Chapter 20, Personal Selling and Sales Management, Class Notes

Content List

Scope and Importance of Personal Selling

In the US, 14 million people are employed in sales positions, according to the department of labor.
Sales personnel include stockbrokers, manufacturing sales representatives, real estate brokers etc.
Most students in this class will have been employed as a sales person.
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Nature of Personal Selling

Gives marketers: Return to Contents

Types of Sales Persons

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Elements of the Personal Selling Process

No 2 salespersons use exactly the same sales method, but it is generally a seven step process:
  1. Prospecting and Evaluating

    Seek names of prospects through sales records, referrals etc., also responses to advertisements. Need to evaluate if the person is able (Undergraduate degree to attend a graduate program), willing and authorized to buy. Blind prospecting-rely on phone directory etc.
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  2. Preapproach (Preparing)

    Review key decision makers esp. for business to business, but also family Helps present the presentation to meet the prospects needs.
  3. Approaching the Customer

    Manner in which the sales person contacts the potential customer. First impression of the sales person is Lasting and therefore important.
    Strive to develop a relationship rather than just push the product.
    Can be based on referrals, cold calling or repeat contact.
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  4. Making the Presentation

    Need to attract and hold the prospects Attention to stimulate Interest and stir up Desire in the product so the potential customer takes the appropriate Action. AIDA
    Try to get the prospect to touch, hold or try the product. Must be able to change the presentation to meet the prospect needs.
    Three types of presentations:
    Overcoming Objections
    Seek out objections and address them.
    Anticipate and counter them before the prospect can raise them.
    Try to avoid bringing up objections that the prospect would not have raised.
    Price objection is the most common
    Need to provide customers with reasons for the $s, build up the value before price is mentioned
    Must be convinced of price in own mind before you can sell to customer.
    Get budget info. on buyer before you try to sell, and must know what they want, must sell service on top of product augmented product--to create value!!
    Must know value of product, provide warranties etc.!!
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  5. Closing

    Ask prospect to buy product/products. Use trial closes, IE ask about financial terms, preferred method of delivery.
    20% sales people generally close 80% sales., Avon, over 1/2 US $1.4 bn business from 17% of 415,000 SRs.
    Need to be prepared to close at any time. The following are popular closing techniques: If prospect says no, they may just need more reasons to buy!!
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  6. Following Up

    Must follow up sale, determine if the order was delivered on time, installation OK etc. Also helps determine the prospects future needs. Accomplishes four objectives: Old school, sell and leave!!--Quickly before customer changes her mind!!

    Handout...Toyota Calling In Japan's Car Market

    Half of cars are sold door-to-door. This is shrinking due to environmental changes. Toyota has more than 100,000 door-to-door sales people.
    Developing Long-term relationships is key, Keiretsu, do business with only those you know and trust. Face-to-face meetings before business to establish trust, the approach stage.
    Follow up is key to relationship:
    After sales: Prospecting includes: Timing of presentation: "At first I had no intention of buying a new car, but Mr. Saito is very good at proposing reasons why I should change" = $1,600 shaken.
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    Management of Salesforce

    Sales force is directly responsible for generating sales revenue.
    Eight general management areas:
    1. Establish Salesforce objectives

      Similar to other promotional objectives
      Demand oriented or image oriented.
      Major objective is persuasion, converting consumer interest into sales.
      Sales objectives; expected to accomplish within a certain period of time.
      Give direction and purpose and act as a standard for evaluation.
      Set for total salesforce and each individual salesperson.
      Can be $s, units sold, market share to achieve, for individual salespersons, also include ave. order size, ave. # of sales/time period, and ratio orders/calls.
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    2. Organizing the Salesforce

      • In-house vs. independent agents (manufacturer's sales agents).
      • Organize by:
        • Geography (simplest, but not suitable if product(s) are complex or customers require specialized knowledge)
        • Customer: Different buyers have different needs
        • Product: Specific knowledge re: products is needed
      • Size. Marginal analysis, or determine how many sales calls/year are needed for an organization to effectively serve its customers and divide this total by the average # of sales calls that a person makes annually. Also use subjective judgement.
        MBNA estimates how many calls to expect, one year in advance, and then determines the size of the salesforce at any given time.
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    3. Recruiting and Selecting Salespeople

      Need to establish a set of required qualifications before beginning to recruit. Prepare a job description that lists specific tasks the salesperson should perform and analyze traits of the successful salespeople within the organization.
      May use assessment centers--intense training environment that places candidates in realistic problem settings in which they give priorities to their activities, make and act on decisions.
      Recruitment should be a continual activity aimed at reaching the best applicants.
      Applicants that most match the demographics of the target market. Changing demographics, may be wise to hire hispanic sales people if your territory is in Florida!!
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    4. Training Sales Personnel

      Use formal programs, or Informal on-the-job training. Can be complex or simple.
      Training should focus on:
      • the company
      • products
      • selling techniques.
      Aimed at new hires and experienced personnel.
      Can be held in the field, educational institutions or company facilities.
      Oldsmobile spent $25 million last year to teach its dealers how to better treat its customers.
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    5. Compensating Sales People

      To attract, motivate and retain sales people, that facilitate and encourage good treatment of the customers. Need to understand personalities of sales people. Strive for proper balance of freedom, income and incentives.
      Need to determine the best level of compensation required, and the best method of calculating it.
      • Straight salary
      • straight commission (selling insurance)--single percentage of sales or sliding rate
      • Combination plan
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    6. Motivating Sales People

      Need a systematic approach, must also satisfy non-financial needs:
      • Job security
      • Working Conditions
      • Opportunities to succeed
      Sales contests increase sales.
      Symbolic awards--plaques, rings etc.
      Can also use negative motivational methods for under performers.
      Due to burn out--even the best need motivating!!
      Ongoing process...keep reps. hungry
      Need a motivational program.
      Spend time with reps, personal attention!!
      Take interest in them and the sales goals
      1. Compensation packet that rewards quality salesmanship and extra effort
      2. Recognition of extra effort of sales force
      3. Make sure SR feel important
      4. Keep SR informed of company activities
      5. Make certain reps. believe in the company
      6. Goals must be realistic and achievable and changeable
      7. Determine what they want and give it to them
      8. Controlling and Evaluating Salesforce performance
      Rely on information from call reports, customer feedback and invoices. Performance is determined by objectives. May compare with predetermined performance standards or with other sales people working under similar conditions.

      Handout Avon....

      $4 billion business, relied solely on personal selling until recently, environmental changes have changed longer is the wife expected to be at home...model is dual income earning parents with children in day care.
      Need to develop more efficient ways to reach customers.
      Salespeople earn pure commission, 10%...50% for top sellers (over $32,750)
      Strategies tried:
      • Avon Select.
        Direct mail catalog and toll free number, attract those that didn't know an "Avon Lady", or didn't want to deal with one. Also used national TV and print campaign in conjunction. Problems =
        • Salesperson creates confidence in the brand, delivering much more than advertising is able to do. When you take away the selling relationship, you're left with a brand that's relatively naked.
        • Key is not to undercut the field salesforce, similar to dual distribution creating channel conflict.
        Mary Kay Corp has also tried this strategy but differently and more successfully:
        • Catalogs carry different merchandise
        • Forward commission to sales rep. in customer's area "Never have a grey area regarding competing with sales force."
        Other demotivational concerns:
        • Restructured commissions
        • Dropped awards, trips and other incentives
      • Leadership Program.
        A Multi-level marketing (MLM) concept. Rewarded for products sold as well as people you recruit as a sales getting some of their commission and a portion of the commission of reps. they recruit etc. Created a hard sell environment and was consequently scrapped.
      To remotivate:
      New CEO
      • Reinstate Birthday presents
      • Anniversary plates
      • Annual Pins
      • Phone Blitzs to indicate appreciation
      "Gifts [and recognition] are part of the magic"
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