranging manpower and
Enabling and motivating them to contribute higher level of
performance

Evaluation and performance management

Monitoring and evaluating individual & group performance
Deploy tools and techniques for higher level of performance
Subhas C Baral

Sales Force Management

Analysis, planning, implementation, and
control of sales force activities
Setting and designing sales force
strategy; and recruiting, selecting,
training, supervising, compensating, and
evaluating the firms salespeople

Subhas C Baral

Sales Force Management Process

Understand the salesman

..they make more noise and more
mistakes, create more cheer, correct more
errors, adjust more differences, spread
more gossip, hear more grievances, pacify
more belligerence (aggression) and waste
more time under pressure, all without
loosing their temper, than any other class
of professionals including politicians.

Subhas C Baral

The salesman
they live in hotels, cabs and tents on
trains, buses, eat all kinds of food, drink all
kinds of liquids good and bad- sleep
before, during and after business, with no
sympathy from the office.
They draw and spend more money with
less effort, they come at the most
inopportune(Unfortunate) time, under the
slightest pretext (excuse), ask more
personal questions.
Yet they are a power in society
Subhas C Baral

The Salesman
With all their faults, they keep the wheels of
commerce turning, and the currents of
human emotions running. More cannot be
said any man. Be careful whom you call a
salesman, lest you flatter him.
Donald Benenson

Subhas C Baral

Traits of a Sales Person

Discuss in a group:
List key traits that you look into a
candidate while recruiting/selecting for a
sales & distribution job?

Subhas C Baral

Traits of Successful Sales People

Enthusiasm
Patience
Job Commitment
Customer
Orientation
Independent

Self-Motivated/Self
Driven
Excellent Listeners
Tireless
Determined/Confident
Attentive
Honest
Pleasant/Calm

Relationship
Oriented
Disciplined
Hardworking
Team Players

Sales person is the front face of the organization

Subhas C Baral

Personality Tests

Big Five (may be more relevant)

Extroversion (talkative, sociable, active, aggressive, excitable)

Agreeableness (trusting, generous, tolerant, honest, flexible, cooperative)
Conscientiousness (dependable, organized, determined)
Emotional stability ( secure, calm, independent, autonomous)
Openness to experience (intellectual, creative, curious, insightful)

Subhas C Baral

Sales Person Recruitment/Selection

Key to success:
Company image
Performance and
Work environment

Person-Job fit

Job requirement
Culture
Value
Ethics

Subhas C Baral

Importance of Recruitment/Selection
of Sales Person

Inadequate implementation
Inadequate sales coverage and lack of
customer follow-up
Increased training costs to overcome
deficiencies
More supervisory problems
Higher turnover rates
Difficulty in establishing enduring
relationships with customers
Suboptimal total sales force performance

Subhas C Baral

Step
Step 1
1

Step
Step 2
2

Step
Step 3
3

Recruitment
and Selection Selection:
Process
Planning for
Recruitment:
Locating

Recruitment &
Selection

Job Analysis
Job
Qualifications
Job Description
Recruitment &
Selection
Objectives
Recruitment &
Selection
Strategy

Prospective
Candidates

Internal Sources
External
Sources

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Evaluation and Hiring

Screening
Resumes and
Applications
Initial Interview
Intensive
Interview
Testing
Assessment
Centers
Background
Invest.
Physical Exam
Selection Decision
and Job Offer

Locating Prospective Candidates

Internal Sources
Internships
Promotions
Lateral/Cross Transfers

External Sources

Advertisements
Private Employment Agencies
Colleges And Universities
Job Fairs
Professional Societies
Computer Rosters/Social Media

Subhas C Baral

Selection: Evaluation and Hiring

Screening Resumes and Applications

Interviews
Testing
Assessment Centers
Background Investigation
Physical Examination
Selection Decision and Job Offer

Subhas C Baral

Screening Resumes and Applications

Evidence of job qualifications

Work history
Salary history
Accomplishments
Responsibilities
Appearance and completeness

Subhas C Baral

Testing: Value and Types

Values

Assists with initial screening

Indicates compatibility with job
responsibilities

Indicates compatibility with

organizations culture and personnel

Types

Personality
Intelligence
Psychological
Ethical Framework
Subhas C Baral

Sales Person Socialization

Objectives:
Make aware of and minimize the possible misunderstanding
of the value, culture, work environment and deliverables
Assist to be a valuable member of the organization
Build up confidence

Three step model

Anticipatory stage --> Encounter stage -->
Setting in
( Blocking stage) ( come across)
Minimize the gap and let him/her set into the organization
system to deliver assigned goals.
Subhas C Baral

Socializing Sales Person

Prearrival

Encounte
r

Expectatio
ns

If similar,
reaffirmation

Attitudes

If not,
socialization
to detach
from past

Perceptions

Total
disillusionme
nt resignation

Metamorphos
is /
Transformation

Outcom
es
Productivit
y
Commitme
nt
Turnover

Discuss with examples

Subhas C Baral

Sales Force Training

Objective
New sales persons need guidance and technical
trainings to perform their assigned sales role
efficiently
Sales training programs are aimed to improve
performance of salespeople there by eliminating
deficiencies
Further it builds capacity for future markets and
carrier enhancement of individuals.
A motivational tool
Subhas C Baral

Training Process
Training need assessment (the gaps)
Organizational level (culture, stricture, objectives, etc.)
Task level (task specific, knowledge and skill requirements) and
Individual level need (assessment post performance
appraisal/self appraisal)
Design and conduct of a training program
Type of training technical, behavioral, cross functional, team
building, process trainings, off the job or on the job, content
Training materials, locations, the trainer, mix of participants
Training methods delivery options, equipment, participation
requirement such as role play, workshop, group discussion,
exercise, visual aid, case studies etc.
Evaluation of a training program
Assessing effectiveness of the training program monetary/non
monetary basis , Vs. set objectives.
Immediate feedback and short term/long-term results
Evaluation of methods, materials etc.
Subhas C Baral

Sales force motivation

the desire to make an effort to fulfill a
need is motivation
Motivation includes three dimensions:
Direction, Intensity and persistence
(Determination)
Performance = Ability x Motivation

Subhas C Baral

Importance of Sales Force

Motivation
Drive to initiate an action.
The intensity of effort in an action
The persistence/determination of effort
over

Subhas C Baral

Why Motivation?
Frequent rejection
Physical separation from company support
Direct influence on quality of sales
presentation
Indirect influence on performance

Subhas C Baral

The process of motivation

Motive (that prompts sales people to action security,
achievements, leadership, loyalty, carrier enhancement)
Leads to display certain behavior/activities and
Motive

Behavior

Tension
Reduction

Goal

Motivated sales person achieves the goal with lesser tension as

if its a process that is automated
Subhas C Baral

Maslows Theory for Discussion

Self
Actualization

Esteem needs

Social needs

Safety needs
Physiological needs
Food, clothing, shelter,
health care
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Motivation
MOTIVATION: Something that
energizes, direct, and sustains
behaviors.

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Frederick Herzberg theory

Two factor theory of motivation
Hygiene ,maintenance, or job context factors.
( dis satisfiers )
Achievement, challenge, advancement, growth in
the job. (satisfiers )

Examples?

Subhas C Baral

Theory Of Motivation
Equity Theory
Sales people tend to evaluate what they get from the
organization and what they contribute to the organization
Get and give ratio
The sales persons are motivated to the extent that they feel that
they are being treated fairly and equitably by the organization
Expectancy Theory
The motivation is an outcome of three factors:
Valance how much one wants the reward,
Expectancy ones estimated probability that the effort will
result into successful performance and
Instrumentality ones estimate that performance will result
into receiving the reward Motivation not equal to satisfaction or
performance
Motivation, a result of perceived positive relationships between
effort and performance, and between performance and outcomes
Subhas C Baral

Sources of Motives
Extrinsic motives (tangible, provided by others, contingent)
(Factors external to the individual and unrelated to the Task
they are performing. Examples include money, good grades,
and other Rewards.)
Intrinsic motives (intangible, self-generated, internal to the
job)-(Internal desires to perform a particular task, people do
Certain activities because it gives them pleasure, develops a
particular skill, or ts morally the right thing to do)

Example : -Intrinsically motivated students are bound to do much better in

classroom activities, because they are willing and eager to learn new material.
Their learning experience is more meaningful, and they go deeper into the
subject to fully understand it. On the other hand, extrinsically motivated
students may have to be bribed to perform the same tasks.
Subhas C Baral

Selecting Mix of Motivational Tools

Sales Manager should understand each sales
person and understand her/her individual
specific interest and need
Analysis to be done of the individual
requirement, customer angle and
organization's objective/position.
Mix of monitory and non monitory tools:
Salary, allowances, commission, incentives, bonus, other direct
financial benefits etc.
Designation, supervisory role, interesting job, sense of
accomplishments, promotion, recognition, training programs,
job security, carrier opportunity etc.
Subhas C Baral

Sales Managers Implications

Importance of meeting sales forces needs
Identification of diverse needs and their importance to
individuals
Arrangement for meeting critical needs off all through
differentiated motivational packages

Change in traditional management

approaches and styles
Sharing of responsibility and empowerment of
employees
Recognition of achievement

Subhas C Baral

Sales Force Reward and Compensation

Subhas C Baral

Effective Compensation and

Rewards
Individualized to reflect differences in what
employees consider important cafeteria
compensation (expectancy theory)-The theory states that the
intensity of a tendency to perform in a particular manner is dependent on the intensity of
an expectation that the performance will be followed by a definite outcome and on the
appeal of the outcome to the individual. The Expectancy theory states that employees
motivation is an outcome of how much an individual wants a reward (Valence), the
assessment that the likelihood /chances that the effort will lead to expected performance
(Expectancy) and the belief that the performance will lead to reward (Instrumentality).

Perceived as equitable (equity theory)-

an individuals
motivation level is correlated to his perception of equity, fairness and justice practiced by
the management. Higher is individuals perception of fairness, greater is the motivation
level and vice versa. While evaluating fairness, employee compares the job input (in terms
of contribution) to outcome (in terms of compensation) and also compares the same with
that of another peer of equal cadre/category. D/I ratio (output-input ratio) is used to make
such a comparison.

Visible to be publicly perceived

Flexible to adjust as needed
Low cost for administration
Subhas C Baral

Criteria for Compensation and

Rewards

Performance
Effort
Seniority
Skills held
Job difficulty
Discretionary/Flexible time

Subhas C Baral

Compensation
External and quantifiable rewards
Components
Base compensation or pay received on a
regular basis
Pay incentives for good performance
Benefits or services arising out of membership
status

A major cost element (up to 80 percent of

personnel cost)
Needs to be aligned with desired strategic
behaviors
Subhas C Baral

Compensation Design Criteria

Internal versus external equity
perceived fair pay
Fixed versus variable pay
Performance versus membership pay
(insurance agent)
Job versus individual pay
Pay leader versus follower
Open vs. closed pay
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Why Compensation Plans Can Fail?

Poor perceived link between
performance and pay
Too low level of performance-based
pay relative to base pay
Lack of objective, countable results for
most jobs
Faulty performance appraisal system

Subhas C Baral

Steps in Designing Compensation

Plan
Determine organizational sales force
compensation objective
Go through the compensation issues
internal and external
Design and implement the long-term and
short-term compensation plan
Measurement of performance linkages over
the period of time
Evaluate the reward and compensation plan
Subhas C Baral

Controlling and Evaluating Sales Force

Subhas C Baral

Controlling Sales Force

A process of Setting performance standards, recording
and evaluating each sales persons performance, and
developing & taking actions for higher performance.
Achieve organizational goals
Move with market trends
Individuals growth and motivation
Team building
Controlling costs
Without evaluation it is difficult to know what has worked, what
has not, and WHY?

The purpose of evaluation is to improve salesperson

and firm performance
Subhas C Baral

Define Work Behaviour

Job description statement
Job descriptions are written statements that describe the:
duties,
responsibilities,
most important contributions and outcomes needed from a
position,
required qualifications of candidates, and
reporting relationship and coworkers of a particular job.
Performance standards
Performance measures or indicators
Person/job specifications
A job specification describes the knowledge, skills, education,
experience, and abilities you believe are essential to performing a
particular job. The job specification is developed from the job
analysis. Ideally, also developed from a detailed job description,
the job specification describes the person you want to hire for a
particular job.
A job specification cuts to the quick with your requirements
whereas the job description defines the duties and requirements of
an employees job in detail.
job specification provides detailed
SubhasThe
C Baral

Work Behaviour Examples

Performance or productivity sales, cost control,
profitability, market share, visibility etc.
Job satisfaction Commitment self control and committed to the
assigned sales job
Organisation citizenship put more efforts that the
job
Change works as a change agent at the market
place
Loyalty reflected to dedication
Absenteeism - low
Turnover - less
Stress carry a reasonable stress but comfortable
Subhas C Baral

Evaluation Guidance
Evaluation allows management to identify
substandard performance and take corrective
action
Adjust training, compensation, or strategy
Assessing personnel in global markets is more
complex
Global evaluations may include technical
ability, cultural empathy, adaptability,
flexibility, diplomacy, and language ability
Cultural skills may be more relevant in
global markets
Subhas C Baral

Evaluating Sales Force Performance

Sales Managers can evaluate overall
sales performance by analyzing
sales, cost, and profit data
No one measure of effectiveness best
Multiple measures are employed

Three most common methods are:

Sales, Cost, and Profit analyses

Subhas C Baral

Sales Analysis
Gathering, sorting, assessing, and
making decisions based upon sales
data
Must organize data to show market and
salesperson deviations
Examine how markets are performing in
comparison to one another
Sales force goal is to increase customer
demand and reach sales goals
Must define sold and compare in local
currency or units sold
Subhas C Baral

Cost Analysis
Compares cost to sales generated
Examine the variance between actual
and budgeted expenses
Areas where actual costs vary
significantly from budgeted should be
set aside for further analysis
Firms can use to set pricing levels,
budgets and commission rates
Sales and Cost analysis used most
frequently
Subhas C Baral

Profit Analysis
When sales and costs are combined
profitability can be determined
Managers can identify unprofitable
territory, unprofitable products, and
year-end bonuses
Profitability easier to compute with
information technology advancements

Subhas C Baral

Outcome Measures
Activities lead to outcomes, such as:

Sales revenue generated

Profits
Sales per account
Sales revenue as a percentage of potential
Number of orders
Number of new customers
Sales to new customers

Outcomes higher when time and quality

devoted to input activities
Supported by a study in Singapore
Subhas C Baral

Profitability Measures
Firms now look at profitability measures

Net profit as a percentage of sales

Net profit contribution
Net profit dollars
Return on investment
Gross margin

Salesperson can impact profitability by

Specific products sold and final price
negotiated

Subhas C Baral

Qualitative Measures
Judgment by the salespersons
supervisor
To what the salespersons knowledge
and performance compare with an ideal
person
To minimize bias, sales managers should
follow a systematic assessment process

Subhas C Baral

Performance Appraisal
A crucial part of evaluation process:
1. Criteria setting for performance
measurement
2. Periodic evaluation of performancesindividual and group
3. Rewards and compensation linkages
4. Performance management action plan

Subhas C Baral

Sales Performance Measures Summary

Measurement criteria
Quantity (how much/ many of sales achieved in terms of value,
volume, geography, brand level performances, has sales quota
achieved?)
Time (how soon/ by when it was achieved?)
Cost (with what resources, has there any cost saving initiatives
deployed?)
Quality (how well?, example setting, standard of performance)
Is the territory managed as expected?
Satisfaction or approval rate (by the supervisor, market,
subordinates)
Need for supervision (degree of supervision requirement, maturity)
Alignment with companys value, culture, leadership etc. the
softer side of the performances

Subhas C Baral

Who Does the Appraising?

Your
Boss

You

Peers

Subordinates
Rating
Committee
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Effective Appraisal System for Sales

force

Use behavior/ outcome based measures

Monitor and documents performance records
Provide on-going feedback
Avoid perceptual errors
Have both interactive (interview) and written
(form) structure
Have multiple raters
Involve the employee in the appraisal
process
Train appraisers
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Bias in Appraisals
Managers must minimize bias that creep
into evaluation efforts
Set standards whenever possible
Based upon behavior or results
Evaluate from a point of neutrality

Informal evaluations
Often subjective in nature
Results in differing amounts and quality of
information

Subhas C Baral

Evaluation and Action

Once evaluation takes place, it is time for action:
Personal development
Reallocation of effort
Modifying the performance setting
Changes may be needed in sales procedures or
methods
New products, selling strategies or credit
policies changed
Must submit detailed study to upper
management
Subhas C Baral

Sales Force Requirement Decision

Subhas C Baral

Interrelatedness of
Sales Force Deployment Decisions
Allocation
Allocation of
of
Selling
Selling Effort
Effort

How much selling effort is needed to cover

accounts and prospects adequately so that
sales and profit objectives will be achieved?

Sales
Sales Force
Force
Size
Size

How many salespeople are required to

provide the desired amount of selling effort?

Territory
Territory
Design
Design

How should territories be designed and

salespeople assigned to territories to ensure
proper coverage of accounts and to provide
each salesperson with a reasonable
opportunity for success?
Subhas C Baral

Sales force Size Decision ..

Decision on the size of the sales force is
complicated because structure of the
customers vary in each territory, the level
of competition varies across territories,
the connectivity for travel varies etc.
There are 3 generally accepted
approaches:
Affordability
Incremental and
Workload methods
Subhas C Baral

Single Factor Model - Example

Market Potential Average Sales Call toAverage Sales Calls to

Categories
an Account LY
an Account NY
A
B
C
D

25
23
20
16

Subhas C Baral

32
24
16
8

Single Factor Models

Easy to develop and use/low analytical consistency

Accounts classified into categories based on one factor,

such as market potential

All accounts in the same category are assigned the

same number of sales calls

Effort allocation decisions are based on the analysis of

only one factor and differences among accounts in the
same category are not considered in assigning sales call
coverage:
Example: sales volume or population or nos. of markets/outlets in
the area and so on

Subhas C Baral

Portfolio Models

Account Opportunity - an accounts need

for and ability to purchase the firms
products
Competitive Position - the strength of the
relationship between the firm and an
account

Product Portfolio

Subhas C Baral

Decision Models
Simple Basic Concept - to allocate sales
calls to accounts that promise the
highest sales return from the sales calls
Optimal number of calls in terms of
sales or profit maximization
Sales Productivity - the ratio of sales
generated to selling effort used
Sales force Turnover - Is very costly,
Should be anticipated

Sales force size = Forecasted sales / Average sales per person

Subhas C Baral

Sales Force Size: Analytical Tools

The Incremental Approach- is the most rigorous for
calculating sales force size.
Its compares the marginal profits and marginal costs
associated with each incremental salesperson.
The major advantage is that it quantifies the
important relationships between sales force size,
sales, and costs.
Difficult to develop, and it cannot be used for new
sales forces where historical data and accurate
judgments are not possible.

# of
Salespeople
100
101
102
103

Marginal
Contribution
$70,000
$75,000
$80,000
$85,000

Subhas C Baral

Marginal
Cost
$75,000
$75,000
$75,000
$75,000

Sales Territories
A sales territory consists of existing
and potential customers assigned to a
sales person. The territory may or may
not have geographic boundaries.

Subhas C Baral

Designing Territories
Territories consist of whatever specific
accounts are assigned to a specific
salesperson.
The territory can be viewed as the
work unit for a salesperson.
Territory Considerations
Markets/geographical coverage
Present effort
Recommended effort (objective based)

Coverage capacity
Subhas C Baral

Reasons for territories

Increase / improve customer
coverage
Control selling expenses
Effective evaluation of salesmans
performance.
improve customer relations

Subhas C Baral

Territory Design Implementation

Process
Main procedural steps:
1. Selection of a basic geographical
control unit
2. Determination of sales potential
present in each unit
3. Combining the basic units into tentative
territories
4. Adjust for differences in coverage
difficulty and readjust the tentative
territories
5. Evaluate the territory as a business unit
Subhas C Baral

Individual Assignment 2
While selecting salespersons for their range of
household electronics, company decided to
adopt the policy of hiring only similar category
experienced salesmen (not women). Evaluate the
advantages and disadvantages of this policy and
propose the appropriate recruitment approach for
this company to recruit sales force.

Last date for submission : 15th

August, 2014 ( Submit the hard copy)

Subhas C Baral

SMQ
Explain the criteria for sales force deployment decision. Which one
is more appropriate for manufacturing & marketing of consumer
electronics company? (one page)
4 unique/key traits of sales person, explain how important these as
compare to the other line function staffs such as finance person.
Suggest a mix of motivational tool that is likely to be more effective
for a banking product sales force. Explain why perhaps the
expectancy theory of motivation may be more relevant to the sales
force motivation.
Understanding and addressing individual need of the sales person
plays key to motivation. explain why it is more important as
compare to other function.
Explain the territory design considerations. Suggest an appropriate
method of sales force sizing/deployment decision criteria for a
telecom service providing company in Nepal.
Subhas C Baral