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Sales Chapter 8

The document discusses staffing the salesforce including recruitment, selection, training, motivation, and compensation. It covers qualitative and quantitative analysis for determining salesforce size, the hiring process with planning, recruitment, selection, and socialization stages, and different types of compensation plans including financial and non-financial elements.

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David Ryan
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19 views41 pages

Sales Chapter 8

The document discusses staffing the salesforce including recruitment, selection, training, motivation, and compensation. It covers qualitative and quantitative analysis for determining salesforce size, the hiring process with planning, recruitment, selection, and socialization stages, and different types of compensation plans including financial and non-financial elements.

Uploaded by

David Ryan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Chapter 8

Staffing the Salesforce:


Recruitment and Selection
SALES FORCE MANAGEMENT

 Sales force management is a specialised


type of personnel management.
 Sales managers perform the sales force
management function.
 They execute the entire human resource
management function in an organisation.
Sales managers tasks:

• Recruit,
• Select,
• Train,
• Motivate,
• Lead,
• Control and
• Compensate the Sales Staff
• Decisions on what to sell (product policies)
and to whom to sell (distribution policies)
are important determinants of the two
components of personal selling strategy -
the kind of sales personnel (qualitative
objective) and their total number
(quantitative objective).
Qualitative Analysis

 Product market analysis,


 Analysis of salesperson’s role in securing
orders, and
 Choice of basic selling styles.
Product market analysis
Product specialists, Market specialists, and Combination
Analysis of salesperson’s role

 Salespeople may be either active or passive


forces in securing orders.
 The encyclopaedia salesperson calling on
households must often function as an order
getter.
 The driver-salesperson for a soft drink
bottling company is primarily an order taker.
 In consumer goods marketing, the missionary
salesperson’s major role is to assist middlemen in
making sales to their consumers.
 In industrial-goods marketing, the sales engineer
plays two major roles: advisor to customers on
technical product features and applications, and
design consultants to industrial users on
installations or processes incorporating the
manufacturer’s products.
Choice of basic selling styles

 Trade selling,
 Missionary selling,
 Technical selling, and
 New-business selling.
Quantitative Analysis

 Work-load method,
 Sales potential method, and
 Incremental method.
Work-load method

  Classify customers, both present and prospective, into


sales volume potential categories.
• Assume that there are 880 present and prospective
customers, classified by sales volume potential as

Class A, Large 150Accounts


Class B, Medium 220 Accounts
Class C, Small 510 Accounts
Work-load method

 Decide on the length of time per sales call


and desired call frequencies on each class.
Class A: 60min/call X 52 calls/year = 52 hours/year.
Class B: 30min/call X 24 calls/year = 12 hours/year.
Class C: 10min/call X 12 calls/year = 3
hours/year.
Work-load method
 Calculate the total work load involved in
covering the entire market.
Class A: 150 accounts X 52 hours/year
= 7800 hours.
Class B: 220 accounts X 12 hours/year
= 2640 hours.
Class C: 510 accounts X 3 hours/year = 1530 hours.
Total: 11,970 hours.
Work-load method
 Determine the total work time available per
sales person.
Suppose that management decides that salespeople
should work 40 hours per week, 48 weeks per year,
allowing 4 weeks for vacations, holidays, sickness
etc.)
40 hours/week X 48 weeks = 1920 hours/year.
Work-load method

  Divide the total work time available per salesperson by task.


• Assuming that the sales personnel apportion their time
as follows:
Selling tasks 45% 864 hours
Non selling tasks 30% 576 hours
Travelling 25% 480 hours
Total: 100% 1920 hours
Work-load method

 Calculate the number of sales people


needed.
This is a matter of dividing the total market
work load by the total selling time available
per sales-person:

11,970 hours/ 864 hours = 14 sales people


needed.
Sales potential method

N = S/P + T (S/P); this reduces to N = S/P (1


+ T);
N = number of sales personnel units, S =
forecasted sales volume,
P = estimated sales productivity of each unit, T =
allowance for rate of sales force turnover
Sales potential method

 Consider a firm with forecasted sale of


Rs.1million, estimated sales productivity per
sales personnel unit of Rs.1,00,000/-, and an
estimated annual rate of sales force turnover of
10 percent. Inserting these figures in the
equation, we have:
 N = Rs.10,00,000/Rs. 1,00,000 X 1.10;
or N = 11 sales personnel units.
Incremental method

A company has found that its total sales volume varies directly
with the number of salespeople it has in the field. Its cost of
goods sold holds steady at 65 percent of sales. All sales
personnel receive a straight salary of Rs.20,000/- annually as
well as a fixed travelling allowance of Rs.12,000/- annually and
in addition are paid commissions of 5% on their sales. The
company now has 15 people on its sales force. Its sales
executives estimate the following increases in sales volume,
cost of goods sold, and gross margin that would result from the
addition of the 16th, 17th, 18th, and 19th sales persons.
Incremental method
Incremental method

Thus, the optimal size of sales force here is 18 people.


Activities involved in Sales Force Management
The Hiring Process

 Stage 1 – Planning
 Stage 2 – Recruitment
 Stage 3 – Selection
 Stage 4 – Socialization
Stage 1 – Planning

 Analysis of the annual turnover


Turnover is defined as the average percentage of the sales
force that leaves a sales organisation in a given period of time.

 The manpower forecast determines the


number of salespeople required by the
organisation.
Stage 1 – Planning

 A sales organisation has two types of hiring


objectives. The first objective is to plan the
replacements of people who have left or would leave
in the near future, and the second is the recruitment
for expansions and for new market coverage.
 strategic position analysis determines the
number and type of salespeople required by the
organisation.
Stage 2 – Recruitment

Internal Sources of Recruitment


 Lateral or upward move
 Internal transfers
 Interns and cooperative students
 Employee referral programmes
Stage 2 – Recruitment

External Sources of Recruitment

 Advertising
 Walk-in-interviews
 Direct unsolicited applications
 Educational institutions and campus recruitments
 Other industry sources
 Employment agencies
 Networking
Stage 3 – Selection
Stage 4 – Socialization

 anticipatory stage
 encounter stage
 settling in stage
SALES TRAINING

A-C-M-E-E Model
MOTIVATION
COMPENSATION OF SALES FORCE

Motivational Roles
 Objectives
 Characteristics or Requirements
 Devising A Sales Compensation Plan
 Types Of Compensation Plans

H
COMPENSATION - Motivational Roles

 (1) provide a living wage,


 (2) adjust pay levels to performance, thereby
relating job performance and rewards (in line with
expectancy motivation theory), and
 (3) provide a mechanism for demonstrating the
congruency between attaining company goals and
individual goals (also in line with expectancy theory)

T H
COMPENSATION - Objectives
 attract quality salespeople.
 help to improve the productivity level of the existing
salespeople in the organization.
 helps in optimizing the sales effort by the salespeople
maximizes the sales,
 Reduces the sales expenses and also the production cost.
 helps in retaining quality manpower and reducing the
attrition rate in the organization.
 establishes a good rapport between the sales force and the
sales supervisors and managers in the company.

H
COMPENSATION - Characteristics or
Requirements

• Should address the short-term as well as the


long term issues of the salesperson.
• While survival is a short-term issue for the
salesperson, recognition and growth in the
company and career are the long-term issues.

T H
Requirements

 provides a living wage


 should have future orientation.
 should take care of the salesperson's housing need, dearness
allowance, conveyance, pension, provident fund, and medical needs.
 The plan fits with the rest of the motivational program
 The plan is fair
 It is easy for sales personnel to understand
 adjusts pay to changes in performance.
 economical to administer.
 helps in attaining the objectives of the sales

T H
DEVISING A SALES
COMPENSATION
Plan
 Define the Sales Job
 Consider the Company's General Compensation Structure
 Consider Compensation Patterns in Community and Industry
 Determine Compensation Level
 Provide for the Various Compensation Elements
 Special Company Needs and Problems
 Consult the Present Sales Force
 Reduce Tentative Plan to Writing and Pretest It
 Revise the Plan
 Implement the Plan and Provide for Follow-Up
T H
Compensation Structure

 Simple ranking
 Classification or grading
 Point system
 Factor-comparison method

T H
Various Compensation Elements

 (1) a fixed element,


 (2) a variable element
 (3) an element covering the fringe or
"plus factor," and
 (4) an element providing for
reimbursement

T H
TYPES OF COMPENSATION
PLANS
Plan Financial Compensation Non-financial

 Straight-Salary Plan
 Promotions
 Straight-Commission
 Recognition
 Combination Salary- Programmes
and-Incentive Plan
 Fringe Benefits
 Use of Bonuses
 Expense Accounts
 Allied Methods
Profit Sharing Plan
 Perks
Special Remuneration plan  Sales Contests
Expense allowance plan

T H

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