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Selling And Negotiation Skills 1st Sem Mms
 

Selling And Negotiation Skills 1st Sem Mms

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selling n negotiation notes

selling n negotiation notes

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    Selling And Negotiation Skills 1st Sem Mms Selling And Negotiation Skills 1st Sem Mms Presentation Transcript

    • Selling and negotiation skills
      • Qualities of a professional sales executive-
      • Thorough analysis
      • Market efficient qualitative and quantitative personal-selling objectives
    • Selling and negotiation skills
      • Appropriate sales policies
      • Personal selling strategy
    • Selling and negotiation skills
      • Skillful application of organizational principles to the conduct of a sales operation
      • The ability to install, operate and use control procedures appropriate to the firm‘s situations and objectives
    • Responsibilities of a sales executive
      • 1)to their organization
      • 2)to the customers
      • 3)to the society
    • Responsibilities towards the organization
      • 1)obtaining sales volume
      • 2)providing profit contributions
      • 3)continuing business growth
    • Responsibilities towards the customer
      • Customers can be wholesalers, retailers or industrial users
      • All of them expect to supply easily resalable products and services
    • Responsibilities towards the customer
      • Backed by supporting activities (training to dealer’s sales personnel, help in preparing local advertisement, provision of credit etc
      • Assurance that the products and services are wise investment
    • Responsibilities to the society
      • Society looks to them to assure the delivery of goods and services that final buyers wants at prices that final buyers are willing to pay
      • To develop and market products which are minimal environment damaging (socially responsible products)
    • Evolution of the sales department
      • Prior to industrial revolution, small-scale enterprises dominated the economic scene.
      • Orders were obtained with minimum efforts
      • Single individual supervised all the phases of the business
    • Evolution of the sales department
      • Manufacturing problems received the most attention (selling and marketing was handled on a part-time basis)
      • With industrial revolution, which began in 1760,in England (shortly after the American revolution), finding new markets became essential
    • Evolution of the sales department
      • Adjacent markets could not absorb the increased quantities
      • Sales departments were established only after the activation of manufacturing and financial departments
    • Sales executive as a-coordinator
      • Coordination involving-
      • 1)the organization
      • 2)the planning
      • 3)other elements in the marketing strategy
    • Organization and co-ordination
      • Coordination of the different order-getting methods personal selling, advertising etc)
      • Inside the sales department, under democratic administration, co-ordination of units under respective control
    • Planning and co-ordination
      • In marketing objectives and draft plans at optimum cost
      • Determine the elements (personal selling, advertising etc)
    • Planning and co-ordination
      • Apportioning the relative amounts
      • Seek to secure a marketing program that is both appropriate for market conditions and reflects the probable contribution of the sales force
    • Coordination with other elements
      • Like advertising, display and other promotional efforts
      • Synchronizing personal selling with advertising
    • Coordination with other elements
      • Point-of-purchase displays are set up in retail stores where customers will see them at the precise time that tie-in advertisements appear in national and local media
      • Alerting dealers to special couponing or sampling effort so that they can benefit from heightened customer interest
    • Co-ordination with distributive network
      • Gaining product distribution
      • Obtaining dealer identification to avoid clogged distribution channels
      • Reconciling business goals-of manufacturers and middlemen
      • Sharing promotional risks (co-operative advertising)
    • Coordination and implementation of overall marketing strategy
      • Sales executives see that field sales personnel integrate every phase and segment of the promotional programs of distributors and dealers
    • Personal selling situations
      • 1)services selling
      • 2)developmental selling
      • 3)developmental but unusual creative
    • Service selling
      • 1)inside order taker-sales clerk behind neckwear counter at a store
      • 2)delivery sales person-delivering bread,milk,oil
    • Service selling
      • 3)route or merchandising salesperson-the soap or spice salesperson calling on retailers
    • Service selling
      • 4)missionary-only to build goodwill, not expected to take orders- pharma detailing
      • 5)technical sales person-engineering sales person
    • Developmental selling
      • 1)creative,selling tangibles-vacuum cleaners, automobiles, encyclopedias
      • 2)creative,selling intangibles-insurance, advertising services, educational programs
    • Developmental-but unusual creativity
      • 1)political,indirect or back-door salesperson-getting large orders for flour from baking companies by catering to key buyer’s interests in fishing, golfing etc
    • Developmental-but unusual creativity
      • 2)salesperson engaged in multiple sales-involves sales of big-ticket items to committee consisting of several individuals-ad agency account executive
    • Is selling an art or science?
      • In a survey of 173 marketing executives,
      • 46% perceived selling as an art
      • 8%as science
      • 46% as an art evolving into a science
    • Selling theories-
      • 1)AIDAS-attention,interest,desire,action,satisfaction
      • 2)’Right set of circumstances theory-
      • 3)buying formula-
      • 4)Behavioral equation theory-
    • 1)AIDAS
      • Attention-can be grabbed by favorable first impressions like proper attire, neatness, friendliness and genuine smile
      • Opening remarks be about the prospect or favorable comments about prospect’s business
    • How to create interest?
      • Develop a contagious enthusiasm for the product or a sample
      • Use flipcharts ,sales portfolios or other visual aids in case of technical or bulky products
      • Find out basic motivation of prospects, their mood (receptive, skeptical, hostile)
    • Kindling desire
      • By keeping the conversation running on the main course
      • Obstacles must be faced and ways found to get around them
    • Kindling desire
      • Objections be answered, before they are raised
    • Kindling desire
      • External interruptions cause break. After resuming,summarise what has been said
      • Digressive remarks be disposed off tactfully with finesse (distracting digression be handled bluntly)
    • Inducing action
      • Buying is not automatic and as a rule must be induced
      • The trial close, close on a minor point and the trick close are used to test the prospect’s reactions
      • Ask for the order straightforwardly
    • Building satisfaction
      • By thanking the customer for the order
      • Reassure the customer that the decision was correct
    • Building satisfaction
      • Customer should be left with the impression that the sales person merely helped in deciding
      • The order is the climax of the selling situation-possibility of anticlimax be avoided
      • Sales person should not linger too long
    • 2)’Right set of circumstances’-theory
      • Situation response theory
    • 2)’Right set of circumstances’-theory
      • Particular circumstances prevailing in a given selling situation cause the prospect to respond in a predictable way
      • More skilled the salesperson is in handling the set of circumstances, the more predictable is the response
    • 3)Buying formula-theory of selling
      • 1)if the prospect does not feel a need or recognize a problem that can be satisfied by the product or service, the need or problem should be emphasized
    • 3)Buying formula-theory of selling
      • 2)if the prospect does not think of the product or service when he or she feels the need or recognizes the problem, the association between need or problem and product or service should be emphasized
    • 3)Buying formula-theory of selling
      • 3)if the prospect does not think of the trade name when he or she thinks of the product or service, the associations between product or service and trade name should be emphasized
    • 3)Buying formula-theory of selling
      • 4)if need or problem, product or service, and trade name are well associated, emphasis should be put upon facilitating purchase and use
    • 3)Buying formula-theory of selling
      • 5)if competition is felt, emphasis should be put upon establishing in the prospect’s minds the adequacy of the trade-named product or service, and pleasant feelings toward it
    • 3)Buying formula-theory of selling
      • 6)if sales to new prospects are desired, every element in the formula should be presented
      • 7)if more sales to old customers are desired, the latter should be reminded (developing new uses is comparable to selling to new customers)
    • Behavioral equation theory (j.a.howard)
      • Is based on stimulus-response model
      • Sophisticated version of the ‘right set of circumstances theory
      • 4 elements of the learning process-drives, cue, response and reinforcement
    • equation
      • B=PXDXKXV where,
      • B=response or the internal response tendency,i.e.the act of purchasing a brand or patronizing a supplier
      • P=predisposition or the inward response
      • D=present drive level (amount of motivation)
      • K=‘inventive potential' that is, the value of the product or its potential satisfaction to the buyer
      • V=intensity of all cues:triggering,product,or informational
    • Summary of J A Howard theory
      • When the satisfaction (K) yields a reward, reinforcement occurs, and, technically, what is reinforced is the tendency to make a response in the future to the cue that immediately preceded the rewarded response.
    • Summary of J A Howard theory
      • After reinforcement, the probability increases that the buyer will buy the product (or patronize the supplier) the next time the cue appears-buyer has learned
    • prospecting
      • Is the planning work which is essential in eliminating calls on non buyers
      • Steps in prospecting-
      • 1)formulating prospect definitions
    • prospecting
      • 2)searching out potential accounts
      • 3)qualifying prospects and determining probable requirements
      • 4)relating company products to each prospect’s requirements
    • Formulating prospect definition-
      • Prospective customers-
      • Must have the willingness
      • The financial capacity
    • Formulating prospect definition-
      • Authority to buy
      • Must be available to the sales person
      • Key characteristics of profitable accounts be found and used while screening the prospects
    • Searching out potential accounts
      • Directories of all kinds
      • News and notes in trade papers and business magazines
      • Credit reports
    • Searching out potential accounts
      • Membership lists of chambers of commerce and trade and manufacturer’s association
      • Lists purchased from list brokers
      • Responses to company advertising
    • Searching out potential accounts
      • Sales personnel of non-competing firms calling on the same general class of trade
      • Conventions and meetings
      • Bankers and other centers of influence
    • Searching out potential accounts
      • Salesperson’s own observation
      • Endless chain (of satisfied customers)
      • Insurance salesman uncover prospects among their acquaintances, members of their professional ,religious and social organizations and referrals of friends
    • Qualifying prospects and determining probable requirements
      • Prospects with requirements too small to represent profitable business are removed from further consideration unless their growth possibilities show promise
      • Additional information by personal visit to confirm prospects from nonprospects
    • Relating company products to each prospect’s requirements
      • By a tailored presentation
      • Clear idea about specific likely objections being raised and other obstacles to the sale that may be encountered
    • Relating company products to each prospect’s requirements
      • The salesperson is ready to contact the prospect
      • The remaining tasks are-making an appointment, deciding how to open the presentation and determining how to persuade the prospect to become a customer
    • Sales resistance-
      • In the form of obstacles or an objection
      • Obstacle is real or unreal
      • Objection is sincere or insincere
    • Obstacles to sales
      • E.g. “a temporary shortage of cash prevents buying”
      • Can be circumvented by explaining a method for financing the purchase
    • Sales objections
      • At best, an objection requires a satisfactory answer; at worst, it blocks the sale
      • Sincere objections trace to incompleteness, in-accuracy, or vagueness in the sales presentation
    • Sales objections
      • Prospects may be confused about their own need or may react unfavorably to the salesperson’s personality
      • Sincere objections are overcome by patient and thorough explanations
    • Sales objections
      • Insincere objections are raised by the customer to get rid of the salesman or to check their competence
      • Insincere objections should not be allowed to provoke into an argument
    • Handling objections
      • One theory says that each objection be treated with utmost courtesy
    • Handling objections
      • Another theory suggests to ignore insincere objections
      • The best defensive strategy often is the strong counterattack and the salesperson should try to regain the initiative as he or she can gracefully possible
    • Closing sales
      • Low pressure sales are closed more easily than high pressure ones
    • Closing sales
      • In low pressure sales, prospects feel that they are reaching the buying decisions themselves, and primarily through rational processes of thought, so there is no need for extra push just before the sales are consummated
    • Closing sales
      • In high pressure sales, the main thrust is to the prospect’s emotions, so salespersons attempt to propel prospects into buying decisions. Often the prospect regains normal perspective as the sale nears its climax,and,if this happens, the salesperson needs unusually effective persuasion to close the sales
    • closing
      • When an attempted close fails, the salesperson should normally try another.
      • The refusal does not necessarily imply an unwillingness to buy; it may indicate the prospect’s need for additional information or clarification of some point
    • closing
      • Some executives recommend that sales personnel attempt as many as five closes before giving up
    • closing
      • Early closing attempts should be so expressed that a refusal will not cut off the presentation
      • The sales person first uses an indirect close,i.e.attempts to get the order without actually asking for it
    • In-direct close
      • The sales person may ask the prospect to state a preference from among a limited number of choice (as to models, delivery dates, order size, or the like) so, phrasing the question that all possible responses are in the salesperson’s favor.
    • In-direct close
      • Secondly, the salesperson may summarize, emphasizing features that visibly impress the prospect, showing how the reasons for the purchase outweigh those opposed to it till he gets a response like, go ahead and write the order and hand it to the prospect for approval-if the prospect balks, the issue is clearer
    • In-direct close
      • Perhaps one last objection is voiced, but after it is answered, the sale is made
    • Direct close
      • When one or more attempts at an indirect close fail, the sales person uses the direct approach.
    • Direct close
      • Few prospects respond negatively to a frank request for the order
      • Many people, especially those who are themselves engaged in selling, do not buy unless the order is asked for outright
    • Personal selling- qualitative objectives
      • 1)to do the entire selling job (as when there are no other elements in the promotional mix
      • 2)to ‘service' existing accounts (that is, to maintain contacts with present customers, take orders, and so forth)
    • Personal selling- qualitative objectives
      • 3)to search out and obtain new customers
    • Personal selling-qualitative objectives
      • 4)to secure and maintain customer’s cooperation in stocking and promoting the product line
      • 5)to keep customers informed on changes in the product line and other aspects of marketing strategy
    • Personal selling- qualitative objectives
      • 6)to assist customers in selling the product line (as though ‘missionary’ selling)
      • 7)to provide technical advice and assistance to customers (as with complicated products and where products are especially designed to fit buyer’s specifications
    • Personal selling-qualitative objectives
      • 8)to assist with (or handle) the training of middlemen’s sales personnel
      • 9)to provide advice and assistance to middlemen on management problem
      • 10)to collect and report market information of interest and use to company management
    • Quantitative objectives
      • 1)to capture and retain a certain market share
      • 2)to obtain sales volume in ways that contribute to profitability (optimum mix)
    • Quantitative objectives
      • 3)to obtain some number of new accounts of a given types
      • 4)to keep personal-selling expenses within set limits
      • 5)to secure targeted percentages of certain account’s business
    • Some definitions-
      • Market potential-is an estimate of the maximum possible sales opportunities present in a particular market segment and open to all sellers of a good or service during a stated future period
    • Some definitions-
      • Sales potential-is an estimate of the maximum possible sales opportunities present in a particular market segment open to a specified company selling a good or service during a stated future period
    • Some definitions-
      • Sales forecast-is an estimate of sales, in dollars or physical units, in a future period under a particular marketing program and an assumed set of economic and other factors outside the unit for which the forecast is made
    • Sales forecasting methods
      • 1)jury of executive opinion
      • 2)the Delphi technique
      • 3)poll of sales force opinion
      • 4)projectino of past sales
    • Sales forecasting methods
      • 5)time-series analysis
      • 6)exponential smoothing
      • 7)survey of customer’s buying plans
      • 8)regression analysis
      • 9)economic model building and simulation
    • Sales related marketing policies
      • 1)product policies (what to sell)
      • 2)distribution policies (to whom to sell)
      • 3)pricing policies
    • Product policies
      • 1)in relation to product objectives
      • 2)product line policy
      • 3)changes in product offerings
    • Product policies
      • 4)reappraising the product line and line simplification
      • 5)reappraising the product line and line diversification
      • 6)ideas for new products
      • 7)appraisal of proposed new products
    • Policies on distribution intensity
      • 1)mass distribution
      • 2)selective distribution
      • 3)exclusive agency distribution
    • Pricing policies
      • 1)policy on pricing relative to the competition-meeting the competition, pricing above the competition, pricing under the competition
      • 2)policy on pricing relative to costs-full cost pricing, promotion pricing, contribution pricing
    • Pricing policies
      • 3)policy on uniformity of prices to different buyers-one price or variable price
      • 4)policy on list pricing-either freedom to middlemen or control his retail price
    • Pricing policies
      • 5)policy on discounts-trade discount, quantity discount
      • 6)geographical pricing policies-FOB pricing, delivered pricing,
    • Pricing policies
      • 7)policy on price leadership-initiate or follow price change
      • 8)product line pricing policy
      • 9)competitive bidding policy
    • Choice of basic selling style
      • 1)trade selling
      • 2)missionary selling
      • 3)technical selling
      • 4)new business selling
    • The effective sales executive
      • 1)ability to define the position’s exact functions and duties in relation to the goals the company should expect to attain
    • The effective sales executive
      • 2)ability to select and train capable subordinates and willingness to delegate sufficient authority to enable them to carry out assigned tasks with minimum supervision
    • The effective sales executive
      • 3)ability to utilize time efficiently
      • 4)abiilty to allocate sufficient time for thinking and planning
      • 5)abiilty to exercise skilled leadership
    • Causes of turnover of sales personnel
      • Under control of the company-
      • Poor recruiting
      • Improper selection and assignment
      • Training deficiencies
      • Inadequate supervision and motivation
    • Causes of turnover of sales personnel
      • Breakdown in communications
      • Unsatisfactory performance-customer complaints etc
      • Discharged for cause-alcoholism, conviction of a felony, dishonesty etc
    • Causes of turnover of sales personnel
      • Cutbacks in personnel
      • Transfer to another department
      • Promotion to a higher position
    • Causes of turnover-not controlled by the company
      • Retirement
      • Death
      • Illness or physical disability
    • Causes of turnover-not controlled by the company
      • Personal and martial difficulties
      • Dislike for the job-travel, type of work, working conditions etc
      • Military duty
      • Better position elsewhere
    • Sales job analysis-
      • To whom does this person report?
      • who reports to this person?
      • What products does this person sell?
    • Sales job analysis-
      • To whom does this person sell?
      • What information should this person gather?
    • Sales job analysis-
      • What reports should this person make and to whom?
      • Specific duties and responsibilities, relations with customers, relations with other sales department and company personnel
    • Sales job description
      • Is an organized factual statement covering-
      • 1)the reporting relationship of a particular job to other job
      • 2)the job objectives
    • Sales job description
      • 3)duties and responsibilities
      • 4)job performance criteria
      • Tells to whom the sales jobholder reports, what has to be done, how it is done, and why and, in addition, describes the standard against which performance is measured
    • Duties and responsibilities-check list-for sales job description
      • 1)sales
      • 2)service
      • 3)territory management
      • 4)sales promotion
      • 5)executive
      • 6)goodwill
    • Sales-
      • Make regular calls
      • Sell the line; demonstrate
      • Handle questions and objections
      • Check stock; discover possible product uses
    • Sales-
      • Interpret sales points of the line to the customer
      • Estimate customer’s potential needs
      • Emphasize quality
      • Explain company policy on price,delivery,and credit
      • Get the order
    • service
      • Install the product or display
      • Report product weaknesses, complaints
      • Handle adjustments,returns,and allowances
    • service
      • Handle requests for credit
      • Handle special orders
      • Establish priorities, if any
      • Analyze local conditions for customers
    • Territory management
      • Arrange route for best coverage
      • Balance effort with customer against the potential volume
      • Maintain sales portfolios,samples,kits and so forth
    • Sales promotion
      • Develop new prospects and accounts
      • Distribute home office literature, catalogues and the like
    • Sales promotion
      • Make calls with customer’s salespeople
      • Train personnel of wholesalers, jobbers and so on
      • Present survey reports, layouts and proposals
    • executive
      • Each night make a daily work plan for the next day
      • Organize field activity for minimum travel and maximum calls
    • executive
      • Prepare and submit special reports on trends, competition
      • Prepare and submit statistical data requested by home office
      • Investigate lost sales and reason for loss
    • executive
      • Prepare reports on developments,trends,new objectives met, and new ideas on meeting objections
      • Attend sales meetings
    • executive
      • Build a prospect list
      • Collect overdue accounts; report on faulty accounts
      • Collect credit information
    • goodwill
      • Counsel customers on their problems
      • Maintain loyalty and respect for the company
      • Attend local sales meetings held by customers
    • Recruiting sales personnel
      • 1)sources within the company
      • 2)sources outside the company
    • Sources within the company-
      • 1)company sales personnel
      • 2)company executives
      • 3)internal transfers
    • Sources outside the company-
      • 1)Direct unsolicited applications
      • 2)Employment agencies
      • 3)Sales people making calls on the company
      • 4)Employees of customers
    • Sources outside the company-
      • 5)Sales executive’s clubs
      • 6)sales forces of non competing companies
      • 7)sales forces of competing companies
      • 8)educational institutions
      • 9)older persons
    • Recruiting effort-
      • College recruiting
      • Recruiting direct-to-consumer sales personnel
      • Recruiting consultants
      • Indirect recruiting
      • Recruiting brochures
    • Selecting sales personnel
      • Preliminary interview and pre-interview screening
      • Formal application
      • Interview (s)
    • Selecting sales personnel
      • Reference and credit check
      • Testing-ability, habitual characteristics and achievement
      • Physical examination
      • Employment offer
    • Planning sales training programs
      • A-C-M-E-E-aims-content-method-execution-evaluation
      • training need are identified from sales person’s reports, sales records, observation of sales personnel etc
    • Planning sales training programs
      • Training need-1)initial sales training (job specifications, individual trainee’s background and experience and sales related marketing policies
    • Planning sales training programs
      • 2)continuous sales training-about basic changes in products and markets, changes in company related policies, procedures & organization, careless or sloppy habits of sales personnel
    • content
      • 1)product data-product use and application, initial factory training, training on competitor’s products
      • 2)sales technique-
    • content
      • 3)markets-customers,their locations, product of their interest, buying habits and motives
    • content
      • 4)company information-history, importance in the industry and economy, relations with stockholders,unions,competitors,government and other group, pricing policies, product service policy, spare parts and repairs credit extension and customer relations etc
    • Training methods (group/individual)
      • 1)the lecture
      • 2)the personal conference
      • 3)demonsatration
      • 4)role playing
      • 5)case discussion
    • Training methods
      • 6)impromptu discussion
      • 7)gaming-simulation
    • Training methods
      • 8)on-the-job training-coach and pupil method
    • Training methods
      • 9)programmed learning-subject matter is broken down into numbered instructional units called frames, which are incorporated into a book or microfilmed for use with a teaching machine
    • Training methods
      • 10)correspondence courses-for insurance field to acquaint new salespeople with industry fundamentals and to instruct in basic sales technique. Also used to train distributor’s sales force
    • Executing and evaluating sales training programs
      • Kipling’s six honest serving men
      • What?
      • Why?
      • When?
      • How?
      • Where?
      • Who?
    • Philosophies of sales training
      • 1)conditioned response philosophy-for trade or missionary-requires and aids designed to facilitate memorizing programmed responses like multiple choice test-can be measured objectively
    • Philosophies of sales training
      • 2)insight response philosophy-for technical or new business requires materials conducive to develop analytical skills and internalizing of responses like an essay test-can be measured subjectively
    • Organization for sales training
      • Who will be the trainees?
      • Who will do the training?
      • When will the training take place?
      • Where will the training site be?
    • Who will be the trainees?
      • Difficult to identify for continuous training
      • Criteria for selection-
      • 1)reward for good performance
    • Who will be the trainees?
      • 2)punishment for poor performance
      • 3)convenience of trainee and trainer
      • 4)seniority(greater seniority more training opportunity)
    • Who will do the training?
      • Initial sales training-either by top sales executive if line function or personnel director if staff function
      • Continuous sales training-top sales executive
    • Who will do the training?
      • Sales training staff- in case of large companies
      • training the sales trainer-
      • Outside expert-for sales techniques (prospecting, selling by telephone, objections handling etc)
    • When will the training take place?
      • Majority sales executives contend that newly recruited trainees should receive formal group training before starting to sell
      • Sizeable minority however assign trainees to selling jobs before sending them to sales schools-(not suitable when highly technical products are sold to sophisticated buyers)
    • When will the training take place?
      • In case of large number of new personnel, group training is advisable
      • Optimum group size-smaller than 12-15 involves inordinate high cost, larger than 30-40 incur heavy losses in terms of learning effectiveness
    • Training site decisions-
      • Generally,
      • Initial sales training at central office (provides better product training but higher costs)
    • Training site decisions-
      • Separate programs at branch office
      • Retraining programs are short and are held either at centralized or decentralized points
    • Instructional materials and training aids
      • 1)manuals or workbooks
      • 2)other printed materials
      • 3)training aids
      • 4)advance assignments
    • manuals
      • Are used in most group type sales training programs
      • Contains-
      • Outlines or summaries of the main presentation
      • Related reading materials
      • Statement of learning objectives for each session
      • Thought provokers
    • manuals
      • Cases and problems
      • Directions for sessions involving role playing or gaming
      • Concise statements of selling,pricing,training of sales personnel and other policies
    • manuals
      • Details on company systems and procedures
      • Information on the products and their application
      • Purpose is-to serve as study guides during training and as reference later
    • Other printed materials
      • Include company bulletins
      • Sales and product handbooks
      • Information bulletins
      • Standard texts
      • Technical and trade books
      • Industry and general business magazines and journals
    • Training aids
      • Is an auxiliary device capable of transmission of sight and/or sound stimuli
      • Blackboard and chalk and other mechanical training aids like Vue-graph projector, transparency roll and screen
    • Training aids
      • Motion picture projector and film are effective to explain complex situations
    • Training aids
      • Actual demonstration in case of conveying technical information on installation and operation of new machine tool models
      • All training films (company produced or commercially produced) be previewed before use
    • Training aids
      • Tape recording and playback equipment is ideal for training in sales techniques
    • Training aids
      • Actual or simulated sales presentations are taped and played back for individual or group appraisal
    • Training aids
      • Miniature (sometimes conceable) cassette type recorders make it easy for salespersons to tape their own sales interviews and play them back later
    • Training aids
      • Closed circuit TV is used when timing is important (suitable for de-centralized programs like new product lines are introduced to salesperson or dealers or in case of policy changes issues and as a substitute for training at national sales meetings
    • Advance assignments
      • 1)reading assignment to provide some minimum comprehension of subjects scheduled
      • 2)read a case and prepare a plan of action
    • Advance assignments
      • It is important that the trainees understand the purposes of advance assignments and receive clear instructions (written instructions)
      • They consume time outside formal sessions, reducing trainee’s inclinations to “go out on the town" or otherwise goof off
    • Evaluating sales training programs
      • Compare the program’s aims with the results
      • Results, such as improved selling performance may come at a later time
      • Comparison of-
    • Evaluating sales training programs
      • Length of time new sales personnel (who have completed initial sales training) take to attain the productivity level of the experienced salesperson
      • The performance against standards of trained and untrained sales personnel
    • Evaluating sales training programs
      • Respective training histories of the best and worst performers
      • Plotting graph of each sales person’s sales records on a before –and-after training basis, generally converting them to market percentage
    • Evaluating sales training programs
      • Some companies use written tests (on a before-and-after training basis)
      • Send observers to work with sales personnel who have completed training programs and ask a report
    • Evaluating sales training programs
      • Solicit customers for their reactions to a salesperson’s performance after training
      • Effectiveness of program be measured when the program is in progress and after completion
    • Evaluating sales training programs
      • Tests and examinations measure trainee retention of materials presented, most appropriately when trainees are to memorize certain information
    • Evaluating sales training programs
      • For sales technique measurement tests and examinations are not useful but performance in role-playing assignment is a better approach
    • Evaluating sales training programs
      • Rate each trainee’s performance in role playing, panels and other discussions
      • Trainees also rate training program after they return to their territories
    • Motivating sales personnel
      • Motivation as applied to sales personnel is the amount of effort the salesperson desires to expend on the activities associated with the sales job, such as calling on potential accounts, planning sales presentations, and filling out reports
    • Why motivation for sales people?
      • 1)inherent nature of the sales job-away from family,travelling,ups and downs
      • 2)salesperson’s boundary position and role conflicts-linkages with 1)sales management, 2)order fulfilling dept,3)customers and 4)other company sales personnel
    • Why motivation for sales people?
      • Conflicts faced by salesman-
      • 1)conflict of identification
    • Why motivation for sales people?
      • 2)advocacy conflict
      • 3)because of dual role as an advocate for both the customer and company and pecuniary interest as an entrepreneur
    • Why motivation for sales people?
      • 3)tendency toward apathy-because of routine customers and territories
      • 4)maintaining a feeling of group identity-works alone, no team spirit
      • 5)salesperson’s linkages with groups with divergent interests
    • How to reduce conflict of salespeople?
      • Improving sales training effectiveness
      • Revising selection criteria
    • Motivation theories
      • 1)Hierarchy of human needs- Maslow-physiological, safety and security, belongingness and social relations need, esteem needs, self-actualization needs
    • Motivation theories
      • 2)Motivation-Hygiene theory-Hertzberg
      • Hygiene factors-interpersonal relations,peers,subordinates,supervisors,company policy, job security
    • Motivation theories
      • Motivation factors-achievement, recognition,advancement,work itself, growth potential, responsibility
      • Deficiencies in hygiene factors lead to job dissatisfaction
    • Motivation theories
      • Fulfillment of hygiene needs does not lead to job satisfaction but leads to ‘fair day’s work’
      • Motivation factors when fulfilled lead to job satisfaction
    • Motivation theories
      • 3)Achievement motivation theory-David McClelland-need for achievement (nAch)
      • nAch can be gauged by TAT (Thematic apperception test)
      • nAch qualities-
    • Motivation theories
      • 1)Like problem situations in which they take personal responsibility for finding solutions (ones in which the possibilities of reaching them are reasonable)
    • Motivation theories
      • 2)tend to set attainable achievement goals
      • 3)want feedback on how they are doing?
    • Expectancy model-Vroom
      • an individual's desire to produce at a given time depends on that individual’s specific goals and perception of the relative worth of performance alternatives as paths to attainment of those goals
    • Other issues in motivating sales personnel
      • Interdependence and motivation
      • Motivation and leadership
      • Motivation and communications
      • Interpersonal contact
      • Written communications
    • Compensating sales personnel
      • Purpose of the plan-
      • 1)provide a living wage
    • Compensating sales personnel
      • 2)adjust pay levels to performance (expectancy motivation theory)
      • 3)provide a mechanism for demonstrating the congruency between attaining company goals and individual goals (expectancy theory)
    • When total overhauling of plan?
      • 1)when the morale is low because of low compensation
      • 2)when a company is anticipating the cultivation of new and different markets
    • 7 requirements of a good compensation plan-
      • 1)it provides a living wage preferably in the form of a secure income
      • 2)fits with rest of the motivational program
      • 3)is fair-equal pay for equal performance
    • 7 requirements of a good compensation plan-
      • 4)easy for sales personnel to understand
      • 5)adjusts pay to changes in performance
      • 6)economical to administer
      • 7)helps in attaining the objectives of the sales organization
    • Devising a sales compensation plan
      • 1)define the sales job
      • 2)consider the company’s general compensation structure
    • Devising a sales compensation plan-
      • 3)consider compensation patterns in community and industry
      • 4)determine compensation level
      • 5)provide for the various compensation elements
    • Devising a sales compensation plan-
      • 6)special company needs and problems
      • 7)consult the present sales force
      • 8)reduce tentative plan to writing and pre-test it
      • 9)revise the plan
      • 10)implement the plan and provide for follow-up
    • Define the sales job
      • Up-to date written job descriptions
      • Sales volume objectives
    • Define the sales job
      • Distribution policies, credit policies, price policies and other policies
      • Current and proposed advertising and sales promotional programs assist in clarifying the nature of the salesperson’s goals, duties and activities
    • General compensation structure
      • As per job evaluation
      • Job evaluation methods-4
      • 1)simple ranking
      • 2)classification or grading
      • 3)point system
      • 4)factor-comparison method
    • Simple ranking
      • Inexpensive
      • Widely used by small businesses
      • Executive committee sorts out job descriptions in the order of worth
    • Simple ranking
      • Without considering current individuals in the job or their compensation levels
      • No effort is made to determine critical factors inherent in the job
      • Only relative appraisal of the relative worth of different jobs are made
    • Classification or grading
      • The grades sometimes called classes, are described in terms of job responsibilitys,skills required, supervision given and received,exposure to hazardous and unfavorable working conditions
    • Classification or grading
      • Job descriptions are then classified into appropriate grades by an executive committee or by personal specialists
      • All jobs within a grade are treated alike with respect to base compensation
    • Point system
      • Most widely used method
      • Factors considered are-
      • Mental and physical skills,responsibility,supervision given and received, personality requirements and minimum education required
    • Point system
      • Each factor is assigned a minimum and maximum number of points (in line with importance)
      • Appraised factor scores are combined into a total point value
    • Point system
      • Finally, bands of points are decided upon and become the different compensation classes
      • Point values make it possible to determine the gap, or distance, between job classes
    • Factor-comparison method
      • Resembles the point system but more complex
      • Utilizes a scheme of ranking and cross-comparisons to minimize error from faulty judgment
    • Factor-comparison method
      • Employs selected factors and evaluation scales
    • Factor-comparison method
      • Scale values are in dollars and cents, and no upper limit exists to the valuation that can be assigned to any one factor
      • A selected number of key jobs, typical of similar jobs throughout the company are then evaluated factor by factor
    • Factor-comparison method
      • This is done by arranging them in rank order from highest to lowest for each factor
    • Factor-comparison method
      • As a check against judgmental evaluation, the compensation dollars actually paid for each job are allocated to the factor; the allocation automatically establishes the relationship among jobs for each other
    • Factor-comparison method
      • The judgment ranking and the ranking by allocation of compensation are compared and differences are reconciled, or else the jobs are removed from the key list
    • Factor-comparison method
      • On the basis of dollar amounts assigned to the several factors making up key jobs, additional jobs are evaluated and their monetary values for each factor interpolated into the scale
      • This process is repeated until all jobs are evaluated
    • Compensation patterns in community and industry
      • What compensation systems are being used?
      • What is the average compensation for similar positions?
    • Compensation patterns in community and industry
      • How are other companies doing with their plans?
      • What are the pros and cons of departing from industry or community patterns?
    • Compensation patterns in community and industry
      • A sound compensation is possible only if it considers the relation of external compensation practices to those of the company
      • Vigil is to be maintained to see that the pay of sales personnel will not get out of line with that paid for similar jobs in the community or industry
    • 4-determine compensation level
      • Decide on the average
      • Ascertain the caliber of the present sales force measures up to what the company would like to have
    • 4-determine compensation level
      • Weigh the worth of individual persons through estimating the sales and profit dollars that would be lost, if particular sales person resigns
    • 4-determine compensation level
      • Another consideration is the compensation company can pay
      • Plot each cost estimate on a break-even style chart
    • Similar companies but different pay? Possibilities-
      • The first group of sales people may be overcompensated
      • Sometimes, management does not know the true worth of individual sales personnel
    • Similar companies but different pay? Possibilities-
      • In other cases, management regards some sales personnel as indispensable or managerial inertia prevents adjustment of the compensation level to a changed selling conditions
    • Similar companies but different pay? Possibilities-
      • Sales managers are biased in favor of high compensation for selling jobs
    • 5-provide for the various compensation elements
      • 4 basic elements-
      • 1)a fixed element, either a salary or drawing account, to provide some stability of income
      • 2)a variable element (a commission, bonus or profit sharing arrangement) to serve as an incentive
    • 5-provide for the various compensation elements
      • 3)an element covering the fringe or ‘plus’ factor-such as paid vacation, sickness and accident benefits, life insurance, pensions and the like
    • 5-provide for the various compensation elements
      • 4)an element providing for reimbursement of expenses or payment of expense allowances
      • Generally fixed and variable component will be 80/20 or 60/40
    • Special company needs and problems
      • 1)Sales people over emphasizing low-margin items and neglecting more profitable products-stimulate the selling of better balanced orders-variable commission rates for different products-higher rates to neglected products
    • Special company needs and problems
      • 2)small order problem-design plan that encourages larger order with a in-built mechanism to vary call frequency with account size
      • 3)securing retail displays-is normally neglected when sales man are paid based on sales volume-give incentive payment for obtaining retail displays
    • Special company needs and problems
      • 4)securing new customers and new businesses
      • 5)improving the quality of salespeople’s reports
    • Special company needs and problems
      • 6)controlling expenses of handling complaints and adjustments
      • 7)eliminating price shading by the sales staff
    • Special company needs and problems
      • 8)reducing traveling and other expenses
      • 9)making collections and gathering credit information
      • For transitory issues, plan should not be changed frequently
    • Consult the present sales force
      • Consult everybody but give more importance to the opinions of desired caliber sales force
    • Reduce tentative plan to writing and pre-test it
      • The more the difference in the tentative plan and current plan, the greater the amount of testing
      • Pretests are generally mathematical and computerized
    • Reduce tentative plan to writing and pre-test it
      • Past payrolls( a year or two) are reworked to check operation of the proposed plan against experience under the old system
    • Reduce tentative plan to writing and pre-test it
      • If sales pattern shows considerable fluctuation, calculations are made for periods representative of average, good and poor business
      • The plan is tested for the sales force as a group and for individuals faced with unique selling conditions
    • Reduce tentative plan to writing and pre-test it
      • Analysis reveals whether the plan permits earning in line with the desired compensation level
      • If deficiencies show up, the plan may not be at fault; weaknesses can trace to the way territorial assignments have been made or to inaccuracies in sales forecasts, budgets or quotas
    • Reduce tentative plan to writing and pre-test it
      • For pilot test, several territories representative of different sets of selling conditions are selected
    • Reduce tentative plan to writing and pre-test it
      • The proposed plan is applied in each one long enough to detect how it works under current conditions
      • Pilot tests are invaluable for spotting possible sources of trouble and other deficiencies
    • revise
      • Revision to eliminate trouble spots or deficiencies
      • If more alterations are there, the revised plan goes through further pretests and perhaps another pilot test
      • For minor changes, further testing is not necessary
    • Implement the plan and provide for follow-up
      • Explain it to sales personnel
      • Convince them of its basic fairness and logic
    • Implement the plan and provide for follow-up
      • Make them to understand what management hopes to accomplish through the new plan and how this is done
    • Implement the plan and provide for follow-up
      • Details of changes from the old plan and their significance requires explanation
      • Send copies to all sales personnel
    • Implement the plan and provide for follow-up
      • If complex, special training sessions are held
    • Implement the plan and provide for follow-up
      • Inadequate understanding of the sales compensation plan is common and often a cause of low morale
      • No effort is spared to make certain that everyone fully comprehends the compensation plan and its working
    • Implement the plan and provide for follow-up
      • Provision for follow-up are made
      • From periodic check-ups ,need for further adjustments is detected
      • Periodic checks provide evidence of the plan’s accomplishment ,and they uncover weaknesses needing correction
    • Types of compensation plans
      • 1)straight salary
      • 2)straight commission
      • 3)combination of salary and commission
    • Straight salary
      • Once popular now less importance
      • @20%organizations use this
    • Straight salary
      • Most common among industrial goods companies
      • Suitable when the selling job requires extensive missionary or educational work, when sales people service the product or give technical or engineering advice, or when sales people do considerable sales promotion work
    • Straight salary
      • If non-selling tasks bulk large in the salesperson’s total time expenditure
      • Commonly used for people involved in trade-selling
      • Sometimes for driver-sales people selling liquor,beverages,milk,bread etc
    • Straight salary-advantages
      • Provides strong control over sales personnel
      • Management can direct their activities along the most productive lines
      • Economical to administer
      • Accounting costs are lower
    • Straight salary-advantages fro salesman
      • Stability of income
      • Less burden of planning routing and scheduling
    • Straight salary-disadvantages
      • Many sales people do only an average rather than an outstanding job
      • There is tendency to under compensate productive people and overcompensate poor performer giving rise to turnover and increased cost of recruiting
      • Maintaining morale
    • Straight salary-disadvantages
      • Difficult to adjust to changing conditions during downswings
      • During upswing, sales people will not be ready to exceed previous sales records by any large amount
    • Straight salary-disadvantages
      • Through good administration, these weaknesses can be overcome
      • Measuring average, good and poor performance is difficult
    • Straight commission
      • Individual sales personnel should be paid according to productivity
      • Sales volume is the best productive measure
      • More complex than straight salary plan
    • Straight commission
      • 2 classifications-
      • 1)straight commission with sales personnel paying their own expenses
      • 2)straight commission with the company paying expenses, with or without advances against earned commissions
    • Straight commission
      • Suitable where non-selling duties are relatively unimportant and management emphasizes order getting
    • Straight commission
      • Common in the clothing,textile,and shoe industries and in drug and hardware wholesaling
      • Insurance, investment securities, furniture manufacturer, office equipment
      • Less than 10%companies use this plan
    • Advantages-straight commission
      • Provides maximum direct monetary incentive for the salesperson to strive for high level volume
    • Advantages-straight commission
      • A means for cost control-all direct selling expenses except for traveling and miscellaneous expenses fluctuate directly with sales volume changes and sales compensation becomes virtually an all variable expense
      • Great flexibility-by revising commission rates applying to different products
    • Disadvantages-straight commission
      • Provides little financial control over salespeople’s activities
      • Negligence towards daily reports etc,consider sales accounts as individual property, high pressure tactics and loss of goodwill
    • Disadvantages-straight commission
      • May push the easiest-to-sell-low margin items and neglect harder-to-sell high-margin items
    • Disadvantages-straight commission
      • Costs of checking and auditing salespeople’s reports and of calculating payrolls are higher than under the straight salary method
      • Some salespeople’s efficiency may decline because of income certainties (management needs to invest in time and money to buoy up their spirits)
    • Determining commission base
      • Company selling policies and problems influence selection of the base
      • If obtaining volume is the main concern, the total sales is the base
      • If sales personnel make collections on sales, commissions are based on collections
    • Determining commission base
      • In case of excessive order cancellation history, commission can be based upon shipments, billings or payments
      • Some companies base commissions on gross margins
      • Other companies use net profits as the base
    • Drawing accounts
      • Company establishes separate accounts for each salesperson, to which commissions are credited and against which withdrawals are made
      • Drawing accounts resemble salaries, since customarily individual sales personnel are allowed to overdraw against future earnings
      • If sales personnel become greatly overdrawn, they may lose incentive to produce, because earned commissions are used to reduce the indebtedness
    • Drawing accounts
      • Some sales personnel become discouraged with the prospect of paying back overdrawn accounts and quit the company
    • Drawing accounts
      • To forestall quitting by overdrawn salespeople, some firms use “guaranteed" drawing account plans (these do not require the paying back of overdrawls)
      • Commonly, drawing account plans include a provision that covers the possibility of overdrafts
    • Salary and incentive combination plan-advantages
      • Sales personnel have both the security of stable income and the stimulus of direct financial incentive
      • Management has both financial control over sales activities and the apparatus to motivate sales efforts
    • Salary and incentive combination plan-advantages
      • Greater flexibility for adjustment to changing conditions
      • Cooperative spirit develops between the sales personnel and the company
      • Disagreement on pay increases and territorial changes are less violent
    • Disadvantages of combination plan
      • Clerical costs are higher
      • More records are maintained and in great detail
      • Generally 80-20 or 60-40 fixed and variable element
    • bonus
      • Is an amount paid for accomplishing a specific sales task
      • Are paid for reaching a sales quota, a performing promotional activities, obtaining new accounts, following up leads, setting up displays or carrying out other assigned tasks
    • bonus
      • Is an additional financial reward to the sales person for achieving results beyond a pre-determined minimum
      • Bonuses are never used alone-they always appear with one of the three main sales compensation methods
    • bonus
      • The bonus conditions require thorough explanation, as all sales personnel must understand them
      • The necessary records must be set up and maintained
    • bonus
      • Procedure for keeping sales personnel abreast of their current standings relative to the goals are needed
      • Any bonus misunderstandings or grievances arising should be dealt with fairly and tactfully
    • Fringe benefits
      • Range from 25 to 40% of the total sales compensation package
    • Fringe benefits
      • Do not bear direct relationship to job performance
      • Some fringe benefits like payments for social security premiums, unemployment compensation and worker’s compensation are required by federal and state law
    • Why fringe benefits?
      • 1)to be competitive with other companies in the industry or community
      • 2)to furnish reasons for employees to remain in the company’s service
      • 3)to comply with what employees expect as fringe benefits
    • Fringe benefits-possible for sales personnel
      • 1)time-holidays,vacations,sick-leave,personal-leave,sabbaticals,pregnancy leave
      • 2)organization dues-trade association, civic clubs, country clubs, professional association
    • Fringe benefits-possible for sales personnel
      • 3)retirement programs-social security (mandatory) ,pension plan, profit sharing, salary reduction plans
    • Fringe benefits-possible for sales personnel
      • 4)miscellaneous-automobile,use of vacation spot,parking,dry cleaning and laundry,lunches(all or part), secretarial services, employee stock purchase plan, company-provided housing, legal services, financial counseling,tution for continuing education programs, financial support for dependent’s education, discount for purchase of company products, child care payments, matching funds to charities and schools, company social events, company sporting tournaments, retirement counseling, career counseling, payment of moving expenses
    • Fringe benefits-possible for sales personnel
      • 5)insurance and medical-physical examination, medical payments and reimbursements, hospitalization insurance, dental insurance, disability insurance, life insurance, travel insurance, accident insurance, worker's compensation (mandatory), unemployment insurance (mandatory), cancer insurance, psychotherapy expense
    • Managing expenses of sales personnel
      • Generally @9% in the electrical equipment industry
      • @34%in the automotive parts and accessories industry
      • Most industries, amount from one-fourth to one-half of sales compensation
    • Managing expenses of sales personnel
      • Missionary selling incurs the lowest expenses since involves calling on professionals who are extremely busy
      • New business selling results in the highest selling expenses (calls are promising investment)
    • Managing expenses of sales personnel
      • Technical selling requires longer calls, more spending
      • Trade selling-routine calls with short times spent with each customer-most expenses for travel and lodging and little for entertainment
    • Managing expenses of sales personnel
      • It is wiser to be overly liberal than to restrict salespeople’s activities through insufficient expense reimbursement
    • Managing expenses of sales personnel
      • Some firms try to hold expenses within a planned total amount or to some percentage of sales volume of gross margin
    • Managing expenses of sales personnel
      • Others control sales expenses only in a general way by scrutinizing expense reports or through policy statements outlining the conditions under which the expenses are reimbursable
    • Reimbursement of sales expenses-policies and practices
      • 1)have sales personnel pay their own expenses
      • 2)reimburse sales personnel for all or part of their expenses
    • 2 common sense principles for expense reimbursement policies
      • 1)reimbursable expenses should be large enough to permit the performance of assigned duties in the expected manner
      • 2)all expenses incurred because sales personnel are away from home on company business should be reimbursable
    • Sales personnel paying their own expenses
      • Is the simpler by far
      • Treat sales personnel as independent businesspeople using straight commission plan
      • No records are necessary
    • Sales personnel paying their own expenses
      • It is essential that their regular commission be sufficient to permit them to further the company’s best interest
      • Little management control can be exercised
      • Avoid missionary duties and ‘high spot’ (call on large account)
    • Full or partial reimbursement
      • Factors affecting-
      • Territorial size and characteristics
      • Caliber of sales personnel
      • Nature and breadth of product line
      • Managerial efficiency
      • Intensity of competition
      • Mode of travel
    • How a expense reimbursement policy should be?
      • Take into account the customary living standards of the salesperson and the customers (more emphasis)
    • How a expense reimbursement policy should be?
      • The salesperson should eat and stay at hotels of the class patronized by the customers
    • How a expense reimbursement policy should be?
      • In some instances, different salespeople in the same company should be allowed different amounts for expense, reflecting deviations in customer’s living standards (actual expenses vary a great deal from one territory to another)
      • Keep expenses reasonable
    • How a expense reimbursement policy should be?
      • No bad feeling among the sales staff
      • Easy to administer-minimum supervision and record keeping
      • Avoid tendency to over economize
    • Methods of controlling and reimbursing expenses of sales personnel
      • 1)flat expense account
      • 2)flexible expense account
      • 3)honor system
      • 4)expense quota
    • Flat expense account
      • No need to keep reports and no need to check expense accounts
      • Makes possible the advance determination of total sales expenses
      • Forces sales personnel to control their own expenses
      • Works best when-
    • Flat expense account
      • 1)the exact amounts of expense accounts do not need changing often (selling staple products in small territories)
      • 2)when expense allowances come up for frequent review and possibly revision
    • Flat expense account
      • Should have flexibility built into them
      • The weakness is the tendency of some sales personnel to over economize thinking it as a regular addition to salary and do not spend all of it, preferring to save a portion for personal use
    • Flexible expense account
      • Known as ‘exact' plan and most common
      • Sales personnel are reimbursed for all allowable expenses incurred and reported
      • for this method to work management must-
    • Flexible expense account
      • 1)know the total amount of sales personnel’s probable expenses
      • 2)classify expenses into ‘allowable' and ‘non-allowable" categories with clear descriptions of items under each heading
    • Flexible expense account
      • 3)set up a system and forms for the sales staff to use in periodic expense reporting
      • 4)establish procedures for checking itemized expense reports and for expeditious handling of reimbursements
    • Flexible expense account
      • Because of the flexibility sales opportunities are fully capitalized on as they arise
    • Flexible expense account
      • Administrative costs are sizable because of the large amount of clerical and accounting work in checking expense reports and making reimbursements (good sales persons are generally poor record keepers)
    • Flexible expense account
      • Without close control, some people spend the company’s money too generously, further aggravated by the opportunity for expense account padding giving rise to disputes
    • Honor system
      • Sales expenses are fully reimbursed
      • Only total expenses are reported
      • Indicates complete honesty of all sales personnel
      • Easy to administer thus paving way to savings in both accounting expenses and time
      • Management control is weak
    • Honor system
      • Sales personnel may become free spenders spending on unwanted heads
      • Regard expense accounts as sources of income causing inequities in expense allowances adversely affecting morale
    • Honor system
      • To control,establish maximum ratios of selling expense to sales
      • Watch the trend of expenses; sudden and sizable increase in reported expenses unless accompanied by parallel increase in sales
      • Remedial action in case of dishonesty
    • Expense quota
      • Permits week-by-week variations but controls total expenses over long period of time
      • Management first studies individual sales territories and estimates the sales volume and upper limit for each sales person
      • Prompt and full reimbursements are made
    • Expense quota
      • Drawback-the burden for controlling expenses is upon the sales personnel rather than upon management
    • Expense quota
      • Skillful administration is necessary
      • In case of wrong forecasts, the sales personnel may curtail their activities towards the end of budgetary periods because of low balances left in accounts
    • Reimbursement of automobile expenses
      • 1)flat mileage rate
      • 2)graduated mileage rate
      • 3)fixed periodic allowance
      • 4)combination fixed periodic allowance and mileage rate
      • 5)runzheimer plan
    • Flat mileage rate
      • Must set the mileage rate high enough to cover all expenses of automobile ownership and operation, yet low enough to permit the company to buy transportation economically
      • Works satisfactorily when a company’s sales force covers small territories all in the same geographical area
      • Most local and regional wholesalers among other small companies favor flat mileage rates
    • Flat mileage rate
      • Short-comings-
      • Ignores cost differentials arising from the use of various makes and models
    • Flat mileage rate
      • Ignores territorial differences in expenses (price of gasoline,oil,tires,insurance coverage, license and inspection fee etc)
      • Hesitation in adjusting the rate upward as well as downward in line with changing actual expenses
    • Graduated mileage rate
      • Different rates apply to mileages in different ranges
      • Setting the rate per mile is difficult
      • Suitable when sales personnel travel long distances annually and serve concentrated geographic areas without significant regional expense differences
    • Fixed periodic allowance
      • To those who use their personal vehicle on company business-on day,week,month basis
      • Assumes that total automobile expenses vary with duration of use rather than mileage
    • Fixed periodic allowance
      • Difficult for sales personnel with large territories requiring extensive traveling
      • If allowances are uniform for all sales personnel, morale suffers because of the inequities
    • Fixed periodic and mileage rate combination
      • Fixed periodic allowance to cover fixed and semi variable expenses such as insurance premiums, license fees and depreciation
    • Fixed periodic and mileage rate combination
      • Mileage payment for operating expenses including cost of gasoline, oil and tires
      • Some companies using combinations systems accumulate reserves to cover depreciation on automobiles and reimburse sales personnel when they buy new cars
    • Runzheimer plan
      • Originated by consulting firm Runzheimer USA in 1933
      • Divides USA into 29 auto-use basic cost areas
    • Runzheimer plan
      • Allowances are for 20,000 miles of average annual travel within each of the cost areas
    • Runzheimer plan
      • Recommends that certain expense items not provided for in the standard allowance be reimbursed as incurred and reported by sales personnel such as local city license fees, property taxes, daytime parking, overnight parking away from home and toll charges etc
    • Runzheimer plan
      • More than 1,50,000 drivers of business automobiles are reimbursed over $500 million each year
    • Sales meetings and sales contests
      • 5 major decisions for planning a sales meeting-
      • 1)defining the specific training aims
      • 2)deciding meeting content
    • Sales meetings and sales contests
      • 3)determining methods of conducting the meeting
      • 4)deciding how to execute (hold) the meeting
      • 5)how to evaluate the results
    • aims
      • 1)a new product may be ready for introduction
      • 2)new insights on customer attitudes and behavior (new research)
      • 3)deficiency of sales personnel in using sales techniques as per the supervisor
    • aims
      • 4)improving the quality of sales force reports
      • 5)orienting sales personnel on the advertising program and its connect with the sales force
    • aims
      • 6)time management for sales force
      • 7)introducing new services (such as inventory control assistance) for customers
    • Content-(agenda)
      • New product being launched by competitor-
      • Content might include-
      • 1)what we know about X’s new product
    • Content-(agenda)
      • 2)what we think the trade’s reaction will be and why
      • 3)what your company is doing
      • 4)what you should do and how
    • method
      • Depends upon the aim and content as well as upon the time available and meeting place
      • Most local meetings are short and participative
    • method
      • GD is used
      • Regional or national meetings are held less often and run for two or more days have more ambitious aims and wider content
    • Execution
      • Room arrangement
      • Audiovisual equipment and supplies
      • Provision of materials to attendees (including pads and pencils)
      • Timing of breaks and refreshments
    • Execution
      • Starting time and closing time
      • 1)Herringbone
      • 2)workshop
      • 3)Inverted U-shape
      • 4)seminar or the ‘British Square’
    • evaluation
      • As per specially designed forms for each meeting
    • National sales meetings
      • When?
      • Comprehensive changes in marketing or sales policies are made
    • National sales meetings
      • Major executives attend national meetings which provides stimulation than written or recorded messages
      • Informal meetings of sales personnel and interchange of experience
    • Drawbacks of national meetings-
      • Expense
    • Drawbacks of national meetings-
      • Difficult to find a convenient time for all sales personnel to attend unless the product line is seasonal
      • Company routine is disrupted and competitors may cut into market share however more aggressive selling results from the national meeting
    • Regional sales meetings
      • Trend is towards regional meetings from national meetings
      • Reduction in total travel costs and lowering lost selling time
    • Regional sales meetings
      • HQ executives brought into direct contact with field personnel learn about current problems at first-hand
      • Smaller attendance may increase participation time per person attending
    • Regional sales meetings- disadvantages
      • Demands on executive time may be excessive
      • Top sales executives often rotate attendance among regional meetings
    • Regional sales meetings- disadvantages
      • Total attendance is smaller developing a spirit of contagious enthusiasm is more difficult
      • May not have top-flight speakers and entertainers featured at national meetings
    • Opposition to national and regional sales meetings
      • Likely results do not justify expected costs
      • Ill affordability to have sales personnel away from the field even for a week
    • Opposition to national and regional sales meetings
      • Demands on their time
      • Low sales force morale since sales personnel will use the meetings to compare complaints and to strengthen their convictions that the company is a bad place to work
    • Local sales meetings
      • Are conducted by district sales managers either weekly or biweekly
      • May last from 15 minutes to several hours
    • Local sales meetings
      • Strengths-informality, opportunity to pose personal questions and to state personal views
      • Occasion to get together, better acquaintance and strengthen group identity
    • Remote control and traveling sales meetings
      • 1)closed circuit television
      • 2)sales meetings by telephone
      • 3)sales meetings at home
      • 4)traveling sales meetings
    • Closed circuit television
      • Suitable for companies with large scale sales force or large dealer organization
      • The program is ‘live’
      • Suitable to introduce new products or to launch national sales campaigns
    • Sales meetings by telephone
      • Uses for small group meetings and discussions-not more than 20
      • Rules-only one individual will speak at a time and speaker to identify themselves and their cities
      • Save time and money
      • Loose less time, (time away from jobs)
    • Sales meetings at home-
      • Some companies mail recording or printed materials to sales personnel at their homes
      • One format is to record an executive conference or meeting and to provide sales personnel with cassette copies
      • Another is to print an illustrated script of a home office meeting for distribution to sales personnel
    • Sales meetings at home-
      • Advantages-
      • 1)sales personnel receive the information at home, free from distractions
      • 2)they can review the information many times
      • 3)there are savings in time and money
    • Traveling sales meetings
      • Suitable when manufacturer introduces a new product line which needs to be displayed and demonstrated
      • Regional meetings become impossible, since shifting and arranging of display and demonstration is cumbersome
    • Traveling sales meetings
      • Some companies use outfitting motorized vans and trailers with product displays and conference rooms
      • Moves from city to city and at each stop sales personnel and/or dealers come aboard
    • Sales contests-why?
      • 1)to obtain new customers
      • 2)to secure larger orders per sales call
      • 3)to push slow-moving items, high margin goods or new products
      • 4)to overcome a seasonal sales slump
      • 5)to sell a more profitable mix of products
    • Sales contests-why?
      • 6)to improve the performance of distributor’s sales personnel
      • 7)to promote seasonal merchandise
      • 8)to obtain more product displays
      • 9)to get re-orders
      • 10)to promote special deals to distributors, dealers or both
    • Contest formats-
      • 1)direct-has a specific objective-Let’s go after new customers
      • 2)novelty-focuses upon a current event, sport or the like-e.g.-Let’s hunt for hidden treasure( find new customers) or Let’s start panning gold (sell more profitable orders)
    • Themes for novelty formats
      • 1)Games-
      • 2)races
      • 3)card games
      • 4)hunting or fishing
      • 5)travel
    • Themes for novelty formats
      • 6)climbing
      • 7)the rising thermometer,pressure,gauge etc
      • 8)building contests-skyscraper, other new buildings, tower, smoke-stack etc
      • 9)military
      • 10)clothing contests
    • Themes for novelty formats
      • A) team type-football, baseball, hockey, bowling, tennis doubles, tug-of-war, soccer etc.
    • Themes for novelty formats
      • B) individual type-tennis singles,golf,wrestling,archery,fencing broad jump, high jump, pole vault, hammer throw, discuss throw, shooting match, javelin throw, bull fight, climbing the greased pole etc
    • Races
      • Team-type-crew, cross country,relay,bobsled,yacht
      • Individual type-horse race, dog race, air race, soap box derby, auto race,hurdles,dashes,marthons,dog sled, trotting race, swimming races, speedboat races
    • Card-games
      • Poker
      • Pinochle
      • Bridge
      • black jack etc.
    • Hunting or fishing
      • Treasure hunt
      • Big-game hunt
      • Uranium rush
      • Gold rush
      • Land rush
      • Fishing derby
      • Trapping contest
    • Travel-
      • Trip around the world
      • to Miami
      • to new York
      • to Hollywood
      • to Waikiki
      • to the moon
      • to space etc
    • climbing
      • Ladders
      • Stairs
      • Mountains
      • Cliff scaling
      • Ascent to the stratosphere
    • The rising thermometer,pressure,gauge etc
    • Building contests
      • Sky scraper
      • Other new buildings
      • Tower
      • Smokestacks
    • military
      • Naval battles
      • Artillery engagements
      • Bombing runs
      • Invasions
      • Interplanetary wars
    • Clothing contests
      • In one of these, the sales person earns one item of clothing at a time and appears at sales meetings clad only in those items earned up to that point
    • Contest prizes
      • Cash
      • Merchandise
      • Travel
      • Special honors or privileges
    • cash
      • Once basic physiological needs and safety and security needs are satisfied, whatever potency money retains as an incentive relates to unfulfilled esteem and achievement needs (non-cash prizes fill these needs better than cash)
    • cash
      • To be a strong incentive, it needs to be substantial-10-25% of an individual’s regular annual income
    • Cash-disadvantages
      • A cash price of $100 means a little to most sales personnel and they exert token efforts to win it
      • Winners mix cash prizes with other income, thus have no permanent evidence of their achievements
    • merchandise
      • Is superior to cash in several respects
      • Winners have permanent evidence of their achievements
    • merchandise
      • The merchandise prize is obtained at wholesale, so it represents a value larger than the equivalent cash
      • For the same total outlay,too,more merchandise prizes than cash awards can be offered; hence the contest can have more winners
    • Merchandise-selection
      • Items should be desired by sales persons or their families
      • Allow winners to select from a variety of offerings
      • Merchandise incentive agencies can be used
    • travel
      • travel awards are popular and a strong incentive
      • Generally provide trips for winners and their spouses
    • Special honors or privileges
      • A letter from a top executive recognizing the winner’s superior performance
      • A loving cup
      • A special trip to a home office meeting
      • Membership in a special group or club (million dollar club for life insurance salesman)
    • Special honors or privileges
      • Publicity through house organs and in hometown newspapers
      • Are used by firms employing sales personnel who are almost ‘independent entrepreneurs”
    • Special honors or privileges
      • These are suitable when management desires to strengthen group identity and build team spirit
      • These appeal to the sales person’s belongingness and social relations needs
    • How many prizes and how should they be awarded?
      • Make it possible for everyone to win
      • Present performance levels be considered
      • Basis for award be improvement rather than total performance( not the total sales volume but %of quota achieved)
    • Contest duration
      • Be decided after considering the length of time interest and enthusiasm maintainability plus the period over which the theme can be kept timely and the interval needed to accomplish the contest objective
      • 1-4 months,13 weeks, not longer than a month etc
    • Contest promotion
      • A planned barrage of promotional material develops enthusiasm
      • A teaser campaign may precede the formal contest announcement; other times the contest announcement comes as a surprise
      • As per the progress of the contest, other techniques hold and intensify interest
    • Contest promotion
      • Results and standings are reported at sales meetings or by daily or weekly bulletins
      • At intervals, new or special prizes are announced
    • Contest promotion
      • Reports of standings are addressed to spouses to generate interest at home
      • Flash reports be shown, additional stimuli be added
    • Managerial evaluation of contests
      • Two levels-pre-evaluation and post-evaluation
      • Pre-evaluation aims to detect and correct weaknesses
    • Managerial evaluation of contests
      • Post evaluation seeks insights helpful in improving future contests
      • Both cover alternatives, short-term and long-term effects,design,fairness and impact upon sales force morale
    • Short and long-term effects
      • A sales contest accomplishes its purpose if it increases sales volume, brings in more profitable volume, or does both in the short and the long run
      • No contest is successful if it borrows sales from preceding months, succeeding months or both
    • Short and long-term effects
      • Successful contest increase both contest period sales and long-run sales
      • Successful contests boost the spirits of sales personnel to have a beneficial carry over effect
    • design
      • A well designed contest provides motivation to achieve the underlying purpose while increasing the gross margin earned on sales volume by at least enough to pay contest costs
    • design
      • The format should tie in directly with the specific objectives, include easy-to-understand and fair contest rules and lend itself readily to promotion
    • fairness
      • Should be visible to all sales contestants
    • fairness
      • While the contest is on, the sales personnel should feel that they have real chance of winning something
      • If its format causes some to give up before it starts and others to stop trying before it is over indicates a unfair format
    • Impact upon sales force morale
      • Successful sales contests result in permanently higher levels of sales force morale
    • Impact upon sales force morale
      • If the format causes personal rivalry, it may have the counter productive effect of creating jealousy and antagonism among the sales force
      • It is advisable to organize teams and place the emphasis on competition among teams for recognition than individuals
    • Objections to sales contests
      • Only 1 in 4 sales departments use contests, why?
      • Sales persons are paid for their service under provision of the basic compensation plan hence no need to reward them further
      • High caliber and more experienced sales personnel consider sales contests juvenile and silly
      • Contests lead to unanticipated and undesirable results such as increased returns and adjsutments,higher credit loss and overstocking of dealers
    • Objections to sales contests
      • Sales slump occur before and after the contest
      • The disappointment suffered by contest losers causes a general decline in sales force morale
    • Objections to sales contests
      • Contests are temporary motivating devices and if used too frequently have a narcotic effect (no greater results in the aggregate are obtained with contests than without them
    • Objections to sales contests
      • The competitive atmosphere of contest weakens the team spirit
      • Good contest design, intelligent contest administration and proper handling of other aspects of sales force management will minimize objections
    • New topic-Controlling sales personnel-evaluating and supervising
      • What is control?(4 steps)
      • 1)Establish performance standards
      • 2)recording performances
      • 3)evaluating performances against the standards
      • 4)taking action
    • Quantitative performance standards
      • 1)quotas
      • 2)selling expense ratio
      • 3)territorial net profit or gross margin ratio
      • 4)territorial market share
      • 5)sales coverage effectiveness index
      • 6)call-frequency ratio
    • Quantitative performance standards
      • 7)call per day
      • 8)order call ratio
      • 9)average cost per call
      • 10)average order size
      • 11)non-selling activities
      • 12)multiple quantitative performance standards
    • quotas
      • Is a quantitative objective expressed in absolute terms and assigned to a specific marketing unit
    • quotas
      • May be dollars, or units of product with the marketing unit being a salesperson or a territory
      • Quotas specify desired levels of accomplishment for sales volume, gross margin, net profit,expenses,performance of non-selling activities etc
    • Selling expense ratio
      • Sales person can affect this both by controlling expenses and by making sales
      • Selling expense ratios are determined after analysis of expense conditions and sales volume potentials in each territory
    • Selling expense ratio-shortcomings
      • Does not take into account variations in the profitability of different products
    • Selling expense ratio-shortcomings
      • May cause the salesperson to over economize on selling expenses to the point where sales volume suffer
    • Selling expense ratio-shortcomings
      • In recession times, selling expense ratios inhibit sales personnel from exerting efforts to bolster sales volume
      • Used by more industrial product firms which require personal selling and entertainment thus involving higher costs of travel and subsistence