Sales Lecture Notes Flashcards
Introduction to Sales and Marketing
Definition of Sales: By definition, "sales" refers to all activities involved in selling a product or service to a consumer or business. Beyond the basic transaction, it encompasses sourcing prospects, relationship building, and provides customers with effective solutions to increase revenue.
The Sales Department: Companies establish entire departments dedicated to sales. These teams are often structured based on target regions, specific products or services, and target customer profiles.
Sales Activity: Salespeople reach out to contacts (prospects) who have demonstrated interest by visiting company websites or interacting on social media. The objective is to identify leads fitting the target customer description and provide a solution resulting in a purchase.
Marketing and Sales Synergy: Marketing campaigns are primary sources for qualified leads. According to the State of Inbound Report, salespeople source approximately of their leads from marketing efforts. While processes differ, both functions are critical to lead generation and company revenue.
Primary Goal: While many teams focus on monthly quotas and benchmarks for conversion, the ultimate goal of sales is solving for the customer.
Core Sales Classifications and Examples
Inside Sales: Teams engage prospects and customers remotely, often from a central office. This approach typically features leaner, more automated processes and structured hours.
Example (AT&T): Inside reps contact leads to uncover needs for phone, internet, and TV services, matching them with solutions and closing deals via sales software.
Outside Sales: Salespeople broker face-to-face deals, traditionally through door-to-door or field sales. Reps have more flexibility to implement personal sales strategies.
Example (Medtronic): Reps specialized in medical equipment travel to meet medical professionals and administrators. They also network at conferences to build relationships before closing high-stakes sales.
B2B (Business-to-Business): Companies selling products/services to other businesses. These usually involve higher ticket values and more complex terms because the goods are essential to the buyer's business operations. These can support SMBs (small to medium businesses) or enterprise customers.
Example (GetAccept): A sales enablement platform that helps other businesses improve their sales processes.
B2C (Business-to-Consumer): Transactions between a company and individual consumers. These are lower in price-value and complexity, involving high volumes of deals with diverse customers.
Example (uPack): A moving company that uses digital ads to source leads and offers free quotes to entice customers to choose them over competitors.
eCommerce Sales: An online-only model where customers research, decide, and purchase without engaging human personnel. This works for lean companies or products effectively sold via digital marketing.
Example (Kissed By A Bee): An herbal remedy provider that operates completely online; worldwide eCommerce sales grew by over in 2022.
Direct Sales: Individuals sell directly to consumers outside of traditional retail, often earning commissions. Common in network marketing and real estate.
Example (Telfar): A fashion company that sells orders exclusively via its digital storefront, often selling out in minutes, creating a robust second-hand market.
Account Based Sales: Focuses on large enterprise accounts with multiple contact points. The opportunity stays with the account-based team from lead to customer success to build long-term relationships.
Benefit: Results in a higher Lifetime Value ().
Essential Sales Terminology
Salesperson: An individual performing selling activities. Synonyms: sales associate, seller, sales agent, or sales rep/representative.
Prospect: A point of contact at a company targeted for sales. Techniques include warm calls, email outreach, and social selling.
Deal: Represents the product/service to be sold and its price. Deals move through multiple stages and are tracked via CRM software.
Sales Pipeline: A visual representation of the stages in the sales process, showing where prospects reside in the sales cycle.
Sales Plan: A document outlining goals, objectives, and strategies. It includes target customers, market conditions, revenue targets, pricing, and team structure.
The Sales Organization: Tasks and Responsibilities
Direct Sales: The method of contacting potential customers directly to present and sell products/services. Modes include face-to-face (stores, events), phone calls, or video calls.
Components: Sales conversations, negotiations (terms and contracts), and closing deals (formalizing documents/payments).
Maintaining Customer Contacts: Crucial for sustainable relationships and loyalty.
Relationship Management: Staying in touch via email, phone, or social media.
Aftercare: resolving issues and technical support.
Follow-up: Gauging satisfaction through surveys.
Cross-selling/Up-selling: Identifying additional needs to enhance relationship value.
Customer Acquisition: Identifying, approaching, and acquiring new customers.
Components: Lead generation (marketing/networking), lead qualification (evaluating budget/readiness), approaching (initiating interest), and conversion (demos/quotes).
Sales Actions and Campaigns: Developing strategies for specific goals (e.g., regional growth), executing promotions (ads/events), and analyzing results.
Sales Roles and Functional Positions
Inside Sales Representative: Operational level; office-based; handles orders and inquiries via phone/email/chat; supports outside sales.
Commercial Employee: Tactical level; combines sales with marketing and customer service; assists with quotes and market research.
Sales Representative: Field-based; visits customers/prospects; focuses on long-term relationships and finalized agreements; often regional.
Outside Sales Representative: Operational level; field-based; focuses on direct sales goals and closing deals with a shorter-term focus.
Account Manager: Strategic level; manages key customer relationships; focuses on satisfaction and increasing revenue per customer.
Sales Leader: Managerial level; directs and motivates the team; sets goals, coaches, and manages daily operations.
Sales Manager: Higher management; responsible for overall sales strategy, budgets, and reporting to executives; collaborates across departments.
Common Models of Sales Organization
Geographical Division: Dividing the market into regions, countries, or zones (Zoning).
Advantages: Simple, minimizes travel time, allows for regional networking.
Disadvantages: Requires extensive product knowledge for varied industries.
Product-Based Division: Organizing by product groups when the range is wide and varied.
Advantages: Salespeople become deep specialists.
Disadvantages: Inefficient zones; multiple reps might visit the same customer.
Customer-Centric Division: Assigning reps to specific customers (often classified as A, B, and C based on revenue).
Advantages: Optimal response to specific customer needs.
Disadvantages: High travel costs; potential for less developed product knowledge.
Market-Oriented Division: Based on segments (Business vs. Consumer) or industries (Hospitality, Wholesale).
Advantages: Deep industry knowledge; tailored strategies.
Disadvantages: Complexity in delineating work areas.
Functional Division: Splitting tasks between roles, commonly Inside vs. Outside sales.
Advantages: Efficient, clear, and specialized.
Disadvantages: Risk of creating departmental silos; less customer-focused.
Operational Sales Planning
Sales Forecast: Prediction of sales over a specific period based on history and trends; used for resource and budget planning.
Sales Objectives: Targeted goals (revenue, volume, market share).
Strategic: Long-term ( years); overarching vision (e.g., increasing market share).
Tactical: Medium-term ( years); regional targets or service improvements.
Operational: Short-term (weeks/quarters); specific activities (e.g., calls/week).
SMART Criteria: Specific, Measurable, Achievable, Relevant, Time-bound.
Activity Planning: Timelines, customer visit schedules, and coordination with marketing (trade shows, webinars).
Resources: Personnel (training), Budget (travel/marketing materials), and Tools (CRM/analytics).
Assortment Structure and Knowledge
Assortment Definition: The collection of items/services sold by a retailer.
Product vs. Service: Products are tangible (clothing/food); services are intangible (subscriptions/haircuts).
Assortment Categories:
Core: Best-selling products always expected by customers.
Peripheral: Complement the core (e.g., bike locks for a bicycle shop).
Supplementary: Profit-boosting items, often seasonal or temporary (e.g., gardening tools in a supermarket).
Assortment Dimensions:
Width: Number of different product groups (Wide vs. Narrow).
Depth: Number of items/varieties within a group (Deep vs. Shallow).
The Rule (Pareto Principle): Research shows of an assortment is typically responsible for of the revenue. Changes to this critical must be planned carefully.
Clerarchy of Assortment: Assortment Group $\rightarrow$ Article Group $\rightarrow$ Article Type $\rightarrow$ Article Variety.
Product Classifications and Customer Effort
Convenience Goods: Everyday purchases made with little thought (supermarket items).
Shopping Goods: Choice goods that consumers actively research and compare (clothing, shoes).
Specialty Goods: Rare, high-research purchases involving high time/money investment (cars, kitchens).
Unsought Goods: Products consumers postpone or find unpleasant to buy (smoke detectors, funeral insurance).
Economic Classifications:
Necessary (Primary): Basic essentials (bread, veggies); demand is price-inelastic.
Luxury (Secondary): Non-essential (cookies); purchases depend on discretionary income.
Inferior: Demand decreases as income rises (e.g., switching from supermarket bread to bakery bread).
Indifferent (Independent): Demand remains stable regardless of income (coffee, salt).
Assortment Consistency and Affinity
Consumption Affinity: Articles used together or meeting the same need.
Complementary: Used together (coffee and creamer).
Follow-up: Required for the main item to function (printer ink).
Substitution: Interchangeable products based on price/availability (different apple types).
Production Affinity: Items produced in the same way (leather bags and belts).
Purchase Affinity: Items bought routines together (batteries and meat in a supermarket).
Other Forms of Affinity: Size, Brand (listing all Chanel together), Theme (Easter displays), Color, Age (Toddler vs. Junior toothpaste), Price, and Style (Modern vs. Baroque furniture).
Branding Concepts
Brand Loyalty and Preference: Repeated satisfaction leads to brand preference; intense loyalty means a consumer will not accept substitutes.
Types of Brands:
Manufacturer's Brand: Given by the producer (Unilever brands like Knorr).
Umbrella Brand: All products share one brand name (Sony, Samsung). Benefit: Economies of scale in advertising.
Individual Brand: Unique names for each product to target specific audiences (Unilever brands like Ola).
The A, B, C Grading:
A Brands: High price, high quality, high status, extensive promotion.
B Brands: Good quality, price is about lower than A brands.
C Brands: Low price, low awareness, often found on bottom shelves.
Retailer's Brand (Private Label): Owned by the retailer (e.g., AH Basic, HEMA house brand). Often commissioned from A-brand manufacturers.
Assortment Management and Adjustments
Sanitizing: The process of making an assortment "healthy" by removing low-revenue items. Can be done in depth (removing variants) or width (removing entire groups).
Trading Up: Adding more expensive variants to improve image.
Trading Down: Adding cheaper varieties to attract new price-sensitive customers.
Cannibalization: When a new (often cheaper) product significantly reduces the sales of existing items (e.g., digital newspapers replacing print).
Penetration Rate: The percentage of the total market that has purchased the item at least once.
Stat: Dutch eggplant penetration rose to in one year, adding eaters.
Demand Types and Customer Behavior
Demand Categories:
Initial: First-time purchase.
Additional: Supplementing an existing product (e.g., a second TV).
Replacement: Replacing an old item.
Expansion: When initial and additional demand coincide.
Derived Demand: Demand for industrial products stemming from consumer demand (e.g., demand for planes is derived from demand for air vacations).
Consumer Problem Solving:
Routine: Regular, small deliberative effort.
Limited: Occasional, requires some assessment.
Extensive: Significant decisions (houses/kitchens) with high perceived risk.
Decision Making Unit (DMU): The group of people influencing a procurement process.
User: Direct interaction with product.
Influencer: Provides expertise/advice.
Gatekeeper: Controls the flow of information (e.g., a secretary).
Decider: Final sign-off on the purchase.
Customer Typologies (DAS Principle)
Dominant: Direct, straightforward, poor listener. Approaches: Be to the point, use direct closing.
Aloof (Afstandelijk): Detail-oriented, professional, seeks certainty. Approaches: Use thoroughness, provable advantages, and detailed summaries.
Social: Warm, friendly, talkative, avoids conflict. Approaches: Be personal, supportive, and non-threatening.
The Sales Funnel and Process Models
Sales Cycle Phases: Preparation $\rightarrow$ Opening $\rightarrow$ Information $\rightarrow$ Transformation (interest to desire) $\rightarrow$ Closing $\rightarrow$ Relationship (loyalty building).
Sales Funnel Stages: Suspect (target profile) $\rightarrow$ Lead (shown interest) $\rightarrow$ Cold Prospect $\rightarrow$ Hot Prospect (ready soon) $\rightarrow$ Order.
Curry's Customer Pyramid:
Top: of customers = revenue.
Large: of customers = revenue.
Medium: of customers = revenue.
Base: Small customers, Inactive, Prospects, Suspects.
International Delivery - Incoterms
EXW (Ex Works): Seller provides goods at their premises. Buyer bears all costs/risks.
FOB (Free on Board): Seller delivers onto a vessel. Risk transfers when goods are on board.
CPT (Carriage Paid To): Seller pays freight to destination. Risk transfers at the first carrier.
DDP (Delivered Duty Paid): Seller pays all costs, including customs/duties, and bears all risks until delivery.
Sales Techniques and CRM
Cross-selling: Selling supplementary items (toothbrush + toothpaste).
Upselling: Selling a more expensive version of the item.
Deepselling: Selling more quantity of the same item (McDonald's large menus, "2 for 1" deals).
Hardselling: Aggressive approach emphasizing scarcity and urgency.
CRM Strategy: Focuses on customer-centricity and centralizing data.
CRM System functions: Data management, contact management, sales pipeline tracking, and reporting/analysis.