Sales Management Mysore University
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The document summarizes the key steps in the personal selling process for salespeople. It discusses prospecting, qualifying leads, pre-approach planning, making an approach, presenting and demonstrating products, overcoming objections, closing the sale, and following up with customers. It also outlines different types of sales organizations, including line, line and staff, functional, and horizontal structures and considers factors in determining the optimal size of a salesforce.
Sales Management Mysore University
- 2. Personal selling Process As a part of selling activities, if salespeople follow the steps or phases shown below, their chances of success are far better. Prospecting & Qualifying Preapproach / Precall planning Approach Presentation & Demonstration Follow-up & Service Trail close / Closing the sale Overcoming Objections âą The sequence of above steps may change to meet the sales situation in hand. âą Some of the above steps may not be applicable for selling to the trade âą We now discuss application of above steps to industrial selling
- 3. Prospecting âą It is identifying or finding prospects i.e. prospective or potential customers. âą Methods of prospecting or sales lead generation are: (1) referrals from existing customers, (2) company sources (website, ads., tradeshow, teleprospecting), (3) external sources (suppliers, intermediaries, trade associations), (4) salespersonsâ networking, (5) industrial directories, (6) cold canvassing, (7) standard industrial classification (SIC) system. Qualifying âą Companies qualify sales leads by contacting them by mail or phone to find their interests (or needs) and financial capacity. âą Leads are categorized as: Hot, Warm, and Cool
- 4. Preapproach âą Information gathering about the prospect. Sources of information: the Internet, industrial directories, government publications, intermediaries, etc. âą Precall planning âą Setting call objectives âą Tentative planning of sales strategy: which products, features and benefits may meet the customer needs
- 5. Approach âą Make an appointment to meet the prospect âą Make favourable first impression âą Select an approach technique: âą Introductory âą Customer benefit âą Product âą Question âą Praise âą The approach takes a few minutes of a call, but it can make or break a sale
- 6. Presentation and Demonstration There are four components: âą Understanding the buyerâs needs âą Knowing sales presentation methods / strategies âą Developing an effective presentation âą Using demonstration as a tool for selling We will examine each of the above points
- 7. Understanding the buyerâs needs âą Firms and consumers buy products / services to satisfy needs âą To understand buyerâs needs, ask questions and listen âą In business situations, problem identification and impact questions are important E.G. âą Have you experienced any problems on quality and delivery from the existing supplies? âą What impact the quality and delivery problems will have on your costs and customer satisfaction?
- 8. Knowing Sales Presentation Methods/Strategies Firms have developed different methods / styles / strategies of sales presentation âą Stimulus response method / canned approach. âą It is a memorised sales talk or a prepared sales presentation. âą The sales person talks without knowing the prospectâs needs. E.G. Used by tele-marketing people âą Formula method / formulated approach. âą It is also based on stimulus response thinking that all prospects are similar. âą The salesperson uses a standard formula â AIDA (attention, interest, desire, and action). âą It is used if time is short and prospects are similar. âą Shortcomings are: prospectsâ needs are not uncovered and uses same standard formula for different prospects.
- 9. Sales Presentation Methods (Continued) âą Need â satisfaction method âą Interactive sales presentation âą First find prospectâs needs, by asking questions and listening âą Use FAB approach: Features, Advantages, Benefits âą Effective method, as it focuses on customers âą Consultative selling method / Problem-solving approach âą Salespeople use cross-functional expertise âą Firms adopt team selling approach âą It is used by software / consulting firms
- 10. Developing an Effective Presentation Some of the guidelines are: âą Plan the sales call âą Adopt presentation to the situation and person âą Communicate the benefits of the purchase âą Present relevant and limited information at a time âą Use the prospectâs language âą Make the presentation convincing â give evidence âą Use technology like multi-media presentation
- 11. Using Demonstration âą Sales presentation can be improved by demonstration âą Demonstration is one of the important selling tools EGs: Test drive of cars; demonstration of industrial products in use âą Benefits of using demonstration for selling are: âą Buyersâ objections are cleared âą Improves the buyerâs purchasing interest âą Helps to find specific benefits of the prospect âą The prospect can experience the benefit
- 12. Overcoming Sales Objections / Resistances âą Objections take place during presentations / when the order is asked âą Two types of sales objections: âą Psychological / hidden âą Logical (real or practical) âą Methods for handling and overcoming objections: (i) For Psychological objections: ask questions. (ii) For logical objections: (a) ask questions, (b) turn an objection into a benefit, (c) deny objections tactfully, (d) third-party certificate, (e) compensation.
- 13. Trial close and Closing the sale âą Trial close checks the attitude or opinion of the prospect, before closing the sale (or asking for the order) âą If the response to trial close question is favourable, then the salesperson should close the sale âą Some of the techniques used for closing the sale are: (a) alternative-choice, (b) minor points, (c) assumptive, (d) summary-of-benefits, (e) T-account, (f) special-offer, (g) probability, and (h) negotiation
- 14. Follow-up and Service âą Necessary for customer satisfaction âą Successful salespeople follow-up in different ways: For example, âą Check order details âą Follow through delivery schedule âą Visit when the product is delivered âą Build long-term relationship âą Arrange warranty service
- 15. Personal Selling Strategy âą Classifying market segments and individual customers within a target segment âą Each firm should first decide on target market segments and if possible, to classify customers into high, medium, low sales & profit potentials âą Sales strategy is developed accordingly âą Relationship strategy âą Whether a selling firm should use transactional, value- added, or collaborative relationship depends on both the seller and the customer âą Each selling firm to decide which segments and individual customers respond profitably to collaborative relationship
- 16. Components of Sales Strategy (Continued) âą Selling Methods âą These are: (1) Stimulus response, (2) formula, (3) need- satisfaction, (4) team selling, (5) consultative âą Selection of appropriate selling method depends on relationship strategy âą Channel Strategy âą There are many sales / marketing channels. For example: company salesforce, distributors, franchisees, agents, the internet, brokers, discount stores âą Selection of a suitable channel depends on both the buyer and the seller, products / services, and markets
- 17. Concepts of Sales Organisation âą A sales organisation assists the sales manager to carry out needed tasks efficiently and effectively to achieve results âą The basic concepts of the sales organisation are: âą Degree of centralisation âą Degree of specialisation âą Line or staff positions âą Market orientation âą Effective co-ordination
- 18. Basic Types of Sales Organisations Sales organisations are generally classified into four basic types: âą Line Organisation âą Line and staff organisation âą Functional organisation âą Horizontal organisation We shall discuss main characteristics, advantages, and disadvantages of each type of sales organisation
- 19. Line Organisation Characteristics: All managers have line authority to direct and control subordinates. Used in small firms / departments Advantages: Simple organisation, clear authority, quick decisions, low cost Disadvantages: No support to line managers from subordinates who have specialised knowledge / skills. Less time for planning / analysis Head Marketing Sales Manager Area Sales Manager1 Area Sales Manager3 Area Sales Manager2 Area Sales Manager4 salespeople salespeople salespeople salespeople
- 20. Line and Staff Organisation Characteristics: Specialist staff managers are available for senior marketing / sales managers. Staff managersâ role is to assist / advise line managers. Used in medium and large size organisations Advantages: Better marketing decisions, superior sales performance Disadvantages: High cost and coordination, slower decision making, conflict may arise if staff managersâ role is not clear Head-Marketing Marketing Research Manager Sales Manager Promotional Manager Customer Service Manager Area Sales Manager-1 Area Sales Manager-1 Area Sales Manager-1 Salespeople Salespeople Salespeople
- 21. Functional Organisation Characteristics: Each functional specialist has line responsibility over salespeople. Used by a large firm with many products / market segments, minimising line authority to functional managers Advantages: Qualified specialists guide salesforce, simple to administer Disadvantage: confusion due to more managers giving orders to salesforce Head-Marketing Marketing Research Manager Promotional Manager Customer Service Manager Sales Manager Area Sales Manager #4 Salespeople
- 22. Horizontal Organisation Characteristics: Removes management levels & departmental boundaries. Except planning team, all others are members of cross-functional teams. Used by firms having partnering relationships with customers. Advantages: Reduction in supervision, unnecessary tasks, & cost; Improved efficiency and customer responses. Research & Design Team: âąCustomer Research âąProduct / Service Design Planning Team: âąStrategic Planning âąAccounts, Finance âąHR, Administration âąChief Operation Officer Operations Team: âąProduction / Operations âąQuality Assurance âąSystems Engineering Customer Support Team: âąInformation âąService âąTraining Customer Satisfaction Team: âąSales & Marketing âąPricing, Promotion âąChannels, Logistics
- 23. Size of the Salesforce âą How many salespeople needed (or salesforce size) to achieve a firmâs sales and profit objectives is a key decision âą Methods available to decide optimum salesforce size are as follows: âą Workload âą Sales potential (or breakdown) âą Incremental âą We shall discuss these methods briefly:
- 24. Workload Method âą Assumption: All salespeople have equal workload âą Steps involved to calculate salesforce size are: 1) Classify customers as per their sales potential 2) Decide time per sales call and call frequencies for each class of customers 3) Calculate total market workload = (1) x (2) in hours 4) Decide total work time available per salesperson 5) Divide total work time available by different activities per salesperson in hours 6) Calculate total number of salespeople needed )5( )3( nsalespersoperavailabletimesellingtotal workloadmarkettotal ïœ
- 25. Workload Method (Continued) âą Advantages: simple method, conceptually sound, used for all types of selling situations âą Disadvantages: Neglects sales productivity & salesforce turnover Sales Potential / Breakdown Method âą The formula used is: , where N=Number of salespeople needed, or salesforce size S=Annual sales forecast for the company in value (Rs. Million) P=Estimated productivity of the average salesperson in sales (Rs. Million) T=Estimated percentage of annual salesforce turnover âą Advantages: Simple and straight forward âą Disadvantages: Conceptually weak; lead time needed for a new salesperson to reach average productivity )1( T P S N ï«ïœ
- 26. Incremental Method âą It is based on marginal analysis theory of economics âą Basic concept: Net profits will increase when additional salespeople are added, if the incremental sales revenues exceed the incremental costs âą Merit: Conceptually accurate, as it quantifies relationships between salesforce size, sales, costs, profits âą Demerit: Can not be used if historical data on sales and costs are not available