12 – Sales Management

Introduction

For their survival and growth, all organisations must sell something. It could be a product (such as shampoo, steel, or toothpaste), a service (such as an airline or insurance), an ideology (such as patriotism), a concept (such as family planning), a location (such as India or Brazil), or a person (politician). “Everyone is surviving on selling something to someone,” stated Robert Louis Stevenson. Salespeople go by a variety of names. They are known as salesmen or saleswomen, sales representatives, sales executives, and customer service executives.

Most businesses organise their sales staff according to region, clients, products, or a mix of these variables. A territory-based structure would be appropriate for a corporation marketing only one product category and selling to dispersed customers in one industry. If a corporation creates a variety of product categories and sells to various customer types, it may be able to find a customer-type-based sales force. Today’s sales manager plans and implements a sales management programme using professional and scientific processes.

This class will expose you to sales management fundamentals and the selling process.

12.1 Functions of Sales Organization

The systematic coordination of the functions required to achieve organisational goals is called organisation. As a result, the goal of a sales organisation is to carry out the numerous actions needed to promote sales. The following are the functions of a sales organisation:

1. Functions of planning (a) Sales forecasting (b) Sales budgeting (c) Selling policy
2. Administrative functions (a) Salesman selection (b) Salesman training (c) Salesman control (d) Salesman remuneration
3. Executive functions (a) Sales promotion (b) Selling routine—customer order execution

12.2 Planning Functions

 12.2.1 Sales Forecasting

Sales forecasting predicts the likelihood of economic activity based on assumptions. It is the process of making specific projections of future events, and the figure derived from the process is known as a ‘sales forecast.’ Forecasting sales would be pointless if the future was known. An organized sales forecasting system helps determine the future course of events.

The following are the many steps in sales forecasting:

1. Establishing the goals to be attained
2. Separation of the diverse groups into homogeneous groups
3. Assessing the significance of various aspects to be investigated for sales forecasting
4. Choosing a technique
5. Gathering and analysing relevant data
6. Concluding the analysis
7. Putting the decision into action
8. Periodically reviewing and improving sales forecasting strategies.

12.2.2 Sales Budgeting

A sales organization’s final point is its sales budget, which is the foundation for all other budgets. So, what exactly is a sales budget? It predicts the number of sales made during the specified period. Sales budgets can be created for each division, brand, product, dealer, area, and sales force.

12.2.3 Selling Policy

A selling policy’s goal is to put the correct type of items in the hands of consumers at the right time and place. Furthermore, it should strive to attract clients and provide satisfactory services. A selling policy entails the following:

1. Distribution method (sale)
2. Purchase conditions
3. Service and guarantee

When it comes to products that require maintenance and repairs, the seller provides what is known as after-sale service. Technical representatives are dispatched to the user’s location to fix the machines/gadgets for free or at a modest charge. Typically, complimentary services are provided during the “guarantee period.” The after-sale-service strategy is a key selling feature for industrial/durable items. It boosts customers’ confidence in the product’s suitability and impresses them with the seller’s concern for the customer’s ease and contentment. It also aids in the acquisition of repeat sales orders.

12.3 Administrative Functions

 12.3.1 Selection of Salesmen

Once a company has identified the number and type of salespeople it needs, the following stage is to find enough qualified candidates to fill the jobs. Recruitment refers to all the efforts involved in obtaining applications for sales employment.

There are several avenues for recruitment:

1. Advertisements
2. Job placement services
3. Educational establishments
4. Non-competing company salespeople
5. Internal transfers
6. Recommendations from current salespeople

The primary goal of the selection process is to acquire information about the candidates for the sales position. This data is then utilised to forecast their chances of success or failure.

12.3.2 Training of Salesmen

The first stage in developing a training programme is assessing the organization’s needs. A need assessment begins with training requirements specific to the organization, tasks, and employees. Case studies, lectures, films, behavioural simulations (role-playing, computer simulations, interactive video, teletraining), and absorption training are all examples of training approaches.

Sales training is intended to change or reinforce behaviour so salespeople can reach their sales goals more efficiently. Salespeople are trained to perform tasks that they would not otherwise complete. Furthermore, training is utilised to reinforce already successful sales methods.

12.3.3 Control of Salesmen

Controlling the sales force is a vital component of marketing/sales management. Outstanding planning and implementation are critical, but a company must have control to meet its sales targets. Controlling a company’s selling strategies, distributors, clients, and sales force are all examples of controlling.

An organisation must examine its selling strategies to evaluate whether it is reaching out to clients in the most effective way feasible. Marketing effort analysis is used to analyse selling tactics since it allows a company to quantify the comparative performance of different selling methods immediately.

12.3.4 Remuneration of Salesmen

The bulk of sales force compensation programmes involve two or more payment streams. The most common pairings are:

1. Salary and commission
2. Salary and bonus
3. Salary plus bonus plus commission

A combination strategy aims to eliminate the shortcomings of separate components while retaining their benefits. Salary is usually more common in reputable, more experienced organisations with consistent revenue. Companies looking to expand their business are paying greater attention to the commission component. Companies have recently emphasised rewards rather than salary. The salary/commission combination is quite popular, mainly when evenly split earnings. The sales team benefits from security, and the organisation may provide significant incentives for the team to thrive. Furthermore, if income is a substantial component of the remuneration package, the corporation can have considerable control over the salesman.

12.4 Structure of Sales Organization

The sales force includes salespeople who primarily interact with consumers in person; however, they may also use the telephone or computer to expedite purchases and provide customer care. A field sales force’s structure is typically based on some form of specialisation, such as location, market, product, activity/function, or combination.

The following are some of the most crucial field sales:

1. Organization specialising in geographical sales
2. Organization specialising in product-based sales
3. Organization for customer-focused specialisation
4. Activity/function-based specialisation
5. A hybrid sales organisation
6. Team-based management
7. Matrix Management Organization (MMO).

12.4.1 Geographic Sales Organization

The most typical way for salespeople to specialise is by geographic region. A salesman in a regionally based sales force must visit all present and potential customers in a specific geographic territory.

Geographic organisations have the following advantages:

(1) proper territory coverage

(2) responsibility definition

(3) familiarity with local economic and competitive situations makes them better prepared to serve local clients.

Geographic Sales Organisation

 

One drawback of geographic specialisation is that salespeople must be accountable for the entire product range in their zone, even if they do not have standard knowledge of all goods. Furthermore, inside their domain, they may focus on products and consumers that are simple to sell.

12.4.2 Product-Based Sales Organization

Companies that specialise their sales forces by product line establish a product-based sales force. Product-based organisations are beneficial for complicated products since they require the sales staff to focus on a small number of items. At the upper levels, product specialisation is usually linked with geographical specialisation, whilst at the field operator level, different salesmen may be allocated to distinct product lines. The drawbacks of a product-based sales organisation include call repetition and buyer displeasure. This overlap in coverage can result in higher selling expenses.

Product-based Sales Organisation

12.4.3 Customer-Based Sales Organization

• Organizations with numerous different and unique markets that account for a significant amount of their sales frequently organise their markets based on consumers.
• Customer-focused organisations include Hewlett-Packard, Xerox, and IBM, to name a few.
• Customer specialisation enables salespeople to become more educated about each customer group’s specific problems and wants. With its increasing emphasis on customer pleasure, a customer-oriented sales force is congruent with the marketing idea.
• The fundamental problem of this type of specialisation is that geographical territories sometimes overlap.

Customer-based Sales Organisation

12.4.4 Activity/Function-based Organization

During the selling process, an activity/function-based sales organisation can focus on using high-cost selling tactics, such as face-to-face sales calls. An activity/function-based sales force can also be built to address the most essential customer care issues at each stage of the selling process. A downside of this organisational style may be the overlapping of accounts due to multiple procedures.

Activity/Function-based Organisation

12.4.5 Hybrid Sales Organization

A hybrid sales organisation is developed when two or more organizational types are blended. This structure is intended to address the issues that plague individual sales organisations. Its key advantage is the ability to provide clients with the required service effectively. The main disadvantage of a hybrid sales organisation is the difficulty of managing various sales forces, whether they serve the same or different customers.

Hybrid Sales Organisation

12.4.6 Team-based Sales Organization

Many organisations are more sensitive to their surroundings because they use teamwork as their fundamental building blocks, resulting in team-based organisations. Teams consist of people from several functional units, such as manufacturing, technical support, marketing, and sales. These cross-functional teams comprise a specific collection of people who bring knowledge from various parts of the supplier organisation to capture, retain, and grow business with clients.

Supplier Selling Team

12.4.7 Matrix Management Organization

• Matrix Management is a form of organisational management in which employees with similar skills are grouped for work assignments.
• It serves as an organization’s vertical and horizontal interface. Traditional organizations are made up of horizontal tiers with a transparent chain of command. Under matrix management, people may report to more than one person.
• It is a management style in which a person reports to two superiors (bosses), one functional and one operational.
• This is frequent in project management, when an engineer, for example, reports functionally to the chief engineer but reports operational project difficulties to the project manager.

The following are some of the advantages of matrix management:

1. Reduces the number of organisational layers to the project level.
2. Makes better use of the organization’s human resources.
3. Reduces unnecessary work and increases value-added activities.
4. Emphasizes the necessity to adapt and work around projects rather than departments.

There are some disadvantages to matrix management:

1. It can lead to conflict since people are compelled to contact others outside their usual circles.
2. Traditional job paths are no longer available.
3. Top managers (particularly Project Managers) can wield more power than regular department heads.

Matrix Management Organisation

12.5 Organizing and Managing Sales Force Size

Sales regions are periodically allotted to sales forces. Several aspects are considered when deciding on the sales force for a specific market. These include the physical size of a force in a particular territory, transportation links inside a territory, consumer purchasing power, and educational and living standards. As a result, a sales force is deployed based on the geographical characteristics of the territory as well as product or consumer requirements.

A corporation should also invest heavily in the training and development of its sales force. There are two forms of sales force training available:

(a) in-house training and

(b) on-the-job training.

A corporation must also schedule regular meetings and conversations with its sales personnel. Finally, the sales force’s performance can be assessed using targets and actuals.

The Selling Procedure

Personal selling has existed since the beginning of time. The objectives and how they must be accomplished have evolved. In today’s highly dynamic and competitive market conditions, a salesperson’s responsibility is not limited to persuading customers to buy things but also to establishing long-term customer relationships.

Prospecting

The first necessity in personal selling is to target the selling effort to specific customers. Prospecting entails establishing and following all leads to identify target consumers, necessitating hard work and effective time management.

Some businesses give prospect lists or customer connection databases to help salespeople. Customer inquiries from multiple territories, including the company website, can be forwarded to salespeople. Lists can also be obtained from commercial companies that provide this service. Other sources of leads include current customers, suppliers, resellers, trade association members, various directories, or cold calling (calling offices and individual residences unannounced), among others.

Pre-approach

Once a collection of prospects and clients has been identified, the salesman should endeavour to understand the individual or company’s needs as much as possible. In the case of a company, the salesperson should gather as much information as possible about the company’s products, competition, market, potential sales volume, purchase procedure, who is involved in influencing the purchase decision, who is the final authority for making the purchase decision, and their characteristics. Salespeople scour corporate websites, review industry information, and network with acquaintances. According to Kirk Smith, Eli Jones, and Edward Blair, properly organised salespeople frequently build some structure because they have too many demands on their time.

The salesperson should analyse the data and establish clear call objectives with measurable outcomes. The goal of the call may not necessarily be to make a sale. The goal may not always be to gain an order but to qualify the prospect, collect information, or get a sales order. Specific goals should be created for each stage of the selling process when several calls are required. The salesperson must also decide on the best approach method and time. Sometimes, this may necessitate a phone call or a letter first. In certain firms, telemarketing personnel schedule a salesperson’s call.

Approach

The salesperson must decide how to greet the customer. A sales call’s first impression is significant and critical to its success, so the salesperson must appear and act professionally.

A salesman should choose an approach based on her or his personality and knowledge of the current sales circumstance. Homer B. Smith has suggested different ways. Among the tried-and-true methods are:

1. Ask Questions: Questions should be related to the sales presentation.
2. Use a Referral: Preferably from someone the potential consumer knows well.
3. Provide a Benefit or Service: This can be effective if relevant to the customer’s needs.
4. Complement the Prospect: It is an excellent method to develop rapport if the prospect has accomplished something.

Sales Presentation

Based on the AIDA model, the salesman offers the product/service storey relevant to the prospect’s needs (capture attention, hold interest, stimulate desire, and get action). The salesman presents the aspects of the product/service, their advantages, benefits (economic, technical, service, and social or psychological), and the entire value the prospect gains from purchasing. According to James E. Lukaszewski and Paul Ridgeway, the salesperson should ensure that the sales presentation is precise, succinct, and well-prepared to be effective with the prospect.

When presenting a sales presentation, salespeople might take a variety of tactics.

1. The stimulus-response theory of learning is the oldest approach (sometimes called canned presentation). This technique reflects that if a customer is exposed to the correct stimuli, such as words, terms, pictures, and behaviours, he or she will buy a product or service. The salesperson memorises the sales presentation, including when to do what, and repeats it with each customer.
2. A modified stimulus-response-based strategy is presented. The salesman determines the prospect’s needs before making a prepared presentation. There isn’t much emphasis on increasing prospect participation in the sales presentation.
3. The need-satisfaction strategy begins by determining the prospect’s unique product or service-related needs and then tailoring the presentation to address those needs. It also encourages the prospect to engage in the presentation and do most of the talking.

Visuals, samples, video cassettes, computer-based simulations, testimonials, examples, assurances, and demonstrations can all enhance sales presentations. It’s a good idea to leave pamphlets and leaflets. With technical improvements, PowerPoint presentations prepared by professionals can now be made and downloaded on the audience’s laptops. These professionally designed presentations can employ animation to clarify what words cannot explain.

Handling Objections

All salespeople face sales resistance, which frequently takes the form of objections. Some of these concerns may be rational, while others may be psychological. These may include product price and quality, company reputation, preference for a competitor brand, postponement of purchase, and annoyance with the salesman, among other things. A salesman should anticipate such objections. However, no matter how well-prepared a salesman is, there is always the possibility that a customer could raise an issue, and the salesperson would have to come up with a solution on his or her own. The salesperson must have a high level of mental present.

The salesperson should maintain a calm demeanour, be upbeat, and ensure that the true nature of the prospect’s problem is conveyed. This necessitates first paying close attention, asking clarifying questions, and comprehending the actual substance of the objection. However, if the prospect does not require the product or does not have the financial resources to purchase it, the salesman should thank her/him for their time and leave a business card with the pledge of exceptional service in the future.

Closing the Sale

The term “closing” refers to the act of requesting an order. After delivering a good sales presentation, the salesperson is ready to ask for the order. Closing is the culmination of all the processes in the sales presentation. It’s the reason the prospect was approached in the first place. Many salesmen, perhaps due to a lack of confidence, are unsettled, fail to recognise good indicators signalling the prospect’s preparedness, and hesitate to ask for an order.

Salespeople should learn to interpret the meanings of prospects’ questions, comments, statements, and body language signals. The salesperson must endeavour to close the sale as soon as feasible. The salesperson may employ a trial close at some point during the presentation. Assume that the prospect is ready to buy and ask about the model, size, colour, financial conditions, quantity, and delivery, among other things, the prospect prefers. The prospect’s response to such inquiries shows how near the prospect is to making the purchase. The salesman may also emphasise the benefit of purchasing now or provide an incentive to act immediately. The salesperson may also reiterate key points of agreement and ask for an order decisively and confidently.

During sales presentations in most business-to-business (B2B) purchasing circumstances, salespeople must be experienced negotiators. Price, quality, service, delivery, payment terms, and other elements may be negotiated. The salesman should be able to negotiate and work out a final settlement to which both the buyer and seller agree on the terms and conditions. When discussions are successfully resolved, it is a win-win situation for both parties.

Follow Up

Following up after a purchase is critical to establishing customer trust and a long-term engagement with the brand. The salesperson contacts the customer to find out if there are any problems and to address any queries the customer may have. He also follows up with consumers regularly to ensure they are satisfied with their purchases and services. Relationship selling is more than just selling a product; it is concerned with understanding changing client wants and resolving their concerns. To strengthen this relationship, all company divisions must grasp the importance of the customer and provide adequate support to salespeople. The relationship will thrive if the client and the seller successfully reach their objectives.