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Part One: Strategic Planning

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Sales Management: Shaping Future Sales Leaders

Introduction to Sales Management Chapter 1

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Learning Objectives  Define strategy hierarchy and understand how sales and marketing strategies affect overall strategy  Identify different types of selling strategies and how the selling process varies  Describe the sales management process and responsibilities and activities of sales managers

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Managing Sales Force Is Important  Sales positions are hardest to fill  Sales consumes >20% of a firm’s revenue

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$$$  Sales starting salaries are ~20% higher than other marketing positions  Many CEOs get their start in sales  Sales managers earn more than managers in other areas  Sales jobs predicted to grow at a faster rate than other professions

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From Sales Rep to Sales Manager  “Manager of people”  Sales success is poor predictor of success as sales manager  Most successful sales reps are eventually pressured to make the transition to sales mgmt “This is a decision that must be carefully analyzed because it’s not an easy transition to go from being a player to a coach.”

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What Being a Sales Manager Means Coaching

 Coaching salespeople so they can improve

Developing

 Developing strategies and delegating the responsibility for implementation to others

Motivating

 Figuring out how to motivate people, some who are older than you

Convincing

 Convincing others that what is right for the sales force is right for their departments, too

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Establishing the Parameters of the Firm’s Strategy: The Mission Statement  Inspire the members of an organization  Give purpose to their actions  Guide their decision-making  Serve as a standard against which decisions can be weighed  Once the mission’s objectives are set, strategy can be created

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Sample Mission Statements  Everything we do is inspired by our enduring mission:  Coca-Cola

 Southwest Airlines

 To Refresh the World . . . in body, mind, and spirit  To Inspire Moments of Optimism . . . through our brands and our actions  To Create Value and Make a Difference . . . everywhere we engage

 The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit

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The Strategy Hierarchy  Corporate strategy encompasses plans and goals for the entire organization  Address questions such as what markets and sourcing options company should engage  Ex: hire sales force vs. use distributors  Ex: outsource mfg and focus internally on marketing

 Business units create their plans to support corporate strategy

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The Strategy Hierarchy

Corporate Strategy

Marketing Strategy

Sales Strategy

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Creating a Marketing Strategy Markets

 What markets do we serve with what products?

Relationships

 What types of relationships do we form and with whom?

Investment

 What level of investment will be required, and how will we locate and allocate the needed resources?

Objectives

 What are the detailed objectives and action plans?

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What Markets Do We Serve with What Products?  Find a sustainable competitive advantage  Need expertise, technology or a patent

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Product-Market Grid

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What Types of Relationships Do We Form and with Whom?  Strategic plan considers network of relationships    

Investors, potential investors, bankers Suppliers Personnel sources Regulatory agencies

 Relationship with customers is most important  A service advantage is often a function of the quality of relationships  Customers’ lifetime value is worth more than the average single purchase 1-15 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Customer Relationship Management (CRM): Key Terms  CRM: identifying and grouping customers to best acquire, retain, and grow customers  Sales and marketing teams are responsible for CRM

 Customer acquisition strategy: plan to obtain new customers  Customer retention strategy: plan designed to keep customers  Growth strategy: plan designed to increase sales to the same customers 1-16 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Global Sales Management: Going Global to Achieve Growth  QuadRep’s expanding customers wanted local support in Singapore E lle s m e r e I s la n d

A r c tic O c e a n B a n k s Islan d

V ic to ria I s la n d

B a ff in

S e v e r n a y a Z e m ly a

A rc tic O c e a n

G re e n la n d (D e n .)

J a n M a y e n ( N o r.)

A r Nc etwi cS i b Oe r i a cn Ies l aa n nd s

F ra n z Jo se f L a n d

S v a lb a r d ( N o r.)

N o v a y a Z e m ly a

W r a n g e l Is la n d

I s la n d

F a r o e Is . (D e n .)

U .S .A .

N o rw a y

F in la n d

Ic e la n d

Ir e la n d Is la n d o f N e w fo u n d la n d

R u s s ia

E s to n ia L a tv ia L ith u a n ia B e la r u s N e th . P o la n d G e r m a n y B e l. U k ra in e C zech. A u s . H uS nl og v. a k . M o ld o v a F ra n c e S w itz . S lo v . C r o . Y u g Ro .o m a n i a B o s. B u lg a ria Ita ly M ac. A lb a n ia S p a in G re e c e T urk U n ite d K in g d o m D en.

C anada

S w eden

60°

A le u tia n I s la n d s (U S A )

K u ril Isla n d s

K a z a k h s ta n

M o n g o lia

 QuadRep opened office in Singapore N o rth A tla n tic O c e a n

U n ite d S ta te s o f A m e ric a

P o rtu g a l

N o rth P a c ific O c e a n

C y p . L e b . S y ria Ira q Isra e l Jo rda n K u w a it

T u n is ia

M o ro c c o

C a n a r y I s la n d s ( S p .)

A lg e r ia

T he B aham as

E gypt

T u rk m e n is ta n

K y rg y z s ta n

Japan

S . K o re a

C h in a

A fg h a n is ta n

Ira n

N . K orea

T a jik is ta n

N epal

P a k is ta n

N o rth P a c ific O c e a n

B hu.

Q a ta r

 Has since followed customers across the globe, opening offices in Malaysia, China, Taiwan, Thailand, the Philippines, and Mexico

H a w a iia n Is la n d s U . S.A .

L ib y a

W e s te r n S a h a r a ( M o r.)

G e o rg ia A r m e n ia A z e rb a ija n

ey

U z b e k is ta n

M e x ic o

C uba

Jam .

G u a te m a la E l S a lv a d o r

B e liz e H o n d u ra s

M a u rita n ia

H a iti P u e rto R ic o (U S )

D o m in ic a

B a rb a d o s

N ic a ra g u a

C o s ta R ic a

V e n e z u e la

Panam a

C o lo m b ia

G a la p a g o s I s la n d s ( E c u a d o r)

Saudi

D o m in ic a n R e p u b lic

T rin id a d a n d T o b ag o G uyana S u r in a m e F r e n c h G u ia n a ( F r.)

M a li

Senegal T h e G a m b ia G u in e a -B is s a u G u in e a S ie rra L e o n e

N ig e r

C ô te D ’ Iv o ire

L ib e r ia

N ig e ria

Congo

A n g o la

M a la w i

B u ru n d i T a n z a n ia

T h a ila n d

Z im b a b w e

N a m ib ia B o ts w a n a

P a ra g u a y

V ie tn a m

P h ilip p in e s

A n d a m a n I s l a n d s ( I n d iCa a) m b o d i a

F e d e ra te d S ta te s o f M ic ro n e s ia

S ri L an k a

B ru nei

M a ld iv e s

M a rs h a ll Is la n d s

G u a m (U S A )

M a la y s ia

S in g a p o re

K irib a ti

In d o n e s ia

P a p u a N e w G u in e a

S e y c h e lle s

S o lo m o n

Is la n d s

M o z a m b iq u e

Z a m b ia

B o liv ia

L aos

K enya

R w anda Z a ire

T a iw a n

M y a n m a r (B u rm a )

S o m a lia

U ganda

B ra z il

F r e n c h P o ly n e s ia ( F r.)

B ang.

Yem en

E th io p ia

C .A . R .

C a m e ro o n

G hana Togo E q . G u in e a

S a o T o m e & P r in c ip e

P e ru

In d ia

D jib o u ti

B e n in

G abon

E cuador

E ritr e a

S udan

C had

B u rk in a F a so

A rUa . bA i .a E . O m an

M adagascar M a u r itiu s

F iji

In d ia n O c e a n

S w a z ila n d

N e w C a led o n ia

A u s tra lia

S o u t h A f r i Lc ae s o t h o

S o u th P a c if ic O c e a n

U ru g u a y C h ile

A rg e n tin a

S o u th A tla n tic O c e a n

N e w Z e a la n d T a s m a n ia

F a lk la n d I s la n d s ( Is la s M a lv in a s ) ( a d m . b y U K , c la im e d b y A rg e n tin a ) Île s C ro z e t ( F ra n c e ) S o u th G e o rg ia (a d m . b y U K , c la im e d b y A rg e n tin a )

A n ta rc tic a Source: Charles Cohon, Vice President of Research of Manufacturers’ Representatives Educational Research Foundation. He can be reached through his Web site, www.cohon.com.

1-17 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Global Sales Management: Going Global to Achieve Growth  Empire Technical Group’s customers moved mfg and purchasing to Asia E lle s m e r e I s la n d

A r c tic O c e a n B a n k s Islan d

V ic to ria I s la n d

B a ff in

S e v e r n a y a Z e m ly a

A rc tic O c e a n

G re e n la n d (D e n .)

J a n M a y e n ( N o r.)

N o v a y a Z e m ly a

W r a n g e l Is la n d

I s la n d

F a r o e Is . (D e n .)

U .S .A .

N o rw a y

F in la n d

Ic e la n d

Ir e la n d Is la n d o f N e w fo u n d la n d

R u s s ia

E s to n ia L a tv ia L ith u a n ia B e la r u s N e th . P o la n d G e r m a n y B e l. U k ra in e C zech. A u s . H uS nl og v. a k . M o ld o v a F ra n c e S w itz . S lo v . C r o . Y u g Ro .o m a n i a B o s. B u lg a ria Ita ly M ac. A lb a n ia S p a in G re e c e T urk U n ite d K in g d o m D en.

C anada

S w eden

60°

A le u tia n I s la n d s (U S A )

K u ril Isla n d s

 ETG and several other companies formed a consortium and included Asian partners where Asia/Pacific resources were required N o rth A tla n tic O c e a n

U n ite d S ta te s o f A m e ric a

P o rtu g a l

N o rth P a c ific O c e a n

M o ro c c o

A lg e r ia

T he B aham as

H a w a iia n Is la n d s

M e x ic o

C uba

Jam .

G u a te m a la E l S a lv a d o r

B e liz e H o n d u ra s

L ib y a

W e s te r n S a h a r a ( M o r.)

K a z a k h s ta n

G e o rg ia A r m e n ia A z e rb a ija n

ey

E gypt

H a iti P u e rto R ic o (U S )

D o m in ic a

B a rb a d o s

N ic a ra g u a

C o s ta R ic a

V e n e z u e la

Panam a

T rin id a d a n d T o b ag o G uyana S u r in a m e F r e n c h G u ia n a ( F r.)

M a li

Senegal T h e G a m b ia G u in e a -B is s a u G u in e a S ie rra L e o n e

N ig e r

E ritr e a

S udan

C had

B u rk in a F a so

C ô te D ’ Iv o ire

K y rg y z s ta n

N . K orea

T a jik is ta n

N ig e ria

Japan

Ira n

N o rth P a c ific O c e a n

C h in a

A fg h a n is ta n

N epal

P a k is ta n

A rUa . bA i .a E . O m an

In d ia

B hu.

B ang.

Yem en

T h a ila n d

V ie tn a m

P h ilip p in e s

A n d a m a n I s l a n d s ( I n d iCa a) m b o d i a

F e d e ra te d S ta te s o f M ic ro n e s ia

S ri L an k a

E th io p ia

C .A . R .

T a iw a n

M y a n m a r (B u rm a ) L aos

D jib o u ti

B e n in

L ib e r ia

T u rk m e n is ta n

M o n g o lia

Q a ta r

Saudi

D o m in ic a n R e p u b lic

M a u rita n ia

U z b e k is ta n

S . K o re a

C y p . L e b . S y ria Ira q Isra e l Jo rda n K u w a it

T u n is ia

C a n a r y I s la n d s ( S p .)

U . S.A .

A r Nc etwi cS i b Oe r i a cn Ies l aa n nd s

F ra n z Jo se f L a n d

S v a lb a r d ( N o r.)

B ru nei

M a ld iv e s

C o lo m b ia

G a la p a g o s I s la n d s ( E c u a d o r)

U ganda

G abon

E cuador

Congo

B ra z il

A n g o la

M a la w i

B u ru n d i T a n z a n ia

Z im b a b w e

N a m ib ia

B o ts w a n a

P a ra g u a y

S in g a p o re

K irib a ti

In d o n e s ia

P a p u a N e w G u in e a

S e y c h e lle s

S o lo m o n

Is la n d s

M o z a m b iq u e

Z a m b ia

B o liv ia

F r e n c h P o ly n e s ia ( F r.)

M a la y s ia

K enya

R w anda Z a ire

S a o T o m e & P r in c ip e

P e ru

S o m a lia

M a rs h a ll Is la n d s

G u a m (U S A )

 Became opportunity to pursue contracts to build entire assemblies as well as just parts C a m e ro o n

G hana Togo E q . G u in e a

M adagascar

M a u r itiu s

In d ia n O c e a n

F iji N e w C a led o n ia

A u s tra lia

 Morphed into international design and assembly house, controlling manufacturing of complete assemblies, turning “a $3 (part) sale to a $103 sale” S w a z ila n d

S o u t h A f r i Lc ae s o t h o

S o u th P a c if ic O c e a n

U ru g u a y

C h ile

A rg e n tin a

S o u th A tla n tic O c e a n

N e w Z e a la n d

T a s m a n ia

F a lk la n d I s la n d s ( Is la s M a lv in a s ) ( a d m . b y U K , c la im e d b y A rg e n tin a )

Île s C ro z e t ( F ra n c e )

S o u th G e o rg ia (a d m . b y U K , c la im e d b y A rg e n tin a )

A n ta rc tic a Source: Charles Cohon, Vice President of Research of Manufacturers’ Representatives Educational Research Foundation. He can be reached through his Web site, www.cohon.com.

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What Level of Investment Will Be Required, and How Will We Allocate the Needed Resources?  Money, human or social capital  Human capital decisions include:  Determining number of salespeople  What skills and experience they must have  What training they require

 Other decisions include:  Whether to hire telephone prospectors or to outsource  Who handles customer service (a sales rep or a customer service rep)

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What Are the Detailed Objectives and Action Plans?  SMART format for establishing objectives

S pecific Measurable A chievable, yet challenging R ealistic T ime-based 1-20 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Self-Assessment Library  Go to http://www.prenhall.com/sal/  Access code came with your book

 Click the following  Assessments I. What About Me C. Motivation Insights 5. What Are My Course Performance Goals?

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Selling Approaches Transactional

 Finish sale as quickly and as easily as possible  Key to success is making as many calls as possible to as many people as possible

Affiliative

 Based on the friendship between the salesperson and the individual buyer  Identify and solve a client’s problems

Problem Solving  Also called needs-satisfaction selling or or Consultative problem/solution selling Enterprise

 Business-to-business (B2B) concept  Based on not only person-to-person relationships but on company-to-company relationships

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The Selling Approach: 8 Steps

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Prospecting  Prospecting involves identifying potential customers for a particular product or service  A prospect is a MAD buyer  the Money to spend  the Authority to buy  the Desire to buy it

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Pre-Approach  During Pre-Approach, the salesperson tries to learn everything he can about the account  Can take a significant amount of time

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Approach  Approach: salesperson asks buyer to commit to a meeting  Opening statement must get buyer’s attention

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Needs Identification  Needs identification: salesperson confirms prospect is MAD (Money, Authority, Desire)  Comprised of 3 elements 1

Questioning

2

Identification

3

Pre-commitment

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Presentation  Presentation: salesperson describes product and how it meets buyer’s needs Feature

Evidence

Benefit

Agreement

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Handling Objections  Objections: reasons a buyer offers to not buy your product  Can occur at any time  Salesperson should find out root of concern and resolve it

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Closing the Sale  Close: when salesperson asks buyer for the sale  Good close  Reinforce decision to buy  Confirm implementation schedule  Thank the buyer  Ask for referral

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Implementation/Follow-Up  Follow-Up: After delivery, ensure that the customer has good experience with product  Training, service, policies and procedures

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Selling Process vs. Selling Approach Selling Approach

Selling Process

Transactional

Prospecting

Affiliative

Consultative

Enterprise

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Closing

Presenting

Sales Leaders

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Sales Executive Plan

 Devise sales plan to meet strategic objectives  Develop general strategies that specify sales approach

Organize

 Determine type of sales force  Create hiring and training policies and strategies

Implement

 Communicate and roll out the plan  Create the right culture  Choose a compensation model

Monitor

 Sales and customer satisfaction  Salesperson recruitment, selection, training  Take corrective action as necessary

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Field Sales Manager  Plans, organizes, implements, and monitors for specific sales team  Salespeople report to Field Sales Manager  Primary responsibility is sales quota  Responsible for training and motivating salespeople

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Sales Executive vs. Sales Manager Duties Activity

Sales Executive

Sales Manager

Plan

Set overall sales targets for each product

Set quotas for each salesperson for each product

Organize

Decide what type of people to Interview and hire specific hire for sales positions people for sales positions

Implement

Determine the compensation plan

Identify each person’s motivators and find ways to reward good performance for each person

Monitor

Track sales by region; take corrective action such as additional training if sales are too low

Observe each salesperson’s actions in the field and offer suggestions for their improvement

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Ethics in Sales Management: Maintaining NCR’s Ethical Sales Culture

We … recognize that selling only works when everything is right for the customer—when we deliver value —Rick Makos President, NCR-Canada 1-37 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Role Play: T&G Supply  Opportunity 1: T&G Supply  Provides maintenance, repair, and operations items to manufacturers  Janitorial products, hardware products to fix machines, and other common maintenance products

 Opportunity 2: Columbia Leasing  Car rental and leasing company  Your job is to sell corporate contracts

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Role Play (continued): Action Steps  Break into pairs  Each person picks 1 company to play sales mgr  Think about issues that reflect a servicedominant logic in each situation  Using other concepts discussed in the chapter, identify three characteristics that you would want each new salesperson to have  Take turns interviewing your partner for a sales position 1-39 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Caselet 1.1: Killebrew Manufacturing  Makes plastic patio products  Widow Francine took over company  Annual growth rate ~5% for past 20 years  Trying to grow company  10% introductory discount  Makes prices same as biggest competitor  Killebrew quality is much better  Problem: Few new accounts are reordering  Are salespeople too quick to sell price, not quality? 1-40 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

Caselet 1.1 (continued): What Would You Do?  Quality must be demonstrated and sold  What sales process or approach should Francine consider?

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Caselet 1.2: Morton’s Ice House  Grill and microbrewery  Owner Sherry Morton hired Trey Denton to sell franchises  Trey sold 12 franchises in 1 year  Corporate goal is to sell 200 franchises in next 2 yrs  Hired 5 salespeople for Trey to manage

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Caselet 1.2 (continued): What Would You Do?  Problems  Salespeople calling on same prospects  Other prospects not being called on  Sold only 22 franchises in 6 months  2 salespeople quit  10 franchises want out of contracts

 What should Sherry do?

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