January 29, 2015

Sales Force Management - Kotler and Keller Book Chapter Summary

Importance of Sales

The original and oldest form of direct marketing is the field sales call. Many business marketing organizations use field salespersons to contact purchasing staff of companies and present their products and offers to them. Similarly many consumer companies like insurance companies and stockbrokers employ field sales persons. Even in company owned outlets, there are salespeople to help consumers locate the right product and buy it.

US firms spend over a trillion dollars annually on sales forces and sales force materials-more than they spend on any other communication or promotion method. Nearly 12 percent of the total workforce work full-time in sales occupations.

Average cost of a sales call ranges from $200 to $300. Closing a sale typically requires four calls, hence the total cost can range from $800 to $1,200. Hence, companies are trying to increase the productivity of sales force through better selection, training, supervision, motivation and incentives.


Designing the Sales Force


Sales personnel are the company’s link to the customers. To the customer, sales person is the company. Salesperson gives information about the customer to the company. Any company’s survival and existence depends on the market and hence the sales force which maintains that link deserves the deepest thought in terms of setting objectives for it, strategy for it and structuring it.

The common term sales representative covers a broad range of positions. Kotler and Keller categorized the salesman jobs into six types.

1. Deliverer: Major task if the delivery of a product (milk, fuel etc.)
2. Order taker: This type of sales person takes the sales order from the customer and delivers himself or forwards the order to others in the organization.
3. Missionary: He educates the potential consumers about the benefits and features of the product.
4. Technician: He helps the client make the choices in complex technical products.
5. Demand Creator: This person approaches people who have a need but have not yet decided to buy and creates demand for the product he is selling.
6. Solution Vendor: Solution vendor is similar to technician, but he is dealing with a variety of products, a combination of which will provide the solution to a customer's problem. 

Sales Force Objectives


Typical objectives could be specified in customer coverage and product coverage. A company might want its sales persons to spend 80% of their time with current customers and 20% with prospects. The objective in terms of products could be that 85% of sales have to come from established products and 15% have to be from new products.

In recent years, the emphasis is shifting to customer satisfaction and profits. Advances in accounting systems are enabling companies to find out channel profitability and customer profitability. In a similar way, customer satisfaction surveys have become more frequent.

Sales Force Strategy


The company can use direct sales force or contractual sales force. Direct sales force consists of full or part-time paid employees who work for the company exclusively. Contract sales force consists of independent representatives, agents and brokers who are paid commission based on their sales.

The selling methods vary depending on the situation. In a simple case, sales occur through a sales person interacting with a buyer. In a more complicated way, a sales person may have to meet many persons to make a sale. In more complex way, sales team has to interact with a buyer group. Conference selling is involved when many complex things are to be explained to a large number of persons in the buying organization. Seminar selling occurs through educational seminars in which state-of-art developments are explained to the participants and the subsequent interaction initiates the sales.

Regardless of selling context, sales people will have one or more of the following specific tasks to perform:

Prospecting
Targeting
Communicating
Selling
Servicing
Information gathering
Allocating


Sales Force Structure


Strategy determines structure. An appropriate strategy for the organization is arrived at first and then any changes required for the existing structure are carried out so that the structure is capable of executing the strategy.

If the company sells one product line to one end using industry with customers in many locations, the company would use a territorial sales force structure.  If the company is selling many products to many types of customers, a product specialized or market specialized sales force structure may be more appropriate. The structure needs to be changed by established companies as they expand and economic conditions change.

Sales Force Compensation


To attract qualified and quality sales people, the company has to develop an attractive compensation package in comparison to the ‘going market price.” The compensation will have four components, a fixed amount, a variable amount, expense allowances and benefits. A popular rule is to have 70% as fixed and 30% as the remaining portion.

Recruiting and Training the Sales Force


At the stage of selection companies have to make sure they get the right persons that subscribe to the company’s objectives and values.

What makes a good sales representative?

Most customers say they want the sales persons to be honest, reliable, knowledgeable and helpful. Charles Garfield identified the following as traits of super achievers in sales. “Risk taking, powerful sense of mission, problem-solving bent, care for the customer and careful call planners.” According to Robert McMurry, an effect sales person is compulsive wooer, an individual who has a strong need to hold the affection of others and win them as friends. The additional trait identified by McMurry are, a high level of energy, abounding self confidence, a chronic hunger for money, a well-established habit of industry, and a state of mind that regards, each objection, resistance, or obstacle a challenge.

Training sales representatives

Sales training programs satisfy the following goals.

1. Sales representatives need to know and identify with the company.
2. Sales persons have to know the company’s products
3. Sales representatives need to know customers’ and competitors’ characteristics
4. Sales parsons have to trained in effective presentations and interaction with customers
5. Sales force has to know the field procedures and responsibilities.
6. Training in ethical decision making


 Source Text Books

Philip Kotler and Kevin Keller, Marketing Management, 12th Edition
Philip Kotler,   Marketing Management, 9th Edition     

For Further Study


Robert N. McMurry, “The Mystique of Supersalesmanship”, Harvard Business Review, March-April 1961.

David Mayer and Herbert M. Greenberg, “What makes a Good Salesman?”  Harvard Business Review, July-August 1964, pp.119-25.

Frank V. Cespedes, Stephen X. Doyle, and Robert J. Freedman, “Teamwork for Today’s Selling”, Harvard Business Review, March-April, 1989, pp. 44-54.

Rolph Anderson, Essentials of Personal Selling: The New professionalism, Prentice Hall, Englewood Cliffs, 1995.

Douglas J. Dalrymple, Sales Management: Concepts and Cases, John Wiley, New York, 1994.

_________________________________________________________________________________


Marketing articles are available under the label http://nraomtr.blogspot.com/search/label/Marketing%20Management
Article on differentiating and positioning http://nraomtr.blogspot.com/2011/11/marketing-strategy-differentiating-and.html

Planned Revision schedule for marketing chapters is in February and March
_________________________________________________________________________________



Updated on 29 Jan 2015, 2 Dec 2011

Article originally posted in
http://knol.google.com/k/   sales-force-management
Knol portfolio rank 69

5 comments:

  1. Read the chapter on 29 January as a part of Zuckerberg - Narayana Rao Reading Challenge.
    http://nraomtr.blogspot.com/2015/01/zuckerberg-narayana-rao-reading.html

    ReplyDelete
  2. Read on 2 March 2016. Good read.

    ReplyDelete