Download - UNIT III SALES FORCE MANAGEMENT
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UNIT III
SALES FORCE MANAGEMENT
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STAFFING THE SALESFORCE
• Sales force staffing is the most important activity of a sales manager.
• Sales force staffing includes planning, recruitment, selection, hiring,
and socialization, is among the most challenging and important
responsibilities of sales management.
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RECRUITMENT AND SELECTION OF THE SALES FORCE
• Recruitment is a process of attracting prospective employees and encouraging
them to apply for job in an organization
• Recruitment involves searching for prospective candidates and encouraging
them to apply for the job
• Selection is concerned with choosing most suitable candidates out of many
available or interested. Available candidates are scrutinized, tests and
interviews are conducted to find out most suitable candidates
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• The recruitment process includes analyzing the requirements
of a job, attracting employees to that job, screening and
selecting applicants, hiring, and integrating the new
employee to the organization
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Recruitment Process
• Deciding the quantity of salesforce
• Conducting Job analysis
- Job Description
- Job Specification
• Finding or identifying the sources of sales recruits recruiting sources
• Evaluating and selecting the recruiting sources
• Contacting candidates through the selected source
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Conducting job analysis:
• Before the company goes to the selection stage it should
conduct a job analysis. The job analysis should identify job
duties and responsibilities as well as critical activities to be
performed for the job success
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job analysis consist of the following steps:
1. Analyze the environment in Which the salesperson is to work. -
customers, competitors, and knowledge and skills required for the
job.
2. Determine the duties and responsibilities that are expected from
the salesperson
3. The person conducting job analysis may be a person from the
sales team, or human resource department, or an outside
consultant.
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Preparing a job description:
• Job description is formal, written statements describing detailed
account of the job. job description-generally cover the following
point:
• Title of job
• Reporting relationship
• Types of products and services sold
• Types of customers called on
• Duties and responsibilities
• Job demands
• Technical requirements
• Location and geographical area
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• Developing job qualifications/specifications
• Job qualification should identify the characteristics and
abilities a person must have to meet the requirements of the
sales positions.
• General Qualities :Good personality, sound health, intelligence, honesty
and integrity of character, sociability, consistency, and power of
observation.
• Particular Qualities :Educational qualifications, past experience,
knowledge of the product, customers and market, languages known.
• Technical Knowledge
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Sources Of Recruiting Salespeople
INTERNAL SOURCE EXTERNAL SOURCE
Employee referral
programmes
Advertisements
Current employees Educational institutions
Promotions and
transfers
Employment agencies
Re-employment of
former employees
Other companies
Past applicants Job fairs
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Evaluation Of Recruiting Sources
• The focus in the evaluation of recruiting sources is on 3
factors:
• Performance rating of the sales force at the end of the 2 years of
working
• % retained after (2 yrs working with the organization).
• The cost of recruiting which should include the total cost of
recruiting, including travel, hotel, proportionate salary and so on
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SELECTING THE SALES FORCE
Selection stage consists of two steps:
1. Developing the selection process consisting of tools and procedure
to measure the applicants against the job specifications or
qualifications
2. Selecting the salespeople
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SELECTION PROCESS
RECEIVING APPLICATIONS
SCREENING APPLICATIONS
WRITTEN TESTS
PRELIMINARY INTERVIEW
FINAL INTERVIEW
REFERENCE CHECK
PHYSICAL EXAMINATION
FINAL SELECTION
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TRAINING THE SALES FORCE
• Sales force training is a process by which an attempt is made to
develop the selling skills so as to increase the ability, knowledge
and experience of the salesmen.
• The purpose of sales training is to achieve improved job
performance
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The Sales Training Process Consists Of 3 Phases
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Assess sales training needs:
Determining the need for, and specific aims of, an initial sales
training program requires analysis of three main factors:
1. Job specifications
2. Individual trainee’s background and Experience
3. Sales -related marketing policies
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Methods Used For Assessing Training Needs
Methods used for
assessing training needs
Sales manager’s
observation
Sales force
survey
Performing tests
Job description
Sales force audit
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Popular sales training needs
Product knowledge
Customer knowledge
Competitive knowledge
Sales techniques
Company knowledge
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Design & Execute Sales Training Programme
Aims (Why ?)Content
( What ?)
Methods
(How ?)
Execution
( Who, When, Where,
What ?)
Evaluation
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1. Aims / Objectives of sales training:
The first step in designing the sales training
programme is to decide the specific aims or objectivesa. Increase sales productivity
b. Increase sales, profits or both
c. Lower sales force turnover rate
d. Improve customer relations
e. Introduce new products, markets, and promotional programme
f. Create positive attitudes and improve sales force morale.
g. Prepare new salespeople for assignment to a sales territory
h. Improve teamwork and co-operative efforts
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2. Content of training programme
The content of the training programme for new sales people for initial
training will include:
1.Company knowledge
2.Product knowledge
3.Customer knowledge
4.Competitor knowledge
5.Selling skills or sales techniques
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Sale Training Methods
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Evaluation Of Sales Training Programme
REACTIONS
These outcomes point out the participants perceptions or reactions.
• whether objectives are achieved .
• whether training was worth while.
• reactions can be measured by interviewing or asking training staff to
complete a few questionnaire.
• reactions can be measured after the completion of the training.
LEARNING
This measures knowledge, skills or attitudes were learnt or
observed by the sales trainees.
Methods to collect info are interview.
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BEHAVIOUR
This measures whether there was a hange in trainees behaviour.
self assessment by the trainee or observation from customers
RESULTS
These are the most important outcomes.
They point out whether the outcome of training has improved results, whether the
benefits of training were more than the costs.
The measures used to assess the final results are : sales profits, customer
satisfaction, new customers and market penetration.
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REINFORCE SALES TRAINING
The training methods used to reinforce the training are
• Refresher training
• Coaching by senior sales manager
• web based or online methods to reinforce formal
training sessions
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SALES FORCE MOTIVATION
• Motivation is the word derived from the word ‘ motive’ which means need, desires, wants or drives within the individuals.
• Motivation is some driving force wit in individuals by which them attempt to
achieve some goa in order to fulfill some need or expectation.
• Motivation is the effort sales people want to make to complete various aspects of
their jobs
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•What motives salespeople
• Need Hierarchy Theory
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Hertzberg’s two factor theory
• Motivation factors ( Achievement ,recognition, responsibilities)
• Hygiene factors (supervision, pay, job security , work condition
• The motivation factors or motivators are the primary causes of
motivation and address the question “why work harder”;
• The hygiene factors are necessary conditions to achieve a
state of neutrality and address the question “why work here”.
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• How sales people choose their action
• Equity Theory
• Equity Theory is defined as the belief that one is treated fairly in relation to others
• A salesperson’s choice of effort to be expended is a result of a comparison
between his output-input ratio and the output-input ratios of others
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• VROOM'S EXPECTANCY THEORY
Motivation = function of (Expectancy x Instrumentality x Valence)
Expectancy is the salesperson’s perception that a certain amount
of
effort will lead to successful performance (e.g., Can I do it?)
Instrumentality refers to salesperson’s perception of the probability
that performance will lead to certain outcomes or rewards
(e.g., What do I get for doing it?)Valence is the perceived attractiveness or unattractiveness of
an outcome or reward (e.g., How much do I value thereward?)
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Salespeople Are Motivated By Different Needs
Need for status (e.g., need for recognition and promotion)
Need for control (e.g., need to be in control and influence others)
Need for respect (e.g., need to be seen as experts who can give advice)
Need for routine (e.g., need to follow a routine that must not be interrupted)
Need for accomplishment (e.g., need more money and challenges)
Need for stimulation (e.g., need to seek outside stimulation and challenges)
Need for honesty (e.g., need to believe in the rightness of their practices)
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TECHNIQUES OF MOTIVATION
• Motivational tools should satisfy at least two criteria.
a) Should generate extra effort that will help the company to
achieve its objectives
b) Must increase job satisfaction among salespeople
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• Financial Motivators : Financial motivation relates to the way for
sales person in which an organization uses compensation structure to
motivate workers to high performance.
• Some are as follows:
Straight salary,
Pay per hour,
Pay per production,
Commission,
Performance bonuses,
Profit sharing
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➢ Non financial motivation: Non financial motivation is related with
the sales person in which he is satisfied by Recognition of
work done by him.
• Some are as follows:
➢ Participation
➢ Status
➢ Personal growth opportunities
➢ Job Enrichment appreciation and non monitory recognition.
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SALES FORCE COMPENSATION
• Compensating sales force means giving monetary and non monetary
benefits in return for the services rendered by sales force.
• Sales compensation is the combination of base salary, commission,
and incentives that are used to drive the performance of a sales
organization..
• .
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Objectives of A Compensation Plan
• The company’s view point: • The company wants to attract, retain and motivate competent
salespeople.
• To control salespeople’s activities
• To be competitive, yet economical
• To be flexible
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• The salespeople’s view point:
• To have regular and incentive income
• To have a simple plan
• To have a fair payment plan
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Structure Of Salesforce Compensation
Salesforce
compensation
Financial
compensation
Non financial
compensation
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•Financial compensation
•Direct payment of money such as salary,
commission, and bonus
• Indirect payment, which includes fringe
benefits such as retirement plans, medical
reimbursement, and leave travel assistance
(LTA). It also includes various insurance plans.
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• Non financial compensation
• Promotion
• Sense of accomplishment
• Personal growth opportunities
• Recognition
• Job security
• Sales meetings and conventions
• Sales training programmes
• Job enrichment
• Supervision
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DESIGNING AN EFFECTIVE SALES COMPENSATION PLAN
Pretest, administer and evaluate the plan
Decide indirect payment plan
Develop the compensation mix
Decide levels of pay/compensation
Setup specific objectives
Examine job descriptions
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Methods Of Sales Force Compensation
• Straight-Salary Plan
• Straight-commission Plan
• Combination Salary and Incentive Plan Salary Plus
Commission
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Straight-salary Plan
• This is simplest compensation plan in which salesman
receive fixed salary at regular interval of time .
• Generally , salary is paid to sales force according to salary
grade approved at the time of appointment .
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Straight-commission Plan
• In this remuneration plan , sales force is paid according to
their performance, efficiency and productivity.
• This plan pay fixed or floating rate of commission on the
sales volume achieved by the salesman.
• Commission can be paid on the basis of sales volume, sales
value ,profits ,collections , order size etc.
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• Types of commission Plan
1.Commission at fixed rates
2. Commission at progressive rates
3. Differential commission plan
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Salary Plus Commission Method
• Some firms combine salary and commission plans .
• This plan is designed to avail the advantages and remove the
disadvantages of both salary plan and commission plan.
• Types of Salary Plus Commission Method
• Salary plus commission
• Salary plus bonus
• Salary plus commission plus bonus
• Commission plus bones
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Merits
• Flexible to reward and control
sales force activities
• Security for living costs and
incentives for superior
performance for sales people
• Rewards specific sales
performance
Demerits
• Complex and difficult to
administer
• May not achieve objectives if not
properly panned , implemented
and understood
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SALES FORCE CONTROL AND EVALUATION
• Sales force control involves measuring sales force performance, comparing
it with standards, detecting deviations and causes, and, if necessary, taking
corrective actions so that performance takes place as per plan
• Sales force control includes verifying sale force performance and
taking corrective actions, if needed.
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Sales Force Expenses
• Some companies allow full reimbursement to their salespeople for legitimate
sales expenses incurred while on the job. Typical reimbursement of
salesforce expenses includes
• Travel,
• Meals
• Lodging
• Entertainment of customers
• Telephone
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Types Of Expense Plans
• The Salesperson Pays All Expenses
• The Company Pays All Expenses (Unlimited Payment Plan)
• The Company Partially Pays Expenses (Limited-payment
Plan)
• Combination Plan (Expense-quota Plan)
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MARKETING AUDIT
• A marketing audit is a comprehensive, periodic, and systematic
examination of a company's marketing environment, objectives,
strategies and tactics with a view to find out opportunities and
problems.
• A marketing audit covers a company's total marketing system.
• The audit concept can be applied to a company's major functions
within the marketing management.
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SALESFORCE AUDIT
• A salesforce audit (or sales management audit) is a comprehensive, systematic,
diagnostic, and prescriptive too1.
• The purpose of a salesforce audit is "to assess whether a firm's sales management
process is adequate, to give direction for performance improvement, and to
recommend the needed changes".
• The salesforce audit should be done by all organizations on a periodic basis,
whether or not they are achieving their goals.
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Process Of A Salesforce Audit
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Evaluation Of Effectiveness Of Sales Organization
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Marketing Cost And Profitability Analysis
• Marketing cost is a managerial tool that is used for planning and
control of a company's future operations.
• The purpose of marketing cost analysis is to determine the
profitability of sales (or marketing) control units, like market
segments, sales territories, and products
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Procedure For Marketing Cost And Profitability Analysis
1. State the purpose of the analysis,
2. Identify functional (or activity) expenses,
3. Convert (or change) natural accounting expenses into functional expenses,
4. Allocate functional expenses to market segments, products, or other
marketing/sales units,
5. Prepare the profitability of the marketing/ sales units.
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Productivity Analysis
• Productivity is usually measured by ratios between outputs and
inputs.
• The productivity analysis gives useful information that is not
available with sales, marketing cost, and profitability analyses done
earlier.
• Sales profitability and productivity are highly interrelated.
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Purposes Of Salesforce Performance Evaluation and Control
• To improve the salesperson's performance by identifying the
causes of unsatisfactory performance.
• To decide the increment in pay and incentive payment based on the
actual performance of the salesperson.
• To identify the salespeople who may be promoted.
• To determine the training needs of the individual salesperson and
the entire salesforce.
• To identify the salespersons whose services may be terminated,
after giving adequate chances for improvement.
• To find out their strengths and weaknesses.
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Procedure For Evaluating and Controlling Salesforce Performance
Decide sales management actions and control
Review performance evaluation with salespersons
Compare actual performance with the standards
Establish performance standards
Decide the bases of salespeople's performance evaluation
Set policies on performance evaluation and control
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Establish Performance Standards
• Performance standards are planned achievement levels that sales organization
expects to reach at progressive intervals throughout the year
Two types of performance standards
• Quantitative performance standards
• Qualitative performance standards
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Quantitative Performance Standards
1. Sales Quotas
How much for what period
2. Gross Margin or Net Profit
Margin Net Profit / Total Sales
3. Sales Expense
Ratio Selling Expense / Total Sales
4. Market Share
Company sales as a percentage of
industry sales in territory
5. Returns on Asset management-
(Total sales - current sales expenses)
• 6. Call frequency ratio
Number of prospects contacted / Number of
calls made
• 7. Order call ratio
• Number calls made / Number of orders
received
• 8. Average order size
• Total sales / Number of orders
• 9. Sales coverage effectiveness index
• Number of customers / Number of prospects
in a territory
• 10.Average cost per call
• Total expense / Number calls made
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Qualitative Performance Standards
• Sales related activities
• Customer relations
• Sales call preparation
• Report preparation
• Marketing intelligence
• Selling skills
• Company knowledge
• Competitors’ knowledge
• Product knowledge
• Customer knowledge
• Communication skills
• Quality of presentation
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Methods Of Sales Force Evaluation
No Involvement of sales person
• Ranking
• Rating scale
• Essays
• BARS (Behaviorally Anchored Rating Scale)