The Sales Management Process: A Comprehensive Guide
THE SALES MANAGEMENT PROCESS Marketing communication tools
a) Personal selling. b) Advertising. c) Sales promotion. d) Public relations. e) Direct marketing. f) Internet communication: web pages, social networking, blogs, etc. g) Others: fairs, publicity, guerrilla…
Personal selling: activity of transmitting a message by a person who represents the firm, with the aim of selling a product
The sales management process
- Defining the strategic role of the sales function
Levels of strategy:
- Corporate: growth, stability, one/several business…
- Business unit: cost leadership, differentiation, focus.
- Marketing: segmentation, targeting, positioning.
- Sales: account targeting, relationship strategy, selling strategy, sales,channel strategy.
SM decides the sales strategy and the relationships with the upper levels (unit 2)
- Developing the salesforce:
- “People” decisions to ensure the right staff, with the skills required.
- Includes recruitment, selection, and training.
- Directing the salesforce:
- Address the sales team to meet the organization’s goals.
- Motivating, supervising and leading the salespeople: Leadership activities, Management activities, Supervisory activities
- Determining salesforce effectiveness and performance:
- Assessing the people and the teams based on sales costs profitability productivity
- Analysis may consider people, products/product lines, regions, time periods.
- Job satisfaction and customer satisfaction are considered when auditing the sales performance.
SALES MANAGEMENT TREND Sales activity environment:
• Competition increases in all sectors.
• Purchasing function is increasingly viewed as a way to lower costs and increase profits.
• Buyers are more demanding, better prepared and highly skilled.
• The costs of maintaining salespeople in the field are escalating, but also the pressure to increase sales but decrease costs of doing business = Challenges everywhere.
From transactions to relationships:
–Salespeople are required to develop long-term relationships, by solving customer problems, providing opportunities, and adding value to customers’ business in the long run. Example :Certain companies (Ford, Xerox, General Electric) have reduced the number of their suppliers, and those work a larger range of products / services. Those firms assume, that long-term success depends on long term relationships. – The management must determine the appropriatte type of approach (transactional / relational) with specific customers.
From individuals to teams:
– “Lone-wolf superstar” salesperson is reducing in most sales organizations, when the focus changes to solve customer problems. – No single person has the knowledge and skills to identify and solve customer’s problems teamwork is required. – Team members come from the sales organization, the sales & marketing department, or among the functions within the business
From sales volume to sales productivity:
– All sales are not equal. Some sales are more profitable than others.
– Sales productivity includes the costs associated with generating sales and serving customers.
– Use of videoconferencing or online contents for both: Customer presentations, Salespeople training activities.
– Sales managers will be pressed to “do more with less”
From Management to Leadership:
– Sales managers are responsible for the performance of their sales teams, and exercise several types of control for desired results.
– This fits in stable environments, but may not work in rapidly changing environments.
– Sales organizations are “flattening” the hierarchy and empowering salespeople to make more decisions in the field.
– The trend for managers’ roles is to lead more and manage less:
• Collaboration rather than control.
• Coaching instead of criticism.
• Salesperson empowerment rather than domination.
• Sharing information rather than with holding it.
• Adapting to individual salespeople, rather than treating everyone the same
From local to global:
– Globalization includes competing with firms from other countries, use international suppliers, work with intnl. partners, be affected by intnl. events, serve global customers, and/or have employees from other countries.
– Challenge for sales managers: deal with these diversity.
– Cultural gaps / cross-cultural negotiation, and the selection of representats (expatriates / own country / third country)
What companies are doing regarding such challenges:
1. Use CRM programs for planning and managing sales activities, tracking leads and tracking expense records.
2. Combine face-to-face activity with telephone support teams and online campaigns.
3. Enhance the level of partnership with customers = increase own sales by expanding the customer’s business.
The salespeople turn into business consultors and customer’s business developers
EFFECTIVE SALES MANAGERS
1. Employ a strategic perspective focused on customers: Bring a customer focus to the organizational strategies and create sales strategies to meet the different customers profitably.
2. Attract, keep and develop sales talent: Hiring the best salespeople, making sure they stay with the sales organization, and helping them perform at their highest levels.
3. Leverage technology: Select the right technology and ensure that it is used in the appropriate manner, to increase productivity
ORGANIZATIONAL STRATEGY LEVELS
BUSINESS STRATEGY AND ROLE OF SALESFORCE
Cost leadership (Aka low cost)
– Aggressive construction of efficient-scale facilities.
– Vigorous pursuit of cost reductions from experience.
– Tight cost, and overhead control, usually associated with market share.
• Role of the salesforce:
– Servicing large current customers, pursuing large prospects, minimizing costs, selling on the basis of price.
–Assuming significant order-taking responsibilities.
Differentiation:
– Creation of something perceived industrywide as being unique.
– Provides insulation against competitive rivalry because of brand loyalty and resulting lower sensitivity to price.
• Role of the salesforce:
– Selling nonprice benefits (high quality of customer service )
– Possibly significant amount of prospecting if high-growth industry, selecting customers based on low price sensitivity.
– Usually requires a high-quality salesforce.
Focus (aka niche / specialization):
– Service of a particular target market, with each functional policy developed with this target market in mind.
– Although market share in the industry might be low, the firm dominates a segment within the industry.
• Role of the salesforce:
– To become experts in the operations and opportunities associated with the target market.
– Focusing customer attention on nonprice benefits and allocating selling time to the target market
Position determinates the marketing mix decisions
SALES STRATEGIES
Account targeting strategy:
– Classification of accounts within a target market into categories for the purpose of developing approaches for selling to each account.
– Similar to market targeting, but instead of selecting later a certain positioning, the account targeting defines a mix of relationship-selling-channel strategies
Relationship strategy:
– Determination of the type of relationship to be developed with different account groups (those of the targeting strategy). They range from transaction – solutions – partnership – collaborative relationships
SALES DEPLOYMENT BASED ON VALUE
Salesforce deployment decisions can be viewed as providing answers to three interrelated questions:
1. How much selling effort is needed to cover accounts and prospects adequately so that sales and profit objectives will be achieved?
2. How many salespeople are required to provide the desired amount of selling effort?
3. How should territories be designed to ensure proper coverage of accounts and to provide each salesperson with a reasonable opportunity for success?
Selling effort:
– Different methodologies to estimate. All of them consider somehow:
• Account opportunity: how profitable they are (actual and potential).
• Firm’s competitive position: how likely a selling effort turns into sales and profits.
– According to the combination of both, the firm decides the amount of selling effort to place in each market
Salesforce size:
– Expressed in terms of number of salespeople.
– Considers the following considerations: • Salespeople productivity (sales / costs) = sales generated to selling effort used. • Salesforce turnover: assessment of how turnover increases / decreases when hiring / firing salespeople. • Organizational strategy: this decision must be consistent with the competitive approach
Designing territories:
– Once the size of the salesforce is determined, it is required an effective sales territory design, and each salesperson be assigned to a specific territory.
– A territory consists of a specific geographic area or a group of specific accounts.
– Objectives: • All accounts are assigned to a specific salesperson. • Each salesperson can adequately cover the assigned accounts
Key concepts about salesforce deployment process:
1. To decide the selling effort, the firm considers the potential profitability of accounts, and the capability of the firm to become a supplier of those accounts. 2. To decision of the salesforce size, starts with the selling effort required, and considers the costs associated and the marginal profit (the last additional unit of profit related to the last cost unit). 3. Once the size is decided, area/accounts allocation to each salesperson intends to maximize the sales team’s effectiveness and efficiency
SALES ORGANIZATION CONCEPT
- Must be Developed to help people and managers perform the activities effectively and efficiently.
- This structure provides a framework by indicating what activities are performed by whom in the SO.
- In order to decide which structure fits best, certain concepts are involved:
Specialization:
• Most sales organizations require some degree of specialization for individuals:
– Certain salespeople might sell only certain products or call on certain customers.
– Some sales managers might concentrate on training, others on planning.
• By concentrating on a limited number of activities, individuals become experts on those tasks, leading to better performance for the entire organization
Centralization:
• The degree to which important decisions and tasks are performed at higher levels in the hierarchy.
• Is a relative concept and organizations tend to have either centralized or decentralized orientation.
• The trends from transactions to relationships, from individuals to teams, and from management to leadership, result in more decentralized organizations.
• Salespeople in contact with customers must be able to respond to customer needs in a timely manner, empowered to make decisions quickly. Task: ethical dilemma
Span of control vs. management levels:
• SpoC: nº individuals who report to each sales manager.• MLvs: nº of different hierarchical levels of sales management within the organization.• SpoC inversely related to MLvs
SALES ORGANIZATION STRUCTURES
Designing the sales organization requires integration of the desired degree of specialization, centralization, span of control and management levels
Geographic sales organization:
• Emphasizes geographic specialization.• Most generalized type of salesforce.• Salespeople and middle managers are assigned a geographic area, and are responsible for all activities to all accounts within that area.
Product sales organization:
• Assign salespeople for specific products or product lines, so they become experts in such categories / lines.• Each specialized sales team performs all selling activities for all types of accounts.• They can later be organized geographically (hybrid types)
Market sales organization: Assign salespeople to specific types of customers: satisfy customer’s needs better
Functional sales organization:Salespeople specialize in performing certain activities: telemarketing to generate leads, qualify prospects, etc., and the outside salesforce concentrate on sales-generating activities
Major account management (key/strategic/global account): Three options to serve large / complex accounts: a) Separate major account salesforce, either for regular salespeople, or for specific teams selected. b) Sales executives (managers) within formal programs: improve communication, and coordinate all activities.c) Salespeople as other accounts: not a major account program.
COMPARISON OG ORGANIZATIONAL STRUCTURES
SALES LEADERSHIP, MANAGEMENT, AND SUPERVISION Sales organization positions:
• Salespeople: in touch with customers. Report to field sales managers (very seldom to senior sales leadership).
• Field sales manager: has direct responsibility for an assigned group of salespeople.
• Senior sales leadership (chief sales executive, national sales manager): have direct responsibility for field sales managers. Activities:
• Sales leadership: to influence others to achieve common goals for the sales organization.
• Sales management: activities related to the planning, implementation and control of the sales management process.
• Sales supervision: working with subordinates on a day-to-day basis (very important in the field sales manager position)
Leadership skills for managers. Leadership: “the use of influence through communication processes”
1. Anticipation and seeking feedback: to extend a vision to the future, by reading customers, salespeople or other sources: field visits, salesforce audits, review of reports…
2. Diagnostic skills: determine the specific nature of the problem or opportunity to be addressed
3. Selection and matching: select the appropriate leadership response to match the concrete situation
4. Communication: delivery of clear, timely information through the appropriate media or interpersonal communications
Coaching: • Sales manager concentrates on continuous development of salespeople through supervisory feedback and role modeling. • Coaching seasons may take place in the office during the sales manager’s field visits with salespeople, immediately before or after each sales call.
Common weaknesses of sales team meetings:
1. Not having a schedule / agenda / points to discuss : then the meeting turns into a “come and go” of topics without going deep into any of them. 2. Not writing out the agreements / points discussed /decisions taken: nobody knows very well what has been agreed. 3. Do not set a duration or distribution of time by subject: the meeting goes on until people just leave. 4. Phone calls during the meeting: 5. Not to assign a person responsible for the agreements made.
6. Let those who like to listen to themselves speak more, and not to let speak more to those who should: – People who, meeting after meeting, remain silent. – People who speak 40 – 50% of the time 7. Failure to bring the right people together 8. Lack of leadership 9. Meeting = everyone participates. If it is information in one sense: email.
10. Bad manners between participants
11. Unnecessary periodicities not appropriate time management
RECRUITMENT AND SELECTION Importance:
– A few problems associated with wrong selections:
1. Inadequate sales coverage and lack of customer follow-up.
2. Increasing training costs to overcome deficiencies.
3. More supervisory problems (adaptation or mismatching between manager and salesperson).
4. Higher turnover rates.
5. Difficulty in establishing enduring relationships with customers.
6. Not optimal salesforce performance
Process:
STEP 1 : PLANING FOR RECRUITMENT AND SELECTION
- Job analysis
- Job qualifications
- Job descriptions
- Recruitment and selection Objectives and strategies
STEP 2: RECRUITMENT: LOCATING PROSPECTIVE CANDIDATES
- Internal Sources
- External Sources
STEP 3: SELECTION: EVALUATION AND HIRING
- Screening resumes and applications
- Initial Interview
- Intensive interview testing
- Assessment Centers
- Background Investigation
- Physical Examination
- Selection Decision/Job Offer
SALES TRAINING Process
- ASSES TRAINING NEEDS
The purpose is to compare the specific performance related skills, attitudes, and behaviors required for salesforce success, with the state of readiness of the salesforce.
– Methods of needs assessment:
• Performance Testing: evaluation of particular tasks or skills of the salesforce
• Observation: first-level sales managers spend a considerable amount of time in the field working with salespeople.
• Customer Survey: determine how competitive the salesforce is compared with other salesforces in the industry
2 ) TYPICAL SALES TRAINING NEEDS
1. Product knowledge: • Benefits, applications, competitive strengths, and limitations.
• The more complex the product or service, the higher the need to appear in the training program.
2. Customer and market knowledge: • Customers’ needs, buying motives, buying procedures, and personalities. • As companies expand their global selling efforts, training programs must address multicultural differences and business protocol in subcultures and foreign countries.
3. Own firm:
• History, main figures, equipment. • Sales procedures: orders, sales conditions, financing.
4. Languages and IT skills:
• English & others.
• Firm’s ERP / CRM.
5. Sales techniques:
• Ineffective listening and questioning.
• Poor job of prospecting for new accounts.
• Failure to match call frequency with account potential.
• Spending too much time with old customers.
• Overcontrolling the sales call.
• Giving benefits before clarifying customers’ needs
3 ) SET TRAINING OBJECTIVES
• Increase sales or profits.
• Reduce role conflict and ambiguity.
• Introduce new products, markets, and promotional programs.
• Teach administrative procedures (e.g., expense accounts, call reports).
4)EVALUATE TRAINING ALTERNATIVE
• Besides classic face-to-face methodologies; internet, video-conferencing and computer assisted learning, expand options today.
• Three key questions.:
• Who will conduct the training? internal (within the company) / external (outside the company) trainers.
• Location for the training: sales training may be conducted in the field, in the office, at conference centers, or at other locations.
• Which method (or methods) and media are best suited for conducting the training
5)DESIGN THE SALES TRAINING PROGRAM
• The necessary responses to what, when, where, and how questions are finalized.
• The sales manager now commits resources to the training to be accomplished.
6)PERFORM SALES TRAINING
• The sales manager’s primary responsibility is to monitor the progress of the trainees and to ensure adequate presentation of the training topics.
• SM should assess the clarity of training materials.
• continuing motivation
7) CONDUCT FOLLOW-UP AND EVALUATION
• Evaluations can be made before, during, and after the training occurs.
• The return-on-investment approach, seeks to define training effectiveness in terms of incremental sales volume from existing accounts, or volume generated by new accounts