04 SALES FORCE DEVELOPMENT RECRUITMENT SELECTION SALES TRAINING

04. SALES FORCE DEVELOPMENT RECRUITMENT & SELECTION SALES TRAINING 05. DIRECTING AND CONTROLLING THE SALES FORCE

The Hiring Process o o Stage 1 2 3 4 – – Planning Recruitment Selection Socialization

Stage 1 – Planning o Analysis of the annual turnover Turnover is defined as the average percentage of the sales force that leaves a sales organisation in a given period of time. o The manpower forecast determines the number of salespeople required by the organisation.

Stage 1 – Planning o A sales organisation has two types of hiring objectives. The first objective is to plan the replacements of people who have left or would leave in the near future, and the second is the recruitment for expansions and for new market coverage. o strategic position analysis determines the number and type of salespeople required by the organisation.

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

Stage 2 – Recruitment External Sources of Recruitment Advertising Walk in interviews Direct unsolicited applications Educational institutions and campus recruitments o Other industry sources o Employment agencies o Networking o o

Stage 3 – Selection

Stage 4 – Socialization o anticipatory stage o encounter stage o settling in stage

SALES TRAINING A-C-M-E-E Model

COMPENSATION OF SALES FORCE l Motivational Roles l Objectives l Characteristics or Requirements l Devising A Sales Compensation Plan l Types Of Compensation Plans H

COMPENSATION - Motivational Roles o (1) provide a living wage, o (2) adjust pay levels to performance, thereby relating job performance and rewards (in line with expectancy motivation theory), and o (3) provide a mechanism for demonstrating the congruency between attaining company goals and individual goals (also in line with expectancy theory). T H

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

COMPENSATION - Characteristics or Requirements o Should address the short term as well as the long term issues of the salesperson. While survival is a short term issue for the salesperson, recognition and growth in the company and career are the long term issues. T H

Requirements T o provides a living wage o should have future orientation. o should take care of the salesperson's housing need, dearness allowance, conveyance, pension, provident fund, and medical needs. o The plan fits with the rest of the motivational program o The plan is fair o It is easy for sales personnel to understand o adjusts pay to changes in performance. o economical to administer. o helps in attaining the objectives of the sales organization. H

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

Compensation Structure o o T Simple ranking Classification or grading Point system Factor-comparison method H

Various Compensation Elements o (1) a fixed element, o (2) a variable element o (3) an element covering the fringe or "plus factor, " and o (4) an element providing for reimbursement T H

TYPES OF COMPENSATION PLANS Financial Compensation Non-financial o Straight-Salary Plan o Straight-Commission Plan Drawing accounts o Combination Salaryand-Incentive Plan o Use of Bonuses o Allied Methods o Promotions o Recognition Programmes o Fringe Benefits o Expense Accounts o Perks o Sales Contests Profit Sharing Plan Special Remuneration plan Expense allowance plan T H

SUPERVISION o Sales personnel may be supervised by home office personnel, branch or district managers, or field sales supervisors o observing, evaluating, and reporting on performance; o correcting deficiencies, clarifying responsibilities and duties, providing motivation; o informing sales personnel of changes in company policy; o helping to solve business and personal problems; and o continuing sales training H

MOTIVATION

Analysis of Sales o Appropriately designed and skillfully implemented control mechanisms increase the chances that the sales organization will focus upon achieving selling and profit objectives

Control Mechanisms o sales budget is the key control mechanism o quotas, properly set and administered, stimulate sales personnel to achieve sales and profit objectives. o sales territories make the control of sales operations more effective

Control Mechanisms o Still other control mechanisms contribute to the effectiveness of the personal selling effort. o sales audit is one of them. o Three other major variables are measured for evaluating and controlling a sales force. o sales analysis, behavioral analysis and cost analysis

Control Mechanisms o Although sales analysis is a traditional method of performance evaluation, more and more modern organizations are using a combination method of performance evaluation. o These control mechanisms help sales executives to monitor profitability of the operation: territory quota budget sales audit sales analysis behavioral analysis cost analysis

Sales Audit o Sales audit is a systematic and comprehensive appraisal of the total selling operation. It appraises integration of the individual inputs to the personal selling effort and identifies and evaluates assumptions underlying the sales operation. o Sales audit is a systematic, critical, and unbiased review and appraisal of the basic objectives and policies of the selling function and of the organization, methods, procedures, and personnel employed to implement those policies and achieve those objectives.

Sales Analysis o Each salesperson’s sales volume can be monitored and measured against the quota allocated to him. o These sales figures can be broken by territory, by product line, by customer types and results can be compared with quota and forecasted sales in these areas.

Sales Analysis o Through sales analyses, management seeks insights on ü strong and weak territories, ü high volume and low volume products, and ü types of customers providing satisfactory and unsatisfactory sales volume.

Sales Analysis o If sales management depends solely on summary sales data, evaluation is often incomplete. o Sales analysis uncovers details that otherwise lie hidden in the sales records.

Sales Analysis o The fact that sales increased by 2 percent over last year but profit decreased by 1 percent would be a cause of concern but of no help in determining how to reverse the profit decline. o Sales analysis provides additional information, for example, that the increased sales volume came from products carrying lower than average gross margin.

Sales Analysis o The original sources of data for sales analysis are the sales invoices. o The information on each transaction identifies the customer details such as name, geographical location, type of account and others as well as sales person details such as name, territory etc.

Sales Analysis o The information also includes such sales data as order date, products sold, quantities, price per unit, total amount of sales per order etc. o With information stored in this detail, sales analyses are performed quickly and at low cost.

Behavioral Analysis o A sales person’s actual behavior should be evaluated with the sales volume and profit generated by each one of them. o techniques such as self ratings, supervisor’s evaluation, self appraisals, field observations, and survey of customer satisfaction used in behavioral analysis.

Cost Analysis o The costs can be evaluated in on the basis of an individual salesman, territory, product line and customer type. o When these data are combined with the sales analysis, a sales manager can find out not only the profitability on segment to segment basis but also the overall customer profitability.

Costs and Profitability o Marketing Cost Analysis analyzes sales volume and selling expenses to determine the relative profitability of particular aspects of sales operations. o The first step in marketing cost analysis is sales analysis by territories, sales personnel, products, classes of accounts, sizes of order, marketing channels, and other categories.

Costs and Profitability o Marketing cost analyses determines the relative profitability of particular aspects of sales operations. o Having broken down sales volume, for instance, by sales territories, the next step is to break down and assign selling expenses by sales territories. o The outcome indicates relative profitability of the sales territory.

Costs and Profitability o The specific objective is to suggest answers to questions like: Which sales territories are profitable or unprofitable? What are the profit contributions of individual sales personnel? What is the profitability of different products? What is the minimum size of a profitable account? Which marketing channels provide the most profit for a given sales volume?

EVALUATION OF THE SALES FORCE o Performance evaluation and control of the sales force are the key prerequisite for effective sales force management. o By evaluating the performance of the sales force, a sales manager can test the effectiveness of the sales program and the quality of implementation of the program by the sales people.

Performance Appraisal o Performance appraisal, a crucial part of evaluation, is the process of identification, measurement, and management of a sales force in an organization. o Performance appraisal is the process of evaluating the performance and qualifications of the sales force in terms of the requirements of the job to ensure effective administration, including the selection for promotion, rewards and other recognitions in the organization.

Performance Appraisal Process Appraisal Criteria o The first step in appraisal of performance is identification of what is to be measured. o Those dimensions of the performance need to be identified which determine effective job performance. o This may be in terms of the quantity or the quality of work done and interpersonal effectiveness.

Performance Appraisal Process Appraisal Criteria o Measuring the performance of salespeople involves assigning a relative score to reflect a salesperson’s performance. o Sales managers can choose the performance measure technique from a wide array of formats available. o These techniques are classified on the basis of the type of judgment required for evaluation (relative or absolute) and the focus of the measure (trait, outcome or behavior).

Performance Appraisal Process Appraisal Criteria Relative Judgement o The sales manager is asked to compare the salesperson’s performance with that of other salespeople on the job. o A rank order for salespeople from the best to the worst performer is developed.

Performance Appraisal Process Appraisal Criteria Absolute Judgement o The sales manager is asked to make judgements about the salesperson’s performance. o This is based on the sales performance measured in sales volume, market share, or revenue realization.

Performance Appraisal Process Appraisal Criteria Trait based o The sales force can be evaluated based on some criteria related to traits, outcome, and the behavior of the sales force. o The most commonly used traits for this purpose are decisiveness, reliability, energy, and loyalty.

Performance Appraisal Process Appraisal Criteria Outcome based o Performance criteria based on outcomes measure the results of the selling process. o The most common approaches used in this method are called management by objectives (MBO) and natural outcome measures.

Performance Appraisal Process Appraisal Criteria Behavior based o The behavioral measure is related to selling activities. o These include product knowledge, presentation quality, closing ability, service performed, the number of active accounts, and relationships with customers. o Other behavioral measures are the number of calls made per day, and number of working days in a specific period of time.

Performance Appraisal Process Appraisal Criteria Performance Rating q Various instruments are used for the purpose of performance appraisal. ü rating forms, ü forced choice scales, ü behavioral observation scales (BOS), ü self assessment questionnaires, and ü customer surveys.

Performance Appraisal Process Forced Choice Scale

Performance Appraisal Process

Performance Appraisal Process

Performance Appraisal Process Conduct of Performance Appraisal o A sales manager can either conduct a performance appraisal or the salespeople can do a self appraisal. o The primary evaluator should be the immediate supervisor of the salesperson in the organization.

Performance Appraisal Process Conduct of Performance Appraisal o Problems with a salesperson's evaluation are known as biases in evaluation. o A bias occurs when sales managers inflate or deflate the subordinate's performance rating. o A bias is either conscious or unconscious.

Performance Appraisal Process Individual versus Team Appraisal o Most of the performance appraisals are done on an individual basis. The appraisal systems are developed to evaluate the contribution of each member of the sales force towards organizational objectives. o However, a modern day selling organization has brought the idea of team selling to the forefront.

Performance Appraisal Process Individual versus Team Appraisal o Many organizations have built up a culture of team based selling. o In this method, a set of salespeople from diverse functional backgrounds constitute a sales team. o For example, the sales team may include a salesperson, service engineer, technical support staff, and a customer service member.

Performance Appraisal Process Individual versus Team Appraisal o Such kind of teams are able to answer all the pertinent questions related to the sale that covers areas like technological specifications, financing pattern, and after sales service issues. o Therefore, a sales team services a customer better than an individual salesperson.

Performance Appraisal Process Individual versus Team Appraisal o Sales managers build a role result matrix for team evaluation. o The role result matrix is a specification of the roles played by each member of the cross functional team and indicates the expected results from each of the team members.

Performance Appraisal Process Individual versus Team Appraisal o The matrix plots the people, tasks, and results expected from each team member. o The sales manager can list the roles of each of the positions in a sales team for the purpose of developing a new business and servicing the existing customers.

Performance Appraisal Process Individual versus Team Appraisal

Performance Appraisal Process Actual Performance vs Standards o Sales managers evaluate the salesperson's actual performance against the standards – industry/organization. o Managers try to collect actual data over a set of territories and calculate the average performance of all the territories and then compare each salesperson with the average of the performance of all the salespeople. o The ranking method ranks salespeople according to their success in the territory in comparison to the other salespersons.

Performance Appraisal Process Actual Performance vs Standards o A comparison with the norm approach evaluates each salesperson on the basis of either industry norms or the norms set by the firm. o The sales manager fixes an upper and lower boundary level and evaluates the salesperson's performance. o If the salesperson falls within the boundary, he is termed as operating within an acceptable level.

Performance Appraisal Process Frequency of Appraisal o Performance appraisal of salespeople is undertaken on an annual basis. o An annual review gives an observable period for reviewing the behaviour of the salesperson, which is too short to observe in a quarterly method. o However, more and more organization's now measure the performance of salespeople on a quarterly basis.

Performance Appraisal Process Frequency of Appraisal o When the top management thinks that the sales force needs tighter control, they ask for evaluations that are more frequent. o When a company has a large number of new employees, it needs to do a more frequent evaluation. o The more the frequency of the appraisal, the more is the administrative and paperwork involved for the sales manager.

Performance Appraisal Process Frequency of Appraisal o One period of evaluation is called a performance cycle and is related to specific product goals or job activities. o A company can decide to have three or four performance cycles per year depending on the product and sales goals set for the cycles.

Performance Appraisal Process Influence of External Variables o There are various external influences on the performance appraisal system of an organ ization. o The most common influencing factors are the legal and ethical issues involved in evaluation. o The appraisal system leads to employee reorientation, training, and in many cases, the termination of employees who are found to be underperforming for a continuous period.

Performance Appraisal Process Influence of External Variables o The biases that sales managers possess result in a disputed evaluation of employees and in some cases can lead to legal battles. o If the company loses the court battle, the employee will be reinstated and it may lead to loss of esteem for the sales manager. o There are various wage rules that guide the termination of employment guided by a performance appraisal, failing which the sales manager may take the company to the court.