Effective sales management


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Effective sales management

  1. 1. 1 Effective Sales Management Obaid Saad Alabdali DBA, MBA, PhD Umm Al-Qura University TIHAMA
  2. 2. 2 Topics To Be Covered ♦ Background ♦ Profiling and recruiting sales force ♦ Selecting applicant ♦ Hiring and socializing new sales people ♦ Developing and conducting a sales training program
  3. 3. 3 ??? ♦ It cost Millions and years to build a name, but 5 minutes to destroy it.
  4. 4. 4 Background ♦ When times and the economy are good, the market drives our companies. ♦ When times and the economy are poor, we must drive our companies
  5. 5. 5 Background (con..) ♦ People buy from – People they know, – people they like, – People they trust!
  6. 6. 6 The Sales Wizard Says…. ♦ There are three types of sales managers: – Those who make things happen – Those who watch things happen – And those who wonder what’s happening
  7. 7. 7 Death of salespeople ♦ Our product is steel. Our strength is people ♦ Our sales people are no important than any of others ♦ They are part of a team and you want to help make the whole team as strong and as productive as possible.
  8. 8. 8 World Class Examples ♦ IBM, is the world’s leading provider of information technology solutions. ♦ IBM sales were $75.9 billions (1996) ♦ Total workforce is 241,000 employees ♦ IBM employs 40,000 salespeople (10,000 in USA)
  9. 9. 9 IBM ♦ IBM received the World Class Sales Benchmark Award based on customer satisfaction
  10. 10. 10 Five Success Factors That Explain IBM’s Success ♦ Strong product and application knowledge ♦ Attention to customer needs and problems ♦ Quality product and services ♦ Customer advocacy ♦ Excellent technical support
  11. 11. 11 Leave me my salespeople ♦ You can take a way my money and take a way my factories, but leave me my sales people and I will be back where I was, in two years.
  12. 12. 12 Myths About Selling ♦ Sales people are born-not made ♦ Sales people must be good talkers ♦ Selling is a matter of knowing the right techniques or tricks ♦ A good sales person can sell anything ♦ A good sales person can sell ice to an Eskimo ♦ People do not want to buy
  13. 13. 13 What You Think of Sales People? Cigar-smoking back-slapping joke-telling
  14. 14. 14 Types Of Sales People ♦ Order taker ♦ Order getter ♦ Support sales people – missionary – technical
  15. 15. 15 Sales people Selection and Strategic Planning ♦ Sales group directly bring money ♦ It is directly involve with carrying out the company’s strategic marketing plan ♦ Marketing strategy implementation – ( considerable services)
  16. 16. 16 Recruiting
  17. 17. 17 Profiling and Recruiting Sales People ♦ Select the sales people ♦ Right people is the key to successes
  18. 18. 18 Important of a Good Selection Program – It addresses the problem of getting good people – It improves sales force performance – It promotes cost saving – It eases other managerial tasks – Sales managers are no better than their sales force
  19. 19. 19 Plan for recruiting and selection – Establish responsibility for recruiting and selection ( top sales executive, field sales manger, human resource department, or combination) – Determine the number and type of sales people – This involve the analysis of market and job ( write job description) – Establish the qualification for that job.
  20. 20. 20 Recruit Applicants ♦ Identify sources of recruits ♦ Select the source to be used ♦ Contact the recruits
  21. 21. 21 Select applicants ♦ Design a system for measuring applicants ♦ Measure applicants against hiring qualifications ♦ Make decisions
  22. 22. 22 Establish Responsibility for Recruiting, Selection, and Assimilation ♦ Management must decide who will be responsible for recruiting and selection decisions and who must be responsible for assimilating the new hires into the organization. ♦ That will depends on size of the company and nature of the job
  23. 23. 23 Determine the Number of People Wanted – Right number – Good faith in their selection system. – Good forecasting – Study your marketing plan (expansion) – Factors affecting size of sales force • promotion • retirements • termination, and resignation
  24. 24. 24 Determine the Type of People Wanted ♦ Three tasks associated with determining the type of people – Job analysis – Job description – Job qualifications
  25. 25. 25 Job Analysis ♦ Is the actual task of determining what constitute a given job – study every aspect of the position (by any member of the sales force, human resource or by an outsider) – requires observation and interviewing with sales rep, customers, other sales reps
  26. 26. 26 Job Description ♦ Once job is analyzed, the resultant description should be put in writing ♦ must be done in great details ♦ It is not enough to say that a sales person is supposed to sell the product, call on customers, or build goodwill toward the company
  27. 27. 27 Scope of Job Description (1) – Title of job – Organizational relationship (to whom do the sales person report) – Types of products and services sold – Types of customers called on – Duties and responsibilities related – Job demand (mental and physical i.e.. Travel)
  28. 28. 28 Scope of Job Description (2) ♦ Use of job description – Job analysis and job description must be used as strategic guidelines for interview, application blanks, psychological test and others selection tools – It can be a foundation for sales force training program – used foe compensation structure – Establish Work load
  29. 29. 29 Determine Hiring Qualifications ♦ The most difficult part of the entire selection process. – Demographic characteristics, education and experience, do little to explain person performance – Personal history may be better indicator for performance
  30. 30. 30 Desirable Characteristics for Sales People – Mental capacities (planning and problem solving) – Physical (appearance and age) – Experience (sales and other business experience) – Education (no. of years, degree, major) – Personality – Skills communication
  31. 31. 31 Buyers’ Top Ten Sales Persons Traits – Knowledgeable – Organization – Follow-through – Punctuality – Energy – Promptness – Problem solver – Willing to work hard and Honesty
  32. 32. 32 Methods of Determining Qualifications ♦ There is no satisfactory methods to use ♦ Some methods can be used – study of job description (technical, supervision) – Analysis of personal history
  33. 33. 33 Recruiting and Its Important ♦ It include all activities involved in securing individuals who will apply for the job. ♦ Recruiting should not be done haphazardly (overlooking good sources/ cost) ♦ Get enough qualified applicants to maximize the chance of getting good one
  34. 34. 34 Find and Maintain Good Recruiting Sources ♦ Many sources ♦ Determine the best sources ♦ Find out from where the best sales people came from ♦ Maintain good relationships with good source
  35. 35. 35 Sources of Sales Representatives – Within the company – Other companies (competitors,customers, non- competitors) – Educational institutions – Advertisement – Job centers – Voluntary applicants – Part-timer workers
  36. 36. 36 Advertisements ♦ Attract attention and have credibility ♦ Company name ♦ Product ♦ Territory ♦ Hiring qualification ♦ Compensation etc.. ♦ How to contact the employer
  37. 37. 37 Evaluation of Recruiting Program ♦ A company should continually evaluate the effectiveness of its recruiting program
  38. 38. 38 Picking Winners is Hard? ♦ In the selection, the number and type of sales people are determined and applicant have been recruited. ♦ Now management should be ready for developing a system for matching the applicants with the predetermined requirements and the actual use of this system to select the sales people.
  39. 39. 39 Selecting Applicants and Strategic Planning ♦ If it handled effectively, it can help ensure successful sales performance ♦ A poor job in processing applicants can hinder implementation ♦ Matching company needs and applicants potential is very important
  40. 40. 40 Legal Considerations ♦ Do not ask: (job relevant) – age – How many children (age, many, who cares) – Applicant height or weight – Citizenship – Was arrested – Marital status – Name and address of any relatives
  41. 41. 41
  42. 42. 42 Application Blanks ♦ personal-history record (application blank) ♦ Company uses two blanks, a short one and a longer one, more details ♦ Short one used as an initial screening device. ♦ Company asks only for information it intends to use now or later
  43. 43. 43 Personal Interviews (1) ♦ No sales person is ever hired without personal interview ♦ Knowing the applicant personally ♦ Personal fitness for a job ♦ Conversational ability ♦ Speaking voice, social intelligence ♦ Appearance
  44. 44. 44 Personal Interviews (2) ♦ Interpret and get further information about facts stated on the application blank. ♦ Fundamentally, all the questions asked during an interview aimed at learning the: – Is the person qualified for the job – How badly does he want the job – Will the job help him to achieve his goals – Will this applicant work to his fullest ability
  45. 45. 45 Reliability of Personal Interview ♦ Situation/behavioral type of interview for sale position is good. ♦ It heavily dependent on the behavior of the interviewer. ♦ Gut reaction ♦ Interviewers talk too much listen to little ♦ They ask the wrong questions
  46. 46. 46 Improving the Validity of Interviews ♦ Review the applicant’s resume or application before proceeding further. ♦ Have more than one interview with each candidate ♦ Use standardized rating form that they fill ♦ Review these information to make ranking ♦ Train interviewers
  47. 47. 47 Interview Structure and Focus ♦ Interviews can be differ (extent of Qs) ♦ Totally structure – all interviewers use the same guide sheet containing a series of questions – Ask these questions in order listed – Inflexible ♦ Informal-ask few question to get applicant talking, interview does little talking
  48. 48. 48 Stress Interview ♦ Is a type of unstructured interview in which the interviewer intentionally places the applicant under stress. – Rude, silent, or aggressive in questions – give you a pen and ask you to sell it.
  49. 49. 49 On the Job Interview ♦ Asking the applicant to spend a day observing one of the company current sales rep ♦ Ask the applicant to make a presentation to customer
  50. 50. 50 Behaviorally Based Interviews ♦ New type of interview which focused on the applicant’s behavior, past or intended.
  51. 51. 51 Timing Of The Interview ♦ Executive valuable time ♦ Initial stages (15-20 minutes) ♦ Later stage, the more time talking with the applicant the better
  52. 52. 52 Psychological Testing ♦ A company uses a battery of these tests rather than one single test. ♦ It is complex and controversy
  53. 53. 53 Types of Tests ♦ Mental intelligence test – intended to measures native intelligence ♦ Aptitude tests – tests a person aptitude for selling ♦ Interest tests ♦ Personality tests
  54. 54. 54 Problem in Testing ♦ Testing may eliminate truly creative person, who might not fall in the average or normal rang in testing
  55. 55. 55 References and Other Outside Sources ♦ The applicant furnishes the leads; a reference ♦ Company get information on its own initiative, credit, insurance report, school record, and motor vehicle. ♦ Reference check made by letter, telephone, or personal visit (advantage, disadvantage of each methods)
  56. 56. 56 Assessment Centers ♦ Assessment center technique is a centralized, comprehensive evaluation procedures involve testing, interviews, and simulation exercises such as business game, discussion group, and individual testing ♦ Very expensive ♦ Takes one to three days to evaluate applicants and their performance
  57. 57. 57 Reaching A decision about an Applicant ♦ A company must decide whether to make a job offer based on the information they get. ♦ Do not leave any applicant dangling ♦ If you decide not to hire him, tell him gently, but clearly ♦ If you decide to hire him, make a formal offer and persuade him to accept it.
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  60. 60. 60 Hiring; The Key to Your Success ♦ If you do not master the skills needed for effective hiring and firing, your business will run like a car with nearly flat tires, it will go, but never as efficiently as if it were operating in peak condition.
  61. 61. 61 Do you really need another employee? ♦ Full time employees (Pro and cons) ♦ Overtime ♦ Redistribute work (workflow) ♦ Outsourcing ♦ Automation ♦ Co-Op students
  62. 62. 62 ♦ Hiring an employee is expensive ♦ Time and money wasted by poor hiring decisions ♦ Once a person is hired, it is not easy to reverse the choice if it proves to be a mistake ♦ More emotionally troubling is firing
  63. 63. 63 If you hire an employee who does not work out, what you will do? ♦ Fire him and hire another one? ♦ Replacement availability! ♦ Cost – Salary – Overhead – Social security – Time spent
  64. 64. 64 Calculating Cost Per Hire Model ♦ Internal cost ( salaries, benefit, etc) ♦ External cost (travel, fees for outside recruiters) ♦ Company visit expenses (candidate travel, , interview expenses ) ♦ Direct fees ( advertising, job fair) ♦ Time
  65. 65. 65 Think about a person you fire ♦ Most stressful responsibilities anyone has in business ♦ The person you fire will feel angry toward you ♦ His college may turn against you ♦ His career and life will suffer
  66. 66. 66 ACDelco’s Experience ♦ Get the best you can get ♦ They put the candidates through an aptitude testing process ♦ After they pass the test, they create a focus group where about 9 different managers interview the candidates
  67. 67. 67 Exxon experience ♦ They look for individual who have a broad and deep background within their organization ♦ The initial sales training during the first three years on the job provides solid sales fundamentals. Covers basic selling skills, negation skills, how to analyze a customer’s business. ♦ After the first three years, advance training is giving such as understanding new market and helping clients reach their goals.
  68. 68. 68 Is Good Relationship enough!!! ♦ The old days of visiting a client and going for lunch together and getting sale based on the relationship are no longer a reality. ♦ Relationship Marketing works
  69. 69. 69 The Most Common Hiring Mistakes (1) ♦ Relying on an interview to evaluate a Candidate – The typical interview increase the likelihood of choosing the best candidate by less than 2% – Why? • Candidate prepare very well • Managers did not prepared for it • Personal chemistry not potential success
  70. 70. 70 The Most Common Hiring Mistakes (2) ♦ Using Successful people as a model – Duplicate success ? – The critical information is how top performers are different from poor performers
  71. 71. 71 The Most Common Hiring Mistakes (3) ♦ Setting Too Many Criteria – No more than 6-8 factors – narrow down your criteria to factors that distinguish winners from failures
  72. 72. 72 The Most Common Hiring Mistakes (4) ♦ Evaluating Personality instead of Job Skills – There is very little correlation between any personality factors and any specific job – Example: is nice to know that a sales candidate has self-confidence and high energy, it is far more likely it is critical to know whether he can retain and pent rate existing customer or develop new ones.
  73. 73. 73 The Most Common Hiring Mistakes (5) ♦ Using Yourself as an Example
  74. 74. 74 The Most Common Hiring Mistakes(6) ♦ Not researching the reasons people have failed in a job – Example: • In most competitive sales situations, the average potential customer buys from a new salesperson only after six contact. The average failed salesperson gives up after three contact.
  75. 75. 75 The Most Common Hiring Mistakes (7) ♦ Relying on General Good Guy Criteria
  76. 76. 76 The Most Common Hiring Mistakes (8) ♦ Not Doing A Careful Background Reference Check – False information – 15 to 20% of applicants hide some dark chapters of their lives – Who will twist the facts to get a job will probably twist the rules on the job.
  77. 77. 77 Others Common Hiring Mistakes ♦ Not knowing what you need ♦ Not knowing what to look for in the resumes you received ♦ Talking too much in the interview – You should not speak more than 25%
  78. 78. 78 Consequences of poor hiring decisions ♦ Waste of time and money ♦ Poor performance ♦ Firing people
  79. 79. 79 Benefit of effective hiring practices ♦ Your company becomes more competitive ♦ Efficiency improves ♦ Employees turnover decline ♦ Cost decrease ♦ Employees morals rises ♦ Training time and expenses are cut
  80. 80. 80 A good match: a suitable person for the job ♦ What does it mean to say, “ Ahmed is really suitable for that job” and Obaid is not cut out for that job” – Is Ahmed a better person than Obaid? Of course not – When we measure people against jobs we are comparing the demand of the job with a person capabilities.
  81. 81. 81 To be affective at hiring you must think about ♦ The demands and requirements of the job ♦ The person’s abilities
  82. 82. 82 Hiring and the Law ♦ Employment tests – Tests should be relevant to the job ♦ Discrimination (color, age, race) ♦ Careful background checks – Company can be held liable if one of its employees goes on crime ♦ Sexual harassment ♦ Ethnic harassment ♦ Saudization
  83. 83. 83 Pre-offer Planning ♦ Thought should be given to the offer process before actual recruit contact begin. ♦ To do this we need to: – The acceptable recruits should be ranked – How the offer (s) will be extended
  84. 84. 84 Ranking the Recruits ♦ Two lists should be developed – a list of the recruits in the order of the firm’s preference of them – The second list can be developed by the firm’s interviewers, based on how interested the recruits seemed in joining the firm. ♦ What about when the person the firm wants most is not interested? (shall we spend time)
  85. 85. 85 What will be included in the Offer ♦ Compensation (type and amount) ♦ Employment package – insurance, – retirement – vacation pay – educational benefit – Profit sharing – Company car – Relocation expenses
  86. 86. 86 How Will the Offer be Extended ♦ Who will make the offer (top manager, Human resource, sale manger) ♦ Most of job offers are initially made over the telephone – how much time will be allowed for acceptance and what concessions will be made if the recruit want to negotiate some of the term of the deal. ♦ A formal letter follows if offer is accepted (this letter needs carefully wording/ contract)
  87. 87. 87 Extending the Offer ♦ Many small, but important, details must be anticipated in making the offer. – Review the job – ask for questions – determine interest (trail close) do you want the job. If we made an offer will you accept it. – If he reject it accept it with grace – Keep good relations, it help
  88. 88. 88
  89. 89. 89 Socialization ♦ Is the process through which the new recruits take on the values and attitudes of the people who are already working for the firm. – Pre-employment socialization (publication, visit) – Assimilation- when he accept the offer • familiar with the environment and their job tasks
  90. 90. 90 Orientation Information ♦ Booklet about company’s history, the executives, product line, health, recreational. ♦ The paycheck ♦ The expense account ♦ Office practices ♦ Dining facilities ♦ What is going to happen next?
  91. 91. 91 Orientation Experience ♦ Be part of the team ♦ Know the supporting staff ♦ Introduction to business ♦ Familiarization with firm’s operation ♦ Spend time in each of the firm’s functional unit. ♦ Need for effective communication
  92. 92. 92 Meeting Social and Psychological Needs ♦ People are social animals ♦ He should be socially integrated into new environment ♦ Social need may be overrule their economic need ♦ Leaving home, family, friend, strange in new city, etc? ♦ Cultural diversity
  93. 93. 93 Mentoring New Employees ♦ A mentor is someone with knowledge, experience, position, or power who provides personal counseling and career guidance for younger employee ♦ Three types of mentoring programs – a senior manager is a assigned for each sales rep – co-worker to be new reps’ adviser – informal process, a senior executive select a younger sales rep and help him climb the ladder
  94. 94. 94 Employee Retention and Problem Solving (reduce employee turnover) ♦ Know your employee – Emotional needs, career needs) ♦ Recognize and reward (reward failure)
  95. 95. 95 Ways to hold on to employees ♦ Good pay (Industry standard) ♦ Communication ♦ Employee review ( people want to know how they are doing) ♦ Training ♦ Employee assistant ♦ Improved working condition ♦ Career path
  96. 96. 96 Common employee behavior problems ♦ Attitude ♦ Attendance problem ♦ Anger
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  99. 99. 99 The Value of Sales Training ♦ The training program is a link in the process of converting the recruit into a productive sales rep ♦ Training was ranked as second important factor in sale person success
  100. 100. 100 Important Factors for Ensuring a Sales Person’s Success ♦ Good/positive attitude ♦ Proper training ♦ Good work habits/hard work ♦ Motivation/self-motivation ♦ Knowledge (customer,market, competition, product)
  101. 101. 101 Successful Training Programs Consist of Three Phases ♦ Training Assessment ♦ Program Design ♦ Evaluation – in each of these phases sales executive mustin each of these phases sales executive must make a number of decisionsmake a number of decisions
  102. 102. 102 Training Assessment ♦ In this phase, sale executive must determine: – What are our training need? – What are the objectives of the training? – Who should be trained? – How much training is needed?
  103. 103. 103 Training Need ♦ Start with sophisticated need analysis that include interviewing customers about their needs ♦ Find weaknesses in selling skills and design a training program to eliminate them. ♦ Sources to gather these information are many such as management and training department judgment
  104. 104. 104 Training Objectives ♦ Increasing sales productivity ♦ Lower turnover (good people less to fail) ♦ Better moral ♦ Control ♦ Improved customer relations ♦ Lower selling cost ♦ Better use of time
  105. 105. 105 Who Should be Trained? ♦ Newly hired sales reps ♦ Existing sales reps – who struggling to achieve their objectives – when new products introduced, market shifts, buyer change ♦ Train people who are not the company’s employees: distribution, middleman representative, etc.
  106. 106. 106 How Much Training Is Needed? ♦ Depends on the training objectives – half a day training may be enough introducing sales rep to promotional program – 2-3 days for introducing him to new feature in the product – Customer relations may needs 3-4 days – Teaching basic selling skills to inexperienced recruits needs 3- 6 months
  107. 107. 107 Program Design ♦ In the program design phase, the following question must be answered: – Who should do the training? – When should the training take place? – Where it should be done? – What should the content of the training be? – What teaching methods should be used?
  108. 108. 108 Who should do the training? ♦ Three basic sources of trainers are: – regular line executive (senior sales representative, field supervisor, territorial manager or sales managers). – Staff trainers-can be hired to conduct training – Outside training specialist ♦ Each one has advantages and disadvantages
  109. 109. 109 When Training Should Take Place ♦ Two basic attitude – no one should be placed in the field who is not fully trained – other attitude is the recruit should sell before investing in training in that person. This philosophy has merits that it is much easier to train people who have some field experience than those who have none.
  110. 110. 110 Where Training Should Take Place ♦ Decentralized Training – Field sales office instruction – use of senior sales people – on-the-job tutoring – local sales schools – local sales seminar ♦ Centralized Training – at central location/ it is very expensive
  111. 111. 111 Content Of Training – Attitude toward selling – Knowledge about the company – Product knowledge and application – Knowledge of competitive products – Knowledge of customers – Time management skills – Legal constraints on selling – Selling skills
  112. 112. 112 Training Techniques – Lectures- ineffective for teaching sales – Discussion – Demonstration – Role playing – Audio cassettes-when sales rep drive – Video-enhanced training – Computer-assisted training – Business TV- broadcast live via satellite – On-the-job training
  113. 113. 113 Training Evaluation ♦ We must assess the effectiveness of our training programs, we must decide on: – what outcomes will be evaluated? – How will these outcomes be measured?
  114. 114. 114 Outcomes and Measures ♦ Reactions-subjective manner ♦ Learning-how much information they get- test before and after ♦ Behavior- whether the trainee’s behavior has changed in substantial ways. ♦ Result-increased sales and productivity
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