Sales Management MKT 383
Popular in Course
Popular in Marketing
This 23 page Class Notes was uploaded by Jeanette Orn on Saturday September 19, 2015. The Class Notes belongs to MKT 383 at Michigan State University taught by Richard Spreng in Fall. Since its upload, it has received 30 views. For similar materials see /class/207247/mkt-383-michigan-state-university in Marketing at Michigan State University.
Reviews for Sales Management
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 09/19/15
1 Moving away from Transactional Selling 0 where each sale by one organization to another is independent of the next sale or the last sale between these same two organizations 0 where both parties are more concerned about their own profitability and financial welfare than about the welfare of the other party regardless of how long they ve done business together Moving toward Relationship Selling 0 where customers and their suppliers make longrange commitments to each other or partner together 0 where both parties make contractual promises to one another to advance each other s market position Wollin Plastics Xerox went from 5000 component suppliers in 1989 to fewer than 500 today P amp G stations key reps in Bentonville AK full time just to serve WalMart Because relationship selling is costly most firms use a multilayered approach that involves both transactional and relationship selling VI Personal Selling in the Relationship Era A Exploration Stage I o In this stage we re being tested as a potential supplier Likely here to get a first order but so are several others in the running 0 Don t overpromise try to exceed customer expectations build trust 0 Monitor Order Processing track this customer s first order know when it ships notify customer when it s in route and on what truck line on large orders be there personally if possible B Expansion Stage II o In this stage the goal is to generate more sales volume from our existing customer base upgrading or switching the customer to a higher quality product where margins are generally greater fuine selling or selling an entire line of related products not just a copier for example but the toner and paper as well cross selling or selling related productd from the same supplier not just a Canon copier but Canon jet printers and fax machines as well C Commitment Stage Ill 0 Seller becomes preferred supplier means seller is assured of major share of customer s business means seller always gets first crack at customer s new business total quality management practices continue to become streamlined to eliminate errorsdefects A Market Exchange 0 Oneshot transactions 0 Little thought toward future interaction 0 Low concern for each other personally 0 Great example would be gasoline purchases B Functional Relationships 0 Longterm 0 Based on close personal relationships 0 Neither party needs the other to exist 0 New functional relationships must be formed when either the buyer leaves or the salesperson from the selling organization leaves C Strategic Partnerships 0 Longterm where partners make significant investments to improve the profitability of both firms 0 The relationship is crossfunctional so no longer is it salespersoncentered 0 Cannot be created with every customer and should be considered only when the customer is large and when the investments needed are going to be worthwhile strong lifetime value V Sales Managers must monitor and adapt to the External Environments A Economic l a country s growth rate 2 unemployment rate 3 in ation levels 4 currency exchange rates 5 the number types and availability of Wholesalers retailers and other intermediaries ie PLACE considerations in different countries 6 competition both the number of competing rms and their relative strengths in the market place Uniform Commercial Code under the agency provision makes it possible for a sales rep to unintentionally bind his or her company into a ruinous agreement that the company never intended USS Steel Ibeams Sherman Act passed to end conspiracies among competing rms to either control their prices or allocate markets among themselves R0bins0n Patman Act prohibits a rm from discriminating in the prices or services it offers to competing customers However discounts to larger buyers are allowed when manufacturing and distribution efficiencies can be shown III 10 Key Successful Factors in RelationshipBased Selling based on a recent study conducted among 215 sales managers from a broad variety of industries A Listening Skills active listening includes 0 Ignoring how you feel about the person and be receptive to the message Be on board from the 1st sentence Focus on what is being said and nothing else Never interrupt but be interruptible Ask questions to stay engaged in the conversation instead of waiting for your turn to talk 0 Watch for body language cues changes in voice in eXion B Followup Skills C Adaptive Selling being able to alter your sales behaviors from customer to customer based on perceived information about the selling situation D Tenacity relationship selling is a longterm proposition that requires patience and the willingness to work with a customer over long periods of time often long before the benefits are realized E Being Well Organized being skilled at time and territory management F Verbal Communication Skills less important today because of email languaging but salespeople nonetheless need to be strong communicators G Pro ciency in Dealing with People at All Levels of a Customer s Organization H Adept at Anticipating and Overcoming Objections In a relationship setting welcome these clarify respond and confirm Trust grows from handling objections 1 Skilled at Closing Presentations J Effective Time Management Skills these skills made far easier today with PDA s laptops email V The Buying Process Players buying center the people in an organization who participate in buying or in uence the purchase of a particular product A Initiators those who perceive an opportunity that may involve the purchase of a new product and thereby start the buying process Can come from anyone at any level in the firm B Users those in the rm who actually use or work with the product Donnelly Mirror C In uencers provide information evaluating alternative products and suppliers of those products Often play a major role in determining the product specifications used in making the purchase decision Typically engineers and quality control personnel D Gatekeepers control the ow of information to other people involved in the purchase decision Two types screens block the ow of information entirely from sources other than those which he she chooses lters permits ow from all sources but picks and chooses what he she tells others in the buying center about each one E Buyer the person who actually places the order with the selling organization F Decider the person with the nal authority to make the purchase decision often the CEO or COO G Controller the person determining the budget for the purchase perceived risk by the rm as to the complexity and repercussions of the purchase decision will determine the makeup and number of people in the buying group straight rebuy where the purchaser has a great deal of familiarity with the item buys it routinely and is of small overall consequence to the rm paper towels copy paper etc Buying group would be just the purchasing department newtask purchase where the purchaser is dealing with a product or components for the rst time for which there are no speci cations or guidelines to go by Buying group would involve many members from across several organizational departments m0di ed rebuy purchase decisions Where an existing product undergoes slight modi cations such as pricing or size and goes out for bid to potential suppliers Lear Seating CRM Advantages over Mass Marketing 0 Reduces advertising costs 0 Easier to target specific customers by focusing on just their needs Easier to track effectiveness of a given promotional campaign Allows firms to compete on service instead of prices Prevents overspending on lowvalue customers and underspending on highvalue ones Shortens product development and market introduction time 3 Major CRM Objectives Customer Retention Customer Acquisition Customer profitability pu strategies attempt to build consumer demand by focusing on strong advertising programs aimed at end users That is they try to pull the end user into the retail m Promotional tools include coupons and trial samples mailed to the consumer s home push strategies attempt to build reseller support at both the wholesale and retail level simultaneously by offering incentives to stock the items They might include 0 Price promotions 0 Volume discounts 0 Sales contests among the trade reps and retail sales associates 0 Coop advertising 0 POP displays 0 Justintime delivery and reorder programs ine organization chain of command runs down from chief sales executive to subordinates where each subordinate reports to only 1 person at the next higher level line and staff organization sales management activities like hiring training distributor relations are assigned to separate staff specialists When to Use sales Agents Instead of Inside Salespeople A When territories are too unproductive to warrant a company salesperson B When the firm is small and can t afford a sales force C When the sales environment is volatile like a steep recession D When the territory has limited sales potential VII Span of Control how many people should each manager supervise span of control should be smaller and the levels of management larger when the sales task is complex the profit impact of each salesperson s performance is high the salespeople are well paid and professional as the span of control increases the fewer levels of management needed and the fewer number of managers required some argue there s greater control and communication between the top sales executive and field sales reps when the sales force has a quotflatquot organization with few management levels others argue quotflatquot organizations actually limit communication and control because the span of control is so large proponents of large spans of control argue that this leads to lower admin costs because so few managers are involved opponents of large spans of control argue these savings are illusionary because the lower quantity of managers leads to lower effectiveness and productivity V Different Ways to Organize the Firm s Sales Force A By Territories tends to be the most cost effective minimizes travel time and expenses relative to other types of organizational structure fewer managerial levels needed to coordinate the sales effort minimizes customer confusion as to who the contact person is for that firm each salesperson must be the jackofaIItrades for each customer minimizing facetoface sales time B By Product Line or Category makes sense when the firm s product categories or target markets vary widely 3M has 50 divisions with products varying from Scotch tape to medical devices saes force develops indepth knowledge by concentrating on just one or a few related products because separate factories often produce different products for the firm closer relationships between sales and production result easier to allocate and control sales efforts if management decides more effort is needed on a particular product it can simply assign another salesperson to it C By Customer Type having different sales forces for distinctly different market segments Hoekstra Trucking salespeople gain better understanding of their customers distinct needs salespeople are in a better position to discover new product needs for those customer segments higher sales costs as different salespeople crisscross the same territory conceivably 2 or more salespeople could be calling on the same account causing confusion D By Selling Function different salespeople specialize in performing different selling functions For example one sales force prospects for new accounts another calls on and services existing accounts a new customer will resent being turned over to a different sales rep once the new customer gets on stream jealousies and resentments likely to erupt between the 2 sales forces as the new account force will be seen as quotprivilegedquot E By Key Accounts 1 Assigning key account responsibility to executives 0 common when the firm has only a few key accounts important customers are serviced by highly placed executives capable of making important onthespot decisions 0 sometimes they overreach their boundaries making decisions that favor their key accounts over the longterm good of the firm Buying Power Index BPI an index of market potential broken out by region and state published by Sales amp Marketing Magazine works well for consumer products a poor index for industrial products requires the rm knows its market share in each product category in which it competes is updated frequently IV How Salesperson Roles are Vulnerable A They operate at the boundary of the rm 0 their customers are extemal and have goals and expectations entirely different from the rep s organization 0 many reps operate from remote offices or from home 0 reps must deal With large role sets in dozens of different customer locations especially if team selling is involved expectancies the rep s estimates of likelihood that expending a sales effort Will lead to improved performance on some specific dimension Eg Will increasing call frequency lead to increased sales valences for performance the rep s perceived desirability of attaining improved performance on some dimension Eg Are sales increases desirable instrumentalities the salesperson s estimates of the likelihood that improved performance on that sales increase dimension above Will lead to attainment of particular rewards valences for rewards the salesperson s perceptions of the desirability of receiving of increased rewards as a result of improved performance Eg does the rep nd an increase in hisher compensation level attractive 111 Career Stages and Motivation A Exploration o in early career stages 20 something ambivalent about sales as a career 0 underdeveloped skills and low product knowledge make them among the poorest performers 0 low psychological job involvement and low job satisfaction and can t see that better performance will produce increased rewards 0 but they do have high valences for higherorder rewards like personal growth and recognition B Establishment 0 late 20 searly 30 s these people committed to their career choice 0 reward expectancies and instrumentality perceptions reach their highest level 0 valences for promotion peak as well leading to job hopping if promotions inhouse don t materialize C Maintenance 0 late 30 searly 40 s sales reps are concerned with retaining their present status position and performance level in the sales organization 0 both the desire and opportunity for promotion diminish 0 but also often show the highest valences in the sales force for pay increases and financial incentives because of increased nancial pressure at home college larger mortgages etc D Disengagement 0 late 50 searly 60 s a psychological withdrawal from the job occurs where a minimum amount of job effort is given while developing interests outside work 0 are satis ed by their loworder rewards have few nancial obligations and are therefore dif cult to motivate E Plateauing is early disengaging from the job and describes 25 of all salespeople Its causes lack of a clear career path especially early on boredom failure to effectively manage the employee F Possible Plateau Solutions reward strong performers with greater challenges within Lies such as key account responsibilities or more lucrative territories to work the duties and responsibilities must truly be different from before not simply a title change Signi cance of Variables to Sales Performance A Demographic age gender physical appearance less than 5 B Background amp Experience 1 personal history family background 21 2 education less than 5 3 previous work experience sales included less than 5 4 marital status of dependents 12 5 nancial status current and past 6 6 lifestyleactivities less than 5 C Aptitude 1 Intelligence or IQ less than 5 2 Cognitive ability verbal skills math ability sales aptitude 57 D Personality responsibilitydependability less than 5 dominance less than 5 social ability less than 5 selfesteem conf1dence less than 5 need for higherorder rewards less than 5 need for lowerorder rewards less than 5 l 09599 E Skills or learned prof1ciencies necessary for effective job performance 1 vocational or job speci c skills technical knowledge 95 2 sales presentation 5 3 interpersonal 5 11 Who Would You Avoid HiringA Recent Study a sloppy dresser 80 uses crude language 78 visible body piercing tattoos 77 unstylish 51 an overweight male sales rep 37 an overweight female sales rep 23 has a heavy foreign or regional accent 20 very unattractive female sales rep 20 very unattractive male sales rep 13 very youthful looking sales rep 12 older looking sales rep 2 A Role Perceptions 1 role accuracy refers to the salesperson s perception of the company demands or expectations of him or her 2 perceived role con ict when the salesperson believes that the demands of two or more of his role partners boss customer company policy are incompatible For example a customer demands credit terms the rep knows will be unacceptable to company superiors 3 perceived role ambiguity when salespeople believe they lack the information necessary to perform the job satisfactorily or how their performance will be evaluated quotlack of clarity in any of these role perceptions decreases motivation and can lead to increased turnover A Objective 1 output measures 0 Ordersnumber of average size of and numbers of that got cancelled 0 Accountsnumber of active number of new number of lost number of overdue number of prospective 2 input measures 0 Sales Callstotal number of number of planned calls vs unplanned 0 Time Utilizationdays worked sales calls per day selling time vs nonselling time 0 Expensestotal by type such as auto phone as a percentage of sales as a percentage of quota 0 NonSelling Activitiesemails to prospects of formal proposals number of displays set up of dealer distributor meetings held of training meetings of service calls made of overdue accounts collected NonSelling Activitiesemails to prospects of formal proposals number of displays set up of dealerdistributor meetings held of training meetings of service calls made of overdue accounts collected 3 ratio measures typically used to evaluate salespeople Expense ratios 0 Sales expense ratio expenses sales 0 Cost per call ratio total costs of calls made Account development amp servicing ratios 0 Account penetration ratio accounts soldtotal accounts available 0 New account conversion ratio of new accountstotal accounts 0 Lost account ratio former accounts not soldtotal accounts 0 Sales per account ratio sales dollar volumetotal accounts 0 Average order size ratio sales dollar volumetotal orders 0 Order cancellation ratio of cancelled orderstotal orders 0 Account share rep s business from accountaccount s total business Sales Call Productivity 0 Calls per day ratio of calls of days worked 0 Calls per account ratio of calls of accounts 0 Planned call ratio of planned callstotal calls made 0 Orders per call ratio of orderstotal calls made B Subjective Measures regardless of how well designed a subjective or qualitative performance evaluation it is unavoidable that some bias will enter in 0 Sales results includes volume performance new account sales selling the full product line 0 Job knowledge knowledge of company policies pricing and products Territory management planning of activities sales calls controlling expenses handling call reports and records 0 Customer and company relations or the rep s standing With customers associates and company Personal characteristics initiative personal appearance resourcefulness personality C Drawbacks of Subjective Performance Evaluations 0 Lack of an outcome focus most subjective evaluations lack the action steps necessary to improve performance once the shortcoming has been identified 0 Illde ned personality traits the actual relationship or bearing that many personality traits commonly used in performance evaluations is unknown Examples include resourcefulness and initiative 0 Halo Effect It s been proven that how the sales manager rates the salesperson on the performance attribute seen as most important by himher Will dictate how that sales manager Will rate the salesperson on all remaining attributes o Leniency or harshness some sales managers Will rate at the extremes either being overly lenient or overly harsh It s a function of the sales manager s personality not the actual performance level of the sales rep in question 0 Central tendency the opposite of being at either extreme Giving middleoftheroad ratings gives no performance insights whatsoever 0 Interpersonal bias how much the sales manager personally likes or dislikes a particular rep is going to heavily in uence that manager s perception of hisher job performance 0 Performance rating uses when promotions and pay increases are tied to the evaluation managers tend to go easy on their reps But when the evaluations are simply to help pinpoint weaknesses and help make improvements sales managers tend to be more straightforward III BARS behaviorally anchored rating scale focuses on key behaviors that can be controlled by the rep and are critical to the rep s success rated on a 17 or 110 scale IV 360Degree Performance Feedback The concept that a salesperson s performance evaluations can be integrated into the firm s CRM software so feedback sources could include the rep s customers the rep s internal team members from other departments other sales repsas well as the sales manager 111 Leading Versus Managing A Today effective sales managers lead not manage 1 leading means communicating With salespeople as opposed to controlling them 2 coaching salespeople instead of being their boss 3 empowering salespeople to make decisions as opposed to directing them 4 mentoring not telling salespeople What to do
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'