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Sales ManagementThe Marketing Series is one of the most comprehensive collections of books in marketing andsales available from the UK today.Published by Butterworth-Heinemann on behalf of The Chartered Institute of Marketing, theseries is divided into three distinct groups: Student (ful lling the needs of those taking theInstitute’s certi cate and diploma quali cations); Professional Development (for those on formalor self-study vocational training programmes); and Practitioner (presented in a more informal,motivating and highly practical manner for the busy marketer).Formed in 1911, The Chartered Institute of Marketing is now the largest professional market-ing management body in Europe with over 60,000 members located worldwide. Its primaryobjectives are focused on the development of awareness and understanding of marketingthroughout UK industry and commerce and in the raising of standards of professionalism inthe education, training and practice of this key business discipline.THEMARKETING SERIESBHSTUDENTTHEMARKETING SERIESBHPROFESSIONALDEVELOPMENTTHEMARKETING SERIESBHPRACTITIONER
Books in the seriesRoyal Mail Guide to Direct Mail for Small BusinessesBrian ThomasThe CIM Handbook of Selling and Sales StrategyDavid JobberThe CIM Handbook of Export MarketingChris NoonanThe Creative MarketerSimon MajaroThe Customer Service PlannerMartin ChristopherThe Effective AdvertiserTom BrannanIntegrated Marketing CommunicationsIan Linton and Kevin MorleyThe Marketing AuditMalcolm H. B. McDonaldThe Marketing PlannerMalcolm H. B. McDonaldMarketing StrategyPaul Fi eldCybermarketingPauline Bickerton, Matthew Bickerton and Upkar Pardesi(Forthcoming: The CIM Handbook of Strategic Marketing by Colin Egan and Michael Thomas; The CIMHandbook of Service Marketing by Colin Egan)
ContentsPreface xviiPart One Functions and Organization of the Sales Force 11 Roles and functions in the sales force 3Key sales and marketing functional activities 3Sales functional activities 5Typical job functions in a sales organization 7The sales manager or sales director 7The eld sales manager 8The key account manager 9The territory manager (or salesperson) 9The merchandiser 10Product promoters 10Sales management qualities 11A sales manager’s personal audit 112 Sales structures and organization 13Considerations in organizing the sales force 13Developing a structure 14Geographical, horizontal, vertical factors 14Management span of control 14Other organizational considerations 16Some typical evolving organization structures 16Developing a basic structure 16A geographically organized sales force 18Trade sector specialization 18Product specialization 23Key account management 24Export department organization 28Matrix organizations 29Checklist 2.1: Effective organizational structures 31Part Two: Developing a Motivating Sales Environment 333 Motivational management in the sales force 35
What is motivation? 35Why salespersons need motivation 35Motivational factors 36Hierarchy of needs theory 36Goal setting theory 37Equity theory 38McClelland’s achievement–power–af liation theory 39Expectancy theory 39Practical motivation 40Job satisfaction 40Demotivators 40Motivators 42A framework for practical motivation 42The manager’s motivational role 47The manager’s leadership role 47Motivation through involvement in decision making 48Checklist 3.1: Demotivators 50Checklist 3.2: Practical motivation 514 Sales management by objectives 52Establishing a hierarchy of objectives 52A hierarchy of objectives for retail products 52A hierarchy of objectives for industrial products 54Managing to sales objectives 55The basic principles of establishing objectives 55Typical focus of sales objectives 59Checklist 4.1: Establishing a hierarchy of objectives 635 Motivating through rewards and incentives 65Developing motivational rewards 65The main options and their suitability 65Basic salary or wages 66Commissions 66Bonuses 68Contests 68Stock options and pro t sharing 69Job perquisites 69Incentive scheme principles 69Checklist 5.1: Reward systems as motivational tools 706 Providing appraisals and feedback for motivation, training and discipline 73The role of appraisals 73What to measure and appraise 73Standards of performance 74Skills and competencies 74Subjective factors 74Sources of appraisal information 75Guidelines for managers operating an appraisal system 75Developing an appraisal scheme 76Giving feedback for motivation, appraisal, training and discipline 79vi Contents
Formal feedback guidelines 79Setting the scene 79Planning for change 79Feedback environment 79Getting a commitment to change 80Checklist 6.1: Feedback 83Checklist 6.2: Appraisals 847 Communication in the sales force 86The role and purpose of communications 86Purpose and means of communicating 86Means of communicating 87How to communicate 88What to communicate 88Essential information 88Optional information 89Whom to communicate with 89Style of communications 89Sales bulletins and other memoranda 90Who communicates with the sales force 91Frequency of communications 91Sales bulletin content 91Structure of sales bulletins 92Audio, visual and computer media communications 92Checklist 7.1: Communications 95Checklist 7.2: Sales bulletins and memos 968 Sales meetings and conferences 98Organizing and running sales meetings 98The purpose of meetings and conferences 98Sales meeting organization 98Conducting sales meetings 99Chairing the sales meeting 100Communication aids 101Making sales meeting presentations 102The audience 102The purpose 102The subject matter 103Structuring the presentation 104Checklist 8.1: Organizing a meeting or conference 106Checklist 8.2: Preparing a presentation for a meetin 107Checklist 8.3: Structuring the presentation 108Checklist 8.4: Practical tips on the presentation 109Part Three: Sales Recruitment and Training 1119 Recruitment and selection in the sales force 113Overview of the recruitment process and key steps 113Qualities and skills of salespersons 113Job descriptions and person speci cations 116Contents vii
Functions of a job description 116Content and coverage of a job description 116Person speci cations 117Sourcing applicants for sales positions 119Job application forms 121Guidelines for press advertisements 123Coverage of advertisements 123Screening applicants 123Screening applicant interests 124Communicating with unsuccessful applicants 124Conducting interviews 125The interview environment 125Duration of the interview 125Interview conduct and content 125Format of the interview 125The eight-point interview framework 126Notes at interviews 128The selection shortlist 128Group selection tasks 128Checking references 131Making the selection 136Checklist 9.1: Recruitment stages 136Checklist 9.2: Interview guidelines 138Checklist 9.3: The eight-point interview framework 140Checklist 9.4: Taking candidate references 14210 Basic sales training 144The role of training in the sales force 144Why train? 144Managing to key result areas 144The focus of sales training 146Assessing the training needs 146Typical coverage of sales training 148Basic training programme coverage 148Company knowledge 148Product knowledge 149Training in the selling process 149Further considerations in industrial and business-to-business selling 151Conducting group training sessions 152Variety in effective training 154Lectures 154Demonstrations 154Role playing 155Closed circuit television in role playing 155Films or videos 155Feedback reviews and discussions 156Printed handouts 156Specialist training 157Use of training consultants 157Length of training courses 157viii Contents
A typical induction training programme 157Training sales managers 157Checklist 10.1: Basic training for salespersons 16011 Field sales training 163The role and purpose of eld training 163Assessing training needs 163Functional activities 163Sales techniques 165Organization 166Personal attitudes 167Training stages 168The training audit 168Conducting eld sales training 169Priority training 170A training framework 172Training feedback 173Judging the trainer’s effectiveness 173Checklist 11.1: Guidelines for eld training 174Checklist 11.2: Guidelines for giving training feedback 176Part Four: Planning, Forecasting and Performance Monitoring 17712 The planning process 179Why plan? 179Stages in the planning process 179Decision areas in strategy development 181Inputs to market sales planning 181Contributions to market planning 181Historical market and performance data in planning 183Key planning assumptions 185Market size 185Market dynamics 185Spend 186Organization changes 186Parallel activity 186Government regulations 186Competitor activity 186Socio-economic factors 187Demographic factors 187Checklist 12.1: Decision areas in sales strategy development 187Checklist 12.2: The planning framework 188Checklist 12.3: Planning inputs – historical data and assumptions 18913 Sales forecasting 191Terminology associated with sales forecasting 191Planning time spans 193What to forecast 193Typical considerations in forecasting 193Main methods of developing forecasts 194Contents ix
Current demand 197Total market potential 197Industry sales and market shares 198Multiple factor index method 199Market build-up method 199Future demand 199Time series analysis 199Statistical demand analysis 200Market sales tests 200Expert opinion 200Marketers’ opinions 201Surveys of future buying plans 201Other considerations in forecasting 201In ation 201Seasonal trends 202Cyclical trends 202Random uctuations 202Product life cycles 202Developing a practical market forecast 202Information inputs for forecasting 203Tabulating data and projecting trends in moving annual formats 204Moving annual data 204The ‘Z’ chart in monitoring performance 206Forecasting from moving annual total data 208Problems in using trend data based on past sales 209Building forecasts from local market sales data 210The importance of key accounts 210Building targets for a larger customer base 212Checklist 13.1: Forecasting and planning 21414 Performance monitoring 217Monitoring sales performance 217Analyses of sales despatches 217Market share analysis 223Monitoring pro tability of sales activity 224Monitoring salesperson performance 228What to measure 228Monitoring monthly sales against territory sales budgets 228Continuous monitoring 230Competitive benchmarking 230Presenting sales monitoring data 230Checklist 14.1: Sales performance measurement 232Checklist 14.2: Competitive benchmarking 233Part Five: Management and Control of the Sales Force 23515 Territory management 237Management of resources 237Managing selling time 237Sales activities 237x Contents
Planning 237Selling 237Communicating 238Administering 239Decision making 241Market intelligence 241Territory planning 241Territory sales forecasting 242Developing sales strategies 242Territory call coverage and journey planning 243Territory call coverage 244Coverage 244Sales call rate 244Journey planning principles 244Journey cycle planning 245Journey scheduling 245Weekly journey plan 245Segmenting a territory for coverage 246Segmenting a territory for coverage: mapping 247Cold call prospecting 248Purpose of cold call prospecting 248Sources of new prospects 249Customer targeting 249The questions in targeting customers 249Surveying for outlets 249Some special considerations in coverage planning 251Van sales 251Tele-sales 251Relief salespersons 252The costs of selling 252Checklist 15.1: Resource control 253Checklist 15.2: Managing selling time 254Checklist 15.3: Functional activities 255Checklist 15.4: Territory management 25716 Sales force administration 260Basic administrative controls 260Field sales administration 260Sales of ce administration 260Customer call records 261Daily activity reports 264Using the daily activity report 266Journey plans 267Order forms 267Credit notes and product uplift notes 268Contact reports 268The sales planning slip 269Sales promotion control forms 270Expense control form 271Quotation forms 271Contents xi
Guidelines for designing forms 272Essential customer communications 275Product price lists 275Speci cation sheets 275Catalogues and brochures 276Advertising and promotional programme information sheets 276Checklist 16.1: Sales force administration 27617 Sales management control 278The need for control 278Types of controls 278Managing time 279Salesperson use of time 279Sales manager’s time use analysis 280Field controls 282Identifying key result areas and setting performance standards 282Sources of control data and performance information 283Supplementary analysis 284Sales performance league tables 285Monitoring performance against territory sales target 285Field checks or audits 289Focusing performance measures on key result areas 289Checklist 17.1: Management control and performance monitoring 292Part Six: Developing the Business 29718 Trade development 299Mapping trade channels 299Using trade channel data 301Developing and using trade terms 306What the trade looks at 306Credit 306Discounts 308Types of motivational discounts 308Minimum orders 308Guidelines for establishing minimum orders 308Managing wholesale distributors 309The role of the wholesaler or trade distributor 309Auditing the wholesalers 310Problems in managing wholesalers 311Attitudes of wholesalers 311Limitations on the supply company’s ability to manage wholesalers 312Developing the partnership and motivating distributors 312The focus of value-adding activities 313Practical ways to add value to wholesaler relations 314Checklist 18.1: Trade channel mapping 315Checklist 18.2: Trade terms and customer credit 316Checklist 18.3: Managing wholesalers and trade distributors 317xii Contents
19 Sales promotion 320Sales promotion 320De nitions 321Using promotions in the marketing communications mix 321Advantages of sales promotions 321A decision making framework for evaluating promotion options 323Types of sales promotions 323The advertising and promotion plan 328Promotion planning 329Setting promotion objectives 330A promotional brief format 335Evaluating and monitoring promotions 335Key account promotional activity 335Guidelines for developing promotional materials 337Financing advertising and promotions 339Advertising reserves 339Spend in the marketing mix 340Exhibitions 342Exhibition objectives 342Which exhibition? 343Exhibition planning 343Exhibition follow-up 344Appendix 19-A: Typical focuses of sales promotions – examples 344Checklist 19.1: Basic promotion planning 348Checklist 19.2: Promotion formats 349Checklist 19.3: Exhibition planning 35020 Merchandising at the point of sale 352The importance of merchandising 352Merchandising in relation to strategy and communications 353Bene ts of merchandising 353Space management in the selling environment 353Merchandising in the sales call 356On-shelf display 359Off-shelf feature displays 361Point of sale material 363Use of point of sale material by the salesperson 363Checklist: 20.1: Merchandising in retail and trade outlets 366Checklist: 20.2: Creating impact at the point of sale 36821 Key account management 370The stages in key account management 370Trade channel mapping 370Developing key account pro les 372Getting to know the buyer 372Establishing relationships 373Building relationships within key accounts 373Contacts to develop and follow up with 378Supporting relationships with a value-adding approach to account management 380Account penetration and development 383Contents xiii
Agreeing a modus operandi for account management 384Key account negotiating 386Typical pattern to the annual round of negotiations 386Follow up to negotiations 387Follow-up with retail accounts 387Follow-up with industrial and commercial key accounts 388Category management 390What is category management? 390The supplying companyís role 390The key account managerís role 390Developing the product category 391The buyer and category management 391Checklist 21.1: Key account pro les 392Checklist 21.2: Key account knowledge 393Checklist 21.3: Getting to know the buyer 394Checklist 21.4: Building relations within key accounts 395Checklist 21.5: Detailed key account knowledge 397Checklist 21.6: Key account development 40022 Alternative sales or distribution operations 402Telephone selling 402Cold call canvassing 402Emergency contact with customers 403Coverage of small accounts or geographically remote customers 404Tele-ordering for regular repeat product orders 404Promotional thrusts focusing on special activity 404Customer satisfaction research 404Other customer-oriented marketing research 404Training 404Wholesalers, distributors, brokers and agents 405Wholesalers and distributors 405Brokers and agents 405Customer contact 405Agreements with agents and distributors 407Other ordering or distribution methods 407Exclusive retail stockists 407Postal orders 407Direct mail campaigns 408Mail order catalogues 408Computer ordering 408Direct home distributors – network marketing 408Checklist 22.1: Alternative methods of generating sales 409Checklist 22.2: Selecting agents and distributors 41023 Developing international markets 412How the company bene ts from exporting 412The broader international opportunities 412The export sales manager 413Role of the export sales manager 413Skills in the international marketer 414xiv Contents
Measuring the export marketers’ performance 415Desk research 415Distribution channels 416Factors in studying distribution needs 417Identifying and selecting agents and distributors 420Managing agents and distributors 421Market activities 421Field work 422Checklist 23.1: Exporting – the bene ts and the opportunities 423Index 425Contents xv
PrefaceSales management is an integral part of marketing management. The sales team are the imple-menters of marketing strategy and tactics at the customer interface. Modern sales manage-ment is not about leading a team of foot-in-the-door salespersons. It is a complex anddisciplined mix of: marketing skills, professional selling and negotiation skills, people man-agement skills (including selection, motivation, communicating and training), sales strategyand tactical planning skills, data management and performance monitoring skills (involvinga high level of numeracy and experience in using computers to advantage in sales and cus-tomer management). The material coverage of this text addresses many of these topics in apractical way that sales managers can use in self-development, or adapt to team developmentneeds.This text is targeted at the professional sales manager, who wants to make the most of themarket opportunities, and develop the productivity of his or her sales team. Companies arefacing increasing competition, with threats to many traditional markets and customer bases,as supply and purchase points in many market segments become more concentrated. Totackle the threats and capitalize on opportunities the modern sales manager needs a farbroader range of selling and managerial skills and experience than in past decades. The aimof this text is to provide some skill-developing inputs that will enable the proactive sales man-ager to build on this material in managing the sales team and sales environment more prof-itably and productively.The contents of this text should be of interest to:● senior sales and marketing directors charged with responsibilities for overalldevelopment of markets, planning and strategy, and who may nd this a useful referencetext● eld sales managers who may nd that much of this text has practical application byadapting the principles as relating to team management into their own environment● salespersons and students of marketing and sales management, who will nd that thetext provides a comprehensive coverage of practical sales management principles thatwill provide a rmer base for their entry into sales line management.The reader with international responsibilities, or with a broader interest in marketing aspectsof management, can usefully supplement reading of this work with reference to my compan-ion volume The CIM Handbook of Export Marketing (Butterworth-Heinemann 1996, ISBN 0 75062573 2).Throughout this text use of the masculine gender can be taken as including the femininegender, without intention to discriminate or imply anything other than that marketers of bothsexes are equal in all respects in selling and sales management.Chris J. NoonanE-mail: Noonan@cjn.co.uk
The sales organization, commonly referred toas the sales force, plays a key role in thegrowth, development, profitability andimpact on customers (whether trade or directcustomers) of most companies. It may repre-sent only one department, or division, withina company organization, and often be rela-tively small in numbers in relation to totalemployees, especially in manufacturingindustries, but it is a critical resource thatmust be nurtured, developed and motivatedto ful l its potential within the companyorganization and the external market place.Key sales and marketing functionalactivitiesThe functional activities undertaken by thesales and marketing departments can nor-mally be allocated into one of the three cate-gories of management, administration orplanning, as illustrated in Figure 1.1, andexpanded in Table 1.2.1Roles and functions in the sales forceFigure 1.1 The main categories of sales and marketing activityManagementAdministration PlanningThe functionalactivities that keepthe businessrunning day to dayThose activitiesthat are reallydealing with pastsalesThose sales managementactivities that are focused onplanning for, and obtaining,future business
4 Sales ManagementTable 1.2 Main functional responsibilities in sales and marketing departmentsFunctional responsibilitiesSales● Achieving sales volume requirements● Achieving distribution objectives● Product display/merchandising● Call (outlet) coverage● Sales force recruitment● Sales force training● Provision of feedback to sales force● – bulletins● – conferences● – personal contact● Trade terms● – ﬁnancial terms of trade● – warranties and sale conditions● – order size and delivery● Performance measurement● – sales volumes/values● – call coverage● – distribution● – display achievements● Credit control● Collection of payments● Customer service and care● Order processing● Maintaining records on sales forceactivity and customer activity● Sales forecasting● Pricing policies and proﬁt planning● Sales promotions and competitions● Sales force rewards and incentives● Management trainingMarketing● Brand management (including proﬁtability)● Market research● Product performance and market shareanalysis● Brand publicity including public relations,sponsorship, etc.● Advertising and promotion● Packaging supplies (ordering and stockcontrol if not an allocated responsibility ofpurchasing or production functions)● Production scheduling (if not an allocatedresponsibility of another department)● Regulatory compliance of product andpackaging in domestic (and export)markets● Sales & marketing forecasts● Pricing policies & proﬁt planning● New product development● New product test marketing● Product design (physical attributes, size,shape, packaging)Functional responsibilitiesSales MarketingAdministrationPlanningManagement
Roles and functions in the sales force 5Sales functional activitiesTable 1.1 can be expanded with the following additional commentary on the main sales man-agement functional activities.Achieving sales Once a forecast or target is set or agreed, the sales manager becomesvolume responsible for its achievement. Achievement of sales forecasts is usu-ally critical to achievement of the company’s nancial plans (pro tabil-ity, ability to meet operating expenses, etc.).Distribution Product distribution targets may be set independently of sales volumetargets, but higher sales volume is commonly a function of increasingdistribution as well as generating more product offtake or usagethrough existing users or outlets.Product display These are traditional sales force functions in consumer product compa-and merchandising nies, and also with some industrial products distributed through tradestockists. Where offtake is a factor of display, the salesperson shouldhave display guide-lines and objectives, possibly for regular shelf spacein the trade outlet (retail outlets, cash and carry stores) and for off-shelfpromotional or feature displays.The merchandising function may be performed by the sales force, or bya separate team (possibly of part-timers) charged with that responsibility.Many consumer goods companies contract the merchandising to special-ist companies that provide merchandising services to a range of suppliers.Call coverage This is the actual process of making physical calls on customers. Wherea company has a stable customer base, calling might be scheduled atsome regular frequency relating to actual or potential sales (see latersections on journey planning), or to the amount of stock a customer can(or will) carry.Sales recruitment The identi cation of suitable persons for a selling position, and theirand training subsequent training, must be a fundamental responsibility of sales man-agers. Clear job speci cations and job holder pro les should be devel-oped, based upon qualities and skills known to be relevant toperformance in the company’s trading environment.Once suitable persons are identi ed and recruited, there are three lev-els of training that the sales manager needs to incorporate into his or hermanagement activities:● initial induction training, likely to include industry and product knowl-edge, as well as basic selling skills● ongoing ﬁeld sales training● supporting training provided at sales meetings and conferences.Provision of It is essential to communicate achievements, objectives, plans, pro-feedback grammes, and policies, in order to provide support and motivation.Sales managers typically hold (area or national) sales meetings at regu-lar frequencies to provide a feedback forum and to give sales teammembers a chance to interrelate, and these can be supplemented bysales bulletins or newsletters.Trade terms Marketing and nance departments will usually have an input to acompany’s trade terms. The sales manager should be the expert on thecustom and practice within his or her markets, knowing industry
6 Sales Managementnorms, and constantly reviewing competitive pricing, trade terms, andpromotions.Performance Statistical sales performance measures must relate sales achievementsmeasurement to targets, plans, and budgets, and form part of a programme of rapidfeedback to salespersons. Performance statistics need to be brokendown to give measures for each territory and customer, and, whereverpractical, should be benchmarked against comparable external data, e.g.for the industry or product category. Comparative gures for perfor-mance against plans often cover:● sales volumes by product and customer● sales values by product and customer● proﬁtability by product and customer (not measured often enough!)● call coverage achieved versus the scheduled or optimum coverage asrelated to sales● product distribution achieved by product and sales territory, or by tar-get market sector● display achievements by product, territory, etc., where this is a rele-vant measure for consumer products.Credit control This functional responsibility is often shared with a section of thenance department. In the nal analysis, however, it must be acceptedas a sales management responsibility to collect overdue payments, asthe sales force are involved in selecting customers and advising on theirsuitability for credit.Collection of In most developed markets payment for goods despatched is made bypayments cheque, or direct bank-to-bank transfers. Late payers are usuallyreminded by a letter serving as a polite reminder, followed subsequently ifpayment is not made by more terse chasers. In some markets salespersonstraditionally collect payment while calling on customers, but this is notideal as it distracts from the salesperson focusing on selling, and maybring a negative atmosphere into what should be a positive environment.Customer service This function has grown in importance over recent years, as suppliersand care work not just to meet customer expectations from products and service,but to exceed them. This may include a very broad range of activities,from providing product lea ets and information, to answering queriesabout where orders are in a supply pipeline, to provision of after salesservice and technical support.Order processing This activity also might t within a sales organization, within customerservice, or possibly a separate distribution department. Wherever it isplaced as an activity, its function impacts on the selling activities, assalespersons and their customers clearly have particular concerns aboutthe speed and accuracy of processing orders, and the management oforder processing from all stages through collection (by a sales call ortelephone call) to delivery and payment.Maintaining The sales force needs to have information on its customers and its ownactivity records activities. Most companies have a customer record system, such as acustomer card where the salesperson records all customer details andsales history, call dates, etc. Salespersons should have information thatshows when calls are scheduled or have been made, and the results, aswell as recording sales objectives for each customer.
Typical job functions in a salesorganizationThe sales manager or sales directorThis is the person who is head of the salesorganization, by whatever title. Frequentlyhe will either sit on the company board orexecutive committee, or, at least, reportdirectly to it. In some companies the salesmanager comes within a combined sales andmarketing department, possibly reporting toa marketing director or commercial director.Here we are less concerned with titles thanwith job functions. The main functions of theposition would include:● forecasting potential sales volumes and prices● identifying, setting, and achieving salesobjectives, targets, budgets and proﬁtplans● assigning sales force priorities in line withobjectives and plans● developing programmes for ﬁeldimplementation of the company’smarketing plan (including developingsupporting sales promotional activitywithin budgetary limits and in conjunctionwith the marketers)● designing and developing a salesorganization and structure to achievecompany plans and objectives, and suitedto the company, industry and markets (andwhich might include selection of agents,distributors, etc.)● developing motivational reward andincentive packages● converting overall plans and objectivesinto speciﬁc standards of performance,sales targets, and programmes forsubordinate functions and managers,including regional/area managers andRoles and functions in the sales force 7Sales forecasting While this is a function that often overlaps with marketing, sales man-agers do have a key contribution to make to the forecasting and plan-ning process, notably in relation to sales volume and value estimates, inestablishing distribution and display objectives, and in setting budgetsfor a sales organization that can achieve its objectives.Pricing policies The marketing and sales departments will both be closely involved indeveloping and implementing market pricing policies, to ensure correctpositioning versus competitors’ products while also satisfying companypro t objectives.Sales promotions While a marketing department might initiate much tactical promotion-and competitions al activity, in support of strategic objectives (e.g. aimed at increasing dis-tribution, display, and user/consumer trial), some promotional activityaimed at improving performance against the same key result areasmight be under the control of the sales manager alone, such as salesforce incentives and competitions.Sales force rewards The sales manager (often with advice from a human resources depart-and incentives ment) will have responsibility to ensure that rewards and incentivespromote a high level of morale, motivating achievement of goals andobjectives, encouraging excellence, and developing loyalty amongst thegood performers. While this could be seen as a management function, Iprefer to assign it to planning, as reward packages have a great bearingon future success.Sales management While many sales managers recognize the need for training their salestraining teams, they often neglect their own development. Management train-ing, to meet the future needs of the business and demands of sales man-agement jobs, is a key activity. A well-trained team of sales managerswill contribute to their own further self-development, to company per-formance, and to the morale and training of salespersons.
key account executives, ensuring that eachis allocated a fair share in relation tohistorical performance or potential● developing systems of monitoring salesperformance at all levels of theorganization and for all trade sectors,including systems for benchmarkingcompany performance versus competitors’performance and trade/customerexpectations● developing a head ofﬁce sales supportorganization that may include:– operational planning and forecasting;– sales recruitment and sales training;– sales performance monitoring andperformance feedback reporting;– sales promotions department (planningpromotions, in liaison with themarketers, and providing all sales aidsincluding product literature, displayaids, samples, etc.);– customer service departments;– order processing departments;– tele-sales departments;– product distribution (if this responsibilityis under the sales function);– production scheduling (if thisresponsibility is under the sales function)● selecting and training all subordinatemanagers and salespersons● setting terms of trade, including basicprices (in conjunction with marketing),scale discounts and allowances,promotional allowances, etc.● communicating with the sales force andwith customers as necessary (includingagents and distributors as appropriate) onmatters concerned with plans,programmes, policies, and performancefeedback● assisting with the test marketing of newproducts● building good internal relationships andliaising with all other departmentsconcerned with forecasting and planning,marketing, production, ﬁnance,distribution, etc.The ﬁeld sales managerThe eld sales manager is the person withspeci c responsibility for the eld implemen-tation of the marketing programme. Largercompanies have a network of eld sales man-agers, often entitled area managers or districtmanagers, leading smaller teams usually offrom six to ten salespersons. The eld salesmanager:● accepts responsibility for achievingassigned objectives, targets, forecasts,budgets, etc., with and through the team● liaises with salespersons and superiors insetting sales performance targets,objectives, standards of performance, etc.by territory● plans and monitors call coverage tooptimize effective frequency of calling inrelation to potential● implements ﬁeld programmes supportingcompany marketing plans● maximizes the sales effort by providingtraining, counselling and feedback● exercises control and maintains teamdiscipline● interprets and ﬁlters company policies● communicates effectively with salespersonsthrough regular sales meetings andbulletins● selects, trains, manages, motivates andcontrols his or her sales team● advises superiors on market intelligence,competitive products, promotions, terms oftrade● liaises between head ofﬁce departmentsand ﬁeld personnel● ensures each of his or her sales teamachieves high job satisfaction through:– job content– team spirit and membership– management– monetary and non-monetary rewards– recognition of achievements– quality of products sold– the company as a good employer.8 Sales Management
The effective eld sales manager will work toaccomplish his or her goals and maximizesales team performance by:● ensuring he or she is well briefed oncompany policies, objectives and activities● putting subordinates ﬁrst in his or herpriorities.The key account managerManagement of the company’s business andrelations with major customers will normallybe the responsibility of a key account man-ager who:● liaises with Sales Director and marketingdepartments in setting customertargets/forecasts, which would be brokendown by product and branch or uselocation (depending on whether thesupplier is offering industrial inputs orproducts for resale through tradedistribution channels)● liaises with buyers to agree annual salesvolume forecasts, and to negotiate anyongoing supply contracts● advises on setting terms of trade for eachkey account, and then manages thebusiness to these trade terms● conducts negotiations on products(standard products or special productionruns such as customized industrialproducts or private label retail products),quantities, prices, promotions, specialoffers, etc.● implements the company’s sales andmarketing programme at the key accountlevel● negotiates special distributionrequirements● monitors key account proﬁt performanceand achieves satisfactory proﬁtcontributions from accounts● recommends key account specialpromotional activity to senior managers● reports market intelligence concerning thekey account’s own strategies andperformance, and that of competitors withthe account● follows up at individual locations of multi-branch customers to ensure programmeimplementation, ensuring that all branchlocations receive adequate directcoverage (either personally or throughother members of the sales team)● develops relationships with other keyaccount personnel inﬂuential in the buyingprocess (e.g. users, speciﬁers, budgetcontrollers, other authorizers, etc.) – thisnetworking within major accounts isnormally critical to successful businessdevelopment● liaises internally with all departments andcolleagues involved in supplying orservicing the key account● monitors performance of the key accountin terms of sales volumes, turnover,proﬁtability, usage/distribution, and anyother relevant criteria, comparingperformance with plans agreed with theaccount head ofﬁce buying team, givingbreakdowns for branches/subsidiaries,providing feedback and promotingcorrective action to counter any deviationsfrom plans.The territory manager (or salesperson)The person who most frequently provides thedirect interface with the mass of customers isthe territory salesperson, who● agrees with his or her ﬁeld sales managerthe individual customer and territoryobjectives, targets and programmes,breaking down the larger territory targetby product and customer, for eachmeasured time period or journey cycle● agrees additional business developmentobjectives for the territory or for individualcustomers to encourage growth beyondthe normal levels expected● develops a professional rapport andbusiness relationship with all buyers andinﬂuential contacts● develops his or her professional sellingskills, not just relying on relationshipselling● maintains planned call coverageRoles and functions in the sales force 9
● develops a programme ofprospecting/pioneer calling to identifynew worthwhile customers on the assignedterritory● identiﬁes new product and new prospectopportunities● maintains full and accurate customer callrecords● avoids out-of-stock situations, checkingstock in all outlets, and sells in product tosatisfy demand and offtake● achieves maximum levels of sales anddistribution in current and potential outlets● achieves optimum levels of product displayfor retailed products in all appropriateoutlets● motivates and trains customer staff topromote company brands againstcompetition, giving them guidance in anynecessary technical knowledge, andhelping them understand andcommunicate the product features andbeneﬁts● provides market intelligence feedback oncompetitive activity.The merchandiserThis role is primarily a function in consumerproduct companies, where goods are offeredfor resale through a network of retailers ortrade distributors, and where there is consid-erable competition for display space and dis-play impact on consumers who face a mass ofsimilar competing products. Typically themerchandiser, whether directly employed bythe supplier or engaged through a contractmerchandising company, will work to:● locate products and display material atkey selling spots within any productcategory (where the merchandiser canarrange this locally)● maximize display of company products inassigned retail outlets● tidy any displays, ensuring damagedproduct is not left on display● ensure products in retail outlets arecorrectly priced according to the retailoutlet’s pricing structure (and can advise astore on competitor pricing where anindividual branch manager has anyauthority to vary prices)● rotate products according to any sell bycode● support products on promotion throughconstruction of feature displays andplacement of promotional point of sale(POS) material● motivate retail outlets to re-order companyproducts as necessary to maintain stocklevels avoiding out-of-stock situations● report on competitive activity.Product promotersWhen a supplier is running certain types ofpromotional activity with trade dealers orretail customers it is sometimes appropriatefor them to place product promoters at thecustomer’s locations to communicate prod-uct features and bene ts directly to cus-tomers. These promoters can ful l a usefulrole, if suitable persons are selected andtrained, by:● promoting consumer trial through:– sampling/demonstrating products– direct customer contact– supporting promotional activity at thepoint of sale● motivating display retention throughpresence and activity● providing a direct interface between thedistribution company and the customer,reporting on attitudes, reactions, etc.● cementing relationships between thedistribution company and on or off traderetailer.Here we have only reviewed some of the typ-ical eld selling job functions within a sellingorganization. These will be supported by arange of specialist functions or departmentsto ensure that they can perform optimally,possibly including order processing, tele-sales, customer service, sales training, salesplanning, sales promotions, with additionalclerical support. There is no de nitively cor-rect sales organization, as it must be designed10 Sales Management
to re ect the needs of the company, the tradechannels, the products, and nal users/con-sumers. This will be looked at further inChapter 2.Sales management qualitiesWhile the later chapter on sales personnelselection will look in more detail at qualitiesof persons suited to selling, at this early stageit is perhaps worth a comment on some basicpersonal qualities appropriate to sales man-agers. He should be:● a good organizer and administrator, able toplan, implement and monitor sales activity● a good communicator, with colleagues,subordinates, customers and tradecontacts at all levels● decisive, thereby inspiring colleaguesand subordinates with a sense ofleadership, direction andconﬁdence● fair, objective and impartial in allocatingobjectives and dealing with business andpersonnel issues● a team leader, with that intangibleleadership quality that inspires others tofollow and take direction, with initiative toidentify and take advantage ofopportunities, and not given to panic intimes of adversity but cool-headed inworking towards corrective action.Roles and functions in the sales force 11
12 Sales ManagementA sales manager’s personal auditAs a short self-analysis exercise take a moment to assign a rating against each of thequestions listed below. This is not all-comprehensive, but will serve to alert you toyour strengths and development areas, and act as a prompt in planning self-develop-ment.Factors you are weaker on should score lower, and factors you consider your strengthsshould score high. How would your subordinate salespersons rate you on each ofthese factors? You can then either sit with your own line manager and discuss the rat-ings versus the importance of each of the factors in the job, or use your notes to assesspersonal training needs objectively.SCORE NOTESDo You 1, 2, 3, 4, 5, 6● Provide leadership?● Motivate your team?● Set goals and objectives?● Develop sales strategies and tactics?● Prepare forecasts, plans or set targets?● Develop promotional programmes?● Recruit the right people?● Provide training to meet job and individual needs?● Communicate effectively?● Measure performance?● Provide feedback?● Exercise control and discipline?● Counsel effectively?● Recognize or anticipate problems?● Exercise initiative?● Take decisions promptly?● Exercise good judgement?● Develop corrective action programmes?● Manage resources cost effectively?● Delegate effectively?● Develop organizational structures to suit thecompany business and trading environment?● Develop or cooperate with sales support functions?● Develop control systems and procedures?● Have all the necessary skills for your job?● Recognize the need for motivating rewardprogrammes?
Considerations in organizing thesales forceThe sales organization, as illustrated inFigure 2.1, should be designed to takeaccount of certain key factors, such as:● marketing strategy– marketing goals and market shareobjectives;– market segmentation and productpositioning issues;– arget market sectors;– marketing communications reaching thetarget market (prospective customersinﬂuenced by advertising andpromotion must have a means to tryand buy the product)● sales strategy– identifying and servicing tradecustomers or product users;– market coverage objectives;– sales volume/value objectives (to meetmarketing objectives)● distribution channels– needs of each level of the distribution chain;– market distribution infrastructure● product needs.2Sales structures and organizationFigure 2.1 Key factors impacting on sales force organization designSALESORGANIZATIONMarketingstrategySalesstrategyDistributionchannelsProductneeds
Developing a structureGeographical, horizontal, vertical factorsA field sales organization is normallydesigned to re ect the geographical spread ofoutlets in any market. In addition it will growboth vertically, with tiers being added, andhorizontally as development demands theintroduction of more specialized positions. Inaddition, account must be taken of tradechannel structures for the market sectorsbeing serviced by the sales teams.GeographicallySales and management responsibilities couldbe divided by geographical area (possiblybased on population locations or customerlocations), so that certain functions are pro-vided within a de ned area. Typically salesterritories are assigned on a geographicalbasis, and with some organizations a net-work of regional distribution centres is strate-gically located to service customers. In alarger sales organization sales support ser-vices might also be split geographically, e.g.with a network of regional sales trainers, orcustomer service staff with a speci c regionalresponsibility.HorizontallyFunctions are mutually exclusive as a depart-mental sub-activity, e.g. sales training, cus-tomer service, sales planning,VerticallyWithin a department, as workload growsbeyond the capacity of existing personnel,functional responsibilities are delegateddownwards, with new tiers of managementand non-management functional positionsappearing. Each new level should haveclearly defined responsibilities, objectivesand standards of performance.Trade channel structuresIn some organizations that sell products inseveral market sectors a different sales teamis developed to handle sales activity in sepa-rate trade channel market sectors withgreater specialization, e.g. in the wines andspirits trade it is common to have separatesales teams servicing the ON trade (hotels,restaurants, food service and institutionalcustomers) and OFF trade (supermarkets,liquor stores). Pharmaceutical companiescommonly develop separate sales teams tosell into pharmacies and hospitals, and tobrief doctors. Suppliers of components mighthave one sales team servicing other manufac-turers who would use the components asoriginal equipment in another nished prod-uct, and a separate team servicing the (larger)network of replacement parts dealers.Management span of controlConsideration will also have to be given tothe span of control limits of each manager tomanage, motivate, train and control salesper-sons, which is dependent on:● the nature of work being performed(skilled or unskilled)● the knowledge or experience of thepersons involved in managing or beingmanaged● the physical proximity of jobs● the similarity of content of the jobs beingmanaged● the time available and required fortraining, planning, communicating andsupervising.There is a general view that any single man-ager is limited in the number of persons he orshe can supervise directly, and in the numberof different functions he or she can manageeffectively. Typically a manager might super-vise four to six functions (sub-departments).In managing a sales team experience showsthat rst line eld sales managers (area ordistrict managers) can only supervise effec-tively between six and ten salespersons, pro-viding all the inputs to management, control,training, performance monitoring, planning,communicating, etc. While some companies14 Sales Management
will try to run with much larger teams, thenormal result is a re- ghting approach toeld sales management, with a negligiblefocus on training, and very little time beingspent with any individual. A good rule ofthumb for a eld sales manager would be tospend at least half a day to a day with eachsalesperson in his or her team each twoweeks.From this commentary we see that the sizeof a sales force will vary with the number ofmanagement tiers, and effective span of con-trol at each level. Figure 2.2 and Table 2.1illustrate how an organization might grow aslevels are added. In these examples I haveassumed that the span on control reduces thehigher the position, as the higher the level ofmanagement the more time must be given toactivities such as planning, rather than eldsalesperson management. Very large salesSales structures and organization 15Figure 2.2 Adding management tiers as the sales force grows in sizeDivisionalmanagersRegional managersArea managersField salespersonsSpan of control3–4 regional managersSpan of control4–6 area managersSpan of control6–10 salespersonsTable 2.1 Relationship between sales force size and span of controlSpan of control of ﬁrst Span of control of ﬁrst Span of control of ﬁrstline manager (area line manager (area line manger (areamanager) = 6 manager) = 8 manager) = 10Required number of ﬁeld Hierarchical Hierarchical Hierarchicalsalespersons to cover management management managementcustomer base organization required organization required organization requiredAM RM DM AM RM DM AM RM DM50 8 1 or 2 6 5100 17 3 13 2 or 3 10 2200 33 5 1 25 4 1 20 3 1300 50 8 2 38 6 or 7 2 30 5 1 or 2400 66 11 3 50 8 2 40 7 2Notes to tableAM = Area manager RM = Regional manager DM = Divisional managerIt is assumed for the calculation that the regional manager can manage six area managers, and the divisional managercan manage four regional managers.Span of control of ﬁrst Span of control of ﬁrst Span of control of ﬁrstline manager (area line manager (area line manger (areamanager) = 6 manager) = 8 manager) = 10Required number of ﬁeld Hierarchical Hierarchical Hierarchicalsalespersons to cover management management managementcustomer base organization required organization required organization required
forces are more commonly found in devel-oped markets for consumer products andsome service industries (such as insurance)rather than in industrial products, as the for-mer normally have a much greater potentialcustomer base to contact and service than doindustrial product suppliers.Other organizational considerationsThere are some other considerations in plan-ning the organization structure, includingthose listed below.● Workloads of individuals The number ofpositions at any level depends on theworkload capacity of individuals withineach functional activity in the sales force.● Functional activities It is necessary toidentify the functions requiring separatemanagement input, control anddevelopment to improve the quality andquantity of output.● Communications within the salesorganization Effective communications areessential to provide feedback, motivation,planning, recognition, and achievement ofcommon objectives through coordinatedactivities.● Flexibility The sales organization shouldbe ﬂexible enough to adapt to changingmarket conditions. Barriers to ﬂexibilityshould be avoided or removed.● Role clariﬁcation Avoid internal conﬂictand non-functioning by ensuring eachperson in the sales team is very clear onhis/her role, and avoid duplication offunctional responsibilities, assign clearresponsibilities, and promote good formaland informal communications.In a eld selling organization managementcontrol and motivation are more likely to beeffective in an environment of ‘one person,one boss’. One salesperson is normallyresponsible for all sales through an accountor, at least, of a clearly de ned product cate-gory. Various forms of functional or matrixmanagement structures that might work inthe of ce environment often result in confu-sion and under-performance if introduced toa eld selling organization. Any factor thatcan introduce confusion into the eld man-agement equation may need to be addressed.For example, companies that introduce therole of eld sales trainer, to supplement thework of the area eld sales managers, usuallynd that those trainers rapidly become awareof the need not to usurp the authority of theline managers and be seen as an ‘alternativemanager’.Some typical evolving organizationstructuresDeveloping a basic structureReaders in medium to larger companies mayhave quite substantial selling organizations,and perhaps forget how the sales organiza-tion developed from its embryonic begin-nings, when there were probably fewcustomers and products, and very few per-sonnel managed by a single sales manager,illustrated in outline in Figure 2.3.16 Sales ManagementSales and marketingmanagerFieldsalespersonDepartmentsecretarySales officemanagerFigure 2.3 A basic sales organization structure
As the sales volume increases, or the prod-uct range or product complexity grows, alarger, more sophisticated organization willbe required to handle workloads or provideadditional support functions, possibly alongthe lines illustrated in Figure 2.4. A number ofthe job functions do not have line manage-ment responsibility over eld selling opera-tions, but provide essential support. A formaljob evaluation process will need to be devel-oped at this point to fairly assess the relativevalues in terms of contribution to sales divi-sion goals and objectives, and seniority ofeach position. In this illustration, the func-tions reporting to the sales planning managerwould be quite different, but would all workin close proximity to him or her and eachother, therefore being a manageable mix offunctions.A further stage of development typicallyoccurs as sales grow to new levels, and it isfelt necessary to split sales and marketingfunctions. Workloads might also be increas-ing, product ranges further expanding, mar-ket infrastructures changing, and targetsegments becoming more defined, withgrowing product service needs. The structureadopted will vary according to the nature ofthe market, i.e. whether consumer goods,industrial goods, or consumer services orbusiness-to-business services are being pro-vided.Sales and marketingdirectorField salesmanagerSales planningmanagerMarketingmanagerArea salesmanagersProductmanagersKey accountsmanagersMarketresearchmanagerSales trainingmanagerDisplay andpromotionsmanagerCustomerservicemanagerInformationand planningmanagerFigure 2.4 A developing organization structure
Any particular organization structureshould have scope for exibility to takeaccount of and develop with environmentalchanges. For example, the buying needs andpractices of retail or industrial customersmight change (buying may be consolidated atfewer buying points within large customerorganizations), product distribution patternsmight change (e.g. the advent of a growingdirect marketing and home shopping cul-ture).The nal organization should re ect skillsof individuals and accountabilities of man-agers. For example, in Figure 2.5, the positionof sales training manager could, logically,report to the national sales manager (in thatthe outcomes of the job impact directly on hisor her responsibilities and key performanceindicators); but he or she may have neitherthe skills, time, nor be well located to managethe function on a day-to-day basis. Figure 2.5illustrates examples of geographical, hori-zontal and vertical specialization.A geographically organized sales forceAs has been mentioned, a common way toorganize a sales force is with some geograph-ical split of responsibilities, breaking thecountry into similar sized areas and territo-ries, where the size comparison might consistof population bases, number of outlets orcustomers, or the relative turnover values orpotential. Figure 2.6 illustrates a typical basicgeographical structure.Trade sector specializationIn many fast moving consumer goods andindustrial product companies more than onesales force emerges over time to serve differ-ent trade sectors with the same product range(albeit the products may be presented andpacked slightly differently to better suit eachtrade sector). The various trade sectors mayhave very different service needs, or require-ments for promotional support, and requiredifferent inputs of selling time to developbusiness optimally. Figures 2.7 and 2.8 illus-trate some example structures.An example of the same products requir-ing more than one sales force to serve differ-ent trade sectors is the wines and spiritstrade. The retail (off-trade) sector will requirea more aggressive selling style in a very com-petitive retail environment, product merchan-dising, in-store promotional displays andconsumer promotions encouraging a take-home trial, with selling activity taking placeduring normal daytime hours. But the on-trade (bars, clubs, etc.) will require a differentselling style (less aggressive, perhaps, withemphasis on relationship development withowners/managers), probably a sales team thatcalls on customers when they are open fortrade (which in many markets will not be untillate in the day or the evenings), different for-mats of promotional support during peakevening opening hours, not with major featuredisplays, but perhaps with sponsored eventsand theme nights. Other examples follow.● Food companies frequently have productssold through more than one type of outlet(e.g. supermarkets and smallerindependent general stores orconfectionery/tobacco/news stores).● Pharmaceutical companies and othersuppliers of over-the-counter remedies arefrequently supplying to pharmacies,sundry non-pharmacy outlets (such as drugstores), and to hospitals and medicalcentres, while also needing to have aspecialist team for brieﬁng the medicalprofessions (who will not be orderingpersonally for resale).● An industrial manufacturer of paintstypically would develop a separate sellingstructure to service the very different enduse markets, likely to include industrialmanufacturers of equipment that requirespainting (e.g. by dipping or spraying), theprofessional decorating trade, as well asthe home do-it-yourself market.● A manufacturer of electrical components,such as switches, connectors, plugs,sockets, etc., might have quite a variety ofpotential trade sectors to supply (seeFigure 2.8), and all might require differentservice formats, and product variations.18 Sales Management
Managing directorSales director Marketing directorNational salesmanagerOperations andplanning managerNational accountsmanagerMarket researchmanagerProduct groupmanagersRegional salesmanagersArea salesmanagersTerritorysalespersonsSales trainingmanagerNational accountexecutivesPlanning andinformationmanagerProductmanagersMarket researchexecutivePromotions anddisplay managerCustomer servicemanagerFigure 2.5 Separate sales and marketing organizations
Sales directorRegionalsalesmanagersSalestrainingmanagerNationalaccountsmanagerRegionalsalesmanagersNationalaccountsmanagerMarketresearchersProductmanagersMarketing directorSalesoperationsmanagerNational salesmanager – pharmacysectorNational salesmanager – grocery anddrug store sectorsMarketresearchmanagerGroupproductmanagersAreasalesmanagersCustomerservicemanagerKeyaccountexecutivesAreasalesmanagersKeyaccountexecutivesPlanning andinformationmanagerTerritorysalespersonsTerritorysalespersonsFigure 2.7 Organization developed to service different trade sectors
In the example shown in Figure 2.8, retailers,such as the multiple do-it-yourself chains,might prefer single unit bubble packs.Building and electrical contractors wouldwant to purchase bulk quantities with price akey selection factor. Manufacturers of otherforms of electrical products would want com-ponent inputs, for designing into their ownproducts, where the component suppliermight have to custom design a product ofspecial size or shape to meet the customer’sneeds. In addition the component manufac-turer is likely to want to promote to personswho specify components (such as architectsof public sector bodies concerned with publichousing). All this can make for a sales forcestructure with several separate sales teamswho are each specialized in a market sector,possibly with special training or experience.Also, in this example I have deliberately usedthe title sales operations manager rather thansales of ce manager, to highlight that the jobis much more than an administrative func-tion, with considerable input to planning,customer service strategy development, anddevelopment of sales promotion support.22 Sales ManagementFigure 2.8 Sales organization for a manufacturer of electrical componentsSales directorRetailsalesmanagersPublic sectorsalesmanagerBuilding tradesalesmanagerProfessionalsector salesmanager, e.g.architectsComponentusage salesmanagerSalesoperationsmanagerKeyaccountexecutivesTrade dealersalesexecutivesOrderprocessingmanagerPlanning andinformationmanagerSalesexecutivesPromotionsmanagerSalesexecutivesSalesexecutivesSalesexecutivesCustomertechnicalsupport manager
Product specializationMany companies offer more than one prod-uct range, and these might be offered to acommon customer base, or to different targetmarket users/consumers. In such situationsthere may also be a need for different salesteams to specialize in the different productgroups, even where they might overlap, call-ing on some of the same customers. In someinstances the different sales teams might callon the same corporate customers, but dealwith quite a different group of buyers orspeci ers. Figures 2.9 and 2.10 give someillustrations.● Insurance companies typically offerproducts to meet very different personalneeds, such as household insurance, lifeassurance, and pension and investmentplans. Some of these categories arefrequently promoted by professionaladvisers (who typically receive acommission for recommendations), such aslawyers and accountants, and theseadvisers will need product brieﬁngs fromspecialist salespersons.● A company selling industrial machineryand consumable materials for use with themachinery, such as print bindingmachinery and the binding materials, orshoe making machinery and shoecomponents, may also decide to split thesales force into product teams. Themachinery may be purchased by one typeof buyer supported by specialist speciﬁers,such as engineers, and the consumablesmight be purchased by another buyersupported by ﬁnished product designersand production managers. Each buyingteam will have very different objectivesand criteria for judging products they areresponsible for. The machinery buyers mayhave concerns for capital cost, operatingSales structures and organization 23Figure 2.9 Sales organization for an insurance companySales directorLife assurancesalesmanagerHouseholdinsurance salesmanagerPensions andinvestmentssales managerPrivateclient salesexecutivesProfessionaladvisers salesexecutivesRegionalsalesmanagersProfessionaladviserssalesexectutivesPrivateclient salesexecutivesAreasalesmanagersTerritorysalespersons
costs, spare part and service availabilityand support, and the sales team mayneed a level of engineering expertise. Theconsumable products buying team may beconcerned for durability of the consumableinputs in ﬁnished products, design andaesthetic factors, ease of use byproduction operatives, minimum down-timethrough consumables jamming inmachinery, etc. If the products are verytechnical, it is likely that the sales teamsmay need to be supported by technicalexperts who can survey needs or workwith engineers in specifying productmodiﬁcations, as well as supervising testsand trials and providing installationsupport. A customer service function mayneed a particular focus on after-salestechnical support.Key account managementSome of the examples illustrated show a keyaccounts selling structure, sometimes alsoreferred to as national accounts management.Some comment on the development and roleof such a sub-organization is warranted here.In many markets there is a growingconcentration of buying points, in partthrough mergers and acquisitions, and inpart through organic expansion. In retailingconcentration is found in food, furniture,electrical goods, toys, pharmaceuticals,clothing, service products such as travel andcleaning, and so on. Smaller independentretailers have often banded into voluntarybuying groups in an attempt to remaincompetitive and to buy on better terms fromsuppliers. Similar trends are found in24 Sales ManagementFigure 2.10 Sales organization for a supplier of machines and related consumablesSales directorKeyaccountexecutivesKeyaccountexecutivesTechnicalsupportengineersTechnicalsupportspecialistsOrderprocessingdepartmentTele-salesdepartmentAfter-salesservicedepartmentCustomer servicemanagerMachinery salesmanagerMaterials salesmanagerSalesinformationdepartmentSalesexecutivesSalesexecutives
manufacturing for many product categories,where mergers provide benefits fromsynergy of operations. Buying then oftenbecomes centralized, rather than each branchor subsidiary organizing its own supplypurchasing.As purchasing becomes moreconcentrated many suppliers becomeconcerned for their margins (as buyersdemand larger discounts, performancerebates, promotional and display allowancesin retailing, and so on), and for security oftheir supply contracts. But there can also bebene ts from purchasing concentration andproactive key account management, such as:● an improved ability to forecast sales asmore and better information becomesavailable● better production planning and plantutilization● improved control over supplies of inputsand inventories● more ﬂexibility and control in developingspeciﬁc sales promotions to supportongoing marketing programmes● opportunities to negotiate larger andlonger-term supply contracts● new opportunities to supplement standardproducts with products customized tocustomer needs (e.g. private labelproducts for retailers, or customizeddesign of industrial products)● concentration of key selling functions tofew highly skilled key account businessdevelopment executives, trained tonegotiate with professional buyers● a possible reduction in the size of a ﬁeldsales force, with resultant cost savings,and an opportunity to focus moremanagement time and effort ondeveloping business with the majoraccounts (nationally and internationally).Key account management thrives on mutualrespect and recognition of professionalism, inall aspects of business relations and negotiat-ing. Neither party bene ts from ignoringproblems, either in relationships or techni-cally with products or service, and both havea strong interest in satisfactory resolution ofproblems standing in the way of mutuallyprofitable business development. Theaccount manager must, above all, be an ef -cient and effective communicator, both withthe customers and internally within the sell-ing organization, with a strong ability toin uence senior managers. It is critical toselect suitable persons to ful l the job func-tions, as not all salespersons will have thepersonal and technical skills and qualities towork as equals with buyers, authorizers,speci ers and any other persons inputting tothe buying process within major accountorganizations.The size of a national accounts organiza-tion will depend on the number of majoraccounts warranting treatment as keyaccounts. Many companies nd that a fewcustomers contribute most sales turnoverand pro t, and analysis normally con rmsthe broad Pareto ndings that 80 per cent ofsales comes from 20 per cent of turnover (i.e.the 80/20 rule, or Pareto rule). Typically,when trying to assess the number of keyaccount executives needed, look at:● how many customers provide at least 50per cent of turnover, or individuallyrepresent more than one per cent of sales(then this list can be reﬁned to include thelargest and those with most potential askey accounts)● the number of subsidiaries or branchlocations that need servicing for eachaccount (as these should all be theresponsibility of a single accountmanager)● the amount of time needed for planningand performance monitoring● the expected frequency of account contact(at head ofﬁce and branches).A simple tabulation of customer sales nor-mally highlights the potential candidates forkey account treatment (see Table 2.2). If thereare different product groups or market sec-tors, the key account structure may have spe-cialists in product groups or trade sectors, asillustrated in Figure 2.11.Sales structures and organization 25
The example customer mix shown in Table2.2 shows that 50 customers of a total activebase of 845 (six per cent of customers)accounted for two-thirds of sales and pro tswith our model company! And from amongstthe top 50 there are probably at least a dozenthat should warrant special development askey accounts, since each contributes betweenone and six per cent of sales. Even from thebrief customer names we can see a mix ofsome industrial and some retail clients, as theplastic moulding company supplies mouldedparts for industry as well as a range of retailplastic house wares.It is interesting to note in this example that,while the top 50 represent a similar propor-tion of both sales and pro ts, the ranking forsales and gross margin would not be exactlythe same, and there are signi cant differencesbetween the gross margin yields from thevarious customers. Key account managementis not just about generating and managingSales structures and organization 27Table 2.2 Tabulating data to identify the key accounts (continued)Alton Plastic Mouldings Top 50 customers (domestic market)Sales rank Customer name Cum % Cumulative Sales Gross Cumulative Cum %sales sales value margin gross marginmargin48 Huntingdon Spares 65 8,556,003 6,2596 22,283 3,580,570 6249 Raschid Electronics 65 8,617,985 6,1981 34,984 3,615,554 6350 Southern Garden Centres 66 8,679,655 6,1670 26,943 3,642,497 64Top 50 totals 8,679,655 3,642,496UK totals 1996(845 active customers) 13,231,111 5,732,214Top 50 as %age of UK customers 66% 64%AVERAGES PER CUSTOMER 15,658 6784Clerical andsupportstaffNorthernindustrialusersSouthernindustrialusersNational accountsmanagerNational accountexecutives – retailbuying groupsNational accountexecutives –industrial usersFigure 2.11 An example key account sales structureAlton Plastic Mouldings Top 50 customers (domestic market)Sales rank Customer name Cum % Cumulative Sales Gross Cumulative Cum %sales sales value margin gross marginmargin
turnover, but managing the total businesspartnership of supplier and customer, with afocus on the pro tability of trading.The key account organization structure, asa sub-department of the sales division, canincorporate, as appropriate, elements ofhorizontal, vertical and geographical special-ization, with an example illustrated inFigure 2.11.Export department organizationAll of the basic principles of developing asales and marketing organization outlined inthis chapter can be applied when structuringan export organization. In some companiesexport sales operations fall under the controlof a sales or marketing director, while inlarger organizations export will often be aseparate function with its own director head-ing the organization. Readers who have aparticular interest in export marketing andmanagement are referred to the author’scompanion book The CIM Handbook of ExportMarketing (Butterworth-Heinemann), whichincludes a number of developing organiza-tion examples. Figures 2.12 and 2.13 illustratetypically how the basic principles expoundedhere might look for a company with a largerexport sales and marketing organization. InFigure 2.12 the technical services manager isshown with a dotted line linking to the28 Sales ManagementExportadministrationmanagerExport directorExportmarketingmanagerExportsalesmanagerTechnicalservicesmanagerRegionalmanager– AsiaShippingmanagerShippingclerksCustomerservicemanagerProductmanagerCustomerservice staffRegionalmanager– AfricaRegionalmanager– MiddleEastRegionalmanager– NorthAmerica &CaribbeanRegionalmanager– SouthEuropeRegionalmanager– NorthEuropeRegionalmanager– SouthAmericaDistributors Distributors Distributors Distributors Distributors Distributors DistributorsFigure 2.12 A typical export department organized geographically
export director, just to indicate that this posi-tion only functionally supports export opera-tions rather than being a direct line report(probably reporting in to the research anddevelopment or engineering director,depending on the nature of the products).Matrix organizationsSome companies have found that the tradi-tional pyramidical organizational hierarchyhas not always been effective or easy to man-age as a company grows in size, and theproduct ranges and market sectors serveddiversify. Internal politics and communica-tion blockages or barriers can result in delaysin implementation of strategies and tacticsthrough all the departments that contributeto achievement of an effective plan.Marketing and sales managers cannot man-age their own departments in isolation fromother specialist functions or production anddistribution departments.The result in some companies has been fora form of matrix management to develop, tosupervise projects and sometimes productdevelopment and management (with Figure2.14 providing an illustration). In this sce-nario the team can control planning, decisiontaking, evaluation and resource allocation, aswell as performance monitoring againstplans and objectives.Typically, within the matrix, team leader-ship would be from a department with keyinputs to contribute, such as marketing orpossibly sales. Hierarchical reporting rela-tionships would still exist, in that each teammember has line superiors who would expectreports. As any reader who has experienceof this type of matrix team has probablySales structures and organization 29Export directorExportadministrationmanagerTechnologylicensingmanagerExportmarketingmanagerExport salesmanager –inudstrialproductsTechnicalservicesmanagerExport salesmanager –consumerproductsProductmanagers –industrialproductsProductmanagers –consumerproductsRegionalmanagers –industrialproductsRegionalmanagers –consumerproductsShippingmanagerShippingclerksCustomerservicestaffCustomerservicemanagerDistributors– industrialproductsDistributors–consumerproductsAfter-salesservicesupportcentresFigure 2.13 An export organization developed to serve market sectors
Productmanager 2Marketresearcher2Financialanalyst 2Distributionlogisticsmanager 2Productionmanager 2Productdevelopmentmanager 1Salesplanningmanager(leader)Regionalmanager 2Productmanager 1(leader)Marketresearcher1Financialanalyst 1Distributionlogisticsmanager 1Productionmanager 1CustomerservicemanagerRegionalmanager 1Accountmanager 1MarketingmanagerMarketresearchmanagerOperationsand planningmanagerNationalsalesmanagerNationalaccountsmanagerFinancedirectorDistributiondirectorProductiondirectorR & DdirectorSales directorExecutivePolicyCommitteeProductGroup AMarketing directorProductGroup BFigure 2.14 A form of team matrix managementNotes:Within each department and division there is a hierarchical structure (the management pyramid), although membership of any partic-ular matrix group need not depend on seniority but upon a manager’s functional contribution to that group. If it is felt that particularfunctions need to be represented on several projects or product groups, then one functional representative might sit on several groups.Each matrix group has a clear team leader.
Sales structures and organization 31discovered, the teams can only function effec-tively where each person has clearly de nedroles and contributions, so that disfunctional-ity and confusion do not hamper progresswhile managers argue over what they viewas incursions into their sphere of operations.While, on the one hand, to internal managersit seems essential to avoid con ict and confu-sion, what can frequently be overlooked inthe melee of internal politics is the confusioncustomers experience when they do notknow who, in a company, can effectivelymanage their business and relationship.Customers who nd they are being contactedby several persons (from the same or differ-ent departments), whether on separate oroverlapping issues, will rst become con-fused but soon learn to play the supplier’sweaknesses in managing communications totheir advantage. So whether a traditionalpyramidical structure or some form ofmatrix organizational structure is preferred,lines of communication, both internallyand externally, must be clearly drawn, andthe roles and responsibilities of individualsclari ed.
32 Sales ManagementChecklist 2.1Effective organizational structuresAction pointsIs your sales organization designed to:● prepare sales forecasts, plans, budgets, sales andmarketing programmes?● increase and/or maximize distribution?● merchandise and display product optimally?● provide timely and efﬁcient distribution to all outlets?● provide ﬁeld management to sales persons or outlets?● identify and develop new stockists/consumer locations?● recruit and develop the most suitable sales personnel?● provide comprehensive initial and ongoing training to staff?● measure performance?● provide performance feedback?● communicate effectively between all levels and to all staff?● control customer credit/cash management?● provide support services to the sales staff and trade outlets?● provide comprehensive customer service?● process orders promptly and efﬁciently?● provide support and service to key accounts and customers?● provide customer after-sales service?● respond to changing market needs for products?● reﬂect customer needs in terms of distribution, producttrends, etc.?● have in-built ﬂexibility to meet changing markets andenvironments?Are the following effective and realistic for all salesteam operatives?● reporting relationships?● spans of control?● workloads?● number/mix/range of functional activities?● internal and external communications?● organizational format?● reporting procedures, administrative systems and controls?If the answer to any of these is a ‘no’ or qualiﬁed ‘yes’, there may be scope for organiza-tional modiﬁcations or improvements that might increase the productivity and effectivenessof the organization.
Part TwoDeveloping a Motivating SalesEnvironment
What is motivation?Motivation is generally seen as the process ofgetting people to work towards achievementof an objective. Management may often takea rather limited view, or perhaps selfishapproach, to motivation, seeing it only as get-ting subordinate employees to work towardsachievement of a company goal or objective,possibly achieving the current salestargets. Traditional motivational theory (e.g.Maslow’s theory, subsequently developedand modi ed by others – see later) postulatesthat individuals are motivated only whenthey see an opportunity to ful l some per-sonal need, within a hierarchy of needs thatmay change over time as some of them aresatis ed. In fact, we can then see needs asbeing positively satis ed, in that somethingis added (perhaps a new automobile, or holi-day), or negatively satis ed in that somesource of dissatisfaction is lessened orremoved (such as accomplishing a task thatstops the pressures from the manager, allow-ing the achiever a quieter life, for a while). Ifwe de ne motivation as follows, then we seethat achievement of a goal or objective thatthe company values should be accompaniedby some reciprocation that the individual val-ues (which might be as simple as praise in asales bulletin, a bonus, or positive feedbackthrough promotion).Why salespersons need motivationMany sales managers apparently expect theirsales teams to be self-motivated, rather like aperpetual motion machine or self-windingwatch. Some readers may recognize thissymptom as common amongst those salesmanagers who spend little time working inthe eld with their team. Many even com-ment that when recruiting they seek to iden-tify self-motivated individuals. Perhaps whatthey are failing to recognize is that the appar-ently ‘self-motivated’ individual is actuallyhighly motivated towards achieving his orher clearly de ned goals and objectives atthat point in time (including landing the jobon offer at the interview), and once certainobjectives are achieved, that person needsnew horizons to aim at, and new motivationsto drive achievement towards those horizons.Salespersons need constant motivation tomaintain performance and productivity tosatisfactory levels, and to present challengesthat encourage them to raise their perfor-mance and productivity to greater than satis-factory levels by offering ways that addressthe personal needs of each. The sales man-ager who, when asked how he treats his sales3Motivational management in the salesforceMotivationThis is the process of getting people toact willingly towards achieving greatersatisfaction of their personal needsthrough the achievement of companygoals and objectives.
team, comments that he treats them all thesame is missing the point. They are not all thesame, any more than two children in a familyhave the same behavioural and motivationalpattern. Individual difference in motivationmust be identi ed, recognized and addressedif team performance is to be improved. Itwould be fairer to talk of treating all mem-bers of the sales team equally, that is byaddressing equally each person’s balance ofneeds.Motivational factorsTo maintain and improve performance andproductivity becomes a full-time job formany supervisors and managers within theirteams. This is particularly likely to be the casewhere managers fail to understand and applysome basic principles of motivation. Whilethis is the subject of many specialized texts,from the practical perspective there are sev-eral interesting approaches that readily trans-late into a sales environment. They have allbeen tested over the years, each having somevalidity in various circumstances. However,most of the attempts to verify motivation theo-ries are based on tests in western cultures, andeven within these there are found to be varia-tions in cultural response to efforts to motivateimproved performance and productivity.Hierarchy of needs theoryThis approach to understanding motivation(initially propagated by Maslow, see Figure3.2) recognized ve main types of needs:● physiological needs, addressing the basicsurvival requirements of the individual(e.g. food, health, security)● safety needs, addressing the need forphysical and emotional security● social needs, such as the need to belongand to be accepted within social groups,to give and receive affection● need for esteem, both internal esteem (self-respect, achievement) and external esteem(status, recognition, public attention)● self-actualization needs, those higher-levelneeds relating to self-achievement and self-fulﬁlment.Primary physiological and safety needs in themain are more easily met in developed36 Sales Management$$$$$Need EffortRewardFigure 3.1 A simple motivational model
nations, as an employer is providing a job,income and range of bene ts that addressthese needs, usually satisfying basic comfortand survival needs through:● security of employment● basic salary meeting ﬁnancialcommitments● earnings protection during periods ofsickness● pensions to provide for post-retirementincome● sickness and life assurance cover● safe working environments.Goal setting theoryThis approach to management and motiva-tion has gained many supporters amongstpractising managers. It postulates that settingand agreeing speci c and dif cult goals willlead to higher performance. Goals tell peoplewhat effort they can expect to have to expendto achieve it, and, if broken down, whatactions they need to take. Gaining acceptanceof, and commitment to, a goal presupposesthe individual sees it as realistic and achiev-able. Self-set goals typically have moreimpact on individual behaviour, particularlywhere the goals are made public within ateam.While on the one hand easier goals aremore likely to nd acceptance with manyemployees, once a harder goal is acceptedeffort towards achieving it normallyincreases until it is achieved, lowered orabandoned. While it is also recognized thatfeedback on progress towards a goal isimportant, it is also recognized that self-gen-erated feedback is a more powerful motivatorthan external feedback.Goal setting also assumes that:● individuals can inﬂuence outcomes● individuals have the independence topursue options● challenging goals will be accepted● performance is seen as important in thework and cultural environment.Managers who travel internationally willrealize that this goal setting approach tomotivation is less effective in some cultures,particularly where:Motivational management in the sales force 37PhysiologicalSafetySocialEsteemSelf-actualizationFigure 3.2 The traditional model of a hierarchy of needs
● employees are adverse to taking risks● employees have little independence, andpossibly have little involvement in activemanagement and decision-makingprocesses● personal performance is not such a drivingforce in motivation.Equity theoryThis theory will, again, be recognized bymanagers who are familiar with situationsthe theory depicts. It recognizes that individ-uals in a work environment will be con-cerned not just with the absolute levels ofrewards from a job, but also with theirrewards relative to those received by othersin appropriate reference groups, such as col-leagues doing similar jobs. It assumes thenthat they are likely to seek to eliminate whatthey judge to be inequities. It is this desire toremove inequities that provides scope formotivation towards increased productivityand performance.Individual employees have four main ref-erence options (illustrated in the table follow-ing) in making equity comparisons.Internal self Experiences of an employeein different positions in thecurrent company organiza-tionExternal self Experiences of an employeein or with different positionsin other (former employer)company organizationsInternal others Comparisons by an em-ployee with other indi-viduals or groups withinthe current companyorganizationExternal others Comparisons by an em-ployee with other indi-viduals or groups out-side the current companyorganizationEmployees do make frequent comparisonswith colleagues, friends and neighbours, andform views about their relative income andvalue. How they judge themselves in relationto other reference groups or individuals isconsidered within equity theory to affecttheir motivation and behaviour. Whenmaking comparisons individuals do tend toconsider the variables of sex (most menfavour comparisons with other males, mostwomen favour comparisons with otherwomen), length of service with an employer,seniority within the organization, and educa-tion or training that will give a measure ofcomparative suitability or professionalism inthe job.Where any individual employee judgesthat he or she is in an inequitable relationshipto others in reference groups, then possiblecourses of action include:● reducing effort and input to the job,thereby balancing their perception of theirrelative equity (rewards) with their inputs● increasing effort and input, trying to raisetheir equity to a higher levelcommensurate with that of referencegroups or individuals● justifying the inequity with particularreference groups by looking for otherreference groups where there would notbe such an imbalance (i.e. instead ofmaking comparisons with colleagues in,say, the private sector, makingcomparisons with persons employed inpublic service)● distorting perceptions of themselves andtheir contributions, self-justifying positions(such as developing a view that they areindispensable in a role, or that they workharder than others)● distorting perceptions of others they havedrawn relative reward comparisons with,such as by claiming they have no interestin the job functions or responsibilities ofsome of those who they considerinequitably rewarded in relation tothemselves● quitting the job and going to look foranother that appears to offer a betterequity relationship with reference groups.38 Sales Management
McClelland’s achievement – power –afﬁliation theoryThis theory postulates three key needs of:● achievement: the individual’s striving toperform to a high level, excelling inrelation to standards and colleagues● power: the desire for power and controlover other persons, inﬂuencing theiractivities and behaviour, the desire tomake an impact● afﬁliation: the desire to build close andharmonious relationships.Within the scope of this theory it has beenrecognized that in a business organizationenvironment high achievers tend to be peo-ple who have stronger needs for achievementand power, and who prefer to tackle tasks orprojects where they have a reasonable chanceof success, but which are also not too simpleto accomplish. They like responsibility, goodfeedback, and a moderate (preferably mea-surable) level of risk. Typically they wouldlike successful outcomes to be the result oftheir inputs rather than as a result of uncon-trollable external factors.High achievement does not necessarilyequate to a good management style, as highachievers are often more self-centred inpursuing achievement. The good managertends to be stronger in the power drivearea, with less concern to develop closeaf liations.Expectancy theoryAnother motivational theory that has gainedcredibility is Vroom’s expectancy theory.This proposes that the strength of anemployee’s inclination to act in certain (pre-dictable) ways will depend on his or herexpectation that the act will be followed by apredictable result (outcome or reward) andthe attractiveness of that to the individual.The desired outcome or reward might be tobene t from a good performance appraisal,move up the promotion ladder, receive a payincrease or bonus. It is implicit that therewards will satisfy an employee’s personalgoals. Figure 3.3 illustrates how expectancytheory is seen to work. Readers may note thatthis is a development of the most basic moti-vational model illustrated earlier in Figure3.1. Managers must understand the goals ofindividual employees, and show howimproved performance resulting from indi-vidual effort leads to company rewards, lead-ing on to satisfaction of personal goals.The expectancy theory offers some insightsinto why some employees might appear notto be motivated to increase productivity orimprove performance. They may be askingthemselves a number of questions, such as:● ‘Is the reward worth the effort?’● ’Will the performance improvements justifythe effort?’● ’Will the effort and performanceimprovements give me extra recognitionthrough appraisals?’● ’If my appraisal rating improves, will itlead to promotion or new responsibilities Ivalue?’● ’Will all my extra effort and performanceimprovements increase my job security?’As this section illustrates, there is quite arange of traditional and more contemporarytheories concerning motivation. They allhave merit, and the practising manager prob-ably adopts a number of them. In a sales con-text the sales manager concerned to improveperformance must ensure that:● there are no obstacles that can prevent thesalesperson increasing effort or improvingperformance (while the sales managercannot control external limiting factors, heshould ensure internal factors areaddressed; e.g. if there are production orsupply limitations these will work againstimproving sales through extra effort)● appropriate resources are made availableto assist the salesperson.Motivational management in the sales force 39
Practical motivationFrom the practical perspective the startingpoint in looking at motivation of a sales teammight be considered as looking at issues ofjob dissatisfaction and satisfaction. This, asthe reader will recall, is basically looking atthe motivation-hygiene theory as it appliesto the sales environment. Ideally factors thatcause demotivation should be neutralized orotherwise tackled if they are seen to detractfrom efforts to input positive motivation.Then we can move forward with a frame-work for practical positive motivation.Job satisfactionEvery job will include a number of interest-ing (motivating) and uninteresting (demoti-vating) factors, and each individualperforming job functions is likely to have dif-ferent views on which factors fall into eachcategory. To maximize individual and teamproductivity, and continuously improve per-formance, managers must develop job con-tent and provide an environment seen byeach salesperson as motivating and reward-ing in terms of each of their collection of per-sonal drives and needs. As a starting point topositive motivation we must analyse the jobfunctions, activities and working environ-ments, and establish the typical motivatingand demotivating factors.DemotivatorsDemotivating factors should be eliminated orneutralized before motivation can begin.Figure 3.4 highlights a range of typical demo-tivators, which can most frequently can becategorized under the headings of:● job uncertainties● job imbalances● inadequate management● inadequate working environment● poor compensation● poor prospects.40 Sales ManagementAchievementagainstpersonalgoalsRewardsfromcompanyIndividualsperformanceIndividualspersonaleffortRelationshipeffortversusperformanceRelationshiprewardsversusgoalsRelationshipperformanceversusrewardThe individualsperception that a giveneffort will produce thedesired performanceStrength of individualsexpectation that a certainperformance will producedesired rewardsThe extent to whichorganizational rewards enablethe individual to satisfypersonal goalsFigure 3.3 Expectancy theory
Motivational management in the sales force 41Causes of demotivation● Insecurity of tenure● Ill-deﬁned roles and responsibilities● Poor training● Absence of performance standards● Poor equipment● Poor location● Poor work relations● Limited internal promotionopportunities● Limited opportunities to increaseknowledge or skills or experiencePoor prospectsInadequate working environmentJob uncertainties● Personal qualiﬁcations (over- orunder-qualiﬁed for job)● Incorrect job assignment(mismatched skills to jobs)● Limited self-developmentopportunities● Poor job content variety● Limited management skills andexperience (poor skill credibility)● Poor management control● Manager’s prejudices● Lack of recognition or appraisalsystems● Inadequate communications● Inadequate company personneldevelopment programmes● Uncompetitive income and incentiverewards● Inequitable rewards and incentiveprogrammes for similar job functionsand responsibilities● Absence of merit reward recognition● Uncompetitive fringe beneﬁts● Feelings of being under-valuedPoor compensationInadequate managementJob imbalances➩➩➩➩➩➩Figure 3.4 Typical demotivators in the working environment
The sales manager should constantly beaware of any signs that there are problems inthe motivational aspects of his salesteam. Frequent signs of demotivationinclude:● increased absence● higher incidence of sickness● complaints about demotivating factors● deteriorating performance● requests for transfers● active job hunting● increased staff turnover● non-compliance with administrativeprocedures● increased cynicism (at meetings).In addition there are a host of attitudinal indi-cations through changed or modi ed behav-iour the manager might spot.It is a useful management exercise (some-times monitored by a human resourcedepartment) to record and plot demotiva-tional indicators that can be quantifiablymeasured (such as absence, sickness, staffturnover). These might be graphed, and vari-ations from levels considered normal can behighlighted for further investigation ofroot causes as a precursor to correctiveaction.MotivatorsNow that we have identi ed a range ofpotential demotivators, some of which can belabelled as hygiene factors, a basic practicalapproach to motivation of the salesperson isto focus on providing:● an understanding of what is expected ofhim or her● conﬁdence that he or she has the skills todo the job● training● feedback on company and personalperformance● security in the job● pride in the company and job● a good working environment● fair reward.We will build on these in the next section.A framework for practical motivationBefore the sales manager can start to moti-vate a salesperson to achieve anything, thesalesperson must know what is expected ofhim or her. The table following highlightssome things the sales manager can address indeveloping a motivational selling environ-ment. Then the sales manager can work atmotivation by recognizing the major motiva-tional drives within each salesperson (seeTable 3.1), and working to help the salesper-son increase the satisfaction of his or hermain motivational drives.42 Sales ManagementTackling demotivation● If morale and motivation areweakening, search out the rootcauses.● Find the cause before treating thesymptoms.● Be brutal in self-analysis andrecognition of your own role indemotivation – work with othermembers of your management teamto resolve problems
Motivational management in the sales force 43Promoting a motivational environmentClarify the job ● Clarify the job content and responsibilities of the jobs inyour team, preparing and issuing job descriptions.Recruit only quali ed ● Develop a job holder proﬁle modelled on successfulpersonnel ● performers, and recruit against objective criteria ofskills, personal characteristics and experience.Provide thorough initial ● Avoid inadequate performance, frustration, or demoti-and ongoing skills ● vation through inadequate skills.training ● Provide induction training and company orientation.● Provide job-speciﬁc training on an initial and ongoingbasis.Establish goals and ● Agree goals and objectives with each team member.objectives ● Clarify the relationship between individuals’ goals,objectives and standards, and company objectives.Set standards of ● Identify key performance indicators from the jobperformance ● description and set standards of performance againstwhich the salesperson can personally measure perfor-mance.Set speci c targets or ● Establish periodic quantiﬁed sales targets that are seenquotas as motivational ● as realistic and achievable by the salespersons involved.tools and performance ● Provide the sales tools (information, sales leads, salesmeasures ● aids and literature, etc.) that facilitate achieving the tar-gets.● Work to time spans, with relevant feedback and relatedrewards, that are long enough to allow achievement,but short enough to generate momentum behind pursu-ing the target. For example, in retail selling, where salesactivity is immediate after a customer enters thepremises, targets might be established on a daily andweekly basis; selling to trade customers or business-to-business customers may take longer to develop contactsand progress to a sale, so targets might be establishedfor monthly and quarterly intervals.● Provide constant performance feedback against the salestargets throughout the period to which the target applies(e.g. daily, weekly, monthly updates).Provide a motivational ● Ensure that the basic rewards package is competitiverewards and bene ts ● and reﬂective of skills required and effort demanded topackage ● achieve the desired results.● Ensure sales incentives (commissions, bonuses, etc.)reﬂect opportunity to achieve sales in relation to effortand skill expended. There is a high risk that if high ‘ontarget earnings’ quoted in recruitment advertisementsprove to be elusive to those persons making a concertedeffort to generate sales, then the incentive package
44 Sales Managementloses credibility, and is demotivational not motivational(usually with a high sales team turnover).● Ensure that the basic rewards package is competitive,reﬂecting skills required and effort demanded to achievethe desired results.● Ensure sales incentives (commissions, bonuses, etc.)reﬂect opportunity to achieve sales in relation to effortand skill expended.Demonstrate ef cient and ● Recruit and train managers who have the qualiﬁca-effective management ● tions, skills and experience to provide leadership, train-ing and motivation.Establish sales controls ● Ensure that controls (continuous and warning controls)geared to the key ● are in place to measure and monitor sales activity andperformance indiscators of ● performance.sales performanceCommunicate information ● Ensure that the salesperson has all technical informationto perform the job.● Ensure all company policies, goals and objectives arecommunicated to each salesperson and that they under-stand how their personal goals and objectives interre-late.Develop communications ● Provide periodic information newsletters or salesand contact forums ● bulletins.● Maintain frequent telephone contact with all sales teammembers.● Organize and run periodic sales meetings (such asmonthly area sales meetings, supported by an annualnational sales conference) that provide:l – information;l – a forum for exchanging experiences and ideas;l – skill development training;l – an opportunity for salespersons to network internallywith colleagues;l – motivation through collective membership of a success-ful sales team.● Develop a pattern of regular personal ﬁeld contact byensuring that ﬁeld sales managers work with all salesper-sons frequently (typically at least every two weeks), andthat more senior sales managers accompany salesper-sons with noticeable frequency.Provide regular ● Develop a system of regular feedback on aspects ofperformance feedback ● quantitative performance, such as sales targets and quo-tas, with team comparisons and league tables showingmeasurement against several criteria (so that there is lesslikelihood that one person always dominates perfor-mance leagues).
Motivational management in the sales force 45● Measurements might cover sales volumes, sales values(turnover), territory proﬁtability, new accounts opened,special promotions organized, new product listingsobtained, and so on.Provide feedback and ● Develop skill audits and identify and communicateappraisal ● training needs.● Develop a pattern of providing informal personal feed-back on skill performance, achievements, and training anddevelopment needs. This might be pro- vided as an inputwhen accompanying salespersons on customer visits, oron occasions that they visit the ofﬁce.● Develop formal performance feedback appraisals at peri-odic intervals, typically at six- or twelve-monthintervals.● Appraisals should be constructive and seen as relevantto the activities and responsibilities of each individualin the sales team, and not be seen as a ‘moan and groan’session of criticisms of personal weaknesses.● Appraisals should have a clear focus on performanceagainst standards and objectives with structured pro-posals for self-development with supportive training fromline managers.Encourage staff ● Recognize the individual needs of salespersons, anddevelopment ● provide opportunities to grow with the job.● Develop training to advance existing skills and to add newskills that stretch salespersons.Promote the use of ● Association with a company that is seen in the marketadvanced technology ● place as modern, progressive and innovative is a sourcesystems and procedures ● of motivation. Make use of technology to increase jobwhere appropriate ● satisfaction, reduce administrative burdens, free uptime for selling, etc.Involve salespersons in ● Encourage participation in sales planning and thethe planning process ● decision-making processes, gaining commitment to goal.Delegate responsibilities ● Encourage development through increased and variedwhenever possible ● responsibility, including through delegation of tasks, func-tions and projects.Recognize the individual ● Clarify to each salesperson how achieving theirsalesperson’s personal ● personal job goals and objectives, and the higher-levelmotivational needs and ● department/area/company objectives, will increasedrives ● their personal satisfaction of needs.Manage and motivate ● No two people are the same, and each salesperson hasthrough needs ● a different mix of needs priorities. The mix of needssatisfaction ● priorities will change over time, as some become more sat-isﬁed. Identify the salesperson’s priority attached to satisfy-ing each major need.
46 Sales ManagementTable 3.1 Using a motivational needs audit to recognize individual differencesMotivational needs audit SalespersonRating Notes1 to 6Prepare an audit of the needs of each team member from time totime (the priority attached to needs changes over time). Assignscores or rankings to key individual motivations.AcceptanceThe need for acceptance by family, friends, peer groups, etc.AffectionThe need for close relationships within home, social and workenvironmentsRespectThe need to receive or to show respect in home, social or workenvironmentsHarmonyPreference for order and harmony in work or socialenvironments, rather than conﬂict and disharmonyDependenceThe need for support and supervisionConsolidationA level of satisfaction with present role and status rather thanseeking changeChangeA need to diversify skills or work responsibilities and to ﬁnd newchallengesActivityA need for physical and/or intellectual activity beyond minimumjob inputsKnowledgeA desire to pursue new knowledge and experiencesAchievementA need for tangible achievements in terms of results, status,beneﬁts, recognition, knowledge, etc.RecognitionPreference for public recognition (within peer groups) rather thanobscurity.ResponsibilityThe need to have or seek responsibility rather than avoid itStatusThe need for a feeling of self-worth or recognition of statusPowerThe need for power through position or knowledgeAcquisitionThe need for additional material things beyond survival needs, andthese need not be functionalSummary DateMotivational needs audit Salesperson
Motivational management in the sales force 47The manager’s motivational roleThe sales manager is key in the motivationalprocess. He identi es the motivational driveswithin his team, and offers ways to increasesatisfaction of personal needs. The sales man-ager has a range of tools he or she can use tomotivate the sales team, including thoselisted below.● Counselling Use counselling to directmotivation to key performance indicators.Frank, honest counselling builds trust anda relationship of respect between a salesmanager and the team.● Recognition Provide a forum forrecognition for speciﬁc efforts andoutstanding results.● Praise Give sincere and timely praise as aform of personal recognition for a job welldone.● Involvement/participation Involve thesalespersons in activities beyond day-to-day routine. The more a person is involvedin a wider range of functions, particularlythose that hold an interest, the greater thecommitment to achievement of goals andobjectives.● Delegation Give authority to take speciﬁcdecisions or positive action, increasingmotivation within those salespersons whohave stronger needs for responsibility,power, personal growth, achievement,and so on.● Training Provide training in all the requisiteskills for the job, and recognize andrespond to the additional training needs ofhigh ﬂiers.● Promotion and self-development Create anenvironment where progress is possibleand promotion is recognized as on merit.Encourage personal development throughreading, study and networking withcolleagues who have other skills andexperiences to share.● Team building Develop teamwork aimed atachieving common goals and objectives.The manager’s leadership roleThe sales team will look to their sales man-ager for leadership in addition to motivation.Leadership means providing direction (par-ticularly by example), and guiding actionsand opinions. The authority that accompa-nies leadership may derive from severalsources:● election by peers to hold a position ofauthority in a group● appointment by higher-placed personswho believe they are in a position toexercise judgement about skills,experience and personal qualities, and toappoint a person to a leadership role● knowledge, where an individual has adegree of specialist knowledge on asubject that is critical to groupperformance, and can command theattention and respect of team subordinates● structure, where an organization isstructured such that it is clear which jobsare more senior to others, and whichsubordinate positions report to eachhigher management tier● personal authority, where an individualhas personal characteristics and attributesthat command attention and respect withinpeer groups (for example, exhibiting highlevels of energy, enthusiasm, leadership,inﬂuence, intelligence, integrity,determination, and so on).A manager’s claim to leadership is com-monly based on a mix of these factors.Recognition as a leader commonly comeswhen team members realize the manager canand does help them achieve their own goalsand objectives. As a leader the sales managermust:● achieve the group’s goals and objectives● maintain a team committed and motivatedto achieving the group objectives● satisfy the personal needs of individualteam members through achieving the
group’s goals and objective● lead in a fashion that motivates staffthrough their personal commitment● be seen by staff as decisive, rational andconsistent● be objective and impartial● accept full responsibility for the actions,activities and performance results of teammembers● lead by example and exhibit the higheststandards of personal integrity, reliability,dependability, loyalty, etc.● be seen as a constant source of motivationand stimulation while exhibiting highlevels of personal energy, enthusiasm,commitment and work effort.Motivation through involvement in deci-sion makingThe management style adopted may be in u-enced by the manager’s views of the abilityof team members to understand issues andmake constructive comment. Some managersbelieve that they alone have the skills andexperience to make decisions. This somewhatcynical view is unlikely to be very motiva-tional. If you, as sales manager, want yoursales team to take ownership for decisionsand their implementation then it is importantto involve them whenever appropriate inthe decision-making processes. Discussionamongst team members who have experi-ence and relevant input to make on subjectsusually produces better decisions, and activeinvolvement helps produce a more coopera-tive environment and a team committed toimplementing the decisions they participatedin making.In deciding whom to involve in the deci-sion-making process, consider:● Whose problem is it?● Have I the authority to decide and act?● Is there time to consult and communicatewith other interested persons?● Are there alternative courses of action?● Who else has information, knowledge orexperience that can contribute to anevaluation of alternatives?● Who else is being committed toinvolvement, participation, action ordecisions?● Who might beneﬁt or suffer from anycourse of action?● Who might beneﬁt from the experience ofinvolvement in management decision-making processes?In arriving at decisions within the sales teamit is often useful to check that each of thestages in Figure 3.5 is covered.48 Sales ManagementThe good manager● He sees, knows, and noteseverything going on in his depart-ment.● He controls many of the activitiesthrough his formal system ofcontinuous controls and warningindicators.● He overlooks many of the non-criticalhappenings.● He corrects through counselling andtraining, focusing on a few of thepoints that particularly inﬂuence keyperformance indicators.
Motivational management in the sales force 491Recognisetheproblem8Review forcorrectiveaction7Monitorresults6Implementaction 5Decide theactioncourse4Evaluatealternatives3Identifyalternatives2Analysethe causesFigure 3.5 The decision-making process
50 Sales ManagementChecklist 3.1DemotivatorsAction pointsCheck if potential or actual DEMOTIVATORS have beenidentiﬁed and removed or neutralized, including:Job uncertainties● insecurity of tenure● ill-deﬁned roles and responsibilities● poor training● absence of performance standardsJob imbalances● personal qualiﬁcations (over- or under-qualiﬁed)● incorrect job assignment (mismatching skills to jobs)● limited self-development opportunities● poor job content varietyInadequate management● limited management skills and experience● poor management control● managers’ prejudices● lack of recognition or appraisal systems● inadequate communications● inadequate company personnel development programmesInadequate working environment● poor equipment● poor location● poor relationsPoor compensation● uncompetitive income and incentive awards● inequitable incentive programmes● absence of merit award recognition● uncompetitive fringe beneﬁts● feelings of being under-valuedPoor prospects● limited internal promotional opportunities● limited opportunities to increase knowledge or skills orexperience
Motivational management in the sales force 51Checklist 3.2Practical motivationAction pointsHave you conducted a motivational audit covering the followingfactors?● Have job descriptions clearly identiﬁed the job functions,duties, responsibilities, and relationships?● Have goals and objectives been established?● Have standards of performance been set and agreed?● Has a needs audit analysis been prepared for each teammember?● Does each salesperson see how personal needs and goalscan be met by achieving company goals and objectives?● Do sales managers manage and motivate through needssatisfaction?● Are sales managers appropriately skilled and experienced toprovide leadership, training and motivation?● Is the motivational environment right in respect of:● correct selection of suitable job holders?● training programmes (induction and ongoing development)?● self-development opportunities?● company development?● speciﬁc , realistic and achievable targets?● fair reward and incentive programmes?● control systems and procedures geared to key performanceindicators of performance?● formal and informal communications?● performance feedback systems?● formal appraisal systems?● career development?● use of technology?In addition to the foregoing, do you, the sales manager,make use of the opportunities for:● counselling/feedback?● expressing recognition?● giving praise?● involvement/participation in planning and decision making?● delegation?● training?● promotion?● team building?
Establishing a hierarchy ofobjectivesObjectives should be set and agreed at thecompany and department level. The objec-tives for all the departments should be mutu-ally compatible between departments, and allfocused towards promoting the achievementof company objectives.Once company objectives are established,then each department should produce a planwith its own objectives. These departmentobjectives should clearly contribute to theachievement of company objectives. Withineach department its objectives should be fur-ther broken down to lower-level objectives,also demonstrably contributing to depart-ment and company objectives, for each sub-department and job function. That way eachperson is set goals and objectives within theirsphere of responsibility that contribute tooverall achievement of company objectives.Within the sales division objectives (seeFigure 4.1) should be set for:● each product● each customer● each territory or salesperson● each sales callA hierarchy of objectives for retailproductsRetail customers typically receive sales callsfrom territory salespersons, or, in theinstances of major retailers, from key accountmanagers (possibly supported by territorysalespersons making calls on branches of amultiple retailer). Objectives (see Figure 4.2)should be developed for each relevant func-tional activity within the account, and at eachlevel of your organization servicing theaccount, e.g. at the account head office,branch, and sales territory level.● Agree objectives for each sales andmarketing functional activity within the keyaccount, and at each branch, e.g.:Market share by brandOverall account volumes by brand byspeciﬁc time periodPerformance rebates – rebates related tovolume objectives/achievementsMarketing and promotional programmesspeciﬁc to account or supporting mainstream activityCooperative advertising (i.e. wheresupplier and customer contribute)Price positioning and policiesDisplay standards by brand andcategoryDistribution procedures, i.e. branchordering or central deliveriesProduct knowledge training for thecustomer’s staff.● Set objectives at each level and for eachfunction within your company salesorganization servicing the key account,e.g.:Branch distribution and orderingDisplay locations and space allocation bybrandVolume targets by brandDemonstration programmes4Sales management by objectives
54 Sales ManagementPromotional activity – localized branchprogrammes or supporting mainstreambrand marketing strategiesStock and order controlsOutlet coverage.A hierarchy of objectives for industrialproductsAs Figure 4.3 illustrates, individuals ordepartments within the industrial customeror business-to-business client organizationwill often have a quite different focus ofobjectives, depending on whether their func-tional activity is as a commercial buyer, prod-uct user or product speci er (or other form ofin uencer in the buying process). The sales-person servicing the customer must recog-nize and address these internal customerobjectives in sourcing product as well asattempting to achieve his or her own com-pany’s objectives with the customer. Thesalesperson should develop objectives foreach customer department that can use aproduct, and for each functional departmentor manager involved in the buying process,either in placing orders or in approving theproduct for use.● Develop objectives within the account’sorganization, e.g.:Purchase and usage volumesProduct trial and testing by all parties ordepartments that inﬂuence purchasedecisionsFormal reports (feedback to the accountmanager) on any trials and tests (technicaltests, productivity tests, performance tests,etc.)Product knowledge or technical training (ifnecessary)New opportunities to expand usage (suchas in other locations or departments thatcould beneﬁt from use of theproduct)Opportunities to customize products to theaccount’s speciﬁc environment or needs(binding the account to the supplier in asupply chain partnership).● Develop objectives within your owncompany organization, involving alldepartments concerned with developingproducts for, or servicing, the customer.The objectives should be speciﬁc to thatdepartment’s functional activity, e.g.:Product design or formulation/speciﬁcation to meet client needsFigure 4.2 An outline objectives hierarchy for a multiple retailerMultiple RetailCustomer AccountObjectivesSales callObjectiveSales callObjectiveSales callObjectiveSales callObjectiveSales callObjectiveSales callObjectiveBranchObjectivesKey accountmanagerTypical sales objectivesCustomer profitabilityProduct range distributionMerchandisingPromotionsPrice positioningTerritory salessupportBranchObjectivesBranchObjectives
Sales management by objectives 55Production quantities and time framesProduct demonstration, trial and testingand quality controlDistribution (availability and timeliness tomeet client needs)Product after-sales servicing (productinstallation, technical training,maintenance)Customer service (order processing,liaison, service levels)Sales contact and support (sales volumes,terms of trade, prices and proﬁt, buildingrelationships and contacts within theaccount organization).Managing to sales objectivesThe objectives set must be agreed with eachindividual charged with achieving them, andmust be accepted by him or her as:● their personal responsibility● achievable within the scope of their skills(possibly with additional training).The basic principles of establishingobjectivesMost managers are aware that, when settingand agreeing objectives, they should followthe principle that objectives should be spe-ci c, measurable, achievable, realistic andtimed (SMART). This is outlined in Table 4.1.This commonly accepted approach toestablishing objectives to motivate higherperformance and personal achievement isIndustrialproduct accountObjectivesInfluencersObjectivesUsersObjectivesBuyersObjectivesKey accountmanagerTypical sales objectivesSales targetsProduct range distribution andusageMerchandising/displayPromotionsPrice positioningCustomer profitabilityPricesProfitsTrade termsVolumesAvailabilityPerformanceProductivity in useReliability in useMaintenance/after-sales serviceTechnical/productknowledge trainingTrials/testsPerformance inuse environmentOperating costsCompatibility incurrent processes orwork environmentQuality control/reliability in useFigure 4.3 An outline objectives hierarchy for an industrial customerIncrease individual satisfaction throughachievement of personal job-relatedobjectives that make a tangible contri-bution to developing each customeraccount.
56 Sales Managementjust as applicable in sales team managementas in other aspects of a business. However, Iwould extend it to consider the importance ofensuring that all objectives must t togetherin a compatible fashion, and, above all, beagreed and communicated.A framework for managing to sales objectives● Market share by brand.● Overall volumes by brand by speciﬁc time period.● Product positioning, trial and loyalty building throughmedia campaigns.● Marketing and promotional programmes supportingmainstream activity (including brands publicityactivity).● Achieving price positioning and policies.● Display objectives standards by brand and by outlet.● Distribution targets by brand and by outlet.● Sales skill and product knowledge training.● Branch/outlet distribution and ordering (percentageincrease over base period).● Display locations and space allocation by brand (shelflayouts and product positioning, etc.).● Volume targets by brand and by outlet.● Demonstration programmes.● Promotional activity – localized branch programmes orsupporting mainstream brand marketing strategies.● Stock and order controls.● Outlet coverage.● Distribution achievements versus a base period(measured from salesperson recording on called-onoutlets or from Nielsen data).● Average sales value/volumes.● Sales value/volume levels.● Product brand listings.● Display (facings per brand).● Daily call rate.● Percentage conversion of calls to orders.● Percentage effective coverage of territory accounts eachjourney cycle, etc.● New customer prospecting.● Assign each individual involved with customer salesactivity some special projects he/she can undertaketo beneﬁt the company/area/department and personaldevelopment, e.g.: for retail products, undertaking aproject to measure the proportion of category displayspace allocated to the various major brands, andrelating that to sales volumes; or display site1. Agree objectives foreach sales and market-ing functional activitywithin the companysales and marketingteam2. Set objectives at eachlevel and for each func-tion within the sellingorganization servicingcustomers, e.g. for keyaccount managers andterritory salespersons,e.g.:3. Agree standards ofperformance for eachjob function, setting thebasic standardsexpected to be achievedwith priority to keyresult areas4. Assign businessdevelopment projects
Sales management by objectives 57●● relocations, promotions, etc. With industrial products a projectmight study the training needs of potential users at customerlocations, with a view to improving product use training.● Encourage personal development through study, takingadditional responsibility, enhancing sales skills, etc. Forexample, study on part-time courses coveringmanagement and marketing will raise their skills andvalue, and also reading professional journals or booksdealing with the product will raise expertise.● Train your subordinates to understand and support yourjob, to accept responsibility for delegated functions, andto be more effective territory managers.● Include all staff involved in servicing accounts in regularplanning and feedback meetings.5. Personal development6. Management training7. Promote team buildingTable 4.1 Establishing objectivesObjectives must be: S-M-A-R-TSpeciﬁc Set detailed numberse.g.10% increase on last year’s turnover£15000 increase in sales turnover monthly2 new accounts per territory per week, etc.Measurable Measure by quantitative not qualitative criteriae.g.Number of customers covered is measurable; service quality is subjectiveexcept through reduced incidence of complaints or customer waiting time.Achievable Can be achieved within the time framee.g.To aim to double turnover in the time period without changing any other fac-tors might be unachievable: to double turnover through increased sales activ-ity, coverage, extra staff and better training might be achievable.Realistic Reasonable for the salesperson’s territory or customerse.g.Based upon historical performance or sound assessments of potential.Timed To be achieved within a prescribed time periode.g.Increase sales by 15% versus same quarter last year.Increase the average order value by 2 cases within 3 months.Objectives must be: S-M-A-R-TSpeciﬁc Set detailed numbersMeasurable Measure by quantitative not qualitative criteriaAchievable Can be achieved within the time frameRealistic Reasonable for the salesperson’s territory or customersTimed To be achieved within a prescribed time period
58 Sales ManagementSome information inputs for setting sales objectives● Review supplier’s previous years’ sales performancewith customers.● Consider customers’ expenditure on the product cate-gory.● Allow for sales area factors (e.g. boundary changes orreallocation of sales responsibilities).● Allow for changing market conditions, customer or con-sumer locations, local economic conditions, or other rel-evant demographic factors.● Use knowledge of customer activity and policies.● Consider customers’ growth and shares in their marketsectors.● Consider customers’ future policies in respect of theproduct category.● Consider market trends (growth or decline) in the prod-uct categories.● Locations, ranges, prices, promotions, quality, supplylimitations, innovations, etc.● Consider any special relationships of competitors withcustomers.● Competitors’ prices and activity.● Consumer spending (or budgets for industrial orbusiness-to-business customers).● Consider trends in the product categories.● Consider impact of economic factors (inﬂation, incometrends, employment levels, credit availability, industrialoutput trends, etc.).● Supplier sales activity may be limited by capacity orstock availability.● Consider new product developments coming on streamduring the plan period and their impact on otherproducts in the supplier’s portfolio.● Consider supplier advertising and promotion activityand budgets, etc.● Set and agree sales objectives by product, customer,and salesperson.● Develop strategies and tactics to achieve objectives.● Periodically evaluate performance against objectives,and provide feedback.● Re-plan or modify strategies/tactics as necessary.Historical customerperformance dataAssessment of salesarea and customer potentialRecognition of competitoractivityKnowledge of market con-ditionsKnowledge of companyproduction capabilities andstock availabilityCompany’s new marketinginitiativesACTION
Sales management by objectives 59Typical focus of sales objectivesMost sales objectives fall into the classi ca-tions of:● higher sales volume● improved proﬁtability from sales activity● cost control and/or cost reduction withinthe sales organization.Table 4.2 illustrates strategic or tacticalactions (right column) that the sales team canaddress to produce improvement against thekey focus of objectives (left column).The sales manager should develop anobjective planning form, where each sales-person records his or her objectives againstthose areas of sales activity that are key toimproving sales performance for the com-pany. There is no single format for an objec-tive planning form, but Table 4.3 illustratesan example. Table 4.4 illustrates some oppor-tunities for salespersons to impact on keyresult areas.Table 4.2 Strategic and tactical factors addressing key sales objectivesSales objectives with customer accountsFocus of sales Some strategic/tactical areasIncrease sales ● Improve company inventory controlvolume ● Increase company production capability● Improve company production planning● Improve distribution efﬁciency● Expand marketing resources● Expand product range available for sale● Expand number of market outlets in customer base● – Locate and qualify more potential customers● Expand outlet coverage● – Increase call frequency● Increase focus on key account development● Expand market sales promotional activity● Improve trade service levels● Expand sales force resources● Expand number of wholesale distributors● Improve wholesaler/retailer training● Increase minimum order requirements● Improve customer stock and order controls● Expand product range stocked or used by customers● Improve merchandising support and attention to spacemanagement issues (for retail products)● Increase promotional support for trade stockists or direct users(where promotions inﬂuence volume)● Adjust trade and retail pricing to boost volume● Improve after-sales service offered by trade stockists● Improve trade channel product knowledge through training staff ofcustomers● Improve technical support for customer product trials and ongoingproduct usageSales objectives with customer accountsFocus of sales Some strategic/tactical areasobjectives
60 Sales ManagementTable 4.2 Strategic and tactical factors addressing key sales objectives (continued)Sales objectives with customer accountsFocus of sales Some strategic/tactical areasIncrease proﬁts ● Increase sales (see above)● – number of wholesale distributors● – number of outlets● – new listings for existing products● – listing for new products● Increase product prices● Vary product portfolio mix in relation to price and product proﬁtability● Develop new higher valued added products, provding opportunitiesto increase margins● Improve cash ﬂow through tighter management to trade terms● Control company costs, e.g. through:● – reduced sales organization costs (see below)● – reduced input costs● – improved productivity● – improved supply chain management● – improved quality of inputs● – reduced input usage in ﬁnished products● – reduced materials and resource wastage● – improved expenditure controls● – improved distribution efﬁciency● – limiting number of delivery points● – increasing delivery drop size● – improved human resource productivity● – reduced inventories of raw materials and ﬁnished productsReduce sales ● Increase sales team productivityforce costs ● – increase call rate● – increase time available for selling (i.e. reduce administration orimprove use of technology)● Reduce sundry selling expenses● Reduce size of sales organization● – discontinue calls on small or unproﬁtable customers● – increase salesperson/territory workloads● – develop alternative means of communicating with customers● Develop sales through third parties (wholesalers or sub-distributors)● Develop a tele-sales operation● Reduce sales promotion and marketing communication budgetsSales objectives with customer accountsFocus of sales Some strategic/tactical areasobjectives
Sales management by objectives 61Table 4.3 An example of a sales objective formUnion Packaging Machinery CompanyCustomer objective planCustomer detail: Contacts PositionName: Acme Foods Products Plc. John Williams Commercial Director (Buyer)Address: Unit 12 Gilbert Johnson Technical DirectorHighbridge Industrial Roy Yelland Production DirectorEstate Edward Lester Finance DirectorCopthorne Road Robert Atherton Managing DirectorDuddington XX1 2YYTelephone: 01234 – 987654Fax: 01234 – 987653Business: pre-packed fresh foodsSuppliers Models/year LocationUnion 1020DX 1982 Highbridge plant Offer: UPM MaxiﬂowUnion 102DX 1985 Netherton Offer: UPM Compact 1100SXAstral Starpack 80 1983 Highbridge plantAstral Starpack 80 1986 Netherton plantAstral Starpack 100 1990 Highbridge plantMishimoto Maxipack 1995 Netherton plantProductUnion Traypack 20/30 140gsm 1,150,000 m Traypack 20/30 140 gsm 750,000 mTraypack 15/25 140gsm 950,000 m Traypack 15/25 140 gsm 600,000 mTraytop 20 lid ﬁlm 140gsm 1,200,000 m Traytop 20 lid ﬁlm 140 gsm 750,000 mTraytop 15 lid ﬁlm 140gsm 1,010,000 m Traytop 15 lid ﬁlm 140 gsm 600,000 mVariﬁlm tray 20/30 140 gsm 500,000 mAstral Astraﬁlm 15/15 9 gauge trays 1,450,000 m Variﬁlm tray 15/25 120 gsm 490,000 mAstraﬁlm 15-9 gauge lidding 1,400,000 m Variﬁlm tray15/15 120 gsm 1,000,000 mVariﬁlm lid 20/30 120 gsm 500,000 mEuroﬁlmFormpack 20/20 100 gauge 1,750,000 m Variﬁlm lid 15/25 100 gsm 490,000 mFormpack 20 100 gauge 1,760,000 m Variﬁlm lid 15/15 80 gsm 1,000,000mOther objectives1. Build closer relations between Union engineering designers and technical staff and Acme Technicaland Production teams.2. Build a better supply chain relationship on consumable ﬁlm supplies, to improve Union planningand Acme stock holding.Comments1. Both Union machines in use and the earlier Astral model are nearing the ends of their economic lives.Proposals to be developed to promote our new variable speed models for production trials, with pack-age to encourage new investment now, before competitors develop presentations and gain advantage.2. Taking account of knowledge of different uses and throughputs, recommend optimum ﬂexibility with3 models.3. If machine sales are achieved, then consumption of Traypack & Traytop ﬁlm varieties will reduce,depending on timing of sales, expected here to be about mid year. Acme will switch to the newVariﬂow ﬁlm, with its advantages of greater rigidity, clarity, and resistance to punctures. There isalso an assumption for next year of 20% steal from competitive packaging ﬁlm as Acme makesgreater use of the new higher performance machines.Union Packaging Machinery CompanyCustomer objective planCustomer detail: Contacts PositionCurrent machine portfolio Opportunity/objectiveCurrent material sources Opportunity/objectiveProduct Last year usage Product Target
62 Sales ManagementTable 4.4 Some opportunities for salespersons to impact on key result areasSetting objectives in key result areasKey result area and focus of objectives Main area of impactCall coverage● Finding new productive outlets (trade stockists or users) ● Sales volumes● Improve sales journey planning, relating frequency to potential ● Costs and productivity● Reduce call frequencies without volume loss ● Costs and productivity● Increase coverage of worthwhile outlets ● Sales volumes/proﬁtDistribution● Reduce out of stocks in trade outlets or with end users ● Sales volumes and proﬁt● Increase usage at new usage points within existing customer base ● Sales volumes and proﬁt● Obtain additional product listings in existing outlets ● Sales volumes and proﬁt● Identify new target customers meeting product proﬁle criteria ● Sales volumes and proﬁt● Obtain new distribution in worthwhile outlets ● Sales volumes and proﬁt● New products sold through existing and new outlets ● Sales volumes and proﬁt● Discontinue coverage and supplies to unproﬁtable outlets ● CostsDisplay (products sold through distributive trade channels)● Promote good space management principles in the product category ● Sales volumes and proﬁt● Improved key site display positioning ● Sales volumes and proﬁt● Increase product facings and display quality on display ﬁxtures ● Sales volumes● Shift display emphasis from lower to higher margin products ● Proﬁts● Improved use of point of sale material ● Sales volumes● Improve impact of product merchandising ● Sales volumes● Negotiate promotional displays ● Sales volumesSales volumes● Set speciﬁc targets for each account and time period ● Sales volumes and proﬁt● Increase average order sizes ● Sales volumes and proﬁts● Increase re-order frequency by encouraging increased usage ● Sales volumes and proﬁts● Promotional sales and product features (e.g. displays) ● Sales volumesEfﬁciency● Improve management of key resource of TIME ● Costs and productivity● Improve expense controls ● Proﬁt● Improve journey planning* ● Costs and productivity● Reduce call frequencies without volume loss* ● Costs and productivity● Improve customer record database ● Sales productivity● Improve post-call administration and order processing efﬁciency ● Costs and productivity(*also noted under call coverage above)Self-development● Improved selling and marketing skills ● Sales volumes● Improved customer care skills ● Sales volumes● Increased product knowledge ● Sales volumes● Greater depth of understanding of customers’ businesses ● Sales volumes/proﬁts● Greater understanding of customers’ markets ● Sales volumes/proﬁtSetting objectives in key result areasKey result area and focus of objectives Main area of impact
Sales management by objectives 63Checklist 4.1Establishing a heirarchy of objectivesAction points● When planning agree objectives for each functional activitywithin the sales and marketing team, e.g.:● – Market share by brand● – Overall volumes by brand by speciﬁc time period● – Product positioning, trial and loyalty building through mediacampaigns● – Marketing and promotional programmes speciﬁc to accountsor supporting mainstream activity● – Brand price positioning and policies● – Display objectives and standards by brand● – Distribution targets by brand and by outlet● – Sales skill and product knowledge training● Agree supporting standards and objectives with othercompany departments such as:● – Marketing department● – Sales operations and support department● – Distribution departments● – Customer service departments● Set standards and objectives at each level and for eachfunction within the company’s ﬁeld selling organizationservicing the customers, e.g.:● – Outlet distribution and ordering● – Display locations and square footage by brand● – Volume targets by brand● – Demonstration programmes● – Promotional activity – localized branch programmes orsupporting mainstream brand strategies● – Stock and order controls● – Outlet coverage● Assign salespersons individual projects.● Encourage personal development through study, givingadditional responsibility, skill training, etc.● Provide continuous training to develop skills andcompetencies, and to promote an environment thatfacilitates delegation.● Promote team building through regular planning andfeedback meetings.
64 Sales ManagementChecklist 4.1 continued Action points● Divide the year into shorter sales cycles. Set speciﬁcobjectives supported by sales activity plans, e.g.:● – Marketing communications● – Sales promotions● – Sales targets● – Distribution● – Display
Developing motivational rewardsTraditionally in most markets salespersonshave a signi cant portion of earnings frombonus incentive schemes. It is important thata sales incentive scheme is designed to moti-vate increases in sales effort and productivity,and not just to be earned automatically.Sales managers should recognize that:● ﬁnancial rewards and incentives satisfyonly some of the salesperson’s personalneeds● marginal increases in productivitymotivated through ﬁnancial rewards maycost more than motivational alternatives(such as product knowledge and skilltraining, praise, recognition, promotion,feedback counselling and appraisals, andgood internal communications).Incentives should not be looked at in isola-tion, but as part of the overall rewards andbenefits compensation package used torecruit, retain and motivate the sales team,and also be considered in relation to the othernon-monetary rewards from the job andworking environment.The sales compensation programmeshould provide:● security of income sufﬁcient to meeteveryday lifestyle needs● ﬂexibility to motivate through merit andincentive schemes● a responsiveness to changes in the joband product market place.In each market environment the local salesmanager should look at a total rewardsscheme in relation to the factors in Table 5.1,i.e.:● team and individual performancestandards and objectives● individual expectations● relative values of tangible and intangiblerewards.The main options and theirsuitabilityThe selection of options you use of salary,commissions, bonuses or competitions willdepend on local practices and culture. Insome cultures people entering the sales pro-fession expect little security and basicincome, being prepared to work largely onperformance-related rewards, an approachcommonly found in some of the developingmarkets such as in Asia. In other cultures, asseen in some of the developed markets of thewest, people have high xed outgoings in theway of living expenses, and may prefer ahigher basic salary with a lower level of per-formance-related rewards. Basic salaries maytend to act more as a maintenance than amotivational factor. The rewards schemedeveloped for any market should meet the5Motivating through rewards andincentives
66 Sales Managementemployees’ needs and expectations, but mustalso meet the company’s needs (such asachieving sales volumes at set prices andmargins, and to recruit, train and retain effec-tive salespersons) and its nancial means.The main forms of alternative rewards areshown in Figure 5.1. This highlights that thesalesperson will see the immediate bene t ofsome forms of reward, but that other forms ofreward do not provide an immediate visiblebene t, only being valued when they comeinto effect to meet needs and situations.The sales manager also must consider hisor her particular motivational objectives, i.e.are incentive rewards being used to directattention to either longer- or short-termstrategic or tactical matters?Basic salary or wagesSalary is a xed reward for work done, and itmay be the only reward or linked with otherincentive schemes. It should:● be competitive with that for similarpositions in similar companies● ﬁt with company job-grading schemes thatreﬂect the differing duties and levels ofresponsibility of positions within thecompany● relate to the skills, experience andresponsibilities required of the position.Many companies prefer to keep individuals’incomes con dential, perhaps with the con-cern that publicizing information will pro-duce a distraction as individuals concernthemselves over their relative level ofrewards. Other companies take quite theopposite approach, believing that publicizingincome information provides motivation tolower earners to strive harder for the biggerrewards. An in-between approach is to pub-lish job grade scales, but not to indicatewhere any salesperson is within the scaleband.CommissionsCommissions generally take the format of astraight percentage commission on sales val-ues or pro ts, usually over the longer term. Ifcommissions are the sole form of remunera-tion, the company needs to ensure that sales-Table 5.1 Developing motivational rewards – some factors to considerFactors to consider in developing rewardsTeam and individualperformance standards andobjectives● Relative emphasis onteam and individualperformance● Ability of the individual toinﬂuence the outcome ofsales presentations● Degree of integration ofindividuals into a teamwith common goalsIndividual expectations● Industry norms● Territory or accountpotential● Job functions and tasks● Personal aspirationsRelative values of tangibleand intangible rewards● Cash now versus cashlater – personal valuationsof present job or throughpromotion● Intangible personalrewards on offer:– recognition– status– praise– achievement● Opportunities forchanging job functionsand responsibilities, e.g.promotionFactors to consider in developing rewardsTeam and individual Individual expectations Relative values of tangibleperformance standards and and intangible rewardsobjectives
Motivating through rewards and incentives 67persons can expect earnings to provide a rea-sonable standard of living for self and family,otherwise they will not stay long in the job.Many companies that reward largely orentirely by commission take the approachthat since they have no investment it does notmatter who is recruited into sales positions,and hence recruits are often unsuited to sell-ing, lacking skills, training and suitable per-sonalities.The advantage of commissions to the com-pany is that selling costs relate directly tosales values, and they are often favoured forcompanies selling into new markets. Theremay be disadvantages where all products donot produce the same gross margins, becauseREWARDSVisiblefinancialrewardsInvisiblefinancialrewardsWages/salariesOvertimeCommissionsUnsocialhourspaymentsBonuses ContestsProfit sharing StockoptionsLifeassuranceDisability andhealthassurancePensions Paid sickleavePerquisitesPetrolCarGeneralexpensesCompany paidtelephone billsFigure 5.1 A typical range of rewards and incentives
if the products most easy to sell offer lowermargins, salespersons may be boosting theirearnings while eroding company pro ts. Oneway to tackle that problem is to reward withdifferential commissions related to productprofitability. Commission schemes mayencourage salespersons to focus on estab-lished customers where the products are con-sumables, rather than devoting adequatetime to pioneer calling for new customers.Commission schemes are dif cult to struc-ture and manage for products in cyclical mar-ket sectors, or where several persons and notjust one individual are involved in develop-ing a sale to a successful conclusion.Attention must also be given to productreturns to avoid salespersons loading tradestockists to boost their commission earningsto suit their own immediate needs. Wherecommission has been paid for goods subse-quently returned, the system might allow forthis to be recovered from the salesperson.BonusesBonuses are normally a lump sum paymentmade when speci c achievements occur, i.e. acertain level of distribution or profit isachieved, or an agreed number of units issold, or a pre-set number of promotions aresold in. Bonuses might be instead of, or inaddition to, other rewards such as commis-sion and other incentives, and can be readilygeared to team efforts. Bonuses are not usu-ally a regular reward, unlike salary and com-mission, but just paid periodically inrecognition of special achievements. Wherebonuses are used to reward team effort it iscommon to create a team bonus pool, andthen allocate bonuses by some formula relat-ing to seniority or perhaps as a percentage ofbasic income. Bonuses, like commissions,should relate to a key performance indicatorof activity where the individual can clearlyaffect an outcome, such as pro tability of cus-tomers or a sales territory.ContestsContests normally offer non-cash prizes (butcash may be offered) for very speci c andmeasurable achievements for effort andresults against short-term priorities andobjectives, i.e. for the salesperson who orga-nizes the biggest supermarket display, or forthe salesperson who organizes the most on-trade promotions supporting a product, orthe person opening the most new accountsover a de ned time period. A contest wherethere can be only one winner could actuallybe counter-productive, as those salespersonswho fall behind early in the contest may sim-ply ‘tune out’ and effectively become non-contestants. A well-structured competitionwill ensure that all salespersons have anequal chance to win a prize, which may putpressure on a sales manager to develop a ter-ritory handicapping system where all salesterritories are not equal in performance andpotential.When structuring contests it may be worthconsidering the following points.● Prizes rather than cash may be moremotivating, and not produce an irregularcash earnings pattern.● Prizes of family interest often proveparticularly motivational.● Offer a range of prizes so that all eligibleparticipants feel motivated to achieve therequired performance results.● Ongoing award schemes, where pointsare accumulated by all participants,leading to the acquisition of any of arange of merchandise when redeemed,can be a good motivator.● Contests should not always be geared tothe same goals and objectives, but variedfrequently to avoid staleness.● Contests should home in on particularfunctional activities of the selling job thatimpact on key performance indicators,e.g. achieving displays or promotionalactivities, or gaining new distributionlocations.● Structure the competition to minimizeabuse (more common where certainparameters are less objectivelymeasurable): any penalty for identiﬁedabuse should be sufﬁcient to discourage it.68 Sales Management
● Competitions geared to a single objectiveoften distract from other important goalsand objectives or functional activities, andthe structuring of a competition may needto consider applying penalties for under-performing against other criteria (e.g.,minimum performance standards must bemet against basic standards ofperformance before additional activitycounts towards the competition).Stock options and proﬁt sharingIncentive schemes that offer annual pro tsharing bonuses or periodic stock options arebecoming more popular, and not just formanagement staff in companies. These tendto develop a recognition that the employeesare important stakeholders in the prosperityof the company, and can also encouragegreater loyalty.Job perquisitesManagers are commonly seen as the mainbene ciaries of job ‘perks’, but salespersonscan also bene t from quite a range of perksthat add value to the job. There are the tangi-ble bene ts of company cars and insurance,mobile telephones, laptop computers, petrolallowances (since often liberal petrolexpenses cover some or all of private drivingcosts), and so on, and intangible bene ts offreedom from close supervision, workingfrom a home base (for many salespersons).Perks can be used as part of a motivationalsystem, where, for example, there is anincrease in perks or their value in relation toperformance, e.g. a larger car as salespersonsare promoted, or where certain levels oflonger-term achievement are maintained.Some companies have exclusive ‘clubs’(e.g. a ‘President’s Club’) open only to highperformers, which encourages competition togain entry, and then to maintain theminimum qualification standard to avoidloss of face from removal of membership sta-tus.Additional holiday entitlement can also beused as a motivational reward.Sales managers should consider carefullybefore conferring bene ts where loss of thosebene ts later could be very demotivating.Incentive scheme principlesThe structuring of a motivational rewardspackage might use any or all of the formatsdiscussed here, and a seemingly endlessrange of variations on these themes. If toomany incentive programmes are running atany one time it might be confusing for sales-persons to clarify their own priorities, andthere may be some con ict between schemesaimed at short-term versus longer-termgoals. Therefore, when more than one incen-tive scheme is operating at the same time itshould be planned that they all address com-patible objectives. For example, a commis-sion scheme that gave varying commissionrelating to the profitability of customeraccounts, with a minimum level of pro trequired for eligibility for the commission,would work against an incentive schemerelating to opening new customer accounts,which would take some time to reach mini-mum pro t levels. Giving time to developingnew accounts might put at risk the mainte-nance of minimum pro ts with establishedpro t (and commission) earners. In this sortof situation the scheme could waive pro t-level requirements for new accounts, say forthe rst year.When devising a motivational incen-tive scheme adopt the following basic principles:● Ensure the scheme’s relevancy andcompatibility with established companyportfolio goals, objectives and priorities.● Base rewards on speciﬁc measurable andquantiﬁable criteria.● Required achievements should be realisticand achievable by the sales team withinany set time spans.● The timing of incentives relating tocompany products and sales activitiesshould match in with the timing andpriorities of mainstream marketing activity.Motivating through rewards and incentives 69
70 Sales Management● Base incentive awards on efforts andactivities controlled or inﬂuenced by thesalesperson or manager.● The scheme should be fair and equitableto all team members, offering rewardsrelated to individual productivity andperformance.● Schemes should not penalize individuals ifcircumstances outside their control (e.g.strikes) affect results unless all are sopenalized.● The scale and level of rewards shouldrelate to the speciﬁc potential of theterritory or accounts under thesalesperson’s direct control.● Earnings of incentives are usually betterspread evenly over a longer period, ratherthan all or nothing on a few orders.● Earnings from incentive schemes, and thetargets and objectives to which they relate,should be assessed at regular intervals tofacilitate personal planning and budgeting,and to maintain motivational momentum.● Reward, like criticism, should followquickly the activity to which it relates.● Avoid ‘all or nothing’ sales rewardschemes, as restrictive schemes where fewcan win are demotivators to the rest of thesales team.● Keep the incentive schemesimple,easy to administer,with minimum requirement of time andspecial training,and ensure it dovetails with existingsystems, procedures, priorities andprogrammes.The following checklist helps in the choice ofwhich scheme or what combination ofrewards to use.The introduction of motivational rewardand incentive schemes is no substitute forthorough training and development by linemanagers, as under-trained salespersons willnot achieve within their true potential andwill become demotivated. Also, programmesshould be designed so that they willnot impose control burdens on the salesmanagers.
Motivating through rewards and incentives 71When● Sales projects take along time to produceorders.● It is not practical toidentify the realcontribution of anyone person, and salesactivity and results area team effort.● Sales force tasks andobjectives are notrelated to directproduct sales, e.g.merchandising.● Individualsalesperson’s activityhas little direct impacton sales levels, e.g.repeat purchaseproducts.Advantages● Administrativelysimple.● Equitable rewardssystem.● Promotes and satisﬁessecurity-drivenmotivations.● Predictable incomesand sales forcebudgets.● Rewards can belinked to longer-termobjectives.● Rewards reﬂectlonger-term merit andloyalty.Disadvantages● Does not relateterritory sales costs tosales volumes.● Favours security-motivated rather thanachievement-motivatedsalespersons.● No ﬂexibility to directlonger- or shorter-termeffort to objectivesthrough the use ofincentives.● The sales force costsare relatively ﬁxedwhereas performancemay exceed or fallshort of targets setwhen budgets areprepared.● Products are notcyclical in salespattern.● For newer products orcompanies withlimited resources.● Pre-trainedexperiencedsalespersons arerecruited.● Attention is to bedevoted only to newor repeat sales ordersand not to non-sellingactivities.● Directly links salescosts to sales valuesor proﬁtability, as apercentage ﬁgure.● Differential;commission levels candirect effort to certainproducts or markets.● Motivates materiallyoriented salespersons.● Limits recruitment tosalespersons nothighly securitymotivated.● Higher sales forceturnover of less pro-ductive salespersons,possibly with higherongoing training costs.● Insecurity of individualearn-ings.● Unsuitable where it isnot feasible to identifyindividual salescontribution.● Requires adjustmentfor product returns andother creditallowances.Checklist 5.1Reward systems as motivational toolsWhatSalaryA ﬁxedform ofrewardunrelated togroup orindividualperfor-mance.CommissionA variablerewardrelatednormallyeither tosalesturnover orproﬁt
72 Sales ManagementWhen● It is difﬁcult toseparate eachindividual’scontribution to anobjective or result butwhere an incentive isconsidered anessential motivator.● For achievement oflonger-term objectives.● Results depend on theeffort of a team ofsalespersons.● To direct attention toshort-term objectivesor limited goals, or tomotivate activity andattention towardscorrective action.Advantages● Good motivator tolonger-term goals andobjectives.● Useful team incentiveprogramme.● Encourages thedevelopment of asystem to recognizeindividualcontributions to teamefforts to achieveobjectives and results(e.g. sales andproﬁts).● A good short-termmotivator to limitedgoals and objectives.● Frequently moremotivationallybeneﬁcial wheregoods rather thancash form the basis ofreward.● Acts as an ongoingmotivator where apoints or otherongoing accrualsystem for recognizingeffort andachievement isdeveloped so that allparticipants receivebeneﬁt.Disadvantages● Not ideal for short-term objectives orcorrective action.● Less easy to budget.● More complexadministratively tomeasure and controlin relation toperformance andresults.● Subjectivity may enterthe ﬁnal valuationprocess e.g. externaldisruptive factors thatimpacted onperformance.● May distract fromlonger-term objectivesand activity.● If there is one or fewwinners this acts as ademotivator to allother participants.● Generally verycomplex toadminister.● Often more open toabuse than otherincentive schemes.● Can distractmanagement unless itcan be centrallycontrolled ormanaged by externalspecialists.WhatBonusesNormallyﬁxedpre-setpaymentslinked toachievementof speciﬁcobjectives orperformancestandards.ContestsCompetitionsbetweensalespersonswhere somebut not allmay beneﬁt.
The role of appraisalsThe process of appraisal is the comparison ofindividual performance against agreed stan-dards and objectives.● Sub-standard performance should result incorrective action programmes.● Above-standard performance may result inmerit rewards, promotion or moreadvanced training and development.The appraisal system formalizes the processof the sales manager sitting with individualteam members to review performance and torecognize the needs of each team memberand his or her ability to satisfy those needsthrough the job. It is important that perfor-mance appraisals are conducted regularly,and form part of the normal sales manage-ment practices in motivating and providingfeedback to the members of the sales team.Each one of us likes to know how we aredoing in our job and whether we meet ourline managers’ expectations, how we com-pare with our colleagues, and what prospectswe might have in the company (includingadvice on our personal development needs tot us for new and bigger jobs).Sales force appraisals should normally beconducted each half-year. This is longenough for a salesperson to implementchanges in performance and behaviour fromthe previous performance appraisal, but nottoo wide a gap where the appraisal systemloses its impact and role in the ongoing pro-vision of feedback and performanceimprovement. The formal appraisals shouldbe supplemented with very regular informalfeedback, so that whatever is to be communi-cated in the formal appraisal feedback doesnot come as a surprise, but more as a sum-mary.If periodic formal appraisals are conductedthen sales managers should recognize thatthere will be changes in the market environ-ment during the appraisal period. Changesmay occur in:● the competitive environment● the company’s own policies and strategiesor organization● sales territory workloads, boundaries ofcustomer responsibilities● the regulatory environment for the productcategories.Many of these changes may be outside thecontrol of any individual salesperson, yetimpact on his performance against his goalsand standards. The appraiser must makeobjective judgements taking account of theimpact of any extrinsic changes on salesper-son performance and achievements.What to measure and appraiseThere are three main areas that should formpart of the salesperson’s appraisal: job per-6Providing appraisals and feedback formotivation, training and discipline
74 Sales Managementformance and achievement, personal skillsand competencies that affect performance,and subjective factors which impact on per-formance. Each of these can be broken downto a number of speci c criteria or factors thatcan be measured.Standards of performanceStandards of performance are those aspectsof job performance where there is a level ofachievement that is set as the standard. It isnot a target of what the sales manager hopesto achieve, but a measure based upon histor-ical or average levels of performance achieve-ment. The standard of performance is thelevel at which a sales person would be con-sidered a satisfactory achiever on any criteria.A salesperson who consistently failed to meetstandards that were demonstrably being metby other salespersons in the team would needspecial counselling and training to raise per-formance, and could be subject to discipli-nary action where that person continuallyfailed to raise performance to meet minimumstandards.Typically standards can be set in all or mostof the following aspects of performance:● Call rate (daily average or number madein a pre-agreed time period)● Call coverage (making customer visits to aplan ensuring all are visited at pre-setintervals)● Pioneer calling (ﬁnding new prospectivecustomers)● Conversion ratio of orders to calls● Distribution achievements (number ofcustomers stocking or using the products)● Display (for retail products, the quality ofdisplay and allocation of space)● Market share● Territory/area and customer proﬁtability● Sales value/volume targets● Distributor sales performance (whereproducts are sold through tradedistributors)● Complaints.Skills and competenciesA range of skills and competencies areneeded by a professional salesperson, withadditional skills needed by a sales manager.Typical skills needed by the salespersoninclude the following:● Professional selling and negotiatingskills● Product knowledge● Verbal communication skills● Numerical skills● Administrative skills● Organizational skills● Planning● Interpersonal (relationship building, peoplemanagement) and motivational/persuasiveskills – the ability to inﬂuence peopleIn each of these areas we can form someobjective measure of what is satisfactory,good or unsatisfactory. The sales managershould make notes on the performance ofeach of his sales team’s abilities in each ofthese areas, and any others he feels particu-larly relevant to selling in the local environ-ment. When conducting the periodicappraisal it is important to be able to givespeci c examples of what is good or unac-ceptable.Subjective factorsSubjective factors are those areas that are notdirectly concerned with actual achievementor performance, but where the factors doimpact in some tangible way on a salesper-son’s achievements or ability to perform to asatisfactory level. Because any assessmentinvolving subjective factors has no rm basein measurement, the appraisal comments onsubjective factors should carry much lessweight in an overall appraisal than the objec-tive measurements of performance andachievement. Typically appraisals will covercommentary on subjective factors includingthe following.
Providing appraisals and feedback for motivation, training and discipline 75Personal characteristicsComparisons might be made with strengthsand weaknesses of characteristics identi edin a job holder pro le, particularly drawingattention to how they impact on perfor-mance, e.g.:Enthusiasm Appearance MaturityIntegrity Persistence InitiativeReliability Resilience LoyaltySincerity Intelligence CommitmentEmpathy Adaptability Sense ofSelf-con dence Self-motivation loyaltyAttitudesThe salesperson’s attitude to the job, the com-pany, his customers and colleagues all have abearing on resultant performance, and nega-tive attitudes warrant comment just as posi-tive attitudes justify praise.Development and training needsThe appraisal should address the develop-ment needs of each salesperson to ensure thatthey have the skills to meet the demands andrequirements of the current job, and theyshould be given the opportunity to developwithin their potential to meet both futureneeds of this job and to take on new jobs andresponsibilities.PotentialThe manager should assess the potential forpromotion or assignment to new responsibil-ities within the sales force or elsewherewithin the company. Salespersons often wantto know where they stand in respect of careerdevelopment within the company, and thesales manager has a duty to communicate onthis subject while not demotivating thosepersons who may offer less developmentpotential than others in the team.Sources of appraisal informationThere are always a number of sources ofinformation on the performance of individ-ual sales managers and salespersons andtheir areas of responsibility, i.e. territories.The sales manager should keep a le of datathat provides measures of performance.Some of the typical sources of appraisal infor-mation available include:● Previous appraisal forms● Training assessment reports● Field check reports relevant to the territoryor customer accounts● Agreed objectives and standards ofperformance● Company published sales statistics ormeasurements kept by the line manager● Relevant correspondence or bulletinsnoting appraisee performance● Notes on any special activities orcontributions, or special achievements● Notes on any (good or bad) criticaloccurrences● Skill assessment reports● Feedback from customers.Guidelines for managers operatingan appraisal systemThe following summarizes the main guide-lines the sales manager should follow whenworking within a formal appraisal frame-work.● The appraiser should communicate clearly(in writing) to the salesperson at thebeginning of each appraisal periodspeciﬁc objectives and performancestandards for the appraisal period.● Objective measurements should beprovided on a regular basis to enable theappraiser and appraisee constantly toreview performance and to implementcorrective action as appropriate.
76 Sales Management● When an appraisal is due the appraisershould not review performance alone butin cooperation with another involved party(line superior), objectively appraising onmeasurable criteria, commenting onrelevant subjective factors.● Where objective and subjective factorsare involved in an appraisal, a weightingshould be applied giving predominance toobjective factors.● The appraisee should participate in his orher own appraisal, and contribute his orher own comments to achievement againststandards and objectives, on strengths andweaknesses and training needs, and onexternal factors that have impacted onperformance.The most dif cult part of an appraisal is notcompiling the assessment but communicat-ing the feedback to the appraisee. The inten-tion of counselling is to improve or modifyperformance, so it should:● let the appraisee see, understand andagree his or her actual performance inrelation to agreed standards● ensure that the appraisee learns his or hermanager’s views of his or her role andperformance● advise the appraisee what prospects he orshe might have, and how to realize thoseprospects through further development● conﬁrm and consolidate with theappraisee the ongoing mini-appraisalscommunicated at counselling and trainingsessions● increase the motivation of the appraisee toimprove his or her productivity andperformance through agreed objectivesand development programmes.The appraisee should be noti ed well inadvance of the time, place and date, and thecounselling should:● be conducted in a reasonably relaxed andinformal atmosphere, away from thenormal work environment (and not in thesalesperson’s car)● be unbroken by interruptions anddistractions● have plenty of time speciﬁcally allocatedto the appraisal so that the salespersondoes not feel rushed● be a two-way exchange of views.When the appraisal is nished the appraisershould write up notes immediately, and havethe appraisee sign as acknowledgement ofthe appraisal after adding his or her ownsummary comments.Developing an appraisal schemeThe starting point in an appraisal system is todesign a basic appraisal form that will mea-sure the performance and other key factorsaffecting performance, and provide a refer-ence document when giving feedback.There are a few basic guidelines that mighthelp a sales manager design a form (seeTable 6.1), if none already exists within acompany.● Keep the form simple in structure andformat with clear instructions oncompletion.● The form should identify key aspects ofperformance, personality and potential.● Criteria listed should be relevant to theparticular job being appraised and becapable of objective measurement.● The design should encourage consistencyin rating between different raters who arefamiliar with the job and appraisee.● The form should encourage consistency inrating between subsequent appraisals.● Rating scales should be used against keycriteria, e.g. possibly numerical or verbal(good, satisfactory, etc.), with whichever ispreferred having clearly deﬁned meaningsto all parties.
Providing appraisals and feedback for motivation, training and discipline 77Table 6.1 An example appraisal formAppraisee: Date of appraisal:Key performance Standards of Actual Rating Commentsindicators performance achievementCall rateCall coverageConversion ratioPioneer callingDistributionDisplaySales targetsMarket shareTerritory proﬁtabilityComplaintsOverall rating 1 2 3 4 5 6 7 8 9 CommentSkills and Rating CommentcompetenciesSelling skillsAdministrationOrganizationCommunicationsPlanningDecision makingTime managementInterpersonalOverall rating 1 2 3 4 5 6 7 8 9 CommentJob performance 1 2 3 4 5 6 7 8 9 CommentsummaryAppraisee: Date of appraisal:JOB PERFORMANCE
78 Sales ManagementTable 6.1 An example appraisal form (continued)SUBJECTIVE FACTORSPersonal Rating Commentcharacteristicsand attitudesInitiativeIntegrityDecisivenessAdaptabilityFlexibilityJudgementTenacityEnthusiasmReliabilityEnergyMotivationRight mental attitudeOverall rating on 1 2 3 4 5 6 7 8 9 Overall comment on subjective factorssubjective factorsPotentialTraining and developmentOverall appraisal rating Appraisee’s summary comment1 2 3 4 5 6 7 8 9Overall appraisal commentSigned: Signed appraisee:1st line manager2nd line manager DateNotes to appraisers:Ratings should be given on the 1–9 scale (1 being less than satisfactory, 9 being most satis-factory).Job performance factors should carry more weight than subjective factors.SUBJECTIVE FACTORSStrengths Development area
Giving feedback for motivation,appraisal, training and disciplineGiving effective feedback is a skill to bedeveloped by sales managers, as feedbackgiven incorrectly can be very demotivating tothe salesperson. The model shown in theFigure 6.1 provides a basic framework forgiving feedback, and is applicable inappraisal, discipline or training situations.Feedback can be either informal or formal,and the choice will depend on the nature ofthe topic to be discussed. A regular periodicappraisal would normally be better con-ducted as formal feedback, but a comment ona personal matter such as appearance wouldnormally be better presented as informalfeedback. Figure 6.2 outlines a model thathelps decide whether formal or informalfeedback is more appropriate to a situation.Formal feedback guidelinesWe can develop a basic framework for givingfeedback under three headings:● Setting the scene for the feedback session● Making a plan for change with thesalesperson● Controlling the environment in which yougive the feedback.Setting the scene● Prepare for the feedback session.● Advise the salesperson in advance of thetime, date and place and subject.● Establish your rapport with thesalesperson.● State any issue clearly, concisely and incomprehensible terms to the salesperson.● Let the salesperson see, understand andagree his/her actual performance inrelation to agreed standards.● Check that the salesperson agrees that theissue/problem or need for change exists.● Seek to develop a mutual understandingof why the issue/problem is arising.● Develop a two-way exchange ofcommunications, views, comments,opinions.● Ensure the salesperson learns your viewsof his role and performance (check byasking the salesperson to summarize).Planning for change● Obtain agreement that changes would bebeneﬁcial to the salesperson (usequestioning techniques).● Seek a commitment to work for a changein performance through modiﬁedbehaviour (plans/activities) or skillsapplication.● Conﬁrm and consolidate with thesalesperson the ongoing feedbackcommunicated at other sessions, trainingor meeting forums.● Develop a programme (with time spans) topromote change, develop skills or modifybehaviour.● Demonstrate your commitment to assist thesalesperson achieve the desired results.● Increase the salesperson’s personalmotivation to improve productivity andperformance through agreed objectivesand development programmes.● Where appropriate conﬁrm the discussionsand action plans in writing.● Monitor progress, provide regularfeedback in relation to the agreedprogramme and changes.● Develop further corrective actionprogrammes (or training) as necessary.Feedback environment● Avoid interruptions and distractions.● Allow plenty of time so that neither younor the salesperson feels pressured.● Providing informal feedback should beconducted in a relaxed informalenvironment, possibly away from thenormal work environment, but should notbe projected in a ﬂippant or sarcasticfashion.Providing appraisals and feedback for motivation, training and discipline 79
Getting a commitment to changeThe purpose of appraisal, disciplinary ortraining feedback is to promote a change,either in performance or attitudes that affectperformance. A model that helps in thisprocess is shown in Table 6.2, which breaksthe process down to the process of gettingchange, i.e. how; the steps we need to gothrough, i.e. the stages; and the results wewant to achieve, i.e. the outcome. Working tothis model will assist in arriving at satisfac-tory and lasting outcomes to feedbacksessions.80 Sales ManagementFeedback stagesThe facts The processAcceptanceUnderstandingAction• That the problem exists• It is relevant to thesalespersons functionsand responsibilities• It reduces personalperformance tosuboptimal levels• What the issue orproblem really is• Taking ownership of it(It is my problem)• Change is in his interest• The salesperson needsto make changes• He can make changes(with help)• He has support (fromsuperiors, etc.)• How he can makechanges• What type/magnitude ofchanges are needed• What his managers willdo to help make thechanges• When to take action• What type of action –making a plan• How to measureimprovement againstagreed objectives setby stages• What additional help orskills/competencies willbe needed?• Where can he acquirethese?• Can we develop acontinuous monitoring andfeedback programme?Figure 6.1 The stages in providing feedback• What the issue orproblem really is• Taking ownership of it(‘It is my problem’ )• Change is in his interest
The salesperson should leave an appraisal orfeedback meeting with a clear understanding of:● what he or she has achieved● his or her strengths and development areas● his or her potential● what is expected of him or her now(including his or her objectives for the nextappraisal period)● and the help you, his or her manager, willprovide to help the appraisee progress hisor her skills and effectiveness.Providing appraisals and feedback for motivation, training and discipline 81Feedback stylesFormal InformalPlanned Opportunistic/unscheduledSpecific in focusAction plan requiredSpecific in focusMay have inputs of two ormore partiesDevelop an action planScheduled meetingSet agendaTimely and frequentOften informalenvironmentNo of pre-set or agreedagendaRecipient relaxedData available toboth sidesClear objectivesTime spansMonitoring againstaction planPeriodic feedbackreview meetingsGive positive feedbackRaise astraightforward issueFocus on peformancerather than personalmattersDiscuss, dont dictateShow what is requiredDemonstrate yoursupportHow it can be achievedDevelop a progressmonitoring programmeFigure 6.2 The main feedback styles used by managers
An appraisal meeting should be motivationalwhile giving honest feedback. The sales man-ager will nd the appraisal progresses moresmoothly if he or she:● makes good use of questions to help takethe heat and emotions from feedbacksituations, to involve the salesperson, tohelp gain recognition and acceptance ofthe need for change, and to lead towardsperformance and/or attitude improvement● listens and actively responds to thesalesperson’s inputs and comments, asthese will provide insight to thesalesperson’s attitudes and understandingof the issues being discussed in thefeedback appraisal● is sensitive to body language,controlling his own so as not toconvey negative or judgementalfeelings, and observing thesalesperson’s body language to be alertfor positive or negative non-verbalfeedback.82 Sales ManagementTable 6.2 Using feedback to create change in behaviour and performanceObjective: commitment to changeHow● Establish rapport● Establish equality● Controlling content andstructure of meeting● Involvement in two-waydiscussion● Presenting the beneﬁts ofchange to the salesperson● Closing on anagreement/ commitment● Using the tools of thecommunications process,e.g.:● – questioning techniques● – listening● – beneﬁt selling● – negotiating principles● – body languageStaes● Present the data● State the issues● Agree interpretations● Develop a commonunderstanding of thecauses/consequences ofthe situation or issues● Sell beneﬁts ofchange/action tosalesperson● Obtain interim agreements● Summarize regularly● Identify the options toaddress thesituations/issues● Evaluate alternativesOutcome● Develop an agreed actionplan and objectives● Ensure the action plan canbe implemented by thesalesperson within hisresources and skilllimitations● Set review time spans andbenchmarks● Develop progressmonitoring and reportingcriteria● Agree the salespersons’support needs from salesmanager● Write up the programmeObjective: commitment to changeHow Stages Outcome
Providing appraisals and feedback for motivation, training and discipline 83Checklist 6.1FeedbackAction pointsFeedback stages: check that you take your feedback sessionthrough the following stages.Acceptance● That the problem exists● It is relevant to the salesperson’s functional responsibilities● It reduces performance to sub-optimal levels● The salesperson needs to make changes● The salesperson can make changes (with help)● The salesperson has his or her superior’s supportUnderstanding● The nature of the problem (causes/consequences)● The salesperson takes ownership that it is his or her problem● Change is in the salesperson’s interest● What type/magnitude of change is required● How appropriate change can be made● What help/support is availableAction● What action is to be taken● When will it start● What additional skills/training are needed● Where can the skills be obtained● How can progress be monitored● – Agreeing interim objectives/reviews● Continuous monitoring and feedbackStyle of feedback: what style is best suited to the issue andindividual?Formal● Planned● Prepared inputs by both parties● Speciﬁc in focus● Agreed action plans resulting:● – Objectives● – Time framed● – Performance monitored● – Periodic reviews
84 Sales ManagementChecklist 6.1 continued Action pointsInformal● Opportunistic● – Unscheduled● – Frequent● – No pre-agreed agenda or detailed preparation● Speciﬁc in focus● – Give positive feedback● – Raise a straightforward issue● – Discuss● – Raise performance rather than personal issues● Develop an action plan● – Show what is required● – Show how it can be achieved● – Demonstrate your support● – Provide progress reviews
Providing appraisals and feedback for motivation, training and discipline 85Checklist 6.2 AppraisalsAction pointsObjective factorsThese are measures against key performance indicators that areprimarily assessed in a quantiﬁable way.Standards of performanceMeasure against standards of performance set in keyperformance indicators for the trade outlets, e.g.:● Call rate ● Conversion ratio of orders to calls● Call coverage ● Distribution achievements● Pioneer calling ● Territory/area/customer proﬁtability● Display ● Sales value/volume targets● Market share ● Distributor/retailer sales performance● Promotional activity● ComplaintsSkillsObjective comment in appraisals should refer to the key skillareas of: Selling; Product knowledge; Verbal and othercommunications; Numerical; Administrative; Organizational;Planning; InterpersonalSubjective factorsTypically appraisals will cover commentary on subjective factorsincluding those following.Personal characteristicsComparisons might be made with strengths and weaknesses ofcharacteristics identiﬁed in a job holder proﬁle, e.g.:● Enthusiasm ● Persistence ● Self-motivation● Integrity ● Resilience ● Maturity● Reliability ● Intelligence ● Initiative● Sincerity/empathy ● Appearance ● Sense of urgency● Self-conﬁdence ● Adaptability ● Loyalty● CommitmentAttitudesComment on negative and positive attitudes to the job, company,customers and colleagues that relate to performance.Development and training needsAddress development needs so meets requirements of current job, andis given opportunity to develop to meet future needs and responsibilities.PotentialComment on potential for promotion or assignment to newresponsibilities within the sales force or elsewhere.
The role and purpose ofcommunicationsGood communications are a major source ofmotivation within a sales team – and badcommunications are a major source of com-plaint, leaving open the opportunity for poorperformance to be argued as the result of notknowing about something. The process ofcommunication is the sending and receivingof signals that should have the same meaningto the recipient salesperson as to the issuingsales manager. The signals must be meaning-ful to the sender, the sales manager, and thereceiver, the salesperson, otherwise they willnot be acted upon.Sales activity communications occurbetween:● sales manager and salesperson● salesperson and customers (whether keyaccounts or smaller customer accounts)● customers and the head ofﬁce● head ofﬁce managers and ﬁeld salesmanagers.In the sales environment a variety of meansof communicating is commonly used withinthe communication chain (see Figures 7.1 and7.2), e.g.:● verbally, such as in face-to-facediscussions, presentations, meetings● written communications, such as letters,memoranda, sales literature● pictorially, through product literature,advertisements, charts, graphs● numerically, as with sales forecasts,performance data, computer printouts● demonstrably, such as showing how toperform a task or use a product● physically, through body language andfacial expressions● attitudinally, demonstrated or expressedby any of the foregoing.Typically in first line sales managementmuch of the communication with the salesteam is on a one-to-one basis, communicatingorally or demonstrably, supported with theoccasional team (area) meeting. Senior salesmanagement and sales of ce support func-tions usually have to rely more on writtencommunications.Purpose and means of communicatingThe starting point of the communicationsprocess is for the communicator (sales man-ager) to clarify the purpose of communicat-ing. Sales communications generally relate to:7Communication in the sales force
● establishing new or existing policies of thecompany● communicating the range of programmes,plans and strategies developed within thecompany● advising on operational procedures andpractices● preceding actions, policies andprogrammes and their outcomes(feedback) or impact on the company orits environment, and relation to currentpolicies, programmes and procedures.Means of communicatingThe means of communication selected in anysituation will depend on such factors as:● the amount of time available to you, thesales manager, to achieve your objective,and the degree of urgency of the subjectmatter● the range of media available to both salesmanager and the salesperson (e.g.,telephone, electronic mail or computer,regular postal services)● the complexity of the subject matter beingcommunicated● the ease with which face-to-face contactscan be made between the sales managerand his sales team (which will beinﬂuenced by the size and geographicalspread of the sales team).Communication in the sales force 87CompanySales divisionmanagementFieldmanagementSalespersonsKey accountmanagementCustomersConsumersBulletinsMeetingsMediaLiteratureLettersFigure 7.1 A typical sales team communication chain
How to communicateCommon communication media are:● face-to-face meetings (team meetings orone-to-one meetings)● written or illustrative reports anddocuments● computers (direct computer links or viamodems using telephone lines, etc.)● telephones● telephonic data transmission services (FAX)● audio or video tapes.In most markets the main means of commu-nications are still through memoranda, bul-letins, sales meetings and telephone, andalso during eld accompaniment of salesper-sons. However, there is very rapidgrowth in computerization within eld salesteams.What to communicateAs the sales manager you have the choice inwhat to communicate, and should avoid over-burdening your team with too much informa-tion or with too many requests for information.It is also important to prioritize requests foraction, otherwise the salesperson will set hisown priorities, which may not match yoursand will normally result in easier requests oraction being undertaken rst. In consideringwhat to communicate to the sales team youshould clarify to yourself whether the contentof the communication is essential or optionalto the management of the sales operation.Essential informationA range of information that both sales man-agers and salesperson would consider essen-tial includes:88 Sales Management$$CommunicationsPictoriallyNumericallyDemonstrablyPhysicallyAttitudinallyVerballyWrittenFigure 7.2 Ways of communicating
● everything the salesperson needs to knowto perform basic job functions (e.g.product information, prices, promotions,etc.)● everything that impacts on the sales team’sability to comply with procedures orimplement programmes (e.g. instructionson administrative procedures)● anything that affects their ability toperform responsibilities and duties (e.g.information of key account productapprovals and promotional activity, orauthorization for merchandising activity,details of above the line marketingprogrammes, etc.)● information that provides feedback andmeasurement against standards ofperformance, forecasts, targets, goals andobjectives (e.g. detailed monthlyperformance feedback based on analysisof order forms and daily activity reports).Optional informationThe range of optional information that couldbe provided (possibly on a ‘need to know’basis) to members of a sales team is extensive,including anything that:● adds to the salesperson’s understanding ofthe company and its operations, or itsresults and achievements (e.g. ﬁnancialaccounts, market share data, productcosting data for account managers,developments in other markets)● improves the salesperson’s understandingof the market place (e.g. company andcompetitive brand rankings and sectorshares, data on trade channels such astheir product category shares, tradechannel and key account developments)● provides a source of training and personaldevelopment (e.g. on the use oftechnology in the company or in retailing,tips on selling, subscriptions to relevantjournals, etc.).Communications should be restricted or lim-ited where premature communication couldbe disruptive or lead to activity that mightimpact negatively on the subject of the com-munication (e.g. with new product launches,promotions, acquisitions and mergers).Whom to communicate withIt is just as possible to send out too little infor-mation as too much, or to communicate withtoo few people as too many. In consideringwhom you should be communicating with itis often useful to make a list of:● everyone who establishes a ‘need toknow’ communication content in order toperform job functions in the salesorganization (e.g. procedural practices,price changes, stock availability)● persons required to take personal actionon communications or to direct others totake action (i.e. if salespersons are tomake certain recordings on daily reportsthen departments concerned with salesstatistical preparation and analyses needto know)● persons who need access to the content ofa communication for information purposes(e.g. a personnel ofﬁcer needs to seedisciplinary notes).Do not copy communications to everyone ifthey are not needed: they serve as a source ofdistraction, and while increasing the admin-istrative burden reduce the managementtime available for planning.Keep memoranda and bulletins to a mini-mum. Every time you write a memo, askyourself: ‘Is this memo really necessary toprogress the management of the business, or is itjust distracting from the key result areas, or serv-ing as a defensive device to show I’m doing some-thing?’Style of communicationsThere are two main formats in communica-tions:● formal communications, such as in letters,memoranda, bulletins and meetings● informal communications, such as over theCommunication in the sales force 89
telephone, in casual meetings at the ofﬁce,or in kerbside discussion in the ﬁeld.Both formal and informal communicationsneed to be:● empathetic, demonstrating anunderstanding of the recipient’senvironment● sincere, in content and expression● informative, providing all the informationthe salesperson needs to fulﬁl functionseffectively● clear, in content, structure and format● concise, homing in on the key issues – getto the point● meaningful, in that the content shouldrelate to the salesperson’s (or otherrecipient’s) environment● simple, in structure and format, so thateven complex data can be grasped.In sales management poor communicationsor communication breakdowns can cost busi-ness or result in sub-standard service to cus-tomers, and communication problems mustbe identi ed and addressed.Sales bulletins and othermemorandaThe main uses of formal sales bulletins andmemoranda to salespersons are to:● issue instructions or guidelines for action,procedures, operating methods andsystems● inform of events, developments, plans,policies, programmes, targets, forecasts● provide feedback on results andachievements against objectives, forecasts,targets, standards of performance● motivate salespersons to improvedproductivity and performance● conﬁrm discussions and agreements,courses of action and projects● give recognition to achievers ofnoteworthy results.The purpose of sales bulletins is not just toconvey factual information, but usually isaimed to provide a boost to sales team moraleand motivation. It should therefore be posi-tive rather than negative (as negative or crit-ical communications are very demotivatingto recipients). Bulletins might be issued peri-odically from the national sales of ce, andalso from local eld district managers.Audio and visual (video) communicationsoffer scope for exibility and variety in com-munication media. The sales team should befamiliar with all company public relationsand advertising videos used in the market.From a practical perspective the sales man-ager should be concerned with:● who communicates with the sales force● the frequency of communications● the content of communications● how information should be presented insales bulletins, i.e. the structure.90 Sales ManagementCommunication guidelines● Where the subject of the communicationis better treated as an informal matter,and not involving any data or detail, thenit is better dealt with face to face orpossibly on the telephone (if not aboutdiscipline or serious criticism).● Where the subject of a communication isnot good news, the ﬁrst communication isbetter face to face.● Where a communication sets out policies,procedures and practices, or relates toplans, forecasts, targets, performancefeedback, standards of performance,product information, or anything thatshould be stored, etc., the communicationis better in writing.● Where the purpose of a communication isto recognize achievement, personal praisemight be supported by mention in abulletin or letter.● Avoid the arbitrary issuing of orders,instructions or information withoutsupporting explanation, otherwise there isthe risk of non-compliance (assalespersons fail to see the need for, orbeneﬁt from, compliance) or of a poorstandard of compliance.
Who communicates with the sales forceThere is a particular danger in too many per-sons making direct contact with members ofthe sales force, in that the salesperson willhave to decide whose communications to acton, and that may distract from the key sellingpriorities.Typically several departments are involvedin making direct communications, e.g.:● Customer service – copies of orderacknowledgements, delivery notes andinvoices; payments chasing; customerqueries● Marketing – requests for data andfeedback on activity; promotions andmarketing programmes● Key accounts – information on customeractivity programmes; instructions onimplementation of programme activity;requests for feedback data● Sales support departments – instructionsconcerning display materials; administrativeinstructionsCommunications other than routine copies ofdocuments concerned with order processingand payments should be controlled throughsales line management. Communicationsfrom individual persons or departmentsseeking help, information or promoting theirown issues must be avoided and minimized,otherwise the salespersons will be distractedfrom selling and take the line of least resis-tance, devoting time to actioning either com-munications from those persons who exertmost pressure, or those where the requestsare easy or interesting to action.The most ef cient means of controllingcommunications is through periodic bul-letins, issued from the sales of ce.Frequency of communicationsThe second danger of distracting the salesforce from its key selling activity is to havetoo much or too frequent communication.The frequency of issue of sales bulletins andmemoranda should be controlled to mini-mize distracting the sales team from the taskof generating business. The formal writtencommunications should be suf ciently fre-quent to serve their purposes but not so fre-quent as to over-burden the salespersons withpaperwork, information and instructions. Asa general guideline, sales of ce bulletins areusually best issued monthly, although, ofcourse, there are occasions when more fre-quent bulletins are justi ed. It is better to havematerial collected and issued centrally, say ina sales administration department, than tohave a multiplicity of individuals communi-cating with salespersons, with resultant con-fusion in content and priorities.Direct contact for feedback, training andmotivational purposes, such as by eld man-agers, is the most critical form of communi-cation and should be the most frequent.Sales bulletin contentThe length, content and structure of a salesbulletin will depend on such factors as:● its purpose (commented on previously)● complexity of the subject matter● experience and ability of recipients toassimilate data● intended impact the communication shouldhave on recipients● the environment in which it will bereceived.Typically sales bulletins communicate:● current promotional or advertising activity● key account (top customer) activity● company performance data, e.g.feedback on sales performance againstplans for latest month and year to date● introduction of new recording systems orprocedures● new product developments● changes in product speciﬁcations,packaging, etc.● notable individual achievements● competitive activity and general marketinformation● miscellaneous information.Communication in the sales force 91
Structure of sales bulletinsBefore drafting a sales bulletin or memoran-dum the sales manager should clarify in hisown mind what he wants to communicateand the purpose of the communication.● Group items with a common purposetogether in a section. All instructions oraction points, or all performance feedbackand recognition points, can be grouped inseparate identiﬁable sections.● Clearly identify the sections. Sections inbulletins, or types of memoranda, mightbe colour coded, e.g. red for action,green for information, etc.● Prioritize items for action within eachsection. Where appropriate, list actionpoints in a sequence representing theorder in which action should be taken.● Give clear guidelines on when actionshould be taken or information submitted.Ensure the recipient is clear on the natureof action to be taken. Normally salesmanagers should monitor and control thataction is taken, such as by asking forconﬁrmation that data has been suppliedto the ofﬁce, or that customers have beencontacted on promotions, etc. In somecases a summary checklist attached to thesales bulletin will help the salespersoncheck he has read and actioned points.● Provide an overview summary of mainactivity (see Table 7.1). This might includepromotions, media, and major customeractivity.It is often practical to have a ring binder withsections in which current and recent bulletinscan be led. The eld sales manager can thencheck this is up to date when accompanyingeach salesperson, and check the action andunderstanding of each section. It should notbe assumed that receipt of a communicationensures reading and action. Similar formatsto the examples in Table 7.1 and Figure 7.3can be devised to suit a business-to-businessor industrial product supplier.Audio, visual and computer mediacommunicationsWhile written and direct personal communi-cations (including on the telephone) are stillthe most common communication meansused in sales forces, some companies withspecialist products and services have devel-oped sophisticated communications usingaudio, video and computer-based communi-cations. These can be developed with clientsas a way of standardizing presentations, anddemonstrating aspects of products hard tocommunicate effectively using traditionalsales presentations and sales literature.Sales managers know the bene ts of com-municating through a variety of media tokeep interest, and involvement and motiva-tion, higher within sales teams.● Audio cassettes can supplement telephonecontact where there is no need forcomplicated data to be communicated, orto accompany a sales bulletin. They areuseful to motivate, and to communicatebroad activity guidelines. They areparticularly useful where direct personalﬁeld contact with line managers is lowerthan desirable.● Video cassettes, while substantially moreexpensive to produce, provide anexcellent medium for showing products intrial and use environments. They are alsoused most effectively to communicate acompany perspective to customers,conveying the history and heritage,innovativeness, production processes, andso on, helping a customer (andsalesperson) to relate to the supplyingcompany. They also have great scope fordevelopment as a ‘talking bulletin’ wherefrequent sales meetings are impractical.● Computers offer the scope to conveyinformation directly by modem, or by disk,where complex data needs to be availableand frequently updated and available to asales team. Complex product data andpricing formulas can often best be held ona laptop computer. Compact disks can92 Sales Management
Communication in the sales force 93CompetitiveactivityPersonalachievementsNewdevelopmentsAdministrationSalesresultsKey accountactivityPromotionsand mediaFigure 7.3 A bulletin divided into identiﬁable sections
contain complete product ranges inpictorial format, letting a buyer see eachproduct in his own ofﬁce.The modern sales manager needs trainingand experience in the use of computers in thebusiness environment, as they also offer themost effective way of maintaining contactand controlling field operations over thecoming years. Complete sales communica-tion, data transfer, customer account manage-ment and eld sales reporting packages areall available now, although generally onlyused by major corporations. The use of com-puter packages greatly reduces the need forpaperwork, and can reduce the time a salesteam must allocate to paperwork processesand reporting, with a resultant cost bene t.Everything from customer records throughpre-agreeing call objectives, and optimizingjourney planning right through to salesreporting and performance monitoring canbe managed with the use of computers.94 Sales ManagementTable 7.1 An example of a monthly activity summaryMonthly promotion activity summaryMonth: DecemberPromotionsBlue Mountain ● Blue Mountain theme nights in key on-trade (clubs, bars, etc.) outlets.Bourbon ● Bar staff incentive: £1 for 5 bottle tops.● Free bourbon tumbler with 1 litre bottle in supermarkets – off-shelf dis-playsMediaBlue Mountain ● Press campaign: Sunday Globe, Sunday News (magazines), DailyBourbon ● News (Thursdays).● TV late evening spots (talk shows)● Magazine advertisements: entertainment pages – Out On The Town,The Scene, Evening Echo (Fridays).Key account activityContinental Hypers ● Blue Mountain Bourbon off-shelf features in all A stores from 1/6 to15/6. Free Glass Offer. All point of sale material approved.Choice Supermarkets● Blue Mountain Bourbon special price reduction 50p: on-shelf featurewith display material.Supasave ● Blue Mountain Bourbon off-shelf feature in all branches 16/6 to30/6. 60p price reduction. Supasave feature cards authorized.LoCost Cash & ● Blue Mountain Bourbon case discount £2.90 all outlets 3/6 to 15/6.Carries ● Off-shelf features. Point of sale material allowed.Brady’s Breweries ● Blue Mountain Bourbon theme nights to be agreed locally by sales-person, with promoters, and lucky draw for free bottle each night;one voucher given with each purchase.● 2 for 1 Happy Hour all outlets 7/6 to 21/6. Point of sale materialsupplied.Monthly promotion activity summaryMonth: December
Communication in the sales force 95Checklist 7.1CommunicationsAction pointsWhat to communicateEssential information:● Everything the salesperson needs to know to perform basicjob functions● Impacts on the sales team’s ability to comply with proceduresor implement programmes● Affects their ability to perform responsibilities and duties● Provides feedback and measurement against standards ofperformance, forecasts, targets, goals and objectivesOptional information:● Adds to an understanding of the company and its operations● Improves the understanding of the marketplace and workingenvironment● Provides a source of personal training and developmentWhom to communicate with● Everyone who establishes a ‘need to know’ the contents of acommunication in order to perform job functions in thesales organization● Persons required to take personal action on communicationsor to direct others to take action● Persons who need access to the content of a communicationfor information purposesStyle of communication● Formal communications, such as in letters, memoranda andbulletins and meetings● Informal communications, such as over the telephone, incasual meetings at the ofﬁce, or in kerbside discussion inthe ﬁeld.● Formal and informal communications need to be: empathetic,sincere, informative, clear, concise, meaningful and simple.Communication guidelines● Avoid the arbitrary issuing of orders, instructions orinformation without supporting explanation● Face to face communication is preferable:● – where the subject of the communication is better treated asan informal matter, and not involving any data or detailwhere the subject of a communication is not good news.
96 Sales ManagementChecklist 7.1 continued Action points● Written communications are preferable:● – where a communication sets out policies, procedures andpractices, or relates to plans, forecasts, targets, performancefeedback, standards of performance, product information, oranything that should be stored, etc.● – where the purpose of a communication is to recognizeachievement, personal praise might be supported by mentionin a bulletin or letter.
Communication in the sales force 97Checklist 7.2Sales bulletins and memosAction pointsThe main uses of formal sales bulletins and memoranda tosalespersons are to:● Issue instructions or guidelines for action, procedures,operating methods and systems● Inform of events, developments, plans, policies, programmes,targets, forecasts● Provide feedback on results and achievements againstobjectives, forecasts, targets, standards of performance● Motivate salespersons to improved productivity and performance● Conﬁrm discussions and agreements, courses of action andprojects● Give recognition to achievers of noteworthy results.Bulletin content and structureThe length, content and structure of a sales bulletin will dependon such factors as:● Its purpose (commented on in previous section)● Complexity of the subject matter● Experience and ability of recipients to assimilate data● Intended impact the communication should have on recipients● The environment it will be received inTypically sales bulletins communicate:● Current promotional or advertising activity● Sales activity priorities● Key account activity● Competitive activity and general market information● Company performance data● Introduction of new recording systems or procedures● New product developments● Changes in product speciﬁcations, recipes, formulas● Notable individual achievements.
Organizing and running salesmeetingsSales meetings are usually organized period-ically, often monthly, amongst a group ofsalespersons with common interests or issuesto address, e.g. key account managers, eldsales managers, territory salespersons,under the chairmanship of their linemanager. Meetings are often planned toaddress:● performance feedback, particularlydeviations from plans● product information (range, packaging,advertising, etc.)● sales promotional activity● sales targeting● sales force procedures and operationalmatters● sales skill training.Sales conferences normally draw togetherall the various sections of the sales and mar-keting team, at a national gathering, oftenonly once per year. Often conferences aredesigned to communicate more momentousdevelopments than might be covered at localsales meetings, and provide a sense of focusand direction to a longer time period, such asthe next year.The purpose of meetings and conferencesA meeting should have a clear purpose (or alimited range of purposes) and agenda,established in advance in order that all theinputs focus on the purpose. The main pur-poses of sales meetings are:● participation which promotes teambuilding● problem resolution, identifying andevaluating alternative options● instruction, imparting new information,data, selling or marketing techniques,training, administrative systems andprocedures, policies, programmes● motivation, focusing on performancefeedback, encouragement, productivityimprovement ideas, and exchanges ofexperiences and ideas● exploration of new ideas to improveproductivity or performance, or promotethe achievement of goals and objectives.Sales meeting organizationIf a sales meeting is to achieve its objectivesand also to enhance the sales manager’s rep-utation as a professional within his or hersales team it is essential that it be plannedthoroughly. The main complaints of salesper-sons about meetings are usually that:● they take too long● subject coverage is repetitive● they don’t seem to achieve anything● too much time is wasted on parochial(individual) issues not relevant to all theattendees.The sales manager must avoid these criti-cisms within his or her own team, and can do8Sales meetings and conferences
this by thorough meeting planning andpreparation, addressing each of the followingpoints.Conducting sales meetingsA sales meeting should be treated like a salespresentation, with the objectives of:● gaining and retaining attention● creating interest in the subject matter● generating desire in the attendees toimplement the content of the meeting ineveryday work practices● provoking appropriate action from theparticipants.The sales meeting might make use of severalformats, as listed in the following table,depending on its purpose and objectives.Sales meetings and conferences 99Theatre formatScreen Speaker ChartsSchoolroom formatScreen Speaker ChartsRectangular formatScreen Speaker ChartsCircular formatScreenSpeakerChartsFigure 8.1 Example meeting room layoutsMeeting formatsPresentations On subjects of interest to the whole groupGroup discussions Related to the objectives, theme or content of the meetingPlanning sessions Groups can turn general plans into speci c area or territory plansRole playing New techniques or skills can be practised by the groupCase studies An individual or team development exercise at meetings, related notjust to sales and marketing matters but general management situationsPresentations by Attendees should be encouraged to make presentations on specialmeeting attendees subjects or areas of expertise as a development and team buildingexercise
Chairing the sales meetingAt the beginning of a sales meeting the salesmanager leading the meeting should:● introduce the topics clearly and deﬁnitively● deﬁne the purpose and objectives of themeeting● limit the scope of the meeting andquestions to matters which can be coveredwithin the time span● set the guidelines on rules and proceduresfor the meeting● work to develop positive and receptiveattitudes in the attending salespersons.100 Sales ManagementGuidelines for preparing and planning for meetings● Objectives Set and agree objectives and build the content round these.● Theme Ensure all speakers are notiﬁed of the core theme.● Responsibility Allocate planning, organizational and administrative authority forthe meeting to someone competent to meet the demands of skilland time (that person might be you!).● Venue Identify and reserve a suitable venue. Major conferences oftenneed to be booked a year ahead.● Length Set the length of the meeting to be no longer than necessary toaccomplish objectives. Two to four hours is common for an areameeting of salespersons or ﬁeld sales managers’ meeting. Anannual conference may occupy much of a day. Meetings should berun strictly to scheduled timings.● Agenda Prepare a full agenda round the objectives and theme, andorganize topics and timings to maintain interest (Table 8.1).● Attendees Decide who should attend and notify early (with joininginstructions, maps, etc., if necessary).● Communication Plan which communication aids to use. Be sure to use a variety to● aids maintain interest, such as overhead transparencies, ﬂip charts,slides, ﬁlms or videos, and so on. Presentation aids should belegible to be read by the farthest participant. Speakers shouldrehearse with their communication aids to ensure ﬂuency andcompetency on the day.● Handouts Prepare handouts where appropriate (and for guest speakers).● Review speaker Obtain draft speeches for guest speakers and ensure they are in● presentations line with theme, objectives and time allocation (and wellrehearsed).● Room layout Consider the most suitable room layout to match objectives, so thatall attendees can hear and see presentations, in comfort, withminimal distractions (see Figure 8.1). Ensure that:● all attendees can see communication aids clearly● there are no distractions drawing attention away from thespeakers and the focal point of the room● heating and ventilation are set to comfortable levels● water and beverages are within easy reach● natural and artiﬁcial lighting are adequate and balanced for aparticular meeting rooml ● the seating is comfortable, and room layout does not create a’them and us’, such as where all the bosses sit at a top table.
The sales manager, acting as the chairperson,should, in a participatory sales meeting:● obtain views and opinions fromparticipants● gather information on the nature andstrength of feelings on issues discussed● get a reaction on the subject matter,discussion points and proposals● develop the discussion so that it leads tothe desired conclusion, action oracceptance of ideas and proposals● produce the intended modiﬁcation ofattitudes, opinions, behaviour, activities,action or techniques● demonstrate a neutrality or impartialitywhich earns the respect and co-operationof the group in the meeting● encourage salesperson participation andinvolvement to retain attention andinterest, drawing in people with acontribution to make.The sales manager must remain in control ofthe meeting while involving each member ofthe team as appropriate. He must work togain acceptance of ideas and a commitmentto programmes introduced, communicatingthe bene ts of change in a way the teamunderstands and accepts.Communication aidsIn a sales meeting communication aids aregenerally used to:● direct and retain attention and interest● present often complex information in ameaningful and comprehensible fashion● record salespersons’ inputs and commentsSales meetings and conferences 101Table 8.1 A sample agenda for a sales area meetingSample area meeting agendaPerformance feedback● Company/area/territory achievement against plans for the month and year to date● Discussion on any problems or serious deviations from plan, with corrective actionplanning● Feedback on any particular individual salesperson’s achievements of note● Brief commentary from each salesperson on his or her territory’s progress against currentplans● Key account performance within the area or territoriesPresentation on a project● Personal presentation from an individual salesperson on progress against a particularpersonal project on his or her territory (e.g. the testing of a new display layout in a majorstore, or surveying the distribution and usage of certain ofﬁce machinery in customers ona sales territory)The new promotion plan● Introduction to the next month’s promotion plan● Discussion on the promotion priorities and objectives● Sales target planning and call objectives● Special administration or recording requirements for the new sales periodPractical training● Role playing how the new promotion can be sold into different types of accountsSummary● A motivational review and commitment to individual objectivesSample area meeting agendaPerformance feedbackPresentation on a projectThe new promotion planPractical trainingSummary
● involve the sales team in a participatorymeeting● increase assimilation and retention ofinformation● summarize main points of presentations● provide a focal point as the meetingdevelops into a practical planning andimplementation session.It is important to use a variety of visual com-munication aids to gain and retain attention.Typical visual aids you, the sales manager,are likely to use include:● blackboards and ﬂip charts, or other formsof ’white board’ used for writing notes● magnetic boards● product samples● ﬁlms and video ﬁlms● prepared charts and graphs (possiblyincluding some overlay charts)● slides (possibly from a computer-basedpresentation programme, projected onto ascreen), and overhead projectortransparencies● pictures and photographs● models such as of products or projects● sound recordings● personal commentaries (from salespersonswho have experience to contribute).Check which visual aids will help you con-duct the meeting, and ensure they are avail-able at the meeting venue. Often you willwant to do some preparation, such as writingnotes on ip charts, in advance of the meet-ing. If any form of slides is being used youwill need to check they are in correct runningorder (it helps to number them). If you arepreparing visual aids in advance then con-sider how to maximize impact throughdesign factors such as:● size● legibility● originality● simplicity● clarity● colour● realism● relevance to the meeting content and theaudience.Do not expect your audience to undertakemental gymnastics trying to comprehendyour meanings and messages.Making sales meeting presentationsThe sales manager frequently has to makepresentations to groups, including cus-tomers, colleagues or his area sales team. Thekey to successful presentations is prepara-tion. Preparation starts with considering theaudience, the purpose and the subject mat-ter (see Figure 8.2).The audienceIn preparing for a sales meeting or presenta-tion take account of:● the present level of subject knowledge ofthe audience● their experience in relation to the subjectmatter● their likely interest level● the attitudes of the audience● their ability to assimilate the informationbeing presented● their familiarity and experience withparticipating in meetings or publicpresentations.The sales team will normally have an interestin a level of detail about products and salesprogrammes that other groups, such as cus-tomers, may not.The purposeYou, the sales manager, need to be clear onyour objectives for the sales meeting or pre-sentation. The format of the meeting shouldre ect its purpose, as should the preparationof notes and supporting materials. Typicalpurposes of meetings include:● to give a background impression oroverview of events, developments,programmes, etc.102 Sales Management
● to increase expertise or present detailedinformation● to teach a new skill or modify participantbehaviour● to present a new point of view● to present a programme or course ofaction.A meeting that is designed to presentdetailed information (e.g. on product ranges,prices, targets, etc.) needs to have more com-prehensive charts and supporting handoutsthan a meeting just giving background infor-mation (e.g. outlining label changes for nextyear). A meeting designed to modify sellingbehaviour (e.g. closing the sale, handlingobjections, addressing bene ts of relocatingshelf displays, etc.) needs to have role playscenarios prepared for active role playing inthe meeting.The subject matterOnce you are clear on the meeting’s audienceand purpose you need to prepare your notesfor your own inputs, structure an agenda,and draft notes on points you want to ensurereceive coverage in the meeting. Attention todetail at this stage will reduce the risk of ameeting degenerating into a moaning or gos-sip session. Your sales team should leaveeach of your meetings feeling it was worth-while and bene cial. Look at the subject mat-ter to be covered and your agenda, and:● jot down all your initial ideas on eachtopic on a sheet of paper● group related points on each topictogether● identify the key points the talk can bestructured around● identify and research any additionalsources of useful information that will helpyou cover the subject thoroughly:● – your personal experience;● – experience of colleagues or members ofthe sales team;● – company literature or any other relevantpublished literature● prepare any meeting presentation aids,e.g. charts, handouts, videos, etc., takingaccount of the ability of the team toabsorb information (avoid using complexdata unnecessarily)● look for ways to involve the audience in aparticipatory fashion at this preparationstage, and plan how and when to drawthem into active participation.Sales meetings and conferences 103CONSIDERThe audienceThe purposeThe subject matterFigure 8.2 Preparing for a presentation
Structuring the presentationGenerally, if you are preparing a formal pre-sentation on a topic, you should divide thepresentation into (Figure 8.3):● an introduction, presenting an overview ofthe topic and highlighting how teammembers can beneﬁt● the core theme of the subject matter,encouraging participation, discussion andquestions● a memorable summary, highlightingpriorities and key action points.104 Sales ManagementIntroductionThemeSummaryThis isthe story…Figure 8.3 Developing a presentation structurePractical tips on making a presentationPrepare comprehensive ● Jot down ideas on a sheet of papernotes ● Group related points on each topic together● Structure the talk around key points● Highlight how participants can beneﬁt from thepresentation
Sales meetings and conferences 105● Research sources of useful information● Prepare any meeting presentation aids● Look for ways to involve the audienceGet to the meeting ● The environmentvenue early and check ● The room layoutfacilities ● Visual aid facilities● Lighting● Positioning of podiums or rostrums● Operation of any public address systems● Potential sources of distraction● Heating/cooling levels● Room ventilation● Availability of ashtrays● Positioning of sales team in relation to the speaker andvisual aids● Water and refreshment breaksMake an impact ● Don’t be apologetic for subject matter or preparation● Speak clearly and audibly; use your natural voice● Address the whole sales team● Avoid ﬂamboyance or distracting mannerisms.● Do not keep stopping to look at notes.● Repeat key points for impact and emphasis.Positioning ● Position yourself where all can see you● Avoid moving round too much● Address yourself clearly to the whole of the sales team● Ensure your visual aids are within sightAvoid distracting ● Jingling coins in your pocketmannerisms ● Fiddling with a tie or earrings, etc.● Waving your notes or clipboard● Prowling all over the stage or room● Adopting awkward posesUse available visual ● Blackboards/ﬂip chartsaids ● Magnetic boards● Samples● Films/videos● Prepared charts and graphs● Slides and overhead projector slides● Pictures● Sound recordings● Product or other samples or examples● Personal testimonies (from concerned persons)Timing ● Keep to a timetable● Use frequent pauses● Summarize regularlyQuestions ● Allow time for questions● Do not embarrass or criticize questioners● Clarify facts promptly● Only delay answers where subject will be covered laterHandouts ● Give handouts where appropriate● Prepare summaries of key points● List action points● Motivate positive action
106 Sales ManagementChecklist 8.1Organizing a meeting or conferenceAction points● Set objectives● Decide main theme● Allocate organizational responsibility● Select a venue, considering:● – Geographical location● – Accessibility● – Accommodation/parking● – Leisure facilities● – Meal facilities● – Available communication aids● – Billing arrangements● – Communications/message facilities● – Meeting room facilities, e.g.:● Size Audio facilities● Location Rest rooms● Ventilation Shape/layout● Lighting Rest break services● Conﬁrm venue booking● Prepare an agenda and circulate to speakers● Invite guest speakers (conﬁrm theme and subjectof presentation)● Invite audience, and advise of travel and accommodationarrangements● Plan room layout● Theatre/table or other format● Water/beverages● Ash trays, waste bins● Lighting/audio● Communication aids● Theme displays● Review all speakers’ presentation scripts● Prepare all communications aids and presentation handouts● Prepare conference folders or manuals for audience (includingwriting materials, name tags, agendas, pre-conference reading)● Plan reception for all attendees● Accommodation check-in● Welcoming committee● Book meals and beverages for break intervals● Rehearse all presentations, including the use and operationof communication aids
Sales meetings and conferences 107Checklist 8.2Preparing a presentation for a meetingAction pointsThe audienceIn preparing for a sales meeting presentation take account of:● The audience’s present level of subject knowledge● Their experience in relation to the subject matter● Their likely interest level● The attitudes of the audience● Their ability to assimilate the information being presented● Their experience at participating in meetings or publicpresentations.The purposeClarify your objectives. Typical purposes of meetings include:● Giving a background overview of events, developments, etc.● Increasing expertise or presenting detailed information● Teaching a new skill or modifying participant behaviour● Presenting a new point of view● Presenting a programme or course of action.The subject matterStructure an agenda, prepare your notes, covering points youwant to ensure receive attention in the meeting, e.g.:● Jot down all your initial ideas on each topic● Group related points on each topic together● Identify the key points the talk can be structured around● Research any additional sources of useful information, e.g.:● Your personal experience● Experience of colleagues or members of the sales team● Company literature or other relevant published literature● Prepare any meeting presentation aids, e.g. charts,handouts, etc.● Look for ways to involve the audience in a participatory fashion.
108 Sales ManagementChecklist 8.3Structuring the presentationAction pointsDivide the presentation into:● an introduction● the core theme of the subject matter● a memorable summary.Introduction● Highlight aspects of the subject likely to interest the sales team● Show how the sales team can personally beneﬁt from the talk● Arouse curiosity by the visual aids and style of presentation● Relate the subject matter to the lives and experience of thesales team● Project your personal enthusiasm, dynamism and commitment.Theme● Cover the detail matter of the topic● Encourage participation and questioning within the sales team● The pace should suit the sales team and the purpose of the talk● Develop the theme in a step-by-step fashion; explain eachpoint in a meaningful way; use examples the sales team canrelate to; use visual aids liberally● Involve the sales team in discussions, developing ideas andtraining situations● Ensure your style is not too dominant, dictatorial, orsuppressing serious comment or participation.SummaryA good meeting summary helps pull a meeting together,conﬁrm what is decided, and set action priorities. It should:● be as brief as practical● repeat the key points of the presentations● highlight priorities for action● draw conclusions from the material presented● leave your sales team feeling motivated with your message.
Sales meetings and conferences 109Checklist 8.4Practical tips on the presentationAction pointsPrepare comprehensive notes or a script● Jot down ideas on a sheet of paper● Group related points on each topic together● Structure the talk around key points● Highlight how participants can beneﬁt from the presentation● Research sources of useful information● Prepare any meeting presentation aids● Look for ways to involve the audience.Get to the meeting venue early and check facilities● The environment● The room layout● Visual aid facilities● Lighting● Positioning of podiums or rostrums● Operation of any public address systems● Potential sources of distraction● Heating/cooling levels● Room ventilation● Availability of ashtrays● Positioning of sales team in relation to the speaker andvisual aids● Water and refreshment breaks.Make an impact● Don’t be apologetic for subject matter or preparation● Speak clearly and audibly; use your natural voice● Address the whole sales team● Avoid ﬂamboyance or distracting mannerisms● Do not keep stopping to look at notes● Repeat key points for impact and emphasis.Positioning● Position yourself where all can see you● Avoid moving round too much● Address yourself clearly to the whole of the sales team● Ensure your visual aids are within sight.Avoid distracting mannerisms● Jingling coins in your pocket● Fiddling with a tie or earrings, etc.● Waving your notes or clipboard● Prowling all over the stage or room
110 Sales ManagementChecklist 8.4 continued Action points● Adopting awkward poses.Use available visual aids● Blackboards/ﬂip charts● Magnetic boards● Samples● Films/videos● Prepared charts and graphs● Slides and overhead projector transparencies● Pictures● Sound recordings● Product or other samples or examples● Personal testimonies (from concerned persons).Timing● Keep to a timetable● Use frequent pauses● Summarize regularlyQuestions● Allow time for questions● Don’t embarrass or criticize questioners● Clarify facts promptly● Only delay answers where subject will be covered later.Handouts● Give handouts where appropriate● Prepare summaries of key points● List action points● Motivate positive action.
Overview of the recruitmentprocess and key stepsWhile motivation is a key management func-tion, the sales manager must have the rightmaterial, in terms of suitably quali ed sales-persons, to motivate. That means selectingand recruiting to rigid criteria that aredemonstrably relevant to successful achieve-ment and high performance as salespersons,and then training those persons to meet thestandards and perform the selling job as suitsthe company’s products and markets. In thischapter the aim is to develop a formalizedframework that sales managers responsiblefor all or part of selection and recruitment canadapt or adopt to reduce the risk of inappro-priate selection of unsuitable salespersons.Typically each sales line manager is responsi-ble for his or her own nal selection of newmembers to his or her team.Sales recruitment is a costly process, andpoor selection results in:● under-performance in sales activities● a distraction of management time as moresupervision is needed● additional training needs● higher staff turnover with resultant repeatrecruitment costs.The basic recruitment process is illustrated inFigure 9.1, but a owchart format of present-ing the process is shown in Figure 9.8 at theend of the chapter.Qualities and skills of salespersonsWhen selecting and managing salespersonswe need to develop a clear view of what per-sonal qualities and job-related skills wemight expect to nd in our successful sales-person. Here we can expand on some generalqualities and skills. Larger corporations oftenmake use of corporate psychologists to con-duct job holder pro ling based on study ofpersons considered demonstrably successful(and comparing for differences with personsfound to be less than successful) that can givea perspective of what to look for whenrecruiting to sales positions in a particularcompany.The range of characteristic qualities andattributes needed in the successful salesper-son (and sales manager!) may be consideredto include those priority qualities and skillsillustrated in Figure 9.2.In a number of these areas of personalqualities you will be called on to make sub-jective judgements during the stages of arecruitment, but these should be supportedthrough questioning and evaluation of com-ments at the selection stage, and by subse-quent observation on the job. A high ratingfor a mix of these qualities being exhibited bya salesperson, when viewed with the assess-ment of more objective skills and competencyfactors, will provide a sounder basis for judg-ing job applicants for sales positions.As was mentioned in the section onappraisals (Chapter 6), a range of skills is9Recruitment and selection in the salesforce
114 Sales Management1Prepare jobdescription and personspecification2Review alternativesources ofapplicants3Advertise orapproach applicantsources4Screen candidates5Short list (Referencesand assessmenttechniques)6Make selection7Plan inductionprogrammeThe basic recruitment stepsLiaise with humanresource dept. for adviceabout preparation, jobsize, and possible salarylevelEXTERNAL• Recruitment consultants• Media advertisement• Search• Direct approachINTERNAL• Advertisement• Direct approach• Through the personneldepartmentSTAGE 1• Review applicationforms or curriculumvitaes• Initial interviews• Selection tests whereappropriate (ability andpsychometric)• Verbal references fromprevious managers ifinternal• Place advertisement• Brief recruitmentconsultants• Approach other contactsSTAGE 2• Final interviews• Assessment centres(where appropriate)• Offer letter• References• MedicalFigure 9.1 Steps in a recruitment
needed by a salesperson, with additionalskills needed by a sales manager. Typicalskills needed by the salesperson includethose listed in the following table.In each of these areas we can form someobjective measure of what is needed, andseek to identify a sufficient standardamongst job applicants during interviews, orto plan internal training of existing salesper-sons.Recruitment and selection in the sales force 115Qualities SkillsAssertivePersuasiveSelf-confidentGood appearanceCreativeEnthusiasticEnergeticResilientSense of urgencyIntelligentSelling/NegotiatingProduct knowledgeCommunicationsNumeracyPlanningOrganizationalAdministrativeInterpersonalFigure 9.2 Some key qualities and skills of salespersonsSkills required of the salesperson● Selling An understanding of the selling and buying processes, and skill inthe use of professional selling techniques is essential. A salespersonacquires these skills as a result of training and practice, not as aninherent talent, although a number of personal characteristicsfacilitate the process of acquiring skill.● Product Detailed product knowledge, and related company and marketing● knowledge knowledge, is essential in selling. Without this the salespersoncannot match his products and programmes to the opportunities ofthe market place and needs of the customers.
Job descriptions and personspeciﬁcationsThe starting point in the recruitment processis to develop a job description and person(job holder) speci cation.Functions of a job descriptionA well-prepared job description serves sev-eral useful functions for the sales manager,including:● as a basis for preparing personnelspeciﬁcations● clarifying job functions to sales managersand job holders● providing a performance measurementbase● providing a base for appraisals and otherformal and informal counselling● aiding inter-job content comparisons● facilitating job evaluations.Poorly prepared job descriptions can producedemarcation disputes, cause interpersonalrivalries and jealousies, or result in unwar-ranted assumptions of authority by one per-son or another.Content and coverage of a jobdescriptionBefore you can recruit someone for a job youneed to be clear on what the job is. It is impor-tant to be sure the job is quite distinct fromjobs being done by other people in the salesorganization, otherwise there is a risk of116 Sales Management● Verbal The salesperson must be able to collect his or her thoughts andmake clear, concise and logical presentations, using developedverbal skills, that hold the buyer’s interest.● Numerical The necessary level of numerical skills will depend on the demandsof a selling job. An account manager will need better developedskills than a territory salesperson. But all salespersons needsufﬁcient numerical ability to understand data, prepare quotationsor costings, calculate prices and volumes, etc.● Administrative Professional selling is not just about talking to customers, but needsan ability to keep good customer records and to handle andprocess the supporting sales force administrative paperwork (ormanage information using computers).● Organizational The salesperson needs to be able to organize his or her workload,use of time, paperwork, promotional activities, etc.● Communicating Good communications skills are needed if the salesperson is not toexperience problems resulting from communication breakdowns.Typically a salesperson must be ﬂuent in verbal communications,and support that with skills in written communications,administrative and organizing aspects of the job as he or sheliaises with customers, colleagues and the ofﬁce support functions.● Planning Planning is a fundamental sales activity. Without good planning atthe level of the territory and each customer, and the resultantimplementation of plans, there will be an under-performanceagainst targets and potential.● Interpersonal Selling and sales management are about inspiring and inﬂuencingpeople. This requires developing relationship building, peoplemanagement, motivational and persuasive skills.
Recruitment and selection in the sales force 117overlapping responsibilities, producing con-ict or a failure by job holders to accept per-sonal responsibility for actions or activities;for example, the salesperson’s role couldoverlap with some responsibilities of keyaccount managers, various managers in mar-keting or support functions, merchandisersor sales promoters.Normally a job description should containat least the information outlined in Table 9.1,although the style and format will varybetween companies. The typical job descrip-tion summarizes the nature of a job, its func-tions, responsibilities, duties and account-abilities, and key competencies of personsappointed to the position. The reader mayalready have job descriptions prepared in hisor her company format, but if not shoulddevelop descriptions for all jobs within thesales organization.Person speciﬁcationsOnce you have a job description the nextstage is to consider the kind of person youneed to perform all the job functions. Thequalities, skills and experience needed to ful-l the job can all be summarized in a personspecification (or job holder profile),which is really just a pen sketch of the idealjob applicant. It can be used as a referencepoint when you are screening jobapplication forms or conducting initial inter-views.When preparing person specificationssome of the questions the sales managershould consider include the following.● What are the present strengths andweaknesses of the team?● What kind of personality will ﬁt with theteam?● What skills/qualities in a new recruit willprovide a better balance within the team?● Do you need more graduate calibresalespersons?● Do you need to increase the mix ofsalespersons with particular skills such asnumeracy or familiarity withcomputers?● Do you need a salesperson withestablished trade relations?● Will special qualities and skills be neededto service any particular types ofcustomer?● Are there any special working hours forcontacting customers that requireparticular ﬂexibility or particularqualities/skills?Some of the categories in which you mightset objective standards include those illus-trated in Tables 9.2 and 9.3, which show alter-native approaches to designing personnelspeci cations.The basic standards and require-ments you include in the person speci -cation should be factors that can be measuredobjectively, or where your personalassessment (if they are subjective factors) iscritical in considering a job applicant. Youreally should only set a standard if theability of an applicant to perform a par-ticular job really may hinge on meeting thatstandard and an assessment can be madefrom application forms or at interviews.The minimum standards set in a personnelspeci cation should be relevant to success-ful job performance, and optional standardscan also be set in respect of qualities orskills that the ideal candidate additionallymight possess. Persons who do not qualifyin respect of minimum standards you setshould not normally be interviewed orappointed.Local laws relating to recruitment andemployment vary round the world, and it isimportant that account is taken of these indeveloping job descriptions, person or jobholder pro les, and the methods and mannerof recruitment.
118 Sales ManagementTable 9.1 Typical coverage of a job descriptionInformation to be included in a job descriptionCompany name The name of the local operating companyOperating divisions e.g. Sales Divisionand/or departmentJob title Generally descriptive of the key functionJob holder’s name This can be inserted where appropriateReporting relationships e.g. to the Regional Sales ManagerPurpose of the job Provide a brief summary of the key elements of the job and what itis expected to achieve in the interests of the company.Key data that summarizes the size of the job might be insertedhere, e.g.:● numbers of direct and indirect subordinates● numbers and sizes of sales accounts.Job accountabilities This section should describe the important end results (usuallyaround 8 or 10 items) the job holder is expected to achieve. Itshould focus on stating what has to be achieved and why, nothow it is to be achieved (which might be covered under the nextsection).Job content and Describe how the various accountabilities listed in this section aretofunctions be achieved.You could detail the main functions and activities, the main tasksof the job holder.Job knowledge and Detail the main areas of experience, knowledge, skills and per-competencies sonal qualities needed to perform the job competently.Decision making Describe the scope for decision making in the job, and the typesauthority of decisions the job holder is expected to make, and note any(this information should limits on authority.not be communicated Any relevant quantitative factors should be noted, such as:at a candidate’s ● sales and ﬁnancial dataﬁrst interview) ● expenditure, e.g. promotion budgets.Relationships Outline the key relationships with internal colleagues (e.g. linemanager, colleagues in other departments, subordinates) andexternal contacts (e.g. customers).In some instances it will be appropriate to include an internalorganization chart showing job functions, reporting relationshipsand other key functional relationships.Additional information This section can be used to add any additional information notcovered in the other sections of the job description.Information to be included in a job description
Sourcing applicants for salespositionsRecruiting can be an expensive exercise intwo respects:1. the actual direct cost of seeking out suitablecandidates and providing basic training2. the resultant costs of mistakes if a personis wrongly recruited for a position forwhich he or she is unsuitable, or if he orshe leaves for any reason within a shortperiod after recruitment (where re-recruit-ment becomes necessary along with therepeat training costs).At the stage of seeking suitable candidatesyou need to consider what alternativesources might produce suitable potential jobcandidates. Some of the more commonsources to be considered include those illus-trated in Figure 9.3.Recruitment and selection in the sales force 119Table 9.2 An example person speciﬁcationPerson speciﬁcationPosition: Territory salespersonJob requirements Essential OptionalPhysical ● 1.70 metrescharacteristics ● Physically ﬁt and able tomerchandise product incompany outlets● No back problems orphysical disabilitiesAttainments ● Secondary school education ● Completed education to 18● with certiﬁcates ● years with appropriate certiﬁ-cates● Ideally with at least 2 yearsworking experience in a salesposition● Formal sales skill training withconsumer goods companySpecial aptitudes ● Linguistic abilitiesPersonality/ ● Outgoing ● Leadership qualitiesDisposition ● Persuasive● Self-conﬁdent● Enthusiastic● Intelligent● Determined/self-motivatedInterests ● Social interests ● Preferably active, e.g. sports● Preferably keeps up to datewith current affairs, e.g. throughreadingCircumstances ● Stable family background ● Living close to territory● Mobile, with no restrictions ● Clean driving licence● travel● Current driving licencePerson speciﬁcationPosition: Territory salespersonReporting to: Area sales manager
120 Sales ManagementTable 9.3 An alternative person speciﬁcation formatPerson speciﬁcationPosition: Territory managerAttribute Deﬁnition AssessmenttechniqueEducational ● School and college attendance and ● Application formattainments ● achievements ● Check● Post full time education courses ● documentation● Professional training or courses related tocareerAppearance and ● Smart, clean-cut look, with well-kept clothes ● Observation atphysical ● Makes a good ﬁrst impression ● interviewcharacteristics ● Physical build suited to performing all jobfunctionsWork experience ● Ideally with at least 3 years selling ● Application form● experience gained in a major international ● Interviews● company servicing similar outlets ● References checks● Able to demonstrate positive contributions toprogress and growth with previous companies● Preferably with formal training in selling andnegotiation techniques● Used to dealing with senior-level customercontacts and clientsAbilities, skills, ● Professional selling: can work to a ● Interviews andcompetencies ● structured sales sequence, use questioning ● selection tests● techniques, make ﬂuent rational presentations,handle objections, close the sale etc.● Negotiation: able to develop a win-win scenario● Verbal: speaks ﬂuently and persuasively, andable to construct a reasoned presentation● Numerical: able to analyse, compute,interpret numerical sales-related data● Administration: able to understand andcomply with all sales administrationrequirements● Organization: well organized in use of time,materials, paperwork, etc.● Communications: a ﬂuent and effectivecommunicator both internally (colleagues)and externally (customers), in both writtenand verbal forms● Planning: thinks ahead, sets objectives andmakes and implements plans to achieve them,and able to deal with crises in a positiverather than negative fashionPerson speciﬁcationPosition: Territory salespersonReporting to: Area sales manager
Job application formsMany companies develop a standard jobapplication form. The advantage of using astandard form (either instead of, or to sup-plement, individual application letters andcurriculum vitae) is that managers can see allthe relevant information and responses in astandard layout, making it quicker to screenapplications. Individual letters and curricu-lum vitae are prepared by the individualapplicant and focus on telling you what theywant you to know rather than what youdecide you want to know about the person.The basic information a job applicationmight request include:● full name of applicant● date of birth, ageRecruitment and selection in the sales force 121Table 9.3 An alternative person speciﬁcation format (continued)Attribute Deﬁnition AssessmenttechniquePersonality ● Assertiveness: persuasive and strong-willed ● Interviews anddisposition ● in negotiating ● objective selection● Self-conﬁdence: self-assured and willing to ● tests● take the initiative● Creative: able to see other perspectives andto use imagination to try out new approaches● Enthusiastic: presenting a positive andzealous attitude● Persistent: continues ﬁrmly in the face ofadversity or problems● Resilient: able to bounce back fromunsuccessful negotiations with a positive mentalattitude● Energetic: proactive in getting things done,and not easily tired from work activities● Intelligent: able to handle all the functionalactivities of the job, to reason rationally, toevaluate situations thoughtfully, and topropose creative courses of action● Good communicator: keeps all interestedparties informed of developments throughwritten or verbal communications● Business oriented: a hard-nosed proﬁtconscious businesspersonHealth ● No physical disabilities limiting ability to ● Observation at● perform job functions including carrying ● interview● and driving ● Company pre-employmentmedicalPersonal ● Stable home environment ● Application formcircumstances ● Mobility and freedom to stay away from ● Interviews● home as the needs of the job dictate ● Check● Home location suited to work environment ● documentation● Current driving licence
● nationality● sex● ethnic origin● marital status● children/dependants● address and telephone number (andfax/electronic mail)● medical history (including information onrecurring ailments and disabilities)● physical characteristics (height/weight)● driving licence, driving record● education– primary schools– secondary schools and examination results– higher education and examinationresults and qualiﬁcations achieved– other courses attended● employment history– positions held– dates applicable to each position– summary of key functions andresponsibilities– current income– reasons for wanting to change jobs– period of notice required at presentemployment● trade or professional qualiﬁcations andmembership of professional institutions● personal interests● personal references122 Sales ManagementSources ofapplicantsInternal transfers and promotionsPress advertisementsReferralsEducational institutionsThe tradeEmployment agenciesRecruitment consultanciesPersonal contactsSpeculative applicationsFigure 9.3 Sources of applicants
● special aptitudes (e.g. languages spoken)● supplementary (i.e. a space that invitesapplicants to comment on any relevantadditional information).Guidelines for pressadvertisementsWhile an advertisement is intended to attracta number of suitably quali ed applicants itshould not be so inviting as to encourageapplications from persons clearly outside thelimits of physical and personal characteristicsand qualities contained in the person speci -cation. The description of the skills, experi-ence, personal characteristics and qual-i cations given in an advertisement shouldenable potential candidates to screen them-selves in respect of their ability to match thecriteria.Coverage of advertisementsThe actual content of the advertisementshould give brief coverage to a range of infor-mation that helps the potential applicantsdecide if they have the quali cations andinterest to pursue an application by sendingin a curriculum vitae or requesting an appli-cation form. You should include:● The job title e.g. Territory salesperson, keyaccounts manager, area sales manager,etc.● The company name and logo. Identify whoyou are, with pride in your company andheritage. Some advertisers prefer toremain anonymous, possibly using postofﬁce box numbers or recruitmentagencies. This tends to be preferred whenthere are strong reasons why you do notwant others within the company to knowabout a recruitment.● The products. Clarify the nature of yourproducts, and the markets you are serving,possibly with a product illustration ifappropriate (a useful way of attractingattention to an advertisement, particularlyif you have an established product).● The job functions. State the basic keyfunctions, accountabilities andresponsibilities that help a potentialapplicant relate to his or her presentexperience.● Location or territory to be covered. Stateclearly where the job will be based, as theissue of relocation can be a factor inattracting to, or detracting from, the job.● Candidate skill and qualiﬁcationrequirements. State what minimum relatedsales or sales management experience,and other experience, you expect.● Rewards and beneﬁts offered. While insome countries, or within somecompanies, it is the practice not todisclose pay and beneﬁts (e.g. ‘Anattractive package will be offered,commensurate with skills and experience’),most applicants prefer a clear statement ofthe range of rewards and beneﬁts theymight expect, as this inﬂuences a decisionto apply.● Details of how to apply for the vacancy.You might note if you want applicants tophone in for an application form or tosend a curriculum vitae.Screening applicantsScreening applicants is the process of com-paring the various candidates for a positionwith the qualities, skills and experiencejudged necessary to ful l the job functionssatisfactorily. The usual screening stages are:● issue job application forms● study (screen) completed applicationforms, comparing them against the personspeciﬁcation● reject unsuitable applicants (usually byletter)● invite most suitable applicants tointerviews.Normally the rst stage in the applicantscreening process is to provide applicantsRecruitment and selection in the sales force 123
with a job application form. The advantageof using a job application form is that all thebasic information you require in decidingwho to invite for interview, or what to pursueduring the interview, is presented in a stan-dard format, which saves you time huntingfor relevant information. The alternative toasking for the completion of job applicationforms is to request the submission of a per-sonally prepared curriculum vitae. Study thecompleted application forms, and invite themost suitable applicants for an interview,allocating time exclusively to the interview-ing process.In studying completed application forms itis normal to look at factors such as thoselisted below, and judge how these matchyour requirements.● Applicant home location in relation to thejob location● Holding a clean current driving licence● Age in relation to speciﬁed range● Relevance of job experience● Any evidence of formal training in sellingskills● Relevance of vocational education andprofessional qualiﬁcations● Educational standards and achievements● Comparison of educational achievementsand job progression with successfulcompany salespersons● Health conditions (poor health is anegative factor, obviously)● Personality and disposition● Personal hobbies and interests● Achievement relative to peer group norms● Motivation and potential.At the pre-interview stage of screening jobapplication forms you should really be con-centrating on objective criteria and trying toavoid rejecting applications for emotional orsubjective reasons. As a rule you cannotattach much importance to handwriting orpresentation unless it is apparent theapplicant lacks sufficient literacy for thejob.The most suitable candidates can beinvited to initial interviews either over thetelephone or by letter. A rejection lettershould be designed to leave rejected appli-cants (before or after interview) well dis-posed to the company – they are or might becustomers!Screening applicant interestsWhile it may be subjective to attach muchimportance to hobbies and interests prior toan interview, sometimes these can indicatespecial skills or attributes. For example: anapplicant might be a youth group leader, orhave intellectual interests such as chess orhome computing, or pursue some otherinterest that indicates something about his orher personality, motivations or abilities.Interests are particularly useful as an icebreaker in the opening minutes of an inter-view, and may provide some guidance to acandidate’s motivations and disposition.In the interview you can probe thebreadth, depth, pattern, commitment (willthe hobby con ict in any way with demandsof the job), stability/maturity, skills andknowledge involved, personal motivationsto pursue interests, and relevancy of interestto the job. Generally interests may be consid-ered to fall into the broad categories of:● social● intellectual● practical● physically active● artistic.Communicating with unsuccessfulapplicantsAs a matter of courtesy and goodwill youshould communicate promptly with allunsuccessful candidates who have submitteda completed application form. It is importantthat rejected applicants still maintain a highdegree of goodwill to the company as theyand their contacts are all potential customers,and a well-conducted recruitment offersanother excellent opportunity to promotegoodwill for your business in the local com-munity.124 Sales Management
Conducting interviewsThe selection process will normally takemore than one interview, possibly supportedby other forms of assessment tests.Candidates you consider most suitableshould be invited for interview (by letter ortelephone) with you or a personnel manageras soon as possible, and if you plan to useother assessment techniques the candidatesshould be noti ed of that, and advised of theduration of the selection process.The interview environmentThe interview stage of the recruitmentprocess should be treated as systematically aseach of the preliminary selection stages ofexploring alternative applicant sources,advertising and screening applications (seeFigure 9.4). It is unwise to try to slot inter-views in between other appointments andmanagement activities. Comparisons will beless meaningful and interviews less thoroughif you see individual job applicants underwidely divergent circumstances at differenttimes.● Allocate a speciﬁc time period (a day,morning, or whatever is needed) to theinterviewing of applicants.● Conduct all interviews without interruptionsin suitably private locations such as yourofﬁce or a hotel room.Duration of the interviewThe time you need to allocate to an interviewso that you can satisfy yourself you haveformed an objective assessment of a jobapplicant will vary according to your per-sonal interviewing skills. Generally youshould expect to allow about 30 to 60 minutesper candidate at a rst interview. Experiencewill show that a good proportion of candi-dates can be eliminated objectively within 15to 30 minutes, where they fail to match thepersonnel speci cation for qualities, skillsand experience.Interview conduct and contentThe way you conduct the interview and itsgeneral content is critical to obtaining rele-vant information to enable you to evaluatecandidates in the minimum time.The possible broad structure of the inter-view process could consist of:1. Personal introductions. Introduce your-self by name and position so that the can-didate does know whom he or she istalking to; candidates are frequently ner-vous and a smile always goes a long waytowards relaxing a nervous interviewee.2. Introduction to the company, the prod-ucts and the job. Ideally this should takeno longer than ve minutes. Prepare noteson your introductory presentation toensure you cover all the main points sys-tematically. It is also useful to have someproduct samples and literature in theinterview room.The introductory commentary should cover:● a brief history of the company and out-line of main company philosophies● a product range summary (best shownby photographs and examples)● the job functions (you can provide a jobdescription now or while the candidateis waiting for the interview)● the main terms and conditions ofemployment.3. The actual interview.At this stage, as the objective is to interviewthe candidate rather than the reverse, it isunwise to permit yourself to wander off at atangent in response to distracting questionsor comments. If a question is raised whichyou will cover in your introductory commen-tary you can just delay response with a com-ment such as ‘That is an important point, andI do plan to comment on that in a moment.’Format of the interviewThe format of an interview will vary accord-ing to your personal experience and inter-Recruitment and selection in the sales force 125
view style, but some useful guidelines of‘do’s and don’ts’ are shown in a checklist atthe end of this chapter.At the outset, in getting yourself into theinterview frame of mind, ask yourself twoquestions:‘Do I know what I am looking for?’‘Will I recognize it when I do see it?’You will nd that the actual conduct of aninterview is easiest if it follows a simplechronological pattern. Your objective is toelicit information on aspects of a person’sexperience, background circumstances andpersonality that will impact on his or her abil-ity to integrate into the company team andeffectively perform the job functions youassign to him or her.The eight-point interviewframeworkThis structured system encourages you, theinterviewer, to ask questions and make objec-tive observations about the candidate by elic-iting relevant information in a number of keyareas illustrated in Figure 9.5, and expandedin the checklist at the end of this chapter.Observations and judgements based on theinterviews can then be supplemented byobjective assessments and further judge-ments based on any other assessment tech-niques (e.g. aptitude tests, assessmentcentres, or personality pro les) used by therecruiting sales managers.The simplest way for you to progress aninterview is to work systematically throughthe information contained on the job applica-126 Sales ManagementInterviewsEnvironment StructurePrivateRelaxedNo interruptionsPersonalintroductionsCompany, job,productintroductionsInterview thecandidateFigure 9.4 The structure and environment of interviews
Recruitment and selection in the sales force 1271Physical characteristics2Achievements3Functional skills andprofessional knowledge4Fit with company5Personality6Hobbies and social interests7Personal circumstances8MotivationsFigure 9.5 The eight-point interview framework
tion form and constantly use questions toexpand on the facts contained in the formand to make observations and notes, to helpyou form judgements and opinions.Notes at interviewsWhen conducting an interview you will needto make brief notes as a record of what youhave discovered in addition to the informa-tion contained in the job application form,and to record your observations and conclu-sions. The notes will act as a pen picture laterwhen you come to review the merits of eachof the applicants you have seen.It is useful to highlight on the interviewnotes record any points that might need fur-ther probing at the shortlist interview.The selection shortlistOnce the rst interviews have taken place,and objective decisions made about whichcandidates warrant further consideration, asecond meeting with each of the shortlistedcandidates should take place to further probetheir suitabilities, skills and experiences. Theshortlist interview can also provide addi-tional information on the company and thespeci c job vacancy. This shortlist interviewshould be conducted within as brief a timeinterval as possible after the rst interview.With an internal recruitment the rst inter-view may be the only stage, or it may be sup-ported by other tests. The typical shortlistprocess may be summarized as in Figure 9.6.The objectives of a short-list procedure are to:● call back those candidates judged mostlikely to meet the requirements of the joband to elicit additional information abouttheir suitability to the job and thecompany environment● give other persons in the company team achance to meet the candidates andprovide an input to their suitability● allow the candidate time to become morefamiliar with the company environmentand team in order that he or she canmake fair decisions about joining thecompany if made a job offer. (It can bevery useful to allow the candidates to meetother salespersons, and perhaps also toarrange for the most suitable candidatesto spend some time with an establishedsalesperson calling on a few customers.)● provide an opportunity for companymanagers to meet a range of candidates,each of whom has been judged at theinitial recruitment stages as havingrelevant skills, experience and personalattributes warranting their furtherconsideration.In most markets reliance will be upon selec-tion through second interviews, often with acolleague involved, i.e. a personnel manageror senior sales manager.At the shortlist stage it may prove appro-priate, for certain positions, to support inter-views with additional assessment techniques,such as additional intelligence or aptitudetests, group selection activities, or individualtasks. If these are appropriate then theyshould be discussed and developed withyour human resource department, andadministered by a person trained in their useand interpretation in the selection process.Depending on the level of the position tobe lled, and local recruitment practices, theshortlist procedure could include any or all ofthe stages outlined in the table on page 130.In many markets it is found to be a veryuseful exercise to ask the nal candidates,prior to a job offer being made or accepted, tospend a day with an established salespersoncalling on trade outlets and observing thenormal job functions. This serves to clarify tothe candidate the real nature of the job andreduces the risk of successful applicants sub-sequently being dissatisfied with the jobcontent.Group selection tasksWhile aptitude, personality and intelligencetests will normally be administered bytrained professionals, when used as part ofthe selection process, the sales manager128 Sales Management
would normally be involved as an observerin any other individual or group tasks thatform a part of the selection process. Grouptasks normally involve from four to eightcandidates being brought together at a short-list venue and being given a project or task totackle for a defined time period. If thisprocess is used candidates should be advisedRecruitment and selection in the sales force 129TheshortlistObjectives StructureObtain additionalinformation onthose most likely tomeet job needsExpose candidatesto other personsin the teamExpose candidateto the workenvironmentExpose managersto a rangeof candidatesInterviewAdditional selectiontestsWork withsalespersonOfferReferences /medicalFigure 9.6 Objectives and structure of a typical shortlist process
of this before being invited to the shortlistselection process.The group selection process is particularlyvaluable in external management recruit-ments where the candidates are unknown tothe recruiting line managers. A group taskmight be as simple as giving the group a pileof paper and handful of paper clips, and ask-ing them to design and construct a papertower, or might just consist of the group beinggiven a subject to discuss (either job-neutralor job-related) for a set time period, or a busi-ness case study exercise. It is not the speci ctask that is important in making group tasksvaluable recruitment aids, but the content andprocess of inputs within the group.The aim of group task observers is to eval-uate the performance of each group partici-pant, and to assess his or her contribution,qualities and skills as demonstrated in thetask and in relation to those required ofthe appointee to the vacant job (see table onpage 132).When observing group tasks the panelmembers should make notes, and remainquiet during the group’s activity, holdingevaluatory discussions afterwards. Dis-cussion should focus on content and process(see Figure 9.7) in the group activity, andrelate those to the job and its environment. Itis particularly worth noting that the groupmember who makes the most noise and130 Sales ManagementTypical activity processes at the selection shortlist stageInterviews ● Panel interviews with several company managers (usuallyfrom sales and human resource departments)● Individual interviews separately with sales and personnelmanagersAdditional selection tests ● Intelligence or aptitude tests● Personality tests● Group selection tasks● (where a group of job candidates is invited to perform agroup task together in order that interviewers can makeobjective interpersonal comparisons on the relative suitabil-ity of each for the company environment, and respectivestrengths and skills)Individual tasks ● In some instances individual applicants might be asked toperform a skill-related task to assess their abilities and apti-tudes. Some examples of individual tasks include:● – placing merchandising materials in strategic locations● – space management exercises● – role playing sales presentations● – analysing and interpreting sales data● – drafting or constructing a letter to customersMaking a job offer ● At this stage the manager will decide the relative strengthsand weaknesses of each applicant, and evaluate theirrespective qualities, attributes, skills and experience in rela-tion to the needs of the job and the teamTaking references ● This is covered separately in the next sectionMedical reports ● Most companies require all recruits to the sales team toundertake medical tests, just to ensure that they have nopre-existing conditions that might impact on ability to per-form the job functions
appears to be the most active might not bethe most in uential, effective in achieving asolution, or acceptable within the group.Checking referencesPrior to making a formal job offer, but aftercompleting the selection process to the pointwhere you have a favoured candidate, youshould take references on the prospectiveappointee (with his or her consent). In somecompanies this may be undertaken by ahuman resource manager, but in others it willfall to the line manager. Where that is not thecase the following guidelines will aid thesales manager in taking references.Recruitment and selection in the sales force 131Group taskdynamicsProcessContentMoraleFeelingsAtmosphereInfluence styleParticipationConflictLeadershipstrugglesCompetitionCooperationProjectionAnalysisLogicQualityJudgementCommon senseFluencyCommunicationskillsPerceptionsAttitudesBreadth of subjectcoverageFigure 9.7 Group task dynamics
132 Sales ManagementSome behaviours to look for when observing group tasksParticipation ● Who exhibits high or low levels of participation?Degrees of inﬂuence ● Who exhibits high or low degrees of inﬂuence?● Rivalries – do they develop and between whom?Styles of inﬂuence ● Who are the autocrats?● Who are the democrats?● Who are the mediators?● Who takes a laissez faire attitude?Task functions ● Who are the controllers?● Who are the strategists?● Who are the analysts?Decision-making procedures ● Self-authorized decision taker?● Decision supporter?● Topic jumpers?● Majority decision (votes)?● Consensus of opinions?● Unrecognized contributions?Maintenance functions ● Who involves others in the task?● Who blocks others’ participation?● Who clariﬁes others’ comments?● Who remains preoccupied?● How are ideas accepted/rejected?● How effective is each group member at communicat-ing?Group atmosphere ● Who avoids conﬂict?● Who prefers conﬂict?● Who resolves conﬂict?● Are participants involved and interested?● How relaxed is the atmosphere?● What is the pace?Group membership ● What sub-groupings develop?● How do sub-groups relate to the rest of the group?● Do developing sub-groups reﬂect agreement/dis-agreement?Group feelings ● What physical and emotional reactions are indicatedby facial, verbal or other physical (body language)expression (e.g. anger, irritation, contempt, frustra-tion, impatience, intolerance, pleasure, warmth, affec-tion, friendliness, enthusiasm, excitement, boredom,competitiveness, sensitivity, etc.)Group norms ● What group norms develop? (e.g. Are some topicsavoided?)● Who reinforces avoidance and how?● Group formality/informality?● Group harmony/disharmony?● Open expressions of feelings or hiding of feelings?● Accepted styles of participation?
Sometimes a job offer is made orally in therst instance, but it should be made condi-tional upon satisfactory references beingreceived. A conditional offer by letter avoidsthe risk of later misunderstandings. (Notethat in some countries the taking of refer-ences from employers is not permitted.)Personal references from friends acting asreferees carry less weight than a referencefrom a current or former employer of a jobapplicant. Good sources of reference include:● a former line superior, who can provideinsight into a candidate’s performanceagainst objectives, job achievements,skills, abilities, strengths, potential,management style, etc.● a peer group colleague, who may provideinsight into how the candidate workswithin a team, interacting with colleagues,and earns and builds respect● a subordinate, who may provide insightinto management style, team building andleadership skills, training and feedbackskills, etc.References are usually best taken over thetelephone. Letters tend to be replied toslowly, if at all, and produce minimum fac-tual information. Table 9.4 illustrates thewho, what and how of taking references.The person asked to give a reference willrespond more positively if you identify your-self and con rm you call with the candidate’spermission, and if the referee has been fore-warned by the candidate to expect the call.Also, make a note of the key points. It is usu-ally best to do this on a structured reference-taking form, such as that illustrated in Table9.4.During a reference-taking conversation it isalways best to start with a few basic ques-tions that are aimed to verify facts, as thatusually will relax the referee more towardsRecruitment and selection in the sales force 133Telephone references: some pointersVerify: ● relationship of referee to applicant● employment dates● job functions and responsibilities● present reported income● fringe beneﬁts● job attendance record● time keeping record● sick leave and health recordQuestion: ● job performance, key achievements and progress versus colleagues● general job-related skills and competencies● planning and organizing competencies● management style (when recruiting for sales management jobs)● time management, including meeting deadlines● team spirit and ability to work with customers and colleagues● reasons for leaving● character assessment● integrity● reliability● independence● motivations● drive and energy● leadership● ability to inﬂuence others● adaptability● creativity
134 Sales ManagementTable 9.4 An example of a form for recording reference notesReference notesCandidate:Position:Reference source:Employment historyProbe with questions about:● employment dates● positions held● job functions and responsibilities● income and beneﬁts● health record● time keepingAchievements and styleProbe with questions about:● job performance● key achievements● management style● ability to inﬂuence andpersuasiveness● planning and organizing abilities● time management● creativity and promotion ofchangePersonality and characterassessmentProbe with questions about:● integrity● reliability● independence● drive and determination● motivations● adaptability● acceptability to colleagues● team spiritImplications for companyand summary● Fit with the company● – skills● – experience● – personalityDate: Reference taken by:Reference notesCandidate:Position:Reference source:
you, and start the ow of information. Thenyou can proceed to elicit some additionalinformation with open questions, e.g.:● ‘How would you describe his/her workand performance?’● ‘How does he/she get on with the otherstaff and supervisors?’● ‘Would you re-employ him/her?’● ‘What have you found to be his/her mainstrengths and weaknesses?’● ‘Is there anything else you think I shouldknow about his/ her work, personality orbackground before offering a job?’Making the selectionWhen the sales manager has made his or herdecision on whom to offer a sales position to,and if all the references taken are judged sat-isfactory, then the last stages in the recruit-ment process are:● sending a Letter of Appointment to theselected person● sending ‘No’ letters to the unsuccessfulcandidates● organizing the welcome and inductionprocess and training for the new recruit.Some or all of these actions might be under-taken by a human resource department insome companies, but where the sales man-ager is responsible for all stages of his or herown recruitment, it is very important in theinterests of goodwill and professionalismthat he or she communicates promptly withall unsuccessful interviewees as well as mak-ing a formal job offer in writing to the suc-cessful candidate.The job offer letter should detail all theterms and conditions relating to employ-ment with the company in the localmarket, and will normally include, either inthe actual letter or in accompanying docu-ments such as an employee handbook,details of:● basic pay● bonus and incentive schemes● hours of work● other conditions of employment, e.g.ﬂexibility to travel● expense allowances or claim procedures● company vehicle● other fringe beneﬁts● sickness beneﬁts if applicable● pension arrangements if applicable● starting dates● any other arrangements for joining thecompany● detailed job responsibilities (i.e. a copy ofthe job description).136 Sales Management
Recruitment and selection in the sales force 137Checklist 9.1Recruitment stagesAction pointsJob description● Is it current?● Has it been checked against functions of current job holders?Job holder proﬁle (person speciﬁcation)● Is it current?● Has it been checked against successful job holders?Sources of applicants● What sources have been checked and researched?● Internal transfers and promotion?● – Advertisements?● – Other referrals?● – Educational and professional institutions?● – Trade competitors?● – Employment agencies and recruitment consultancies?● – Personal contacts?● – Speculative applications?Job application form● Is it suited to sales recruiting?● Does it ask relevant questions to facilitate pre-interviewscreening of applicants?● Has it been sent to all applicants?Job advertisement● Does it:● – attract attention?● – arouse interest?● – sell the beneﬁts of the job?● – provoke positive response from suitable candidates?● – identify the company?● – describe the job?● – give the job location?● – identify candidate qualiﬁcations?● – state job rewards and beneﬁts?● – tell how to apply?● Has the advertisement been placed with the most appropriatemedia?Telephone screening of applicants● Is it appropriate for the position?● Has a screening question form been prepared?● Does the advertisement give the phone-in details?
138 Sales ManagementChecklist 9.1 continued Action pointsApplication screening● Have application forms been sent to all candidates?● Has all screening been conducted objectively against the jobholder proﬁle?● Have applications been acknowledged?● Have invitations to interviews been sent?● Have rejection letters been sent?Initial interviews● Have dates and locations been arranged?● Have all interviews been conducted?● Have post-interview rejection letters been sent?● Have shortlist invitations been sent?Shortlist● Have dates and locations been arranged?● Have any other interviewers been notiﬁed to attend?● Have interviews been conducted?● Have any additional selection techniques been completed,e.g. intelligence, personality or aptitude tests?● Have rejection letters been sent to unsuccessful applicants?References● Have former employers been contacted for references?● Have other personal referees been contacted?● Are references satisfactory?Appointment letter● Has a letter of appointment been sent?● Does it cover all the terms and conditions of employment?● Has the offer been accepted?
Recruitment and selection in the sales force 139Checklist 9.2Interview guidelinesAction pointsDo adopt the following positive technique guidelines● Choose an informal interview environment● This is more likely to relax a candidate, e.g. possibly use acoffee table and easy chairs rather than across-the-deskinterview.● Control the interview● Direct its contents along lines that help you to form objectiveassessments of each candidate’s suitability to the companyand the job.● Structure the interview round a framework● It is easiest to follow chronological events or circumstancesusing the job application form as a guide, and elicit relevantinformation about each candidate, e.g.● – impact on other people● – qualiﬁcations and experience● – innate abilities● – motivation● – personality/disposition and adjustment● Project a friendly interest and atmosphere● The candidate should feel your warmth, empathy, sincerity,and interest.● Keep to a logical sequence● Avoid topic-jumping in a manner that seems irrelevant to thecandidate.● Link questions to replies● By linking the next question to the last reply you willencourage the ﬂow of information.● Ask open questions● Questions that demand more than just a simple yes/noanswer will encourage the candidate to expand and give youmore interesting information upon which to base judgements.● Give thinking time● Do not pressure the candidate to answer too quickly butrelax him or her by waiting for answers.● Ask probing questions● Try to get to the issues behind the facts (e.g. ’Why did youchoose to resign from your last job without another jobwaiting for you?’).
140 Sales ManagementChecklist 9.2 continued Action points● Use expansionary comments● More information can often be encouraged from a candidateby the use of expansionary comments such as ’and whathappened then?’.● Do not be afraid of silence● This can be used as an effective tool to encourage acandidate to continue talking and to expand on earliercomments.Avoid the following bad interview habits● Do not project any prejudices during an interview● Do not use exaggerated or distracting mannerisms● Avoid projecting your own personality into the interview● Avoid multiple questions● Avoid leading questions● Avoid technical jargon● Avoid direct or implied criticism
Recruitment and selection in the sales force 141Checklist 9.3The eight-point interview frameworkAction pointsPhysical characteristics● Has the candidate any visible defects of health or physiquethat could present a problem in performing the salesperson’sjob functions?● Is the candidate’s appearance, bearing, presentation andspeech suitable to represent the company?Achievements● What are the candidate’s formal education achievements?● Does the candidate’s response to interview questions reﬂecteducational/work achievements?● How does the candidate respond to information you provideduring the interview?● Does the candidate appear to learn quickly?● What type of formal education has the candidate had, andwhat standards did he/she attain?● How well has the candidate progressed (in work)?● Are there any distinguishing speciﬁc personal achievementsversus the peer group?● What occupational experience and training has he/she had,and is it relevant to the present vacancy?● What are the candidate’s personal contribution to change,business development, creativity, etc.?● What have been his/her reasons for changing jobs (e.g.dissatisfaction with employers, seeking faster progression, etc.)?Functional skills and professional knowledge● Is the candidate able to sell?● What relevant training and experience has the candidate had?● Has the candidate negotiating skills?● Has the candidate any special trade knowledge orrelationships of value to the company?● How good are the candidate’s verbal communications?● How good are the candidate’s written communications?● Has the candidate sufﬁcient numeracy and analytical ability?● How is the candidate’s organizational ability and timemanagement?● Does the candidate demonstrate planning ability?● Are the candidate’s interpersonal skills suited to the job?● What potential may this candidate have?● Does the candidate have a broad business knowledge?
142 Sales ManagementChecklist 9.3 continued Action pointsFit with company● Does the candidate have relevant knowledge about thecompany and its products?● Has the candidate apparent networking skills?● Will the candidate make a good team member, and enhanceteam spirit?● Has the candidate any other cross-functional experiencerelevant to the position or the company?● Will the candidate blend into a cross-cultural environment?● Has the candidate any demonstrable linguistic abilities?● How will the candidate ﬁt into the existing sales/marketingteam?● How compatible are the candidate’s skills, experience andpersonality with the company’s values and principles?Disposition/personality● Is the candidate committed to achieving results?● Has the candidate an ability to motivate customers?● Is the candidate a self-starter, demonstrating drive andinitiative?● How does the candidate work within a team?● Does the candidate inﬂuence others?● Does the candidate demonstrate a problem solving capability?Hobbies and social interests● To what extent are the candidate’s interests intellectual,social, practical, active or cultural?● What motivates him/her to pursue interests?Personal circumstances● Will the candidate’s domestic circumstances impact on the job?● Is the family background relevant?● Does the candidate project any particular attitudes (religious,social, economic)?Motivations● What have been his or her main motivations in life?● What motivated particular courses of action at critical careerpoints?● Does the candidate exhibit obvious motivational drives?● Why is the candidate interested in the job?
Recruitment and selection in the sales force 143Checklist 9.4Taking candidate referencesAction pointsTaking a reference on a candidate from a current or previousemployer is the sales manager’s opportunity to:● Verify● – Relationship of referee to applicant● – Employment dates● – Job functions and responsibilities● – Present reported income and fringe beneﬁts● – Job attendance and time-keeping record● – Sick leave and health record● Question● – Job performance, key achievements and progress versuscolleagues● – General job-related skills and competencies● – Planning and organizing competencies● – Management style (if recruiting for sales management jobs)● – Time management, including meeting deadlines● – Team spirit and ability to work with customers and colleagues● – Reasons for leaving● – Character assessment – Integrity; Reliability; Independence;Motivations; Drive and energy; Leadership; Ability to inﬂuenceothers; Adaptability; Creativity● Identify yourself to the referee and conﬁrm you call with thecandidate’s permission.● During a reference-taking conversation it is always best tostart with a few basic questions that are aimed to verify facts,as that usually will relax the referee more towards you, andstart the ﬂow of information.● Elicit additional information with open questions, e.g.● – How would you describe his/her work and performance?’● – ‘How does he/she get on with the other staff and supervisors?’● – ‘Would you re-employ him/her?’● – ‘What have you found to be his/her main strengths andweaknesses?’● – Is there anything else you think I should know about his/herwork, personality or background before offering a job?’● Record telephone reference notes on a reference form
The training of sales team subordinates is afundamental responsibility of the sales man-ager. He or she can delegate that responsibil-ity to a sales training manager or toindividual eld sales line managers, each ofwhom is accountable for the performance oftheir direct subordinate team. But the com-pany sales manager cannot abdicate the salestraining responsibility.The role of training in the salesforceWhy train?The purpose of training is to improve theoverall competence of members of a salesteam, and this is usually tackled by salesmanagers working to:● impart knowledge of the company, itsproducts, and its markets● create or change attitudes that affectperformance● develop skills that increase performance● develop habits that contribute to improvedperformance● reduce the level of ﬁeld managementsupervision subsequently needed, or toenable managers to widen their span ofcontrol and take on other duties or moresubordinates● increase job satisfaction (reducing salesforce turnover).Some of the basic competencies in a sellingand sales management environment arelisted below.For these competencies to be exhibited it isessential that managers clarify the specialistand generalist skills that develop these com-petencies, and provide training. The skillsshould be supported by appropriate systemsand procedures that aid implementation anduse of the skills, and measure and monitorperformance.Figure 10.1 highlights the stages in devel-oping training from concept through to per-formance improvement and measurement.Managing to key result areasThe key to creating improved performance isillustrated in Figure 10.2, the model of theprocess for managing to key result areas. Thesales manager can adapt this process model,identify the key sales result areas for the busi-ness, and focus each subsequent stagetowards those, i.e.:10Basic sales trainingSome competencies in selling● Inﬂuence (over people and performance) ● Organization and planning● Interpersonal skills ● Business and commercial skills● Teamwork ● Creativity
● by measuring current performance at eachlevel that inﬂuences results (the store anddown to the individual salesperson)● setting standards and establish key resultarea goals and objectives● training against the key result areas(quantitative and qualitative)● then monitoring subsequentperformance and providing frequentfeedbackBasic sales training 145Identify trainingneedsDesign trainingImplementtrainingTrained salespersonsfocus on value-addingactivities within theircustomer networkPositive and tangible improvement incustomer performance against objectivesdevelops positive attitudes to furthertraining, and customers cooperate in asupply chain partnershipEstablish– corporate mission– corporate strategy– core competency needsConsider– attitudes/aptitudes– current skills– skill training gap– skill relevancy to jobsDevelopvalue-addingskillsSupport throughperformancemeasurement,system development,and extra inputsfrom other supportfunctionsFigure 10.1 Stages in the training process
● linking the rewards and incentives to teamand individual achievement against thefactors that create improvement in the keyresult areas.Figure 10.2 shows that we must start by iden-tifying for any job activity the key result areas– the things that job holders in uence or cando that contribute to quantitative or qualita-tive results. From that point we can move for-ward through the framework model todevelop measurements, goals and objectivesfor the jobs, relevant training to improve per-formance, and packages of rewards andincentives that recognize performanceimprovements and achievements against thegoals and objectives.A loss of focus or under-performance willresult if any stage of the process is notadhered to and followed through as part ofthe whole, for example:● setting goals/objectives has little meaningif they are not related to measurableachievements, or if feedback does notshow periodic achievement and fostercorrective action for deviations● training will be less effective if individualfeedback is not given on resultant changesin performance● rewards and incentives will not bemotivational if individual measurementsare not made and fed back, and iftraining is not geared primarily toimprovement in the key result areas.The focus of sales trainingSales training should be directed towards thefollowing key result areas:● better territory and account management,including identifying potential newcustomers and planning call coverage● improved negotiating skills, includingmaking presentations, handling customerobjections and closing the sale● improving the salesperson’s adaptability todiffering selling situations● developing administrative, organizationand planning skills in order to improveterritory management and administration● setting call objectives and managing byobjectives● understanding basic marketing principlesin order to improve ﬁeld implementation ofprogrammes● improving the understanding of the buyers,their motivations, objectives and priorities● more efﬁcient time utilization● post-call analysis resulting in self-appraisalof performance and self- developmentprogrammes● developing greater expertise in aspects ofhuman relations (interpersonal skills)relevant to selling● customer care.Training can have a major bene t in reducingthe amount of supervision needed by sales-persons, releasing management time forother key business development activities. Itcommonly also helps reduce sales teamturnover (leaving rate), as performance andhence satisfaction with jobs (status, recogni-tion, rewards, prospects, management) andwork environments improve.Assessing the training needsNo two members of the sales team can beexpected to have the same training needs aseach is likely to be a different mix of qualities,skills and experience. Sales managers need torespond with customized personal fieldtraining to support general structured train-ing usually provided in core courses. Thenext chapter presents a model training auditform.In designing training the sales managerneeds to consider the level and mix of sales-related skills within the team. The amount oftraining needed by any individual is not nec-essarily a function of age, although eld salesmanagers are often very sensitive to longer-serving members of the sales team. The train-ing required by any individual is a functionof:● existing knowledge, experience and skills146 Sales Management
Basic sales training 147Identify the key resultareas,– the things that make adifferenceEstablish the frameworkof rewards andincentivesQuantitative factorsQualitative factorsQuantitative termsQualitative termsContinuous controlsWarning controlsBy key result areaBy salespersonBy customer accountBy key result areaBy salespersonBy customer accountContinuous feedback against key resultareasPeriodic formal appraisalsLinked to performance against companyand personal goals, objectives and keyresult areasRecognition of personal element ofperformance and team elementSet standards of performance for eachjob functionSet objectives for each key result areaSkills to meet standards and objectivesUnderstanding of goals and objectivesAttitudesMeasure the base,– the status quoEstablish goals andobjectivesProvide training for eachskill area related to keyresult areasMonitor performance foreach key result area,– standards andobjectivesProvide feedbackagainst each key resultareaFigure 10.2 Training in relation to the process for managing to key result areas
● aptitude for the job● attitude to the job● adaptability and ﬂexibility● ambitions and motivations● the ‘training gap’ between requiredstandards and actual performance.The sales manager should identify perfor-mance de ciencies of salespersons in order tofocus training efforts, e.g.:● achievement against objectives● analysis of the conversion rate of orders tocalls● analysis of call rates compared withstandards or average achievements● identiﬁcation of new potential customers● success in obtaining new product listings,product displays, etc.● effectiveness of sales presentations● ability to overcome objections andobjection handling techniques● closing techniques and success rates● customer relationships● relationships between territory cost ofoperations and sales revenues comparedwith standards or averages● compliance with administrativerequirements and procedures.Typical coverage of sales trainingIf skills are to be increased, performanceimproved, and individuals to adapt to chang-ing market conditions and work environ-ments, then training must be an ongoingactivity, with an ongoing review of needs.New salespersons need training in companyorientation, products and basic selling skills.Established salespersons need ongoing train-ing in developing new business, territory andcustomer management, advanced selling andnegotiating skills, and ongoing personaldevelopment.Basic training programme coverageCompany knowledgeMost training programmes for new employ-ees include a period of induction trainingduring which they are familiarized with:● company history and heritage● the company’s role in the industry● management philosophies and style● organization and management structuresand reporting● growth and performance148 Sales ManagementTypical focus of trainingNew salespersons● Company orientation● Company product knowledge● The selling process, including basiccustomer care, professional selling skillsand company administrativeprocedures, e.g.:● – Developing a sales sequence● – Selling techniques● – Using the sales aids● – Communicating effectively● – Job administration● – Pace control● – Journey planningEstablished salespersons● Territory management● Advanced selling skills● Product promotion and merchandising● Developing new business● Refresher courses● Communication skills● Personal development planning● Time management● Key account management *● Sales management *(* Where appropriate to responsibilities)
● goals and objectives for the future● personnel policies and practices● factory production and ofﬁce facilities(usually with organized tours andintroductions of key persons).Product knowledgeUnder this broad heading training shouldgive coverage to:● product heritage and historical productdevelopment● current product range, design aspects,packaging, speciﬁcations● production methods and processes● product range features and beneﬁts● new product innovations, developments,expansion plans● legal aspects relating to products andmarkets● competitors’ products with comparisons● the markets for the products● marketing programmes and support.Checklists at the end of this chapter highlighta range of training and information materialstypically available within a company thatcould be provided to salespersons duringinduction and basic sales training.Training in the selling processSelling is concerned with satisfying the needsof customers and presenting solutions totheir problems. As sales professionals we rec-ognize that this involves communicating theproduct bene ts to customers and not justlisting product attributes and features.Whether the sales team is involved in hightechnology industries or mass market con-sumer goods, the basic steps of the sellingprocess will include:● identifying potential customers and theirinternal decision-making process● analysing their product needs● setting relevant and achievable objectivesfor the customer● obtaining meetings with the decision makers● presenting the products and productbeneﬁts in relation to customer needs● responding to any objections in a mannerthat satisﬁes the customer’s concerns● negotiating terms and conditions withinany prescribed limits● closing the sales by asking for the order● completing any post-sales administrationand follow-up appropriate to the productsand customer.When training salespersons in selling skills itis usually best to work to a structuredapproach to selling (see Figure 10.3), and thisstructured approach can be modi ed to suitconsumer products, industrial or business-to-business products, or sales through retailtrade channels. The structured approach toselling in most companies is designed to pro-vide skill training that suits your productsand trade channels. It should be imple-mented to give broad but detailed coverageof customer care, prospect identi cation andthe seven steps to the call identi ed here.In Figure 10.3 we break down the sellingprocess for key accounts, products distrib-uted through retail trade channels, andindustrial products to the seven stages eachsales call should move through on the way toa successful outcome, the main sales tech-niques commonly adapted for use during thevarious stages, and a typical range of salesaids or sales ‘tools’. As this text is focusing onsales management rather than selling skills,we can devote little space to selling skillshere. Figure 10.4 does illustrate that there arethree levels of activity, pre-call activity, in-call activity and post-call activity, that eachsales call will encompass, and that everysalesperson should be trained to progressthrough within a structured selling process.Figure 10.5 highlights the different key activ-ity focuses of a salesperson selling into majorcategories of customers, namely for retailcustomers, trade distributors of products,and industrial users.These diagrams can be used to provide a use-ful structure to the selling process, and as aidsto developing appropriate selling skills trainingcovering this structured approach to selling.Basic sales training 149
150 Sales ManagementSEVEN STEPS OFSELLINGKey accountsellingRetail selling Industrial selling1. Preparation andplanning2. Outlet check andcanvassing3. Review objectives4. Sales presentation5. Negotiation6. Close7. Administration,evaluation andfollow-up withimplementers1. The sales presenter2. The brand talk3. Samples/demonstrations4. Pen/pencil5. Sales planning slip6. Customer record card1. Working to objectives2. Customer needs analysis3. Benefit selling4. Questioning techniques5. Overcoming objections6. Increasing the sale7. Using appropriate bodylanguage8. Using appropriate sellingstyles1. Preparation andplanning2. In-outlet check3. Review callobjectives4. Sales presentation5. Close6. Productmerchandising7. Administration andevaluation1. Preparation andplanning2. Preliminary needsassessment andcanvassinginfluencers/users3. Sales presentation4. Trials and tests5. Final negotiations6. Close7. Administration,evaluation andfollow-upSix sales tools Selling techniquesFigure 10.3 The structured selling process – the professional selling road map
Further considerations in industrialand business-to-business sellingAs illustrated, a structured approach to sell-ing can be developed for any selling environ-ment, but there are differences betweenconsumer and industrial selling and special-ity markets that impact on sales training. Anindustrial or service salesperson is usuallyoffering to supply:● plant or equipment● raw materialsBasic sales training 151THESELLINGPROCESSPre-callactivityIn-call activityPost-callactivityQualifyingprospectsPreliminaryneedsidentificationSchedulingappointmentsPreparingquotations,samples, etc.Setting callobjectivesRetail IndustrialChecking stockandmerchandisingproductBuildingrelationshipsPresentingproductfeatures andbenefitsHandlingobjectionsClosing onsalesAssess needsfor technicalproductsBuildrelationships(users, specifiers,authorizers, etc.)Presentingproductfeatures andbenefitsProduct testsand trialsNegotiating,handlingobjectionsand closingCompletingadministrativepaperworkReviewingachievementsagainst objectivesOrder processingDelivery (andinstallation)Product promotionsupport, technicalsupport, etc.Figure 10.4 Activity in the selling process
● other components or inputs● material supplies, such as packaging,stationery, etc.● services (e.g. legal, ﬁnancial, insurance,cleaning, security, etc.).Some of these inputs are productive, used inthe processing of a company’s nal products,and others are just seen as a cost or overheadto the business operation. There are severalways that industrial and commercial marketsdiffer from consumer markets, and thatimpact on sales opportunities and thereforeon training, as illustrated in the table oppo-site, and training programmes developed forsalespersons in any industrial or specialitymarkets need to take account of any particu-lar market structure factors.Conducting group training sessionsChapter 8 dealt at some length with salesmeetings and conferences. At this point a fewadditional points can usefully be made aboutrunning group training meetings. In generalthe principles for training individuals, dis-cussed further in Chapter 11, should beapplied to group training sessions, with thefollowing points being taken into account.152 Sales ManagementVARIATIONS INSALES ACTIVITYFOCUSRetail outlets Trade distributors Industrial usersPriceProfitPromotionDisplayCountering competitivethreatsMaintaining distributionover timeKeeping distributionchannels open to thecompanyDeveloping personalrelationshipsBuilding personalloyalty betweendistributor andsalespersonSupporting thedistributors service tocustomersPromoting long-termloyaltyBuilding a supply chainpartnership approach tomutual businessdevelopmentEnsuring compatibilityof products with usersown processes,blocking openings forcompetitorsAdvising and leadingwith technologyFigure 10.5 Variations in sales activity focus
Basic sales training 153Decision in uencers In industrial and business-to-business selling situations there isoften a network of persons who will in uence the decision. Thesalesperson needs to be trained to:● identify all persons in the decision-making process● develop a strategy for making initial contact with all inﬂu-encers, and then to develop ongoing relationships● develop presentations that address the particular needs of eachseparate person inﬂuencing buying decisions.Transaction size Industrial or service supply contracts often involve much largertransactions than consumer transactions, and not all salespersonsare experienced in dealing with ‘big ticket’ sales.Purchasing motives The professional commercial buyer is often much less concernedwith emotional factors in buying decisions than with rational fac-tors, and salespersons may need additional training to focus onrational presentation factors.Long-term supply Many industrial contracts involve scheduled deliveries overagreements longer time spans. A prospective supplier will have to wait untilan existing contract runs its course before having an opening tobecome a supplier to the customer and salespersons will needpatience and diligence in pursuing opportunities.Service support A manufacturer who buys or leases equipment from a supplieragreements typically wants some form of maintenance agreement, and isoften obligated to take this from the original equipment supplieras part of the contract.Price negotiations While in consumer product sectors customers may face xedprices, in industrial sectors price is a very negotiable factor,dependent on quantities, speci cations, distribution costs, and soon. Salespersons need training in managing negotiations to maxi-mize pro t.Negotiation lead times Commercial contracts can take considerable time to develop tofruition, through various stages of problem analysis, product speci -cation, tests and trials, developing product costings, cost–bene tanalysis, and negotiations. Some salespersons do not suit that, as theywant immediate results and feedback on their own performance.Special relationships There may be ‘favoured supplier’ relationships the industrial orbusiness-to-business salesperson needs to manage. Where asalesperson encounters situations where other parties have spe-cial relationships, this is a tough situation to break into as a newsupplier, and requires great skill and patience, a quality notsuited to all salespersons.Technical assistance Buyers of industrial equipment commonly need considerabletechnical assistance in testing and evaluating products in theirown operating environment. This may involve specialists otherthan the salesperson working with specialists within the buyer’sorganization. Managing these specialist interactions is a skill thatnot all salespersons develop.After-sales service Most industrial supplies have an element of after-sales service,possibly as an additional add-on product, or included withinoriginal warranties. The salesperson may need training in ways
At the beginning of a group training meet-ing the trainer should:● introduce the topic clearly anddeﬁnitively● deﬁne the purpose and objectives of thetraining session● limit the scope of the training session andquestions to matters which can be coveredwithin the time span● set the guidelines on rules and proceduresfor the training session● work to develop positive and receptiveattitudes in the attending audience.In a participatory meeting the trainer should:● obtain views and opinions fromparticipants● gather information on the nature andstrength of feelings or experience● get a reaction and group input on thesubject matter, discussion points andproposals● develop the discussion so that it leads tothe desired conclusion, action oracceptance of ideas and proposals● produce the intended modiﬁcation ofattitudes, opinions, behaviour, activities,action or techniques● demonstrate a neutrality or impartialitywhich earns the respect and cooperationof the group in the training meeting.Variety in effective trainingThe experienced trainer recognizes the needto provide training information using a vari-ety of means of communication (see Figure10.6) in order to retain the attention and inter-est of participating trainees. Sales managersinvolved in presenting formal trainingcourses are encouraged to use a multi-mediaapproach.LecturesThese are often an excellent method ofinvolving an audience, if it is not too large. Asan audience’s attention span is limited it isusually advisable to change speakers everycouple of hours, unless practical sessions canbreak the routine.DemonstrationsThe sales trainer should always be willing todemonstrate selling techniques and skills forhis or her products in typical selling situa-tions encountered during direct customercontact.154 Sales Managementof maximizing additional sales opportunities relating to such ser-vices.Cash availability With large-value commercial sales, extended credit that aids cashow planning may be a key element in the choice of suppliers.Salespersons can be hampered by lack of exibility to negotiateterms.Cyclical uctuations While retailers may react quicker in curtailing ordering when there is acyclical downturn, manufacturers may curtail production for longer,needing more time to build up production again. Salespersons need tounderstand the cycles in their industries, and the lead times in reactingto cyclical changes in demand and supply.Market coverage While consumer product outlets are both numerous and spreadall over a country, manufacturers in particular product categoriesare often few in number and fairly concentrated in certain geo-graphical regions that better suit an industry. This may mean thatit is easier for an industrial salesperson to identify and service hisor her customer network.
Role playingDiscussion, lectures, demonstrations, lmsand so on are no substitute in sales trainingfor role playing, where each trainee isinvolved in simulated sales situations.Multiple role plays of any situation or anyuses of a technique are usually necessary todevelop skill and confidence, and thosetrainees watching the role plays of their col-leagues are also learning.Closed circuit television in role playingThis is a most useful tool in sales training, aseach trainee can see himself or herself in sim-ulated selling situations, and learn the skill ofself-evaluation as well as developing speci csales-related skills and con dence. Closedcircuit videoing of role playing scenarios pro-vides one of the most powerful training tools,providing feedback, illustrating behaviour,and developing skill often at a much fasterpace than could be accomplished without itsuse.Films or videosMany good sales training lms are availablefor purchase or rent. Trainees are often morewilling, initially, to comment on, or criticize,lm or video role plays than live roles playswith colleagues. This medium can usefullycommunicate the development of sales objec-tives, use of sales presentation aids, presenta-tion techniques, communicating features andbene ts, questioning techniques, handlingobjections, closing techniques, body languageand so on. The disadvantage is that they areusually fairly short, and have to focus on afew key messages designed for a multiplicityof selling situations. The skilled trainer canBasic sales training 155Some do’s and don’ts of group trainingDO● Encourage questions and participantinput.● Praise and comment positively on input.● Draw out relevant experiences fromtrainees.● Encourage active participation throughrole playing and exercises based on thematerial.● Encourage the group to feed back toeach other on group activities.● Demonstrate how to perform activities,tasks or functions.● Monitor performance and providegroup and individual performancefeedback so that each participant canprogress within his/her capabilities,skills and experience.● Pay attention at all times.● Involve everybody.DO NOT● Criticize input.● Poke fun at participants, or cause themto become a butt of jokes amongst thegroup.● Deliver material in a monologue withanecdotes which they cannot relate totheir own experiences.● Allow the pace to become monotonousor the group to become stale throughlack of variety.● Allow the group to become polarizedinto sub-groups.● Expect the group to learn and improveperformance without the trainer settingbasic standards through demonstration.● Sit on the sidelines allowing the groupto drift along without clear support andguidance.● Let your mind drift so that you miss keyaspects of group dynamics or of thecontent or process of group/individualinput.● Develop favourites or be seen to focusmore attention on particular trainees.
build on the lm or video training messagesin speci c company-oriented role plays.Feedback reviews and discussionsFeedback and discussion at each stage oftraining are essential tools in skill develop-ment and performance evaluation. If a posi-tive attitude is to be developed feedbackshould not just be critical, but include a goodproportion of praise and compliments.Printed handoutsParticipants in training programmes shouldhave some materials to take from training156 Sales ManagementVARIETIESIN SALESTRAININGLecturesDemonstrationsRole playingClosed circuitvideo televisionFilms andvideosFeedback reviewsand discussionsHandouts ortraining manualsto convey information and develop ideasto support with slides and chartsto answer participants questionsto show how to do itto develop real/problem case situationsto involve the trainees and build confidenceto practise and develop skills or changebehaviourto consolidate learning and develop goodhabitsto provide feedback, illustrate behaviour,develop skillsto change the pace and give varietyto provide case studiesto develop self-assessment ofperformanceto counsel on techniques, skilldevelopment and resultsto aid learning and retentionto summarize the content of training sessionsto consolidate knowledge, procedures andpractices in reference manualFigure 10.6 Variety in effective sales training
sessions that provide a post-training refer-ence point. Typical sales training manualsinclude coverage of essential informationsalespersons need on:● the company● the products● job descriptions and responsibilities● company personnel practices relating tothe sales team operations● practical and comprehensive guide to allthe sales administrative and relatedprocedures● a summary of the sales skills andtechniques covered in practical training.The traditional training methods and mediaare now being supported by multi-mediaprogrammed texts suited to computer use.While these have a most useful role in train-ing, they cannot substitute for role playingand practical experience.Specialist trainingSome product categories are very technical,and prolonged periods of product-orientedtraining may be necessary. Alternatively, itmay be considered best to select persons witha high level of technical knowledge tobecome salespersons, and then to train themin professional selling. Whatever the scenariofacing a company and sales manager, timedevoted to training will reap dividendsthrough increased sales and improved jobperformance and job satisfaction.Use of training consultantsWhile larger companies may have internalresources to develop and run sales training tohigh standards, many smaller to medium-sized companies lack these human and nan-cial resources. Such companies can, andshould, still have a formal disciplinedapproach to sales training, but can do somaking use of external consultants and train-ing courses. A sales manager should carefullyevaluate the available courses or consultantsto ensure the proposed approach to sellingsuits company products and markets. If aparticular training organization is favouredthen that organization can usually developprogrammes to be run internally with a clientteam, ensuring that all the case situations androle plays do apply to the products, and giv-ing participants more con dence that thetraining is relevant to their customers andmarkets.Length of training coursesThe length of training courses is clearly veryexible. They need to be long enough toimpart knowledge and give time to practiseand consolidate skills, but not so long thatparticipants become bored with material andrepetition. Many companies favour anapproach of conducting training through sev-eral shorter modules of two to three days inlength, with interim ‘on-the-job’ trainingwhere sales trainers accompany salespersonsin their eld selling activities.A typical induction training programmeNew recruits should experience a profes-sional approach to their induction to the com-pany. This demonstrates both the companycare and interest in staff and the professional-ism of the sales organization. Basic inductionshould cover:● company orientation● product knowledge● basic customer care, professional sellingskills and administrative procedures.Where a sales manager does not have thefacilities or resources to place new recruits ona formal induction and selling skills pro-gramme as soon as they join the company, atypical sales force induction programmecould consist of the following.Basic sales training 157
158 Sales ManagementA typical induction programmeDays 1 and 2: Ofﬁce-based training1. Ofﬁce tour.2. Introductions to managers and colleagues based at the ofﬁce.3. Provide induction knowledge and sales administration pack (prepared in advance):● Company knowledge information● Product literature● Company accounts● Organization charts● Policy and philosophy statements● Terms and conditions of employment● Staff personnel handbook● Job description● Sales manual● Samples● Sample case/document case● Sales administrative systems (paperwork)● Sample head ofﬁce performance feedback reports.4. Take the new starter through all paperwork concerned with employment, e.g. termsand conditions of employment, staff personnel handbook, job description.● Ensure understanding and address all questions.● Allow reading time.5. Take the new starter through all information relating to company knowledge.● Ensure understanding and address all questions.● Allow reading time.6. Hand over all company equipment that goes with the job:● Car● Manuals● Administrative paperwork.7. Take the new starter through all company sales administration documents.8. Show the range of head ofﬁce performance feedback reports, and illustrate how theseare used in territory management.9. Introduce the company’s version of a sales manual.Day 3: Demonstration day by ﬁeld sales managerThe ﬁeld sales manager should meet the new starter salesperson at the ﬁrst call of theappropriate journey schedule day (or other suitable meeting point) at the normal starttime. The ﬁeld sales manager should then perform all the normal selling functions forthe scheduled calls that day (he or she should not take specially pre-selected calls).This ﬁrst day should be a ‘model’ of the company’s selling practices as demonstratedby the accompanying sales manager. (Sales calls should not be specially selected aseasy calls, as that is usually transparent to the trainee, and less of a learning exper-ince.)Days 4 and 5: Field practice day by new salespersonWork to the normal journey cycle call schedule (do not use specially selected calls).The ﬁeld manager usually should demonstrate the ﬁrst call of the day.The salesperson should be left to do the second call alone, to build conﬁdence.
Training sales managersThe sales manager needs all of theskills of the salesperson in professionalselling and negotiation, and a lot morebesides. The list below provides a sum-mary in menu format of some of the skillareas in which a professional sales managershould expect to be able to demonstrate com-petency. The training of sales managers canbe organized either on an internal basis, orthrough the broad range of excellent externalcourses available at leading businessschools.Basic sales training 159Thereafter the manager can accompany the salesperson. After each call there shouldbe a brief discussion on any matters that arose. The ﬁeld sales manager should beproviding feedback and training advice after each call, still focusing on the majorpoints only, and personally demonstrating skills and techniques as necessary.Week 2During this week the ﬁeld sales manager should expect and plan to accompany thenew salesperson for at least two complete days, following the principles of ﬁeld train-ing outlined in the next chapter and in the related training checklists.The ﬁeld sales manager should continue to provide positive support, and to demon-strate personally in calls any key training points, not relying only on post-call discus-sion.Week 3As in Week 2 the ﬁeld sales manager should plan to accompany the new salespersonfor at least two days, possibly one complete day and two half days. By this time thesalesperson should have a basic level of competence, and assessments of further train-ing needs can be made on an individual basis.Subsequent trainingAll salespersons should participate in formal product knowledge, professional sellingskills and other courses as soon as possible after recruitment (either taking part in com-pany organized internal programmes, or suitably evaluated external programmes).Skills and competencies of sales management● Marketing and strategy development:● – Market research● – Marketing strategy development● – Developing marketing plans● – Marketing communications● Legal aspects of trading:● – Sales contracts● – Customer rights● – Intellectual property protection (trademarks, copyrights, patents, designs)● Human resource management:● – Leadership● – Recruitment and selection of the salesforce● – Feedback and appraisal● Sales planning and forecasting:● – Sales strategy development● – Developing sales plans● – Sales forecasting● – Sales performance measurement● Category management● Developing trade terms● Planning market coverage● Developing key accounts● Use of information technology in thesales environment● Selecting and managing distributorsand sub-distributors:● – Developing meaningful selection criteria● – Identifying suitable distributors
160 Sales Management● – Developing sales training skills● – Developing motivational rewards andincentives● Communication skills:● – Making group presentations● – Developing motivational sales teamcommunications● Financial management:● – Budgeting principles● – Financial controls● – Costing/pricing principles● – Cash ﬂow management● – Product and customer proﬁtabilitymanagement● – Managing distributors● Selling and negotiating skills:● – Professional selling● – Negotiating with major accounts● Organization and administration:● – Organizing a sales force● – Developing effective sales forcecontrols and administrative systems
Basic sales training 161Checklist 10.1Basic training for salespersonsAction pointsHave the training needs and skills of new recruits been assessed?Has an initial training course to cover needs been developed?Does the initial training provide sufﬁcient knowledge and skills in:● Company knowledge● Company history● Role in the industry● Management philosophies and style● Organization and management structures and reporting● Growth and performance● Objectives for the future● Market personnel policies and practices● Product knowledge● Product heritage and historical product development● Current product range, design aspects, packaging● Production methods and processes● Product range features and beneﬁts● New product innovations, developments, expansion plans● Legal aspects relating to products and markets● Competitors’ products with comparisons● The markets for the products● Marketing programmes and support● Customer care and professional selling skills● Does it give coverage of customer care, prospect identiﬁcation,● and the seven steps of the call, i.e.● – Customer care● – Prospect identiﬁcation● – Preparation and planning● – In-outlet review● – Reviewing the call situation against objectives, stock● – checking, etc.● – The sales presentation● – Closing the sale● – Merchandising● – Call administration and evaluation● Does it show how to use the basic six sales tools, of:● – The sales presenter● – The brand talk● – Samples and the sample case● – Pen/pencil
162 Sales ManagementChecklist 10.1 continued Action points● – Sales planning slip● – Customer record card● Does it provide basic training in the techniques of selling,● including:● – Working to objectives● – Customer needs analysis● – Beneﬁt selling● – Selling styles● – Questioning techniques● – Using body language● – Overcoming objections● – Increasing the saleWhat range of training materials is provided to salespersonsparticipating in training programmes:● Company knowledge information● Product literature● Company accounts● Samples● Organization charts● Policy and philosophy statements● Staff personnel handbook● Sales manual● Job description● Administrative systems (paperwork):● – Customer record cards● – Order forms● – Daily activity reports● – Product uplift or credit notes● – Territory journey plans● – Sample request forms● – Expense control forms● – Stationery request forms● – Display material requisitions● – Customer invoices● – Sales promotion control forms● – Internal memo padsDoes the formal training programme use a variety ofcommunication media, e.g.:● Lectures?● Films/videos?● Role playing?● Closed circuit television of role playing?● Personal feedback?● Discussions?● Printed handouts?Is feedback provided to all training course participantsthroughout the training process?● Are participants encouraged to develop self-evaluation?
The role and purpose of ﬁeldtrainingField training of salespersons is probably themost important function of the eld salesmanager. Field managers commonly set par-ticular eld training objectives in the areas of:● increasing marketing knowledge tosharpen awareness at the point of sale● imparting product knowledge to increaseexpertise, enthusiasm and conﬁdence● improving personal selling and negotiatingskills● improving understanding of buyers’motivations, their organizations, role andobjectives● gathering market intelligence aboutcustomers and competitors● increasing salespersons’ adaptability todifferent buying and selling environmentsin changing markets● developing administration andorganizational skills (whether apaperwork-based system or computer-based system is in use)● developing skills in interpersonalrelationships● developing expertise in customer needsidentiﬁcation and creation.Assessing training needsField training (see Figure 11.1) is particularlyeffective in focusing on:● functional activities● sales techniques● organization● personal attitudes.Using a form such as the model trainingaudit, shown later in this chapter, duringeld evaluation and training helps identifythe speci c key result areas the eld salesmanager might focus on in any eld trainingsession.Functional activitiesQuantitative or objective measures can bemade of most aspects of a salesperson’sfunctional activities. The eld sales managercan observe each activity the sales-person undertakes during the selling day,and form judgements and conclusions on thesatisfactoriness of performance in each area,while also making interpersonal comparisonswith other team members. Most functionalactivities will apply in all selling environ-ments, whether consumer, industrial orbusiness-to-business, but their relativeimportance in the selling process mayvary.11Field sales trainingEvery eld visit by a sales manager withevery salesperson should have a train-ing objective and training input,adding value to the visit and sharpeningthe salesperson’s skills.
● Selling activity – working to a structuredselling process. Does the salesperson workto a structured selling process?Observation will quickly show if thesalesperson works to an appropriatestructure to the selling process, such as theseven-step selling sequence proposed inthis text. The manager is likely to want tofocus on key stages that impactparticularly on sales success and businessdevelopment and proﬁtability, such asidentifying needs, effective presentations,negotiating and closing the sale.● Setting call objectives. Does the salespersonestablish realistic and achievable (butstretching) sales objectives in advance ofcommencing sales presentations,recognizing that managing to objectives isessential to growing business?Sales managers need to be alert tosalespersons whose only objective is‘obtaining an order’, and to develop apositive approach to setting quantiﬁableobjectives in terms of volumes andturnover, or even other business-buildingobjectives such as obtaining new listings,or new locations where the product canbe displayed or used.● Use of time. Does the salesperson managehis/her time effectively to maximize sellingtime?Time is a key limiting resource of thesales team, so analysis of use of timemight consider the following points:● – Time of ﬁrst call● – Time of leaving last call● – Amount of time during the day spentdriving and parking● – Pre-call preparation and planning activities● – Post-call administration● – Lengths and frequency of inter-callbreaks● – Waiting time at calls● – Time spent checking stocks● – Time spent merchandising product● – Time given to effective selling activities(e.g. the presentation)● Building relationships. Are relationships withall buyers and decision inﬂuencerssatisfactory and carefully cultivated over time?● Call rate. Does the salesperson achieve asatisfactory daily call rate on customers,and how does this compare with theaverage for the sales team?● Conversion rate. Does the salespersonhave a satisfactory ratio between orders164 Sales ManagementTRAININGFunctionalactivitySalestechniquesOrganizationAttitudesFigure 11.1 The focuses of ﬁeld training
and calls (compared with the average forthe sales team), and if this variessigniﬁcantly at times can causes beidentiﬁed?● Administration. Does the salespersoncompetently and promptly complete alladministrative tasks associated with theselling activities?● Job description. Does the salespersoncomply with all the other responsibilitiesoutlined in the appropriate jobdescription, and with other jobrequirements established by the salesmanager?Sales techniquesStudying performance records does not givean indication of skill in using sales techniquesin the face-to-face selling situation. That onlycomes through observation when the man-ager is accompanying members of his or hersales team. Field training can then be focusedon areas of weakness or aspects of techniquesjudged as priorities in obtaining and buildingbusiness.Customer approach● Is the approach professional, warm,conﬁdent and enthusiastic?● Does the salesperson have theappearance and bearing to make apositive impression, commanding attentionand respect as the buyer’s equal?Identifying/accessing decision makers● Does the salesperson identify and gainaccess to the decision maker in the buyingorganization?● Does the salesperson identify andrecognize all the other decision inﬂuencersin the buying organization?● Does the salesperson develop aprogramme of regular contact with thevarious decision inﬂuencers?● Does the salesperson present productinformation to the decision inﬂuencers inways that address their particular needs?Working to call objectives● Does the salesperson set overall objectivesfor the business with each customeraccount?● Does the salesperson break down larger-scale objectives to speciﬁc objectives foreach customer contact, and with eachperson involved in the decision-makingprocess?Identifying customer needs● Does the salesperson establish the buyer’sneeds and problems in relation to theproducts being offered (includingaddressing the speciﬁc needs for eachother person involved in the buyingprocess, such as product speciﬁers, testers,users)?● Do presentations recognize and satisfyneeds, and address any buyer queries orconcerns?Beneﬁt selling● Does the salesperson highlight key beneﬁtsin relation to buyer needs, or just presenta list of product features (leaving the buyerto judge the beneﬁts)?● Does the salesperson narrow down therange of features and beneﬁts to focus onwithin a presentation, or run through theentire menu item by item?● Does the salesperson approach each otherdecision inﬂuencer with a range ofproduct beneﬁts addressing their particularconcerns and needs?Objection handling● Can the salesperson recognize realobjections and clarify them?● Can the salesperson respond to objectionswith appropriate objection handlingtechniques?Increasing the sale● Does the salesperson recognize andpursue opportunities to increase the saleField sales training 165
(in value or volume) through productswitching opportunities, selling up tohigher value/proﬁt items, or linking tosales of supplementary items (such asaccessories, service contracts, etc.)?Closing techniques● Does the salesperson control the closingstage of the presentations?● Does the salesperson present a positiverequest for an order (using the mainclosing techniques of positive close,assumptive close, concession close, fearclose, alternative close)?Use of sales aids● Does the salesperson prepare all salesaids ready for sales presentations? (Checkthe salesperson has all available salesaids in their latest format, e.g. salespresenter and product literature, samples,customer records, order forms, other visualaids?)● Does the salesperson make effective use ofthe range of sales aids to progress thesale and inﬂuence the buyer (or otherdecision inﬂuencers)?Control of the call● Does the salesperson control the pace,environment and content of thepresentation (or is the buyer in control)?● Does he work to inﬂuence the buyer’sviews, opinions and decision making (andsimilarly work to inﬂuence other decisioninﬂuencers)?Communication skills● Does the salesperson exhibit suitablestandards of communication skills (verbalﬂuency, skills in presenting data andinformation, questioning techniques,listening skills, responsiveness tovoluntary/involuntary signals from thebuyer, body language, etc.).Use of product knowledge● Has the salesperson adequate knowledgeabout the company, its heritage andproducts, and the markets served by thecompany and its customers?● Can the salesperson effectively answerbuyer questions and concerns based onknowledge (e.g. product speciﬁcations,performance, pricing, terms, servicing andmaintenance, availability)?Initiative in exploiting opportunities● Does the salesperson network within thebuying organization and demonstrateinitiative in seeking opportunities foradditional business?OrganizationThe eld sales manager’s audit of trainingneeds should encompass organizationalaspects of the selling job. Any de ciencies canthen be the focus of training according tohow they are judged as impacting on salesperformance.Call records● Does the salesperson keep all customerrecords completely up to date?● Are all customer records carried by thesalesperson (physically as record cards, orlogged on to a laptop computer)?● Does the salesperson make use ofcustomer record information whenpreparing and planning for salespresentations?Information retrieval● Has the salesperson organized all ﬁlesand data in a fashion that aids storageand retrieval of information during theselling day?● Is all sales equipment (including recordsand sales aids) kept in tidy and accessiblefashion in the vehicle? (It may beappropriate from time to time, where166 Sales Management
salespersons work from a home-basedofﬁce, for line managers to have access tocheck storage and management ofcompany equipment and information.)● Can all sales aids, paperwork, samples,equipment, etc., carried in any briefcase,be readily accessed by the salespersonduring a sales presentation, and are theyorganized in some systematic fashion foruse during sales presentations?Sales aids● Does the salesperson have a complete setof all current sales aids and relatedproduct and promotional materialavailable throughout the selling day (i.e.in the car)?● Does the salesperson check all necessarysales aids prior to making a call on eachcustomer?● Are appropriate sales aids taken into thecall (or left in the vehicle)?Journey planning● Does the salesperson schedule salesappointments (where this is consideredappropriate for the industry and marketsectors)?● Are appointments scheduled at intervalsthat maximize customer coverage duringthe selling day?● Is the journey planning organized in themost cost- and time-effective manner?● Are calls on customers made atfrequencies that reﬂect their current salesperformance with the supplier, or theirpotential (are some customers being over-visited, and others under-visited)?Vehicle● Is the vehicle kept clean and tidy to reﬂecta suitable image of the company and thesalesperson’s professionalism?● Is the vehicle servicing up to date, with allaspects complying with relevantregulations?Administration● Are pre-call and post-call administrationcarried out promptly and efﬁciently?● Are communications and correspondencewith customers and other head ofﬁceservice functions and colleagues handledin a timely and efﬁcient manner?● Does the salesperson record, follow up,and honour all commitments made tocustomers and colleagues?Personal attitudesThis is perhaps the most subjective area of allin preparing a training audit. Assessments ofattitude may be in uenced by personal feel-ings, prejudices and preferences. The eldsales manager needs to attempt as best possi-ble to make impartial assessments in thisqualitative subject area, if only because it isoften harder to train people to change atti-tudes than to improve performance of techni-cal skills. For example, some salespersonsbecome sceptical of a company’s ‘indoctrina-tion style’ of making sales presentations,mainly because they lack the con dence andskills to implement the recommended salessequence and selling systems. The sales man-ager may recognize that skills training in themore objective areas of assessment will fre-quently produce a modi cation in attitudes,where the salespersons see that they can actu-ally improve their sales performance. Theattitude audit typically might cover the fol-lowing aspects judged as impacting on salesperformance.Personal warmth● Does the salesperson exhibit warmth andfriendliness to all contacts in customerorganizations?Empathy● Does the salesperson project empathy withthe buyers when discussing theirproblems?Field sales training 167
Enthusiasm● Does the salesperson project enthusiasm,for the company, its products, policies andphilosophies, and his or her job?Loyalty● Is the salesperson visibly loyal to thecompany, colleagues and management?Positiveness● Has the salesperson the right positivemental attitude to the job and life ingeneral, and does this come over tocustomers in his or her contacts with them?Team spirit● Is the salesperson a good team personand participative at meetings andconferences (or is he or she more of aloner)?● Will the salesperson voluntarily helpcolleagues in any practical ways that willhelp promote the development of thebusiness?Training stagesField training by the sales manager shouldtake the salesperson involved through thefive stages of discussion, demonstration,explanation, practice and consolidation asillustrated in Figure 11.2.The eld training provided by the salesmanager when accompanying the salesper-son lays the foundations for progress andimproved performance by the salesperson,but the salesperson must build on it throughongoing practice and self-evaluation. Thesales manager must ensure that he or shedoes not simply disappear after a trainingsession, only to reappear for another sessionsome weeks later, but must maintainregular contact and provide support byspecifically discussing progress andany problems arising with the salesperson.It is normally necessary to break a trainingprogramme down to the ve stages illus-trated in Figure 11.2 in order to take partici-pants through the chain of: unconsciousincompetence – conscious incompetence –conscious competence – unconscious compe-tence (see Figure 11.3). When we perform anytask or function very regularly we get into aroutine that includes developing many badhabits. Only when we recognize and identifythe bad habits will we achieve consciousincompetence, and therefore be able to takethe corrective action to move back to thestage of conscious competence.The training auditThe rst stage of eld training is for the salesmanager to audit present skills and activi-ties, and form a judgement on the mostimmediate training priorities. The sales man-ager should develop a formalized approachto auditing or assessing his or her team, inorder to be consistent on the criteria againstwhich he or she is making assessments andjudgements. Developing an audit form (anexample is illustrated in Table 11.1), helps thisprocess. The results and interpretation of theanalysis should be shared with the salesper-son being assessed and trained, and speci cpriority areas identi ed as the focus of prac-tical eld training and further self-develop-ment that will make tangible changes toperformance.If a standard audit assessment form isdeveloped, an attempt should be made tostandardize the terminology, measurementcriteria and rating scales used by eld man-agers preparing training audits and conduct-ing performance assessments. A trainingaudit should have a section where the traineris required to report and comment on whattraining he or she has given the salespersonthat day, and these notes can form part of anongoing record of training and the salesper-son’s response to it.168 Sales Management
Conducting ﬁeld sales trainingAn assessment of sales performance andskills, strengths and weaknesses, and train-ing needs should always be discussedpromptly with the particular salespersoninvolved, and will generally be betterreceived if it can commence with somefavourable comment on strengths and goodpoints in techniques and skills. The salesper-Field sales training 169DiscussionDemonstrationExplanationPracticeConsolidationThe opening stage of training,when we analyse what we do,and why, and look foralternatives that might givebetter resultsThe trainer gives personaldemonstrations to illustratemodel techniques, how theywork, and how to use them inthe selling environmentFurther discussion andexplanation ensure thetrainee understands thedifferences and benefits ofthe model technique versushis/her current practicesPractice is necessary to helpthe trainee develop correcttechniques and goodhabitsThrough regular usage andpractice, supported by fieldtraining and counselling, skillsdevelop and good habitsbecome a routine part ofselling techniquesFigure 11.2 Stages in training
son should be clear that there is a differencebetween a training audit (and resultantcorrective and performance-improvingtraining) and a periodic formal appraisal.The training audit is based on analysis andjudgement at a speci c point of time, and isaimed at improving skills and performanceover the short term in particular, and thelonger term if possible. A formal appraisalwill measure performance against agreedstandards and objectives and otherrelevant criteria, based on an overview of allthe data and events occurring betweenappraisals.Priority trainingThe field sales manager’s priority is toimprove performance by change-creatingtraining in areas of skill and attitude, and it isunlikely to be productive to spend long peri-ods of time lecturing the salesperson onminor matters (in terms of impact on salesresults). Field training should normally onlyfocus on from one to three priorities on anyvisit to reduce the risk of confusion.Training is a major route to improvingsales performance and maintaining high lev-els of motivation, and needs time.170 Sales ManagementUnconsciousincompetenceUnconsciouscompetenceConsciousincompetenceConsciouscompetenceStagesin the trainingcycleAdopts bad habits,fails to use bestpractice skillsand techniquesCounselling,explanation,demonstrationRegular skill usage,slippage into somebad habitsDemonstration,role playing,practicePerformingunsatisfactorily, butunaware of theproblemor causesPerformingvery satisfactorily,and consciouslyapplying skillsand techniquesPerformingsatisfactorily, butnot consciouslyapplying skillsand techniquesPerforming lessthan satisfactorily,but aware of theproblem andcausesFigure 11.3 The training process in relation to consciousness
Field sales training 171Table 11.1 A model training audit templateTraining audit SalespersonDate:● Sales sequence – Seven steps of the call● – Preparation and planning● – Outlet review (against objectives)● – Stock check● – Sales presentation● – Closing the sale● – Merchandising● – Post call evaluation● Setting call objectives● Use of time● Building relationships● Call rate● Conversion rate● Administration/organization● Other● Customer approach● Identifying/accessing decision makers● Working to call objectives● Identifying customer needs● Beneﬁt selling● Objection handling● Increasing the sale● Closing techniques● Use of sales aids● – Sales presenter● – Brand talk● – Samples/sample case● – Pen/pencil● – Sales planning slip● – Customer record card● Control of the call● Communication skills● Listening skills● Use of product knowledge● Initiative in exploiting opportunities● Call records● Information retrieval● Sales aids● Journey planning● Vehicle● Administration● Personal warmth● Empathy● Enthusiasm● Loyalty● Positiveness● Team spiritTraining given:ManagerTraining audit SalespersonDate:Functional activities Rating CommentsTraining given:ManagerSales techniquesOrganizationAttitudes
● Set time aside for sales team training to aformal programme.● Do not move from one training subject toanother until you are satisﬁed withprogress.● Work at the pace suited to the trainee.Time is not the priority in training: thestandards you achieve are.● Allow plenty of time for practice.● Keep a record of training provided andprogress made through the programme.A training frameworkThe training framework developed by theeld sales managers should take account of:● individual differences● individual needs of the trainees.No two salespersons are the same, and there-fore they must be recognized and treated asindividuals by the sales manager if he or sheis to succeed in motivating and training eachof them. Table 11.2 highlights some pointerswhen training more experienced or less expe-rienced salespersons.Training must take account of:172 Sales ManagementConcentrate your eld training on keyresult areasTable 11.2 Training in relation to sales experienceApproaches to training experienced and less experienced salespersonsCommon characteristics● open-minded● little personal experience to draw upon● more responsive to change● willing to try new techniques● keen to increase skills and knowledge● less reliant upon relationship selling● ambitious during early sales career● responds more positively to training andwith a high rate of assimilationResponds to:● demonstration of general best practicesales techniques● logical explanation of selling techniques● guided practice● opportunities to increase knowledge andexpand experience● variety in activity● job related goals and objectives● incentives related to sales performance● regular positive feedback (praise forprogress)Common characteristics● sceptical attitudes (seen it all before)● sensitive to criticism● reluctant to change● ingrained bad habits● more reliant upon relationship selling● less motivated by ambition than byrecognition for experience, status,acceptance● responds more negatively to training innew skills and techniques, and with aslower rate of assimilationResponds to:● recognition for seniority and experience(e.g. in training younger salespersons)● demonstrations of alternative techniques tocrack particular problems in speciﬁcaccounts● training in small doses on very speciﬁcand relevant techniques, supported by aclosely monitored personal developmentprogramme which rapidly yields tangibleresults● training which is non-threatening and notcalling into question status, achievementsor experience● projects which use experience andincrease peer group recognition andacceptance● increased recognition, status, acceptanceApproaches to training experienced and less experienced salespersonsInexperienced (often younger) Experienced (often older)
● the salesperson’s understanding andimplementation of company policies andstrategies● the sales manager’s previous experienceof the trainee’s● – abilities to perform job functions● – existing skill levels● – rate of assimilation● – attitudes● previous experience of the trainee’sresponse to training● the different mix of needs and motivationsof each salesperson.At the end of this chapter is a usefulsummary checklist of guidelines for eldtraining that will act as a practical frameworkfor eld sales management.Training feedbackThe intention of feedback is to improve ormodify performance or behaviour. Givingfrank, honest and open feedback serves sev-eral useful purposes:● It lets salespersons see that their linemanager is interested in them and theirprogress in the job.● Salespersons recognize consistency in thebehaviour of their line manager towardsthem, learn to expect and acceptcounselling and training, and come torealize that the line manager does notexpect perfection, but does expect effortand improvement● It helps the salespersons improve self-analysis in selling situations, and thereforeto develop self-improvement programmes.● It leads to awareness that changes inbehaviour and performance improvementlead to greater acceptance, respect andsatisfaction exhibited by line managers.● It aids maintenance of high morale, as it can,and should, refer to the positive as well as thenegative aspects of behaviour and perfor-mance, with praise being a more commoninput from line managers than criticism.A checklist of guidelines for giving trainingfeedback is included at the end of this chapter.Judging the trainer’s effectivenessThe effectiveness of a sales manager as atrainer can be judged through progressagainst a mix of objective and subjective fac-tors. In the sales environment the results andbene ts of training are often quickly appar-ent, often more so during periods of eco-nomic recession when the general level ofsales activity is lower.Field sales training 173Some factors where change provides a measure of training effectivenessObjective factors● More time allocated to productivebusiness building activities during thenormal working day (better timemanagement)● Salespersons’ call rate● Sales to calls (conversion ratio)● Size of orders (cases/value/range)● Display activity● – shelf layouts● – promotional features● – use of point of sales material● Expanding distribution● Market share versus competitors.Subjective factors● Higher team and individual morale (lesscynicism, fewer complaints)● Increased participation in meetings● Increased ﬂow of creative ideas● Evidence of improved networking withincustomer organizations (targeting abroader range of decision inﬂuencers)● Lower sickness rates (less lost time)● Less time spent at home on non-sellingactivities● Less time spent during the working dayon non-selling activities (e.g. breaks,waiting).
174 Sales Management● Prices controlled within guidelines indistribution channels● Territory and account proﬁtability● Implementation and effectiveness ofsales promotion programmes● Increase in identiﬁcation of (andtackling) new business opportunities● Staff turnover (reducing)● Compliance with administrativeprocedures (fewer problems)● Fewer customer complaints andexpressions of dissatisfaction with salesservice● Less management time needed forroutine supervision● Salespersons actively seeking ﬁeldtraining time with the sales manager● Observations or other evidence ofimproving levels of job satisfaction● Team members gaining promotion
Field sales training 175Checklist 11.1Guidelines for ﬁeld trainingAction pointsDevelop a consistent framework to your approach to ﬁeldtraining, e.g.● Relax the salesperson to your presence● Observe performance● Identify current training needs● Assess skill levels● Concentrate on priorities:● – Using the information from the training audit, recognize andconcentrate on priorities● – Concentrate on key result areas● Provide training, giving attention to the stages:● – Discussion● – Demonstration● – Explanation● – Practice● – Consolidation● Review different techniques● Obtain agreement and acceptance of beneﬁts of change● Demonstrate the techniques● Encourage practical application● Provide feedback:● – It lets the salesperson see you are interested in him● – Consistency in your style creates an expectation of trainingand counselling, and builds conﬁdence● – Feedback sharpens self-analysis● – The salesperson realizes he earns favour by modifyingperformance and behaviour, increasing satisfaction fromrespect, achievement and acceptance● – Feedback improves morale● – Regular feedback gains acceptance as counselling notas criticism.● Maintain contact● Provide frequent supportive training● Maintain progress records● Take account of:● – The salesperson’s understanding and implementation ofcompany policies and strategies● – Previous experience of the trainee’s abilities to perform jobfunctions, sales techniques, and attitudes● – The salesperson’s previous responses to training
176 Sales ManagementChecklist 11.2Guidelines for giving training feedbackAction pointsThe intention of feedback is to improve or modify performanceor behaviour.● Field training feedback should be given generally in arelaxed informal environment● Avoid interruptions and distractions● Allow plenty of time so that the neither you nor the traineefeels pressured● Establish your rapport with the trainee● State any issue clearly, concisely and in comprehensible termsto the trainee● Develop a two-way exchange of communications, views,comments, opinions● Let the trainee see, understand and agree his or her actualperformance in relation to agreed standards● Check that the trainee agrees the training need exists● Seek to develop a mutual understanding of why the trainingneed is arising● Obtain agreement that changes would be beneﬁcial to thetrainee (use questioning techniques)● Seek a commitment to work for a change in behaviour, skillsor performance● Ensure the trainee learns your views of his or her performance● Demonstrate your commitment to assist the trainee achieve thedesired results● Advise the trainee how to realize his or her potential throughfurther training and personal development● Increase the trainee’s personal motivation to improve his/herproductivity and performance through agreed objectives andpersonal development programmes● Monitor progress, provide regular feedback in relation to theagreed programmes and changes, and develop furthercorrective action training as necessary
Part FourPlanning, Forecasting and PerformanceMonitoring
Why plan?Planning is a core management function,although one that often attracts too little timewithin a busy marketer’s schedule. Whileplanning is perhaps the most important func-tion of the sales management and marketers itneed not be the most time consuming, but iscritical in reducing the risks associated withinvesting in sales and marketing activity.The time given to planning is less criticalthan the quality of the planning, and withthat in mind this chapter will attempt to pre-sent a framework for the planning process.My companion volume, The CIM Handbook ofExport Marketing, provides more extensivecoverage of the topic. Planning gives a senseof purpose and direction to subsequent activ-ities, by:● setting objectives● identifying priorities● recognizing key result areas● developing strategies and tactics● monitoring results.Key result areas are those aspects of the busi-ness that impact on the outcome of a plan,but which might not always appear in theshortlist of primary objectives. Typical keyresult areas within the selling organizationcan include:● use of professional selling skills andtechniques● product knowledge● sales call rates (average number ofcustomer calls being made bysalespersons)● customer coverage (customers on thedatabase receiving scheduled visits atprescribed intervals)● conversion ratio of sales to calls● product distribution● the effective use of point of sales material● obtaining display siting in the most visibleand accessible position in an outlet.● accessing the end user of a product withinan organization (usually a different personfrom the buyer)● effective networking with inﬂuencers incustomer organizations● the selection of key exhibitions to targetspeciﬁc user groups.In any form of selling activity, critical keyresult areas include the level and use of pro-fessional selling skills, and product knowl-edge, and these are core training topics forinitial and ongoing training (see previouschapters on basic sales training and eldsales training). The sales manager shouldtake a little time to identify and list those keyresult areas that demonstrably impact on hisor her performance and ability to achievemarket objectives in order that appropriateprogrammes are developed to improve per-formance in the key result areas.Stages in the planning processThe full planning process in most companieswill encompass the stages of:12The planning process
● developing an overall company corporateplan● setting objectives for each market sectoror target market (including exportmarkets)● developing speciﬁc strategies to achieveobjectives● developing market sales and proﬁtforecasts● making speciﬁc programmes (tactics andplans) to achieve objectives (e.g. breakingdown market sales forecasts by outlet orcustomer and setting sales targets,identifying new business opportunitiessuch as targeting speciﬁc potential outletsor users, developing supportingpromotional activity)● developing controls to monitor results andensure the implemented strategies andtactics produce results in line with plans● taking corrective action where deviationsfrom plans occur.The sales manager and his or her marketingcolleagues must look to identify what infor-mation is needed to assist the planningprocess as well as considering how he or shecan measure progress against plans andtowards achieving objectives. Making a mar-ket plan means having access to historicaldata on each market sector and using thathistorical data to project market trends, andthen making reasoned assumptions aboutfactors that are outside the control of the mar-keter and other players in his or her market(such as economic conditions and regulatorycontrols). Figure 12.2 illustrates the stages inthe planning process.An alternative way of illustrating the plan-ning process is shown in Figure 12.3. Thispresents planning rather like a road map,working from a starting point, with a cleardestination in mind, planning the route, andhaving landmarks to check you remain oncourse.180 Sales ManagementCOMPANYOBJECTIVESMarketingobjectivesFinancialobjectivesStrategiesDomesticsales andmarketingProduction HumanresourcesResearchanddevelopmentExport salesandmarketingFigure 12.1 Developing strategies from company objectives
Decision areas in strategydevelopmentFigure 12.4 summarizes the key areas wherethe sales managers and marketers will beinvolved in taking decisions and which willimpact on performance of the products in thetarget market sectors. At the end of this chap-ter a checklist breaks down these key consid-erations to specific points that needaddressing in developing the sales and mar-keting strategy.Inputs to market sales planningContributions to market planningThe key to planning is market knowledge,and some general market knowledge isrequired in respect of the following factors:● The economic and social environmentexternal to the company:● – Incomes● – Prices● – Interest rates● – Currency movements● – Employment levels● – Production● – Distribution● – Demographic factors● – Lifestyle trends● Legislative and regulatory environment● Competition (domestic and foreign)The planning process 181PLANSObjectivesStrategiesForecastsTacticsHistoricalperformanceKeyassumptionsAction plansPerformance reviewFigure 12.2 Stages in the planning process
● Political considerations● Distribution channel factors (e.g. changesin patterns of distribution)● Trend and product preference patterns andchanges● User attitudes, perceptions andexpectations● Company human resources and training● Company ﬁnancial resources and controls.In preparing market plans account must alsobe taken of your own company resources inrespect of:● plant production capacity and ﬂexibility tovary any product mix to meet changingopportunities● limitations resulting from a need to modifyproducts to suit certain customers● availability of input supplies to meetexpanding production● product innovations and technology (howyour own innovations and range changeswill impact on the market, or how they willcompare with competitor productdevelopments)● sales and marketing resources (i.e. salesforce resources to cover the potentialcustomer base, marketing budgets formarketing communications support)● ﬁnancial resources to fund growth (i.e. asmore of the limited resources are tied upin input supplies, goods in process,inventories, and trade credit).Many sales managers nd that the marketopportunities are greater than they can tacklewithin their limited resources of product,182 Sales ManagementReviewhistoricalperformanceState keyassumptionsClarify goalsand objectivesPlanstrategiesPrepareforecasts andbudgetsDevelopspecifictacticsMonitorperformanceCorrectiveactionadjustmentsWhere arewe now?Where do wewant to be?How do we checkif weve arrived?How do weget there?Figure 12.3 The planning road map
finances and staffing levels. That meansassigning priorities to opportunities, ordiverting internal resources from other activ-ities, which in turn can impact on quality andservice in support functions.Historical market and performance datain planningEarlier Figure 12.2 referred to the importanceof using available historical market and per-formance data in market planning. This isexpanded in Figure 12.5, which shows a typ-ical range of market data that might be avail-able and useful in framing the sales andmarketing plan.Estimates should be made or obtained(from desk research) into the total market forthe product category, so that you have esti-mates of the total market for your products,rather than looking at your own sales in iso-lation.Your own distribution should be comparedwith that of your competitors, as a measureof the effectiveness of your sales team, and asa guide to the suitability of your productsand prices to market needs.You will want to know about market pric-ing structures to ensure your competitivenessand positioning correctly in relation to com-petitors’ products and your strategic market-ing objectives. It is essential to know trademargins at each level of the distribution chainif you are to control market prices. Manysuppliers do not have much in uence overthe market pricing of their products, in partbecause of lack of knowledge of market pric-ing structures and in part because of theabsence of any control over their trade dis-tributors (where a product is re-sold ratherthan purchased for use directly by end users).Your historical performance in sales andThe planning process 183KeydecisionareasThe product rangeMarket opportunitiesDistribution channelsProduct pricing parametersMarketing supportSales resourcesFigure 12.4 Key considerations in developing sales strategies
184 Sales ManagementHistorical marketand performancedataMarkettrendsPricemovementsTrademarginsMarketresearchdataDistributorperformanceSalesvolumesSupplierdispatchesTradechannelsalesPricingtrendsInflationeffectsExchangerateeffectsSuppliermarginsWholesalermarginsRetailermarginsSalestrendsProductdistributionTradechannelstructuresUser attitudesandperceptionsSupplierdispatchesCompetitorpricesTradechannelsalesSalesvaluesLocal keyprice pointsDistributionachievementsCompanyproductsCompetitorproductsProductofftakeProductvolumesTrendanalysisSalesturnoverTotalturnoverOnsuppliersproductsProfitperformanceGrossmarginsOverheadstructureDistributionachievementsBy tradechannelBy keyaccountFigure 12.5 Historical market and performance data for use in planning
distribution achievements may providean important insight as to how youmight perform in the future, and howeffective your sales team might be in imple-menting your marketing strategies andplans.Key planning assumptionsThere are a number of aspects of planningwhere we might make assumptions, as illus-trated in Figure 12.6.Market sizeUnder this heading, when making assump-tions or projections based upon assumptions,the marketer will be looking for informationrelating to product volumes and valueswithin relevant product categories or substi-tute products. Also he or she will want anyinformation about distributors of the productcategory, such as how many distributors ordistribution points are estimated to cover themarket, and their estimated sales volumes. Itwill also be useful to know the numbers ofusers or consumers in the target market seg-ments, and their likely level of use or demandfor the product.Market dynamicsThis is about the changes that are takingplace in the product sector and distributionchannels, independently of the supplier. Forexample, users or consumers may bedemanding higher quality products withgreater reliability and lower servicing needs.Or there may be a move towards higher(value-added) or lower (basic commoditytype) priced products. Consumers might bepressuring for more variety in products (suchas car models with a greater range ofoptions), or there might be movements inuser or consumer product preferences, suchas the move in recent years towards moreenvironmentally friendly and natural prod-ucts.Looking at distribution channel dynamics,these are constantly changing. SuppliersThe planning process 185Figure 12.6 Key assumptions in planningKeyassumptions inplanningMarketSizeSpendParallelactivityCompetitoractivityDemographicfactorsMarketdynamicsOrganizationchangesGovernmentregulationsSocio-economicfactors
merge with other suppliers, with objectivesof strengthening market positions. New sup-pliers enter markets to service niche needs. Inconsumer goods the retail market is dynamic,with new outlet formats servicing customerneeds, e.g. the move to out of town shoppinglocations.SpendThe market plan must make assumptionsabout the users’ or consumers’ spendingpower. Some products are essential either asindustrial components or consumer necessi-ties, and others are discretionary if funds per-mit purchase. The availability of disposablefunds to use on the products may be a criticalfactor in purchase decisions. High interestrates may discourage investment in capitalgoods. High unemployment may discourageconsumer spending on non-essentials.Knowledge of the state of the local marketeconomy will assist in making sensible plan-ning assumptions.Organization changesIn some situations there may be a need toconsider likely changes in either the mar-keter’s own company organization, or in thatof his or her market distributors. Internalcompany re-organizations might impact onmarkets and planning. Whatever companyorganizational changes occur, if they arelikely to impact on performance thenassumptions must be made at the planningstage and factored into plans.Parallel activityIn some product categories it is quite com-mon for marketers to nd a signi cant levelof parallel trade. This is trade that is not of -cially sanctioned or managed by the supply-ing company, normally by-passing of cialdistribution channels, and possibly evenincluding smuggling operations. Paralleltrade normally develops where there areonerous duties or taxes or where a companyfails to supply (for whatever reason) suf -cient goods to meet market demand, orwhere there are signi cant price differentialsbetween markets. Goods exported from thehome market may return through oppor-tunistic traders if they can be purchasedabroad and re-imported more cheaply.The effect of parallel trade is quite disrup-tive to orderly marketing, particularly ofbranded goods, and can often result in thesame products selling at differing price levelsthrough the alternative distribution channels.When it comes to market planning, if themarketer’s products or markets attract paral-lel trade then this must not be ignored, butfactored into plans, and estimates made bothof its magnitude and of its effect on orderlymarketing.Government regulationsGovernment involvement in trade can covera number of situations:● control of sales through authorized tradechannels (where the government wants tocollect taxes or limit persons permitted topurchase products)● advertising and promotion of products● control of imports though an importlicensing or quota system● labelling regulations● speciﬁcations and quality standards.The plan should normally summarize regula-tions applying to trade in a market and mustthen make assumptions as to whether thesewill remain consistent or change during theperiod of the plan.Competitor activityMarkets are dynamic not static, and it is dan-gerous to plan without taking account ofcompetitors’ achievements and activity, andtheir responses to your plan. Continuousmonitoring of competitors’ marketing pro-grammes, their product ranges (particularlynoting innovations and changes), and theirproduct pricing and target market position-ing all add to the base of knowledge that186 Sales Management
helps the marketer make a better plan. Withthis knowledge the marketer must then makeassumptions about what the competitorswill do in the future, during the planningperiod and in response to his or her marketactivities.Socio-economic factorsThe stability of the political environment,levels of income and employment,and consumer/user attitudes mayimpact on sales of many products, but insome markets the degree of industriali-zation may also have an impact on sales vol-umes or the product mix suited to localneeds. The market plan should consider anysocio-economic factors that will affect theimplementation of the plan and presentthe assumptions on which the plan isdeveloped.Demographic factorsThe marketer needs to identify what demo-graphic factors affect his or her planningprocess, and factor in assumptions on devel-opments and their likely impact on salespotential. Planning assumptions for manyproducts need to consider market demo-graphics. Consumer products can be in u-enced by population age, the sexual balance,size of average family unit, birth rate andother factors affecting population growth,trends in population location, and educationof the population and resultant increase inincomes and lifestyle sophistication can allimpact on sales potential for many products.With the wealth of market knowledge themarketer acquires over time, the planningprocess should become more sophisticatedand accurate in its predictions about trendsand sales volumes.The planning process 187
188 Sales ManagementChecklist 12.1Decision areas in sales strategy developmentAction pointsThe product range● What product sectors to target product at● Company brand versus private label brand● What product range to offer● How to differentiate company products from competitorsThe markets● Customer mix, target customers or market segments● Domestic sales versus export opportunities● Geographical spread● Cultural factors in marketing the productsDistribution channels● Distributor networks● Direct user/consumer sales● Retail outlets● Physical distribution● After-sales service product support needsPricing parameters● Marketer’s quoted prices to distributor or customer● Market price positioning● Market trade terms (discounts, rebates, minimum orders)● Distribution costs, sales taxes, other levies or dutiesMarketing support● Advertising and promotional budgets● Advertising media selection● Promotional activity● Public relations/sponsorship● Sales promotion literature and sales aids● Consumer trial and loyalty building programmesSales resources● Size of direct sales force● Geographical spread of sales force● Sales management structure● Key account management structure● Financial resources of marketing unit● Training resources● Distributor network● Sales promotion budgets● Rewards and incentives in sales organization● Key sales functional activities with customers● After-sales service support
The planning process 189Checklist 12.2Planning – the planning frameworkAction pointsDevelop a formalized approach to market planning:● Establish corporate objectives:● – Marketing objectives● – Financial objectives● Set objectives for market sectors● Develop speciﬁc strategies to achieve objectives● Develop market sales and proﬁt forecasts● Develop speciﬁc market tactics and plans● Develop controls to monitor performance● – Allow for corrective actions to counter deviationsDevelop a portfolio of market knowledge to use in marketplanning, e.g.:● The market economic and social environment, e.g.● – Incomes● – Prices● – Interest rates● – Currency movements● – Employment levels● – Production● – Distribution● – Demographic factors● – Lifestyle trends● Legislative and regulatory environment● Competition (domestic and foreign)● Political considerations● Distribution channel factors● Trend and product preference patterns and changes● User attitudes, perceptions, expectations● Company (and distributor) human resources and training● Company (and distributor) ﬁnancial resourcesIn preparing market plans take account your own companyresources limitations, e.g.:● Plant production capacity● Flexibility to modify products to suit customers● Availability of input supplies to meet expansion● Product innovations and technology● Marketing and sales resources● Financial resources to fund growth
190 Sales ManagementChecklist 12.3Planning inputs – historical data and assumptionsAction pointsNote historical market and performance data, e.g.● Market trends● Price movements● Trade margins● Market research data● Distributor performanceMake planning assumptions about changes that might occurduring the plan period and impact on plan implementation andperformance, e.g.:Market size● Volumes: demand and product availability● Values: prices and product mix● Distribution outlets: number, locations, throughputs● Users/Consumers: numbers, levels of use, frequency of useMarket dynamics● Sector dynamics: trends on price, quality, variety, taste, etc.● Distribution channel dynamics: numbers and locations ofsuppliers and outletsSpend● Incomes● Interest rates● Employment● Proximity to productOrganizational changes● Changes in resource allocation to sales and marketing● Changes in product portfolio● Change in production or distribution logistics● Changes in management control (ownership)Parallel activityGovernment regulatory actions● Importation; restrictions, duties, etc.● Products: labelling, composition, advertising, use controlCompetitive activity● Distribution: achievements, trade channels,strengths/weaknesses● Marketing; advertising and promotion, ranges, pricing,positioningSocio-economic factors● Employment: levels, income, stage of industrialization● Government and politics; stability, free market or controlledeconomy● Attitudes: social, religious, politicalDemographic factors● Population trends● Location trends
This chapter will look at some of the issuesthat sales forecasters might consider in devel-oping their market sales forecasts. It is notintended to turn them into statisticians, andtherefore the focus is on practical approachesusing data that most sales forecasters can ndinternally or through basic desk research.Those readers whose companies are alreadyusing more advanced statistical forecastingtechniques, which experience shows are few,can refer to more specialized texts.Sales forecasting is all about:● estimating the total size of the potentialmarket for a product or group of relatedproducts● estimating the current level of total marketdemand (normally lower than the marketpotential)● estimating the supplier’s current share ofthe total market demand (i.e. companydemand)● forecasting forward the level of sales thecompany would expect to achieve in eachmarket sector based upon particularmarketing strategies.As we will attempt to show in this chapter,simply taking last year’s sales and adding aset percentage is not a forecast in any sensethat a sales forecaster would nd acceptable.The forecast growth of the company must bebenchmarked against external data, to ensurethat the company is keeping pace with themarket and competition. Table 14.6 in thenext chapter shows a situation where a com-pany was very happy with its percentagegrowth year on year, until it compared saleswith the total UK product category andfound that it was in relative decline. Laterexamples in this chapter also highlight howsales can be lost through poor forecasting.Sales managers responsible for forecastingand achieving sales must satisfy themselvesthat the market demand is not rising fasterthan the demand for their own products.The issue of poor data availability can beaddressed through:● desk research into markets and customers● market research into total productcategory (and substitute product) sales,including local production and net importsto estimate total local demand in eachmarket.Terminology associated with salesforecastingA useful starting point in looking at the sub-ject of sales forecasting is probably to developcommon understanding of the standard ter-minology used, and an approach to develop-ing working de nitions follows.For simplicity and clarity here we will usethe term forecasts to refer to any guresaimed at assessing demand for a product ateither the market or the company level.In many companies the common practicewith respect to sales forecasts and marketingplans and budgets is to make an estimate ofsales, and then to develop marketing plansand supporting marketing expenditure bud-13Sales forecasting
gets. This is logically erroneous, in that theearlier sales forecast de nition clearly indi-cates that the sales forecast is derived fromthe marketing strategy, which assumes alevel of marketing expenditure to support theprogramme aimed at pursuing the strategy.To base marketing plans on sales forecastsmay seem reasonable where the marketerdoes not expect the company’s demand in thetotal market to be capable of expansion, but itis patently wrong where company demand iscapable of expansion and in uenced by mar-keting expenditure.Another common scenario is that wheresales run behind forecasts, the response is tocut back on the marketing budgets. If for anyreason in any market the sales forecast is notbeing achieved then before cutting marketingexpenditure the marketer should seek toestablish the reason for any shortfall. If there192 Sales ManagementForecasting terminologyMarket The potential market for a product is the total of all those persons orpotential businesses with the means, need and opportunity to buy.Market The market demand can be considered as the total volume of the productdemand that would be purchased by a quali ed customer group in a prescribedtime period, in a known marketing environment. The known marketingenvironment is assumed to include an established political/economic/legal/social environment, an established distribution infrastructure, and pre-dictable levels of marketing activity – advertising, promotion, etc. Changes inthe marketing environment will prompt changes in the level of demand (i.e.variations in industry marketing expenditure, and stages of an economiccycle are two key variables that typically in uence market demand).Company This will normally be limited by the demand that can be created aspotential the company increases its marketing activity relative to its competitors.Forecasts These can be de ned as projections of expected sales over a particulartime period based upon known parameters.Forecasts are normally prepared for each market sector at the industryand company level. The industry forecast will make assumptions aboutindustry marketing support for the products in the market. The companysales forecast should be based upon a de ned marketing strategy andassumed level of marketing expenditure in pursuing that strategy.Targets These can be de ned as a statement of what the sales manager wants toachieve in the way of market sales, and may be based mainly on dataexternal to the company, such as competitors’ known sales, market vol-ume data, etc.Achievement of targets is heavily dependent on developing and imple-menting suitable strategies and tactics, including promotional activity.Budgets These really are a projection of revenues and expenditure, and the term‘budgets’ is really an accounting term that has been adopted into the lan-guage of marketers in many companies through its use in annual com-pany plans that are largely nancially based and prepared byaccountants.Budgets may or may not be based on sales performance history, and arejust as likely to be a target of sales revenues, volumes and pro ts neededfrom sales operations to achieve overall company nancial projections.
have been changes in the marketing environ-ment (such as imposition of import restric-tions, changes in duties or taxes, etc.) then itmay be reasonable to re-forecast sales andprepare new marketing expenditure budgetsat the same time as making any appropriatechanges to the marketing strategy. If short-falls arise for other reasons, such as poor per-formance by members of the sales team, then,on the assumption that the strategy wasappropriate and the forecasts were realistic,attention must be given to improving the per-formance of the sales team – cutting market-ing budgets will only prove a short-termsaving and will do nothing to help you toachieve your forecasts or potential.Planning time spansCompanies vary in the time spans they applyto their planning process. Forecast time spansmight be de ned for practical purposes as inthe following chart.Apart from the accuracy of forecastingdepending on the stability and maturity ofthe overall product markets, considerationmust be given to the security of access toindividual market sectors (or export markets,if included in the forecasting process) whenforecasting. If a company’s trade in a marketsector is under threat then this should bere ected in forecasts (e.g. if new sources ofsimilar products are likely to start supplyingthe market, or innovation by competitors willmake company products obsolete, or changesin rules and regulations will block companysales opportunities).What to forecastThe starting point for any forecasting is toattempt to estimate the total market size forthe product category (or near substitutes),and then to make an estimate of the share ofthe total market that the company can expectto achieve, through a proactive marketingprogramme.Typical considerations in forecastingSales forecasting is primarily about predict-ing sales volumes and sales values (rev-enues). The strategies the company plans toadopt in pursuing its marketing objectivesare key considerations when forecasting vol-umes and values, along with the productmix, and expectations of market price move-ments. Figure 13.1 illustrates the two sides ofthe forecasting equation, as seen from theperspective of the marketer and the nancialplanner.It is common for the sales forecaster tofocus primarily on estimates of sales-relatedgures, such as volumes and revenues. InSales forecasting 193Planning time spansShort-term forecasts These usually cover the period immediately ahead, such asfrom three to six months. Short-term tactical decisions, suchas promotional activity, are based on the short-term forecasts.Medium-term forecasts These are usually projecting sales volumes and values atleast a year ahead, and sometimes for 18 months to twoyears ahead, with a greater input of detailed marketingstrategy than long-term forecasts.Long-term forecasts These typically attempt to forecast three to ve years ahead,with limited accuracy, and often with coverage of thelonger-term diversi cation or expansion strategies of thecompany.
looking at these, clearly attention must begiven to the product mix expected to be sold,as variations in product mix will affect vol-umes, revenues and resultant pro ts. Also,since in good forecasting practice the forecastis derived from the marketing strategy (andnot vice versa), account must be taken ofstrategies and marketing expenditure, and asthese change so must the forecasts be modi-ed to re ect the expected impact of thechanges on sales volumes and values.When the forecasts are developed from themarketing strategy, the marketers need to beinvolved with the accountants in preparingthe budgets, taking account of any resourceslimitations (human, physical and nancial).The values of sales should match up with therevenue budget, and estimates should bemade of the operating costs, material inputsand staf ng levels need to achieve the fore-casts. If the marketer is estimating marketpotential and market demand, he or she canbenchmark performance and forecastsagainst these.Main methods of developingforecastsThere are a number of approaches to fore-casting, at the macro level of the total marketor industry, and at the micro level of the com-194 Sales ManagementForecastsSales forecastsRevenues andcost budgetsVolumesValuesProduct mixOperatingcostsStaffinglevelsMaterialinputsPricemovementsMarketstrategiesRevenuesProfitsMarketstrategiesResourcesFigure 13.1 The forecasting equation
Sales forecasting 195On the sales forecasting side of the equation account must be taken of:Volumes ● By product● By customer or distributor● By market sector● By foreign market (for exports)Values ● By product● By customer or distributor● By market sector● By foreign market (for exports)Product mix ● Variations in the marketer’s product portfolio and price mix maychange the levels of sales volumes or values, with resultant effectson product or total pro ts for marketsPricing levels ● Regionally/nationally/internationally (versus competition)and movements ● Changes in product costs (inputs, etc.)● By market sector● By product type● Currency movements (if these impact on market prices)Marketing ● Product positioningstrategies ● Pricing● Distribution● Advertising and promotional activity● Product ranges● Quality● Presentation● Consumer attitudes/preferences● Changes in the market environment● Regulatory controls● Market dynamics/distribution channels● Consumer attitudes/preferences● Employment/incomes● Competitive activity and marketing strategiesSales forecasts should be supported by resource/cost estimates, e.g.:Operating costs ● Sales departmental costs● Wages and wage increases● Sales training● Recruitment● Support department costs● Travel and subsistence● Sales force expenses including vehicles● Bonus and incentive payments● Sales promotional activities (off sales budgets)● Customer service/shipping● Order processing● Sales planning● Transport and distribution of goods● Export distribution (where applicable)● Export travel and subsistence costs (where applicable)
pany down to the individual customers.Forecasting normally needs to be undertakenat both levels, and then a consideredapproach by the sales manager to the out-comes of macro forecasting and micro fore-casting should help come to a reasoned viewof realistic and achievable sales forecasts ortargets. These can be looked at in relation tothe overall goals and objectives for the mar-ket, and the range of marketing and salesstrategies and tactics to be employed in amarketing plan to ensure their achievement.Figure 13.2 illustrates a number of themajor macro and micro forecasting tech-niques, split under two headings that groupthose dealing with future demand separately196 Sales Management● Marketing costs● Advertising and promotion budgets● Promotional and display materialsStaf ng levels ● Sales management● Sales of ce support staf ng● Marketing management● Export marketing management (where applicable)● Shipping/customer service staff levels● Expansion/contraction to meet market coverage needs● Natural wastage● Retirement● Sickness/holidays● Changes in required quali cations, experience, skillsMaterial inputs ● Capabilities of the company to source/produce competitively.● Breadth/depth of company range● Exchange rate movements (for imported inputs)● Input supply availability (labour & materials)Revenues ● By product● By customer or distributor● By market sector (and by foreign market for exports)Pro ts ● By product● By customer or distributor● By market sector (and by foreign market for exports)Macro forecasting Macro forecasting involves looking at the overall market for a productor category of products. It is about:● studying company historical performance in relation to the environ-ment (political, economic, social, legislative), industry performance,demographic factors related to company or market performance, andproduct demand● relating industry demand to national levels of production, income lev-els, interest rates, employment, imports, demographic factors.Micro forecasting The typical approach to market micro forecasting is to:● study the performance of each existing and potential customer accounton a product-by-product basis over the past few years or recent salesperiods and preparing forward sales estimates for the next forecastperiod● build up to territory, area and national sales forecasts for comparisonwith the independently prepared macro forecasts.
from those dealing with current demand.Some of the techniques are quantitative, inthat there are often accessible statisticalrecords that will form a rm basis for esti-mates and forecasts, and others are qualita-tive, in that they rely heavily upon thejudgement of the forecasters and their marketknowledge and assessments of trends. Thequantitative techniques would mainly becompiled using appropriate computer pro-grams and spreadsheets.Current demandThe starting point should be to make someestimate of market potential for each marketsector and the overall market for companyproducts, and then see how this is being sat-is ed, i.e. current levels of demand, and thecompany share of the current demand canthen be factored in to develop marketingstrategies to develop the company’s sales andmarket share.Total market potentialThe market potential is basically an estimateof the total sales potential for all industrysuppliers in a market (a macro market fore-cast). This will invariably be a larger numberthan current actual levels of demand.Quantitative techniques can lead to estimatesof volume or value being made. First the fore-caster must make some assumptions aboutwhat quali es a person as a prospectivebuyer.It is always dif cult to make a reasonableestimate of the number of prospective buyersSales forecasting 197Methodsof forecastingFuture demand Current demandTime series analysisStatistical demand analysisMarket testTotal market potential estimatesIndustry sales and market shareMultiple factor index methodExpert opinionMarketers opinionsSurvey of buyers intentionsMarket build-up methodFigure 13.2 Methods of developing forecasts
for a product. The target market should bepro led or quali ed in any practical way thatrelates to product consumption or use, inorder that estimates of the number of poten-tial buyers have some rational basis.For example, a basic pro le of the scotchwhisky drinker might be a male, over 35,with certain levels of income. If we haveknowledge of the average consumption ofthe typical whisky drinker we can then addthis to the equation, and nd a rst estimateof market potential as in the following table.With industrial products this kind of macromarket estimate is often dif cult to developwith any accuracy, although some good esti-mates can be built up from micro-level data(discussed shortly).A starting point is often to attempt to estab-lish the number of persons employed in anindustry or market sector that uses the prod-ucts, and apply a ratio of usage based onexperience or rational criteria.A supplier of computers might obtain mar-ket estimates of numbers of personsemployed in industrial and commercial activ-ities (excluding agriculture) and apply a rea-sonable ratio (possibly based on experiencein similar markets) of computers toemployed persons (say one computer per 20persons) to estimate maximum likely marketpotential.A more re ned approach to estimatingtotal market potential involves taking a basenumber considered to represent the maxi-mum possible level of consumers, and thenapplying a sequence of percentage ratios(chain ratio approach) that narrows downthe market and to which some value or vol-ume factors can be applied. Readers inter-ested in this technique will nd it explainedin detail in more specialist texts on forecast-ing methodology.In many developed countries governmentorganizations monitor industry statistics ofproduction and consumer expenditure, anddesk research to access this data can help indeveloping estimates of market potential andmarket demand for products.Manufacturing companies are normallyclassi ed by standard industrial classi cation(SIC) codes, and if a company’s industrialproducts have applications in certain indus-tries then accessing government statistics andlists of companies in appropriate SIC classi -cations will assist the sales manager in esti-mating market potential and in subsequentsales forecasting.Industry sales and market sharesMaking quantitative estimates of industrysales and market shares is often easier forconsumer goods producers than for indus-trial products suppliers. There are some start-ing points in developing industry salesestimates, and competitor shares, includingfrom the following sources:● trade association data● company accounts for competitors,suppliers and customers● market research studies (e.g. A. C.Nielsen market audits, and the numerousother sources of published market researchinto product categories and industries)● import and local production statistics● user surveys (a ratio of usage can bedeveloped for survey respondents thatmight then be applied to other non-respondents).198 Sales ManagementEstimating whisky market potentialMarket potential (litres volume) =Number of males meeting the pro-le criteria (over age 35 years andearning at relevant income level)timesaverage consumption (litres)per whisky consumerMarket potential (value) =Number of males meeting the pro-le criteria (over age 35 years andearning at relevant income leveltimesaverage consumption (expenditure)per whisky consumer
Multiple factor index methodThis approach to forecasting regionaldemand is most commonly used by con-sumer goods companies wanting to breakdown national forecasts to regional forecasts,or trying to build national forecasts fromknown regional data about a product cate-gory. It involves having access to a reasonablerange of relevant demographic data on apopulation, in order to build an index relat-ing to demand and potential for growth. Themethod is probably a little more complexthan most sales forecasters will normallychoose to involve themselves in, unless formarkets where a lot of relevant index data isreadily available (often to be purchased ordeveloped by a market research company),and, once again, those readers with particularinterest can refer to other specialist texts onforecasting methodology.In some markets where governmentdepartments monitor consumer expenditure(as in the UK), statistics may be available toshow national expenditure on a range ofproduct categories and regional variations inexpenditure, and sales forecasters may beable to use this data to make forecasts ofregional sales as a percentage of nationalforecast sales.Market build-up methodThis approach to forecasting is commonlyused for both industrial and consumer goodsas a quantitative technique, building up fromthe micro level to give an overall macroassessment of sales or forecast. It does requirethe sales forecaster to have access to lists (e.g.from trade directories) identifying the poten-tial buyers for a product.With an industrial product, an initial pro-le can be developed for typical potentialusers, and use might be made of any listingsof companies by standard industrial classi ca-tion (SIC) codes to identify other companiesmatching the user pro le. If there are a largenumber of potential customers in the productcategory then data obtained from a sample ofusers can provide broad criteria to build mar-ket demand estimates (see the earlier sectionon user surveys).Future demandWhen forecasting the future, a much moredif cult period to forecast, many more vari-ables come into play, not least of which mustbe technological change and changes in con-sumer or user preference.Much future forecasting activity is directedto macro market forecasts, using both quanti-tative and qualitative techniques.Time series analysisBearing in mind the target readership for thistext, practising sales managers, we will notattempt lengthy expositions of complex sta-tistical forecasting techniques, most of whichare based on analysing data over a longertime period (time series analyses) but referinterested readers to more specialist texts. Wewill look brie y at some of the main macroforecasting quantitative techniques.Time series data studies, which wouldnormally make use of computer facilitiessuch as spreadsheets, include the followingmain statistical techniques.● Trend ﬁtting is a technique where historicalactual data is plotted and the trendprojected.● Moving annual totals or moving annualaverages are practical techniques thatsmooth data in a time series, showing atrend that is not distorted by seriousseasonal, cyclical or random ﬂuctuations.An example of constructing a movingannual total trend follows in this chapter.A disadvantage of moving annual ormoving average techniques is that they donot respond quickly to unexpected orsigniﬁcant changes in the pattern of sales.● Exponential smoothing is where extraweighting is given either to earlier or tomore recent data (depending on whichdata is seen as more likely to berepresentative of the future sales pattern),in an attempt to take account of moreSales forecasting 199
signiﬁcant changes in the pattern of sales.● Forecasting from time series data usingstandard deviations. Again, thisquantitative technique, which can be usedat the level of industry or company sales,is probably unlikely to be used by mostsales forecasters except possibly withinmajor corporations serving major marketsectors. But it is a technique that can bedeveloped quite easily using a computerspreadsheet package, and also it is atechnique most suited where there is arepetitive seasonal sales pattern (i.e.monthly or quarterly). The objective is tomeasure the seasonal ﬂuctuations,typically by month or quarter of the year,in terms of their deviation from theaverage trend, then to project the trendforward, adding back in the seasonaldeviation factors for each quarter.Statistical demand analysisThe weakness in time series forms of analysisand forecasting is that it treats sales only as afunction of time, taking no account of anyother demand-in uencing factors that affectsales, such as the effects of price and promo-tion, income levels, changes in population (orthe mix of population where relevant, e.g.age structures, sex mix, education levels, andso on) or the introduction of new technologyor product varieties. Various statisticaldemand techniques (often referred to ascausal analysis techniques) are available, forthose with access to computers and suf cientinterest and expertise, but we will only men-tion them here by way of an introduction,leaving the reader to study specialist textswhere appropriate.These causal studies, often found in useonly in the largest companies, include:● regression analysis, where equations aredeveloped that relate the volume of salesto a number of independent variablesknown to impact on sales performance(such as: advertising, salesperson callrate, number of distribution points,promotional expenditure, display activity,etc.) and a line of regression (line of ‘bestﬁt’) describes in quantitative terms theunderlying correlation between any twosets of data● econometric models, which look at theinterdependent relationship of a number offactors that affect sales and proﬁts● input/output models, which might be veryuseful for ingredients or componentforecasting where projections willencompass the demand for inputs inrelation to outputs in user industries. Thistechnique requires some knowledge of theexpected level of output from users of theforecaster’s products.Market sales testsNormally in market sales tests for new con-sumer products, the products are distributedinto a limited geographical sales area whoseconsumer profile matches closely thenational pattern, and where it is judged thatsales performance can be monitored closelywhile any marketing communications canalso be tightly focused to the target audience.National forecasts can be extrapolated fromthe test market results in this quantitativetechnique.Expert opinionIn this mainly qualitative approach to macroforecasting, panels of experts on the industry(both internal and external) give their rea-soned opinions on trends and estimates ofmarket volumes in this qualitative technique.From the perspective of the sales forecaster,an expert panel might include himself/her-self, trade distributors, trade dealers or retailstockists, major end users (for industrialproducts), marketing consultants, interna-tional market researchers, and possibly tradeassociation representatives.However small or large the panel is, it willhave a weakness in that each participant willhave limited market exposure and knowl-edge. That does not mean the approachshould be discarded, but does suggest that itshould be only one of the approaches to fore-200 Sales Management
casting adopted by a company, and not theonly one.Any known historical market or companydata should be shared between all the panelof experts, and each expert will add to thisfrom his or her own perspective of marketknowledge or insight. The experts should allstate the assumptions upon which they arebasing their estimates. The sales forecastercan then take account of panel inputs in plan-ning marketing strategies and developingsales forecasts.In some markets local research rms orspecialist economic forecasters will developmacro market models of expected trends anddemand levels for certain industries, andlarger companies often avail themselves ofdata from these sources.Marketers’ opinionsIn this approach the sales forecaster uses hisor her experience to make a primarily quali-tative judgement of demand in, or sales to,each market sector based upon the knowndata and historical performance, and a con-sidered view of the trading environment. Insome instances, particularly with majorbranded consumer products, market researchreports may indicate consumer attitudes,buying patterns, and product preferences,thereby providing help in observing or pre-dicting trends.The weakness in relying only on judge-mental estimates in practice is that they oftenrely too much on the marketer’s own recentsales data, taking little account of the totalmarket and competitive activity. If an agentor distributor is under-performing againstthe overall market this may be missed, oreven if recognized, might not be addressedthrough a corrective action plan. A sales man-ager may be more in uenced by his or herdistribution or sales limitations in estimatingsales potential or demand than by indepen-dent data on the market.Another factor that produces a weakness inbasing forward forecasts on sales team opin-ions is that the team usually have no reason-able basis to anticipate trends that willemerge from significant technologicalchanges.The more data that sales forecasters haveavailable on markets and existing and poten-tial customers, the more meaningful will beany sales estimates they produce. Later in thischapter we will look at an example of buildingup sales estimates from customer sales records.Surveys of future buying plansSurveys of future buying plans are also a keymeans of obtaining information that can beused in preparing future forecasts of marketdemand and potential. This is a qualitativetechnique commonly used for industrialproducts or larger consumer products (suchas household appliances and cars), whereusers are asked about expected product cate-gory purchases to meet their own companyneeds, and the company estimates its likelyshare of these user estimates. Most industrialproducts have a certain life in use, and userswill need to replace equipment over time,either with an identical item where it ispurely a consumable product in productionprocesses or a wearable part, or usually withmore recent technology where it is equip-ment. With industrial products advanceknowledge of likely buying intentions andpatterns can be important to plan marketcoverage and marketing strategies.Other considerations in forecastingApart from the foregoing commentaries thereare other factors that may warrant considera-tion when preparing a forecast, such as:● inﬂation● seasonal trends● cyclical trends● random ﬂuctuations● product life cycles.InﬂationNormally forecasts of cost factors need toallow for in ation, and if an allowance isSales forecasting 201
made in costs then a similar assumptionshould be made about the effect of in ationon prices. In some companies they prefer toavoid taking a view about in ation in themedium- to longer-term plans, forecasting allvalues at constant costs/prices applicable atthe time of forecasting, and they would thentake a similar approach as they roll forwardthe plans to further years. However, for theshort term (one year) it is normal to attemptto judge the levels of in ation and its effecton both costs and prices.Seasonal trendsMany industries and their products experi-ence seasonal sales trends, such as in holidayand leisure goods, home improvements, gar-dening equipment, toys, cosmetic products,etc. If the manufacturer of the nished goodsexperiences seasonal sales trends, then gener-ally the suppliers of components and otherinputs will face similar trends.Seasonality of sales affects the organizationof production and the organization of thesales effort. If goods can be produced season-ally to meet demand, there may be bettercash ow positions, but there may be otherproblems in nding suitable labour or otherinput supplies at short notice. The sales man-ager faced with seasonal products will notonly need to forecast market sales with agood degree of accuracy, to ensure adequatestock is produced and available for shipment,but also will need to work with his or hersales team and any distributors to ensure thatseasonal coverage of all current and potentialoutlets or users is at a high enough level tomaximize sales during key selling seasons.Cyclical trendsIndustries serving the building, constructionand agricultural products markets are famil-iar with the cyclical nature of these markets.Sales volumes and resultant revenues andpro ts are often erratic, but in some instancesthere is a cyclical trend that can be monitoredand included in planning, so that costs (andpossibly investment) can be reduced in adownswing, and expansion planned early inthe upswing. If the cycles are occurring at dif-ferent times in different markets supplied bythe company there may be a suf cient spreadof markets so that the overall sales are lessdisruptive to the planning process and thecompany’s pro t performance.Random ﬂuctuationsTypical unpredictable events that cause ran-dom or erratic uctuations in markets caninclude industrial disputes, natural catastro-phes, conflict and political upheaval.Random uctuations can have positive ornegative effect on sales, and as they are notnormally the result of predictable events theyare not normally allowed for in the marketplanning process.Product life cyclesIn longer-term planning the sales forecastershould consider where each of his or herproducts lies on their product life cycle foreach market sector when developing fore-casts. All products have a life cycle (seeFigure 13.3), where sales will rise for a periodafter launch, eventually reach a peak, andthereafter decline. What differs betweenproducts and markets is the length of the lifecycle, the rate of growth and decline, and thelevels of peak sales; in other words the shapeof the life cycle graph is not identical betweenproducts and markets.Not all markets move at the same rate, andin some instances sales managers and mar-keters may nd that an obsolete product insophisticated markets may have clear func-tional bene ts, and therefore a longer life, inless developed markets.Developing a practical marketforecastHaving looked at the issues in market fore-casting, at this point it is worth taking time tolook at developing a practical sales forecast-ing process based upon the available data. In202 Sales Management
this section we will develop tables andgraphs using a consistent set of figuresthrough the examples given in Tables 13.1and 13.2 and Figures 13.4 to 13.7.Information inputs for forecastingMost historical sales performance data canplay a role in forecasting. In many companiesa basic problem arises over how data isrecorded and presented. It is quite commonfor performance data to be prepared by thedepartment responsible for nancial control,and, quite naturally, that department is some-times more interested in monitoring costsand pro ts than in monitoring unit sales byproduct and by market. The starting point inmarket planning is to ensure that sales per-formance is monitored for the volumes andvalues of each product shipped to customerson a month-by-month basis.Where sales are through a network of dis-tributors, it becomes important to receivemonthly reports of the distributor’s salesfrom his or her stock in volume terms, as thisprovides the real measure of sales perfor-mance in the market. This local data is essen-tial if the nal forecasts (or targets) are to bebroken down to the level of targets for indi-vidual customers in the market. A macro(market level) forecast is much less likely tobe achieved, or even if the forecast isachieved it might represent an under-achievement against real sales potential,where it is not broken down to the microlevel on an account-by-account basis. Amulti-product company will need to forecastor target separately for each product.The basis for a simple practical forecastingprocess can be as follows:● use recorded historical data to provide abase for measurement against plans andforecasting● ﬁt a trend line (using judgement or moresophisticated statistical techniques ifpractical)● plot total industry data, and project trendssimilarly● build up forecasts by product, marketsector and account, summarizing to givesales territory and national estimates (thismicro-level build-up of account salesforecasts can be compared with the macroforecasts).Forecasts should include any appropriateadjustment for any signi cant developmentsthat are expected to affect sales more than aforward projection of historical sales mightSales forecasting 203VolumeTimeMaturity DeclineGrowthLaunchSeedInvestMaintainHarvestIntroductionFigure 13.3 Typical product life cycle and marketing strategies
suggest, e.g. innovative new technology thatmight open the market to more consumersthrough price, availability, ease of use factors,etc., such as we have seen in the computerand mobile telephone industries.While the sales forecaster will normallyhave access to data on his or her own marketsales, industry data for the total product cat-egory (in volume or values) or sub-categoriesmight be available through national tradeassociations, market research sources, gov-ernment statistical publications, or otheridentifiable sources. Industry estimatesmight not always be very accurate for anysingle market sector, but they should not beignored as the sales manager should bench-mark his or her performance against the totalmarket and individual competitors (whereany data is available on their sales perfor-mance).Tabulating data and projecting trends inmoving annual formatsThe sales forecaster can compile a simpletable of market sales data, as illustrated inTable 13.1, where we have assumed the dataused is sourced from the company’s salesreports. The illustrative graphs in Figures13.4 to 13.7 are based upon the data in thistable.From the reported actual monthly sales,entered in the left-hand column under eachof the three year’s data, the cumulative salesdata can be tabulated (shown in the secondcolumn under each year’s data) as a simplenumerical summation, producing the total ofthe full year’s sales in the last row for eachyear. The monthly sales data illustrated inthis example shows a wide variation in localmonthly sales, likely to indicate a seasonalsales pattern or possibly some stock manage-ment problems.The cumulative sales for 1995 show anincrease over 1994 of 6.5 per cent, with a fur-ther increase in 1996 compared with 1995 of5.5 per cent. So, in this example, there is realgrowth in unit sales of the company’s wid-gets in the national market, albeit with a veryirregular monthly sales pattern. To use thisbasic data to see a clearer overall picture ofsales trends we can tabulate what is termedmoving annual data.Moving annual dataAs was referred to earlier in the chapter,when introducing some of the quantitativeforecasting techniques, tabulating movingmonthly averages of monthly sales data204 Sales ManagementTable 13.1 Market sales data, units soldMarket sales performance data, company sales of widgets(including monthly sales, cumulative sales and moving annual data)Units 1994 1995 1996Actual Cumul- Moving Moving Actual Cumul- Moving Moving Actual Cumul- Moving Movingative monthly annual ative monthly annual ative monthly annualaverage total average total average totalJan. 25350 25350 27960 27960 17648 211770 25560 25560 18365 220390Feb. 30010 55360 30260 58220 17668 212020 47520 73080 19804 237650March13560 68920 12170 70390 17552 210630 16800 89880 20190 242280April 13090 82010 11830 82220 17448 209370 7080 96960 19794 237530May 18040 100050 14260 96480 17133 205590 8420 105380 19308 231690June 13600 113650 16670 113150 17388 208660 16190 121570 19268 231210July 8470 122120 16180 129330 18030 216370 14280 135850 19109 229310Aug. 22890 145010 10880 140210 17030 204360 12360 148210 19232 230790Sept. 28760 173770 25560 165770 16763 201160 29740 177950 19580 234970Oct. 15480 189250 25130 190900 17568 210810 26390 204340 19685 236230Nov. 8270 197520 12330 203230 17906 214870 11420 215760 19610 235320Dec. 11640 209160 17430 209160 19560 222790 18565 222790 19240 235000 19583 235000Market sales performance data, company sales of widgets(including monthly sales, cumulative sales and moving annual data)Units 1994 1995 1996Actual Cumul- Moving Moving Actual Cumul- Moving Moving Actual Cumul- Moving Movingative monthly annual ative monthly annual ative monthly annualaverage total average total average total
smoothes out wide fluctuations in actualmonthly sales patterns, and tabulating mov-ing annual totals (MAT) of sales smoothesout wide uctuations in seasonal sales, show-ing the longer-term underlying sales trendmore clearly. Moving annual data is devel-oped as shown above.In Figure 13.4 alternative ways of plottingdata are illustrated, and each can be used inthe forecasting process to project sales trendsinto the future.The graph in Figure 13.4(a) shows theactual monthly sales, with wide uctuationsbetween months but the main seasonal peakaround December to February, with a lesserpeak in the late summer. By plotting the mov-ing monthly average the underlying trend ismore apparent, and can be projected forwardfrom the point where actual data nishes,indicated by the arrow on the graph, tting aline by inspection or through calculation (inthis case into 1997). The moving monthlyaverage projected to a point in time can bemultiplied by 12 to give the estimate ofmoving annual total sales to that point if thesales continue to follow the projectedtrend. In this example we are not looking atany more sophisticated techniques butjust projecting a trend line by eye and judge-ment. We will look at some of the manyways of projecting the trend line, using thesame base data, through calculationlater.The graph in Figure 13.4(b) plots the mov-ing annual total of the data from the preced-ing table, and from the point marked by thearrow this has been projected forward, ttinga trend line by inspection based on a similarpercentage sales growth pattern.So far the data recorded, and projectionsmade, look at the market sales of the sup-plier’s widgets in isolation, without anycross-reference to what is happening in thetotal market for widgets. The marketershould seek out any data on the total marketfor widgets, plot this and compare his or herown performance with the total market per-formance. It is not usual to get meaningfultotal market data on a month-by-month basis, but annual data may beavailable (or calculated from local produc-tion statistics if available, plus imports,minus exports). Figure 13.5 illustrateshow data might look when total marketsales of widgets are plotted, with our sup-plier’s widget sales also plotted for compari-son, and some sales trend projectionsadded in for the next ve years, tted byjudgement.Plotting the total market compared withcompany product sales can highlight aspectsof the marketing strategy that might needSales forecasting 205Moving annual This data is a useful measure of trends and performance on a year-ontotals year rolling basis. Once data for a full year on a monthly basis is avail-able, the moving annual total can be developed and updated each month.Starting from the total for the base period of 12 months, a calendaryear in Table 13.1, you add the actual monthly sales gure for the nextmonth (for volumes or values, as appropriate) to the 12-month total,and deduct the monthly sales gure for the same month in the previ-ous year, i.e. the MAT for January 1995 is209160 + 27960 – 25350 = 211770This is continued for each subsequent month, so that you are alwayslooking at a rolling year total, including all seasonal or monthly salespatterns, highlighting positive or negative sales trends.Moving monthly In the example, this gure is purely a division of the moving annualaverages total by 12, to show the average monthly sales on a rolling year basis.That smoothes out wide uctuations between the sales for individualmonths.
attention. In our example of widgets, thecompany widget sales have grown muchfaster than the market rate of growth, to thepoint where the company has approximately25 per cent market share at the end of 1995.While this may be the result of good market-ing and sales activity, with product advan-tages communicated effectively to customers,the supplier’s high share may need to belooked at in relation to potential competitorswho might erode that share, and in relation tothe total widget market that might be grow-ing at a slower rate than the company’s sales.The resultant considerations, taken withregard to all the other information and vari-ables, might prompt marketing strategiesaimed at:● defending the existing share, buildingfurther on customer loyalty,● reinforcing perceptions of points of branddifferentiation,● price positioning strategies aimed atstealing a larger share through aggressivepricing, or of harvesting proﬁt from theproduct possibly by conﬁdent upwardpricing,● or of diversifying the marketing effort tobuild other products in the portfolio.The ‘Z’ chart in monitoring performanceAnother way of depicting sales data is asillustrated in the ‘Z’ chart of Figure 13.6,which plots actual monthly, cumulative and206 Sales ManagementJ M M J S N J M M J S N J M M J S N J M M J S N250003000035000400004500050000200001500010000500001994 to 1996 and projectionUnitsalesActual month salesMoving monthly averageFigure 13.4 Fitting trend lines to historical performance data to aid forecasting(a) Actual monthly widget unit sales and moving annual average of unit sales(b) Moving annual total of widget sales and trend projection ﬁtted by inspectionJ M M J S N J M M J S N J M M J S N J M M J S N25000200001500010000500001994 to 1996 and projectionUnitsalesTrend projectionMoving annual total
moving annual data for a year, in this case1995 sales of the company’s widget.In this example, where we have plotted themarketer’s forecast for 1995 along with thesubsequent actual sales, we should question:● the accuracy of the forecasting process,since the forecast cumulative sales wereless than was achieved in the previousyear (shown from the moving annual totalat the start of the year)● the pattern of monthly sales forecast,which bears little relationship to the actualmonthly sales.In some cases there would be valid reasonsfor forecasting a downturn in sales, but withour additional data in this instance, it is sus-pect, possibly with a forecast being submittedby a cautious forecaster rather than calcu-lated rationally and negotiated between themarketers and the sales management team aspart of a joint planning process for the mar-ket. Also, if production were scheduled tomatch the forecast monthly sales pattern,without suf cient account of the apparentseasonal nature of sales, then it is likely thatthere would be stock problems at certainpoints in some months, or sales rationed, andin either case actual company product saleswould then have been below potential sales.Figure 13.7 shows some of the data fromTable 13.1 plotted over recent years with theaddition of sales forecast data for the market,and in this example we can see that the mar-keter has taken action in the latest year, 1997,to improve the forecasting and narrow thegap between actual and forecast sales.When sales data is being recorded the salesforecaster should note any particular eventsthat cause unusual uctuations in sales thatmight affect forecasting. For example, thewidget sales for February 1996 in this exam-ple jumped to an extremely high gure ofover 47,000 unit sales, some 50 per cent overprevious February sales, even though this is apeak selling month. If this represents a seri-ous and lasting increase in sales, it is reason-able to continue to forecast at that sort oflevel for future months of February. If, how-ever, it was a freak month’s sales for any rea-son, possibly in anticipation of an expectedSales forecasting 207120000010000008000006000004000002000000Time in yearsWidgetunitsalesCompany widget salesTotal widget market salesProjected widget market salesProjected company widget sales83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01Figure 13.5 Total market widget sales and company widget sales
price increase, or there was an unusuallyheavy burst of advertising, then future fore-casts should re ect the more normal levelindicated using average monthly deviationsin this example.Forecasting from moving annual total dataAn alternative to just projecting a trend lineon a graph of tabulated moving annual totaldata is to take the moving annual total at apoint in time, and to project it forward by afactor expected to represent the achievablegrowth (this factor possibly being higherthan that shown by plotting the trend lineforward by eye and judgement). Normallyspreadsheet packages are used in forecastingcalculations, which enable variations to beincorporated easily.In the example here we have taken theactual data from Table 13.1, and made twoforecasts (see Table 13.2) at the level of veper cent and ten per cent on the movingannual total at December 1996 (235,000 wid-gets). We have arbitrarily assumed straightline growth in the moving annual total forboth calculations, and can use the projectedmoving annual totals to calculate themonthly sales that would be necessary toachieve those moving annual totals.The reader may note that one problem inforecasting by projecting a moving annualtotal in a straight line, and using that to cal-culate the monthly sales, is that it will project208 Sales Management2500002000001500001000005000001995UnitsalesCumulativeActualMoving annual totalActual forecastCumulative forecastJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecFigure 13.6 ‘Z’ chart – sales performance of company widgets
a pattern of sales representing the last year,which may not be fully representative of thelonger-run seasonal pattern. In this examplewe would be projecting extremely highFebruary sales followed by low April andMay gures, as per the 1996 pattern. Thealternative way to build the forecast this wayis to estimate the monthly sales rst, andbuild these into the moving annual total tosee what projected growth (or decline) pat-tern of sales is predicted.Forecasting as in this example adds moreweight to recent months and the last yearthan to earlier years, again producing a pos-sible bias.Problems in using trend data based on pastsalesWhenever trends are identi ed and plottedthey are, quite obviously, based on history,and do not allow for strong current trends,particularly when based upon averages oflonger time periods. Any forecasts based onmoving annual data, moving monthly aver-ages, moving quarterly averages or otherpast data must be tempered with the salesforecaster’s inputs of judgement to allow forcurrent trends or anticipated developments.A weakness in using moving averages is thatall the time periods being analysed areweighted equally, and information from theoldest periods are just as important in theforecasting as information from the newestperiods – which is often inappropriate inreal-life marketing, where recent eventsshould have more weight attached to them.In essence, what we are saying is that thereis no simple ideal and accurate way of pro-ducing a forecast, particularly with all thecomplexity of factors to be considered inproduct marketing. If there is additional mar-ket knowledge the sales forecaster mightdecide to apply his or her judgement to thisSales forecasting 2092500002000001500001000005000001994–96UnitsMonthly actual salesMoving annual totalsMonthly forecast salesJ F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N DFigure 13.7 Continuous monitoring of market sales
knowledge, and alter the growth factoraccordingly from that indicated by historicalsales data. Other information might also beavailable suggesting the forecasts should beadjusted from the moving monthly averageor moving annual total trend approaches toforecasting (including surveys, expert opin-ions or panels, or through statistical quantita-tive techniques).In summary of this section, the sales fore-caster should attempt to gather and plot dataon his or her product sales in total and foreach market sector, and comparable data forthe total market for his or her product cate-gory. Actual monthly and cumulative (year todate) sales statistics can be tabulated andgraphed, along with moving annual totaldata and moving monthly average data thatsmoothes out major uctuations and helps inidentifying trends and developing moreaccurate forecasts.For readers interested in developing fore-casts using actual data and calculations ofseasonal deviations I would refer them toChapter 14 on Export Sales Forecasting in mycompanion volume, The CIM Handbook ofExport Marketing. That text extends the cover-age of this chapter, which is aimed more atpractising sales managers probably with lim-ited data and resources to devote to the fore-casting process.Building forecasts from local market salesdataApart from using the overall data of sales to,or in, the market to monitor progress andprovide a basis for market forecasting, fore-casts can also be built up from the micro levelby looking at the historical sales for each cur-rent customer account and potential sales toeach prospective account, and comparing thetwo to come to a reasoned, realistic andachievable (within the forecast period timeframe) gure. To build forecasts in this way itis necessary to have sales data on individualcustomers kept for each product.The importance of key accountsFor most suppliers, and in most markets, afew key accounts dominate purchases (forlocal distribution and re-sale) or direct use ofa supplier’s products. The sales managershould be monitoring sales to and throughthese accounts. If they are being supplied bydirect shipments from the supplier, it is easierto access the direct shipment records. If they210 Sales ManagementTable 13.2 Using moving annual totals in forecastingMonth Forecast Forecast Forecast Forecastmoving monthly moving monthlyannual total sales annual total sales(5% growth) (5% growth) (10% growth) (10% growth)1996 base Dec. 235,000 235,0001997 Jan. 235,958 26,518 236,880 27,440Feb. 236,919 48,482 238,775 49,415March 237,885 17,765 240,685 18,710Apr. 238,854 8,049 242,611 9,005May 239,827 9,393 244,552 10,361June 240,805 17,167 246,508 18,146July 241,786 15,261 248,480 16,252Aug. 242,771 13,345 250,468 14,348Sept. 243,760 30,729 252,472 31,744Oct. 244,754 27,383 254,491 28,410Nov. 245,751 12,417 256,527 13,456Dec. 246,753 20,241 258,580 21,292Month Forecast Forecast Forecast Forecastmoving monthly moving monthlyannual total sales annual total sales(5% growth) (5% growth) (10% growth) (10% growth)
are being supplied through locally appointeddistributors, it will be necessary to obtaindata from the distributors, and that will bemore forthcoming where distributors see theneed for the data in forward planning, andthe bene ts of accuracy in forward planningto their sales throughput, cash ow and stockmanagement.The sales manager might design some sim-ple form (or computer spreadsheet) that sum-marizes sales history and contains anestimate (ideally based on discussions withthe key account) of its likely purchases in thenext planning period. A well-designed form,provided the information can be collected,can provide useful insights into the relativegrowth of major customers, and provideinformation useful to developing marketsales tactics.Table 13.3 illustrates a form that can beused in key account planning. Experience ofthe account and judgement of its progressand prospects will play a role in forecastingits future demand for the supplier’s prod-ucts.In Table 13.3 we have assumed that theproduct is an industrial component sold tomanufacturers of other products for incorpo-ration in their own products. The exampleshows the key widget accounts, with theirpurchases from our widget supplier, andtheir estimated total widget purchaserequirements for 1997. With this data thesales manager can judge the importance ofaccounts in the market and to his or her com-pany in particular, and plan particular salestactics to develop business with individualkey accounts. In this example the top tenlisted accounts represent 42.5% of the 1997projected total market for widgets, and thehigher share of 47.8% of our supplier’s pro-jected widget sales to the market, so keySales forecasting 211Table 13.3 Forecast of widget sales to key user accountsTop accounts’ share of markets and forecastsUnit Sales Company TotalCompany sales history sales volumeforecast estimateYear 1994 1995 1996 1997 1997Key accounts Volume Volume Volume Volume1 Acme Toy Factory 2,470 7,970 8,230 9,000 45,0002 Car Spares Incorporated 14,690 18,930 16,500 17,500 40,0003 Wing Electronics 13,780 15,780 15,900 16,000 38,0004 Lee Mechanical Toys 7,500 9,560 8,900 10,000 36,0005 A & B Accessories 6,490 9,670 10,350 11,500 30,0006 Chan Radiophonics - - - 4,000 30,000,7 Oriental Lighting 8,240 12,530 13,420 15000 35,000,8 Asian Electronic Industry 11,420 7,420 9,460 10000 60,0009 Photo Accessories Ltd. 6,900 13,600 12,630 14,000 50,000,10 Intelligent Toys Ltd. 5,640 8360 10,200 12,000 46,000,Total key accounts sales 77,130 103,910 105,590 119000 410,000% share of company total 36.9% 46.6% 44.9% 47.8%TOTAL COMPANY SALES 209,160 222790 235,000 249,000Company share of market 23.4% 24.5% 25.0% 25.8%,TOTAL MARKET SALES 893600 910,750 940,000 965,000 965,000Key account % share of market 42.5%Top accounts’ share of markets and forecastsUnit Sales Company TotalCompany sales history sales volumeforecast estimate
account relations and development areclearly critical in that market category.Once the overview of the key account mar-ket is prepared, and targets or forecasts estab-lished, sales tactics must be developed andimplemented to turn these targets into reality.Since not every customer may want the iden-tical format of widget the supplier can planproduction to suit customer requirements,and minimize stock holding of product vari-ants.If it is helpful to the planning process thesales manager may want to summarize his orher sales history and forecasts or targets bycategory of end use, as illustrated in Table13.4. This might be particularly useful wherethere are differences in the product variantsneeded for each industry sector or outlettype.Building targets for a larger customer baseSince most products are sold to a larger num-ber of users or outlets (i.e. retail outlets orother sub-distributors for re-sale), if forecastsor targets are being built up from the marketbase then a more comprehensive listing ofcurrent and prospective customers will beneeded. The sales manager can design somesuitable forms for data tabulation, or a simplecomputer spreadsheet data record, but typi-cally data is needed that shows the expectedpattern of sales across the year, or theexpected sales by product variant.Typical example forms, on which computerdatabase spreadsheets can be modelled, fordeveloping market targets or forecasts areshown in Tables 13.5 and 13.6. Whether thesales manager is marketing industrial or con-sumer products, the same approach to build-ing forecasts or targets can be applied.Most sales forecasters can improve theirmarket sales forecasting. If the only currentapproach to forecasting is either taking lastyear’s gures for shipments and aiming tobetter it by a certain percentage, or justdeveloping an annual sales ‘target’ anddividing it into 12 equal portions, then therewill be additional information available fromsome source that can improve upon that, andreduce the risks of a hit or miss forecastingstyle. As we have seen in this chapter, apartfrom making better use of company salesdata, having an external benchmark, such asindustry data on market sales, will providean additional dimension further refiningforecasting. Identifying trends and incorpo-rating them into forecasting (whether sea-sonal or cyclical) improves themeaningfulness.The medium-term annual forecasts willneed to be monitored frequently, at leastmonthly, and updated short-term forecastsprepared as necessary, often quarterly, toensure production and sales plans areadjusted to meet demand or potential.212 Sales ManagementTable 13.4 Sales analysis and forecasts by market sectorWidget sales by market sectorUnits 1994 1995 1996 ForecastMarket sector 1997Toys 41,320 47,400 48,175 49,800% total 19.8% 21.3% 20.5% 20.0%Electrical and Electronics 118,080 121,630 133,715 141,930% total 56.5% 54.6% 56.9% 57.0%Car Accessories 49,760 53,760 53,110 57,270% total 23.8% 24.1% 22.6% 23.0%TOTALS 209,160 222,790 235,000 249,000Widget sales by market sectorUnits 1994 1995 1996 ForecastMarket sector 1997
Sales forecasting 213Table 13.5 Market sales target product summary sheetUK Wall coverings (10 metre rolls) 1997Customer 1996 1997Sales Target Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec.Khan Stores 340 355 15 15 20 20 50 70 40 30 35 25 20 15Acme DIY 460 535 20 20 25 30 100 70 110 60 40 20 20 20Decor City 900 980 40 60 60 70 130 160 200 100 60 40 30 30,TOTALS 20,960 22,990 1020 1,170 1,340 1,900 2,560 2,980 3,100 2,420 19,60 1,800 15,40 1,200Table 13.6 Market annual product sales targets, unit sales and valuesMarket: Product group: YearUK Hand cut crystal 1997Royal Windsor Buckingham Westminster TOTALSCustomer Volume Value Volume Value Volume Value Volume ValueAstel Dept Store 560 6,160 380 4,560 470 6,110 1,410 16,830Royal Dept. Store 350 3,850 620 7,440 720 9,360 1,690 20,650The Wedding List 290 3,190 430 5,160 370 4,810 1,090 13,160TOTALS 21,300 234,300 49,000 588,000 47,500 617,500 117,800 1439,800Market: Product variant: YearUK Wall coverings (10 metre rolls) 1997Customer 1996 1997Market: Product group: YearUK Hand cut crystal 1997Royal Windsor Buckingham Westminster TOTALS
214 Sales ManagementChecklist 13.1Forecasting and planningAction pointsSales forecastingDecide on forecast period● One year (short term)● One/three years (medium term)● Three/ﬁve years (long term)Check data sources relevant to planning and forecasting● Internal sales records:● – Volumes/values● – Month by month data● – Product data● – Trade market sector data● – By customer/distributor● – (Unfulﬁlled order enquiries)● External relevant data:● – Published data on potential markets● – Import and local production data● – Competitive foreign market activityChoose the approach to forecasting current or future demand:● Statistical approaches (time series analysis such as movingannual totals and moving monthly averages, demandanalysis, multiple factor index method)● Surveys of buyers’ intentions or market tests● Marketer’s judgement, distributor’s judgement, sales forceopinions or expert opinions● Estimates of market potential● Industry sales and market share analysis● Market build-up methodsDevelop your sales forecasts at macro and micro levels:● Product volumes/values● Market/product group proﬁtability● Target market shareby relevant categories such as:● Monthly● Annually● Market sector● Product or product groupConsider:● Market knowledge● – Competition● – Economic and trading environments
Sales forecasting 215Checklist 13.1 continued Action points● – Political factors● – Distribution channel factors● Trends in market sales/production/imports● Regulatory factors● Consumer (changing) attitudes, perceptions, etc.● Product innovation● Seasonal or cyclical factors● Product life cycles● Company resource limitations● – Production capacity● – Flexibility to modify products● – Availability of inputs● – Financial resources for sales and marketing activity● – Human (marketing) resources● Adaptations or specialist products for customers (or export)Set overall company objectives for each market● Market volumes/values● Distribution● Market sharesTake account of:● Product mix● Pricing levels● Marketing strategiesSet objectives for each level of sales activity in the market:● Trade market sector● Product/product group● Key account● Customer● Salesperson/territoryRevenue and cost budgetingSupport forecasts with department budgets, taking account ofcosts of:● Order processing and physical distribution costs● Marketing communications● Advertising and promotion● Travel and related expenses● Customer service● Department salaries● Sales training and recruitmentPlan stafﬁng levels required to achieve objectives and forecasts:● Marketing management● Sales personnel● Clerical and administrative support● Changes in the needs and mix of skillsEstablish availability of material inputs enabling the companyto source and produce competitively, with consideration to:● Breadth/depth of product range
Monitoring sales performanceProfessional sales managers or marketers willwant a broad range of performance monitor-ing data to enable them to measure theirprogress and benchmark performance inrespect of:● company forecasts or targets (sales values,volumes and proﬁtability)● national sales of similar products to theirmarkets● the activity and progress of competitors(both domestic producers and importers)● the share of each product category ormarket sector that they supply● product distribution within the company’scustomer base, and within all companiesbuying or using products in theappropriate product categories● the effectiveness of any distributors inexpanding market share, distribution andsales volumes (versus competitors)● sales progress with individual accounts orcustomers (particularly key accounts)● effectiveness of sales promotions● effectiveness and responses to advertisingprogrammes.Figure 14.1 illustrates diagramatically someof the levels of activity and information thatthe sales manager may want to measure andmonitor on an ongoing basis, dependingwhat is available or relevant to an individualcompany. The diagram emphasizes the needto monitor both company performanceagainst itself, i.e. current performance com-pared with performance in previous compa-rable periods, and company performance inrelation to an outside benchmark, such as theperformance of the industry sector.If the company is exporting, then measure-ments, where possible, should be for each ofthe categories illustrated in Figure 14.1 on a:● market-by-market basis● company sales versus national exportsales (obtained from Customs & Excisepublished data) for each product typeidentiﬁed● company sales versus the total foreignmarket sales for each product or category(i.e. imports to the foreign market from allsources, plus local production, minus anyexports or re-exports).In the sub-sections below we will take abroader look at sales performance monitor-ing, and examples of how performance mon-itoring data might be constructed.Analyses of sales despatchesMost companies will be using computerspreadsheets and databases to monitor sales14Performance monitoringA company’s performance should notjust be looked at in isolation, butalways monitored or benchmarkedagainst external or industry data to givea measure of comparative performance.
218 Sales ManagementWhat tomeasureMeasure the actual figuresand percentage changefor each of the following thatis relevant to the businessMarketshareMonthlyCumulativelyyear to dateMoving annualtotalBy volume By valueBy customerBy tradechannelBy marketsectorBy productvariant(pack/unitsize etc.)By product By productcategoryTotal salesCompanysalesIndustrysalesFigure 14.1 What to measure – company and industry sales to the market
performance, but we can illustrate here withtables some data that can be recorded as partof the sales monitoring process. First identifythe performance criteria that can bene ciallybe measured. More usually you will want toestablish progress and measurement againstsome or all of the following criteria.● Compare the individual performance ofyour company against industry nationaltotal sales of the relevant productcategories. Figures can compare volumes,values and percentage share of eachitemized product category.● Your company’s share of market sales inthe relevant category, monitored byvolume, value and percentage share ofeach market sector.● Your company’s month-by-month salesperformance in volume and value,recorded for total sales and by product orproduct type. This data can be comparedwith, say, the same month last year. Thisgenerally should be done both for totalsales covering product categories ormarket sectors you supply, and on anindividual sector-by-sector or category-by-category basis. It is also useful to measurethe percentage change of this year (TY)versus last year (LY).● Cumulative performance in total, andsector by sector or category by category,for the current year to date (updatedmonthly) versus last year to date, both byvolume and value.If you are starting an information recordingprocess you could design simple salesdespatch records, as in Tables 14.1 to 14.4, inwhich the sales of some electrical productsare monitored. It is always useful to note thesales forecast or target wherever you arePerformance monitoring 219Table 14.1 Monitoring current year despatchesMarket despatch record: UK Year 1997Product Electric razorsDate Customer Invoice Units Valueno.Forecast 10,000 150,000JAN. 01/01 Khan Ltd 0001 50 75015/01 Acme Ltd 0004 25 37519/01 Capitol Ltd 0011 100 1,500Month 175 2,625YTD 175 2,625FEB. 03/02 Acme Ltd 0019 40 60009/02 Astra Ltd 0023 50 75015/02 Capitol Ltd 0027 75 1,12526/02 Disco Ltd 0031 100 1,500Month 265 3,975YTD 440 6,600MARCHMonthYTD%TY/LYMarket despatch record: UK Year 1997Product Electric razorsDate Customer Invoice Units Valueno.
recording performance data, as that keepsyou conscious of progress against objectives.Table 14.1 records individual despatches tocustomers for each month, and total them togive a month and year to date (YTD) gure.Alternatively, the same individual data fordespatches can be tabulated, but additionallywe could enter the despatch gures for theprevious year, shown as last year to date(LYTD), and a comparison of the perfor-mance this year versus last year in percentageterms (%TY/LY). Table 14.2 shows that, whileJanuary was not a good month comparedwith last year, shipments picked up inFebruary, and by the end of Februarydespatches for the rst two months wereahead of last year by two per cent on unitsand ten per cent on values.For each separate month, say February,you can then extract the total by product,sold through each trade channel sector, andthe grand total for each individual product,and place these gures on a monthly marketsummary covering all products or sectors(see Table 14.3). This chart shows monthly,year to date (YTD) and a comparison with thelast year to date (LYTD). Additionally, youcan make a percentage comparison of thisyear versus last year (TY/LY).Using the same format, you can transferthe month-by-month totals from the bottomof the market despatch summaries for eachseparate month and build these to givemonth-by-month comparisons (see Table220 Sales ManagementTable 14.2 Comparison of current year despatches with previous yearMarket despatch record: UK Year 1997Product Electric razorsDate Customer Invoice Units Valueno.Forecast 10,000 150,000JAN. 01/01 Khan Ltd 0001 50 75015/01 Acme Ltd 0004 25 37519/01 Capitol Ltd 0011 100 1,500Month 175 2,625YTD 175 2,625LYTD 200 2,800%TY/LY 87.5% 94%FEB. 03/02 Acme Ltd 0019 40 60009/02 Astra Ltd 0023 50 75015/02 Capitol Ltd 0027 75 1,12526/02 Disco Ltd 0031 100 1,500Month 265 3,975YTD 440 6,600LYTD 430 6,020%TY/LY 102% 110%MARCHMonthYTDLYTD%TY/LYMarket despatch record: UK Year 1997Product Electric razorsDate Customer Invoice Units Valueno.
14.4). This example shows the overall com-pany sales position to the latest month, andin the format illustrated here the sales man-ager can see at a glance his or her overall per-formance against the annual forecast. Table14.4 indicates that sales values are increasingat a faster percentage rate than volume, butthis basically re ects in ation, in that therewas a product price increase.This format could be re-designed to show aseparate forecast for each month of the year,and subsequent performance against thatmonthly forecast. That might be more usefulwhere there were strong seasonal variationsto sales, and therefore it could be necessary tomonitor each individual month more closelyto ensure the performance in key monthsmatches expectations.Table 14.4 shows that while the year didnot start off well, indicated by the Januaryfigures for all product sectors (possiblydespatches or orders were late in the post-Christmas period), February showed anupturn, and by the end of the second monththere is real growth.Looking at any single month usually tellsus little in monitoring sales performance.Year-to-date versus last-year-to-date compar-isons are generally important in sales analy-ses because there are so many distortions toaffect any single month, such as delays indespatching resulting from production prob-Performance monitoring 221Table 14.3 Monthly market shipments summaryMarket sector record: ALL SECTORS Year: 1997Month: FebruaryProducts Razors Toasters Hair dryers Electric ironsUnits/ Units Value Units Value Units Value Units Value£ 000’sForecast 43,200 6,48K 24,000 288K 13,000 135K 17,000 272KElectrical 265 3,975 140 1,680 120 1,248 160 2,560specialistsYTD 440 6,600 310 3,720 190 1,976 280 4,480LYTD 430 6,020 300 3,360 180 1,728 265 3,975%TY/LY 102% 110% 103% 111% 106% 114% 106% 113%Department 330 4,950 300 3,600 160 1,664 290 4,640storesYTD 560 8,400 500 6,000 280 2,912 410 6,560LYTD 540 7,560 480 5,376 300 2,880 400 6,000%TY/LY 104% 1115 104% 1125 93% 101% 103% 109%Catalogue 110 1650 90 1,080 20 208 150 2,400suppliersYTD 150 2,250 130 1,560 40 416 250 4,000LYTD 260 3,640 140 1,568 40 384 240 3,600%TY/LY 58% 62% 93% 99% 100% 108% 104% 111%YTDLYTD%TY/LYTOTALFEBRUARY 3,000 45,000 2,000 24,000 900 9,360 1,050 16,800YTD 4,750 71,250 3,000 36,000 1,400 14,560 1,650 24,600LYTD 4,500 63,000 2,900 31,900 1,450 14,210 1,800 27,000%TY/LY 106% 113% 103% 113% 97% 102% 92% 91%% F/cast 11% 11% 13% 13% 11% 11% 10% 9%Market sector record: ALL SECTORS Year: 1997Month: FebruaryProducts Razors Toasters Hair dryers Electric ironsUnits/ Units Value Units Value Units Value Units Value£ 000’s
lems, or late ordering by customers in oneyear versus another.This detail of analysis draws the sales man-ager’s attention to potential problems whereplans are not being met, may assist in identi-fying seasonal patterns not previously takeninto consideration (if, say, you simply allo-cated the same plan volume to each month),and enables future planning and forecastpreparation to be more accurate and sophisti-cated as you build up a historical database. Ifyou have a relevant budget figure, thisshould appear at each point of measurementon each of your analysis sheets and you canshow achievement by individual salespersonand/or customer, month by month, totalsales month by month, and percentageachievement and cumulative achievementsagainst the budget or plan.As more data becomes available over alonger time period you will benefit bypreparing moving annual total analyses ofmarket sales (discussed in Chapter 13). Thesewill provide a measure of the longer-termtrends that the sales manager should moni-tor. As shown in the previous chapter, mov-ing annual totals (MATs) and/or movingmonthly averages (MMA) can usefully betabulated and updated monthly for:● the total sales of company products(turnover, volume sales, proﬁtperformance)● individual products and/or productcategories (turnover values and volumes)● market sectors or trade channels suppliedby the company (turnover values andvolumes)222 Sales ManagementTable 14.4 Company summary: cumulative sales data for all market sectorsMarket Despatch Record: ALL MARKETS Year: 1997Products Razors Toasters Hair dryers Electric Irons TOTAL COMPANYUnits/ Units Value Units Value Units Value Units Value Units Values£000’sForecast 43,200 648K 24,000 288K 13,000 135K 17,000 272K 97,200 1,379JAN. 1,750 26,250 1,000 12,000 500 5,200 600 9,600 3,850 53,050YTD 1,750 26,250 1,000 12,000 500 5,200 600 9,600 3,850 53,050LYTD 1,800 27,000 1,100 12,100 530 5,194 620 9,300 4,050 53,594%TY/LY 97% 97% 91% 99% 94% 100% 97% 103% 95.1% 100%% F/cast 4% 4% 4% 4% 4% 4% 3.5% 3.5% 4% 3.8%FEB. 3,000 45,000 2,000 24,000 900 9,360 1,050 16,800 6,950 95,160YTD 4,750 71,250 3,000 36,000 1,400 14,560 1,650 24,600 10,800 146,140LYTD 4,500 63,000 2,900 31,900 1,450 14,210 1,800 27,000 10,650 136,020%TY/LY 1,06% 113% 103% 113% 97% 102% 92% 91% 101.4% 107.4%% F/cast 11% 11% 13% 13% 11% 11% 10% 9% 11.1% 10.6%MARCHYTDLYTD%TY/LY% F/castYTD = Year to date TYTD = This year to date TY/LY = This year/Last year comparisonMarket Despatch Record: ALL MARKETS Year: 1997Products Razors Toasters Hair dryers Electric Irons TOTAL COMPANYUnits/ Units Value Units Value Units Value Units Value Units Values£000’s
● by sales territory where it would be anadditional longer-term meaningfulmeasure.Do constantly bear in mind that there is nobene t in producing data just for the exerciseof statistics. Production of statistical data isworthwhile only if it:● measures performance againstcomparable relevant criteria (forecasts,targets, budgets)● helps in identifying underlying trends andaids the planning process● gives warnings of signiﬁcant variancesfrom plans and programmes in sufﬁcienttime for corrective action to beimplemented to impact on results withinthe plan’s time frame● aids the planning process● aids the sales team in the performance ofits functions and assists in the recognitionand acceptance of training needs.Market share analysisThe rst estimate of performance that in anyway relates to a share of a market is generallyto monitor your share of total sales to themarket, which gives you a simple compari-son of your performance against other sup-pliers. That may be broken down further tomarket shares by particular trade channelsectors or market segments, or even to yourshare of category purchases for particularcustomers (e.g. key accounts). Table 14.5Performance monitoring 223Table 14.5 Market share analysisShare of UK sales: clocks by trade channelPeriod: Jan.–June 1997Trade Company National – all Company % ofchannel suppliers NationalVol. Val. Vol. Val. Vol. Val.IndependentjewellersTY 9,100 38,000 18,800 66,000 48% 58%LY 8,500 34,000 18,000 60,000 47% 57%%TY/LY 107% 112% 105% 110%DepartmentstoresTY 4,800 20,000 13,300 60,000 36% 33%LY 4,700 19,000 13,600 59,000 36% 32%%TY/LY 102% 105% 98% 102%CataloguecompaniesTY 14,600 61,300 48,600 168,000 30% 36%LY 13,700 54,600 46,500 153,600 29% 36%%TY/LYOthersTY 6,600 27,700 21,700 74,600 30% 37%LY 6,300 25,100 22,000 72,300 29% 35%%TY/LYAll sectorsTY 35,100 147,000 102,400 368,600 34% 40%LY 33,200 132,700 100,100 344,900 33% 38%%TY/LY 105.7% 110.8% 102.3% 106.9%Share of UK sales: clocks by trade channelPeriod: Jan.–June 1997Trade Company National – all Company % ofchannel suppliers NationalVol. Val. Vol. Val. Vol. Val.
illustrates one simple analysis of a company’sshare versus industry national sales. Theexample shows that, while both the companyand industry are showing growth versus theprevious year (comparing TY/LY gures),our supplier is growing faster than the indus-try for both volume and value sales, andgaining slightly in market share.As an alternative in the example, clocksales could be monitored by market sectorrather than trade channel, such as:● personal household users● commercial usersor by type of clock, possibly with further sub-categories, e.g.● digital clocks● analogue clocks● wall clocks● desktop/ mantel clocks.Total market sales data may be availablefrom:● industry trade associations● feedback from major users or customers,building up an estimate from individualpurchases● government monitoring data, such as● household expenditure surveys● production output surveys● import/export (Customs & Excise) data.If the sales manager can obtain data forindustry sales of key product categories tomajor customers some useful analyses canoften be prepared to compare company per-formance with the industry. In the example ofTable 14.6, if the company looked at its salesin isolation the performance might seem sat-isfactory, as the bottom line shows it has year-on-year growth over 11 per cent and over 12per cent for 1995 and 1996 respectively. Butby looking at individual key accounts we seethat in some it has grown in value and inshare, in some it has grown in value butdeclined in share of UK product categorysales, and to some major customers it doesnot supply at all. The company’s sales marketranking in the second to last (from right) col-umn reasonably parallels the UK sales to themain customers ranking of the last column,but there are some glaring differences, whichwould warrant investigation or commentaryif this chart were part of the marketing strat-egy plan.● Company sales to Welcome arenegligible, yet it is the second largestcustomer in the industry.● The company has no sales to Argosy,Khans and Altons.● Company sales to Morrisey and Delmonare well below the users ranking in theindustry.● Company sales to Mangels and Aisher &Aisher indicate an unusually high variationin share and ranking from the industry,possibly resulting from too much attentionto these accounts to the neglect of some ofthe others mentioned.● The top 20 accounts represent 87% ofindustry offtake, but only 72.7% ofcompany sales, suggesting scope for morekey account development.● The company has grown consistently at11.7% and 12.7% year on year, but inthe latest year industry sales grew18.2%.Monitoring proﬁtability of sales activityGood sales management practice shouldrequire that attempts are made to measurethe pro tability of all sale transactions. Thiscan be done:● on a customer-by-customer basis, possiblyconsolidated into sales territories (suited tosituations of ongoing regular supplies tothe customers, such as with consumergoods, industrial consumables,components and inputs)● on a shipment-by-shipment basis (oftenmore suited to products or services thatare subject to irregular orders with noregular market supply pattern, as withheavy equipment, tenders, etc.).224 Sales Management
Some typical performance measures that thesales manager should monitor and that relateto pro table customer management include:● the average order size by customer (involume and value terms)● the average costs of servicing an order(e.g. order processing, physicaldistribution, and any other relevant andmeasurable costs)● the break-even order size (taking accountof costs of order processing, delivery, andrelated directed selling costs)● the pattern of orders, in total and bycustomer, by size and proﬁtability, toprovide a measure of the number oforders that are serviced unproﬁtably.Where the sales manager cannot get a goodmeasure of transaction processing costs,some rough measures are usually available(quite simply, for a speci c time period, sayone month, or the last year, taking all therelated sales, order processing and distribu-tion costs in total, dividing by the number oftransactions processed, as separate invoice-able transactions or separate deliveries, willgive an average processing cost that can thenbe compared with the gross margin perorder). Table 14.7 illustrates a calculation ofaverage pro tability for a company that canthen be compared with the performance forindividual customers (see Table 14.8). This isa more sophisticated analysis than an earlierillustration shown in Table 2.2.From the calculations in Tables 14.7 and14.8 we have gures that show an averageorder value of £402, average order gross con-tribution of £161, and an average order grosstransaction processing cost of £118. If we onlyPerformance monitoring 225Table 14.6 Ranked UK sales of widgets to major accounts 1994–6 (£000s)UK Widgets sales totals and company shareAccount Total Company % Total Company % Total Company % Company UK£000s 1994 1994 1995 1995 1996 1996 rank rank1996 1996Intermart 36,700 2,459 6.7% 40,958 2,867 7.0% 48,421 3,480 7.2% 1 1Welcome 22,035 115 0.5% 20,815 100 0.5% 22,161 110 0.5% 20 2Trade Centres 13,034 1,538 11.8% 13,439 1,626 12.1% 13,900 1,750 12.6% 2 3Argosy 4,100 - - 6,922 - - 11,868 - - - 4PriceLo 9,095 637 7.0% 10,574 634 6.0% 11,187 696 6.2% 6 5Morrisey 6,529 286 4.4% 7,963 320 4.0% 9,634 340 3.5% 11 6Superbuy 5,478 696 12.7% 7,456 764 10.2% 8,926 896 10.0% 4 7LoCost Centres 2,749 102 3.7% 6,475 259 4.0% 8,440 346 4.1% 10 8Delmon 5,913 151 2.6% 7,909 183 2.3% 8,176 196 2.4% 16 9Selections 6,965 620 8.9% 6,800 639 9.4% 7,402 720 9.7% 5 10Top 10 Sub Total 112,598 6,604 5.9% 129,311 7,392 5.7% 150,115 8,534 5.7%% UK sales 69% 52.6% 71% 53.0% 70% 54.3%Wells & Wallace 2,596 125 4.8% 1,676 84 5.0% 5,850 305 5.2% 13 11Uptown Discount 3,029 60 2.0% 2,560 70 2.6%. 5,109 80 1.6% 23 12CenterPoint 2,379 92 3.9% 4,374 108 2.5% 4,593 120 2.6% 18 13Deco-Art 3,849 331 8.6% 3637 331 9.1% 4,102 405 9.9% 8 14Mangels 2,884 662 31.6% 3,069 994 32.4% 3,602 1,280 35.5% 3 15Khans C & C 2,095 46 2.2% 3,188 - - 3,151 - - - 16Rite Group 902 110 12.2% 2,342 138 5.9% 3,103 140 4.5% 17 17Altons 1,605 - - 2,348 - - 2,554 - - - 18Aisher & Aisher 3,179 345 10.9% 2,137 370 17.3% 2,487 420 16.9% 7 19Waltons 2,664 47 1.8% 2,211 190 8.6% 2,201 150 6.8% 16 20Top 20 Sub Total 137,780 8,422 6.1% 156,853 9,677 6.2% 186,867 11,434 6.1%% UK Sales 84% 67.1% 86% 69.4% 87% 72.7%UK TOTALS 163,290 12,551 7.7% 182,447 13,948 7.6% 215,683 15,720 7.3%% Change 11.7% 11.1% 18.2% 12.7%UK Widgets sales totals and company shareAccount Total Company % Total Company % Total Company % Company UK£000s 1994 1994 1995 1995 1996 1996 rank rank1996 1996
want to consider the direct order processingcosts (paperwork processing and delivery,excluding the share of overall sales and mar-keting costs) on average, then this would be£39.With an average gross margin of 40%, wecan see that on the basis of direct transactionprocessing costs (paperwork processing anddelivery) we would have a break-even ordersize of £98. If we were to include the averagesales and marketing costs (£79) which gave afull average sales, marketing and distributionaverage of £118 per order, then the break-even average order size would rise to £295.What we are saying is that on average, anyorder shipped that has a value lower than£295 is losing money for us, and certainly anyorder shipped at under £98 value does noteven generate the gross contribution to coverthe average costs of paperwork processingand distribution.In the analysis of the top 50 customers forthe case example (Table 14.8), we see that in avery basic calculation, where gross contribu-tion is set in standard costings at an average40%, we have 5.9% of the customer base (i.e.50 out of 845 customers) accounting for 59%of turnover and gross contribution, and 48%of order transactions. What is particularlyapparent for this company is that it has a veryhigh number of low value transactions (com-mon to many suppliers of small items andconsumables). Of particular concern to thesales manager will be the two top 50 cus-tomers who have average gross contributionsper order at £38 and £39, approximating thelevel of contribution that hardly covers aver-age direct transaction costs of paperworkprocessing and delivery. In addition, thereare 11 other customers that contribute lessthan the average of £118 that we wouldexpect to cover the full sales and marketing,processing and distribution costs per averageorder. In other words, we have clear signsthat a number of our major accounts are mak-ing unsatisfactory profit contributions.Without a doubt, this sales manager wouldbe very interested in the remaining 795 cus-tomers’ pattern of orders and contribution!There are many situations where customerpro tability can be eroded in a way that canbe easily missed by the busy sales manager,and a few are noted here.● Where there are many buying and usepoints for a supplier’s products in acustomer organization, a multiplicity ofsmall order transactions can result226 Sales ManagementTable 14.7 Example of analysing customer proﬁtabilityAverage order proﬁtability analysisCompany turnover (12 months) £14,650,000Gross proﬁt contribution 40% £5,860,000Number of active customers 845Average turnover per customer £17,337Average gross contribution per customer £6,935Number of orders processed 36,400Average order value £402Average contribution per order £161Costs of processing ordersEstimated portion of sales and marketing budgetsallocated to order processing £728,,000 £20Carriage and packing at cost £691,600 £19Cost of marketing and ﬁeld sales operations £2,875,600 £79£4,295,200Average sales, marketing and distribution costs per order £118Average order proﬁtability analysis
● Where a supplier of equipment that needsconsumables or spare parts has customersthat order on an item-by-item-as-neededbasis● Support engineers may need to go to meeta customer, to provide training orinstallation assistance● Over-calling by the salesperson, in relationto sales volume and potential● Overlooked costs of ﬁnancing the majorsales transactions (goods in process orstore, insurance, credit to the customers,bank charges, etc.)● Special promotional materials provided toa customer to support promotional activity.Customer pro tability should be monitored(ideally net pro tability, but otherwise, atleast, gross profitability), and correctiveaction taken where problems are identi ed.The answer is not normally to discontinuesupplies, but to look for changes in the waysof servicing the customer that will return it topro tability.Monitoring salespersonperformanceIf the company sells through a network ofsalespersons who either sell on direct to endusers/consumers, or who supply variouslevels of trade stockists, then there is bene tin establishing measures of salesperson per-formance.What to measureThe company can measure the salesperson’sperformance by monitoring:● salesperson’s share of total company sales● – by volumes/values● – by product/ trade sector● product/brand performance● – by volumes/values● – versus competitive brands● trade sector sales● – by product● – by volume/ values● key account sales (where thesalespersons/distributors have local keyaccounts to service)● – by volumes/ values● – by brand● salesperson’s share of category sales onhis or her territory or through his or heraccounts.Monitoring monthly sales againstterritory sales budgetsThe next example illustrates a simplifiedform (Table 14.9) of an annual sales budgettypical of the format (normally logged on acomputer) that might be used in monitoringthe performance of an individual territorysalesperson. Monthly totals for actual salesagainst budget and for percentage achieve-ment, as well as comparisons with the sametime last year, can all be monitored on thesame table.In this example the budget was closelybased on the previous year’s actual sales,228 Sales ManagementInformation requests and feedback in selling1. Keep information requests to a minimum2. Provide feedback● Ensure when you ask a salesperson for data that he or she understands why youneed it and how you use it.● Provide the salesperson with feedback on data use and interpretation or analysisresulting from his or her data inputs, e.g.: table of comparative performance withother salespersons (for products, market sectors or trade channels), or his or her ownperformance historically presented (sales over time).
with a budgeted growth of between seven percent and nine per cent, depending on product.However, each product actually exceeded thelocal sales budgets (forecasts). If we look atthe individual months, there are some monthswhere sales of products varied greatly frombudgeted gures. An unusually high month’ssales would presumably have depleted com-pany reserve stocks, possibly contributing toa lower following month through stock short-ages (e.g. electric irons in June/July).The example territory gures in Table 14.9illustrate the use of moving annual totalanalysis in territory measurement (the con-cept of moving annual totals as a trend mea-sure is explained in Chapter 13). In ourexample, where we are looking at unit salesrather than sales values (i.e. real growth ver-sus monetary growth), the percentage changein the moving annual total comparison forthis year versus last year is increasing as theyear moves through the months, indicating afaster rate of growth presumably throughgreater sales activity (possibly a newsalesperson on the territory). Movingannual totals provide an additional longer-term trends measure to supplement thenormal sales measures of comparingmonthly actual data and cumulative annualdata.Those readers who have limited directsales operations, but who work through anetwork of specialist distributors (either inthe domestic market or in export markets)will nd useful extension coverage of thetopic of measuring and monitoring perfor-mance of distributors in my companionvolume, The CIM Handbook of ExportMarketing, and are recommended to read thatsource.Continuous monitoringChapter 12 dealt with the basic principlesof developing a formalized approach tosales and marketing planning. Once astrategy plan is developed it is essentialto monitor both its implementation andthe performance outcome at everystage, as these are very much within thesphere of responsibility and control of thesales organization. You must also set inprocess a programme of monitoring the keyaspects of both the market environment andcompetitive environment that impact on theplan, as illustrated in Figure 14.2, as both ofthese are dynamic and will not stand stillunchanged for the duration of the planningperiod.Competitive benchmarkingThe sales manager should establish (possiblywith the marketing department) a system ofmonitoring indicators of competitive perfor-mance versus his or her company and its dis-tributors in the markets qualitatively andquantitatively. This serves to benchmarkfactors considered important to trade usersand consumers in buying or promoting acompany’s products versus the competition.Both for industrial and consumer productsthe marketer can prepare a list of factors (seeTable 14.10) that are important in in uencingthe decision to make a purchase, at the levelof the trade channel and at the level of theconsumer or user.You can obtain periodic qualitative orquantitative data by:● personal observation while in the marketand when calling on customers● asking questions of trade stockists,consumers and users● developing a system of recording keypoints on salesperson daily reports orcustomer record cards● obtaining data from periodic marketaudits (including some governmentmonitored data such as householdexpenditure on items).230 Sales Management
Presenting sales monitoring dataAs a general rule all marketing monitoringdata should be shared with your sales teamto help improve sales performance and mar-ket planning.● Data should be presented in a meaningfulformat that highlights trends andencourages corrective action where thereare deviations from plans.● Do not assume the salesperson will taketime studying and analysing copiousstatistical reports, but focus on onlyproviding performance reportsthat are meaningful and useful in thecontext of managing localdistribution.● Where statistical reports are beingpresented these should be accompaniedby an explanation of the interpretation thatthe salesperson should attach to them,along with suggestions for action. Somedata may be presented graphically, suchas moving annual data.● Do not make the salesperson (or yourdistributors) produce information andtables that will neither give anymeasurement of progress or marketingprogramme effectiveness, nor aid in futureplanning.Performance monitoring 231Plan performancee.g.● Sales performancerelative to targets● Proﬁt return frommarket, or by product,or customer● User/consumer trialand/or product usage● Product distribution● Customer coverage● Distributor stock levelsand sales● Distributor contacts/outlet coverage● Advertising andpromotion spend● Export shipmentsMarket environmente.g.● Governmentlegislation, e.g.:● – Product control● – Outlet control● – Sales taxes● – Excise taxes● Economic data, e.g.:● – Incomes● – Inﬂation● – Employment● – Interest rates● – Economic activity● Demographic factors,e.g.:● – Age factors● – Population locationand movements● – Cultural/socialfactorsCompetitiveenvironmente.g.● Industry data● Distributor audits● Usage and attitudestudies● Distribution audits● A. C. Nielsen audit● Millwood Browntracking● Omnibus studies● Competitor outletcoverageFigure 14.2 Monitoring the plan performance and the market environment
232 Sales ManagementTable 14.10 Typical factors to bench mark in monitoring competitionSome factors for bench markingConsumer factors (consumer goods)● Trade channel in-store service● Demonstrations● Merchandisers● Promotional support● Marketing support● Media selection● Media weight● Advertising executions(positioning/targeting)● PR and sponsorship activity● PromotionsIndustrial user factors● Product tests and trials● Availability from local stock● Local spare parts and service facilities● Product training (and installation)● Product reliability in service● Service costs● Speed of delivery from ordering● Product pricing● Payment terms● Product promotional support● General user friendlinessTrade factors● Product pricing● Product distribution● Display● Delivery system and reliability● Distributor stock levels/availability● Trade channel stock levels● Distributor sales force structure● Quality of sales representation● After-sales (trade customer) service● Accuracy of invoicing/paperwork● Order cycle frequency and suitability totrade channel/customer needs● Communications on stock/order status● Cooperative advertising and promotionactivitiesSome factors for bench marking
Performance monitoring 233Checklist 14.1Sales performance measurementAction pointsPerformance measurement● Have you identiﬁed key result areas?● Do quantitative measures exist for them?● Is data presented meaningfully?Do analyses measure:● variances from your plans and forecasts?● trends?● promotional and advertising effectiveness?● proﬁtability by:● – market sector?● – trade channel?● – product group?● – major customer account?Speciﬁcally, is it relevant to monitor company’s sales performance(volume/value/share – TY/LY) versus:● total industry product category or market sector sales?● competitor sales performance (market share)?Do you monitor performance in actual volume/value terms andagainst forecasts● monthly (This year/Last year)?● cumulatively?● on a moving annual basis?● other (note)?Do you measure change (i.e. % TY/LY):● by market sector?● by product or product group?● by volume/value?● by trade channel?● by customer (particularly key accounts)?Are moving annual total (MAT) analyses prepared for:● sales volumes?● sales values?● proﬁtability?● market shares?● distributors’ sales performance?Is each item of data analysis being presented in the mostmeaningful and easily interpreted format for action?
234 Sales ManagementChecklist 14.2Competitive benchmarkingAction pointsDevelop a survey to benchmark your own marketing anddistribution expenditure and performance in relation to competitors(Agencies can assist in some of markets, or compile aconﬁdential outlet panel.)Trade factors to be benchmarked in regular surveys include:● Product pricing● Product distribution● Display● Delivery system and reliability● Distributor stock levels/availability● Trade channel stock levels● Distributor sales force structure● Quality of sales representation● After-sales (trade customer) service● Accuracy of invoicing/paperwork● Order cycle frequency and suitability to tradechannel/customer needs● Communications on stock/order status● Cooperative A & P activitiesConsumer products marketing support factors that can bebenchmarked in regular surveys include:● Trade channel in-store service● Demonstrations● Merchandisers● Promotional support● Marketing support● Media selection● Media weight● Advertising executions (positioning/targeting)● PR and sponsorship activity● PromotionsIndustrial user factors to be benchmarked include:● Product tests and trials● Availability from local stock● Local spare parts and service facilities● Product training (and installation)● Product reliability in service● Service costs● Speed of delivery from ordering● Product pricing● Payment terms● Product promotional support● General user friendliness
Part FiveManagement and Control of theSales Force
Management of resourcesThe salesperson has three key resources tomanage:● time● company resources● himself or herself.Some of the typical activities within theseresource categories are illustrated in Figure15.1.Managing selling timeSelling time is the one irreplaceable resourcethe salesperson controls, and is often the mostdif cult to manage. There are many demandson the salesperson’s time, some less critical orimportant than others, yet still a necessarypart of the workload. The ef cient salespersonrecognizes the importance of good time man-agement. In most markets the typical salesper-son spends only two to three hours daily infront of customers, conducting negotiations.The rest of the day goes in travel, pre-callpreparation, waiting at calls, administration,breaks or contacting the sales of ce.A simple salesperson use of time analysisform, illustrated in Table 15.1, can be adoptedby eld sales managers to conduct an audit ofthe use of time by salespersons. It is usuallybest to use the form discreetly during thecourse of a day with the salesperson, tickingthe appropriate box for the main activity thatuses the time within each 10-minute interval.The sales manager wants to get a fair repre-sentation of how time is normally used,rather than a distorted picture if the salesper-son is aware of being monitored, and changeswork habits as a result. The results of thistime audit can then be fed back to the sales-person to create awareness of where time isgoing during the working day, and trainingcan focus on more productive use of time.Sales activitiesThe typical range of activities of the salesper-son can be allocated generally to one of thefunctions identi ed in Figure 15.2.PlanningThe planning functions of the salespersoninclude the following.● Prospecting for new customers● Journey planning● Appointment scheduling● Travel plans● Longer-term account planning● Call objectives● Sales presentation strategies● Preparing sales aids● Post-call evaluation and future planning.SellingTypically the selling activities will cover atleast the following stages, depending on thenature of the products being offered to thecustomer.15Territory management
● Identifying decision makers● Access to decision makers● Analysing customer needs● Making effective presentations● Overcoming objections● Closing sales● Product merchandising● Promotional activities● Post-call follow-up.CommunicatingMuch of a salesperson’s activity involvescommunicating, in person, by telephone, orthrough correspondence. Skill training maybe bene cial in each of these areas. There is arisk of misunderstanding in any communica-tion, and brevity, clarity and simplicity arebasic guidelines that reduce the risk. A typi-cal salesperson will be communicating with:● customers● sales line managers● head ofﬁce support departments● distribution depots● wholesale distributors or other tradedealers.The range of communication tasks willencompass:● arranging appointments with customers● communicating journey plans● reading, interpreting, understandingand implementing communications fromhead ofﬁce and line managers, whichfrequently relate to matters such as: cus-tomer payments, marketing and promo-tional activity, new products andinitiatives, price changes, trading terms,performance analysis of sales with238 Sales ManagementTIME COMPANY SELFDrivingPre-call planningCall waitingSales presentationsPost-call administrationMeal breaksGeneral administrationUse of his skillsFunctional activitiesperformed in callsPerformanceachievements (targets,standards ofperformance, etc.)Attitudes to:• the job• company• colleagues• customers• himself/herselfMotivationTangibleVehicleFinancial resources e.g.• expenses• promotion fund• trade discounts• special allowancesPromotional materialsand equipmentSales aidsIntangibleGood will in thecompany brand namesTime (in that thecompany is paying fortime through salary etc.)Resources managed bythe salespersonFigure 15.1 Resources that the salesperson manages
accounts, deliveries, production issues(scheduling of product production),product speciﬁcations, and so on● distilling relevant aspects of communica-tions originating from head ofﬁce into alocal territory action plan, or relayingcommunications in a digestible form tocustomers● communicating the contents of sales pre-sentations and marketing and promo-tional activity effectively to buyers● liaison with head ofﬁce support serviceson aspects relating to particular cus-tomers, such as order lead times, prod-uct availability, and payments.AdministeringSales administration puts a signi cant timeburden into the lives of most salespersons,whether systems are still paperwork based orcomputer based, and therefore managersshould work to keep administration to a min-imum and as simple as effective managementcontrol will permit. The use of standardforms and recording systems will aid ef cientand effective administration, and reduce therisk of neglect. The next chapter will examinesome typical standard sales administration,but a few key controls include:● customer call records● journey planning reports or programmes● order forms and other order processingpaperwork● daily activity reports● contact reports (for major accounts)● credit notes (for goods uplifted orexchanged)● internal memos to internal departments● sales promotion control forms (for man-aging sales promotional activity)● sales invoicesTerritory management 239Making the most of time in sellingExtend the selling day ● Avoid start of day or end of day visits to the ofﬁce● Schedule the ﬁrst call to start by 9.00 a.m.● Avoid lengthy breaks (including business lunches)Plan the sales itinerary ● Determine optimum call frequencies in relation to poten-tial volumes● Schedule calls logically to minimize driving and call-backs● Have alternative calls ready to ﬁll spare time (regularaccounts or new prospect calls)Organize your sales aids ● Check all sales literature is collated in the order of bestreference for use in the call● Check you have appropriate samples for the customer● Plan call objectives by reference to customer recordsUtilize call-waiting time ● Check sales aids● Plan strategies● Make contacts within the accountUtilize travel time ● Re-set objectives● Plan strategies● Make phone calls to customers as appropriateUse the phone ● Make appointments● Follow up on previous calls or promotions● Book repeat orders● Liaise with the sales ofﬁce
240 Sales ManagementTable 15.1 Monitoring a salesperson’s use of timeSalesperson’s use of time analysis SalespersonTick main activity box Travelling Preparation Waiting time Active Administ- Breaksfor each interval and planning at calls selling ration09.00–09.10 ✔09.10–09.20 ✔09.20–09.30 ✔09.30–09.40 ✔09.40–09.50 ✔09.50–10.00 ✔10.00–10.10 ✔10.10–10.20 ✔10.20–10.30 ✔10.30–10.40 ✔10.40–10.50 ✔10.50–11.00 ✔11.00–11.10 ✔11.10–11.20 ✔11.20–11.30 ✔11.30–11.40 ✔11.40–11.50 ✔11.50–12.00 ✔12.00–12.10 ✔12.10–12.20 ✔12.20–12.30 ✔12.30–12.40 ✔12.40–12.50 ✔12.50–13.00 ✔13.00–13.10 ✔13.10–13.20 ✔13.20–13.30 ✔13.30–13.40 ✔13.40–13.50 ✔13.50–14.00 ✔14.00–14.10 ✔14.10–14.20 ✔14.20–14.30 ✔14.30–14.40 ✔14.40–14.50 ✔14.50–15.00 ✔15.00–15.10 ✔15.10–15.20 ✔15.20–15.30 ✔15.30–15.40 ✔15.40–15.50 ✔15.50–16.00 ✔16.00–16.10 ✔16.10–16.20 ✔16.20–16.30 ✔16.30–16.40 ✔16.40–16.50 ✔16.50–17.00 ✔TOTALS 120 mins 40 mins 40 mins 160 mins 60 mins 60 minsSalesperson’s use of time analysis SalespersonTick main activity box Travelling Preparation Waiting time Active Administ- Breaksfor each interval and planning at calls selling ration
● letters and forms chasingpayments/credit control.Decision makingWhile the decisions that a salesperson has tomake may not be as large in impact on com-pany performance as those of the sales direc-tor, they are probably as frequent, and requirethe same processes in arriving at a judgementon a course of action. Some of the typical sub-jects of decision making at territory levelinclude:● alternative account development strategies● sales presentation strategy and tactics● trade channel product mix priorities● product portfolio mixes in customer outlets● display space utilization advice (forconsumer products)Territory management 241SellingactivitiesMarketintelligencePlanningSellingCommunicatingAdministeringDecisionmakingFigure 15.2 Key selling activitiesMarket IntelligenceCompetitors Customers● Competitive sales activity ● Financial status and performance● New products and packs ● Changes in key contacts● Sales team stafﬁng levels ● Changes in ownership/management● Prices ● Buying plans and budges● Competitive promotional activity ● Creditworhiness● Distribution ● Investment plans (new facilities etc.)● Products on trial with customers ● Changes in layouts or outlet format● Product speciﬁcations ● New branch openings/closures● Organization structure management ● Promotional activity
● alternative promotion opportunities● choice of product to offer to an industrialor business-to-business client● trade terms to individual customers.Market intelligenceAn important function of every salespersonis to collect market intelligence about cus-tomers and competitors. This might cover arange of topics such as those in the followingtable. The sales force should collect informa-tion and submit a (weekly) report on all rele-vant market intelligence in order thatevaluations can be undertaken by sales man-agement.Territory planningTerritory management is basically aboutadopting normal management principles atthe level of the territory, e.g.:● setting goals and objectives (see Chapter4)● preparing targets and forecasts● developing strategies and tactics for eachaccount● implementing the sales and marketingprogrammes at the level of each account.Territory sales forecastingIn Chapter 13 we explored sales forecastingin some detail. One approach to forecastingfavoured by many sales managers is the mar-ket build-up method. The salespersonshould be involved in the planning process,even if the main targeting or forecasting isdone at the sales of ce. The salesperson canbe involved in either of two ways:● in building up his or her own territoryforecast by account, by product, byvolume/value to produce his or her overallterritory forecast● by taking the head ofﬁce territory forecastand breaking that down to the level ofeach individual account, and allocating aproduct mix target for each account whichat least equals the overall company targetfor the territory.Periodically the sales manager should workwith each of his or her sales team to exploretheir views and knowledge and to build localsales forecasts for each territory and accountbased on knowledge of:● existing customer account sales history● existing customer account assessedpotential● potential for additional new business fromunexplored (or unexploited) pioneer calls(pioneer calls being those we have notpreviously developed to active sales)● knowledge of the local economicenvironment● competitive activity● wholesale distributor’s or other tradedealer activity● company marketing initiatives andprogrammes● trends in product preference.Developing sales strategiesThere are two sets of factors to take accountof in developing a successful sales strategyaimed at maximizing sales:● brand strategy factors● sales strategy factors.Sales strategies, aimed at achieving volume,value and share of spend objectives withcustomers (see Table 15.2) typically willencompass a range of issues, including:● the product range (range extensions,product modiﬁcations, productcustomization, etc.)● pricing (price positioning in relation tocompetition for retail products, and inrelation to relative value-adding beneﬁtsversus competitors for industrial products)● trade terms● trade marketing and promotion242 Sales Management
● building supply chain partnerships andcustomer loyalty.Within any single customer, strategies typi-cally can focus on:● strategies to increase share of thecustomer’s expenditure● strategies to increase buying requirements● strategies to inﬂuence the customer’sgrowth rate.These are expanded on in Table 15.2.Territory call coverage and journeyplanningCompanies in developed markets tend nowa-days to seek to identify the actual or potentialcustomer base within each postal code dis-trict. The outlets can then be classi ed byappropriate criteria into groupings thatre ect differing sizes and potential. All salesmanagers will have heard of the 80–20 rule,which postulates that around 80 per cent ofsales (and pro ts) will come from around 20per cent of customers. On this basis, compa-nies commonly develop three customer clas-si cation grades, A, B and C. Customersclassi ed as A customers would typically bethose whose sales potentials would placethem in the top 15 to 20 per cent of customersby volume. The B classi cation customerswould then typically fall into the next 30 to 35per cent by volume potential. The C classi -cation customers will typically be the lower50 per cent or so, by volume potential.When all actual and prospective customersare identi ed, and classi ed according to vol-ume potential, the frequency of calling oncustomers can then be assigned in relation toTerritory management 243Table 15.2 Account strategies for increasing salesStrategies to increase share● Improved pricecompetitiveness● Quantity discounts● Performance rebates andallowances● Lower delivery costs● Increased or improvedtechnical support● Product customization● Improving service● Enhancing productbeneﬁts● Enhanced customer valueperceptions from products● Improved networkingamongst decisioninﬂuencers● Improving communicationswith customerStrategies to increase con-sumption or buying require-ments● More intensive productusage● New usage points withincustomer organization● New applications forestablished products● New products for newapplicationsFactors that inﬂuence the rateof growth of the account● Demographic factors● Economic factors● Competition● Government regulatoryfactors● Changingtastes/preferences withinthe account’s customerbase● Innovativeness● Range of markets andmarket sectors served● Effectiveness andproductivity of thecustomer’s sales andmarketing organizationand programmesNB: These are not generallyunder the inﬂuence of thesupplierStrategies to increase share Strategies to increase con- Factors that inﬂuence the ratesumption or buying require- of growth of the accountments
their sales potential – the higher the potentialthe greater the calling frequency. From thisinformation a collection of sales territoriescan then be built up to give balanced work-loads (and also, ideally, sales potential)between the sales territories.Territory call coverageCoverageCoverage is the planned calling on customersand prospects, with regular calls scheduledaccording to the needs and potential ofeach customer or retail outlet (forproducts resold through trade distributivechannels).Planning coverage requires informationon:● outlet locations● outlet turnover/potential● outlet requirements● – delivery frequencies● – stockholding practices● – merchandising support● company sales resources.Sales call rateThe call rate that a salesperson can beexpected to achieve is a function of:● distance between calls (i.e. allowance fordriving and parking time)● pre-call preparation● in-call functions to be performed, e.g.:● – stock checking● – merchandising● – networking amongst other decisioninﬂuencers● – selling● average length of presentation● post-call administration.A salesperson for a consumer products com-pany or supplier of business-to-businessproducts (e.g. of ce stationery) might be ableto manage 12–15 calls a day if sales calls arein close proximity to each other or groupedinto tight clusters. If sales calls are beingmade on larger volume customers, such ashigh street shops, where some product mer-chandising is required, then the call rateexpectation might fall to around 6–8 calls. Akey account executive or salesperson forindustrial products, such as machinery,might only nd it practical to schedule 2–4calls per day.Journey planning principles● Each trade call in a geographical areashould be classiﬁed according to thefrequency of call it requires.● The length of a journey cycle will begoverned by the minimum frequency ofcall needed to maintain and developbusiness.● All the calls in a geographical area canbe tabulated on a list to estimate the timeneeded to service the call on each visit,and in total over a journey cycle (i.e. thetime per visit multiplied by the number ofcalls with a journey cycle).● The requisite size of a national sales forcecan be calculated from the workloads foreach territory and the national calluniverse.In the example of Table 15.3 a journey work-load analysis is illustrated for a consumerproducts salesperson calling on food outlets.In this example, where call durations formany smaller outlets are short, typically 20minutes, and calls are also normally closetogether, we have allowed a minimum calltime of 30 minutes to include driving time.We show in the example 240 customers onthe territory, with 380 selling calls over theeight-week journey cycle. The planning prin-ciples apply to any product category where aregular customer base exists for repeatorders, and use of a computer database orspreadsheet can speed the planningprocess. Driving time can be factored intothe calculation either as an average per call(as in our example) or as a separate calcula-tion.244 Sales Management
Journey cycle planningOnce each call has been allocated a call fre-quency and the territory workload assessed,the territory salesperson should then preparehis or her territory journey cycle schedule.The next stage with a regular journey cycle isto plan each day’s work activity. A simple for-mat such as the journey cycle planning sheetillustrated in Table 15.4 can assist in planningdaily journey routing.Journey schedulingThe calls listed on a journey cycle planningsheet can then be scheduled in correct, logi-cal, call order, as illustrated in Table 15.5, justgiving brief name and address details. On aterritory with an eight-weekly call cycle eightforms would be completed, copies kept bythe sales person and the appropriatefield sales manager. The only calls notappearing would be new prospects visited onjourney.Weekly journey planA weekly journey plan may not be necessarywhere salespersons are working set territo-ries and have a pre-set journey scheduledetailing calls and the sequence of calling onaccounts. Where this is not the case, such aswith a salesperson doing relief work on vari-ous territories, or where a salesperson doesnot have regular customers and preparescontacts and appointments only a short timein advance of meetings, there must still be acontrol. That can be provided by having ajourney plan completed each week inadvance, as for an insurance salesperson,illustrated in Table 15.6. It can either be com-pleted in full, or, where a relief salesperson isdoing a set journey schedule day of a vacantterritory, may just use a short note, sayagainst Monday, showing ‘Journey ScheduleDay 11 on Territory 4’, which would beenough for a sales manager to locate a sales-person on journey, and the subsequent dailyactivity report can be compared with theTerritory management 245Table 15.3 A journey workload analysis exampleJourney Workload Analysis Territory: Northern Region 1Customer details Annual potential Expected call Calls per Minutes Minutes Cumulativesales volume frequency cycle per call per cycle time(weekly) visit (mins)1. J & J Superstore, Newtown 1,000 1 8 60 480 4802. Acme Hypermarket, Hightown 1,500 1 8 60 480 9603. Micro C & C, Anytown 2,800 1 8 60 460 1,44030. Wilson’s Market, Newtown 900 2 4 30 120 4,42031. Save-All Supermarket, 600 2 4 30 120 4,540Hightown32. Johnson Wholesale, Newtown 1,700 2 4 40 160 4,700108. The Corner Store, Newtown 280 4 2 30 60 7,680109. Khans Store, Hightown 240 4 2 30 60 7,740110. Alpha Grocery, Hightown 180 4 2 30 60 7,800156. Hightown Coop, Hightown 100 8 1 30 30 14,600157. Moon Grocery, Newtown 80 8 1 30 30 14,630158. Star Grocery, Anytown 60 8 1 30 30 14,660240. Jason’s Mart, Anytown 60 8 1 30 30 15,900TOTALS 380 15,900Journey Workload Analysis Territory: Northern Region 1Customer details Annual potential Expected call Calls per Minutes Minutes Cumulativesales volume frequency cycle per call per cycle time(weekly) visit (mins)
appropriate journey schedule day to checkthat all customers scheduled for calls andcoverage that day did receive a sales call bythe salesperson.Segmenting a territory for coverageThe sequence of calling on customers will inlarge part depend on the geography of theterritory. For urban areas the preferred styleof calling is more of a circular motion, asillustrated in Figure 15.3. Many salespersonsadopt an approach of starting either at theclosest point to home, or at the farthest. It isnot normally a good practice to start closestto home, as that does mean that as the dayprogresses the salesperson is getting fartherfrom base, while also becoming morefatigued. Usually it is better to make thelonger drives early in the day, while the sales-246 Sales ManagementTable 15.4 Journey cycle planning sheetTerritory 6 Journey cycle day 11Outlet Time allocation Special calling times Frequency of(mins) calls per cycleJ & J Superstore, Newtown 60 Mornings 8Micro C & C 60 Mornings 8Wilson’s Market, Newtown 30 4Johnson Wholesale, Newtown 30 4Acme Hypermarket, Hightown 60 8Khans Store, Hightown 30 Not Wednesday 2Alpha Grocery, Hightown 30 2Save-All Supermarket, Hightown 30 4Hightown Coop, Hightown 30 Afternoons 1Moon Grocery, Newtown 30 1Totals 390Prepared by: Approved by:Territory salesperson Sales managerTable 15.5 An example of a weekly territory journey scheduleTerritory Journey cycle Territory 6Journey schedule week number 3Monday Tuesday Wednesday Thursday Friday1 J & J Superstore2 Wilson’s Market3 Micro C & C4 Save-All5 Moon Grocery6 Kahns7 Alpha8 Acme9 Johnson10 Hightown CoopTerritory 6 Journey cycle day 11Outlet Time allocation Special calling times Frequency of(mins) calls per cycleTerritory Journey cycle Territory 6Journey schedule week number 3
person is fresher, with a plan to arrive at therst call at their opening time. What shouldbe avoided is frequent doubling back overthe same route, as this is wasteful of bothtime and petrol.Daily calls should be sequenced to mini-mize driving time and distances, and to facil-itate call-backs if a customer is missed for anyreason (such as a buyer being unavailable fora short time). Many salespersons mark cus-tomer locations on territory maps to aid jour-ney planning. The general principles ofjourney planning are:● tours should be circular● sales tours ideally should never cross● do not use the same route to and from acustomer whenever possible● visit customers in neighbouring areas insequence.Segmenting a territory for coverage:mappingA. Divide the territory into ve main seg-ments, as in Figure 15.3, if you work ave-day week, one for each weekday in aTerritory management 247Table 15.6 A weekly journey plan for an insurance salespersonAlpha Insurance Group Week commencing: TerritoryWeekly journey plan 1 December 199- Southern9.00 a.m. Minster Ofﬁce Dunn’s OfﬁceAccountants EngineeringActon, W3 Wolverhampton10.00 a.m. Portaglass LtdBrighton11.00 a.m. Mrs Wilson Nuttal & Skinner, Alpertons Review meetingEaling, W5 Accountants PlasticsWembley West Bromwich12.00 p.m. Mr FotheringayHove13.00 p.m. Fred BrownLunchBirmingham14.00 p.m. Brown & Brown, Mr Dunstable TelephoneSolicitors, Alperton appointmentEaling W5 scheduling15.00 p.m. Mr Devlin Dr JohnsonBrighton Birmingham16.00 p.m. Ofﬁce17.00 p.m.18.00 p.m. Dr Rothman John EtheringtonWorthing Stratford19.00 p.m. The AskewsBirmingham20.00 p.m.Night Home Home Minster Arms Homecontact Hotelpoint Birmingham0121 123 4567Alpha Insurance Group Week commencing: TerritoryWeekly journey plan 1 December 199- SouthernMonday Tuesday Wednesday Thursday Friday
week, and subdivide each segment intofour further segments. This aids call plan-ning on a 20- or 40-day journey cycle (thenumbers indicate the journey day).B. Each weekday the salesperson should bein a different segment of the territory, andif any customer is missed on the pre-setjourney day the salesperson will be backin that vicinity within a week, able to pickup the missed call.C. Customers with differing call frequenciescan be factored into the daily schedules inthe way discussed in the previous sec-tions.Cold call prospectingPurpose of cold call prospectingThe main reasons a salesperson would call ona new prospect are:● to identify and qualify prospectivecustomers for products to evaluate salespotential, possibly with a view toproviding a regular call and supplying thecustomer directly if sales volume warrantsthat approach● to promote the brands, possiblyintroducing new brands or promotionalactivity● to identify outlets suitable for supplythrough a local wholesale distributor(where the usage volumes would notwarrant direct supply from the company).Prospecting is a more important activitywhere sales territories have too low a call load,or where the company does not have adequatebrand representation in some or all categoriesof trade outlets, or where the nature of theproducts or services is that they are one-offsales without serious repeat purchase poten-tial (such as with home improvements).248 Sales Management2040153510305 2519 3914 34929183813338284243231737123272722216361131626121xxxxxxxxxxxx x xxFigure 15.3 Segmenting a territory for sales coverage
Sources of new prospectsApart from observation while on journey,some sources of new prospect leads include:● personal contacts, e.g. existing customers,friends● listings in directories, e.g. tradedirectories, appropriate Yellow Pagessections● journals, particularly advertisements suchas in entertainment sections, professionaldirectories● exhibitions, e.g. approaches from visitorsto exhibitions where the company isparticipating● referrals from existing customers orsuppliers of other products● enquiries responding to advertisements intrade journals● callers to the company● local market research aimed at customeridentiﬁcation.Priority should be given to pursuing leadsfrom sources most usually found to be pro-ductive, possibly referrals from other cus-tomers, and to those that are ‘quali ed’ asmatching pro les of existing customers onestablished criteria.Customer targetingAt the core of eld sales activity is customertargeting. The role of customer targeting is toensure the cost-effective deployment of salesresources by identifying and classifying cus-tomers, and scheduling call coverage onthose meeting speci c relevant criteria, suchas those illustrated in Table 15.7.The sales manager should chart the saleslevels of product categories in which thecompany competes and company businessthrough local trade channels or categories ofproduct users (for industrial type products),and look for areas of coverage weakness,often indicated where there is a wide differ-ence between the trade channel pattern forthe product categories and company pattern.Table 15.8 is illustrative of where there arepotential coverage problems.In this example it would seem the com-pany performance is poor in the restaurant,bar and nightclub sectors, probably resultingfrom poor coverage of those sectors (absence ofevening sales activity, perhaps), and that thereis a heavy company concentration of salesthrough the larger volume outlets of super-markets, grocery stores and hotels. This is typ-ical of situations arising where one sales forcecovers all trade channel outlets. The varioustrade channels may have different coverageneeds, i.e. certain outlets may need eveningcoverage to match their opening hours.Study the relationship between your shareof each trade channel and the general marketpattern to look for coverage weaknesses,either nationally or locally by area.The questions in targeting customersThe sales manager should address the ques-tions:● How many outlets or customers do wecover?● What proportion of the respective tradechannels, or product category users, dothey represent (volume/value)?● Are they the best outlets or users to coverwithin our resource limitations?● Do we call often enough?● Do we call too often?Surveying for outletsThe market outlet database needs to be com-prehensive before strategic marketing, distri-bution and organizational decisions can bemade. Data can be collected by variousmeans, including:● local government agencies (controllingcompany registration or reporting bybusiness classiﬁcation)● trade associations● trade directories● telephone directories● wholesaler customer lists (rarely released)Territory management 249
Table 15.7 Criteria for targeting customersCriteria for targeting retail outlets● Type of outlet● Type of products sold● Volume or potential● Compatibility of retail customer proﬁles● Creditworthiness● Location● Cooperativeness with productpromotional programmes● Brands sold into inappropriate outlets● Hard-won distribution being quickly lostor eroded by competitive activity● Scatter-gun approach draining valuablemanagement time and sales forceresources● Poor performance in wrong outletsleading to negative trade perceptions● Poor sales force morale resulting frompoor sales performance, earningsagainst sales targets, wasted effort, etc.Criteria for targeting industrial companies● Type of industry● Type of product produced or serviceoffered● Suitability of supplier’s standardproducts or services● Opportunities for customized productsbuilding supply partnerships and loyalty● Volume or potential● End customer proﬁles of producer● Creditworthiness● Prospective customer proﬁles matchthose of existing customers● Products that do not meet performanceexpectations lead to customerdisillusionment and negativity● Time wasted organizing product testsand trials● Limited product development resourcesmisused● Standard products do not meetprospects needs● Misuse of scarce development resourcesattempting to customize productsCriteria for targeting individuals as cus-tomers● Income● Creditworthiness (access to sources ofﬁnance)● Employment and/or profession● Age● Sex (male/female)● Family situations (single, married,children)● Home location (urban/rural)● Home style (house, apartment, etc.)● Lifestyle factors● Time wasted making selling calls whereno need is established● Unproductive use of limited sales andsales management resources● Customer dissatisfaction where productsare wrongly soldCriteria for targeting retail outlets Criteria for targeting industrial companies Criteria for targeting individuals as cus-tomersResults of poor outlet targeting Results of poor customer targeting Results of poor prospect targeting
● market surveys and questionnaires● trade press advertisements requestingresponse if interested in productcategories.Once prospective customers are identi ed byname and address location it will be necessaryto survey them to check how they matchideal call criteria. Contacts identi ed can thenbe surveyed (by direct personal contact, orthrough telephone contact) as appropriateusing:● existing sales resources● specialist market research agencies● other resources, such as students.Some special considerations incoverage planningVan salesCar or van cash sales may have a place incompany distribution in some markets or tosome trade channels. Van selling:● provides an opportunity to minimize out-of-stocks of standard brands or promotionalproducts through instant off-the-carreplenishment for cash, usually focusing oncertain speciﬁc trade channels (e.g.smaller independent stockists)● supports advertising and promotionalcampaigns by ensuring distribution isachieved or maintained along with theplacement of relevant POS material.Factors to consider in operating a car salesprogramme include:● stock security● salesperson security while carrying cash● stock record controls● cash handling, invoicing and banking● sourcing stock (if it is not always availablefrom the supplier’s own warehouses), e.g.from wholesaler distributors● range to be carried, with a focus on● – major brands● – focus brands● – promotional brands● – new packs/varieties.Tele-salesTelephone sales operations may have a role ina sales strategy to provide sales support in:● making initial cold contacts with newoutlets● replenishing stocks with existing accountswhere ﬁeld support is not essential● providing emergency cover during lapsesin ﬁeld coverage● soliciting orders from small,geographically remote, or some seasonaloutlets● focused blitz activities, e.g.:● rapid distribution of new packs/varieties● countering competitive activity withpipeline ﬁlling deals.Territory management 251Table 15.8 Model of outlet categories in relation to distributor businessTrade channel share of all Trade channel share ofsoft drinks Company’s soft drink salesSupermarkets 30% 45%Grocery stores 12% 18%Hotels 10% 20%Restaurants 9% 5%Bars 20% 8%Night-clubs 14% 3%Others 5% 1%Trade channel share of all Trade channel share ofsoft drinks Company’s soft drink sales
Relief salespersonsWhen systematic coverage is planned to aregular pre-set journey schedule (i.e. all cus-tomers are to be visited at pre-set frequen-cies) it is essential to budget additional salesresources in the form of relief salespersonsto allow for:● sickness● holidays● training days and meetings● public holidays● resignations● promotions● blitz activities.Estimates should be made for the averagetime lost, or days’ coverage lost, for each ofthese factors if a set coverage schedule is tobe maintained, as illustrated in the followingcalculation.Calculation of relief salesperson needsDays available for work (365 – 104weekend days) 261Less:Holidays per year at 20 days perpersons 20Public holidays at 8 days per person 8Average sickness at 5 days per person 5Training/meetings at 12 days perperson 12Net days available for eld coverageof customers 216Annual coverage gap persalesperson 45Relief salesperson can ll the gaps unlessalternative arrangements are made (such astele-sales calls).The costs of sellingThe sales force is a major cost centre in mostcompanies, but also one of its major assets.Sales managers should recognize the costs ofselling, and work to improve salespersonproductivity through the use of technology,systems and training. Obviously costsincrease over time, but an example of anapproximate costing for a salesperson isshown in Table 15.9. This highlights that asalesperson costs a lot more than just basicsalary, and what the sales manager should beparticularly aware of is the average cost persales call made (and the average cost perorder obtained, which will usually be ahigher cost gure – see the example illus-trated in Table 14.7 in the previous chapter).252 Sales Management
Territory management 253Table 15.9 The typical costs of sellingUK £Direct costs● Salary, commissions/bonuses 25,000● Fringe beneﬁts (life assurance, pensions, etc.) 5,500● Company vehicle: depreciation and running costs 8,000● Subsistence expenses: hotels, meals, entertainment 5,000● Telephone and postage 1,300Total direct costs 44,800Indirect costs● Sales support services: samples, literature, stationery● Management and central overheadsTotal indirect costs 20,000Typical total costs per salesperson 64,800Net working days per salesperson 216Average sales cost per day worked 300Average daily call rate 5Average sales cost per customer call 60UK £Direct costsIndirect costs
254 Sales ManagementChecklist 15.1Resource controlAction pointsTime● Is driving time minimized (effective journey planning)?● Is pre-call planning thorough?● Is call waiting time at customers’ premises used effectively?● Is stock checking and merchandising efﬁciently and quicklycompleted?● Are sales presentations conducted with an awareness of time?● Is post-call administration completed promptly and accurately?● Are breaks too long or too frequent?● Is contact with the sales ofﬁce excessive?CompanyTangible● Is the vehicle well maintained and effectively organized as amobile ofﬁce?● Are ﬁnancial resources managed cost-consciously?● Are expenses reasonable?● Are promotion funds used to generate maximum sales?● Do trade terms reﬂect turnover without favouritism?● Is customer credit controlled within prescribed terms?● Are promotional materials and sales aids used to maximumeffectiveness?Intangible● Is goodwill in the company brand names developed?● Is company working time well used (see above)?Self● Are the skills present to perform all the functional requirements?● Are all functional activities performed in calls?● Are performance achievements against targets satisfactory?● Are standards of performance being achieved?● Are attitudes (to the job, company, colleagues, customers andhimself/herself) positive?● Are morale and self-motivation high?
Territory management 255Checklist 15.2Managing selling timeAction pointsExtend the selling day● Avoid start of day or end of day visits to the ofﬁce● Schedule the ﬁrst call to start by 9 a.m.● Avoid lengthy breaks (including business lunches)Plan the sales itinerary● Determine optimum call frequencies in relation to actual orpotential volumes● Schedule calls logically to minimize driving and call-backs● Have alternative calls ready to ﬁll spare time:● regular accounts● pioneer calls (preferably previously qualiﬁed)Organize your sales aids● Check all sales literature is collated in the order of bestreference for use in the call● Check you have appropriate samples for the customer● Plan call objectives by reference to customer recordsUtilize call-waiting time● Check sales aids● Plan strategies● Make contacts within the accountUtilize travel time● Re-set objectives● Plan strategies● Make phone callsUse the phone● Make appointments● Follow up on previous calls or promotions● Book repeat orders● Liaise with the ofﬁce
256 Sales ManagementChecklist 15.3Functional activitiesAction pointsPlanning● Are potential new customers identiﬁed, contacted anddeveloped?● Is journey planning efﬁcient?● Are appointments scheduled in the most time-efﬁcient manner?● Are travel plans produced on time?● Are longer-term account development plans produced?● Are call objectives set for each customer and visit?● Are presentation strategies pre-planned and objectionsanticipated?● Are sales aids prepared for each call?● Is post-call evaluation undertaken and is call planningadjusted to reﬂect call outcomes?Selling● Are decision makers identiﬁed?● Is access obtained to key decision makers?● Are customer needs correctly analysed and considered insetting objectives and preparing call strategies?● Are sales presentations effective?● Are objections handled competently?● Is there a close to every presentation?● Is product merchandising completed satisfactorily?● Are promotional opportunities pursued, and promotionalactivities properly supported?● Is post-call follow-up thorough?Communicating● Are telephone communications effective?● Are communications with the sales ofﬁce timely and effective?● Are communications with the sales manager thorough,informative, accurate and sufﬁciently frequent?● Are communications with customers timely, efﬁcient andmutually beneﬁcial?Administering● Do you train in the correct use of administrative procedures?● Are all administrative procedures correctly complied with? E.g.● – Are customer call records accurate and kept up to date?● – Is journey planning efﬁcient and timely?● – Are order forms correctly processed?● – Are daily activity reports completed after each call, accurateand correctly submitted?
Territory management 257Checklist 15.3 continued Action points● – Are contact reports prepared, informative, and submitted ontime (for major accounts)?● – Are sales promotion control forms correctly used?● – Are outstanding payments pursued with priority?● Are incoming mail and bulletins read promptly and actioned?Decision making● Are decisions taken promptly?● Does the quality of decisions show good judgement?● Is the eight-point decision-making cycle understood andadhered to?● – Recognizing the problem● – Analysing and identifying causes● – Identifying alternatives● – Evaluating alternatives● – Deciding on a solution● – Implementing● – Monitoring outcome● – Take corrective actionMarket intelligence● Does a formal system of gathering and reporting onmarket intelligence exist?● Is it effectively operated and complied with?● Does it cover:● Competitors, e.g.:● – Competitive sales activity● – New products and packs● – Sales team stafﬁng levels● – Prices● – Competitive promotional activity● – Distribution● – Products on trial with customers● – Product speciﬁcations● – Organization structure and management● Customers, e.g.:● – Financial status and performance● – Changes in key contacts● – Changes in ownership/management● – Buying plans and budgets● – Creditworthiness● – Investment plans● – Changes in layouts or outlet format● – New branch openings/closures● – Promotional activity● Are report inputs reviewed, studied and considered in relationto their impact on company market plans and activities?
258 Sales ManagementChecklist 15.4Territory managementAction pointsKey focus of territory management is on:● Setting goals and objectives● Preparing targets and forecasts● Developing strategies and tactics for each account● Implementing the sales and marketing programmes at thelevel of each account.Agree personal objectives with each territory salesperson oraccount manager, for all categories of trade outlets. E.g.● Call rate● Outlet coverage● – Current accounts● – New prospecting (pioneer) calls● Sales conversion rate● Personal development● – Additional personal development programmes, i.e. readingor college courses● Skill development training● – Formal courses● – Field training by line manager● Set account objectives● – Sales volume/value● – New product listings● – Existing range extensions● New accountsTerritory forecast/targets should be prepared taking account of:● Existing account sales history● Existing account assessed potential● Potential from new prospect/pioneer calls● Knowledge of economic environment● Competitive activity● Wholesale distributor’s activity● Company marketing programme● Trends in product preferenceTerritory call coverageCoverage is the planned calling on accounts and prospects,with regular calls scheduled according to the needs andpotential of each account or outlet.Planning coverage requires information on:● outlet locations● outlet turnover/potential
Territory management 259●Checklist 15.4 continued Action points● outlet requirements● – delivery frequencies● – stockholding practices● – merchandising support● company sales resourcesCall rate is a function of:● distance between calls● pre-call preparation● in-call functions to be performed, e.g.:● – stock checking● – merchandising● – networking amongst decision inﬂuencers● – selling● average length of presentation● post-call administrationJourney planning● Each regular sales call should be assigned a call frequencyrelated to sales volume or potential.● Typical journey cycle length relates to the minimum callfrequency judged necessary to maintain distribution.● Calculation of coverage needs enables the size of a nationalsales force to be calculated.● Segmenting a territory for coverage: guidelines● – Tours should be circular● – Sales tours ideally should never cross● – Don’t use the same route to and from a customer wheneverpossible● – Visit customers in neighbouring areas in sequenceCustomer targetingIssues to consider in targeting customers include:● How many outlets or customers do you cover?● What proportion of the respective trade channels, or productcategory users, do they represent (volume/value)?● Are they the best customers to cover within your resources?● Do you call often enough?● Do you call too often?
Basic administrative controlsEach company will need to develop certainminimum administrative records and proce-dures in standardized form to aid in manag-ing sales operations. The needs may varycompany by company, and industry byindustry (consumer product selling tradition-ally requiring more standard reporting andcontrol documents than larger value indus-trial product sales within smaller customerbases). Records and reporting may be devel-oped using traditional paperwork systems,or may be computer based within sales forcesthat make use of computer technology ineld selling. These days several computerpackages already provide comprehensivesales management programmes that can bemodi ed to meet the needs of most sellingenvironments.Sales administration occurs at two levels:● ﬁeld sales administration, normallycompleted by the salesperson● sales ofﬁce administration procedures andcontrols, designed to control orderprocessing and monitor ﬁeld activity.Field sales administrationThe typical range of sales force eld paper-work or computerized administrative report-ing systems, used by the salesperson incontrolling and managing his or her work andterritory, includes at least the following items:● customer call record cards● daily activity report● journey plans (examples shown in Chapter15 under section on journey planning)● order forms● credit/product uplift notes● contact report forms● sales planning slips● sales promotional activity forms● expense forms● quotation forms● internal memo pads.Model examples, just for illustrative pur-poses, of the main control forms follow in thetext, and these may be adapted to suit partic-ular company requirements depending onthe nature of the industry or markets.Sales ofﬁce administrationWhile in this chapter we will only reviewtypical eld sales administration controls, thesales of ce will provide a lot of sales support,and is also likely to have a range of standarddocuments that may be routed to eld salespersonnel, including all or some of the fol-lowing:● order acknowledgement● invoices● despatch advice notes● product uplift notes● credit notes● overdue payment advice notes(including computer printouts giving thepayment status for each customer’saccount).16Sales force administration
Customer call recordsThese might be in the form of a double-sidedrecord card, or a record folder into which thesalesperson puts other paperwork concern-ing an individual customer, or might form acomputer record within a database. The basicinformation required for the customer callrecord would include:● trading name of the company● ownership/afﬁliations (if relevant or nototherwise apparent)● full postal address, telephone and faxnumbers (and e-mail if appropriate)● buyer’s name (and job title)● names of other contacts inﬂuential inbuying decisions● any special buying times (or times to beavoided) and other relevant callnotes● sales historySales force administration 261Guidelines for building a customer pro leWho owns the buying ● Is it a sole proprietorship, partnership, private cor-company? ● poration, public corporation, government agency?Who are the key persons ● Are any of them known to you (directors, key depart-in the organization? ● ment managers)?Who might be involved in ● Who is involved in specifying, evaluating, or usingthe buying process? ● product, authorizing purchases or paying for themfrom budgets?What market does the ● Trade sectors, e.g. industrial companies, retail,buying company serve? ● customers, trade buyers, etc.?● What is its image to its customers (quality, reliability,market positioning, product pricing)?● How does it distribute its products?● Is it subject to seasonal trends or changes in consumerfashions?● How does it promote and market its products?● Who are its competitors and how are they reacting tothe buying organization?● Is it expanding or contracting?● What are its present sources and consumption patternsof similar or alternative products?Who are its customers? ● Are they industrial companies, service companies orretail distribution channels?● How does the customer proﬁle match those of yourcompany products or brands?● What socio-economic groups do the majority of its cus-tomers fall in (e.g. social class, income, education,employment, etc.)?● What lifestyle characteristics do the majority of cus-tomers pursue or share?What is the nancial status ● Is it creditworthy?of the buying organization? ● Is it proﬁtable?Is there an established need ● What problems are there with existing sources offor company products? ● supply and their products?● Can you create a need for your products?
262 Sales ManagementTable 16.1 Individual prospect recordIndividual prospect record NuGlaz ConservatoriesContact name Address:William Evans 100 Acacia AvenyeHampton ValeTel: 01234 567 8910 Best visit times:Fax: Evenings after 7 pm, on SaturdaysFinance available: Finance needed:£1000 deposit £700Method of ﬁnancing:Bank loan for house improvement on re-mortgage house (not keen on NuGlaz nance schemneLifestyle indicators:Four bedroomed, detached property well maintained with one third acre garden.Two cars, Main house double glazed, with recently tted kitchen. Garden pond.Substitute products in use:Small existing conservatory attached to kitchen, not functional axcept as storage.Propose removing this and replacing with NuGlaz model that would link behind the house to French windowsfrom the dining room.Key personsName Age Occupation Education Interests Image/aspirationsBill Evans 42 Accountant Chartered Gardening Wothaholic,Accountant Golf conservative,ambitiousLinda Evans 39 Teacher University Home, Art Creative outgoing,and Design committed tocareerFrankie Evans 14 Student Secondary Sport, Friends Outdoor type, likesentertainingfriends
Sales force administration 263Table 16.2 Company prospect recordCompany prospect record Process Controls LimitedCustomer name ContactsFlowLine Foods Ltd Jim Wilson – Engineering buyerAddress Tel: 01234 567891Unit 99, Fax: 01234 567892Newtown Industrial EstateNewtonBest visit times By appointment – Wednesdays or Friday morningsOwnership Nature of businessDivision of Multi-Foods Ltd. Food production packagingKey managers Persons with authority to buyJohn Briggs – Production Director Frank Nuttall – Chief Engineer (budget holder)Alan Evans – Head of R & DBudget period Finance availableCompany year starts in May Funds available from MayCredit ratingGood – division of listed Plc.Key suppliers to the companyTakes input supplies from Del Norte Foods, European Fresh Foods Ltd, Clearview Packaging LtdCurrent suppliers of alternative productsElectra Controls LtdFoodline Systems Inc. (USA)Trading history Date incorporated 1982Turnover Proﬁt Employees1994 £35m £1.1m 2201995 £37m £1.5m 2101996 £42m £2.3m 195Trading prospectsSales and pro ts growing during a period of market stagnation. Increased use of technology resulting inimproved productivity per employee. Well managed.Product opportunitiesStandard products Modiﬁed products Potential sales volumeIn-line metal detectors Computerized production line Four production lines producingCheck-weight controls management control systems pre-packed foodsOther special product requirementsOnce established as reputable supplier, future potential for customized systems.Delivery arrangements Billing arrangementsBy agreement FlowLine attention Jim WilsonTraining needs After-sales service needsOn-site training of production, engineering Annual maintenance contract covering partsand R&D personnel and operatives and labour
● stock and order records (for repeatableproducts)● notes on display or merchandising (forretail products)● customer objectives.Figure 16.1 and Table 16.2 illustrate basicexample designs for customer call records,showing the type of information that mightbe collated for products sold direct to indi-viduals (e.g. conservatories) and productssold to companies (in this case, a process con-trols supplier, with the customer being a foodpackaging company). Table 16.3 illustratesthe reverse of a record card where stock andorders are recorded.These forms illustrate the importance ofbuilding customer pro les, and some guide-lines for that activity follow.Daily activity reportsSome form of daily activity report should berequired from all levels of salespersonsincluding territory salespersons, key accountmanagers and eld sales managers, partly asa record of activity and partly for manage-ment control purposes.A key account executive is likely to ll in a264 Sales ManagementTable 16.3 Reverse of a customer record card showing stock, orders, objectivesCustomer stock record CustomerAcme marketsCall date 15 March 12 April 10 MayProduct S O S O S O S O S O S OKopi Kola2 litre 2 5 1 6 2 51 litre 3 9 3 10 4 10Cans 3 12 2 15 3 15Sunset Orange1 litre 1 4 2 3 2 3Cans 1 4 2 3 1 4‘Arundel’2 litre 4 2 61 litre 5 2 10330 ml bottle 5 1 10Objectives/Notes Obtain launch Re-position PromotionNotes order for cans on ‘Arundel’‘Arundel’ shelf ﬁxture
form of contact report, which is basically abrief record of who was met, points dis-cussed, agreements reached, and subsequentaction required (including a note of whoshould progress the action).Any eld sales manager working with asubordinate with the objective of monitoringperformance and providing training andmotivation should prepare a brief trainingreview record noting strengths and weak-nesses observed and training given. Thisrecord should be kept as part of ongoing per-formance review and development pro-grammes.If a eld sales manager is making visits toretail or other trade customers with a view toestablishing levels of display and distribution,his or her observations should be recorded on asimple form to be reviewed with the appropri-ate salesperson as soon afterwards as practical.Prompt feedback is an essential element oftraining and development processes if the feed-back is to have current relevance to activitiesand performance.When a eld sales manager is conducting afollow-check audit on a recent day’s work bya territory salesperson (which is particularlyappropriate in many consumer goods mar-kets), the best recording aid is to use the man-ager’s copy of the relevant daily activityreport, and mark observations on the copy asappropriate.At the level of the territory salesperson, thedaily activity report is most important to:● identify the salesperson and territory● identify who was visited: customer nameand addressSales force administration 265Table 16.4 An example of a daily activity reportDaily activity report Alpha Products LtdTerritory salesperson: Date:Opening mileage: Time of ﬁrst call:Closing mileage: Time of last call:Customer Order Volumes Facings PromotionsA B C D E I II III IV V X Y Z123456789101112131415Total daily salesCumulative salesDaily targetCumulative targetVariance
● provide a statement of daily work activityand achievements● summarize orders taken on journey● summarize special in-call activity (productmerchandising, promotional activity, etc.)● provide a post-call control to linemanagers● assist in monitoring performance andtraining needs● enable actual calls made to be comparedwith scheduled calls in the territory salesjourney schedule (i.e. to check thescheduled call coverage)● monitor pioneer calling activity (i.e.contact with new prospective customers,where all such contacts should berecorded on the daily report)● enable ﬁeld audit checks to substantiatereports based upon the salesperson’sreported activity.Daily activity reports can also be designed torecord information covering:● time of ﬁrst and last calls● time spent in each call● in-call activity● contacts made● objectives● orders received● mileage● use of time (time of entry to ﬁrst call – exitfrom last call).There is no ideal format for a salesperson’sdaily activity report. Design and layout(whether in paperwork form, or using a com-puter reporting system as now used in manyselling organizations) should be suited to theinformation and management control needsof the business. What is important is thatevery salesperson has an obligation to recordrelevant daily activities and achievements asa personal discipline and management con-trol. Some companies do tend to adopt theapproach that their salespersons are wellknown to the company, and can be trusted tobe working. The purpose of a daily report isnot to show distrust: it is to provide a meansof accurate measurement of activity that canthen provide a focus on ways to improveskills and productivity, to improve returnsfrom that very valuable company resource –the sales team. A simple design format isillustrated in Table 16.4.The advantage of a daily activity report isthat it focuses attention over a relatively shorttime span, and adds a sense of urgency toselling as the salesperson is faced with writ-ing his or her results down as the day pro-gresses. Some information should always berecorded, such as the customers visited andthe orders taken (with a note of value or vol-ume, such as bottles sold, if that is easier torecord against target). The informationrecorded in the other columns can focusattention on priorities in any month, such asdistribution, display and promotional fac-tors.Using the daily activity reportThere are many variations on this format thatmight suit a company, but most will be simi-lar in content.● Calls should be recorded in the order inwhich they are made.● If a duplicate form is used, then the backcopy can be used as a pre-planning(journey plan) copy, where the salespersonsubmits his or her proposed daily itineraryin advance, in calling order, and a ﬁeldsales manager should be able to pick thesalesperson up on journey.● Also, where a pre-planning copy is made,this can be cross-checked with callsactually made (calls not made will notshow entries under the categoryheadings).● The column headings can either havepermanent recording categories pre-printed in, or can be varied monthlyaccording to priorities for recordingand monitoring. In the example ofTable 16.4, particularly suited to retailselling:● – the volume headings, A to E, might beused for the top ﬁve brands, or top fourplus one brand on special promotion;266 Sales Management
● – the facings heading, which in this caseis intended to measure the number ofdisplay facings of product on thestandard shelf ﬁxtures, similarly can beused for a regular set of products, orvaried to note special products ofinterest to the company;● – the promotions heading leaves room torecord up to three special promotionalactivities, such as demonstrations, off-shelf feature displays, point of salematerial, etc.● The salesperson can record his or herdaily and cumulative progress againsttargets at the bottom of the sheet.● New prospects (pioneer) calls can beentered on the daily activity report fromthe bottom upwards, so that they arenoted separately.● Monitoring mileage and time into ﬁrst calland out of last call acts as a control onsalesperson productivity.● Inter-salesperson comparisons can bemade on:● – call rates● – sales to calls ratios and average salesvalues and volumes per call● – average time spent in call, etc.Journey plansA journey plan should be submittedin advance of a day’s work or week’s work tothe sales line manager as a control that thesalesperson has a speci c work programme,and to enable the line manager to plan his orher own work schedule in choosing when towork with any individual salesperson, or toconduct any post-call eld audits.In an industry where set journey cycles arenot possible or practical, or for an accountexecutive who is calling on major accounts,the journey plan may simply be an advancelist of the calls or contacts to be made the fol-lowing week (as illustrated in Figure 15.3 inthe previous chapter).As a general rule, the principles of submit-ting journey plans are:● they should be submitted weekly/monthlyin advance;● they should clearly identify calls to bemade, in planned calling sequence;● pre-set journey scheduling (for marketswhere repeat product sales are normal)simpliﬁes weekly journey planning;● a pre-planning copy of the daily activityreport can be used for journey planning;● line managers should plan their ﬁeld workusing salespersons’ journey plans (ﬁeldfollow checks, training days).A more comprehensive example of a journeyplan is illustrated in Table 16.5, where thecalls are identi ed in advance, along with astatement of the main focus of sales objec-tives for that particular visit. This enables thesales manager to check:● that the salesperson does set speciﬁc andmeaningful objectives● the effectiveness of a salesperson inworking to and achieving objectives.Order formsIt is normal practice for companies to havestandard order forms, either with productspre-printed, or with blank spaces left forsalespersons to enter products, prices andquantities. The style and format will varywith the nature of the products, size ofproduct range and pack variations, and com-pany and customer needs for infor-mation. Essentially order forms shoulddetail:● customer’s name and full delivery address● invoicing address● customer reference (order) number● company reference (order) number● salesperson’s name and territory reference● special delivery instructions● list of goods being ordered (varieties,pack sizes, quantities)● prices of goods being ordered● total order quantities and valuesSales force administration 267
● terms and conditions of sale (these may bestandard, or may be subject to individualnegotiation with each customer).Credit notes and product upliftnotesSalespersons sometimes have occasion toissue credit notes or arrange for the uplift ofproduct and transfer of goods, perhapsbecause of wrong delivery or faulty merchan-dise. Some companies prefer the salespersonto request the uplift of goods using an appro-priate form, with the subsequent issue of acredit note (see Table 16.6) from head of ceonce the returned goods are processed backinto the system. This reduces the risk ofabuse of credit note systems and provides agood control.Contact reportsThese are usually used by sales managersand/or key account executives calling onmajor customers. In that type of organizationthere are often several persons involved inthe buying process: the titular buyer, andother decision in uencers (sifters, authoriz-268 Sales ManagementTable 16.5 An example of a comprehensive journey planSalesperson: Fred Wilson Week commencing: 1 DecemberCustomer name and address Appointment Objectives/notes Overnighttime locationMonday1 United Controls, Hightown 9.00 Present new model to Homebuyer and chief engineer.Try for test.2 ABC Motors, Hightown 10.30 Final price negotiation3 Tendex Ltd, Newtown 12.00 Review test results, andmove to full productiontrial.4 Alpha Controls, Newtown 14.00 Negotiate new lease5 Foster & Co, Anytown 15.30 New contact. Establishbuying organization.TuesdayWednesdayThursdayFriday
ers, testers, users, influencers, etc.).Negotiations are often protracted over aseries of meetings and stages, often includingproduct tests and trials before nal price andterms negotiations. This selling scenariomakes it especially important that notes andrecords are kept of the various meetings andcontacts in contact reports (see Table 16.7)that summarize:● dates and times of meetings (andlocations)● persons present at meetings (salespersonand contacts from buying organization)● meeting objectives● discussions and agreements reached● notes on action required (and by whom),with deadlines● note on any subsequent meeting datesand objectives.The sales planning slipThe sales planning slip is a very simple butversatile tool to aid the selling process, beingparticularly useful when discussing orderquantities and closing the sale. Its use is notlimited to consumer product salespersons,and it can be designed to suit most industrialand business-to-business selling environ-ments.A sales planning slip has several usefulfunctions, such as:● providing a focus of attention when talkingspeciﬁcs about products and quantities● outlining a suggested order when startingto close on a sale● discussing concessions in relation tosuggested quantities● highlighting recommendations foradditional quantities to supportpromotional activity● highlighting key promotion dates or buy-inperiods● adding authority to a discussion onproducts and relative order quantities● providing a neutral point of referencewhen discussing products and quantities(including range extensions), as theclosing of the sale can often be anemotional point in the presentation whendecisions must be made● it can be used to highlight informationspeciﬁc to a dealer, such as particularspecial prices, discounts, retail price inrelation to cost, margins, etc., which mightSales force administration 269Table 16.6 An example format for a credit note and product uplift noteProduct uplift/credit note Alpha Products LtdCustomer name Account numberAddress To be collected*Collected by salesperson*Tel. No. *(delete as appropriate)Product Pack size Quantity Reason for uplift/creditSalesperson Store manager Date
not be so clearly expressed on generalprice lists or literature● it shows a very personal input to the salespresentation, where the salesperson hand-writes key quantities or data on the salesplanning slip● acting as a reminder for an indirectcustomer (who purchases from awholesaler) to place an order, or it cansometimes even serve as a transfer orderform for the salesperson to take an orderto a trader’s normal wholesaler.There is no special format for designing asales planning slip, but a typical modelwould look like the examples in Tables 16.8and 16.9, for consumer or industrialproducts.Sales promotion control formsSales promotions are used in many compa-nies , in consumer sectors, industrial productmarkets, and business-to-business environ-ments. Sales promotion monitoring shouldfocus on:● costs● quantities● commitments● performance.Sales promotions are a major cost factor inmost companies and markets. However, theyare not always controlled and monitored toensure a bene t is achieved in terms of an270 Sales ManagementTable 16.7 Contact report example formatContact report Account:Date of meetingLocationMeeting objectivesPoints discussed and agreements reachedAction resulting from meeting Actionable by (person/date)Pre-agreed objectives and discussion points for next meetingNext meeting scheduled for: Signed: Account managerDate
increase in sales giving incremental pro tsgreater than the cost of the promotion. A formcan be designed, as in Table 16.10, that can beused by territory salespersons and sales man-agers in planning and negotiating specialpromotional programmes with customers.The promotion can be evaluated against itsobjectives, and a calculation made as towhether the total costs of the promotion aremore or less than the incremental contribu-tion from the extra case sales over the normallevel of sales.Expense control formReporting and control of sales force expenses(see example Table 16.11) is essential if a man-ager is to keep costs within budgets, and isalso required for auditing purposes. At thesame time, integrity is a vital quality in thesales force, where there can be more scope forabuse of systems than in many of ce basedpositions (and any abuses identi ed shouldbe dealt with quickly and rmly according toa company’s disciplinary procedures). Thecommon alternative approaches to control-ling sales expenses are to:● state ﬁxed daily allowances for approvedexpense items (where the allowances arerealistic and at such a level to permit thefulﬁlment of responsibilities)● establish standard guidelines formeals/accommodation, and reimburseexpenses against receipts.Quotation formsIn industries where it is customary to quoteto supply goods or services, the suppliersmay want to design simple standard quota-tion forms to be prepared at the buyer’s loca-tion by the salesperson. The form is likely tocontain blank spaces for products, quantities,prices and delivery (or installation)dates.Sales force administration 271Using the sales planning slip in selling situations● The particular information it is being used to communicate can be written alongsidethe product.● (e.g. suggested order quantities, promotion quantities, recommended retail prices,promotion prices, dates, proﬁt margins, display facing agreements, etc.).● Key points can be highlighted by using a pen as a pointer, possibly circling any keydata such as a suggested promotion quantity or new brand listing.● Concessions, when agreed, can be written alongside the original suggestion, whichmakes a buyer feel more comfortable that he or she is being listened to and pointsnoted.● When giving a concession it is useful to draw attention to another point on the salesplanning slip and gain an agreement on that as a trade-off for a concession.● A copy of any information on the sales planning slip can be left with the buyer asconﬁrmation or a record of an agreement.● Sometimes it can be useful to add authority to a deal by asking a buyer to sign orinitial the information on the sales planning slip.● Using coloured pens to highlight key points (e.g. red as well as black) can addimpact.
Basic information normally needed on aquotation form includes:● supplier’s name and address, and othercontact details (telephone, fax)● name of the person preparing theauthorized quotation● date of the quotation● period of validity of the quotation● products quoted on:● – description and speciﬁcation● – quantity or volume involved● – prices of units of packs● – any discounts, rebates or allowances● method of accepting the quotation (i.e.signing the quotation form)● guarantees or warranties attached to thegoods or services (although these may bereferred to in other documents associatedwith the sale, such as an orderconﬁrmation)● general terms and conditions of trade orrelated to the speciﬁc offer (also possiblyincluded separately in an orderconﬁrmation)● timing and terms of shipment and delivery,or installation of plant and equipment● payment terms, including depositsrequired on acceptance of the quotation.Guidelines for designing formsEach company will develop paperwork sys-tems to meet internal needs for informationand control, and to assist in managing saleforce operations. However, all documents(whether for manual completion or for use incomputer-based sales controls and reportingsystems) should be designed with ease ofcomprehension and administrative compli-ance in mind, to minimize time given toadministration, to facilitate/promote action,and to standardize systems and proceduresinternally.272 Sales ManagementTable 16.8 An example of a sales planning slip for a consumer productNational Soft Drinks Co. Acme MarketsRegular order PromotionKopi Kola2 litre 5 cases1 litre 10 casesCans 15 casesSunset orange1 litre 3 casesCans 4 cases‘ Arundel’ Natural Mineral Water2 litre 6 cases Off shelf1 litre 10 cases Demonstrator330 ml bottle 10 cases Price reduction(5 cases free)
Sales force administration 273Table 16.9 An example of a sales planning slip for a commercial productNational computer supplies company The Graphic Design Co.Computer modelsMagnus Pentium XL1 2Magnus PC DL2 2Magnus Laptop 1Hard drive options1000 MB (laptop only) 1 Laptop2000 MB4000 MB (4 gigabyte) 2 / DL25000 MB (5 gigabytes) 2 / XL1Other hardware optionsCD-ROM 1 / XL1Tape Streamer 2 / XL1Fax Modem (int./ext.) 2 / XL1Full sound, etc. XL1Support optionsStandard warranty only1 year on-site warranty3 year on-site warranty Group contractHot-line support service Group contractInstalled software optionsNote preferences from list Full standard packageon XL1/DL2Software training 2 days on-site1. List prices less 10% for hardware.2. Support & software options at list.3. Prompt settlement within 7 days of deliveryBasic guidelines for developing forms● Keep the layout simple.● Do not ask for information that will not be used in measuring or monitoringperformance, planning or control.● Note special recording instructions on the form if possible, along with any routinginstructions for originals and copies.● Ensure the design encourages completion after the activity to which it relates (i.e.particularly that the customer record card and daily activity report are completed duringor immediately after the customer visit).
Table 16.10 An example of a sales promotion control formAccount promotion programme: Control formCost factors lBrand/Pack Promotional Promotion Normal Target Normal Promotion Other ﬁxed Budge Normal Promotion Actual Actual Actualactivity dates period promotion case cost case cost costs e.g. promotion retail retail sales total cost percase sales case sales adverts case cost price price costs caseSupasoap Buy 1 14–28 100 200 £30.00 £24.00 £100.00 = £6.50 £4.50 £6.75 for 250 £1600 £6.40– large 2nd half price March £0.50 each 2 packs casesper caseWondawash On pack 1–14 50 100 £33.00 £33.00 £200.00 £2.00 £4.65 £4.65 110 £200 £1.82– large coupon: April end of excluding each casescollect 3 gondola towel costcoupons plus fee (self-£3 for beach liquidating)towelAccount promotion programme: Control formCost factorsPost-promotionalanalysis
Essential customer communicationsAt this point some brief commentary isappropriate on the essential company litera-ture that is generally supplied to customersin standard format:● product price lists● product speciﬁcation sheets● catalogues and brochures● advertising and promotional informationsheets.Each of these documents is intended to com-municate information important in the sell-ing process, and should be designed to createinterest and gain attention, encouraging abuyer to pursue contact with the salespersonto the point where an order is placed.Product price listsThese need to include information on:● product names and/or descriptions, alongwith any item codes that facilitate ordering● pack or unit sizes (volumes, weights,dimensions)● number of units in a shipping pack● price quotes per shipping unit to the pointof ownership transfer (customarily deliveryto the buyer’s speciﬁed location fordomestic transactions)● standard terms of sale, payment terms andconditions● warranties and exclusions● periods of validity of the quotedprices.Speciﬁcation sheetsThese will normally include comprehensivetechnical data concerning the structure andperformance of the products, with illustra-tions, drawings, technical data, wiring dia-grams (if appropriate), servicing andmaintenance data, etc.Sales force administration 275Table 16.11 An example expense control formExpense report form Salesperson:Week Function:DateSunday Monday Tuesday Wednesday Thursday Friday SaturdayLunchOther mealsAccommodationEntertainmentCar maintenancePetrol and oilParkingOther travelTelephonePostageOther: (specify)Signed: Approved:Attach all receipts to the top copy of this form.Top copy to line manager. Bottom copy to be retained by salesperson.
Catalogues and brochuresThese are intended to show the product to aprospective buyer, but cannot substitute for asample or demonstration. Illustrationsshould be photographic wherever possible,as this makes more impact than line draw-ings, although those can usefully aid a pre-sentation where they show the workings orfunctions of a product.Companies are now looking at other mediato carry catalogue information, such as videotapes and computer systems (on CD-ROMdisks). Without a doubt the use of computerand associated media will grow rapidly, ascompanies can download latest prices andcatalogue data via modem links. This willlink with direct ordering over computer linksas we move more towards a paperless busi-ness environment. But the salesperson willnot become redundant, still having a key rolein promoting consumption growth, commu-nicating about products to prospective cus-tomers.Advertising and promotional programmeinformation sheetsThese are most commonly issued bysuppliers of consumer products and productssold through trade dealer networks as theyalert their distribution outlets and tradedealers to the forthcoming marketingcommunications supporting products.Typically a lea et will summarize the timesand dates of media advertisements, toencourage trade purchase and display inorder to maximize the impact of advertisingon sales and pro ts through distribution out-lets. Salespersons would normally use thisinformation during presentations to obtainorders and increase sales, selling up on thestrength of media support generating addi-tional demand through increased consumerawareness.The reader may nd some of the principlesand guidelines expounded in Chapter 7 rele-vant to the presentation of information tocustomers.276 Sales Management
Sales force administration 277Checklist 16.1Sales force administrationAction pointsHave you conducted an audit to identify:● all administrative documents used by the sales force?● all administrative documents originated by the ofﬁce andcopied to salespersons?● all sales related literature despatched to salespersons?● what performance feedback data is: relevant to doing the job?;● needed?; used?● which persons at the ofﬁce contact salespersons?Guidelines● Keep paperwork to a minimum● Control through formal reporting those parts of the jobthat impact on the sales performance and proﬁtability● Design customer record cards and daily report forms that:● – require completion at the time of the call● – focus on key result areas and priorities of the job.● Minimize the number of head ofﬁce staff with authority tocontact salespersons with requests for information, etc.Typical sales force ﬁeld control documents:● Customer call record cards● Daily activity report● Journey plans● Order forms● Credit/product uplift notes● Contact report forms● Internal memo pads● Sales planning slips● Promotional activity control forms● Expense forms● Quotation formsHead ofﬁce administrative documents copied to the salesforce typically include:● Order acknowledgements● Invoices and despatch advice notes● Product uplift notes and credit notes● Overdue payment advice notes● Responses to customer queries● Price lists● Promotional literature● Marketing information● Sales bulletins● Target setting documents● Performance feedback reports● Correspondence from a variety of departments
The need for controlAn assumption is often made that salesper-sons are all highly motivated work-horses,who, because they are frequently rewardedby substantial commissions or bonuses, needvery little active management and control.That assumption is erroneous. A sales forcewithout proactive hands-on management islike a missile without a guidance system – adevice full of energy but with no sense ofdirection, drifting along aimlessly throughspace. In managing a sales force controls areneeded to:● ensure performance and results relate toplans, programmes and policies● maximize the productivity from theavailable resources, e.g.● the sales team● time● sales aids and promotional materials● ﬁnancial resources allocated to budgetsfor sales and marketing activities.Controls cannot exist in a vacuum. If controlsare to be implemented in the sales force thenas prerequisites it is necessary for salesmanagers to:● identify key result areas● establish standards of performanceagainst which productivity and activity canbe measured.Controls can be implemented either by thesales of ce or by the eld sales managers.● Sales ofﬁce controls normally focus onmonitoring sales performance at thecompany level down to the level of theindividual territory, against companyobjectives, e.g. sales targets in terms ofvolumes and values of products sold.● Field management control normallyfocuses on monitoring and controlling:● – work activities● – skills● – achievements and standards ofperformance covering aspects of the jobnot easily monitored from paperworkcontrols, or where reporting throughpaperwork controls needs to be veriﬁed(e.g. claims about display andpromotional activity).Types of controlsControl, like training, is on ongoing manage-ment function. There are three main forms ofcontrol.● Continuous controls are designed to:● – monitor tasks and duties, reducing therisks of problems occurring;● – monitor objective factors (quality,quantity, cost, time).● Warning controls are designed to:● – recognize and identifying deviationsfrom plans;● – identify the direction and magnitude ofvariations, usually in numerical formanalysis of performance measurements17Sales management control
Sales management control 279operating in key result areas.● Warning controls typically take the formof:● – computer printouts● – graphs● – tables of comparative performance.● Self-control is promoted through skilltraining and feedback, where thesalesperson monitors his or her ownperformance against standards ofperformance and requirements of the job.The salesperson is the best guide toproblems and deviations from standards ofperformance and plans.It is particularly important to concentratecontrol in the sales force on key result areasbecause of the natural tendency we all haveto concentrate effort on those aspects of thejob that are noticed or are emphasized intraining, bulletins or other verbal or non-ver-bal communications.All personnel should be familiar with theirstandards of performance so that they cancheck their own performance against objec-tive factors and criteria. It is useful to encour-age salespersons to keep their own basicrecords in key result areas, such as call rates,or sales against targets, and to ask for these tobe summarized (possibly on the daily report).Self-control is fostered where salespersonsmake commitments as to how a territory tar-get will be broken down and achievedthrough each individual customer at amonthly area sales meeting.Managing timeTime is the one irreplaceable sales forceresource. Time lost or wasted cannot berecovered, and is rarely made up subse-quently, with a resultant loss in overall busi-ness. The eld sales manager must recognizewhere time goes to in the selling day. Mostobjective surveys show that little of the day isactually spent in productive selling activities,with often only from two to three hours beingspent on business generating activities suchas selling and merchandising.Sales managers must control and managethe use of time at two levels:● salesperson use of time● managers use of their own time.Salesperson use of timeIt is useful for a sales manager, as well as asalesperson, to have a good understanding ofwhere time goes in the eld sales force. Onesimple form, illustrated previously (Table15.1), suggested occasionally measuring timeused in 10-minute intervals against mainactivities in the selling day. An alternativeapproach, illustrated in Table 17.1, possiblyundertaken as part of a more serious salesengineering project, is to measure your salesforce’s use of time under the categories of:● preparatory work● productive or selling activitiesTwo basic rules in sales management1. Practise management by exception to monitor management by objectives.That means you focus on monitoring and controlling against key result areas of the jobwhere there are deviations from standards, objectives or plans, either within the wholeteam, or with one individual.2. Good managers see, know and note everything going on within their team, and con-trol many of the activities through their system of formal continuous and warning con-trols. But they overlook many of the non-critical situations, focusing on correcting,through training and counselling, a few key points that particularly in uence resultsin key result areas of the job.
280 Sales Management● unproductive or non-selling activities● call management● personal time.By sales managers becoming more aware ofhow time is used in relation to priority func-tions, eld management time should be moreeffectively directed to management of keyresult areas, and to focusing training on thoseaspects of the job that make a difference tosales performance.Sales manager’s time use analysisA similar time management exercise can beconducted for each sales manager. The salesmanager should monitor his or her use oftime to ensure its use is focused on priorityand key result areas. In the format illustratedin Table 17.2 time use can be monitored overa typical 20-working-day month, using amonitoring form such as the example shownin this section. Standards of performance foruse of time in major and priority functionscan be set, such as training, and managerscan measure themselves against those stan-dards.Table 17.1 Sales activity time management analysisSales activity time management analysis Salesperson Date(time recorded in minutes) John Smith 5 Jan. 199-Call 1 2 3 4 5 6 7 8 9 10 11 12 Total Average %PreparatoryCustomer record checks 2 3 2 1 2 2 2 3 17 1.7 3%Objective setting 1 2 2 2 2 9 0.9 2%Proposal preparation 2 2 2 3 1 2 12 1.2 2%Selling activitiesContact making 2 4 3 5 3 17 1.7 3%Stock checking 3 4 3 2 3 4 19 1.9 4%Sales presentations 16 10 9 15 10 20 16 30 20 12 158 15.8 31%Merchandising 5 5 3 4 2 3 5 3 30 3.0 6%Non-selling activitiesDriving 20 10 6 8 12 11 7 14 9 17 114 11.4 22%Waiting at calls 5 5 2 3 2 3 7 27 2.7 5%Administration 5 3 5 4 6 2 4 3 1 2 35 3.5 7%Meeting attendanceOfﬁce contact 2 5 10 17 1.7 3%Call managementPost-call accountservicingEvaluation of 4 4 0.4 1%programme resultsProcessing queries 3 2 5 4 14 1.4 3%PersonalMeal breaks, etc. 10 30 40 4.0 8%TOTAL (in minutes) 51 35 46 50 47 48 70 64 40 62 513 51.3 100%
Obviously not all management activitiesoccur at regular intervals or with the samefrequency. There are certain tasks the salesmanager might perform only at infrequentintervals. As a useful time control it might beworth preparing a list of the main occasionaltasks that are time bound, noting in whichmonths or weeks action is needed. An exam-ple is illustrated in Table 17.3, and most salesmanagers would log this onto a wall planner,or into their computer diary planning sys-tem. Key periodic tasks can then be built intothe short-term monthly detailed time plan-ner.Field controlsIdentifying key result areas and settingperformance standardsOnce overall company plans, forecasts or tar-gets, and objectives have been establishedand communicated, these need to be brokendown to territory and customer forecasts,objectives, strategies and tactics. Then mea-surement and achievement bases can beagreed for each salesperson, with standards ofperformance set and agreed for each key resultarea, where objective measures can be made interms of quantity, quality, cost or time.The main key result areas where sales man-agers should set standards of performanceand make control measurements are:● standard daily call rate (i.e. minimumacceptable)● average daily call rate (measured over alonger period, such as a month)● minimum order size (volume/value)● average order size (volume/value)● total daily, weekly, monthly salesachievements (against targets, forecasts)● calls on new prospects● conversion ratio of calls to orders● distribution by product● product display achievements (qualityobserved from ﬁeld audit checks; quantitypossibly measured through daily reportrecordings)282 Sales ManagementTable 17.3 Sales manager’s key task diary plannerAnnual key task plannerJ F M A M J J A S O N DAnnual sales forecast xAnnual cost budgets xAnnual sales force objectives xAnnual sales promotion plan xAnnual sales conference xManpower planningschedule xRegional sales conferences x xNational trade convention xField sales managers’meeting x x x x x x x x x x x xSales force appraisals xNew starters’ course x x x xSalary reviews x xVacations x xQuarterly performancereview & plan update x x x xAnnual key task planner
● achievement of scheduled call coverage● pre-call objective setting.By monitoring each of the objective criteriafor each member of the sales team a goodmeasure of interpersonal differences in pro-ductivity can be made. The manager’s per-sonal judgement can be used where there areparticular differences in the potential or tradechannel structure of territories.A standard of performance can beexpressed as an absolute number, such as ’toachieve 10 calls per day and 100 per centscheduled call coverage over a journey cycle’,or in ratio terms, such as ’to convert 40 percent of calls made to active customers’. Ifstandards of performance are to have credi-bility with the sales team responsible forachieving them, they must have a basis in his-torical performance and achievement. Theymust be seen as realistic and achievable by all,and only work as motivators within the teamwhere they are subject to measurement andregular feedback. It would be of little bene tsetting a standard for, say, new customerprospecting, if there is no measure of newcalls made and the outcomes of those calls.Sources of control data and performanceinformationSources of information that the sales manageror head of ce sales department can use foranalysis should include the daily activityreport and the customer order form. If welldesigned and properly used in sales manage-ment these two documents contain a wealthof information for analysis as measures ofactivity and effectiveness. In addition, any ofthe standard forms and control documentsused by the sales force provide sources ofcontrol data to the eld sales manager. Someof their control uses are illustrated in the fol-lowing table.Sales management control 283Developing sales force controls from available informationDaily activity ● This can be used for:reports ● – coding and sorting of information to monitor against overallplans and objectives;● – exception analysis to identify trends and deviations from plans;● – comparison of calls made with journey cycle schedules, andexception printouts of missed calls● Monitor effective coverage.● – Have scheduled calls been made?● – Why are scheduled calls missed and will they be picked up?● Monitor call rates and sales conversion ratios and prepare inter-territory comparisons.● Monitor sales volumes and values against targets.● Monitor special display or promotional activity where a specialrecording is requested (self-reporting of achievements).● Monitor new prospect pioneer calling (new calls to be identiﬁedon report).● Check seasonal outlet coverage.● Monitor car mileage.Customer order ● Analyse volumes and values of orders, and average order sizesforms ● by customer, territory, area, and each higher tier to nationalsales force total.● Make comparisons of actual sales to targets and forecasts, andpercentage changes over time, e.g. by● – week or month
Supplementary analysis● Supplementary analysis of daily activityreports and customer order forms can alsofocus attention on:● – product-by-product analysis to showgains and losses in distribution bycustomer, territory, area, etc. (oftenusing self-reporting by salespersons);● – to identify and highlight new distributionachievements;● – to measure achievements againstestablished standards of performance;● – to conduct analysis of specialrecordings or data of short term interest;● – proﬁt performance byarea/territory/salesperson.● When working with salespersons in theﬁeld the sales manager should take theopportunity to check that all customer callrecords maintained by the salesperson areup to date, and that they are used by thesalesperson during the selling day for callplanning and management purposes.Managers often ﬁnd it useful to check thecall records for accounts that have notbeen active in recent sales periods. Also,surveys of call records can often highlightweaknesses in product distribution orusage, and if stock levels are entered itmay be possible to spot where sales arebelow potential from recorded stock levelson entry to calls.● Managers can look to see if calls beingmissed follow a pattern, such as the moreremote customers, or where buyers areconsidered less cooperative.● Salespersons should be encouraged to logon the daily activity reports their daily and284 Sales Management● – this year/last year analysis● – actual values and percentages● – cumulative and moving annual totals● – geographical area (territory/area)● – trade channel sector (outlet type).● Develop exception printouts of customers who have not orderedon a journey cycle.Journey plans ● Are calls made to schedule?● Are appointments made?● Are calls planned to ﬁll the working day?● Do calls made match the master journey cycle schedule?● Are pre-call objectives being set and pursued?● Is the salesperson giving contact point details?Customer call ● Do call record cards exist for all customers?records ● Are records current?● Are call objectives being set?● Are special reporting requirements being complied with?● Are all product ranges and items being fairly represented?● Are additional volume and distribution being actively sought?Credit notes ● Obtain copies of all product uplift and credit notes.● Set guidelines for the issue of notes.● – If goods are credited ensure they are withdrawn from the outlet.● Check uplift/credit note books when working with salespersons.Expenses records ● Check receipts.● Monitor for reasonableness.Discounts and ● Monitor for abuse of discretionary trade allowances.allowance levels
cumulative sales against targets, to createa self-awareness of achievement againstterritory targets.● Managers must closely monitorsalespersons who have authority to varyterms and prices, to ensure that best pricesare being achieved, and that proﬁtabilityis not being eroded unnecessarily. Acommission salesperson normally will bemore motivated by his or her personalearnings than improving companyproﬁtability.Where data is mon