Selling and Negotiation Skills 1st Sem Mms

Selling and negotiation skills
Qualities of a professional sales executiveThorough analysis Market efficient qualitative and quantitative personal-selling objectives

Appropriate sales policies Personal selling strategy
Skillful application of organizational principles to the conduct of a sales operation The ability to install, operate and use control procedures appropriate to the firms situations and objectives
Responsibilities of a sales executive

1)to their organization 2)to the customers 3)to the society
Responsibilities towards the organization

1)obtaining sales volume 2)providing profit contributions 3)continuing business growth
Responsibilities towards the customer
Customers can be wholesalers, retailers or industrial users All of them expect to supply easily resalable products and services
Responsibilities towards the customer
Backed by supporting activities (training to dealers sales personnel, help in preparing local advertisement, provision of credit etc Assurance that the products and services are wise investment
Responsibilities to the society
Society looks to them to assure the delivery of goods and services that final buyers wants at prices that final buyers are willing to pay To develop and market products which are minimal environment damaging (socially responsible products)
Evolution of the sales department
Prior to industrial revolution, small-scale enterprises dominated the economic scene. Orders were obtained with minimum efforts Single individual supervised all the phases of the business
Manufacturing problems received the most attention (selling and marketing was handled on a part-time basis) With industrial revolution, which began in 1760,in England (shortly after the American revolution), finding new markets became essential
Adjacent markets could not absorb the increased quantities Sales departments were established only after the activation of manufacturing and financial departments
Sales executive as acoordinator

Coordination involving1)the organization 2)the planning 3)other elements in the marketing strategy
Organization and coordination
Coordination of the different ordergetting methods personal selling, advertising etc) Inside the sales department, under democratic administration, coordination of units under respective control
Planning and co-ordination
In marketing objectives and draft plans at optimum cost Determine the elements (personal selling, advertising etc)
Planning and co-ordination

Apportioning the relative amounts Seek to secure a marketing program that is both appropriate for market conditions and reflects the probable contribution of the sales force
Coordination with other elements
Like advertising, display and other promotional efforts Synchronizing personal selling with advertising
Coordination with other elements
Point-of-purchase displays are set up in retail stores where customers will see them at the precise time that tie-in advertisements appear in national and local media Alerting dealers to special couponing or sampling effort so that they can benefit from heightened customer interest
Co-ordination with distributive network

Gaining product distribution Obtaining dealer identification to avoid clogged distribution channels Reconciling business goals-of manufacturers and middlemen Sharing promotional risks (co-operative advertising)
Coordination and implementation of overall marketing strategy
Sales executives see that field sales personnel integrate every phase and segment of the promotional programs of distributors and dealers
Personal selling situations

1)services selling 2)developmental selling 3)developmental but unusual creative
Service selling
1)inside order taker-sales clerk behind neckwear counter at a store 2)delivery sales person-delivering bread,milk,oil
Service selling
3)route or merchandising salespersonthe soap or spice salesperson calling on retailers
Service selling
4)missionary-only to build goodwill, not expected to take orders- pharma detailing 5)technical sales person-engineering sales person
Developmental selling
1)creative,selling tangibles-vacuum cleaners, automobiles, encyclopedias 2)creative,selling intangibles-insurance, advertising services, educational programs
Developmental-but unusual creativity
1)political,indirect or back-door salesperson-getting large orders for flour from baking companies by catering to key buyers interests in fishing, golfing etc
Developmental-but unusual creativity
2)salesperson engaged in multiple sales-involves sales of big-ticket items to committee consisting of several individuals-ad agency account executive
Is selling an art or science?
In a survey of 173 marketing executives, 46% perceived selling as an art 8%as science 46% as an art evolving into a science
Selling theories
1)AIDASattention,interest,desire,action,satisfacti on 2)Right set of circumstances theory3)buying formula4)Behavioral equation theory-
1)AIDAS
Attention-can be grabbed by favorable first impressions like proper attire, neatness, friendliness and genuine smile Opening remarks be about the prospect or favorable comments about prospects business
How to create interest?
Develop a contagious enthusiasm for the product or a sample Use flipcharts ,sales portfolios or other visual aids in case of technical or bulky products Find out basic motivation of prospects, their mood (receptive, skeptical, hostile)
Kindling desire
By keeping the conversation running on the main course Obstacles must be faced and ways found to get around them
Kindling desire
Objections be answered, before they are raised
Kindling desire
External interruptions cause break. After resuming,summarise what has been said Digressive remarks be disposed off tactfully with finesse (distracting digression be handled bluntly)
Inducing action
Buying is not automatic and as a rule must be induced The trial close, close on a minor point and the trick close are used to test the prospects reactions Ask for the order straightforwardly
Building satisfaction

By thanking the customer for the order Reassure the customer that the decision was correct
Building satisfaction
Customer should be left with the impression that the sales person merely helped in deciding The order is the climax of the selling situation-possibility of anticlimax be avoided Sales person should not linger too long
2)Right set of circumstancestheory
Situation response theory
2)Right set of circumstancestheory
Particular circumstances prevailing in a given selling situation cause the prospect to respond in a predictable way More skilled the salesperson is in handling the set of circumstances, the more predictable is the response
3)Buying formula-theory of selling
1)if the prospect does not feel a need or recognize a problem that can be satisfied by the product or service, the need or problem should be emphasized
2)if the prospect does not think of the product or service when he or she feels the need or recognizes the problem, the association between need or problem and product or service should be emphasized
3)if the prospect does not think of the trade name when he or she thinks of the product or service, the associations between product or service and trade name should be emphasized
4)if need or problem, product or service, and trade name are well associated, emphasis should be put upon facilitating purchase and use
5)if competition is felt, emphasis should be put upon establishing in the prospects minds the adequacy of the trade-named product or service, and pleasant feelings toward it
6)if sales to new prospects are desired, every element in the formula should be presented 7)if more sales to old customers are desired, the latter should be reminded (developing new uses is comparable to selling to new customers)
Behavioral equation theory (j.a.howard)

Is based on stimulus-response model Sophisticated version of the right set of circumstances theory 4 elements of the learning processdrives, cue, response and reinforcement
equation
B=PXDXKXV where, B=response or the internal response tendency,i.e.the act of purchasing a brand or patronizing a supplier P=predisposition or the inward response D=present drive level (amount of motivation) K=inventive potential' that is, the value of the product or its potential satisfaction to the buyer V=intensity of all cues:triggering,product,or informational
Summary of J A Howard theory
When the satisfaction (K) yields a reward, reinforcement occurs, and, technically, what is reinforced is the tendency to make a response in the future to the cue that immediately preceded the rewarded response.
Summary of J A Howard theory
After reinforcement, the probability increases that the buyer will buy the product (or patronize the supplier) the next time the cue appears-buyer has learned
prospecting
Is the planning work which is essential in eliminating calls on non buyers Steps in prospecting1)formulating prospect definitions
prospecting

2)searching out potential accounts 3)qualifying prospects and determining probable requirements 4)relating company products to each prospects requirements
Formulating prospect definition
Prospective customersMust have the willingness The financial capacity
Formulating prospect definition
Authority to buy Must be available to the sales person Key characteristics of profitable accounts be found and used while screening the prospects
Searching out potential accounts

Directories of all kinds News and notes in trade papers and business magazines Credit reports
Membership lists of chambers of commerce and trade and manufacturers association Lists purchased from list brokers Responses to company advertising
Sales personnel of non-competing firms calling on the same general class of trade Conventions and meetings Bankers and other centers of influence

Salespersons own observation Endless chain (of satisfied customers) Insurance salesman uncover prospects among their acquaintances, members of their professional ,religious and social organizations and referrals of friends
Qualifying prospects and determining probable requirements
Prospects with requirements too small to represent profitable business are removed from further consideration unless their growth possibilities show promise Additional information by personal visit to confirm prospects from nonprospects
Relating company products to each prospects requirements

By a tailored presentation Clear idea about specific likely objections being raised and other obstacles to the sale that may be encountered
Relating company products to each prospects requirements
The salesperson is ready to contact the prospect The remaining tasks are-making an appointment, deciding how to open the presentation and determining how to persuade the prospect to become a customer
Sales resistance
In the form of obstacles or an objection Obstacle is real or unreal Objection is sincere or insincere
Obstacles to sales
E.g. a temporary shortage of cash prevents buying Can be circumvented by explaining a method for financing the purchase
Sales objections
At best, an objection requires a satisfactory answer; at worst, it blocks the sale Sincere objections trace to incompleteness, in-accuracy, or vagueness in the sales presentation
Sales objections
Prospects may be confused about their own need or may react unfavorably to the salespersons personality Sincere objections are overcome by patient and thorough explanations
Sales objections
Insincere objections are raised by the customer to get rid of the salesman or to check their competence Insincere objections should not be allowed to provoke into an argument
Handling objections
One theory says that each objection be treated with utmost courtesy
Handling objections
Another theory suggests to ignore insincere objections The best defensive strategy often is the strong counterattack and the salesperson should try to regain the initiative as he or she can gracefully possible
Closing sales
Low pressure sales are closed more easily than high pressure ones
Closing sales
In low pressure sales, prospects feel that they are reaching the buying decisions themselves, and primarily through rational processes of thought, so there is no need for extra push just before the sales are consummated
Closing sales
In high pressure sales, the main thrust is to the prospects emotions, so salespersons attempt to propel prospects into buying decisions. Often the prospect regains normal perspective as the sale nears its climax,and,if this happens, the salesperson needs unusually effective persuasion to close the sales
closing
When an attempted close fails, the salesperson should normally try another. The refusal does not necessarily imply an unwillingness to buy; it may indicate the prospects need for additional information or clarification of some point
closing
Some executives recommend that sales personnel attempt as many as five closes before giving up
closing
Early closing attempts should be so expressed that a refusal will not cut off the presentation The sales person first uses an indirect close,i.e.attempts to get the order without actually asking for it
In-direct close
The sales person may ask the prospect to state a preference from among a limited number of choice (as to models, delivery dates, order size, or the like) so, phrasing the question that all possible responses are in the salespersons favor.
In-direct close
Secondly, the salesperson may summarize, emphasizing features that visibly impress the prospect, showing how the reasons for the purchase outweigh those opposed to it till he gets a response like, go ahead and write the order and hand it to the prospect for approval-if the prospect balks, the issue is clearer
In-direct close
Perhaps one last objection is voiced, but after it is answered, the sale is made
Direct close
When one or more attempts at an indirect close fail, the sales person uses the direct approach.
Direct close
Few prospects respond negatively to a frank request for the order Many people, especially those who are themselves engaged in selling, do not buy unless the order is asked for outright
Personal selling- qualitative objectives
1)to do the entire selling job (as when there are no other elements in the promotional mix 2)to service' existing accounts (that is, to maintain contacts with present customers, take orders, and so forth)
3)to search out and obtain new customers
Personal selling-qualitative objectives
4)to secure and maintain customers cooperation in stocking and promoting the product line 5)to keep customers informed on changes in the product line and other aspects of marketing strategy
6)to assist customers in selling the product line (as though missionary selling) 7)to provide technical advice and assistance to customers (as with complicated products and where products are especially designed to fit buyers specifications
Personal selling-qualitative objectives
8)to assist with (or handle) the training of middlemens sales personnel 9)to provide advice and assistance to middlemen on management problem 10)to collect and report market information of interest and use to company management
Quantitative objectives
1)to capture and retain a certain market share 2)to obtain sales volume in ways that contribute to profitability (optimum mix)
Quantitative objectives
3)to obtain some number of new accounts of a given types 4)to keep personal-selling expenses within set limits 5)to secure targeted percentages of certain accounts business
Some definitions
Market potential-is an estimate of the maximum possible sales opportunities present in a particular market segment and open to all sellers of a good or service during a stated future period
Some definitions
Sales potential-is an estimate of the maximum possible sales opportunities present in a particular market segment open to a specified company selling a good or service during a stated future period
Some definitions
Sales forecast-is an estimate of sales, in dollars or physical units, in a future period under a particular marketing program and an assumed set of economic and other factors outside the unit for which the forecast is made
Sales forecasting methods

1)jury of executive opinion 2)the Delphi technique 3)poll of sales force opinion 4)projectino of past sales
Sales forecasting methods

5)time-series analysis 6)exponential smoothing 7)survey of customers buying plans 8)regression analysis 9)economic model building and simulation
Sales related marketing policies

1)product policies (what to sell) 2)distribution policies (to whom to sell) 3)pricing policies
Product policies

1)in relation to product objectives 2)product line policy 3)changes in product offerings
Product policies
4)reappraising the product line and line simplification 5)reappraising the product line and line diversification 6)ideas for new products 7)appraisal of proposed new products
Policies on distribution intensity

1)mass distribution 2)selective distribution 3)exclusive agency distribution
Pricing policies
1)policy on pricing relative to the competition-meeting the competition, pricing above the competition, pricing under the competition 2)policy on pricing relative to costs-full cost pricing, promotion pricing, contribution pricing
Pricing policies
3)policy on uniformity of prices to different buyers-one price or variable price 4)policy on list pricing-either freedom to middlemen or control his retail price
Pricing policies
5)policy on discounts-trade discount, quantity discount 6)geographical pricing policies-FOB pricing, delivered pricing,
Pricing policies
7)policy on price leadership-initiate or follow price change 8)product line pricing policy 9)competitive bidding policy
Choice of basic selling style

1)trade selling 2)missionary selling 3)technical selling 4)new business selling
The effective sales executive
1)ability to define the positions exact functions and duties in relation to the goals the company should expect to attain
2)ability to select and train capable subordinates and willingness to delegate sufficient authority to enable them to carry out assigned tasks with minimum supervision

3)ability 4)abiilty thinking 5)abiilty
to utilize time efficiently to allocate sufficient time for and planning to exercise skilled leadership
Causes of turnover of sales personnel

Under control of the companyPoor recruiting Improper selection and assignment Training deficiencies Inadequate supervision and motivation

Breakdown in communications Unsatisfactory performance-customer complaints etc Discharged for cause-alcoholism, conviction of a felony, dishonesty etc

Cutbacks in personnel Transfer to another department Promotion to a higher position
Causes of turnover-not controlled by the company

Retirement Death Illness or physical disability
Causes of turnover-not controlled by the company

Personal and martial difficulties Dislike for the job-travel, type of work, working conditions etc Military duty Better position elsewhere
Sales job analysis
To whom does this person report? who reports to this person? What products does this person sell?
Sales job analysis
To whom does this person sell? What information should this person gather?
Sales job analysis
What reports should this person make and to whom? Specific duties and responsibilities, relations with customers, relations with other sales department and company personnel
Sales job description
Is an organized factual statement covering1)the reporting relationship of a particular job to other job 2)the job objectives
Sales job description

3)duties and responsibilities 4)job performance criteria Tells to whom the sales jobholder reports, what has to be done, how it is done, and why and, in addition, describes the standard against which performance is measured
Duties and responsibilities-check list-for sales job description

1)sales 2)service 3)territory management 4)sales promotion 5)executive 6)goodwill
Sales
Make regular calls Sell the line; demonstrate Handle questions and objections Check stock; discover possible product uses
Sales
Interpret sales points of the line to the customer Estimate customers potential needs Emphasize quality Explain company policy on price,delivery,and credit Get the order
service

Install the product or display Report product weaknesses, complaints Handle adjustments,returns,and allowances
service

Handle requests for credit Handle special orders Establish priorities, if any Analyze local conditions for customers
Territory management

Arrange route for best coverage Balance effort with customer against the potential volume Maintain sales portfolios,samples,kits and so forth
Sales promotion

Develop new prospects and accounts Distribute home office literature, catalogues and the like
Sales promotion

Make calls with customers salespeople Train personnel of wholesalers, jobbers and so on Present survey reports, layouts and proposals
executive
Each night make a daily work plan for the next day Organize field activity for minimum travel and maximum calls
executive
Prepare and submit special reports on trends, competition Prepare and submit statistical data requested by home office Investigate lost sales and reason for loss
executive
Prepare reports on developments,trends,new objectives met, and new ideas on meeting objections Attend sales meetings
executive

Build a prospect list Collect overdue accounts; report on faulty accounts Collect credit information
goodwill

Counsel customers on their problems Maintain loyalty and respect for the company Attend local sales meetings held by customers
Recruiting sales personnel

1)sources within the company 2)sources outside the company
Sources within the company
1)company sales personnel 2)company executives 3)internal transfers
Sources outside the company
1)Direct unsolicited applications 2)Employment agencies 3)Sales people making calls on the company 4)Employees of customers
Sources outside the company
5)Sales executives clubs 6)sales forces of non competing companies 7)sales forces of competing companies 8)educational institutions 9)older persons
Recruiting effort
College recruiting Recruiting direct-to-consumer sales personnel Recruiting consultants Indirect recruiting Recruiting brochures
Selecting sales personnel
Preliminary interview and pre-interview screening Formal application Interview (s)
Selecting sales personnel

Reference and credit check Testing-ability, habitual characteristics and achievement Physical examination Employment offer
Planning sales training programs
A-C-M-E-E-aims-content-methodexecution-evaluation training need are identified from sales persons reports, sales records, observation of sales personnel etc
Training need-1)initial sales training (job specifications, individual trainees background and experience and sales related marketing policies
2)continuous sales training-about basic changes in products and markets, changes in company related policies, procedures & organization, careless or sloppy habits of sales personnel
content
1)product data-product use and application, initial factory training, training on competitors products 2)sales technique-
content
3)markets-customers,their locations, product of their interest, buying habits and motives
content
4)company information-history, importance in the industry and economy, relations with stockholders,unions,competitors,govern ment and other group, pricing policies, product service policy, spare parts and repairs credit extension and customer relations etc
Training methods (group/individual)

1)the lecture 2)the personal conference 3)demonsatration 4)role playing 5)case discussion
Training methods

6)impromptu discussion 7)gaming-simulation
Training methods
8)on-the-job training-coach and pupil method
Training methods
9)programmed learning-subject matter is broken down into numbered instructional units called frames, which are incorporated into a book or microfilmed for use with a teaching machine
Training methods
10)correspondence courses-for insurance field to acquaint new salespeople with industry fundamentals and to instruct in basic sales technique. Also used to train distributors sales force
Executing and evaluating sales training programs

Kiplings six honest serving men What? Why? When? How? Where? Who?
Philosophies of sales training
1)conditioned response philosophy-for trade or missionary-requires and aids designed to facilitate memorizing programmed responses like multiple choice test-can be measured objectively
Philosophies of sales training
2)insight response philosophy-for technical or new business requires materials conducive to develop analytical skills and internalizing of responses like an essay test-can be measured subjectively
Organization for sales training

Who will be the trainees? Who will do the training? When will the training take place? Where will the training site be?
Who will be the trainees?
Difficult to identify for continuous training Criteria for selection1)reward for good performance
Who will be the trainees?

2)punishment for poor performance 3)convenience of trainee and trainer 4)seniority(greater seniority more training opportunity)
Who will do the training?
Initial sales training-either by top sales executive if line function or personnel director if staff function Continuous sales training-top sales executive
Who will do the training?
Sales training staff- in case of large companies training the sales trainerOutside expert-for sales techniques (prospecting, selling by telephone, objections handling etc)
When will the training take place?
Majority sales executives contend that newly recruited trainees should receive formal group training before starting to sell Sizeable minority however assign trainees to selling jobs before sending them to sales schools-(not suitable when highly technical products are sold to sophisticated buyers)
When will the training take place?
In case of large number of new personnel, group training is advisable Optimum group size-smaller than 12-15 involves inordinate high cost, larger than 30-40 incur heavy losses in terms of learning effectiveness
Training site decisions
Generally, Initial sales training at central office (provides better product training but higher costs)
Training site decisions
Separate programs at branch office Retraining programs are short and are held either at centralized or decentralized points
Instructional materials and training aids

1)manuals or workbooks 2)other printed materials 3)training aids 4)advance assignments
manuals
Are used in most group type sales training programs ContainsOutlines or summaries of the main presentation Related reading materials Statement of learning objectives for each session Thought provokers
manuals

Cases and problems Directions for sessions involving role playing or gaming Concise statements of selling,pricing,training of sales personnel and other policies
manuals
Details on company systems and procedures Information on the products and their application Purpose is-to serve as study guides during training and as reference later
Other printed materials

Include company bulletins Sales and product handbooks Information bulletins Standard texts Technical and trade books Industry and general business magazines and journals
Training aids
Is an auxiliary device capable of transmission of sight and/or sound stimuli Blackboard and chalk and other mechanical training aids like Vue-graph projector, transparency roll and screen
Training aids
Motion picture projector and film are effective to explain complex situations
Training aids
Actual demonstration in case of conveying technical information on installation and operation of new machine tool models All training films (company produced or commercially produced) be previewed before use
Training aids
Tape recording and playback equipment is ideal for training in sales techniques
Training aids
Actual or simulated sales presentations are taped and played back for individual or group appraisal
Training aids
Miniature (sometimes conceable) cassette type recorders make it easy for salespersons to tape their own sales interviews and play them back later
Training aids
Closed circuit TV is used when timing is important (suitable for de-centralized programs like new product lines are introduced to salesperson or dealers or in case of policy changes issues and as a substitute for training at national sales meetings
Advance assignments
1)reading assignment to provide some minimum comprehension of subjects scheduled 2)read a case and prepare a plan of action
Advance assignments
It is important that the trainees understand the purposes of advance assignments and receive clear instructions (written instructions) They consume time outside formal sessions, reducing trainees inclinations to go out on the town" or otherwise goof off
Evaluating sales training programs
Compare the programs aims with the results Results, such as improved selling performance may come at a later time Comparison of-
Length of time new sales personnel (who have completed initial sales training) take to attain the productivity level of the experienced salesperson The performance against standards of trained and untrained sales personnel
Respective training histories of the best and worst performers Plotting graph of each sales persons sales records on a before and-after training basis, generally converting them to market percentage
Some companies use written tests (on a before-and-after training basis) Send observers to work with sales personnel who have completed training programs and ask a report
Solicit customers for their reactions to a salespersons performance after training Effectiveness of program be measured when the program is in progress and after completion
Tests and examinations measure trainee retention of materials presented, most appropriately when trainees are to memorize certain information
For sales technique measurement tests and examinations are not useful but performance in role-playing assignment is a better approach
Rate each trainees performance in role playing, panels and other discussions Trainees also rate training program after they return to their territories
Motivating sales personnel
Motivation as applied to sales personnel is the amount of effort the salesperson desires to expend on the activities associated with the sales job, such as calling on potential accounts, planning sales presentations, and filling out reports
Why motivation for sales people?
1)inherent nature of the sales job-away from family,travelling,ups and downs 2)salespersons boundary position and role conflicts-linkages with 1)sales management, 2)order fulfilling dept,3)customers and 4)other company sales personnel

Conflicts faced by salesman1)conflict of identification

2)advocacy conflict 3)because of dual role as an advocate for both the customer and company and pecuniary interest as an entrepreneur
3)tendency toward apathy-because of routine customers and territories 4)maintaining a feeling of group identity-works alone, no team spirit 5)salespersons linkages with groups with divergent interests
How to reduce conflict of salespeople?

Improving sales training effectiveness Revising selection criteria
Motivation theories
1)Hierarchy of human needs- Maslowphysiological, safety and security, belongingness and social relations need, esteem needs, self-actualization needs
Motivation theories

2)Motivation-Hygiene theory-Hertzberg Hygiene factors-interpersonal relations,peers,subordinates,supervisors ,company policy, job security
Motivation theories
Motivation factors-achievement, recognition,advancement,work itself, growth potential, responsibility Deficiencies in hygiene factors lead to job dissatisfaction
Motivation theories
Fulfillment of hygiene needs does not lead to job satisfaction but leads to fair days work Motivation factors when fulfilled lead to job satisfaction
Motivation theories
3)Achievement motivation theory-David McClelland-need for achievement (nAch) nAch can be gauged by TAT (Thematic apperception test) nAch qualities-
Motivation theories
1)Like problem situations in which they take personal responsibility for finding solutions (ones in which the possibilities of reaching them are reasonable)
Motivation theories
2)tend to set attainable achievement goals 3)want feedback on how they are doing?
Expectancy model-Vroom
an individual's desire to produce at a given time depends on that individuals specific goals and perception of the relative worth of performance alternatives as paths to attainment of those goals
Other issues in motivating sales personnel

Interdependence and motivation Motivation and leadership Motivation and communications Interpersonal contact Written communications
Compensating sales personnel

Purpose of the plan1)provide a living wage
Compensating sales personnel
2)adjust pay levels to performance (expectancy motivation theory) 3)provide a mechanism for demonstrating the congruency between attaining company goals and individual goals (expectancy theory)
When total overhauling of plan?
1)when the morale is low because of low compensation 2)when a company is anticipating the cultivation of new and different markets
7 requirements of a good compensation plan
1)it provides a living wage preferably in the form of a secure income 2)fits with rest of the motivational program 3)is fair-equal pay for equal performance
7 requirements of a good compensation plan
4)easy for sales personnel to understand 5)adjusts pay to changes in performance 6)economical to administer 7)helps in attaining the objectives of the sales organization
Devising a sales compensation plan

1)define the sales job 2)consider the companys general compensation structure
3)consider compensation patterns in community and industry 4)determine compensation level 5)provide for the various compensation elements
6)special company needs and problems 7)consult the present sales force 8)reduce tentative plan to writing and pre-test it 9)revise the plan 10)implement the plan and provide for follow-up
Define the sales job

Up-to date written job descriptions Sales volume objectives
Define the sales job
Distribution policies, credit policies, price policies and other policies Current and proposed advertising and sales promotional programs assist in clarifying the nature of the salespersons goals, duties and activities
General compensation structure

As per job evaluation Job evaluation methods-4 1)simple ranking 2)classification or grading 3)point system 4)factor-comparison method
Simple ranking

Inexpensive Widely used by small businesses Executive committee sorts out job descriptions in the order of worth
Simple ranking
Without considering current individuals in the job or their compensation levels No effort is made to determine critical factors inherent in the job Only relative appraisal of the relative worth of different jobs are made
Classification or grading
The grades sometimes called classes, are described in terms of job responsibilitys,skills required, supervision given and received,exposure to hazardous and unfavorable working conditions
Classification or grading
Job descriptions are then classified into appropriate grades by an executive committee or by personal specialists All jobs within a grade are treated alike with respect to base compensation
Point system

Most widely used method Factors considered areMental and physical skills,responsibility,supervision given and received, personality requirements and minimum education required
Point system
Each factor is assigned a minimum and maximum number of points (in line with importance) Appraised factor scores are combined into a total point value
Point system
Finally, bands of points are decided upon and become the different compensation classes Point values make it possible to determine the gap, or distance, between job classes
Factor-comparison method
Resembles the point system but more complex Utilizes a scheme of ranking and crosscomparisons to minimize error from faulty judgment
Employs selected factors and evaluation scales
Scale values are in dollars and cents, and no upper limit exists to the valuation that can be assigned to any one factor A selected number of key jobs, typical of similar jobs throughout the company are then evaluated factor by factor
This is done by arranging them in rank order from highest to lowest for each factor
As a check against judgmental evaluation, the compensation dollars actually paid for each job are allocated to the factor; the allocation automatically establishes the relationship among jobs for each other
The judgment ranking and the ranking by allocation of compensation are compared and differences are reconciled, or else the jobs are removed from the key list
On the basis of dollar amounts assigned to the several factors making up key jobs, additional jobs are evaluated and their monetary values for each factor interpolated into the scale This process is repeated until all jobs are evaluated
Compensation patterns in community and industry
What compensation systems are being used? What is the average compensation for similar positions?
How are other companies doing with their plans? What are the pros and cons of departing from industry or community patterns?
A sound compensation is possible only if it considers the relation of external compensation practices to those of the company Vigil is to be maintained to see that the pay of sales personnel will not get out of line with that paid for similar jobs in the community or industry
4-determine compensation level

Decide on the average Ascertain the caliber of the present sales force measures up to what the company would like to have
Weigh the worth of individual persons through estimating the sales and profit dollars that would be lost, if particular sales person resigns
Another consideration is the compensation company can pay Plot each cost estimate on a break-even style chart
Similar companies but different pay? Possibilities
The first group of sales people may be overcompensated Sometimes, management does not know the true worth of individual sales personnel
In other cases, management regards some sales personnel as indispensable or managerial inertia prevents adjustment of the compensation level to a changed selling conditions
Sales managers are biased in favor of high compensation for selling jobs
5-provide for the various compensation elements

4 basic elements1)a fixed element, either a salary or drawing account, to provide some stability of income 2)a variable element (a commission, bonus or profit sharing arrangement) to serve as an incentive
3)an element covering the fringe or plus factor-such as paid vacation, sickness and accident benefits, life insurance, pensions and the like
4)an element providing for reimbursement of expenses or payment of expense allowances Generally fixed and variable component will be 80/20 or 60/40
Special company needs and problems
1)Sales people over emphasizing lowmargin items and neglecting more profitable products-stimulate the selling of better balanced orders-variable commission rates for different productshigher rates to neglected products
2)small order problem-design plan that encourages larger order with a in-built mechanism to vary call frequency with account size 3)securing retail displays-is normally neglected when sales man are paid based on sales volume-give incentive payment for obtaining retail displays
4)securing new customers and new businesses 5)improving the quality of salespeoples reports
6)controlling expenses of handling complaints and adjustments 7)eliminating price shading by the sales staff
8)reducing traveling and other expenses 9)making collections and gathering credit information For transitory issues, plan should not be changed frequently
Consult the present sales force
Consult everybody but give more importance to the opinions of desired caliber sales force
Reduce tentative plan to writing and pre-test it
The more the difference in the tentative plan and current plan, the greater the amount of testing Pretests are generally mathematical and computerized
Past payrolls( a year or two) are reworked to check operation of the proposed plan against experience under the old system
If sales pattern shows considerable fluctuation, calculations are made for periods representative of average, good and poor business The plan is tested for the sales force as a group and for individuals faced with unique selling conditions
Analysis reveals whether the plan permits earning in line with the desired compensation level If deficiencies show up, the plan may not be at fault; weaknesses can trace to the way territorial assignments have been made or to inaccuracies in sales forecasts, budgets or quotas
For pilot test, several territories representative of different sets of selling conditions are selected
The proposed plan is applied in each one long enough to detect how it works under current conditions Pilot tests are invaluable for spotting possible sources of trouble and other deficiencies
revise
Revision to eliminate trouble spots or deficiencies If more alterations are there, the revised plan goes through further pretests and perhaps another pilot test For minor changes, further testing is not necessary
Implement the plan and provide for follow-up

Explain it to sales personnel Convince them of its basic fairness and logic
Make them to understand what management hopes to accomplish through the new plan and how this is done
Details of changes from the old plan and their significance requires explanation Send copies to all sales personnel
If complex, special training sessions are held
Inadequate understanding of the sales compensation plan is common and often a cause of low morale No effort is spared to make certain that everyone fully comprehends the compensation plan and its working

Provision for follow-up are made From periodic check-ups ,need for further adjustments is detected Periodic checks provide evidence of the plans accomplishment ,and they uncover weaknesses needing correction
Types of compensation plans

1)straight salary 2)straight commission 3)combination of salary and commission
Straight salary

Once popular now less importance @20%organizations use this
Straight salary
Most common among industrial goods companies Suitable when the selling job requires extensive missionary or educational work, when sales people service the product or give technical or engineering advice, or when sales people do considerable sales promotion work
Straight salary
If non-selling tasks bulk large in the salespersons total time expenditure Commonly used for people involved in trade-selling Sometimes for driver-sales people selling liquor,beverages,milk,bread etc
Straight salary-advantages
Provides strong control over sales personnel Management can direct their activities along the most productive lines Economical to administer Accounting costs are lower
Straight salary-advantages fro salesman

Stability of income Less burden of planning routing and scheduling
Straight salary-disadvantages
Many sales people do only an average rather than an outstanding job There is tendency to under compensate productive people and overcompensate poor performer giving rise to turnover and increased cost of recruiting Maintaining morale
Difficult to adjust to changing conditions during downswings During upswing, sales people will not be ready to exceed previous sales records by any large amount
Through good administration, these weaknesses can be overcome Measuring average, good and poor performance is difficult
Straight commission
Individual sales personnel should be paid according to productivity Sales volume is the best productive measure More complex than straight salary plan
Straight commission

2 classifications1)straight commission with sales personnel paying their own expenses 2)straight commission with the company paying expenses, with or without advances against earned commissions
Straight commission
Suitable where non-selling duties are relatively unimportant and management emphasizes order getting
Straight commission
Common in the clothing,textile,and shoe industries and in drug and hardware wholesaling Insurance, investment securities, furniture manufacturer, office equipment Less than 10%companies use this plan
Advantages-straight commission
Provides maximum direct monetary incentive for the salesperson to strive for high level volume
Advantages-straight commission
A means for cost control-all direct selling expenses except for traveling and miscellaneous expenses fluctuate directly with sales volume changes and sales compensation becomes virtually an all variable expense Great flexibility-by revising commission rates applying to different products
Disadvantages-straight commission
Provides little financial control over salespeoples activities Negligence towards daily reports etc,consider sales accounts as individual property, high pressure tactics and loss of goodwill
May push the easiest-to-sell-low margin items and neglect harder-to-sell highmargin items
Costs of checking and auditing salespeoples reports and of calculating payrolls are higher than under the straight salary method Some salespeoples efficiency may decline because of income certainties (management needs to invest in time and money to buoy up their spirits)
Determining commission base
Company selling policies and problems influence selection of the base If obtaining volume is the main concern, the total sales is the base If sales personnel make collections on sales, commissions are based on collections
Determining commission base
In case of excessive order cancellation history, commission can be based upon shipments, billings or payments Some companies base commissions on gross margins Other companies use net profits as the base
Drawing accounts
Company establishes separate accounts for each salesperson, to which commissions are credited and against which withdrawals are made Drawing accounts resemble salaries, since customarily individual sales personnel are allowed to overdraw against future earnings If sales personnel become greatly overdrawn, they may lose incentive to produce, because earned commissions are used to reduce the indebtedness
Drawing accounts
Some sales personnel become discouraged with the prospect of paying back overdrawn accounts and quit the company
Drawing accounts
To forestall quitting by overdrawn salespeople, some firms use guaranteed" drawing account plans (these do not require the paying back of overdrawls) Commonly, drawing account plans include a provision that covers the possibility of overdrafts
Salary and incentive combination plan-advantages
Sales personnel have both the security of stable income and the stimulus of direct financial incentive Management has both financial control over sales activities and the apparatus to motivate sales efforts
Salary and incentive combination plan-advantages
Greater flexibility for adjustment to changing conditions Cooperative spirit develops between the sales personnel and the company Disagreement on pay increases and territorial changes are less violent
Disadvantages of combination plan

Clerical costs are higher More records are maintained and in great detail Generally 80-20 or 60-40 fixed and variable element
bonus
Is an amount paid for accomplishing a specific sales task Are paid for reaching a sales quota, a performing promotional activities, obtaining new accounts, following up leads, setting up displays or carrying out other assigned tasks
bonus
Is an additional financial reward to the sales person for achieving results beyond a pre-determined minimum Bonuses are never used alone-they always appear with one of the three main sales compensation methods
bonus
The bonus conditions require thorough explanation, as all sales personnel must understand them The necessary records must be set up and maintained
bonus
Procedure for keeping sales personnel abreast of their current standings relative to the goals are needed Any bonus misunderstandings or grievances arising should be dealt with fairly and tactfully
Fringe benefits
Range from 25 to 40% of the total sales compensation package
Fringe benefits
Do not bear direct relationship to job performance Some fringe benefits like payments for social security premiums, unemployment compensation and workers compensation are required by federal and state law
Why fringe benefits?
1)to be competitive with other companies in the industry or community 2)to furnish reasons for employees to remain in the companys service 3)to comply with what employees expect as fringe benefits
Fringe benefits-possible for sales personnel
1)time-holidays,vacations,sickleave,personalleave,sabbaticals,pregnancy leave 2)organization dues-trade association, civic clubs, country clubs, professional association
3)retirement programs-social security (mandatory) ,pension plan, profit sharing, salary reduction plans
4)miscellaneous-automobile,use of vacation spot,parking,dry cleaning and laundry,lunches(all or part), secretarial services, employee stock purchase plan, company-provided housing, legal services, financial counseling,tution for continuing education programs, financial support for dependents education, discount for purchase of company products, child care payments, matching funds to charities and schools, company social events, company sporting tournaments, retirement counseling, career counseling, payment of moving expenses
5)insurance and medical-physical examination, medical payments and reimbursements, hospitalization insurance, dental insurance, disability insurance, life insurance, travel insurance, accident insurance, worker's compensation (mandatory), unemployment insurance (mandatory), cancer insurance, psychotherapy expense
Managing expenses of sales personnel
Generally @9% in the electrical equipment industry @34%in the automotive parts and accessories industry Most industries, amount from onefourth to one-half of sales compensation
Missionary selling incurs the lowest expenses since involves calling on professionals who are extremely busy New business selling results in the highest selling expenses (calls are promising investment)
Technical selling requires longer calls, more spending Trade selling-routine calls with short times spent with each customer-most expenses for travel and lodging and little for entertainment
It is wiser to be overly liberal than to restrict salespeoples activities through insufficient expense reimbursement
Some firms try to hold expenses within a planned total amount or to some percentage of sales volume of gross margin
Others control sales expenses only in a general way by scrutinizing expense reports or through policy statements outlining the conditions under which the expenses are reimbursable
Reimbursement of sales expenses-policies and practices
1)have sales personnel pay their own expenses 2)reimburse sales personnel for all or part of their expenses
2 common sense principles for expense reimbursement policies
1)reimbursable expenses should be large enough to permit the performance of assigned duties in the expected manner 2)all expenses incurred because sales personnel are away from home on company business should be reimbursable
Sales personnel paying their own expenses

Is the simpler by far Treat sales personnel as independent businesspeople using straight commission plan No records are necessary
Sales personnel paying their own expenses
It is essential that their regular commission be sufficient to permit them to further the companys best interest Little management control can be exercised Avoid missionary duties and high spot (call on large account)
Full or partial reimbursement

Factors affectingTerritorial size and characteristics Caliber of sales personnel Nature and breadth of product line Managerial efficiency Intensity of competition Mode of travel
How a expense reimbursement policy should be?
Take into account the customary living standards of the salesperson and the customers (more emphasis)
The salesperson should eat and stay at hotels of the class patronized by the customers
In some instances, different salespeople in the same company should be allowed different amounts for expense, reflecting deviations in customers living standards (actual expenses vary a great deal from one territory to another) Keep expenses reasonable

No bad feeling among the sales staff Easy to administer-minimum supervision and record keeping Avoid tendency to over economize
Methods of controlling and reimbursing expenses of sales personnel

1)flat expense account 2)flexible expense account 3)honor system 4)expense quota
Flat expense account
No need to keep reports and no need to check expense accounts Makes possible the advance determination of total sales expenses Forces sales personnel to control their own expenses Works best when-
1)the exact amounts of expense accounts do not need changing often (selling staple products in small territories) 2)when expense allowances come up for frequent review and possibly revision

Should have flexibility built into them The weakness is the tendency of some sales personnel to over economize thinking it as a regular addition to salary and do not spend all of it, preferring to save a portion for personal use
Flexible expense account
Known as exact' plan and most common Sales personnel are reimbursed for all allowable expenses incurred and reported for this method to work management must-
1)know the total amount of sales personnels probable expenses 2)classify expenses into allowable' and non-allowable" categories with clear descriptions of items under each heading
3)set up a system and forms for the sales staff to use in periodic expense reporting 4)establish procedures for checking itemized expense reports and for expeditious handling of reimbursements
Because of the flexibility sales opportunities are fully capitalized on as they arise
Administrative costs are sizable because of the large amount of clerical and accounting work in checking expense reports and making reimbursements (good sales persons are generally poor record keepers)
Without close control, some people spend the companys money too generously, further aggravated by the opportunity for expense account padding giving rise to disputes
Honor system

Sales expenses are fully reimbursed Only total expenses are reported Indicates complete honesty of all sales personnel Easy to administer thus paving way to savings in both accounting expenses and time Management control is weak
Honor system
Sales personnel may become free spenders spending on unwanted heads Regard expense accounts as sources of income causing inequities in expense allowances adversely affecting morale
Honor system
To control,establish maximum ratios of selling expense to sales Watch the trend of expenses; sudden and sizable increase in reported expenses unless accompanied by parallel increase in sales Remedial action in case of dishonesty
Expense quota
Permits week-by-week variations but controls total expenses over long period of time Management first studies individual sales territories and estimates the sales volume and upper limit for each sales person Prompt and full reimbursements are made
Expense quota
Drawback-the burden for controlling expenses is upon the sales personnel rather than upon management
Expense quota

Skillful administration is necessary In case of wrong forecasts, the sales personnel may curtail their activities towards the end of budgetary periods because of low balances left in accounts
Reimbursement of automobile expenses

1)flat mileage rate 2)graduated mileage rate 3)fixed periodic allowance 4)combination fixed periodic allowance and mileage rate 5)runzheimer plan
Flat mileage rate
Must set the mileage rate high enough to cover all expenses of automobile ownership and operation, yet low enough to permit the company to buy transportation economically Works satisfactorily when a companys sales force covers small territories all in the same geographical area Most local and regional wholesalers among other small companies favor flat mileage rates
Flat mileage rate

Short-comingsIgnores cost differentials arising from the use of various makes and models
Flat mileage rate
Ignores territorial differences in expenses (price of gasoline,oil,tires,insurance coverage, license and inspection fee etc) Hesitation in adjusting the rate upward as well as downward in line with changing actual expenses
Graduated mileage rate
Different rates apply to mileages in different ranges Setting the rate per mile is difficult Suitable when sales personnel travel long distances annually and serve concentrated geographic areas without significant regional expense differences
Fixed periodic allowance
To those who use their personal vehicle on company business-on day,week,month basis Assumes that total automobile expenses vary with duration of use rather than mileage
Fixed periodic allowance
Difficult for sales personnel with large territories requiring extensive traveling If allowances are uniform for all sales personnel, morale suffers because of the inequities
Fixed periodic and mileage rate combination
Fixed periodic allowance to cover fixed and semi variable expenses such as insurance premiums, license fees and depreciation
Fixed periodic and mileage rate combination
Mileage payment for operating expenses including cost of gasoline, oil and tires Some companies using combinations systems accumulate reserves to cover depreciation on automobiles and reimburse sales personnel when they buy new cars
Runzheimer plan
Originated by consulting firm Runzheimer USA in 1933 Divides USA into 29 auto-use basic cost areas
Runzheimer plan
Allowances are for 20,000 miles of average annual travel within each of the cost areas
Runzheimer plan
Recommends that certain expense items not provided for in the standard allowance be reimbursed as incurred and reported by sales personnel such as local city license fees, property taxes, daytime parking, overnight parking away from home and toll charges etc
Runzheimer plan
More than 1,50,000 drivers of business automobiles are reimbursed over $500 million each year
Sales meetings and sales contests
5 major decisions for planning a sales meeting1)defining the specific training aims 2)deciding meeting content
Sales meetings and sales contests
3)determining methods of conducting the meeting 4)deciding how to execute (hold) the meeting 5)how to evaluate the results
aims
1)a new product may be ready for introduction 2)new insights on customer attitudes and behavior (new research) 3)deficiency of sales personnel in using sales techniques as per the supervisor
aims
4)improving the quality of sales force reports 5)orienting sales personnel on the advertising program and its connect with the sales force
aims

6)time management for sales force 7)introducing new services (such as inventory control assistance) for customers
Content-(agenda)
New product being launched by competitorContent might include1)what we know about Xs new product
Content-(agenda)
2)what we think the trades reaction will be and why 3)what your company is doing 4)what you should do and how
method
Depends upon the aim and content as well as upon the time available and meeting place Most local meetings are short and participative
method

GD is used Regional or national meetings are held less often and run for two or more days have more ambitious aims and wider content
Execution

Room arrangement Audiovisual equipment and supplies Provision of materials to attendees (including pads and pencils) Timing of breaks and refreshments
Execution

Starting time and closing time 1)Herringbone 2)workshop 3)Inverted U-shape 4)seminar or the British Square
evaluation
As per specially designed forms for each meeting
National sales meetings

When? Comprehensive changes in marketing or sales policies are made
National sales meetings
Major executives attend national meetings which provides stimulation than written or recorded messages Informal meetings of sales personnel and interchange of experience
Drawbacks of national meetings
Expense
Drawbacks of national meetings
Difficult to find a convenient time for all sales personnel to attend unless the product line is seasonal Company routine is disrupted and competitors may cut into market share however more aggressive selling results from the national meeting
Regional sales meetings
Trend is towards regional meetings from national meetings Reduction in total travel costs and lowering lost selling time
Regional sales meetings
HQ executives brought into direct contact with field personnel learn about current problems at first-hand Smaller attendance may increase participation time per person attending
Regional sales meetingsdisadvantages
Demands on executive time may be excessive Top sales executives often rotate attendance among regional meetings
Regional sales meetingsdisadvantages
Total attendance is smaller developing a spirit of contagious enthusiasm is more difficult May not have top-flight speakers and entertainers featured at national meetings
Opposition to national and regional sales meetings
Likely results do not justify expected costs Ill affordability to have sales personnel away from the field even for a week
Opposition to national and regional sales meetings

Demands on their time Low sales force morale since sales personnel will use the meetings to compare complaints and to strengthen their convictions that the company is a bad place to work
Local sales meetings
Are conducted by district sales managers either weekly or biweekly May last from 15 minutes to several hours
Local sales meetings
Strengths-informality, opportunity to pose personal questions and to state personal views Occasion to get together, better acquaintance and strengthen group identity
Remote control and traveling sales meetings

1)closed circuit television 2)sales meetings by telephone 3)sales meetings at home 4)traveling sales meetings
Closed circuit television
Suitable for companies with large scale sales force or large dealer organization The program is live Suitable to introduce new products or to launch national sales campaigns
Sales meetings by telephone
Uses for small group meetings and discussions-not more than 20 Rules-only one individual will speak at a time and speaker to identify themselves and their cities Save time and money Loose less time, (time away from jobs)
Sales meetings at home
Some companies mail recording or printed materials to sales personnel at their homes One format is to record an executive conference or meeting and to provide sales personnel with cassette copies Another is to print an illustrated script of a home office meeting for distribution to sales personnel
Sales meetings at home
Advantages1)sales personnel receive the information at home, free from distractions 2)they can review the information many times 3)there are savings in time and money
Traveling sales meetings
Suitable when manufacturer introduces a new product line which needs to be displayed and demonstrated Regional meetings become impossible, since shifting and arranging of display and demonstration is cumbersome
Traveling sales meetings
Some companies use outfitting motorized vans and trailers with product displays and conference rooms Moves from city to city and at each stop sales personnel and/or dealers come aboard
Sales contests-why?

1)to obtain new customers 2)to secure larger orders per sales call 3)to push slow-moving items, high margin goods or new products 4)to overcome a seasonal sales slump 5)to sell a more profitable mix of products
Sales contests-why?
6)to improve the performance of distributors sales personnel 7)to promote seasonal merchandise 8)to obtain more product displays 9)to get re-orders 10)to promote special deals to distributors, dealers or both
Contest formats
1)direct-has a specific objective-Lets go after new customers 2)novelty-focuses upon a current event, sport or the like-e.g.-Lets hunt for hidden treasure( find new customers) or Lets start panning gold (sell more profitable orders)
Themes for novelty formats

1)Games2)races 3)card games 4)hunting or fishing 5)travel

6)climbing 7)the rising thermometer,pressure,gauge etc 8)building contests-skyscraper, other new buildings, tower, smoke-stack etc 9)military 10)clothing contests
A) team type-football, baseball, hockey, bowling, tennis doubles, tug-of-war, soccer etc.
B) individual type-tennis singles,golf,wrestling,archery,fencing broad jump, high jump, pole vault, hammer throw, discuss throw, shooting match, javelin throw, bull fight, climbing the greased pole etc
Races
Team-type-crew, cross country,relay,bobsled,yacht Individual type-horse race, dog race, air race, soap box derby, auto race,hurdles,dashes,marthons,dog sled, trotting race, swimming races, speedboat races
Card-games

Poker Pinochle Bridge black jack etc.
Hunting or fishing

Treasure hunt Big-game hunt Uranium rush Gold rush Land rush Fishing derby Trapping contest
Travel
Trip around the world to Miami to new York to Hollywood to Waikiki to the moon to space etc
climbing

Ladders Stairs Mountains Cliff scaling Ascent to the stratosphere
The rising thermometer,pressure,gauge etc
Building contests

Sky scraper Other new buildings Tower Smokestacks
military

Naval battles Artillery engagements Bombing runs Invasions Interplanetary wars
Clothing contests
In one of these, the sales person earns one item of clothing at a time and appears at sales meetings clad only in those items earned up to that point
Contest prizes

Cash Merchandise Travel Special honors or privileges
cash
Once basic physiological needs and safety and security needs are satisfied, whatever potency money retains as an incentive relates to unfulfilled esteem and achievement needs (non-cash prizes fill these needs better than cash)
cash
To be a strong incentive, it needs to be substantial-10-25% of an individuals regular annual income
Cash-disadvantages
A cash price of $100 means a little to most sales personnel and they exert token efforts to win it Winners mix cash prizes with other income, thus have no permanent evidence of their achievements
merchandise

Is superior to cash in several respects Winners have permanent evidence of their achievements
merchandise
The merchandise prize is obtained at wholesale, so it represents a value larger than the equivalent cash For the same total outlay,too,more merchandise prizes than cash awards can be offered; hence the contest can have more winners
Merchandise-selection
Items should be desired by sales persons or their families Allow winners to select from a variety of offerings Merchandise incentive agencies can be used
travel
travel awards are popular and a strong incentive Generally provide trips for winners and their spouses
Special honors or privileges
A letter from a top executive recognizing the winners superior performance A loving cup A special trip to a home office meeting Membership in a special group or club (million dollar club for life insurance salesman)
Publicity through house organs and in hometown newspapers Are used by firms employing sales personnel who are almost independent entrepreneurs
These are suitable when management desires to strengthen group identity and build team spirit These appeal to the sales persons belongingness and social relations needs
How many prizes and how should they be awarded?

Make it possible for everyone to win Present performance levels be considered Basis for award be improvement rather than total performance( not the total sales volume but %of quota achieved)
Contest duration
Be decided after considering the length of time interest and enthusiasm maintainability plus the period over which the theme can be kept timely and the interval needed to accomplish the contest objective 1-4 months,13 weeks, not longer than a month etc
Contest promotion
A planned barrage of promotional material develops enthusiasm A teaser campaign may precede the formal contest announcement; other times the contest announcement comes as a surprise As per the progress of the contest, other techniques hold and intensify interest
Contest promotion
Results and standings are reported at sales meetings or by daily or weekly bulletins At intervals, new or special prizes are announced
Contest promotion
Reports of standings are addressed to spouses to generate interest at home Flash reports be shown, additional stimuli be added
Managerial evaluation of contests
Two levels-pre-evaluation and postevaluation Pre-evaluation aims to detect and correct weaknesses
Managerial evaluation of contests
Post evaluation seeks insights helpful in improving future contests Both cover alternatives, short-term and long-term effects,design,fairness and impact upon sales force morale
Short and long-term effects
A sales contest accomplishes its purpose if it increases sales volume, brings in more profitable volume, or does both in the short and the long run No contest is successful if it borrows sales from preceding months, succeeding months or both
Short and long-term effects
Successful contest increase both contest period sales and long-run sales Successful contests boost the spirits of sales personnel to have a beneficial carry over effect
design
A well designed contest provides motivation to achieve the underlying purpose while increasing the gross margin earned on sales volume by at least enough to pay contest costs
design
The format should tie in directly with the specific objectives, include easy-tounderstand and fair contest rules and lend itself readily to promotion
fairness
Should be visible to all sales contestants
fairness
While the contest is on, the sales personnel should feel that they have real chance of winning something If its format causes some to give up before it starts and others to stop trying before it is over indicates a unfair format
Impact upon sales force morale
Successful sales contests result in permanently higher levels of sales force morale
Impact upon sales force morale
If the format causes personal rivalry, it may have the counter productive effect of creating jealousy and antagonism among the sales force It is advisable to organize teams and place the emphasis on competition among teams for recognition than individuals
Objections to sales contests
Only 1 in 4 sales departments use contests, why? Sales persons are paid for their service under provision of the basic compensation plan hence no need to reward them further High caliber and more experienced sales personnel consider sales contests juvenile and silly Contests lead to unanticipated and undesirable results such as increased returns and adjsutments,higher credit loss and overstocking of dealers
Sales slump occur before and after the contest The disappointment suffered by contest losers causes a general decline in sales force morale
Contests are temporary motivating devices and if used too frequently have a narcotic effect (no greater results in the aggregate are obtained with contests than without them
The competitive atmosphere of contest weakens the team spirit Good contest design, intelligent contest administration and proper handling of other aspects of sales force management will minimize objections
New topic-Controlling sales personnel-evaluating and supervising

What is control?(4 steps) 1)Establish performance standards 2)recording performances 3)evaluating performances against the standards 4)taking action
Quantitative performance standards

1)quotas 2)selling expense ratio 3)territorial net profit or gross margin ratio 4)territorial market share 5)sales coverage effectiveness index 6)call-frequency ratio
Quantitative performance standards

7)call per day 8)order call ratio 9)average cost per call 10)average order size 11)non-selling activities 12)multiple quantitative performance standards
quotas
Is a quantitative objective expressed in absolute terms and assigned to a specific marketing unit
quotas
May be dollars, or units of product with the marketing unit being a salesperson or a territory Quotas specify desired levels of accomplishment for sales volume, gross margin, net profit,expenses,performance of nonselling activities etc
Selling expense ratio
Sales person can affect this both by controlling expenses and by making sales Selling expense ratios are determined after analysis of expense conditions and sales volume potentials in each territory
Selling expense ratioshortcomings
Does not take into account variations in the profitability of different products
May cause the salesperson to over economize on selling expenses to the point where sales volume suffer
In recession times, selling expense ratios inhibit sales personnel from exerting efforts to bolster sales volume Used by more industrial product firms which require personal selling and entertainment thus involving higher costs of travel and subsistence

Selling and Negotiation Skills 1st Sem Mms

Încărcat de

Informații document

Descriere originală:

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Selling and Negotiation Skills 1st Sem Mms

Încărcat de

Drepturi de autor:

Formate disponibile

Selling and negotiation skills

Selling and negotiation skills

Appropriate sales policies Personal selling strategy

Selling and negotiation skills

Responsibilities of a sales executive

1)to their organization 2)to the customers 3)to the society

Responsibilities towards the organization

1)obtaining sales volume 2)providing profit contributions 3)continuing business growth

Responsibilities towards the customer

Responsibilities towards the customer

Responsibilities to the society

Evolution of the sales department

Evolution of the sales department

Evolution of the sales department

Sales executive as acoordinator

Organization and coordination

Planning and co-ordination

Planning and co-ordination

Coordination with other elements

Coordination with other elements

Co-ordination with distributive network

Coordination and implementation of overall marketing strategy

Personal selling situations

1)services selling 2)developmental selling 3)developmental but unusual creative

3)route or merchandising salespersonthe soap or spice salesperson calling on retailers

Developmental-but unusual creativity

Developmental-but unusual creativity

Is selling an art or science?

1)AIDASattention,interest,desire,action,satisfacti on 2)Right set of circumstances theory3)buying formula4)Behavioral equation theory-

How to create interest?

Objections be answered, before they are raised

2)Right set of circumstancestheory

Situation response theory

2)Right set of circumstancestheory

3)Buying formula-theory of selling

3)Buying formula-theory of selling

3)Buying formula-theory of selling

3)Buying formula-theory of selling

3)Buying formula-theory of selling

3)Buying formula-theory of selling

Behavioral equation theory (j.a.howard)

Summary of J A Howard theory

Summary of J A Howard theory

Formulating prospect definition

Prospective customersMust have the willingness The financial capacity

Formulating prospect definition

Searching out potential accounts

Searching out potential accounts

Searching out potential accounts

Searching out potential accounts

Qualifying prospects and determining probable requirements

Relating company products to each prospects requirements

Relating company products to each prospects requirements

Personal selling- qualitative objectives

Personal selling- qualitative objectives

3)to search out and obtain new customers

Personal selling-qualitative objectives

Personal selling- qualitative objectives

Personal selling-qualitative objectives

Sales forecasting methods

Sales forecasting methods

Sales related marketing policies