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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