Sales Force Management: Retribution, Control & CRM

Posted on May 22, 2024 in Economy

Retribution System

Goals of a Retribution System

• To align the interests of the salesperson with those of the firm:
  • Focus on the markets/customers chosen by the firm.
  • Focus on the products with higher profits, not just turnover.
• Generate high levels of dedication and effort:
  • Bonus based on outcome or certain behaviors, fosters more working hours, better organization…
  • A high level of salesperson extrinsic motivation is required.

Requirements of a Retribution System

1. Perceived as fair: prize and effort have to be balanced.
2. Objective: applied equally for the whole sales team. No member should have privileges:
   • Growth might be unfair if starts with different sales volumes.
   • Certain products are best sold in certain areas.
3. Valid in the short, middle and long term:
   • Changes in the retribution system might be dangerous.

Types of Retribution Systems

1. Fixed Income

• Salary changes just through collective agreements, promotion or special agreements.
• Labor relationship (RGSS) with the firm.
• The firm assumes the risk and the control.
• Certain situations cannot rely on indexes and objectives.

2. Fully Variable Income

• Agency contracts (no labor agreement).
• The firm has little or no control on the salesperson’s activity.
• Salesperson may represent several firms.
• Percentage of sales / profits.
• Risk is on salesperson.
• The firm doesn’t wish or cannot afford a marketing fixed cost.

3. Mixed Systems

• Fixed + either a commission or a bonus when reaching a certain goal.
• Commission may not start in 0 (sales or profit).
• Several incentives may be combined.
• Risk is somehow shared.
• When setting the goal: agreement with salesperson is advisable.

Sales Plan and Goal Setting

Importance of Sales Forecasting and Types

• Resource allocation (marcom budgeting)
• Determining salesforce size and designing territories
• Establishing sales quotas and selling budget
• Evaluating salesperson performance
• Logistic and transport needs and resources

Management Based on Objectives

Companies use top-down ordering systems in their planning processes

Each objective that is proposed in each level, will be reached if linked objective established in lower levels are achieved

Strategy Pyramid

Sin esto el corporate strategy no puede funcionar:

• Corporate strategy: Main objective + objetivo del conjunio de empresas
• Business strategy: Objetivo para toda la empresa
• Functional strategy: Objetivo por departamento

Salesperson Goal Setting

Take Into account when assigning sales objectives:

Meet SMART requirements

specific measurable achievable relevant timebound

• Starting point: historical sales values of each territory
• Potential of sales area
• If opp. Or threats in the market or general economy may affect Just consider CEO guidelines might involue demotruation
• If just started objectives are unallained or are greatly exceed the s.m has failed

Pros and cons of the indexes most frequently used:

Sales Control Systems: Behavior, Outcome and Capability

1. Behavior (or Activity) Control

– Monitorize, evaluate and reward the behavior of the salesperson, in aspects such as personal attitudes, the activity or the sales approach used.

– In this system:

• The representatives have a fixed remuneration.
• Assumes control but also the risk: the firm pays all costs, no matter how the outcome is.
• The salesperson appraisal will be subjective, depending on the personal criteria of the manager. This means a significant spending of time and energy.

Elements used for the activity control:

a) Salesperson Attitude

• Flexibility: adapt to the different needs that the department may have.
• Overcoming: willingness to make the necessary effort to achieve a goal.
• Motivation and optimism.
• Initiative to propose and implement improvements.

b) Teamwork (activation of the five Cs)

• Complementarity.
• Communication.
• Coordination.
• Confidence.
• Commitment

c) Time Management

• Organization of tasks.
• Access to the information needed in the CRM / ERP.
• Automation of work processes.
• Elimination of distractions.

d) Appearance and Manners

• Image of the salesperson: becomes one additional element of marketing communication.
• Verbal, non-verbal and paraverbal languages.

2. Outcome Control

• Free-hands system: the salesperson has freedom to manage the own time and activity.
• Most of the times is a commercial relationship with the company.
• Remuneration depends on the outcome (unit 5).
• The company does not have relevant control and transfers the risk of the commercial cost to him (unit 5).
• If successful, the remuneration from the commissions will normally be greater than that of a fixed salary.
• The assessment will be completely objective and quantitative: sales, margins, new customers, loyalty…
• The control will be performed periodically, when reviewing the sales figures, margins and other numerical data on the market.

Elements used for the outcome control:

a) Profits

• Margins: total / by product lines or reference / by market, segment, territory or representative.- Return on investment / marketing investment.

b) Sales

• Total, by product lines, references, markets, segments, sales territories or representatives:
• Euros / growth.
• Physical units, weight, length or volume

c) Market Shares

• Totals / product lines / references / segments/ territories…

d) New Customers

e) Visits and Business Efficiency

• Sales / orders per visit made.
• New customers per visit made.

f) Sales, Orders or Commercial Margin, by Cost Associated

• Labor cost, travel and living expenses, communication and management tools, marketing communication, etc

3. Capability Control

– Compatible with the two previous. Emphasizes the development of the individual skills and abilities of salespeople, establishing mechanisms to improve them.

– Remuneration may be either fixed, variable or mixed. Often fixed or mixed remuneration.

– The firm assumes both: the cost of training and the commercial cost = assumes the risk of commercialization.

– Levels of knowledge and skills: determined by the job description itself.

– Sales management and human resources management collaborate to assess whether salespeople meet the requirements in each of their positions.

Elements used for the capability control:

a) Knowledge of the Product or Service: Technical and Commercial

• Type of activity that may be interested in the product.
• Argument to be used.
• Processes and equipment for the application of the product.
• Features of the product or service and its key positioning elements.

b) Sales Skills

• Ability to arrange a meeting with the customer.
• Ability to present and generate interest + providing a positive image.
• Ability to close the sale and to provide good after-sales service and customer follow-up.
• Communication and negotiation skills, and knowledge of the sales process.

c) Knowledge of the Market and the Competition

• Competitors of each product in each market.
• Positioning of each competitor and their strengths and weaknesses.
• Knowledge of industrial consumers.

d) Ability to Plan and Organize Own Work

• Maximize the performance of the tasks: what is urgent does not prevail over what is important.
• Ability to create work-queues and their corresponding alarms.
• Reserve the most appropriate time slots to visit clients, leaving the rest of the day to carry out the work of preparation, monitoring, sending commercial offers or to dispatch with the department’s management.

4. Hybrid Control Systems

Sales People Reports

A. Key Aspects of Sales Team Activity Reports

• Contain only simple facts, data and evaluations, so that its writing will be simple. No adding elements that could waste time in its writing and reading.
• Attention to the handwritten notes taken during the meeting with the customer.
• ERP / CRM applications may facilitate the management of reports.
• Easily accessible, both for the manager and for the seller himself.
• Daily elaboration: not to forget relevant details.

B. Content Items

a) Header Detailing

• Salesperson: who writes the report.
• The date and time the meeting took place.
• The name of the company and its physical location.
• The people who have been present at the meeting, including their titles.

b) Content with Relevant Commercial Aspects

• Products/services to be sold and their potential for consumption by the customer.
• Competitors to consider and prices at which they are offering.

c) Customer’s Assessment About Our Proposal + Likehood to Sell

d) Possible Technical, Quality or Service Requirements to be Considered

e) Final Section: Agreements and Follow-up Elements

• Proposals, offers or budgets to be sent and conditions to be taken into account (financing, amounts, etc.)
• Catalogues, samples to be sent and the agreed date.
• Date for the next follow-up contact: it is recommended to include an alarm in the ERP/CRM or similar application (Outlook, Google Calendar, etc.)

C. Supervision of the Reports by the Sales Manager

• Request the delivery of the reports on specific dates for all the salespeople to supervise.
• Find specific time slots to carry out the supervision, trying to ensure that these moments do not overlap with other high-value activities.
• Feedback to vendors during weekly team-wide meetings.

Customer Satisfaction

Most frequent systems to find out satisfaction levels:

1. Surveys: online / printed forms or by mail, phone calls / in presence.
2. Many companies focus the analysis on a few specific aspects of the key areas of the business:
   • The product: its quality in relation to competitors, prices, etc.
   • The people of the commercial team (salespeople and the commercial administration).
   • The service: the terms of delivery, meeting the needs of the client, the fulfillment of commitments, etc.
   • The generation of value.
3. Loyalty level: customers which remain / volume of sales to these customers.
4. Complaints, claims and non-conformities:
   • Product or packaging quality issues / errors in deliveries: different references to those ordered, delays, etc.
   • Failures: different price than agreed, different financing conditions, etc.
   • Situations related to the treatment of people, such as disrespect, contempt, etc.
   • Congratulations and recommendations

Sales and Marketing Information System

Sales CRM and ERP (Sales Function) Most Common Fields

1. Customer general data: address, telephone nr., e-mail.
2. Customer people (contact / decision takers): including e-mails, telephones, and other relevant information: job name, personal address, birthday, family, decision’s weight, etc.
3. Commercial information (by customers, representants, markets, etc.): sales, margins, units, growth…
4. Offers, orders (tracing options).
5. Reports: visits or telephone calls.

CRM and ERP (sales function) functionalities that make them a competitive advantage:

1. To prepare sales visits: relevant data at a glance, before meeting the customer. Includes previous visit reports.
2. To organize the accounts to be contacted, according to certain criteria (offers, historical sales…)
3. To visualize customer data or other guidance during telephone calls for telemarketers:
   • Regular orders / last orders.
   • Prices / margins.
   • To follow scripts / flowcharts.
   • Open offers.
4. For the administrative staff of the sales department, to work faster, with less mistakes and integrated with the rest of the firm:
   • Orders, invoices and delivery notes.
   • Inventory and product availability (dates, quantities, etc.)
5. For managers, to review and work with all relevant statistics at any moment and with the desired detail level:
   • For sales plans and forecasts.
   • For customer segmentation.
   • To develop communication campaigns (sales promotions, direct marketing, etc.).
   • For territory designs.

Key aspects to work with CRM and ERP in the sales function:

1. Potential massive data theft by people who have access to the system, especially if they are leaving the company. Access limits have to be set.
2. The system must be as intuitive as possible. When people need guidance for every single step, the system becomes useless. After a reasonable training period, most users should need little support.
3. Many firms select and train a super user (with a higher knowledge of the CRM/ERP, but not an IT expert) as a support element for the sales department.
4. Systems should allow users to work in any place (airports, hotels, customer place…), fast, easily and with real time info.