21-1© 2000 McGraw-Hill Ryerson Limited
C H A P T E R T W E N T Y - O N E
PERSONAL SELLING ANDSALES MANAGEMENT
21-2© 2000 McGraw-Hill Ryerson Limited
AFTER READING THIS CHAPTER YOU SHOULDAFTER READING THIS CHAPTER YOU SHOULDBE ABLE TO:BE ABLE TO:
� Recognize different types of personal selling.
� Describe the stages in the personal selling process.
� Specify the functions and tasks in the salesmanagement process.
� Determine whether a firm should use manufacturer�srepresentatives or a company salesforce and thenumber of people needed in a company�s salesforce.
� Understand how firms recruit, select, train, motivate,compensate, and evaluate salespeople.
� Describe recent applications of salesforce automation.
21-3© 2000 McGraw-Hill Ryerson Limited
Dun & Bradstreet: Selling Information in the Information AgeDun & Bradstreet: Selling Information in the Information Age
� Selling information is a demanding task, even forD&B, which is a master of database managementand marketing, with a database of companiesthat is unrivalled.
� However, D&B is finding that its market hasbecome more competitive, especially with somuch free data via the Internet.
� D&B�s field salespeople must demonstrate howmuch better off credit managers and marketingexecutives will be by using D&B�s information.
21-4© 2000 McGraw-Hill Ryerson Limited
Personal SellingPersonal Selling� Personal selling involves a two-way flow of
communication between a buyer and seller,often in a face-to-face encounter, designed toinfluence a person�s or group�s purchasedecision.
� With advances in telecommunications,however, personal selling takes place over thetelephone, through video teleconferencing andinteractive computer links between buyersand sellers.
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Sales ManagementSales Management� Sales management involves planning the selling
program and implementing and controlling the personalselling effort of the firm.
� Numerous tasks are involved in managing personalselling including:
-- setting objectives;
-- organizing the salesforce;
-- recruiting, selecting, training, and
compensating salespeople; and
-- evaluating the performance of individual
salespeople.
21-6© 2000 McGraw-Hill Ryerson Limited
PP21-1a Personal Selling and Sales Management QuizPP21-1a Personal Selling and Sales Management Quiz
1. About how much does it cost for a manufacturer�s sales
representative to make a single personal sales call? (check one)
$100 _____ $200 _____ $300 _____
$150 _____ $250 _____ $350 _____
21-7© 2000 McGraw-Hill Ryerson Limited
PP21-1b Personal Selling and Sales Management QuizPP21-1b Personal Selling and Sales Management Quiz
2.�A salesperson�s job is finished when a sale is made.�
True or False? (circle one)
True False
3. About what percent of companies include customer
satisfaction as a measure of salesperson performance?
(check one)
10% _____ 20% _____ 50% _____
20% _____ 40% _____ 60% _____
21-8© 2000 McGraw-Hill Ryerson Limited
Pervasiveness of Personal SellingPervasiveness of Personal Selling
� More than 1 million people are employed insales positions in Canada.
� Virtually every occupation that involvescustomer contact has an element of personalselling.
� Many executives in major companies haveheld sales positions at some time in theircareers.
� Selling often serves as a stepping-stone to topmanagement.
21-9© 2000 McGraw-Hill Ryerson Limited
How Salespeople Create Value for CustomersHow Salespeople Create Value for Customers
� Identify Creative Solutions To Customer Problems� Identify Creative Solutions To Customer Problems
� Ease The Customer Buying Process� Ease The Customer Buying Process
� Follow-up After The Sale Is Made� Follow-up After The Sale Is Made
Customer ValueCustomer ValueCustomer Value
+
+
=
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Relationship SellingRelationship Selling
Relationship selling is the practiceof building ties to customers basedon a salesperson�s attention andcommitment to customer needsover time.
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Partnership SellingPartnership Selling
With partnership selling, buyers and sellers
combine their expertise and resources to create
customized solutions; commit to joint planning;
and share customer, competitive, and company
information for their mutual benefit, and
ultimately the customer.
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Concept CheckConcept Check
1. What is personal selling?
2. What is involved in sales
management?
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Order Taking (Order Taking (order takerorder taker))
� An order taker processes routine orders or reordersfor products that were already sold by the company.
� The primary responsibility of order takers is topreserve an ongoing relationship with existingcustomers and maintain sales.
� Types of order takers include:
-- outside order takers
-- inside order takers
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OrderOrder Getter Getter� An order getter sells in a conventional sense and identifies
prospective customers, provides customers with information,persuades customers to buy, closes sales, and follows up onthe customers� use of a product or service.
� Order getters can also be inside (an auto salesperson) oroutside (a D&B salesperson).
� Order getting involves a high degree of creativity, customerempathy and is typically required for selling complex ortechnical products with many options, so considerableproduct knowledge and sales training are necessary.
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How Salespeople Spend Their Time
11%
31%
19%
25%
15%
PP21-2 How Outside Order-Getting Salespeople Spend Their PP21-2 How Outside Order-Getting Salespeople Spend Their Time Each Week Time Each Week
Service calls
Face-to-face-selling
Waiting/travel
Administrative tasks
Selling over the phone
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Comparing Order Takers and Order Comparing Order Takers and Order GettersGetters
Objective Handle routine product Identify new customersreorders and uncover customer needs
Purchase Focus on straight re-buy Focus on new buy andsituation or simple purchase situations modified re-buy purchase
situations
Activity Perform order processing Act as creative problemfunctions solvers
Training Require significant clerical Require significant sales,training product, and customer
training
Basis ofBasis ofComparison Comparison Order Takers Order Takers Order Order Getters Getters
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Concept CheckConcept Check
1. What is the principal differencebetween an order taker and anorder getter?
2. What is team selling?
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Stages in the Personal Selling ProcessStages in the Personal Selling Process
ProspectingProspecting
PreapproachPreapproach
ApproachApproach
PresentationPresentation
CloseClose
Follow-upFollow-up
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PP21-3a Stages and Objectives of the Personal Selling PP21-3a Stages and Objectives of the Personal Selling Process Process
1. Prospecting
2. Pre-approach
3. Approach
Search for and qualify prospects
Start of the selling process; prospects produced through advertising, referrals, and coldcanvassing.
Gather information and decide how to approach the prospect.
Information sources includepersonal observation, othercustomers, and own salespeople.
Gain prospect�s attention, stimulate interest, and make transition to the presentation.
First impression is critical;gain attention and interest through reference to commonacquaintances, a referral, orproduct demonstration.
21-20© 2000 McGraw-Hill Ryerson Limited
PP21-3b Stages and Objectives of the Personal Selling PP21-3b Stages and Objectives of the Personal Selling Process Process
4. Presentation
5. Close
6. Follow-up
Begin converting aprospect into a customerby creating a desire forthe product or service
Different presentation formats arepossible; however, involving thecustomer in the product or servicethrough attention to particular needsis critical; important to dealprofessionally and ethnically withprospect skepticism, indifference,or objections.
Obtain a purchasecommitment from theprospect and create acustomer.
Salesperson asks for the purchase; different approaches include the trial close and assumptive close.
Ensure that thecustomer is satisfiedwith the productor service.
Resolve any problems facedby the customer to ensurecustomer satisfaction andfuture sales possibilities.
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Presentation FormatsPresentation Formats
Stimulus-Response Format
Formula Selling Format
Need-Satisfaction Format
-- adaptive selling
-- consultative selling
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Techniques for Handling ObjectionsTechniques for Handling Objections
Accept theobjection
Accept theobjection
Acknowledge andconvert the objectionAcknowledge and
convert the objectionAgree andneutralize
Agree andneutralizePostponePostpone
DenialDenial Ignore theobjection
Ignore theobjection
Handling an objection
Handling anHandling an objection objection
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Techniques for ClosingTechniques for Closing
1.1. Trial closeTrial close
2.2. Assumptive closeAssumptive close
3.3. Urgency closeUrgency close
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Concept CheckConcept Check
1. What are the six stages in the personal
selling process?
2. What is the distinction between a lead
and a qualified prospect?
3. Which presentation format is most
consistent with the marketing
concept? Why?
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Sales Management ProcessSales Management Process
Sales management consists of
three interrelated functions:
1. Sales plan formulation
2. Sales plan implementation
3. Evaluation and control of the
salesforce
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PP21-4 The Sales Management ProcessPP21-4 The Sales Management Process
Sales planformulation
Setting objectivesOrganizing thesalesforceDeveloping accountmanagement policies
Sales Plan Implementation
Salesforce recruit-ment and selectionSalesforce trainingSalesforce motivation and compensation
Evaluation andcontrol of the salesforce
Quantitative assess-mentBehavioural evaluation
21-27© 2000 McGraw-Hill Ryerson Limited
Three Questions Related to Organizing the Three Questions Related to Organizing the SalesforceSalesforce
1. Should the company use its own salesforce
or should it use independent agents such as
manufacturer�s representatives?
2. If the decision is made to employ company
salespeople, then should they be organized
according to geography, customer type, or
product/service?
3. How many company salespeople should be
employed?
21-28© 2000 McGraw-Hill Ryerson Limited
PP21-5 Break-Even Chart for Comparing PP21-5 Break-Even Chart for Comparing Independent Agents and a Company Independent Agents and a Company SalesforceSalesforce
CompanyCompanysellingselling costcost($ ($ thousands))
Independent agentselling cost
500500
1,0001,000
1,5001,500
2,0002,000
2,5002,500
3,0003,000
3,5003,500
00 55 1010 1515 2020 2525 3030 3535 4040 4545 5050 5555 6060
Company sales-force selling cost
Independent agent and companysalesforce selling are equal at $25 million in sales
Company sales Company sales ($millions)($millions)
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PP21-6a Organizing the PP21-6a Organizing the SalesforceSalesforce by Customer, Product, and by Customer, Product, and Geography Geography
Customer Organization
Sales ManagerAuto Industry
DistrictSales Manager
Individual(salespeople)
DistrictSales Manager
DistrictSales Manager
Sales ManagerFarm and construction
equipment
Sales ManagerGovernment and
military
General SalesManager
21-30© 2000 McGraw-Hill Ryerson Limited
PP21-6b Organizing the PP21-6b Organizing the SalesforceSalesforce by Customer, Product, and by Customer, Product, and Geography Geography
Product organization
Eastern RegionalSales Manager
DistrictSales Manager
Individualsalespeople
DistrictSales Manager
DistrictSales Manager
Western RegionalSales Manager
Divisional SalesManager
Product A
Divisional SalesManagerProduct B
General SalesManager
21-31© 2000 McGraw-Hill Ryerson Limited
PP21-6c Organizing the PP21-6c Organizing the SalesforceSalesforce by Customer, Product, and by Customer, Product, and Geography Geography
Geographical Organization
DistrictSales Manager
Individual(salespeople)
DistrictSales Manager
DistrictSales Manager
Eastern RegionalSales Manager
Western RegionalSales Manager
General SalesManager
21-32© 2000 McGraw-Hill Ryerson Limited
Major Account ManagementMajor Account Management
� Major account management, or key accountmanagement is a variation of the customerorganizational structure. It involves the practice ofusing team selling to focus on important customers soas to build mutually beneficial, long-term,cooperative relationships.
� This approach, which often assigns companypersonnel to a customer account, results in �customerspecialists� who can provide exceptional service.
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Account Management PoliciesAccount Management Policies
� Account management policies specify:a. who salespeople should contact,
b. what kinds of selling and customer service activities should be
engaged in, and
c. how these activities should be carried out.
These policies might state:
a. which individuals in a buying organization should be contacted,
b. the amount of sales and service effort that different customers should
receive, and
c. the kind of information salespeople should collect before or during a
sales call.
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PP21-7 Account Management Policy GridPP21-7 Account Management Policy GridCOMPETITIVE POSITION OF SALES ORGANIZATION
HIGH LOW
AC
CO
UN
T O
PP
OR
TU
NIT
Y
HIGH
LOW
1Attractiveness. Accounts offer good opportunity because they have high potential and sales organi-zation has a strong position.Account management policy. Account should re-ceive high level of sales calls and service to retainand possibly build accounts.-
2Attractiveness. Accounts are somewhat attractivebecause sales organization has a strong position,but future opportunity is limited.Account management policy. Accounts should re-ceive moderate level of sales and service to main-tain current position of sales organization.
3Attractiveness. Accounts may offer good opportunityif sales organization can overcome its weak position.Account management policy. Emphasize a heavysales organization position or shift resources to other accounts if stronger sales organization position impossible.
4Attractiveness. Accounts offer little opportunity, and sales organization position is weak.Account management policy. Consider replacing personal calls with telephone sales or direct mail to service accounts. Consider dropping account.
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Sales Plan ImplementationSales Plan Implementation
The three tasks involved inimplementing a sales plan are:
1. Salesforce recruitment and selection,
2. Salesforce training, and
3. Salesforce motivation and compensation.
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Emotional IntelligenceEmotional Intelligence
Emotional intelligence is the ability tounderstand one�s own emotions andthe emotions of people with whom oneinteracts on a daily basis. Thequalities are important for adaptiveselling and may spell the differencebetween effective and ineffectiveorder-getting salespeople.
21-37© 2000 McGraw-Hill Ryerson Limited
SalesforceSalesforce Motivation & Compensation Motivation & Compensation
Research on salesperson motivationsuggests that:
1. a clear job description,
2. effective sales management practices,
3. a sense of achievement, and
4. proper compensation, incentives, or
rewards will produce a motivated
salesperson.
21-38© 2000 McGraw-Hill Ryerson Limited
Three Plans for Compensating SalespersonsThree Plans for Compensating Salespersons
Three Plans for Compensating Salespersons
1. Straight salary
2. Straight commission
3. Salary plus commission
21-39© 2000 McGraw-Hill Ryerson Limited
SalesforceSalesforce Evaluation and Control Evaluation and Control
Salesforce evaluation and controlinvolves determining whether or notsales objectives were met and whetheraccount management policies werefollowed. Two types of assessmentmeasures are used:
1. Quantitative measures
2. Behavioural measures
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SalesforceSalesforce Automation Automation� Salesforce automation is clearly changing how selling is
done and how salespeople are managed. The objectiveof salesforce automation is to increase productivity whilesimultaneously decreasing costs.
� Computer software and hardware are integral parts ofthe sales management process. Salesforce automationcost about $2,500-$5,000 or more per salesperson.
21-41© 2000 McGraw-Hill Ryerson Limited
Concept CheckConcept Check
1. What are the three types of selling
objectives?
2. What three factors are used to
structure sales organizations?
3. How does emotional intelligence
tie to adaptive selling?