sdm module 5 & 6
TRANSCRIPT
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Module V & VI
Managing the Sales Force
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Motivating Sales Force High productivity in a sales force comes about neither naturally nor accidentally. It
requires motivation.
Importance of Motivation Theories for Sales Forcei. Nature of Job: A sales representatives job is usually tiring with irregularworking hours. They do not often have the authority to do what is necessaryto win an account and they sometimes lose large orders that they haveworked hard to obtain.
ii. Boundary Position & Role conflicts
iii. Human Natureiv. Personal Problems: They are occasionally preoccupied with personalproblems, such as sickness in the family, debt, etc.
v. Maintaining a feeling of group identity
Motivation has mainly three dimensions: Intensity, Persistence & direction
Motivation Can Also be Intrinsic or Extrinsic
Intrinsic motivation means that individuals are motivated internally by a desire to
please themselves or merely by the satisfaction of performing a job.
Extrinsic motivation means that someone else provides the motivation through
methods such as pay, promotion or recognition.
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Career Stages & Motivation
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Career Stages & Motivation
Sales force MotivatorExploration: Use communication to build self
confidence & lower uncertainties
Establishment: Widen criteria for success,Introduce rewards for meeting challenges
Maintenance: Reward creativity & self reliance,
emphasize techniques for working smarterDisengagement: Flexible/reduce working hours
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MOTIVATION THEORIES
1. MaslowsNeed Hierarchy Model
Abraham H Maslow developed a conceptual framework and defined a persons
effectiveness as the function that matches mans opportunity with the appropriate
position in the hierarchy of needs.
SELF-ACTUALISATION
SELF-ESTEEM
LOVE AND BELONGINGNESS
SAFETY & SECURITY
PHYSIOLOGICAL
HIERARCHY OF NEEDS
Challenging job,
creativity andachievement in work;Job title, responsibility,recognition andpromotion;Amount of liking andrespect from others;Job security and fringebenefits;
FinancialCompensation;Heat, air conditioning,cafeteria.JOBCHARACTERISTICCOMPONENTS
Fulfiling oneself bymaximum use of skillsand abilities;Achievement,adequacy andcompetence;Love, affection andbelongingness;Security, stability and
protection;Food, drink and otherprimary needs.
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2. HerzbergsMotivation-hygiene Model (Two-Factor Theory)
Herzberg concluded that job satisfiers are related to job contents which act as motivators
and are thus called as MotivationalFactors. On the other hand, job dissatisfiers are related
to job contexts. Their presence provides no motivation but their absence causes
dissatisfaction. Therefore, they are called Dissatisfiers or Hygiene Factors.
DISSATISFIERS/HYGIENE FACTORS MOTIVATIONAL FACTORS
1. Company policy and administration 1. Achievement
2. Technical supervision 2. Recognition
3. Interpersonal relation with
(a)Supervisors (b) Peers (c)Subordinates
3. Advancement
4. Salary, job securi ty 4. Work itself
5. Personal life, status 5. Possibility of growth
6. Working conditions 6. Responsibility
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3. AlderfersExistence-Relatedness-Growth Model (ERG Theory)
Clayton Alderfer formulated a need category model with three main core groups
1. Existence Need (E): Concerned with survival, ie., physiological and
biological needs, and safety needs, ie., Maslowsfirst and second level needs.
2. Relatedness Need (R): Importance of interpersonal and social relationships, i.e.,
Maslowsthird and fourth level needs.
3. Growth Need (G): These are concerned with the individuals intrinsic desire
for personal development, i.e., Maslowsfifth and last level need.
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4. McClelland Three Need Model
David N McClelland, a Harvard psychologist (1961), used the Thematic Appreciation
Test (TAT) to study various human needs. Through this test, he developed a model of
motivation which is based on the three types of needs:
1. Need for Achievement (nAch):A drive to excel, advance and grow
2. Need for Power (nPow): A drive to influence others and situations
3. Need for Affiliation (nAff): A drive for friendly and close interrelationships.
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5. Vrooms Expectancy Model: Explains how individuals goals influence
efforts. A persons motivation towards an action at any time would be
determined by the individuals perception that a certain type of action will
lead to a specific outcome and his personal preference for this outcome.
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FINANCIAL : Compensation components
NON FINANCIAL FACTORS:
1. Sales Meetings: ACMEE approach
Arrangements: Herringbone, Workshop, Inverted U Shape,
British Square
2. Sales Contests : Specific Objectives, Contest Formats, Prizes
(cash, merchandise, travel, privileges), duration,
promotion, evaluation
3. Sales conferences and conventions
4. Recognition, Persuasion, Positive feedback, clarity of Job
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Cont.
Motivation to the Sales Force
Keeping your sales force motivated is vital to execute ongoing sales. How effectively do you
motivate your salespeople? Answer the following questions and you be the judge.
1. What are the three most effective techniques you use for motivating your entire sales
force?
2. Do you know what motivates each person who reports to you?
3. Do you know what role compensation plays in the motivation of each salesperson?
4. Do you know what role recognition plays in the motivation of each salesperson?
5. Do you know what role opportunity for growth plays in the motivation of each
salesperson?
6. Have you customised a motivational programme for each person who reports to you?
7. What have you done in the past week with the deliberate intention of motivating a
salesperson?
8. Did you praise someone today?
Are you an Effective Motivator?
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9. Do you show your commitment to developing each salesperson by actively (at leastonce a month) coaching him on skills and techniques?
10. When a salesperson seems to be feeling stressed, do you ask questions and spend
time listening to his concerns?
11. Do you ask your representatives, Whatcan I do personally to help your sales efforts?
12. Do you review their monthly performance with them in a timely manner?
13. Have you done anything recently to demotivateyour salespeople?
For example: failed to give recognition; embraced a salesperson in front of peers or
clients; taken over a sales call?
14. Do you treat your salespeople with respect?
15. Do you show your salespeople trust?Source:Ginger Trumfio, Areyou an Effective Motivator?Sales and Marketing Management (May
1994): 136.
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Leading the Salesforce
Leadership is the ability to influence people to achievement of
objectives
Leadership is necessary for a sales managerseffectiveness
Leadership Styles
Transactional leadershipequates to supervisionrelating to day-to-
day operations & control, and task-orientation Transformational leadership changes values and attitudes of
followers, who perform beyond expectations
Situational leadershipuses a style that fits the situation
Leadership skills
Leadership skills required by an effective sales manager are:
communication, problem-solving, and interpersonal
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Supervising Salespeople
Supervising is directing and controlling day-to-day activitiesof
salespeople
It is a part of leadership
Sales managers use a combination of methods to supervise
salespeople
Methods of supervision are classified into two categoriesdirect and
indirect
Direct Supervisory Methods Indirect Supervisory Methods
Telecommunications
Sales meetings
Personal contacts
Coaching / Mentoring
Sales reports
Compensation plan
Sales analysis
Expense accounts
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Cont.
Controlling the Sales Force
1. Sales Audit
2. Sales Analysis
3. Credit control Analysis
4. Cost & Profitability Analysis
5. Productivity Analysis
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Sales Audit
A comprehensive, systematic, diagnostic, and prescriptive tool, to be used
periodically
The Aim of the Audit
i. Find out the true and accurate position of sales.
ii. To exercise control over future planning and over the results of the company.
iii. To analyze the past performance and learn from mistakes/shortcomings.
iv. To bring alertness to the organization.v. To award increments, promotions, giving extra rewards in case of exceptional
performances and to punish those whose actions have resulted in loss to the
company.
Sales audit can be conducted in two ways:
By internal staff of the company. By outside auditors like chartered accountants or consultants experts in
particular type of business activities.
Aspects of Selling operations Covered : Objectives, Policies, Organization, Methods,
Procedures and Personnel
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Sales Analysis
Sales analysis of a company can be done in different ways:
Different alternatives are shown in a frameworkbelow:
SalesAnalysis
All levels
In Sales
Organisation
Different
Type of
Sales
Different
Type of
Analysis
National and/or international levels sales organisation
Regional level
Branch /district level
Territory level
Individual level
Total sales of the company
By type of products
By type of distribution channels
By type of customer classifications
By size of orders
Comparisons with sales quotas / targets
Comparisons with previous periods
Comparisons with industry / competitors
Comparisons within sales organisations
Comparisons with sales forecasts
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Credit Control
Steps in Designing a Credit Control System
1. Identifying credit distributors and wholesalers or consumers on the basis of past
experience. Factors to be considered: Organizational set-up , Market reputation, tradeline of dealers, Financial position, history of payments.
2. Processing the credit sanction.
3. Circulating and implementing the credit sanction.
4. Aging analysis.
5. Reviewing credit sanctions from time to time.
Customer
Code
Customers
NameCredit
Amount
(Rs)
SanctionedDays
TotalOutstanding
(Rs)
Below 60days (Rs)
60-120days(Rs)
Above120
days(Rs)
0005
0008
0014
M/s A.S Ltd
M/s Tara Ltd
M/s Gulati Bros
10,000
5,000
10,000
60
30
60
50,000
40,000
12,000
30,000
30,000
4,000
5,000
6,000
15,000
10,000
2,000
Aging analysis statement of M/s ..........................
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Marketing Cost and Profitability Analysis
Purpose: To measure profitability of companys marketing
units such as territories, market segments, products,
channels, & customers
This information helps to decidewhich marketing units to be
expanded, reduced, or eliminated in future.
Procedure
State purpose of the analysis
Identity major functional (or activity) expenses
Convert natural accounting expenses into functional
expenses
Allocate functional expenses to marketing units
Prepare profitability of marketing units, by using full-cost
approach,or contributionapproach
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Purpose of the Analysis
Before starting cost and profitability analysis, it is necessary to
know for which marketing unitsthe analysis would be done
This helps to classify costs into direct and indirect. E.G.
Salespersons salary is direct cost for territory analysis, but
indirect cost for analysis of products or segments
Identify Major Functional Expenses The company should prepare a list of major functions or activities
with respect to marketing expenses
E.G. Personal selling expenses, order processing expenses,
packing and delivery expenses, warehousing and inventory
expenses, administration expenses
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Convert Natural Accounting Expenses into
Functional Expenses
Natural or traditional expenses are to be converted to functional expenses,for doing marketing cost analysis
An examplewill make this point clearNatural /
Traditional
Expenses
Total Functional Expenses
Personal
Selling
Adv. and
Sales
Promotion
Warehousing &
Inventory
Administration
Salaries 20,000,000 10,000,000 4,000,000 2,000,000 4,000,000Rent 10,000,000 2,500,000 1,000,000 5,000,000 1,500,000
Travel 5,000,000 5,000,000 __ __ __
Adv. and
Sales
Promotion
15,000,000 __ 15,000,000 __ __
Total 50,000,000 17,500,000 20,000,000 7,000,000 5,500,000
A better method for allocating costs is activity-based costing (ABC), whichallocates costs based on cause of expenses
Note:All figures are in Rupees
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Allocate Functional Expenses to Marketing Units
Functional expenses are allocated to the marketing unit under study,
depending on several bases shown below, as examples
Function Bases of allocation of expenses
Personal selling Directly to sales territories
Selling time given to each product and market
segment
Sales calls x average time per call to customers &channels
Advertising and
sales promotion
Circulation of media to sales territories
Media space for each product & market segment
Equal charges to customers & channels
Administration Equal charges for all marketing units
Above allocations are done to find marketing costs and profitability of
marketing units
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Prepare Profitability of Marketing Units
This is done by preparing profit & loss statements for the
marketing units under study Two approaches are available in allocating marketing costs for
profitability analysis: (1) Full-cost, (2) Contribution
Full-cost approach:All marketing costs, both direct & indirect, are
allocated to the marketing unit
Useful for long-term profitability studies of products and
market segments
Contribution approach:Only direct marketing costs are allocatedto the marketing unit
Useful for short-term decisions like profitability of branches /
regions
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An Example of Profitability Analysis
SNo Particulars Full-cost
Approach
Contribution Approach
Western Region Branch A Branch B Branch C
1 Sales 400 150 130 120
2 Cost of good sold 300 112.5 97.5 90
3 Gross margin (1-2) 100 37.5 32.5 30
4 Branch selling
expenses
12.7 4.5 4.2 4
5 W. Region direct
selling expenses
12.0 - - -
6 Contribution (3-4-5) 75.3 33.0 28.3 26.0
7 Allocated indirect
expenses
36.3 - - -
8 Net profit (6-7) 39.0 - - -
Note:All figures are in Rupees million
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Productivity Analysis
Productivity is generally measured by ratio between output & input
Some of the productivity ratiosin sales management are:
Sales per salesperson(used by many companies)
Selling expenses per salesperson
Sales calls per salesperson
Improvement in productivity leads to increase in profitability
Some of the methods usedby firms to improve productivity
Reducing salesforce size
Hiring manufacturersreps. or agents on commission basis
Using the internet, telemarketing, direct mail to reach customers
Increasing sales volume substantially
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Evaluating the Salespeople
Mainly to find how salespeople have performed
This information is used for other purposes, such as: Improving salespersons performance, by identifying
causes of unsatisfactory performance
Deciding salary incrementsand incentive payments
Identifying salespeople for promotion Determining training needs
Motivatingsalespeople through recognition and reward
Understanding strengths and weaknessesof salespeople
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Procedure for Evaluating and Controlling
Salesforce Performance
The stepsinvolved in the procedure are:
Set policieson performance evaluation and control
Decide basesof salespersonsperformance evaluation
Establishperformance standards
Compareactual performancewith the standards
Review performanceevaluation with salespeople
Decidesales management actions and control
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Set Policies on Performance Evaluation & Control
Most companies establish basic policies. Examplesare:
Frequencyof evaluation. Mostly once a year.
Who conducts evaluation?Mainly immediate supervisor
Assessment techniques to be used. E.G. Management by
objectives (MBO), 360-degree feedback
Sources of information. Sales analysis, new business
reports, lost business reports, call plans, etc
Basesof salesforce evaluation. (next slide)
Conducting performance review sessionswith salespeople
Decide Bases for Salespersons Performance Evaluation
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Decide Bases for Salespersons Performance Evaluation
A firm should decidewhich of the following bases / criteria it would use: (1)
Quantitative result based (output), (2) Quantitative efforts based (input), or (3)
Qualitative based
Quantitative results criteria Quantitative efforts criteria Qualitative criteriaSales volume
In value / units
by products , customer
segments, outlets or outlet
typeAccounts / customers
New accounts nos.
Lost accounts nos.
G.P/N.P generated
Profit per call ratioNo. of orders taken,
cancelled, order call ratio
Average order value, Av.
Profit generated
No. of complaints
Customer calls
No. of calls per day
No. of calls per customer
(potential & existing)
Prospecting success ratioNon-selling activities
overdue payments
collected
No. of reports sent
No. of service calls madeNo. of demonstrations
No. of dealer displays
obtained
Personal skills
Selling & communication
skills
Planning ability
Team playerTime Mgt.
Knowledge of products,
competitors, company
policies, customer
relationships
Personality & Attitudes
Attitude, initiative
Cooperation
Enthusiasm
Appearance & manners
Creativity
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Establish Performance Standards
Performance standards are also called sales goals, targets,
sales quotas, sales objectives
Performance standards for quantitative resultsare related to
the companyssales volume or market share goals
Performance standards for efforts / behavioural criteria are
difficult to set For this, companies do time and duty analysis or use
executive judgement
Performance standards should not be too high or too low
After establishing standards, salespeople must be informed
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Compare Actual Performance with Standards
Salespersonsactual performance is measured and compared
with the performance standards
For this, sales managers use different methods or forms:
Graphic rating scales
Ranking Behaviourally anchored rating scale (BARS)
Management by Objectives (MBO)
Descriptive statements
Companies combine some of the above methods for an
effective evaluation system
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Decide Sales Management Actions and Control
Many companies combine this step with the previous stepi.e.
performance review
During performance review meeting with salesperson, sales
manager does the following:
Identifies the problem areas. E.G.Sales quotas not achieved
Finds causes. E.G. less sales calls, poor market coverage, or
superior performance of competitors
Decides sales management actions E.G. train salesperson,
redesign territories, or review companys sales / marketing
strategies
If a salespersons performance is good, he / she should be
rewarded and recognised
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Salesperson Evaluation Matrix
Quantitatively measured results
GOOD BAD
GOOD
Qualitativelymeasured results
BAD
- Praise
- Reward
- Promote
- Limited praise
- Guide
- Train
- Limited Praise
- Advise
- Educate
- Discuss
- Train
- Punish
- Remove
I i l S l M
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International Sales Management
Introduction
Sales management has increasingly taken on international dimensions. The multinationals and
other companies with foreign production and marketing operations look to sales management
to implement sales related marketing policies in each national market. In companies with
sophisticated exporting operations, sales management obtains international distributors and
dealers, maintains relationships with their distributors and dealers, maintains relationships withtheir distributive networks and monitors continuing changes in marketing conditions and needs
in national markets.
Ethnocentric Orientation: Home country practices adopted in host country. Could lead to
decreased sales & profits due to bias and cross cultural differences.
Polycentric Orientation: Policies & practices differ according to each host country. Likely to
increase costs and reduce profits as duplication of work, no standardization in procedures and
no economies of scale.
A balance is required to reap eco. of scale and reach customers within their cultural patterns.
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Qualities of the International Sales Force
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Qualities of the International Sales Force
Cultural Adaptability
In the host country, a salesman has to work without supervision. He must be able to
discharge his duties and show a great amount of responsibility. He should also have
credibility.
Physical Fitness
A salesman should be physically fit because he has to travel across the country. He
should take a balanced diet at all times as he has a lot of strain on him.
Knowledge
The salesman should have proper knowledge of the area that he has to visit. Search and
research is a part of his task.
Decision Making Ability
The salesman should be able to take decisions as per the requirement of the customer.
He should also possess adequate selling techniques as risks are much greater in
international selling if proper decisions cannot be taken at the right time.
Language
The salesman should be able to follow the language that is spoken in that country so
that he can clarify the queries of the customers.
Aspects Of ISM:
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Aspects Of ISM:
1. Setting of Objectives: Emphasis is on intl. strategic planning rather than admn. In
Mfrg. Co. with integrated worldwide prodn. & markets, H.O influence is high; in FMCG
sector, it is low.
2. Strategies: National level inputs are considered more for planning, training, admn. &control to reflect local culture and behaviour patterns.
3. Orgn. Structures: varies with the degree of market development cultural
homogeneity, infrastructure, population spread etc.
4. Sales Job Description : be developed for different countries. Duties and responsibilities
are different for different countries. Job outputs may be the same but inputs need to bepolycentric.
5. Recruitment and Selection: A company should use a multi-step selection system for
different international markets. Generally the responsibility of local Sales mgr as
personal & cultural factors need to be considered to minimize potential salesperson-
customer differences.6. Compensation: Influenced by culture, motivational patterns and govt. regulations of
host country.
7. Presentations:tailored to suit host countrys needs.
8. Evaluation & control: reports adapted to suit local market conditions, job components
d ibili i