Managing the sales force

Dr. Karpagam

Director – Academics ISBR Business School

Bangalore

Chapter outline

• Effective Recruiting• Selecting and training the sales force• Time and territory Management• Sales territories and sales quotas• Compensating sales force• Motivating the sales force• Controlling the sales force• Evaluating the sales force

Learning outcomes

After reading this chapter, you will be able to understand What is effective recruiting ?How to select and train the sales force?How to devise sales territories and sales quotas ?What are the different compensation methods

available ?Why should we motivate the sales people ?How to control the sales & evaluate the sales force ?

Effective recruitment

• Recruiting and selection of sales personnel varies from company to company– Company Size– Executives’ Personalities– Departmental Structure

• Sources of Sales Force Recruits – Sources within the company– Sources outside the company

The recruiting effort

• Seeks Individual with minimum or general education• Little or no experienceTrade Selling

• High caliber individuals with specialized education• Equivalent qualification gained through job

experienceMissionary Selling

• High caliber Individuals with scientific or engineering educationTechnical Selling

• Management looks for individuals with the required abilities

New Business Selling

Selecting the sales personnel

Reject

Preliminary Interview

Rel

ativ

e de

gree

of

hel

pful

ness

Expe

nse

Formal Application

Interview(s)

Reference & credit checks

Physical examination

Testing

Employment offer

TimeTime

Selection process

• Interview– Who should be doing the interviewing ?– How many interviews ?– Interviewing the spouse

• Interview techniques :– Patterned interview– Nondirective interview– Interaction interview– Rating scales

Types of tests

1. Test of ability :– How well a person can perform particular tasks with maximum

motivation– Mental ability ( intelligence test)– Aptitude test ( special abilities )

2. Test of habitual characteristics :– Gauge how prospective employees act in their daily work

normally– Attitude, personality and interest test

3. Achievement Test :– How much individuals have learned from their experience,

training or education

Training the sales force

Aim(s

)

Content

Method(S)

Execution

Evaluation

Why ? What ? How ? Who ?When ?Where ?

Recycle, Redesign, Modify and so forth

Philosophies of sales training

• Two philosophies of sales training– Conditioned Response• Behave in a standardized or programmed ways

– Insight Response• Seeks to develop trainees insight and analytical skills

so that they respond appropriately• Which philosophy is appropriate ?– The choice depends upon predominant selling style• Trade or Missionary – Conditioned response• Technical or new business – Insight Response

Organization for sales training

• The execution step of ACMEE (the first ) requires four key organizational decisions:1. Who will be the trainees ?2. Who will do the training ?3. When will the training take place4. Where will the training site be ?

Who will be the trainees ?

• Very complex for continuing than initial sales training• Criteria to select the trainees :

Reward for good process

Punishment for poor performance

Convenience of trainee and trainer

Seniority (greater the seniority, greater the opportunity for added training)

Who will do the training

Initial sales trainingContinuing sales trainingSales training staff

Training the sales trainingOutside experts

When will the training take place ?

• Timing group versus individual training– Minority view– Minority view inappropriate when technical selling is involved

• Timing initial sales training programs :– Depends upon• The size of the sales force• Sales personnel turnover• Management’s plans for changing sales force size

• Timing continuing sales training programs– Weaknesses lie in different areas, on the job coaching– Several people are weak in the same area, use instructional

method

Sales Motivation is Critical

• Influenced by Sales Manager• Even More Important for Salespeople• Freedom of Supervison• Lack of Faith in Themselves• Lack of Faith in Their Brands

Motivation Includes

• Drive to Initiate Action on a Task• Drive to Put Forth Sufficient Effort on a Task• Persistence to Maintain Effort Over Time

Motivation is INTERNAL

• Manager Influences• Manager Cannot Create• Can Increase Chances• But Easier to Destroy

Maslow

• You have had this before• Physiological and Safety/Security Needs are First

– For Good Reason• What Motivates Changes Over Time (and

Environment)• Salespeople satisfied by pay are less interested in

higher pay

Herzberg

• Dissatisfaction must be removed before motivation• Perceived Inequity in Pay,• Company Policy, • Working Conditions or Relationships kill motivation• Removing Dissatisfaction Motivation

Herzberg #2

• Motivation is associated with:– Achievement– Recognition– Challenging Work– Advancement

Herzberg Useful?

• Have Clear Policies and Procedures– Don’t have to be equal but must be seen as “fair”

• Pay is not a great motivator – but is a great demotivator (Do Not Make Salary Info Public)

• Non Pay Factors are Key to Motivation

Expectancy Useful?

• Working Stupid Kills Motivation• If Salesperson Thinks the Goal Cannot Be Reached

they Give Up or Cheat• The Performance + Goal Link is Essential• Are The Rewards Even Important to the Individual?

Expectancy Useful?

• Working Hard & Smart Are Both Critical• Skills Training is Vital• Do Not Ever Over-Promise• Be Sure Everyone Has the Chance to Succeed• Give Rewards People Want

Compensating sales personnel

• A sales compensation plan properly designed, has three motivational roles :1. Provide a living wage2. Adjust pay level to performance3. Provide a mechanism for demonstrating the congruency

between attaining company goals and individuals goals

Requirements of a good sales plan

1. Provides a living wage2. Plan fits with the rest of the motivational program3. The plan is fair4. Easy to calculate own earnings5. Adjusts pay to changes in performance6. Economical to administer7. Helps in attaining the objectives of the sales

organization

Types of compensation plans

Combination of salary and variable elements

Straight commission

Straight salary

Straight salary plan

• More common among industrial goods companies • Used for personnel engaged in trade selling• Economical to administer, because of simplicity• Provides freedom from financial uncertainties• Disadvantages :

1. Do average job than outstanding job2. Undercompensate productive salesperson and overcompensate

poor performers.

Straight commission plan

• Paid according to productivity• Sales volume is the best productivity measure• Falls under two category :– Straight commission with sales personnel paying their own

expenses, advances may or may not be made against earned commissions

– Straight commission with the company paying expenses, with or without advances against earned commissions.

• Used in order getting than nonselling duties

Cont’d…

• Common in– Clothing, textile, and shoe industries and in drug and

hardware wholesaling• Applicable to firms selling intangibles :– Insurance and investment securities, and manufactures of

furniture, office equipment and business machines.• Advantages :– Direct monetary incentive– Means of cost control

Cont’d

• Disadvantages :– Unless differential commission rates are used, sales

personnel push • the easiest to sell Low margin items• Neglect harder to sell high margin items

– Sales person’s efficiency may decline because of income uncertainties

Combination salary and incentive plan

• Straight salary method :– Lacks a financial means for stimulating the sales force to

greater effort.• Straight Commission method :– The executive has weak financial control over nonselling

activities• Blending – management seeks control and motivation• Actual results depends on management’s skills in– Designing and administering plans

Use of Bonuses

• Bonuses are different from commissions– It is an amount paid for accomplishing a specific task

• Commission :– Varies in amount with sales volume or other commission

base• Bonuses are– Paid for reaching a sales quota– Performing promotional activities– Obtaining new accounts– Following up leads

Sales territories

• Establishing sales terrioroties facilitates– matching selling efforts with sales opportunities

• Territorial assignments lend direction to the planning and control of sales operations

• Realistic sales planning is done on a territory-by-territory basis

• Sales territory :– Grouping of customers and prospects assigned to an

individual salesperson

Reasons for establishing or revising sales territories

1. To provide proper market coverage2. To control selling expenses3. To assist in evaluating sales personnel4. To contribute to sales force morale5. To aid in the coordination of personal selling and

advertising efforts

Procedure for setting up or revising sales territories

Selecting a basic geographical control unit

Determining sales potential in control units

Combining control units into tentative territories

Adjusting for coverage difficulty and restricting tentative territories

Territory shape (tentative territories

Sales quota

• Quantitative objectives assigned to sales organizational units

• Quotas are devices for directing and controlling sales operations

• In effective systems, – Management bases quotas on information derived from

sales forecasts– studies of market and sales potentials – Cost estimates

Objectives in using quotas

To provide quantitative performance standards

To obtain tighter sales and expense control

To motivate desired performance

To use in connection with sales contests

• Differences in forecasting and budgeting procedure, quotas fall into four categories :1. Sales volume quotas2. Budget3. Activity4. combination

Types of quota and quota-setting procedures

Procedure for setting sales quota

• Sales volume quotas derived from 1. Territorial sales potential2. Total market estimates3. Past sales experience alone4. Executive judgement alone5. Compensation plan

Controlling sales personnel : evaluating and supervising

Establishing performance standards

Recording performanc

e

Evaluating performances against

the standards

Taking action

Cont’d…

• Control has both static and dynamic facets• Depending on the circumstances, management may

decide to take1. “no action" now2. Aimed to increase the degree of attainment of objectives3. To revise the policy or plan or the strategies used in their

implementation to facilitate achievement of objectives4. To lower or raise the objective standard or criteria for

measuring their degree of attainment.