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Sales management

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Recruiting, retaining, and managing the sales force; and managing the sales effort is the major function of any business. Sales is the only revenue generating operation and it needs to be carefully …

Recruiting, retaining, and managing the sales force; and managing the sales effort is the major function of any business. Sales is the only revenue generating operation and it needs to be carefully studied and understood to maximise results in today's globally competitive, Triple Bottom Line, world

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  • 1. Sales management The only business function that generates revenue. 1
  • 2. sales management  Planning, direction and control of personal selling including recruiting, selecting, training, equipping, assigning, supervising, compensating and motivating as these tasks apply to the personal sales force. 2
  • 3. Sales management  Management of the personal selling task.  Is there anything like ‘impersonal selling’ or ‘non- personal’ selling?  Selling is an exchange transaction. Exchange of Product or service for money  Money is the revenue or the earnings of an enterprise often called ‘turnover’ or ‘top line’  Sales therefore is the only revenue generating function in an enterprise. 3
  • 4. Objectives of sales management  3 general underlying objectives: 1. SALES VOLUME 2. PROFITS 3. GROWTH Sales – cost of sales = gross margin. Gross margin – expenses =net profit. 4
  • 5. Sales management: evolution  Industrial Revolution – 1760  Small home industries – Large scale manufacturing –marketing – sales and sales support  Concept of hunters and farmers  The modern day sales manager is both an administrator in-charge of personal selling activity and a member of the group that makes marketing decisions of all types. 5
  • 6. The salesman  …..they make more noise and more mistakes, create more cheer, correct more errors, adjust more differences, spread more gossip, hear more grievances, pacify more belligerence and waste more time under pressure, all without loosing their temper, than any other class of professionals –including politicians. 6
  • 7. The salesman  …they live in hotels, cabs and tents on trains, buses, eat all kinds of food, drink all kinds of liquids –good and bad- sleep before, during and after business, with no sympathy from the office.  They draw and spend more money with less effort, they come at the most inopportune time, under the slightest pretext, ask more personal questions.  Yet they are a power in society… 7
  • 8. The salesman  With all their faults, they keep the wheels of commerce turning, and the currents of human emotions running. More cannot be said any man. Be careful whom you call a salesman, lest you flatter him. -Donald Benenson in Ziglar on Selling 8
  • 9. Sales Management “QUALITIES THAT LEAD TO EFFECTIVE SALES MANAGEMENT ARE OFTEN OPPOSITE THE ATTRIBUTES OF A SUCCESSFUL SALES PERSON”
  • 10. Sales organization  With various tasks required to be performed the enterprise had to create a structure to ensure that work is done. (the Sears story)  Principles of structure: authority, responsibility, performance, support/coordinate. 10
  • 11. Sales organization  Concept of organization: Group of individuals working jointly to achieve a defined goal and bearing formal and informal relations with one another. An organization is oriented towards and a co-operative endeavor and a structure of human relationships. 11
  • 12. Purpose of organization  Eliminate waste of effort  Minimize friction  Maximize co-operation  Permit development of specialists  Ensure that all activities get done  Achieve co-ordination/balance  Define authority  Fix responsibility 12
  • 13. Types of organization structures  Line organization: line managers perform sales and sales management activities.  Line and staff organization: Staff managers have advisory or support responsibility. e.g.Market research manager, Training manager.They are not directly responsible for achieving sales targets. 13
  • 14. Organization structures  Functional organization: focus is on the principle of specialization. Each specialist has a functional responsibility and are permitted to direct and control the salesperson thru their immediate superior. 14
  • 15. Organization structure  Horizontal structure.  Specialised structure: Geographical; Product; Market or customer; Combination of specialised structures. 15
  • 16. Line Sales Organization structure Head –Marketing Sales Manager Area Sales Mgr Area Sales Mgr Area Sales Mgr Area Sales Mgr Sales Force Sales Force Sales Force Sales Force Clear authority & Responsibility Quick response & Decision, Low Cost Weak on marketing inputs Sales manager controlled 16
  • 17. Functional Sales Organization Administrative Simplicity Access to Specialists Multiple reporting HOD is Pressures to co-ordinate 17
  • 18. Operations team Production QA Engineering Systems Research & Design team Customer Research Product / Service design Planning Team Strategy Finance HR COO Customer Support team Service Training Information Customer Satisfaction teams Sales & Marketing Pricing & Promotion Channels Logistics 18
  • 19. Sales relation with marketing activities  Sales &Advertising: both stimulate demand. They need to be blended. Salespersons can improve advertising effectiveness. Advertising needs to support sales where and when they need it most.  Sales & Marketing information: data is needed for analysis of sales problems, for determining sales potential. Raw data is collected by sales people. 19
  • 20. relationships  Sales and service: contributes to strategy success.  Sales and distribution: minimizes stock out situation; improves inventory control; helps sales to focus on demand generation.  Sales & Production:  Sales and R&D  Sales &Finance 20
  • 21. SALES PLANNING a managerial function  EXISTING BUSINESS LONG RANGE PLAN 3 TO 5 YEAR PROJECTIONS ANNUAL OPERATING PLAN REVISED YEAR TO YEAR SEGMENTWISE PLAN PAST TREND GEOGRAPHICAL PLAN PREVIOUS YEAR SALES CUSTOMERWISE PLAN CURRENT YEAR ACHIEVEMENT PLAN BY VALUE NEXT YEAR PLANS PLAN BY VOLUME ASSUMPTIONS 21
  • 22. PLANNING FOCUS AREAS: • PROFITABILITY IMPROVEMENT  A REGION OR TERRITORY CEASES TO CONTRIBUTE  DISCONTINUATION OF SALES TO AN ACCOUNT  DE-EMPHASISING PRODUCTS  ACCEPTING A PRIVATE BRAND ORDER  VARIANCE BETWEEN BUDGET AND ACTUAL SALES 22
  • 23. SALES PLANNING  NEW BUSINESS  VISION MISSION GOALS  STRATEGY  *ACTION PLANS 23
  • 24. Key Deliverables of the Sales function  Planning  Organizing  Training  Motivating  Controlling  Leading 24
  • 25. Sales planning  Forecasting a key planning tool PRODUCT LEVEL – total sales industry sales company sales product line sales product variant sales 25
  • 26. Time period forecast  Long Range  Medium range  Short term (range) 26
  • 27. Planning process  Sales plan  Capacity plan  Production plan  Cash flow plan  Procurement plan Human resource plan 27
  • 28. Sales forecast  Why forecast? One of the keys to success in sales is knowing where customers are located and being able to predict how much they will buy. 28
  • 29. Sales forecasting; Industry estimates • Objective definition • Identifying critical factors (assumptions) • Selecting method of forecasting • Collecting, analysing, interpreting data. • Concluding predictions. 29
  • 30. Geographic Area forecast  Nation  Region ( REGION OR ZONE )  Territory ( BRANCH / DISTRICT )  Customer 30
  • 31. Forecasting Approaches  Top - down / Break –down approach An SBU level forecast broken down to region, district, territory, salesperson and individual customer sales quotas  Bottom –up / Build – up approach Individual customer to branch to zone to company level forecast 31
  • 32. Methods of sales forecast  Qualitative methods: Executive opinion Delphi method – prediction by a panel Sales force composite – ‘grass roots’ approach. Test marketing –controlled or simulated 32
  • 33. Sales forecast methods  Quantitative methods: Moving averages Exponential smoothing Regression analysis Econometric analysis 33
  • 34. Selling situations  Customer’s intention and expectation are        specific. (insurance, mobile service) Customer is contacted over phone Customer is an organizational buyer Customer seeking service or solution Customer in a retail store Cold calling situation Pharmaceutical selling Creative selling ( ad.campaign) 34
  • 35. The sales budget  To the sales department, the budget is a blue print for making sales. It involves money invested in distribution facilities, promotion efforts, and sales personnel. It is the foundation on which to plan sales objectives and the means of achieving them during the coming year. 35
  • 36. Sales budget  A budget is a quantitative expression of plans. Most well managed enterprises use a budget which is a comprehensive and coordinated plan for the operations and resources of the enterprise.  It is a formal and intricate process  Approaches are either incremental or zero based.  In a volatile economic climate organizations estimate optimistic, realistic and pessimistic scenarios. 36
  • 37. Sales budget Critical factors considered: 1. past trends 2. Sales force estimates 3. Trade prospects 4. Present scenario 5. Customers: existing and potential 6. Government policies 7. Industry environment 37
  • 38. Number of sales people  Decision on the size of the sales force is very complicated because structure of the customers vary in each territory, the level of competition varies across territories, the connectivity for travel varies etc.  There are 3 generally accepted approaches: affordability, incremental and workload methods. 38
  • 39. Sales territories  Definition : A sales territory consists of existing and potential customers assigned to a sales person. The territory may or may not have geographic boundaries. 39
  • 40. Reasons for territories  Increase / improve customer coverage  Control selling expenses  Effective evaluation of salesman’s performance.  improve customer relations 40
  • 41. Territory design  Main procedural steps: 1. Selection of a basic geographical control unit 2. Determination of sales potential present in each unit 3. Combining the basic units into tentative territories 4. Adjust for differences in coverage difficulty and readjust the tentative territories ( build up / break down method ) 41
  • 42. Territory design  Build up method: Decide call frequency Calculate total no of calls in the unit Estimate workload capacity of salesman Make tentative territories Develop final territories 42
  • 43. Territory design  Break down method: Estimate company sales potential for total market. Forecast sales potential for each control unit. Estimate sales expected from each salesman. Make tentative territories. Develop final territories. 43
  • 44. Routing Scheduling and control  Reasons / advantages:  Maintain lines of communication  Improve territory coverage  Minimize wasted time  Closer scrutiny of sales force movement  Journey plans for improving customer satisfaction 44
  • 45. Quotas  Quotas are quantitative goals assigned to individual sales persons for a specified period of time.  One of the most widely used tools in sales management.  Should not be confused with sales potential or sales forecast.  Quotas may be set equal to ,above or below the sales forecast. 45
  • 46. Why Quotas ?  To help management motivate sales people.  To direct sales people where to put there efforts.  To provide standards of performance evaluation 46
  • 47. Types of Quotas  Sales volume Quotas : Rupee volume / Unit volume  Profit based Quotas: contribution / gross margin  Activity Quotas: calls per day; sales meetings; product demos; ( efforts = results.)  Expense Quotas 47
  • 48. QUOTA SETTING MECHANISM  S-specific  M-measurable  A-achievable  R-realistic  T-time bound 48
  • 49. What is Motivation??  Drive to initiate an action.  The intensity of effort in an action  The persistence of effort over 49
  • 50. Why motivation  Frequent rejection  Physical separation from company support  Direct influence on quality of sales presentation  Indirect influence on performance 50
  • 51. Sales force motivation  “the desire to make an effort to fulfill a need is motivation”  Motivation includes three dimensions: Direction, Intensity and persistence.  Motivation may also be Intrinsic or extrinsic  Maslow’s hierarchy of needs: 51
  • 52. Maslow’s theory Self Actualisation Esteem needs Social needs Safety needs Physiological needs Food, clothing, shelter, health care 52
  • 53. MASLOW’S HIERARCHY OF NEEDS Intense job challenge, full potential, full expression, creative expansion. Achievement, respect, recognition, responsibility, prestige, independence, attention, importance, appreciation. Belonging, acceptance, love, affection, family and group acceptance, friendships. Security, stability, dependency, protection, need for structure, order, law, tenure, pension, insurance. Hunger, thirst, reproduction, shelter, clothing, air, rest. 53
  • 54. Frederick Herzberg theory  “Two factor theory” of motivation  Hygiene ,maintenance, or job context factors.( dis satisfiers )  Achievement, challenge, advancement, growth in the job. (satisfiers ) 54
  • 55. SELLING THE WORD SELL IS DERIVED FROM A Norwegian WORD SELJE WHICH MEANS TO SERVE TO SERVE YOUR PROSPECTS YOU MUST UNDERSTAND THEIR NEEDS. PEOPLE INVARIABLY BUY WHAT THEY WANT, EVEN ABOVE WHAT THEY NEED 55
  • 56. The sales process  Process: a sequential series of decisions and or actions. BUYING PROCESS SELLING PROCESS NEED SEARCH IDENTIFY ISOLATE PREPARE FOCUS DEFINE PROPOSE/PRESENT SELECT BUY CONSUME HANDLE OBJECTIONS CLOSE THE SALE FOLLOW UP 56
  • 57. The sales process 1. 2. 3. 4. 5. 6. 7. Prospecting & Qualifying Pre approach (pre call planning ) Approach Presentation & Demonstration Overcoming Objections Trial close / Closing the sale Follow –up and Service. 57
  • 58. SELLING PROCESS the Ziglar method  Focus on Prospects NEEDS and WANTS.  Sell by design, not by chance. Follow a proven 4 step formula: NEED ANALYSIS NEED AWARENESS NEED SOLUTION NEED SATISFACTION 58
  • 59. Prospecting  Process of identifying potential buyers.  A prospect has a reasonable probability of buying ,has sufficient need to justify a profitable sale ,has financial resources to buy and can be classified as ‘eligible to buy’ MONEY? AUTHORITY? DESIRE? 59
  • 60. Locating prospects Lead generation – a three step process. 1. Defining the target market :what it wants; what it buys; where and when it buys; what it buys; how it buys; 2. Using communication tools to gather leads –Advertising, Direct mail, Telemarketing, Trade shows, buying data 3. Qualifying the Leads. 60
  • 61. Selling first time to Prospects (pre sale planning)  Adequate knowledge of the product to be sold, company being represented, the market competition ,category or segment of customers and selling techniques.  Product knowledge: Evolution-Features-BenefitsUniqueness-Price  Company knowledge: History-Values-AchievementsManagement-Policies 61
  • 62. Pre sale plan  Competitors knowledge :structure-share- strategy-systems.  Customer knowledge :attitudespreferences- behavioural habits  Selling techniques : 62
  • 63. Pre approach planning  Focus on understanding customer needs and characteristics and preparing a proposal on how the product or service offered can satisfy the need.  Steps involved are: Determining call objectives. Development of customer profile. Determine customer benefits. Determine the flow and content of the presentation. 63
  • 64. Understanding buyer’s needs  Situational questions: questions about prospect’s current situation. (who will decide? is it the first time ? Changing source ?  Problem identification question: Questions to uncover problems, difficulties or needs ( problems on quality, delivery ?)  Problem impact questions: questions to make the buyer realise the impact of the problem and the need to solve it.( what will be the impact on costs , on customer satisfaction ?) 64
  • 65.  Solution value questions :questions to help the buyer asses the value or usefulness of the solution ( for x benefit how much would you save ?  Confirmation questions: (how would an error free system help?) 65
  • 66. Need awareness  At this stage you need to THINK  Prospect and Salesperson should both be aware of the need. (remove blind spots) 66
  • 67. Need solution  Present your product  Time to stop asking questions and start providing solutions.  People don’t buy products, they buy what the product does for them. 67
  • 68. Questions are the answer  Thinking vs. feeling questions.  When you learn how the customer feels you are more likely to find out what the person thinks.( the seat belt case)  Tying emotion to logic. 68
  • 69. The questioning process  Three basic types of questions enable us to discover the needs of our potential customers.  1st The Open Door Questions.-allows the prospect the freedom to go where ever they like. the “who, what where ,when, how and why” questions 69
  • 70. Questioning …  The closed door question: “would you tell me more”; “what do you mean by…Answers to these give you information to helping the prospect and building trust. 70
  • 71. Questioning…  “yes or no” questions demand a direct response. “do you agree..” “would my proposal..” “are we in agreement..”  They allow you to check on your progress on the sales process. “trial close” 71
  • 72. Presentation methods  Stimulus response method: also called a ‘canned approach’, a memorised sales presentation .It assumes that if a right stimuli is made it will get a favourable response.  Formula method: the AIDA process.  Need-satisfaction method: an interactive sales presentation. The most challenging and creative method. The FAB way. Features, Advantages, Benefits. 72
  • 73. The presentation  Attracting Attention  Creating Interest  Building Desire and conviction  Initiate Action to buy. 73
  • 74. Presentation methods  Team selling method: a multi person sales team deals with a multi person buying centre (or buying committees) Sales team consists of Account executive, technical support engineer, logistics expert, IT or systems executive and Finance executive. Buying committee consists of materials exec. manufacturing/operations exec. supply chain exec. Materials manager and Finance exec. 74
  • 75. Presentation methods  Consultative selling method: problem- solution method. Requirements are: Knowledge of the industry, clients company, awareness of key members needs, 75
  • 76. Objections  Objections , opposition , resistance to the presentation typically happens during the presentation or while asking for the order.  Objections should be welcomed.  Objections indicate that the prospect is involved and not indifferent.  Objections reflect the prospect’s view. 76
  • 77. Objections Psychological ( hidden ) – includes predetermined ideas or beliefs, preference for established brands, dislike of making decisions , anxiety or resistance to spend money , suspect about quality etc. 2. Logical or practical or real –delivery schedule, high price , product availibility, 1. 77
  • 78. Handling objections  Listen  Understand  Negotiate 78
  • 79. Methods of handling objections  Ask questions: listen, rephrase, reconfirm the objection and explain.  Turn objection into a benefit and trial close.  Deny objections tactfully. (arrogance and sarcasm to be strictly avoided)  Testimonials, referals  Compensation for valid objections. 79
  • 80. Negotiation  Plan – pre determine ‘firm’ and ‘flexible’ factors; define limits.  Ensure an atmosphere of trust , understanding and respect.  Define purpose and objective. 80
  • 81. Negotiation styles  Win – loose  Win – Win  Loose - Loose 81
  • 82. Closing the sale  Summarize  Advantage and disadvantage comparison  Opportunity benefit  Emotional appeal  Direct closure A.A.F.T.O=Always Ask For The Order 82