Chapter 1

Sales management
 Personal selling Process
As a part of selling activities, if salespeople follow the steps or
phases shown below, their chances of success are far better.

Prospecting & Preapproach / Presentation &

Qualifying Approach
Precall planning Demonstration

Follow-up & Trail close / Overcoming

Service Closing the sale Objections

• The sequence of above steps may change to meet the

sales situation in hand.
• Some of the above steps may not be applicable for selling
to the trade
• We now discuss application of above steps to industrial
selling
Prospecting
• It is identifying or finding prospects i.e. prospective or
potential customers.
• Methods of prospecting or sales lead generation are: (1)
referrals from existing customers, (2) company sources (website,
ads., tradeshow, teleprospecting), (3) external sources (suppliers,
intermediaries, trade associations), (4) salespersons’ networking,
(5) industrial directories, (6) cold canvassing, (7) standard
industrial classification (SIC) system.
Qualifying
• Companies qualify sales leads by contacting them by mail or
phone to find their interests (or needs) and financial capacity.
• Leads are categorized as: Hot, Warm, and Cool
 Preapproach
• Information gathering about the prospect.
Sources of information: the Internet, industrial
directories, government publications, intermediaries,
etc.
• Precall planning
• Setting call objectives
• Tentative planning of sales strategy: which products,
features and benefits may meet the customer needs
 Approach
• Make an appointment to meet the prospect
• Make favourable first impression
• Select an approach technique:
• Introductory
• Customer benefit
• Product
• Question
• Praise
• The approach takes a few minutes of a call, but it can make
or break a sale
 Presentation and Demonstration

There are four components:

• Understanding the buyer’s needs
• Knowing sales presentation methods / strategies
• Developing an effective presentation
• Using demonstration as a tool for selling
We will examine each of the above points
 Understanding the buyer’s needs
• Firms and consumers buy products / services to
satisfy needs
• To understand buyer’s needs, ask questions and listen
• In business situations, problem identification and
impact questions are important
E.G.
• Have you experienced any problems on quality and
delivery from the existing supplies?
• What impact the quality and delivery problems will
have on your costs and customer satisfaction?
Knowing Sales Presentation Methods/Strategies
Firms have developed different methods / styles / strategies of sales
presentation
• Stimulus response method / canned approach.
• It is a memorised sales talk or a prepared sales presentation.
• The sales person talks without knowing the prospect’s needs. E.G.
Used by tele-marketing people
• Formula method / formulated approach.
• It is also based on stimulus response thinking that all prospects are
similar.
• The salesperson uses a standard formula – AIDA (attention, interest,
desire, and action).
• It is used if time is short and prospects are similar.
• Shortcomings are: prospects’ needs are not uncovered and uses
same standard formula for different prospects.
 Sales Presentation Methods (Continued)

• Need – satisfaction method

• Interactive sales presentation
• First find prospect’s needs, by asking questions and
listening
• Use FAB approach: Features, Advantages, Benefits
• Effective method, as it focuses on customers
• Consultative selling method / Problem-solving
approach
• Salespeople use cross-functional expertise
• Firms adopt team selling approach
• It is used by software / consulting firms
 Developing an Effective Presentation
Some of the guidelines are:
• Plan the sales call
• Adopt presentation to the situation and person
• Communicate the benefits of the purchase
• Present relevant and limited information at a time
• Use the prospect’s language
• Make the presentation convincing – give evidence
• Use technology like multi-media presentation
 Using Demonstration
• Sales presentation can be improved by
demonstration
• Demonstration is one of the important selling tools
EGs: Test drive of cars; demonstration of industrial
products in use
• Benefits of using demonstration for selling are:
• Buyers’ objections are cleared
• Improves the buyer’s purchasing interest
• Helps to find specific benefits of the prospect
• The prospect can experience the benefit
Overcoming Sales Objections / Resistances
• Objections take place during presentations / when the
order is asked
• Two types of sales objections:
• Psychological / hidden
• Logical (real or practical)
• Methods for handling and overcoming objections:
(i) For Psychological objections: ask questions.
(ii) For logical objections: (a) ask questions, (b) turn an
objection into a benefit, (c) deny objections tactfully,
(d) third-party certificate, (e) compensation.
 Trial close and Closing the sale
• Trial close checks the attitude or opinion of the
prospect, before closing the sale (or asking for the
order)
• If the response to trial close question is favourable,
then the salesperson should close the sale
• Some of the techniques used for closing the sale are:
(a) alternative-choice, (b) minor points, (c)
assumptive, (d) summary-of-benefits, (e) T-account,
(f) special-offer, (g) probability, and (h) negotiation
 Follow-up and Service

• Necessary for customer satisfaction

• Successful salespeople follow-up in different ways:
For example,
• Check order details
• Follow through delivery schedule
• Visit when the product is delivered
• Build long-term relationship
• Arrange warranty service
 Personal Selling Strategy
• Classifying market segments and individual customers
within a target segment
• Each firm should first decide on target market segments
and if possible, to classify customers into high, medium,
low sales & profit potentials
• Sales strategy is developed accordingly
• Relationship strategy
• Whether a selling firm should use transactional, value-
added, or collaborative relationship depends on both the
seller and the customer
• Each selling firm to decide which segments and
individual customers respond profitably to collaborative
relationship
Components of Sales Strategy (Continued)
• Selling Methods
• These are: (1) Stimulus response, (2) formula, (3) need-
satisfaction, (4) team selling, (5) consultative
• Selection of appropriate selling method depends on
relationship strategy
• Channel Strategy
• There are many sales / marketing channels. For example:
company salesforce, distributors, franchisees, agents, the
internet, brokers, discount stores
• Selection of a suitable channel depends on both the
buyer and the seller, products / services, and markets
 Concepts of Sales Organisation
• A sales organisation assists the sales manager to carry
out needed tasks efficiently and effectively to achieve
results
• The basic concepts of the sales organisation are:
• Degree of centralisation
• Degree of specialisation
• Line or staff positions
• Market orientation
• Effective co-ordination
 Basic Types of Sales Organisations
Sales organisations are generally classified into four
basic types:
• Line Organisation
• Line and staff organisation
• Functional organisation
• Horizontal organisation
We shall discuss main characteristics, advantages, and
disadvantages of each type of sales organisation
 Line Organisation
Head
Marketing

Sales
Manager

Area Sales Area Sales

Area Sales Area Sales
Manager3 Manager4
Manager1 Manager2

salespeople salespeople salespeople salespeople

Characteristics: All managers have line authority to direct and control

subordinates. Used in small firms / departments
Advantages: Simple organisation, clear authority, quick decisions, low cost
Disadvantages: No support to line managers from subordinates who have
specialised knowledge / skills. Less time for planning / analysis
 Line and Staff Organisation
Head-Marketing

Marketing Research Promotional Customer Service

Sales Manager
Manager Manager Manager

Area Sales Area Sales Area Sales

Manager-1 Manager-1 Manager-1

Salespeople Salespeople Salespeople

Characteristics: Specialist staff managers are available for senior marketing /

sales managers. Staff managers’ role is to assist / advise line managers. Used in
medium and large size organisations
Advantages: Better marketing decisions, superior sales performance
Disadvantages: High cost and coordination, slower decision making, conflict may
arise if staff managers’ role is not clear
 Functional Organisation
Head-Marketing

Marketing Research Promotional Customer Service

Sales Manager
Manager Manager Manager

Area Sales Manager #4

Salespeople

Characteristics: Each functional specialist has line responsibility over

salespeople. Used by a large firm with many products / market segments,
minimising line authority to functional managers
Advantages: Qualified specialists guide salesforce, simple to administer
Disadvantage: confusion due to more managers giving orders to salesforce
 Horizontal Organisation
Operations Team:
Research & Design Team: •Production / Operations
•Customer Research •Quality Assurance
•Product / Service Design •Systems Engineering

Planning Team:
•Strategic Planning
•Accounts, Finance
•HR, Administration
•Chief Operation Officer

Customer Support Team: Customer Satisfaction

•Information Team:
•Service •Sales & Marketing
•Training •Pricing, Promotion
•Channels, Logistics

Characteristics: Removes management levels & departmental boundaries.

Except planning team, all others are members of cross-functional teams. Used
by firms having partnering relationships with customers.
Advantages: Reduction in supervision, unnecessary tasks, & cost; Improved
efficiency and customer responses.
 Size of the Salesforce

• How many salespeople needed (or salesforce size) to

achieve a firm’s sales and profit objectives is a key
decision
• Methods available to decide optimum salesforce size
are as follows:
• Workload
• Sales potential (or breakdown)
• Incremental
• We shall discuss these methods briefly:
 Workload Method

• Assumption: All salespeople have equal workload

• Steps involved to calculate salesforce size are:
1) Classify customers as per their sales potential
2) Decide time per sales call and call frequencies for each class
of customers
3) Calculate total market workload = (1) x (2) in hours
4) Decide total work time available per salesperson
5) Divide total work time available by different activities per
salesperson in hours
6) Calculate total number of salespeople needed

total market workload (3)


total selling time available per salesperson (5)
 Workload Method (Continued)
• Advantages: simple method, conceptually sound, used for all types of
selling situations
• Disadvantages: Neglects sales productivity & salesforce turnover
Sales Potential / Breakdown Method
• The formula used is: , where
S
N  (1  T )
N=Number of salespeople needed, or salesforce size
P

S=Annual sales forecast for the company in value (Rs. Million)

P=Estimated productivity of the average salesperson in sales (Rs.
Million)
T=Estimated percentage of annual salesforce turnover
• Advantages: Simple and straight forward
• Disadvantages: Conceptually weak; lead time needed for a new
salesperson to reach average productivity
 Incremental Method

• It is based on marginal analysis theory of economics

• Basic concept: Net profits will increase when additional
salespeople are added, if the incremental sales revenues
exceed the incremental costs
• Merit: Conceptually accurate, as it quantifies relationships
between salesforce size, sales, costs, profits
• Demerit: Can not be used if historical data on sales and
costs are not available