Sales and distribution management Lecture notes

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? Sales and Distribution ManagementSALES AND DISTRIBUTION MANAGEMENT UNIT 1 INTRODUCTION TO SALES MANAGEMENT LESSON 1 UNIT 1 OBJECTIVE AND SCOPE OF PERSONAL SELLING Learning Objectives services backed up by supporting activities (help in doing training dealer salesforce, local advertising, credit) and assurance • To know the broad objectives of sales management that products and services are wise investments in competitive • Definition of sales management market place. • How a Sales executive acts as a coordinator Society looks to them to assure delivery of goods & services • To know about personal selling • that final buyers want at price In this lesson we will study about an overview of Sales • of increasing importance Management. • to market products whose potential for damaging the Sales Managers today must develop an integrative manage- environment is minimal. ment style using adaptive, problem solving, extensive information, in many cases is an ever changing market place. If goods and services made and sold are needed and accepted The overwhelming majority of business environment workers by buying public and if this products are socially responsible, are service providers such as investment bankers, consultants, then it is likely that management’s objectives will have been and information technology specialists. Sales Mangers in the achieved. Ultimately, a business’s earnings depend upon, how current business environment must have the ability to add well the interest of the firm, the final buyers and society are value, which means functional expertise in sales and marketing blended. To the extent that these interests are in harmony, the along with knowledge of industry. However managers must firm experiences Sales Volume, Net Profits and Business also have the skills to lead, communicate, use changing tech- Growth. nologies, build teams, motivate sales people, form strategic Sales Management as defined by alliance with customers. American Marketing Association — is Planning, direction and These are times of drastic corporate downsizing in which control of Personal selling including recruiting, selecting, sales orgranisations are expected to do more with less. Many equipping assigning, routing, internal and external changes in organizations have dictated the Supervising, paying and motivating as these task apply to need to conduct business differently. personal Salesforce. External business environment has experienced changing Sales Managers are responsible for organizing the sales effort, technology, globalization, more competition and more both within and outside their Companies. Within the Com- demanding and sophisticated customers. pany the Sales Manager builds formal and informal Internal changes have included greater emphasis on quality organizational structures that ensure effective communication levels in product and service output, faster communication not only inside the sales department but in its relations with channels and more educated, skilled employee base. other organizational units. The relationship between sales people and customer is changing Outside the Company, Sales Manager serves as a key contact faster than sales orders can be processed. Most remarkable is the with customers and other external publics and is responsible for fact that it is customers who are driving change. They are asking building and maintaining an effective distribution network. for, if not demanding better service from vendors. The shift Sales Managers have still other responsibilities. They are has radically changed the way selling is done. Companies are responsible for participating in preparation of information building relationships, improving technologies, processes and critical to the making of key marketing decisions, such as those systems along the way. on budgeting quotas and territories. Sales Management helps Sales Executive are professionals. The professional approach to respond proactively and effectively to customers, the key to requires thorough analysis, market efficient personal selling winning business and processing orders during the pre-sales, objectives, appropriate sales policies and personal selling order management and post shipment phases. strategy. Objectives of Sales Management Sales Executives have responsibilities to their Organization, From the Company View point, there are three general objec- Customer and Society. tives of Sales Management Top Management holds them responsible for • Sales Volume 1. Obtaining Sales Volume • Contribution To Profits 2. Providing Profit Contribution • Continuing growth 3. Continuing Business Growth Sales Executives, of course do not carry the full burden in the Customers (most often, wholesalers, retailers or industrial effort to reach these objectives, but they make major contribu- user) expect them to supply easily resalable products and 1SALES AND DISTRIBUTION MANAGEMENT tions. Top Management has the final responsibility, because it is should have knowledge about production schedule. They accountable for the success a failure of entire enterprise. should be able to provide the market with precise delivery of materials. Further sales personnel should be aware of changes Top Management delegates to Marketing Management, which in product features, quality styles so as to update the market then delegates to Sales about the product.They in turn provide information about Management, sufficient authority to achieve the tree general customers want and demand to the production department . objectives. In the process objectives are translated into more This is because they are in direct contact with the customers. specific goals. Organisations need to add features to their product or con- Top Management stantly improve quality in order to survive in the market. ↓ Co-ordination with Human Resource Marketing Management Sales Department works under lot of pressure. They experience rapid changes due to constant development in market place. ↓ They have to keep the objectives in mind and there are targets to Sales Management be achieved. It is essential that there is constant motivation in the department. Human Resource department need to provide the necessary facilities to the Sales Personnel. Adequate compen- Objectives are broken down an restated as definite goals that sation package keeping the interest of Sales Personnel is Company has chance of achieving. prepared. Sales Personnel should be aware of these benefits. Before goat setting Sales Executives provide estimate on market What is personal selling? and Sales potentials, the capabilities of sales force and middle- Personal selling involves oral conversations, either by telephone men. Once goals are finalized it is the Sales Executives who or face-to-face, between salespersons and prospective customers. guide and lead Sales Personnel and middlemen who play critical role in implementing selling plans. Contribution of personal selling • Salespeople generate revenue Sales Executives as Coordinator Why is it necessary to coordinate sales activities with other • Salespeople provide market research and customer feedback departments ? • Salespeople provide solutions to problems Sales Executives have responsibilities to co-ordinate sales • Salespeople provide expertise and serve as information activities with other departments in the organization. This is resources essential as the product/service which is the final output of any • Salespeople serve as advocates for the customer when organization is to be ultimately sold by the Sales Personnel. dealing with the selling organization Higher ranking Sales Executives are those most concerned with obtaining effective co-ordination, but Sales Executives at all The Four Sales Channels organizational levels have some responsibility for coordinating. • Over-the-counter selling: personal selling conducted in retail and some wholesale locations in which customers Production Department come to the seller’ place of business Advertising Department Sales Department • Field selling: sales presentations made at prospective customers’ homes or businesses on a face-to-face basis Human Resource Department • Telemarketing: promotional presentation involving the Coordinating with Advertising use of the telephone on an outbound basis by salespeople Synchronizing personal selling with advertising is important. or on an inbound basis by customers who initiate calls to Advertising may prove uneconomic unless the sales force obtain information and place orders capitalizes upon interest aroused. Personal Selling effort is • Inside selling: performing the functions of field selling wasted in explaining details that might be explained by but avoiding travel-related expenses by relying on phone, advertising, but when sales personal and advertising use the mail, and electronic commerce to provide sales and product same appeals, promotional impact is magnified. The timing service for customers on a continuing basis and sequence with which different phases of personal selling Sales Management in the 21st Century and advertising efforts are executed affect firm’s chances for • Building long-term relationships with customers marketing success. • Creating sales organizational structures that are more Marketing nimble and adaptable • Gaining greater job ownership and commitment from salespeople by removing functional barriers within the Advertising Sales organization • Moving sales management style from commanding to Co-ordination with Production coaching Selling should be coordinated with production. There should • Leveraging available technology for sales success be stocks available to be sold in the market. Sales Personnel 2SALES AND DISTRIBUTION MANAGEMENT • Better integrating salesperson performance evaluation to The core responsibilities Some senior managers feel include full range of activities and outcomes of senior management there is no time to analyze are to set strategy and Personal selling which forms part of sales management will be a the factors and understand affecting profitability. objectives, secure way to reach out to customers. resources, and maxi- Questions mize profitability. It is Q1. How do you define sales management? imperative that top managers have a deep enough knowledge of profitability management to be able to communicate that Q2. What are objectives of sales management? wisdom to the sales force. It is futile to simply instruct the sales Q3. How a sales executive acts as a coordinator? force to produce the most profitable results. Q4. What is personal selling? Translate into business objectives: All companies have business plans, but often these plans, which feature mainly company and market analysis, sets of programs, and numbers, Annexure 1 are not adequate to guide a sales force. Jonathan Byrnes is a senior lecturer at MIT and president of The core questions that must be addressed every day by the Jonathan Byrnes & Co., a focused consulting company. He earned a sales reps and sales managers are who to call on and what each doctorate from Harvard Business School in 1980 call needs to accomplish. A sales rep can accomplish a limited by Jonathan Byrnes number of things, such as increasing sales in an existing You are what you sell. Sales is the front-wheel drive that pulls a account, changing a customer’s product mix, up-selling, cross- company forward in the marketplace. But in many companies, selling, obtaining a new customer, minimizing discounts, top managers are frustrated because the sales process seems minimizing returns, etc. Effective business plans must give disconnected from corporate objectives. This presents a serious guidance to the sales force about which objectives they should impediment to management’s efforts to manage profitability pursue in given situations in order to produce the highest effectively. payoffs. The sales reps cannot maximize everything. Why does this occur so often, and what can managers do about Effective business plans have three essential roles: first, to state it? clearly the company’s objectives; second, to specify new initia- The process of transforming top management’s goals into tives, required resources, and expected results; and third, to concrete sales typically breaks down for one or more of the guide the day-to-day activities of the company toward maxi- following reasons: mum profitability. In most companies, the first objective is • Lack of top management clarity about objectives. usually met, the second is sometimes met, and the third is often neglected. When this occurs, it causes the sales force to • Difficulty translating objectives into an operational become disconnected from profitability. business plan. • Vagueness communicating objectives and business plan to Communicate the business objectives: In some companies, the sales force. business objectives and plans are simply not communicated to the sales force. They are created by department heads or staff, • Failure to align compensation with the objectives. and shared only with upper- and middle-level managers. • Problematic individual sales plans and managerial coaching. Sometimes business plans are considered confidential. This Each of these can be remedied through thoughtful manage- causes the sales force to be disconnected. ment. There is a parable about three bricklayers who are asked what A Five-step Remedy they are doing: the first replies, “laying bricks,” the second In order to reconnect sales management to profitability, address replies, “building a wall,” and the third replies, “building a each of the points of breakdown. Managers can do this cathedral.” In the absence of an understanding of business through a five-step process. objectives that guide profitability maximization, the sales force is simply laying bricks. They never see the cathedral, and the Understand profitability: A surprisingly frequent underlying company loses the inspired performance. reason why the sales force does not succeed in maximizing company profitability is that the senior managers themselves do In effective companies, the top managers communicate the not have a clear understanding of the company’s key profitabil- company’s objectives to the sales force. If the objectives have ity drivers. This makes it impossible for them to communicate changed, they explain the decision and why the new objectives to the sales force clear, implementable objectives and systematic are good for the company, the customers, and the sales force. procedures to accomplish them. They do not hand off to the head of sales the responsibility for this vital communication. Some senior managers feel there is no time to analyze and understand the factors affecting profitability, and to devise This direct communication creates two important benefits. concrete measures to guide managers in their efforts to maxi- First, because most top managers have a deeper understanding mize profits. This is a major error. of the factors that create profitability across the company, they are able to communicate the nuances of how to maximize the company’s profitability in the everyday decision-making that is 3SALES AND DISTRIBUTION MANAGEMENT the heart of the sales process, and they can communicate why get sales? How will I get sales? How will I meet my objectives this is important to the sales force and the company. Second, and the company’s objectives? How will I make money? Well- the mere fact that the top managers personally communicate the specified account plans provide the basis for management objectives to the sales force strongly underlines their commit- coaching. They also protect the company against losing sales in ment to accomplishing these goals. By demonstrating that they the event of rep turnover. have taken the time to understand and explain how to maxi- Here’s an example of the power of effective account plans. The mize profitability, these top managers display the “body top management of a company had looked carefully at its language” that motivates the sales force. profitability and sales force productivity. It determined that the Translate into a compensation plan: In some companies, highest-payoff sales objective was to “turn around” high objectives are changed each year, or more frequently, with little or potential, under penetrated accounts that were clustered in areas no change in the that minimized installation costs. However, the reps were compensation plan. focused on increasing revenues in a vague way, and consequently Every aspect of the account There is an old spent inordinate amounts of time with “easy” or “friendly” plans should be saying that a person accounts, many of which were only marginally profitable to measurable. can understand a serve. vision and can buy In order to increase into the vision, but in the end will do what you pay him to do. sales force productiv- A sales rep is most Conversely, if a person does not understand how to accomplish ity, top management productive when focused on accomplishing the few the vision, it does not do a lot of good to tie her compensation devised a clear set of things that really matter in to its realization. The difficulty with tailoring an effective sales business plans to each sales call. compensation plan is that it requires a set of well-thought-out guide the reps in business objectives that are specific enough to guide the sales account selection and force every day. The sales force should be driven by the compen- managing their time. They helped the sales managers work with sation plan. “Work your pay plan” is one of the central tenets the reps to identify the highest-potential underperforming of sales management. Simply telling the sales reps to maximize accounts in each territory, and to create step-by-step account profitability without giving them an understanding of how to plans to map the buying center and systematically position the do this, and compensating them to do this, will render the company for the sale. Management understood that turning compensation plan largely ineffective. around an account could be a three-month process, and set up milestones to monitor progress with compensation tied to Sometimes, the sales force is asked to maximize many objec- achieving specific milestones. Sales managers coached the reps tives, or a set of objectives that cannot be simultaneously account-by-account, milestone-by-milestone. maximized. In these cases, the sales force defaults to the simplest way to maximize their compensation. Sales compensa- The initiative was extremely effective, with sales increasing by tion is so critical to a company’s success that top management more than 30 percent in a number of target accounts within a should directly review the plan. month. Top management had succeeded in reconnecting the sales force to profitability. Create individual sales plans: In many companies, sales plans for individual sales reps do not exist or are too vague. This is “Top Gun” Sales Managers like writing a paper without taking the time to develop an Several years ago, the U.S. military developed “Top Gun” effective outline. For example, a rep may simply plan to increase training programs to increase the effectiveness of fighter pilots. revenues by a certain percent for a cluster of accounts. This is a These programs were based on the finding that, although hope, not a plan. By contrast, an effective individual sales plan technology had improved considerably, many pilots were must be specified at the account/product level, so the rep and becoming less effective. The problem was that these pilots were sales manager can track progress and continuously improve the having difficulty with information overload. The best pilots had rep’s performance. learned to focus on the few things that mattered most. Once the other pilots were taught what to focus on in specific The building blocks for a tightly-connected sales force are three- situations, their effectiveness skyrocketed. fold: 1) clear business plans, which include guidance on what to do to maximize profitability in particular types of situations, In a similar way, top managers can reconnect their sales manage- and which reflect top management clarity and commitment; 2) ment to profitability. A sales rep is most productive when compensation that has been tailored to direct the sales reps to focused on accomplishing the few things that really matter in meet the company’s objectives; and 3) well-specified account each sales call. It is management’s responsibility to identify plans that will enable the reps to fulfill the business objectives those few things, and to tie compensation specifically to their and allow the sales managers to monitor and coach the reps’ accomplishment. It is the rep’s responsibility to get the job progress. These plans must be developed by the individual sales done. reps, and include step-by-step, account-specific initiatives to The biggest problem in sales force productivity is often that obtain new accounts, to increase penetration in existing management has not given the reps the necessary goal clarity accounts, and to increase account profitability. and focused compensation. This five-step process will ensure Every aspect of the account plans should be measurable. They that top managers give the sales force what it needs to succeed, should provide specific answers to the questions: Where will I in the process ensuring the success of the whole company. 4SALES AND DISTRIBUTION MANAGEMENT LESSON 2 BUYER SELLER DYAD AND PERSONAL SELLING SITUATIONS Learning objectives customer’s perception of what that behavior should be is a 4 necessary condition for the continuation of dyadic interaction. · To know about buyer seller dyads Another factor influencing buyer-seller dyadic interactions is the • Το know about the different personal selling situations. buyer’s initial conditioning with respect to selling. Salespeople • To know the recent trends in selling. have been maligned and the butt of nasty stories for genera- Buyer Seller Dyad tions. People are taught from childhood to beware of the tricky salesperson. Let us Understand what is Buyer Seller Dyad? There are indications that salespeople, not as stereotyped, but as Fundamental to understanding salesmanship is recognition they actually perform, leave much to be desired in the impact that it involves buyer-seller interactions. Sociologists use the they make on customers. Studies of the attitudes of buyers and term “dyad” to describe a situation in which two people purchasing agents reveal that many are critical of the interact. The salesperson and the prospect, interacting with each salesperson’s lack of product knowledge, failure to follow up, other, constitute one example of a “buyer-seller dyad”. Another general unreliability, slavish adherence to “canned” presenta- is the interaction of a seller using advertising with a particular tions, blatant use of flattery, bad manners, commercial prospect in the reading, listening, or viewing audience. In both dishonesty, and so forth. advertising and personal selling, the seller seeks to motivate the prospective buyer to behave favorably toward the seller. The Buyer-Seller Dyad Whether or not the buyer reacts as the seller desires depends Good communication is a key to successful marketing, and it is upon the nature of the interaction. The opportunity for particularly important for positive personal selling results. The interaction is less in the advertising case than in personal selling. buyer-seller dyad is flexible and efficient, closes sales, and However, advertising and personal selling often supplement or provides feedback. support each other, and the buyer reacts to their combined impact. 1. Salesperson determines consumer needs. Franklin Evans researched buyer-seller dyads in the life insurance 2. Salesperson presents information Consumer Salesperson business. Prospects who bought insurance knew more about and answers consumer questions. salespersons and their companies, and felt more positively 3. Salesperson and consumer conclude transactions. toward them, than did prospects who did not buy, Further- more, the more alike salespersons and their prospects were, the greater was the likelihood that a sale would result. This was true Salesperson-customer Relationship for physical characteristics (age, height), other objective factors Customer Salesperson (income, religion, education), and variables that relate to 3 personality factors (politics, smoking). Evan’s findings have significance for sales management. Role Requirements Personal Personal Role Requirements Characteristics Characteristics & characteristics & characteristics Whenever possible, sales personnel should be assigned to Personal affiliation prospects whose characteristics are similar to their own, thus improving the chance of successful dyadic relationships. Pairing salespersons with customers of similar backgrounds is more easily accomplished in industrial selling, where there are fewer Needs and Expectations Adjustment Needs and Expectations prospects about whom information is needed, than in con- sumer-goods selling, where the number of prospects and customers per salesperson is much larger. Choice of Strategy Choice of Strategy Henry Tosi studied dyads of wholesale drug salespeople and retail pharmacists who made buying decisions. When the buyer Negotiation perceived the salesperson’s performance to be similar to his or Adapt Adapt her concept of “ideal” performance, the number of sources from which purchases were made was low. Although this did not necessarily result in a larger percentage of purchases from Exchange the salesperson, customer satisfaction with the salesperson’s behavior did at least allow the salesperson to get into the store. Tosi concluded that, in addition to the physical characteristics Stop and personality and objective factors cited by Evans, the Conceptual model of ‘Salesperson – Buyer ‘Dyadic Relationship 5SALES AND DISTRIBUTION MANAGEMENT Figure in the last page is a conceptual model of “salesperson- 4. Missionary – aims only to build goodwill or to educate the buyer” dyadic relationships. This model, developed after an actual or potential user, and is not expected to take an extensive literature search, views the sales process as being order; for example, the distiller’s “missionary” and the influenced by both salesperson and buyer, each a focal person pharmaceutical company’s “detail” person. influenced by personal characteristics and role requirements. 5. Technical Salesperson – emphasizes technical knowledge; Personal characteristic include personality, values, attitudes, past for example the engineering salesperson, who is primarily a experiences, and the like. Role set requirements (for example, consultant to “client” companies. formal authority and organizational autonomy) interact with Group B (developmental Selling) personal characteristic to shape needs and expectations. Focal 6. Creative Salesperson of Tangibles – for example, persons’ perceptions of each other’s needs may lead to adjust- salespersons selling vacuum cleaners, automobiles, siding, ments of their own (see the “feedback” mechanism represented and encyclopedia. by the broken lines in Figure 2.1). 7. Creative Salesperson of Intangibles – for example. Based on individual needs and expectations, each focal person Salespersons selling insurance, advertising services, and develops a strategy aimed to negotiate a favorable exchange. educational programs. That strategy may embrace persuasion, ingratiation, communi- cation of facts or offers, friendship, and other elements. If the The more developmental selling required in a particular sales job strategies are compatible, an exchange takes place. Otherwise, the and the more complex it is, the harder it is to make sales. The salesperson and the buyer may stop interacting, or based on amount and kind of developmental selling depends upon the feedback from the unsuccessful negotiation, either or both may natures of prospects and customers, on the one hand, and the adapt by altering strategy, attempting to adjust needs and nature of products, on the other hand. The easiest sales are self- expectations, or modifying role requirements. Role require- service sales: customers know their needs, know the products ments, as well as needs and expectations, often are determined capable of satisfying these needs, sell themselves, and go by forces beyond the focal person’s control, so one or both may through the checkout line. The most difficult sales require find it impossible to adapt. For instance, to meet a buyer’s developmental selling and creativity – where sometimes the expectations, a salesperson may need to set prices, yet this may sales must be made on something other than the product’s be against company policy and beyond the salesperson’s control. merit, or “multiple” sales are necessary to get the order, and When the particular round of negotiations is terminated where continual effort is required to keep the account. regardless of its outcome, the experience becomes input into Recent Trends In Selling future interactions of the salesperson Let us see what are the recent trends in selling to understand Diversity of Personal-selling Situations selling in present environment. Considerable diversity exists among personal-selling situations, • Relationship selling and it is helpful to distinguish between service and develop- Regular contacts over an extended period to establish a sus- mental selling. Service selling aims to obtain sales from existing tained seller-buyer relationship. The success of tomorrow’s customers whose habits and patterns of thought are already marketers depends on the relationships that they build today conducive to such sales. Developmental selling aims to convert Relationships are built upon trust. prospects into customers. Developmental selling, in other According to Stephen X. Doyle and George Thomas Roth words, seeks to create customers out of people who do not (“Selling and Sales Management in Action: The Use of insight currently view the salesperson’s company favorably, and who & Coaching to improve Relationship Selling,” Journal of likely are resistant to changing present sources of supply. Personal Selling & Sales Management, Winter 1992, p. 62) there Different sales positions require difference amounts and kinds are five characteristics of trust-building in salespeople. of service and developmental selling. McMurry and Arnold Customer Orientation means that the salesperson places as classify positions on a spectrum ranging from the very simple to much emphasis on the customer’s interests as on the the highly complex. They categorize sales positions into three salesperson’s interests. Presentations balance the pros and cons. mutually exclusive groups each containing subgroups, a total of The salesperson doesn’t push a product that the buyer doesn’t nine subgroups in all: need. Group A (service Selling) Competence includes the salesperson’s ability, knowledge, and 1. Inside Order Taker –”waits on” customers; for example, resources to meet customer expectations. The salesperson the sales clerk behind the neckwear counter in a men’s store. displays technical command of products and applications. These jobs are known as technical support staff, sales Dependability is the predictability of the salesperson’s actions. assistants, telemarketers, and telesales professionals. His or her words and actions are consistent with a professional 2. Delivery Salesperson – mainly engages in delivering the image. product; for example, persons delivering milk, bread, or Candor is the honesty of the spoken word. The proof used to fuel oil. support claims is credible. Subsequent events prove the 3. Route or Merchandising Salesperson – operates as an order salesperson’s statements to be true. taker but works in the field – the soap or spice salesperson calling on retailers is typical. 6SALES AND DISTRIBUTION MANAGEMENT Likability is rooted in each party’s perception of “having personal interests, competition, etc. Online access to the something in common” with the other. This is an emotional company’s customer and prospect database gives the salesper- factor, yet a powerful force in buyer and seller relationships. son the ability (and the responsibility) to update files from the field. In some cases, it makes sense to create a dedicated (and • Consultative Selling more manageable) sales database for a special initiative, product, Meeting customer needs by listing to them, understanding — or region. Salespeople become intelligence agents in the field and caring about — their problems, paying attention to details, when they feed that information directly into the data resources and following through after the sale shared by the rest of the sales force and the company at large. • Team Selling Conclusion Combination of salespeople with specialists from other We here studied that buyer seller dyad is face to face conversa- functional areas to promote a product. Team selling is the use tion between a buyer and a seller. Understanding the of teams made up of people from different functional areas to importance is important as it helps in selling process. We also service large accounts.. Increasingly, sales representatives who studied that there are different types of personal selling lack technical expertise work as a team with a technical expert. In situations. The personal selling in todays business environment this arrangement, the duties of a sales representative are to is taking a new shape with emphasis on team selling, sales force make the preliminary contact with customers, introduce the automation, relationship selling. company’s product, and close the sale. The technical expert will attend the sales presentation to explain and answer questions Questions and concerns. In this way, the sales representative is able to Q1. Why is it necessary to understand buyer seller dyad? spend more time maintaining and soliciting accounts and less Q2. What are the different personal selling situations? time acquiring technical knowledge. After the sale, sales repre- Q3. What do you mean by Team selling? sentatives may make frequent follow-up visits to ensure the equipment is functioning properly and may even help train Q4. Why is relationship selling important? customers’ employees to operate and maintain new equipment. Q5. What do you mean by sales force automation? Useful in sales situations that call for detailed knowledge of new, complex, and ever-changing technologies • Sales Force Automation (SFA) Applications of computer and other technologies to make the sales function more efficient and competitive Many salespeople need to go to the prospective customer in order to demonstrate or illustrate the particulars about the product. Technology makes salespeople more effective and productive because it allows them to provide accurate and current information to customers during sales presentations. Sales automation (also known as customer asset management and total customer management) implies that technology can be used to speed up previously inefficient operations. The Internet and related technology have affected the personal selling process. Product information on Web sites is available to customers and prospects. In the past, salespeople delivered this information to the customer. The Internet frees salespeople to focus on the most important aspects of their job (such as building long-term relationships with customers and focusing on new accounts). Information is shared among users in every department that touches the customer. Also, information sharing promotes more effective channel partnership. Salespeople use computers (with communications devices, contact management programs, and email) to connect them (over the Internet) to their own company’s databases when they are out on sales calls. This gives them with the ability to provide the customer with extensive, relevant information almost immediately. Salespeople have access to current, relevant marketing materials, including data sheets, brochures, multime- dia presentations, and proposal templates, online or via CD-ROM. Salespeople have access to dossiers on prospects, customer and prospect companies, perceptions, loyalties and buying histories, 7SALES AND DISTRIBUTION MANAGEMENT Points to Ponder The Buyer-Seller Dyad RECENT TRENDS IN SELLING Good communication is a key to successful marketing, and it is p articularly important for positive personal selling results. The buyer buyer- -seller dyad seller dyadis flexible and efficient, closes sales, and provides • Relationship selling feedback. • Team selling • Sales force automation 1. Salesperson determines consumer needs. 2. Salesperson presents information Consumer S alesperson and answers consumer questions. 3. Salesperson and consumer conclude transactions. Ehical Dilemma You are a sales manager of a highly successful firm that produces bricks for home and office builders . The territory’s top seller , Mr. singh is leaving for a month on a Vacation .You know that for the past three weeks Mr. Singh has worked relentlessly with one particular home builder Raheja’ s in an attempt t sell bricks for building purpose. Such a sale would DIVERSITY OF PERSONAL- have netted Mr. Singh a healthy Rs.20,000 commission Despite Mr. singh’s successful closing of more than 40 sales last SELLING SITUATIONS month he was never able to close this particular sale even after meeting and negotiating with Raheja’s several time , who kept • Inside Order Taker insisting of better deal. • Delivery Salesperson Yesterday Mr. Singh left on his vacation . Early this morning one of your newest hires , Vinod received a call from Raheja’s • Route or Merchandising Salesperson wanting to purchase the bricks at the price Mr. Singh had • Missionary selling negotiated before his departure.Since Mr. Singh cannot be • Technical Salesperson accessed Vinod was forced to handle the one hour of paper work in order to finalise the deal. • Creative Salesperson of Tangibles Later that afternoon while reviewing the papers Vinod had • Creative Salesperson of Intangibles completed and kept on your desk you notice that in the blank marked “salesperson “ Vinod had written his own name. The name of the individual who is in this blank will receive Rs. 20,000 check. Thinking that Vinod has simply made a mistake you call him in your office to correct the error. However you soon find out that Vinod had purposely written his own name. He explained “ I made the sale . I wrote up the client , placed the order and used my own selling time to do it. In fact he was never actually able to make the sale when he was here. He was not even in the town when customers finally decided to place the order. He did not work with the customer at all today—he is on vacation I did. I deserve the credit for sale.” You know Mr. singh is struggling to make his sales quota. What do you do? 8SALES AND DISTRIBUTION MANAGEMENT LESSON 3 THEORIES OF PERSONAL SELLING Learning Objectives there is little doubt that the construct is based upon experiential To learn about the different theories of selling : knowledge and, in fact, was in existence as early as 1898. During the successful selling interview, according to this theory, the • AIDAS theory of personal selling prospect’s mind passes through five successive mental states: • “Right Set Of Circumstances” Theory Of Selling attention, interest, desire, action, and satisfaction. Implicit in • “Buying Formula” Theory Of Selling this theory is the notion that the prospect goes through these • “Behavioral Equation” Theory five stages consciously, so the sales presentation must lead the prospect through them in the right sequence if a sale is to Is selling An Art or a Science? result. Let us see what is it Securing Attention Is selling a science with easily taught basic concepts or an art The goal is to put the prospect into a receptive state of mind. learned through experience? In a survey of 173 marketing The first few minutes of the interview are crucial. The salesper- executives, 46 percent perceived selling as an art, 8 percent as a 9 son has to have a reason, or an excuse, for conducting the science, and 46 percent as an art evolving into a science. The fact interview. If the salesperson previously has made an appoint- that selling is considered an art by some and a science by others ment, this phase presents no problem, but experienced sales has produced two contrasting approaches to the theory of personnel say that even with an appointment, as salesperson selling. must possess considerable mental alertness, and be a skilled The first approach distilled the experiences of successful conversationalist, to survive the start of the interview. The salespeople and, to a lesser extent, advertising professionals. prospect’s guard is naturally up, since he or she realizes that the Many such persons, of course, succeeded because of their grasp caller is bent on selling something. The salesperson must of practical, or learned-through-experience psychology and their establish good rapport at once. The salesperson needs an ample ability to apply it in sales situations. It is not too surprising that supply of “conversation openers”. Favorable first impressions these selling theories emphasize the “what to do” and “how to are assured by, among other things, proper attire, neatness, do” rather than the “why”. These theories, based on experien- friendliness, and a genuine smile. Skilled sales personnel often tial knowledge accumulated from years of “living in the market” decide upon conversation openers just before the interview so rather than on a systematic, fundamental body of knowledge, that those chosen are as timely as possible. Generally it is are subject to Howard’s dictum, “Experiential knowledge can be advantageous if the openings remarks are about the prospect 10 unreliable.” (people like to talk and hear about themselves) or if they are The second approach borrowed findings from the behavioral favorable comments about the prospect’s business. A good sciences. The late E.K. Strong, Jr. professor of psychology at conversation opener causes the prospect to relax and sets the the Stanford Graduate School of Business, was a pioneer in this stage for the total presentation. Conversation openers that effort, and his “buying formula” theory is presented later in this cannot be readily tied in with the remainder of the presentation section. John A. Howard of the Columbia Graduate School of should be avoided, for once the conversation starts to wander, Business was in the forefront of those who adapted the great skill is required to return to the main theme. findings of behavioral science to analysis of buying behavior; Gaining Interest his “behavioral equation,” discussed later in this section, The second goal is to intensify the prospect’s attention so that it attempts to develop a unified theory of buying and selling. evolves into strong interest. Many techniques are used to gain 8 Theories of Selling interest. Some salespeople develop a contagious enthusiasm for In this section we examine four theories. The first two, the the product or a sample. When the product is bulky or technical, “AIDAS” theory and the “right set of circumstances” theory, sales portfolios, flipcharts, or other visual aids serve the same are seller oriented. The third, the “buying-formula” theory of purpose. selling, is buyer oriented. The fourth, the behavioral equation, Throughout the interest phase, the hope is to search out the emphasizes the buyer’s decision process but also takes the selling appeal that is most likely to be effective. Sometimes, the salesperson’s influence process into account. prospect drops hints, which the salesperson then uses in AIDAS Theory of Selling selecting the best approach. To encourage hints by the prospect, This theory – popularly known as the AIDAS theory, after the some salesperson devise stratagems to elicit revealing questions. initials of the five words used to express it (attention, interest, Others ask the prospect questions designed to clarify attitudes desire, action, and satisfaction) – is the basis for many sales and and feelings toward the product. The more experienced the advertising texts and is the skeleton around which many sales salesperson, the more he or she has learned from interviews training programs are organized. Some support for this theory with similar prospects. But even experienced sales personnel do is found in the psychological writings of William James, but considerable probing, usually of the question-and-answer 9SALES AND DISTRIBUTION MANAGEMENT variety, before identifying the strongest appeal. In additional, had its psychological origin in experiments with animals and prospects’ interests are affected by basic motivations, closeness holds that the particular circumstances prevailing in a given of the interview subject to current problems, its timeliness, and selling situation cause the prospect to respond in a predictable their mood – receptive, skeptical, or hostile – and the salesper- way. If the salesperson succeeds in securing the attention and son must take all these into account in selecting the appeal to gaining the interest of the prospect, and if the salesperson emphasize. presents the proper stimuli or appeals, the desired response (that is, the sale) will result. Kindling Desire The set of circumstances, included factors external and internal The third goal is to kindle the prospect’s desire to ready-to-buy to the prospect. To use a simplified example, suppose that the point. The salesperson must keep the conversation running salesperson says to the prospect, “Let’s go out for a cup of along the main line toward the sale. The development of sales coffee”. The salesperson and the remark are external factors. But obstacles, the prospect’s objections, external interruptions, and at least four factors internal to the prospect affect the response. digressive remarks can sidetrack the presentation during this These are the presence or absence of desires: (1) to have a cup phase. Obstacles must be faced and ways found to get around of coffee, (2) to have it now, (3) to go out, and (4) to go out them. Objections need answering to the prospect’s satisfaction. with the salesperson. Time is saved, and the chances of making a sale improved if objections are anticipated and answered before the prospect Proponents of this theory tend to stress external factors and at raises them. External interruptions cause breaks in the presenta- the expense of internal factors. They seek selling appeals that tion, and when conversation resumes, good salespeople evoke desired responses. Sales personnel who try to apply the summarize what has been said earlier before continuing. theory experience difficulties traceable to internal factors in many Digressive remarks generally should be disposed of tactfully, selling situations, but the internal factors are not readily with finesse, but sometimes distracting digression is best manipulated. This is a seller-oriented theory: it stresses the handled bluntly, for example, “Well, that’s all very interesting, importance of the salesperson controlling the situation, does but to get back to the subject not handle the problem of influencing factors internal to the project, and fails to assign appropriate weight to the response SATISFACTION side of the situation-response interaction. ACTIONS “Buying Formula” Theory of Selling DESIRE In contrast to the two previous theories, the third emphasizes INTEREST the buyer’s side of the buyer-seller dyad. The buyer’s needs or ATTENTION problems receive major attention, and the salesperson’s role is to help the buyer find solutions. This theory purports to Inducing Actions answer the question: What thinking process goes on in the If the presentation has been perfect, the prospect is ready to act- prospect’s mind that causes the decision to buy or not to buy? that is, to buy. However, buying is not automatic and, as a rule, The buying formula is schematic representation of a group of must be induced. Experienced sales personnel rarely try for a responses, arranged in psychological sequence. The buying close until they are positive that the prospect is fully convinced formula theory emphasizes the prospect’s responses (which, of of the merits of the proposition. Thus, it is up to the salesper- course, are strongly influenced by internal factors) and son to sense when the time is right. The trial close, the close on deemphasizes the external factors, on the assumption that the a minor point, and the trick close are used to test the prospect’s salesperson, being naturally conscious of the external factors, reactions. Some sales personnel never ask for a definite “yes” or will not overlook them. Since the salesperson’s normal inclina- “no” for fear of getting a “no”, from which they think there is tion is to neglect the internal factors, the formula is a convenient no retreat. But it is better to ask for the order straightforwardly. way to help the salesperson remember. Most prospects find it is easier to slide away from hints than The origin of this theory is obscure, but recognizable versions from frank requests for an order. appear in a number of early books on advertising and selling by Building Satisfaction 13 authors who had experiential knowledge of salesmanship. After the customer has given the order, the salesperson should Several psychologists also advanced explanations similar to the reassure the customer that the decision was correct. The 14 buying formula. The name “buying formula” was given to this customer should be left with the impression that the salesper- theory by the late E.K. Strong, Jr., and the following step-by- son merely helped in deciding. Building satisfaction means 15 step explanation is adapted from his teaching and writings. thanking the customer for the order, and attending to such Reduced to their simples elements, the mental processes matters as making certain that the order is filled as written, and involved in a purchase are following up on promises made. The order is the climax of the selling situation, so the possibility of an anticlimax should be need (or problem) solution purchase avoided – customers sometimes unsell themselves and the Because the outcome of a purchase effects the chance that a salesperson should not linger too long. continuing relationship will develop between the buyer and the seller, and because nearly all sales organizations are interested in “Right Set of Circumstances” Theory Of Selling continuing relationships, it is necessary to add a fourth element. “Everything was right for that sale” sums up the second theory. The four elements then, are This theory, sometimes called the “situation-response” theory, 10SALES AND DISTRIBUTION MANAGEMENT need (or problem) solution purchase satisfaction The answer to each selling problem is implied in the buying formula, and differences among answers are differences in Whenever a need is felt, or a problem recognized, the individual emphasis upon the elements in the formula. is conscious of a deficiency of satisfaction. In the world of selling and buying, the solution will always be a product or Where the emphasis should be placed depends upon a variety service or both, and they will belong to a potential seller. of circumstances. Without going into detail, it may be said that In purchasing, then, the element “solution” involves two parts: 1. If the prospect does not feel a need or recognize a problem (1) product (and/or service) and (2) trade name (name of that can be satisfied by the product or service, the need or manufacturer, company, or sales-person). problem should be emphasized. In buying anything, the purchaser proceeds mentally from need 2. If the prospect does not think of the product or service or problem to product or service, to trade name, to purchase, when he or she feels the need or recognizes the problem, and, upon using the product or service, he or she experiences the association between need or problem and product or has been established, the buying formula is: service should be emphasized. 3. If the prospect does not think of the trade name when he need or product and/or trade name purchase satisfaction/ problem service dissatisfaction or she thinks of the product or service, the association between product or service and trade name should be To ensure purchase, the product or service and the trade name emphasized. (that is, the source of supply) must be considered adequate, and 4. If need or problem, product or service, and trade name are the buyer must experience a (pleasant) feeling of anticipated well associated, emphasis should be put upon facilitating satisfaction when thinking of the product and/or service and purchase and use. the trade name. in many cases, an item viewed as adequate is also liked, and vice versa, but this is not always so. Some 5. If competition is felt, emphasis should be put upon products and services that are quite adequate are not liked, and establishing in the prospects’ minds the adequacy of the some things are liked and bought that are admittedly not as trade-named product or service, and pleasant feelings good as competing items. Similar reasoning applier trade toward it. names. Some sources of supply are both adequate and liked, 6. If sales to new prospects are desired, every element in the others are adequate but not liked, still others are liked but formula should be presented. patronized even though they are inadequate compared to 7. If more sales to old customers are desired, the latter competing sources. should be reminded. (Developing new uses is comparable With adequately and pleasant feelings included, the buying to selling to new customers.) formula becomes “Behavioral Equation” Theory Adequacy Adequacy Using a stimulus-response model (a sophisticated version of the “right set of circumstances” theory), and incorporating need or product and/or trade name purchase satisfaction findings from behavioral research, J.A. Howard explains buying problem service behavior in term of the purchasing decision process, viewed as phase of the learning process. Pleasant feelings Pleasant feelings Four essential elements of the learning process included in the When a buying habit is being established, the buyer must know stimulus-response model are drive, cue, response, and reinforce- why the product or service is an adequate solution to need or ment, described as follows: problem, and why the trade name is the best one to buy. The 1. Drives are strong internal stimuli that impel the buyer’s buyers also must have a pleasant feeling toward the product or response. There are two kinds: service and the trade name. a. Innate drives stem from the physiological needs, such Then, whenever the buyer’s buying habit is challenged by a as hunger, thirst, pain, cold, and sex. friend’s remark, a competing salesperson’s presentation, or a b. Learned drives, such as striving for status or social competitor’s advertisement, the buyer needs reasons to defend approval, are acquired when paired with the satisfying the purchase, and, in addition, he or she needs a pleasant feeling of innate drives. They are elaborations of the innate toward both the product or service and the trade name. All this drives, serving as a façade behind which the functioning is represented by the dashed lines in the formula. of the innate drives is hidden. Insofar as marketing is The primary elements in a well-established buying habit are concerned, the learned drives are dominant in those connected by solid lines, on the central line of the economically advanced societies. formula. Most purchases are made with scarcely a thought as to 2. Cues are weak stimuli that determine when the buyer will why, and with a minimum of feeling. And it should be the respond. constant aim of the salesperson and advertiser to form such direct associations. Reasons (adequacy of solution) and pleasant a. Triggering cues activate the decision process for any feelings constitute the elements of defense in the buying habit. given purchase. As long as they are present, repeat buying occurs. b. Nontriggering cues influence the decision process but do not active it, and may operate at any time even 11SALES AND DISTRIBUTION MANAGEMENT though the buyer is not contemplating a purchase. wishes to sell a product and the buyer wishes to buy it—these There are two kinds: are the economic features. Each participant also places a value and cost upon the social features. Behavior concerning these i. Product cues are external stimuli received from the features of the relationship consist of sentiments, or expres- product directly, for example, color of the package, sions of different degrees of liking or social approval. weight, or price. Salesperson attempt to receive rewards (reinforcements) either in ii. Informational cues are external stimuli that provide sentiment or economic by changing their own behavior or information of a symbolic nature about the product. getting buyers to change theirs. Such stimuli may come from advertising, conversations Salesperson’s influence process: The process by which the with other people (including sales personnel), and so salesperson influence the buyer is explainable in terms of the on. equation B = P x D x K x V. The salesperson influences P c. Specific product and information cues may also (predisposition) directly, for example, through interacting with function as triggering cues. This may happen when the buyer in ways rewarding to the buyer. The greatest effect on price triggers the buyer’s decision. P, however, comes from using the product. The salesperson 3. Response is what the buyer does. exerts influence through D (amount of motivation), this 4. A reinforcement is any even that strengthness the buyer’s influence being strong when the buyer seeks information in tendency to make a particular response.” terms of international cues. If the ends to be served are not clearly defined, by helping to clarify these, the buyer’s goals, the Howard incorporates these four elements into an equation: salesperson again exerts influence through D. When the buyer B = P x D x K x V has stopped learning—when the buyer’s buying behavior where becomes automatic—the salesperson influence D by providing B = response or the internal response tendency, that is, the act triggering cues. When the buyer has narrowed down the choices of purchasing a brand or patrionizing a supplier to a few sellers, the salesperson, by communicating the merits of the company brand, can cause it to appear relatively better, P = predisposition or the inward response tendency, that is, and thus affect K (its potential satisfaction for the buyer). force of habit Finally, the salesperson can vary the intensity of his or her effort, D =present drive level (amounts of motivation) so making the difference in V (the intensity of all cues). K =“incentive potential” that is, the value of the product or its Salesperson’s role in reducing buyer dissonance: According potential satisfaction to the buyer to Festinger’s theory of congnitive dissonance, when individuals V =intensity of all cues: triggering, product, or informational choose between two or more alternatives, anxiety or dissonance The relation among the variables is multiplicative. Thus, if any will almost always occur because the decisions, people expose independent variable has a zero value, B will also be zero and themselves to information that they perceive as likely to support there is no response. No matter how much P there may be, for their choices, and to avoid information likely to favor rejected example, if the individual is unmotivated (D = 0), there is no alternatives. response. Although Festinger evidently meant his theory to apply only to Each time there is a response—a purchase—in which satisfac- postdecision anxiety, it seems reasonable that it should hold for tion (K) is sufficient to yield a reward, predisposition (P) predecision anxiety. Hauk, for instance, writes that a buyer may increases in value. In other words, when the satisfaction yields a panic on reaching the point of decision and rush into the reward, reinforcement occurs, and, technically, what is reinforced purchase as an escape from the problem or put it off because of is the tendency to make a response in the future to the cue that the difficulty of deciding. It seems, then, that a buyer can immediately preceded the rewarded response. After reinforce- experience either predecision or postdecision dissonnsce, or ment, the probability increases that the buyer will buy the both. product (or patronize the supplier) the next time the cue Reducing pre- and predecision anxiety or dissonance is an appears—in other words, the buyer has learned. important function of the salesperson. Recognizing that the Buyer-seller dyad and reinforcement: In the interactions of a buyer’s dissonance varies both according to whether the product salesperson and a buyer, each can display a type of behavior that is an established or a new one, and whether the salesperson- is rewarding, that is reinforcing, to the other. The salesperson client relationship is ongoing or new, these are four types of provides the buyer with a product (and the necessary informa- cases involving the salesperson’s role. tion about it and its uses) that the buyer needs; this satisfaction 1. An established product—an ongoing salesperson-client of the need is rewarding to the buyer, who, in turn, can reward relationship. Unless the market is unstable, the buyer tends the salesperson by buying the product. Each can also reward the toward automatic response behavior, in which no learning is other by another type of behavior, that of providing social involved and thus experiences little, if any, dissonance; but approval. The salesperson gives social approval to a buyer by insofar as it does occur, the salesperson is effective because the displaying high regard with friendly greetings, warm conversa- salesperson is trusted by the buyer. tion, praise, and the like. 2. An established product—a new salesperson-client In understanding the salesperson-client relation, it is helpful to relationship. The salesperson, being new, is less effective in separate economic aspects from social features. The salesperson reducing dissonance. 12SALES AND DISTRIBUTION MANAGEMENT 3. A new product—an ongoing salesperson-client relation- Points to Ponder ship. Unless the buyer generalizes from personal experience with an established similar product, the buyer experiences AIDAS theory of selling dissonance, especially if it is an important product. Because of the established relationship with the buyer, the salesperson can reduce dissonance. • Securing attention 4. A new product—a new salesperson-client relationship. • Gaining interest The buyer needs dissonance reduction, and the sales, and the • Kindling desire salesperson is less capable of providing it. • Inducing actions How can a salesperson facilitate the buyer’s dissonance reduc- • Building satisfaction tion? Two ways are (1) to emphasize the advantages of the product purchased, while stressing the disadvantages of the forgone alternatives, and (2) to show that many characteristics of the chosen item are similar to products the buyer has forgone, but which are approved by the reference groups. In other words, the buyer experiencing cognitive dissonance needs reassuring that the decision is or was a wise one; the salesperson provides information that permits the buyer to rationalize the decision Notes - Right set of circumstances theory of selling 13SALES AND DISTRIBUTION MANAGEMENT Question Q1 What is AIDAS theory of selling? Q2 How important is AIDAS theory in personal selling? “Buying formula” Q3 What is” Buying formula” of theory of selling ? Q4 When you are a customer do you experience a similar theory of selling process as given in “Buying fformula” theory? “Behavioral Equation” Theory B = P x D x K x V 14SALES AND DISTRIBUTION MANAGEMENT LESSON 4 PERSONAL SELLING PROCESS Learning Objectives 2. Pre approach: once the prospect has been identified and qualified the next step in selling process is pre approach. · To understand about the steps in personal selling process. During pre approach the sales person is gathering information • To know the mistakes that can be done in sales. to use in the attempt to make the sale. Salesperson investigates Personal Selling Process the prospect in greater depth and plans the sales call. Pre Certainly no magical formula exists for making a sales. Many approach is planning the sales presentation to meet the different factors may influence a purchase decision.Yet most customer’s wants or to solve the customer’s problem. It sales trainers believe logical , sequential steps do exists that , if involves gathering research about the prospect. The salesperson followed can greatly improve the chance of making a sale. This must determine where the specific target market consumer is in is called a sales process. This sequential series of actions by sales the purchasing process. In the approach, the salesperson meets person leads to customer taking a desired action and ends with and greets the buyer and puts the buyer at ease. At this a follow up to ensure purchase satisfaction. meeting, the salesperson asks some key questions to get some essential information before getting the buyer’s attention and There is a certain way in which sales person needs to attend his launching into the presentation. function. It involves few steps. A sales person need not follow all steps .Depending on his nature of job he goes about the Sales persons should carefully plan their sales call . Although personal selling process. numerous reasons exists for planning the sales call , four of the most frequently mentioned are Steps in Personal Selling Process • Helps build a salesperson confidence The personal selling process consists of creating new customers and maintaining existing customers. Salespeople follow a series • Develop an atmosphere of goodwill and trust with the of steps in identifying prospects and turning them into buyer customers. • Help create an image of professionalism 1. Prospecting: is identifying potential qualified customers. It is • Increase sales because people are prepared. the first step in personal selling process. A prospect is a person 3. Presentation: the sales opener , or approach , is the first or business that needs the product a salesperson is selling and major part of sales presentation If done correctly , it greatly has the ability to buy it.A sales person constantly looks for new improves the chances of a sales person’s chances of getting the prospects for two reasons. One is to increase sales. The other is sale. Purpose of presentation is to provide knowledge about to replace the customers who will be lost over time. the features , advantages and benefits of the product . Telling Prospects may come as referrals from existing customers, from the product “story” to the prospect, showing how the product suppliers, dealers, etc. Sometimes they come from analysis of will solve a problem for the product. The salesperson must public sources such as directories, newspapers, or public build a case for how the product can serve the needs of the activities of the firm. Once prospects have been identified, they buyer. A need-satisfaction approach involves carefully listening need to be qualified or screened to see if they are good pros- to the buyer’s needs and then clearly explaining how the product pects. can satisfy those needs. Questioning and listening are more important than talking. Presentations using Microsoft’s PowerPoint significantly enhance the professionalism of the The Sales Cycle presentation. To do an adequate job in planning a presentation, salespeople Appointment Prospecting making must understand the concepts of features, potential benefits, and confirmed benefits. Extensive research by Learning International, a major sales training and consulting firm, Compensation concludes that stating features and potential benefits may result Pre approach in successful sales calls, or at least may lead to a continuation of Follow up the sales dialogue on the next sales call. This same research, however, concluded that a far more promising way to achieve sales call success is to seek customer confirmation of potential Presentation benefits. According to Learning International, successful sales Closing the Sale calls have approximately five times as many confirmed benefit statements than for unsuccessful sales calls. Negotiating & handling A feature is a factual statement about a characteristic of the objectives product or service being sold. 15SALES AND DISTRIBUTION MANAGEMENT Examples of features: Sales person should recognize these comments as signs of interest and shift to closing techniques. These we will discuss in • Bell-shaped nozzle on vacuum cleaner detail in next lesson. • Daily delivery of Frito-Lay potato chips 7. Follow-up: is essential to building a relationship between • Technical support personnel for a computer system the seller and the buyer. The sales person follows-up to ensure A potential benefit describes how the product or service may that the buyer received the right products in the right condition meet a customer need that is assumed to be important by the at the right time. Any problems or concerns on the part of the salesperson. When a customer acknowledges the importance of buyer after the sale are addressed immediately. The salesperson a benefit to his or her buying situation, it is a confirmed demonstrates continued interest in the account and a desire to benefit. In selecting specific benefits to be stressed, salespeople satisfy the buyer’s needs on an ongoing basis. should focus on any unique benefits not offered by competi- It is a must that sales should end in follow up, determine if the tion, as long as the benefits are of interest to the prospect. order was delivered on time, installation OK etc. Also helps These might include product benefits, along with non-product determine the prospects future needs. Accomplishes four related benefits such as delivery, extraordinary customer service, objectives: or additional sales support available to the customer. • customer gain short term satisfaction Examples of corresponding benefits: • referrals are stimulated • Optimum airflow improves cleaning ability • in the long run, repurchase • Retailer can reduce inventory costs • prevent cognitive dissonance • Assistance in installation, maintenance, and expansion Follow up activities are critical to the success of salespeople and 5. Handling Objections: theoretically salesperson presenta- sales managers . Customers expect after-sale service and it is tion should show the prospect that the product is required by frequently the job of sales people to make sure these activities him and it should be bought. Very few presentations end that are carried out. successfully and very few prospects are that easily convinced As a general rule when an order is not obtained on the initial call Usually prospect will raise objections .Objections raised by the the sales person should express appreciation for the time made prospect takes a great deal of skill and training. Experienced available and suggests a later visit . In this way a sales person sales person welcome objections . The salesperson must be show continued interest in helping the prospect and in getting able to identify the real reasons for an objection, respond to the the order. When leaving a sales person should inquire if there objection, and overcome it. Objections provide the salesperson are any brochures , samples or othew information that the with the opportunity to learn more about the customer’s needs prospects needs before they meet again. and provide information about the product to satisfy those needs. The most difficult prospect is one who does not say Whenever a sales person leaves without an order they should anything during the presentation , refuse to buy and gives no immediately write down what they have learned about the reason for the decision. The best way to deal with objections is prospect for example What were prospects chief objections , to avoid them by building answers to common questions in to who makes the decision and what are the prospects primary the formal sales presentation. needs. If the sales person made any critical mistake during presentation they should be noted so that they are not repeated 6. Closing: closing follows once the objection have been in the next visit. handled . It is at this point that the sales person should ask for order. Unfortunately , many sales persons are to reluctant to Old school, sell and leave—Quickly before customer changes close : in fact one study revealed that 50% of salespeople failed her mind to directly ask for the order. The major reason the salespeople Now: are so resistant to close seems to be is fear of rejection . If sales • Stay a few minutes after sale—reinforce, make them feel people do not ask for an order they cannot be turned down and good, made wise choice, leave small gift (with co. name on thereby they avoid embarrassment or disappointment . it), call office at any time etc However all professional purchasing agents expect a sales • Follow up, reinforce, know birthdays, new year etc, friendly representatives to attempt a close. Closing the sale is asking the correspondence...relationship building prospect for an order. The salesperson must be able to Salespeople who do not follow up on sales are unlikely to recognize the signals that indicate the prospect is ready to close. establish long term relationship with customers or secure repeat Successful salespeople learn to time their closing remarks on the business. Purchasing agents expects post sale service and it is basis of signals given by the buyer . These cues can take the sales person’s responsibility to see that they remain satisfied. form of a gestures ( Customer nods in agreement , picks up the product and examines it closely ) or they can be verbal com- Compensation ments . When prospect makes comments like Compensation plans include (1) straight wages or salary, (2) straight commission, (3) wages or salary plus bonus, and (4) “Shipment must be completed in five months?” wages or salary plus commission. Salespeople receive hourly ”We like the speed control feature?” wages, a salary, commissions, or a combination of wages or ”Do you have custom model in stock?” salary and commissions. Commissions are usually based on the 16SALES AND DISTRIBUTION MANAGEMENT amount of sales, whereas bonuses may depend on individual uses these signs to help understand when to close a sale. performance, on the performance of all salespeople in the Knowing “when to close” is an important element in sales (p. group or district, or on the company’s performance. Commis- 313). sions offer salespeople the opportunity to significantly increase 2. Not Knowing How to Close the Sale their earnings, but they may find their earnings depend on their One must ask “a question that moves the prospect into a ability to sell their product and the ups and downs of the position of having to make an ownership decision.” An economy. Employers may use incentive programs such as example would be: “If I have the red one, do you want to take awards, banquets, and profit-sharing plans to promote it with you today, or shall I ship it?” (p. 314) teamwork among the sales staff. 3. Lack of Sincerity Mistakes in Sales Be sincere and mean it. Do not let greed get in the way, or you 1. Not Understanding Selling may not get anywhere. Make sure you are selling to benefit the The purpose of salespeople is to sell a service or a product. customer and not yourself. A salesperson needs to be selling a One should have knowledge of one’s company’s current style product that they believe in and believe that it is good. If one of selling and how it is analyzed so that it can be improved. does not believe in one’s product, a customer will “recognize” One should know who the ideal customer is, and what he or the insincerity and want nothing to do with the salesperson and she wants. One should know why some people buy his or her the product. They will also tell their friends about it as well. product and why they do not. One must gain knowledge of Another effect is that one convincing them of something that the service provided and the customers’ needs. Selling is not one does not believe in, can make one seem like a con artist. As about being pushy and being aggressive, some regard that as a salesperson, “selling or persuading others must be your “incompetent.” Companies must train their employees to be sincere desire to serve others and help them get involved in “professional salespeople or persuaders are low-key, service- something that is truly beneficial for them. Honesty and oriented, and relationship-builders” (Hopkins, 2001, p. 311). integrity are the key elements to every successful selling career” (p. 314). 2. Expecting Things to Improve by Themselves If someone is unskilled and incompetent in sales, one cannot 4. Not Paying Enough Attention to Details expect that he or she will improve by themselves. “Sales skills Not being prepared, by not paying attention to detail, can cause are not a gift of birth.” It is something that can be mastered loss in sales. Not paying enough attention to a sales letter when with study and work. Watching people from personal experi- there are grammatical errors, not being prepared for a presenta- ence will help you identify what makes people good and bad tion, or not knowing one’s product can result in a decline in persuaders. Training salespeople is very important to having sales. These are all signs of not doing ones best. If one cannot the difference between competent and incompetent sales do this someone else will, and get the sale (p. 315). people. For most salespeople sales do not come naturally. 5. Letting yourself Slump “Even though they may be naturally comfortable talking with Are you a bull sometimes and a bear other times? When being others, the actual skill of persuading must be learned just as the a bear, or in a slump, it takes a lot to get out of it. Try to be ins and outs of the product or service must be learned in order consistent with sales, in order to do so be a bull all of the time to succeed” (p. 312). (p. 315). 3. Talking Too Much and Not Listening Enough 6. Not Keeping in Touch A salesperson does not just talk, they listen too. A salesperson People do business with people who give them attention. All it should think of himself or herself as a detective. One must takes is a couple of phone calls to keep customers. Call ask the right questions, take good notes, and “intently” listen to customers every so often to see how the product is doing, and what the customer says as well as their body language. It is not if there is room for improvement. It shows that a company about the talking, it is about asking the right questions that cares about the customer by keeping in touch (p. 315). “lead down the path” and toward a sale (p. 312-313). Lack of training is a large contributing factor of poor communi- 4. Using Words that Kill Sales cation in sales; it is hazardous to a company’s “health.” Poor One tries to “paint a picture” with words when making a communication can result in a bad relationship between presentation in sales. “A few wrong word pictures can ruin the mangers and sales people; manufactures and sales people; or entire portrait” one is “trying to paint.” Sales people can use salespeople and customers. In the end it means a lack of sales specific words that create negative thoughts in customers’ and profit, which will lead to the inevitable, demise of a minds, which could mean the difference between a successful company. sale or an unsuccessful sale. Avoid using negative words. One Conclusion can rephrase negative words into positive words (p. 313). In this lesson we learnt about the selling process. It is a 1. Not Knowing When to Close the Sale continuous process. There are different steps in the process. A Customers who leave a place of business without purchasing salesperson should proceed in the similar steps to make sales. something are lost sales. A sales person must look for “buying Then we have also discussed that there may be some common signs.” These “signs” might be when they say “will” instead of mistakes that can occur in sales. In the next lesson we will learn “might.” For example, “Is it in stock?” or “Is there delivery?, about prospecting, Objection handling and closing in detail. are other signs that a customer is going to say yes to a sale. One 17SALES AND DISTRIBUTION MANAGEMENT Points to ponder Questions Q1. Why do salesperson spend part of their time in prospecting? The Sales Cycle Q2. What is the importance of preapproach? Appointment Q3. Why should form the part of presentation? Prospecting making Q4. Why is follow up necessary for a sales person? Compensation Pre approach Follow up Presentation C losing the Sale Negotiating & handling objectives The Sales Cycle Appointment Prospecting making Comp ensation Pre approach Follow up Presentation Closing the Sale Negotiating & handling objectives 18SALES AND DISTRIBUTION MANAGEMENT LESSON 5 UNIT - 2 PROSPECTING, OBJECTION HANDLING AND CLOSING Learning Objectives and able to pay for it, but a particular salesperson may have no way to make the contact. · To understand about prospecting In addition to meeting the stated requirements, there are other • To know how objections can be handled. requirements unique to each company’s customers. Starting the • To know closing techniques. data on the profitability of present accounts, any characteristics Prospecting typical of profitable accounts but not shared by unprofitable In the last lesson we studied about the sales cycle. Now let us accounts should be detected. These identifying characteristics study the prospecting step in detail. ideally should be ones recognizable from information appearing in directories or lists. Prospects in many businesses and Efficient organization of time and thorough planning of work professions, for instance, are readily identified from classified are earmarks of above-average salespersons. They look for ways listing in telephone and city directories. Key characteristics that to “stretch” productive selling time. They arrange travel and call identify profitable accounts are assembled into descriptions of schedules to economize on time spent enroute and distance the various classes of customers, and these are the prospect traveled. They make appointments to avoid prolonged waiting definitions. for callbacks. They do not waste time trying to sell to people who cannot buy or are not likely to do so. The planning work, Searching out Potential Accounts which is essential in eliminating calls on non buyers , is called Using the prospect definitions, the salesperson combs different “prospecting.” sources for the names of probable prospects, or “suspects,” as Improvement in prospecting is one way to stretch productive they are called. Sources of prospect information include selling time. Many sales personnel devote too little time to • Directories of all kind prospecting and, as a consequence, too much to calling on non • News and notes in trade papers and business magazines prospects . Salespersons who are proficient in prospecting apply • Credit reports, membership lists of chambers of their selling efforts productively; they do not call on commerce and trade and nonprospects and can devote their full attention to those likely to buy. • Manufacturers’ associations Some companies use specialized personnel for prospecting, but • Records of service requests. most regard it as one of the salesperson’s responsibilities. Even • Other sources are though salespersons may not to “all” the prospecting, they • Responses to company advertising often have access to information on likely prospects that is not • Sales personnel of noncompeting firms calling on the same available to central office personnel. general classes of trade Steps in Prospecting • Conventions and meetings bankers and other “centers of Let us see what are steps in prospecting which will help in influence,” and the salesperson’s own observations. understanding it better Salespeople selling services, insurance, for example, uncover The steps in prospecting are prospects among their acquaintances; members of their 1. formulating prospect definitions, professional, religious and social organizations; and the referrals 2. searching out potential accounts, of friends. Another source of prospects is the “endless chain” – satisfied customers suggest, voluntarily or on request, other 3. qualifying prospects and determining probable leads to the salesperson who served them. requirements, and 4. relating company products to each prospect’s requirements. Qualifying Prospects and Determining Probable Requirements Formulating Prospect Definitions As information is assembled on each tentative prospect it is Prospective customers must have the willingness, the financial easier to estimate the probable requirements of each for the capacity, and the authority to buy, and they must be available to types of products sold by the company. Prospects with the salesperson. Salespersons waste time when they attempt to requirements too small to represent profitable business are sell individuals who have neither need for the product or removed from further consideration, unless their growth money to pay for it. Salespersons waste time if they try to sell to possibilities show promise. Even after tapping all readily the wrong persons; so it is important to ascertain which available information sources, additional information often is persons in each firm have the authority to buy. Although required to qualify certain prospects, and personal visits by individuals may qualify as prospects in other respects, they may salespersons may be the only way to obtain it. These visits may be inaccessible to the salesperson. The president of a large corporation, for example, may need insurance and be willing 19

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