Session 3

Session 3

Customizing the Sales Approach An Expert’s Viewpoint: Lisa Gregg, Director of Sales Development for American Express had this to say about customizing the sales approach: “Depending on the application, the card may have hundreds of different benefits. A supermarket manager has different needs than a client in the furniture business. We wanted to create a message to fit the specific needs of our customers.” Sales representatives now input specific customer information, then the database produces sales materials ranging from industry data sheets to Power Point slides that can be used in the sales presentation.

Actio n

Customizing the Sales Approach An Expert’s Viewpoint:

Result

Customers now receive sales presentations based on their unique needs, and American Express has greatly improved the efficiency of its sales organization.

The Sales Process: An Salesperson Overview Attributes

Selling Strategy

Initiating Customer Relationship s

Developing Customer Relationship s

Enhancing Customer Relationship s

The Sales Process: Selling Strategy In order to be successful in today’s global business environment, salespeople must also think and act strategically. The must develop strategies for:

Their Sales Territory Each Customer Each Sales Call

The Sales Process

Salesperson Attributes

Initiating Customer Relationships

Developing Customer Relationship s

• Prospecting • Preapproach • Presentation Planning • Approaching the Customer

Enhancing Customer Relationship s

The Sales Process

Salesperson Attributes

Initiating Customer Relationships

Developing Customer Relationship s

• Sales Presentation Delivery • Earning Customer Commitment

Enhancing Customer Relationship s

The Sales Process

Salesperson Attributes

Initiating Customer Relationships

Developing Customer Relationship s

Enhancing Customer Relationship s

Adding Value through Follow-up, Self-leadership, and Teamwork

Personal Selling-Driven vs. AdvertisingDriven Marketing Communications Strategies Personal Selling When Message Flexibility is Important When Message Timing is Important When Reaction Speed is Important When Message Credibility is Important When Trying to Close the Sale When Low Cost per Contact is Important When Repetitive Contact is Important When Control of Message is Important When Audience is Large Advertising

Merging Two Sales Forces An Expert’s Viewpoint: Zeneca and Astra were two independent pharmaceutical companies that merged, forming AstraZeneca. Integrating the two sales forces was a major challenge, for example, Astra was more decentralized and Zeneca was more centralized. The decision was made to develop a new sales model that blended the advantages of centralization and decentralization, and they decided to move to a market-oriented sales organization structure.

Actio n

Merging Two Sales Forces An Expert’s Viewpoint:

Result The new sales organization has been successful in generating significant sales and market share growth. Tony Zook, vice president of sales at AstraZeneca, thinks that “by bringing together two winners, you can create a champion.”

Sales Organization Concepts Specialization The degree to which individuals perform some of the required tasks to the exclusion of others. Individuals can become experts on certain tasks, leading to better performance for the entire organization.

Centralization The degree two which important decisions and tasks performed at higher levels in the management hierarchy. Centralized structures place authority and responsibility at higher

Sales Force Specialization Continuum

Generalists

Some All selling activities specialization and all products to of selling all customers activities, products, and/or customers

Specialists

Certain selling activities for certain products for certain customers

Span of Control vs. Management Levels Flat Sales Organization

District Sales Manage r

District Sales Manage r

District Sales Manage r

District Sales Manage r

Span of Control

District Sales Manage r

Management Levels

National Sales Manager

Span of Control vs. Management Levels Tall Sales Organization

National Sales Manager

District Sales Manager

District District Sales Sales Manager Manager Span of Control

Regional Sales Manager District Sales Manager

District Sales Manager

District Sales Manag er

Management Levels

Regional Sales Manager

Geographic Sales Organization National Sales Manager

Eastern Region Sales Manager

Western Region Sales Manager

Zone Sales Managers (4)

Zone Sales Managers (4)

District Sales Managers (20)

District Sales Managers (20)

Salespeople (100)

Salespeople (100)

Product Sales Organization National Sales Manager

Office Equipment Sales Manager

Office Supplies Sales Manager

District Sales Managers (10)

District Sales Managers (10)

Salespeople (100)

Salespeople (100)

Market Sales Organization National Sales Manager

Commercial Accounts Sales Manager

Government Accounts Sales Manager

Zone Sales Managers (4)

District Sales Managers (5)

District Sales Managers (25)

Salespeople (50)

Salespeople (150)

Functional Sales Organization National Sales Manager

Field Sales Manager

Telemarketing Sales Manager

Regional Sales Managers (4)

District Sales Managers (2)

District Sales Managers (16)

Salespeople (40)

Salespeople (160)

Comparison of Sales Organization Structures Organizational Structure • • Geographic • •

Produc t

Advantages

Disadvantages

Low Cost • Limited No geographic duplication specialization No customer duplication • Lack of Fewer management levels management control over product or • Salespeople become • customer High cost emphasis experts • Geographic in product attr. & duplication applications • Customer duplication • Management control over selling effort

Comparison of Sales Organization Structures Organizational Structure

Market

Function al

Advantages

Disadvantages

• Salespeople develop better understanding of • High cost unique customer needs • Management control over • Geographic selling allocated to different duplication markets

• Efficiency in performing selling activities

• Geographic duplication • Customer duplication • Need for coordination

SALES QU OTA S: QUOT AS ARE SE T A S S TA NDARDS TO SP ECIF Y A D ESIR ED LEV EL OF PERF OR MA NCE F OR A SP EC IFIED MA RK ETIN G UNIT . A LL QU OT AS ARE GUID ED BY A C ER TAIN T IME ELEME NT W ITH IN WH IC H MA NA GE ME NT FEELS T HE QUOT A SHO UL D B E A TTA IN ED . A.TH E PU RPO SE OF QU OT AS: -P RO VID ING GOA LS AN D IN CEN TIV ES -E VA LUA TING PER FOR MA NC E -C ON TR OLLIN G THE SA LES

-

UNC OV ER ING ST REN GT H A ND WEAK NE SS IN TH E SEL LING STR UCTU RE - IM PR OVIN G T HE EFFECTIV ENE SS OF THE COMPE NS ATIO N P LAN - CONT ROL LIN G TH E S EL LING EXPE NS ES - ENH ANC IN G SALES C ON TE ST S

B.

TYPE S OF QUO TA S: SALES V OL UME QUOT AS BASED ON RUPU EE4 S, UN ITS OR POIN TS . S UC H QU OT AS ARE BASED ON PAST SA LES EXPE RIEN CE, TE RRITO RIA L SALES P OTE NTIA LS, T OT AL MA RKE T ES TI MA TE S OR ON SALES P ER SON’ S E ST IMA TES . FINA NC IA L Q UOT AS : GR OSS MA RGIN OR NE T PROF IT QUO TA S

C. ADMIN IST RATION OF SALES QU OT AS: i. ii.

SET TI NG R EA LIST IC QUO TAS CREATIN G UN DCER STA NDABLE QUOT AS iii. IN CLUD IN G TH E SA LES PERSO N IN QUOT A SE TT ING iv. KEE PIN G TH E SA LES F OR CE UPD ATED v . MA INTAIN ING C ON TRO L

SA LES COMP EN SA TION : MO NE TA RY C OM PE NS ATIO N REMA INS AS ONE OF TH E MO ST DIR ECT, L EA ST AMB IG UOU S WAYS OF COMMUN I- CAT ING TO S ALES PER SON S A BOU T TH EIR PER FORMA NC E. SALES COMPE NS ATIO N P LANS CAN BE THE “S TE ER ING WH EEL ” TH AT ENA BLES T HE MA NA GE ME NT TO GU ID E THE ACTIV IT IES OF SALES PEO PL E. SALES F ORC E COMPE NS ATIO N IS U SUA LLY THE LARGES T C OM PO NE NT OF THE DIR ECT S EL LIN G C OS T.

THR EE B ASIC ME THOD S OF FIN ANC IA L C OMP ENS ATIO N: A. STRA IGHT SALARY B. STRA IGHT COMMIS SI ON C. COMB INA TION OF SA LARY, COMMIS SIO N A ND /O R BONUS

Sa lesp eople a re i. CREATU RES OF HA BIT ii. GOA L-OR IE NT ED IND IV ID UALS iii. SATIS FIE RS iv. MO NE Y-ORIEN TE D IND IV ID UAL S

DEVE LOP ING A COM PENS ATI ON PL AN: - PRE PARE J OB DE SCRIPT ION - ES TABL ISH SPEC IFIC OBJE CTIVES - DET ERM INE GENERA L L EVEL S OF COMP ENSAT ION - DEVE LOP T HE CO MPE NSATION MIX - PRE TE ST THE PLAN - ADMINI STER T HE PL AN - EVAL UATE T HE PL AN

-

SPE CIF IC OB JECTI VE S FROM TH E VIE WP OIN T OF T HE COMPA NY COUL D B E: CONTR OL OV ER TIME ALLOC ATION ECONO MY . A D ES IR ABLE BALANC E BETW EEN S ALES C OS TS AND SALES R ES UL TS MO TIV ATION . A PL AN THA T CAN MO TIV ATE PEO PL E TO OPT IMA L PER FORMA NC E. SIMPL IC ITY . SIMP LE TO ADMIN IST ER , EA SY TO E XPL AIN TOS ALES PE OP LE AND FLEX IB LE

FR OM THE VIEW POI NT OF THE SAL ES PERSON TH E PLA N SHOULD OFFER: - INCOM E REGULA RIT Y - REWA RD FOR SUPERIOR PERF ORMA NCE - FA IRNESS DETER MIN E THE GENERA L LEVEL OF COM PEN SA TI ON: SEVER AL FAC TOR INFL UENCE THE BA SI C LEV EL, VIZ, THE SK ILL S, EX PER IENC E AND EDUCA TI ON REQUI RED TO DO THE WO RK -THE LEV EL OF INCOM E FOR COM PARA BL E JOBS IN THE COMPA NY -THE LEV EL OF INCOM E FOR THE

ADVANTA GES & D ISA DV ANTA GES OF DIFFER ENT C OMP EN SA TION ME THO DS : A.ST RAIGH T SA LARY-MO ST APPR OPR IAT E WHE N: i TEAM SEL LING IS INV OL VED . ii . LONG NEG OT IA TIN G PE RIOD v. MIX ED PROMO TIO NA L SITU ATIO N vi. LEARNING PE RIO DS

ST RAIGH T SALARY -ADV ANTA TGE S i. PROV ID ES SE CUR ITY T O SALES PERS ON ii. HE LPS DEVEL OP A SE NS E OF LOYALTY T O TH E C OM PA NY vi. IN CREA SES F LEXIB IL IT Y IN TER RIT OR IA L ASSI GNME NT S iv. GI VE S A HIG HE R DEGR EE O F CONT ROL OV ER SALES PEO PL E’S ACTIV ITIE S. V. IS SIMP LE T O A DMINIS TE R

DISA DVA NTA GES : i. PROV ID ES NO FINA NC IA L IN CE NTIV E TO PU T F ORT H EXTR A EF FOR T ii. MA Y INC REA SE SE LLIN G C OS T iii. OFTE N L EADS T O INC OME IN EQ UIT IES iv. LEADS TO A DEQ UA TE B UT NOT SUP ER IO R PERFOR MA NCE.

B. i.

STR AIG HT COMMIS SI ON: DECID E T HE BASE OR UN IT ON WHIC H T HE COMMIS SIO N WIL L B E PAID ii. THE RATE T O BE PA ID P ER UNI T iii. THE POIN T A T WHIC H THE COMMIS SIO N START iv. THE TIME WHE N C OMM ISSION IS PAID ADVANT AGE S: i. IN COME IS D IR EC TLY LINK ED TO PROD UCTIV IT Y ii. EASY T O C AL CUL ATE

iii.

THE RE IS NO CE IL ING ON POT EN TIA L EARNING S iv. MO NE Y IS NO T TIE D UP IN SALARIES v. COST S A RE PROP OR TION AL TO SALES vi. SALES P EOP LE HAVE MA XIMU M WOR K FREEDOM vii. POO RLY PERF OR MIN G SA LES PER SON S E LIMINA TE THE MS EL VES BY QU ITT ING viii. IN COME IS B ASE D NOT ON SUB JECTI VE EV AL UA TIONS .

DISA DVA NTA GES : i. EXCES SIVE EM PH ASIS MA Y B E PLACED ON SALES VOLUME RATHE R THA N ON PR OFITA BLE VOLUME ii. SALES P EOP LE HAVE L IT TL E LOYALTY T O TH E C OM PA NY iii. DUE TO EXTR EME FLUC TUA TIONS IN EARNIN GS , IT CAN CREATE UN CER TA INT Y iv. MA Y L EAD TO HIG H SA LES FORCE TUR NOV ER WHE N THE SALES A RE LOW

v. NON S EL LING A CTIVITIE S MA Y GE T NEG LEC TED vi. SALES P ER SONS MA Y DUMP IN VEN TO RY ON C US TO ME RS THUS STR AIN ING RELATIONS HIP S. vii. FLEX IB IL IT Y TO SPL IT TER RIT OR IE S OR TRANS FER SALES PE RSONS IS DIMIN ISH ED B EC AU SE OF L ACK OF CONT ROL . viii. SALES MA NA GER S MA Y BECOM E PER FUNC TOR Y IN RECRUIT ING, SEL EC TING AND

MA RGINA L SA LES PE OPL E ACCEPT ABLE UND ER THIS PL AN C.

COMB INA TION P LAN:

i. ii. iii.

SALARY PLUS C OM MISS ION SALARY PLUS B ON US SALARY PLUS C OM MISS ION PLUS BONUS COMMIS SIO N PLUS B ON US

iv.

TE RRIT OR Y MA NAGEMEN T

TER RIT OR Y MA NA GEM EN T: EST ABLIS HIN G SALES T ER RIT OR IE S: A SA LES TERRITO RY IS A GEO GR APHIC A REA T HA T CONT AINS CUST OME R A CCOU NTS PRES ENT & PO TE NT IA L, ASSI GNE D TO A PA RTIC UL AR SA LES PE RSO N. SALES T ER RIT OR IE S A RE DESIG NE D IN SUCH A W AY THA T IT CAN BE CUL TIV ATE D IN THE MOS T EFFECTI VE A ND EC ONO MIC AL WAY. A SSIG NING SALES TERR ITOR IES HEL P TH E S AL ES MA NA GE R TO MA TCH SA LES EFFORTS WIT H SA LES

REASO NS FOR ES TA BLISHI NG SALES TE RRITO RIE S: A. TO EN HA NCE MA RKET COVER AGE B. TOM INIMIZ E S EL LIN G C OS T C. TO ST RENGT HEN C US TOME R RELATION S D. TO B UIL D A MOR E EFFEC TIV E SALES F ORC E E. TO EV AL UA TE T HE S ALES FORCE BETT ER F. TO C OO RDINA TE SE LLING W ITH OTH ER MA RKE TING FUNC TION S

SE TTIN G UP SALES TE RRIT OR IE S: A. SEL EC TING A GE OGR APH ICA L UNIT AS A C ON TR OL UNIT . THIS SHO UL D B E A SMA LL UN IT. B. MA KING AN ACCOU NT ANAL YSIS ENU ME RA TION OF ACCOU NT S, EST IMA TED SALES PO TE NT IA L OF EACH A CCOUN T A ND COMPA NY’S S HA RE IN THE ACCOUNT PO TE NT IA L.

C.

DEVEL OPI NG A SALES PER SON ’S WOR K LOAD ANA LYSIS-NO . OF ACCOUNT S, FREQU EN CY OF CAL LS, DURA TION OF EA CH CALL, TH E TRAVEL TIME REQUI RED AND T HE NON S EL LING TI ME.

D. CO MB INING GEO GRA PH IC CO NTR OL UNI TS INTO SALES TER RITO RI ESTER RI TORY MA PPI NG S OFTWA RE PA CK AGES CA N ALI GN TER RI TO RIES QUI CKLY AND EV EN LY. TEN TA TI VE ALI GN MEN TS W ILL HAV E TO BE MO DI FIE D TO BR ING A BOUT C LO SER

E. ASSIG NIN G SA LES PER SON NE L TO TER RIT OR IE S F. REVISIN G SA LES TERRITO RIES . ROU TIN G : A PR OPE RLY D ES IGN ED R OU TIN G PLAN OF FER S THE F OL LOW ING ADVANTA GES : - REDUC ED TRAVEL TIME AND SEL LING C OS TS - IMP ROV ED TERRITO RY COVER AGE - IMP ROV ED COMMU NIC ATION DIS ADVANT AGE S

- REDUC ED SALES PE RSON IN ITIA TIV E - IN FLEXIB LE WH ENEV ER TH E PROD UCT IS SU CH T HA T IT REQUI RE S FREQU EN T CONTA CT AND F REQU EN T S ER VIC ING A STR IC T ROUT ING PLAN IS A MUS T DRIV ER-SALESMA N FOR SO FT DRINK S, B REA DS, G RO CER IES ETC. ROUTI NE S EL LING J OBS A RE MO RE AME NA BLE TO ROUT ING. R OUT ING IS MO RE C OM MON FOR EST ABLIS HE D COMPA NIE S.

SE TTIN G UP A R OU TIN G PL AN: IN FOR MA TION NEE DED A RE: NO . OF CALLS T O B E MA DE PER DAY, THE CA LL F REQ UE NC Y F OR EACH C LASS OF C US TO ME R, T HE DIS TA NCE TO EA CH A CCOUNT , A ND THE MOD E OF TRANS POR TAT ION TO B E US ED. US ING GI S B ASE D SOF TWARE , A PC CAN DRAW OUT A ROUTI NG P LAN GIV EN TH E AVAIL ABIL ITY OF T HE ABOVE IN FOR MA TION . S UC H A PL AN WIL L MIN IMIZ E B ACKT RACKING AN D CRIS SC ROSS ING THU S OP TI MIZIN G TRAVEL TIME & C US TOM ER

ROU TIN G PA TTE RNS : THE SE ARE EIT HE R STRAIGHT L INE OR CIR CULAR. W ITH A ST RAIGH T LIN E R OU TE , THE SALESP ER SON STA RTS A T THE BASE AND THE N MA KES CALLS IN ON E D IR ECTIO N UN TIL THE END OF THE TERRITO RY IS REACHE D. CIR CULAR PATE RNS IN VO LVE STA RT ING AT TH E B ASE AND MO VING IN A C IR CLE OF STO PS UNT IL TH E SA LES PE RSO N END S UP B ACK A T T HE BASE. ANOTH ER MO RE C OMP LEX ROUTI NG PA TTER N IS A CLOVER LEAF. IT IS S IMIL AR TO CIR CULAR PATT ERN, BUT INS TE AD

COVER ING TH E EN TIR E TER RIT OR Y, THE R OU TE CIR CULES A PA RT OF A TERR ITO RY. TH E NE XT TRIP IS AN ADJACE NT CIR CLE AND THE PA TTER N CONTI NUE S TIL L A LL TH E L EAVES ARE COVER ED. WITH HOP SC OTC H PATT ERN, THE SALES P ER SON STA RTS AT THE F ARTH ES T POINT FROM THE HO ME B ASE A ND MA KES CA LLS ON TH E WA Y B ACK TO TH E B ASE . THE SA LES PER SON WIL L TY PIC ALLY F LY T O THE OU TER L IMIT S OF THE TERRI TOR Y

SKIP -STO P R OU TING INV OLVES DIF FERENT CALL FRE QUEN CIE S FOR DIF FER ENT ACCO UN TS . IN THIS PATTE RN, SALESMA N WIL L MA KE ON E TR IP IN WH IC H A LL TH E ACCOU NT S ARE CALLED ON , B UT ON ALTE RNA TE T RIPS ONL Y T HE MO RE PR OFIT ABLE A CCOUNT S A RE CALLED. SA LES CALL GRID AN ALYSIS: IN THIS APPRO ACH, A S ALES C ALL STR ATEG Y IS D EV ELOP ED BASED ON ACCO UN T OP POR TUNIT Y AN D STR ENG TH OF POSIT ION OF THE

SUP PL IER . THE GR ID SHO WS FOUR PO SS IB LE CELL POS ITIO NS , A S F OLLOWS : A. HIGH A /C OP PO RTU NIT Y & STRO NG SUP PLIER POS ITIO NHIGHL Y ATTR ACTIV E ACCOU NT S, SH OU LD RECEIVE HIGH L EVEL S OF SALES CALLS. B. HIGH A /C OP PO RTU NIT Y & WEA K SUP PL IER P OSI TIO N A/C s A RE POT EN TIA LLY ATTR ACTIV E. THE SE A /C s SHO UL D R EC EIV E HIGH LEVEL OF SALES CALLS TO

STREN GTH EN THE SU PP LIE R POS IT ION. D. LOS A/C OP POR TUNIT Y & STRO NG SUP PL IER P OS ITIO N A/Cs A RE SOM EW HA T ATTR ACT IV E BUT FUTUR E OPP OR TUN ITY IS LIMIT ED. THE SE A /C s SHO UL D R EC EIV E MOD ERATE LEVELS OF SALES CALLS T O MA INT AIN TH E CURREN T POS IT ION. E. LOSS A /C OP PO RTU NIT Y & WEAK SUP PL IER P OS ITIO N- A/C s ARE VER Y UNA TTR ACTIV E.

THE SE SH OUL D RECEIV E MIN IMA L L EV EL OF S ALES CALLS. EFFORTS SHOUL D B E MA DE TO R EPL AC E F IE LD CALLS BY TE LEPH ON E C ALLS, D IR EC T MA IL E TC .