Ch 17. Personal Selling and Sales Management

• Personal selling offers several advantages over other forms of promotion:

  • Personal selling provides a detailed explanation or demonstration of the product. This capability is especially needed for complex or new goods and services.

  • The sales message can be varied according to the motivations and interests of each prospective customer. Moreover, when the prospect has questions or raises objections, the salesperson is there to provide explanations and guidance. By contrast, advertising and sales promotion can respond only to the questions and objections the copywriter thinks are important to customers.

  • Personal selling should be directed only toward qualified prospects. Other forms of promotion include some unavoidable waste because many people in the audience are not prospective customers.

  • Costs can be controlled by adjusting the size of the sales force (and resulting expenses) in one-person increments. On the other hand, advertising and sales promotion must often be purchased in fairly large amounts.

  • Perhaps the most important advantage is that personal selling is considerably more effective than other forms of promotion in obtaining a sale and gaining a satisfied customer.

• Personal selling also has limitations when compared to other forms of promotion:

  • Cost per contact is much greater than for mass forms of communication, leading companies to be highly selective about where and when they use salespeople.

  • If the sales force is not properly trained, the message provided can be inconsistent and inaccurate. Continual sales force management and training are necessary.

  • Salespeople may convince customers to buy unneeded products or services. This can lead to increased levels of cognitive dissonance among buyers if a salesperson is being pushed to meet certain quotas.

Comparison of Personal Selling and Advertising/Sales Promotion

• By contrast, modern views of personal selling emphasize the relationship that develops between a salesperson and a buyer. Relationship selling , or consultative selling , is a multistage process that emphasizes personalization, win–win outcomes, and empathy as key ingredients in identifying prospects and developing them as long-term, satisfied customers. The focus, therefore, is on building mutual trust between the buyer and seller through the delivery of long-term, value-added benefits that are anticipated by the buyer.

• Key Differences between Transactional Selling and Relationship Selling

  Transactional Selling Relationship Selling
  Sales Techniques Often canned, nonflexible presentations that are repetitive from one presentation to the next. Flexible presentations that are customized for each buyer and are focused on identifying customer’s needs and wants to reach the best solution(s).
  Length of the Sales Cycle Short term—focused on closing the sale as quickly as possible and moving to the next potential customer/sale. It has limited to no focus on customer development. Long term—focused on maintaining the relationship over an extended period of time with the generation of higher-quality new customers who can be further developed over the long term.
  Importance of Relationships between the Parties Low expectation and importance of the relationship between the two parties beyond the immediate transaction. It is important for the relationship to develop between buyers and sellers.
  Levels of Trust Low-to-limited levels of trust are required beyond the actual transaction. High levels of trust are required to develop and maintain the relationship over an extended period of time.
  Outcomes Win–lose—each party is trying to get the most benefit without considering the other party. Win–win—each party is trying to create additional value for both parties.
  Performance Assessment Mainly output/sales-based and focused on the amount sold and/or profit per sale. While amount sold and profit per sale are important, customer satisfaction and support activities are also important and assessed.
  Pros Lower levels of employee training are required. Easy assessment of performance. Highly customer-centric. More value-creation focused. Less price-focused. Higher levels of customer satisfaction.

Completing a sale requires multiple steps. The sales process , or sales cycle , is the set of steps a salesperson goes through in order to sell a particular product or service. The sales process can be unique for each product or service offered. The actual sales process depends on the features of the product or service, characteristics of customer segments, and internal processes in place within the firm (such as how leads are gathered).

Some sales take only a few minutes to complete, but others may take much longer. Sales of technical products (like a Boeing or Airbus airplane) and customized goods and services typically take many months, perhaps even years, to complete. On the other end of the spectrum, sales of less technical products (like stationery) are generally more routine and often take less than a day to complete. Whether a salesperson spends a few minutes or a few years on a sale, there are seven basic steps in the personal selling process:

1. Generating leads

2. Qualifying leads

3. Approaching the customer and probing needs

4. Developing and proposing solutions

5. Handling objections

6. Closing the sale

7. Following up

Step 1: Generating Leads

Initial groundwork must precede communication between the potential buyer and the salesperson. Lead generation , or prospecting , is the identification of firms and people most likely to buy the seller’s offerings. These firms or people become “sales leads” or “prospects.”

Sales leads can be obtained in many different ways, most notably through advertising, trade shows and conventions, social media, webinars, or direct mail and telemarketing programs. Favorable publicity also helps to create leads. Company records of past purchases by clients are another excellent source of leads. Many sales professionals are also securing valuable leads from their firm’s website, including questions posted by leads about a product or service.

• A basic unsophisticated method of lead generation is done through cold calling —a form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects’ needs or financial status

• Another way to gather a lead is through a referral —a recommendation from a customer or business associate. The advantages of referrals over other forms of prospecting are highly qualified leads, higher closing rates, larger initial transactions, and shorter sales cycles.

• Salespeople should build strong networks to help generate leads. Networking is using friends, business contacts, coworkers, acquaintances, and fellow members in professional and civic organizations to identify potential clients.

Step 2: Qualifying Leads

When a prospect shows interest in learning more about a product, the salesperson has the opportunity to follow up, or qualify, the lead. Typically, unqualified prospects give vague or incomplete answers to a salesperson’s specific questions, try to evade questions on budgets, and request changes in standard procedures like prices and terms of sale. In contrast, qualified leads are real prospects who answer questions, value the salesperson’s time, and are realistic about money and when they are prepared to buy.

• A recognized need: The most basic criterion for determining whether someone is a prospect for a product is a need that is not being satisfied. The salesperson should first consider prospects who are aware of a need, but should not disregard prospects who have not yet recognized that they have one. With a little more information about the product, they may decide they do have a need for it. Preliminary questioning can often provide the salesperson with enough information to determine whether there is a need.

• Buying power: Buying power involves both authority to make the purchase decision and access to funds to pay for it. To avoid wasting time and money, the salesperson needs to identify the buyer’s purchasing authority and ability to pay before making a presentation. Organizational charts and information about a firm’s credit standing can provide valuable clues.

• Receptivity and accessibility: The prospect must be willing to see and to be accessible to the salesperson. Some prospects simply refuse to see salespeople. Others, because of their stature in their organization, will see only a salesperson or sales manager with similar stature.

Step 3: Approaching the Customer and Probing Needs

Before approaching customers, the salesperson should learn as much as possible about the prospect’s organization and its buyers. This process, called the preapproach , describes the “homework” that must be done by the salesperson before contacting the prospect.

• The salesperson’s ultimate goal during the approach is to conduct a needs assessment to find out as much as possible about the prospect’s situation. The salesperson should determine how to maximize the fit between what he or she can offer and what the prospective customer wants. As part of the needs assessment, the consultative salesperson must know everything there is to know about the following:

  • The product or service: Product knowledge is the cornerstone for conducting a successful needs analysis. The consultative salesperson must be an expert on his or her product or service, including technical specifications, features and benefits, pricing and billing procedures, warranty and service support, performance comparisons with the competition, other customers’ experiences with the product, and current advertising and promotional campaign messages. For example, a salesperson who is attempting to sell a Canon copier to a doctor’s office should be very knowledgeable about Canon’s selection of copiers, their attributes, capabilities, technological specifications, and postpurchase servicing.

  • Customers and their needs: The salesperson should know more about customers than he knows about himself. That’s the secret to relationship and consultative selling, where the salesperson acts not only as a supplier of products and services, but also as a trusted consultant and adviser. The professional salesperson brings business-building ideas and solutions to problems to each client. For example, if the Canon salesperson is asking the “right” questions, then he or she should be able to identify copy-related areas where the doctor’s office is losing or wasting money. Rather than just selling a copier, the Canon salesperson can act as a consultant on how the doctor’s office can save money and time.

Step 4: Developing and Proposing Solutions

Once the salesperson has gathered the appropriate information about the client’s needs and wants, the next step is to determine whether her company’s products or services match the needs of the prospective customer. The salesperson then develops a solution, or possibly several solutions, in which the salesperson’s product or service solves the client’s problems or meets a specific need.

Step 5: Handling Objections

Rarely does a prospect say “I’ll buy it” right after a presentation. Instead, the prospect often raises objections or asks questions about the proposal and the product. The potential buyer may insist that the price is too high or that the good or service will not satisfy the present need.

Step 6: Closing the Sale

At the end of the presentation, the salesperson should ask the customer how they would like to proceed. If the customer exhibits behavior or actions indicating they are ready to purchase, all questions have been answered, and objections have been met, then the salesperson can try to close the sale. Customers often give signals during or after the presentation that they are ready to buy or are not interested. Examples include changes in facial expressions, gestures, and questions asked. The salesperson should look for these signals and respond appropriately.

• Negotiation often plays a key role in the closing of the sale. Negotiation is the process during which both the salesperson and the prospect offer special concessions in an attempt to arrive at a sales agreement. For example, the salesperson may offer a price cut, free installation, or a trial order.

Step 7: Following Up

A salesperson’s responsibilities do not end with making the sale and placing the order. One of the most important aspects of the job is follow-up —the final step in the selling process, in which the salesperson must ensure delivery schedules are met, goods or services perform as promised, and buyers’ employees are properly trained to use the products

Social Media and the Sales Process

Social media has specifically impacted the sales process through what is referred to as “social selling.” Social selling focuses on using social network sites (SNS), such as LinkedIn, Twitter, and Facebook, to help with the sales process. Salespeople engage in social selling activities such as research, prospecting, networking, and relationship building.

Salespeople share and/or develop relevant content to answer questions posed by current and potential users. Relationships are built between salespeople providing the content and potential future customers. While the process may not generate immediate sales, foundations for relationships are already established when a prospect decides to move forward with the buying process. When that happens, the salesperson holds at least an initial advantage over the competition.

.Sales Management

There is an old adage in business that nothing happens until a sale is made. Without sales, there is no need for accountants, production workers, or even a company president. Sales provide the fuel that keeps the company engines humming.

• Just as selling is a personal relationship, so is sales management. Although the sales manager’s basic job is to maximize sales at a reasonable cost while also maximizing profits, he or she also has many other important responsibilities and decisions:

  1. Defining sales goals and the sales process

  2. Determining the sales force structure

  3. Recruiting and training the sales force

  4. Compensating and motivating the sales force

  5. Evaluating the sales force

Defining Sales Goals and the Sales Process

Effective sales management begins with a determination of sales goals. Without goals to achieve, salesperson performance would be mediocre at best, and the company would likely fail. Like any marketing objective, sales goals should be stated in clear, precise, and measurable terms and should always specify a time frame for their completion. Overall sales force goals are usually stated in terms of desired dollar sales volume, market share, and/or profit level

Determining the Sales Force Structure

Because personal selling is so costly, no sales department can afford to be disorganized. Proper design helps the sales manager organize and delegate sales duties and provide direction for salespeople. Sales departments are most often organized by geographic regions, product lines, marketing functions performed (such as account development or account maintenance), markets, industries, individual clients, or accounts.

Recruiting and Training the Sales Force

Sales force recruitment should be based on an accurate, detailed description of the sales task as defined by the sales manager. For example, GE uses its website to provide prospective salespeople with explanations of different career entry paths and video accounts of what it is like to have a career at GE. Aside from the usual characteristics, such as level of experience or education, what traits should sales managers look for in applicants?

Compensating and Motivating the Sales Force

Compensation planning is one of the sales manager’s toughest jobs. Only good planning will ensure that compensation attracts, motivates, and retains good salespeople. Generally, companies and industries with lower levels of compensation suffer higher turnover rates. This increases costs (including training and recruiting costs), decreases sales effectiveness, and harms relationship management. Therefore, compensation needs to be competitive enough to attract and motivate the best salespeople

Evaluating the Sales Force

The final task of sales managers is evaluating the effectiveness and performance of the sales force. To evaluate the sales force, the sales manager needs feedback—that is, regular information from salespeople. Typical performance measures include sales volume, contribution to profit, calls per order, sales or profits per call, customer satisfaction, or percentage of calls that achieve specific goals, such as sales of products that the firm is heavily promoting.

Customer Relationship Management and the Sales Process

As we have discussed throughout the text, customer relationship management (CRM) is the ultimate goal of a new trend in marketing that focuses on understanding customers as individuals instead of as part of a group

• 
  Identify Customer Relationships

  Companies that have CRM systems follow a customer-centric focus or model. Customer-centric is an internal management philosophy similar to the marketing concept discussed in Chapter 1. Under this philosophy, the company customizes its product and service offering based on data generated through interactions between the customer and the company.

Understand Interactions of the Current Customer Base

The interaction between the customer and the organization is the foundation on which a CRM system is built. Only through effective interactions can organizations learn about the expectations of their customers, generate and manage knowledge about them, negotiate mutually satisfying commitments, and build long-term relationships.

Capture Customer Data

Vast amounts of data can be obtained from the interactions between an organization and its customers. Therefore, in a CRM system, the issue is not how much data can be obtained, but rather what types of data should be acquired and how the data can be used effectively for relationship enhancement.

The traditional approach for acquiring data from customers is through channel interactions. Channel interactions include store visits, conversations with salespeople, interactions via the Web, traditional phone conversations, and wireless communications.

Leverage Customer Information

Data mining can be used to identify the most profitable customers and prospects. Managers can then design tailored marketing strategies to best appeal to the identified segments. In CRM, this is commonly referred to as leveraging customer information to facilitate enhanced relationships with customers. Exhibit 17.5 shows some common CRM marketing database applications.