Chapter 1 Introduction to Sales Management and Its

Chapter 1 Introduction to Sales Management and Its Evolving Roles Power. Point presentation prepared by Dr. Rajiv Mehta New Jersey Institute of Technology

Chapter Outline • What Is Sales Management? • Types, Titles, and Hierarchical Levels of Sales Managers • Responsibilities and Duties of Sales Managers • Expanding Roles of Sales Managers • What Qualities Are Needed to Be a Sales Manager? Source: Flying Colours Ltd. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1|2

Chapter Outline • Integrating Sales Management and Marketing Management • Monitoring and Adapting to the Macroenvironment • How Well Are Sales Managers Performing? • Developing Sales Managers for the New Millennium Source: Flying Colours Ltd. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1|3

Learning Objectives After reading this chapter, you should be able to do the following: 1. Summarize the basic responsibilities and evolving roles of sales management. 2. Demonstrate how sales managers can better integrate their roles with marketing management. 3. Identify and prepare for megatrends that will affect your future in sales management. 4. Evaluate the selection criteria for sales management and compare them to your present and potential qualifications. 5. Analyze how the sales manager’s job is expanding and what it will mean for your career. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1|4

What Is Sales Management? • Few jobs are more crucial to the ultimate success of a business than sales management. • Sales management shapes and determines nearly all the firm’s interactions with customers. • Sales managers oversee the sales force—the direct income producers who determine the financial health of their organizations. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1|5

Types, Titles, and Hierarchical Levels of Sales Managers V. P. sales National sales manager Zone, division, or regional sales manager District, branch, or field sales manager Sales supervisor Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1|6

Hiring Sales Managers/Leaders • To see a video on hiring sales managers/leaders, go to – http: //www. sellingpower. com/video/index. asp? date=1 1/8/2006 • To read the “Top Tips for the Newly Appointed Sales Manager, ” go to – http: //www. cmctraining. org/articles_view. asp? sid=0& article_id=25 Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1|7

Responsibilities and Duties of Sales Managers • Sales managers plan, lead, and control the selling activities of their organizations. • They continuously monitor and adjust their marketing strategies to dynamic technological, competitive, economic, legal, and cultural factors. • Sales managers also consider the interests of the company's stakeholders, such as these: – – – – employees suppliers financial community media stockholders special interest groups governments Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1|8

Figure 1. 1: Responsibilities and Duties of Sales Managers: A Conceptual Framework Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1|9

Twenty-First Century Sales Force Management • Chapters 1– 4 will help you understand the following: – Introduction to Sales Management and Its Evolving Roles (chapter 1) – Managing Ethics in a Sales Environment (chapter 2) – Customer Relationship Management and Building Partnerships (chapter 3) – The Selling Process (chapter 4) Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 10

The Definition of Selling • To see a video on the definition of selling and the role of the sales manager in managing the sales management function, go to – http: //www. sellingpower. com/video/index. asp? date=1 2/15/2006 Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 11

Sales Forecasting and Budgeting • Sales Forecasting and Budgeting (chapter 5) shows how sales managers accomplish the following: – estimate market potential for their industry – estimate sales potential for their company – develop a final sales forecast • Sales managers employ these skills: – quantitative sales forecasting approaches – qualitative sales forecasting approaches • A sales budget is a financial plan of expenditures needed to accomplish the organization’s goals and objectives. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 12

Sales Force Planning and Organizing • Sales Force Planning and Organizing (chapter 6) provides guidelines and direction for most other sales decisions and activities. • Sales managers need to do the following: – – set sales goals and objectives establish sales policies and procedures devise sales force strategies and tactics implement controls Source: Flying Colours Ltd. • Sales managers must determine these things: – the optimal number of salespeople to hire – the best way to structure the sales force (geographically, by product, by customer type, or by some combination of these factors) Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 13

Time and Territory Management • Time and Territory Management (chapter 7) helps sales managers determine which accounts their salespeople should call on, when, and how often. • Sales managers must do the following: – design sales territories – decide individual sales quotas – design a formal routing pattern for salespeople to follow in calling on customers Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 14

Recruiting and Selecting the Sales Force • Recruiting and Selecting the Sales Force (chapter 8) deals with sales managers taking these actions: – identifying sources of potential sales recruits – devising a system for measuring candidates against predetermined job requirements using numerous tools and techniques – deciding whether to select or reject each applicant Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. Source: Stockbyte 1 | 15

Training the Sales Force • Training the Sales Force (chapter 9) deals with designing programs to train salespeople. • Sales managers must answer several questions: – Who should receive the training? – Who should do the training? – Where, when, and how should the training be accomplished? – What should be taught? Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. Source: Stockbyte 1 | 16

Sales Force Leadership • Sales Force Leadership (chapter 10) is the emotional process of exercising psychological, social, and inspirational influence on individual salespeople and the sales force collectively toward the Source: Flying Colours Ltd. achievement of organizational objectives, goals, and values. • Several different theories, concepts, and approaches to effective sales force leadership are explored. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 17

Sales Force Motivation • Sales Force Motivation (chapter 11) deals with the set of dynamic interpersonal processes that stimulate the initiation, direction, intensity, and persistence of work-related behaviors of salespeople toward attaining organizational goals and objectives. • Three types of theories that can be used to motivate the sales force: – content theories of motivation – process theories of motivation – reinforcement oriented theories of motivation Source: Triangle Images Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 18

Sales Force Compensation • Sales Force Compensation (chapter 12) deals with all monetary payments and benefits used to remunerate and influence the performance of salespeople. • Most companies use three main methods: – straight salary—a fixed amount of Source: Photo. Link money at fixed intervals, such as weekly or monthly – straight commission—an amount that varies with results, usually sales or profits – combination—a mix of salary and commission Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 19

Sales Volume, Costs, and Profitability Analysis • Sales Volume, Costs, and Profitability Analysis (chapter 13) is essential to assure the organization’s bottom‑line goal of improving profitability. • Sales managers need to analyze sales volume, costs, and profit relationships by product lines, territories, customers, and salespersons as well as across sales and marketing functions. Source: Triangle Images Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 20

Sales Force Performance Evaluation • Sales Force Performance Evaluation (chapter 14) must be measured and evaluated to determine commissions and bonuses for salespeople and to make promotion decisions. • Performance evaluation is used to do the following: – improve sales force productivity – take corrective actions to improve organizational profitability and performance Source: Triangle Images Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 21

Changing with the Times Old Marketing Perspective marketing largely viewed from the seller perspective Product strategy emphasis on management of the marketing mix Pricing Strategy Target market Promotion strategy Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. marketing’s role primarily to create exchanges Place strategy satisfaction of individual and organizational objectives 1 | 22

A Formal Definition of Marketing The new official definition of marketing approved by the AMA in 2004 appears below. “Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. ” • Marketing is moving from a transaction orientation to a customer relationship building orientation. • New AMA definition shifts the perspective more to the customer side by focusing on delivering value and managing customer relationships. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 23

Changing with the Times New Marketing Perspective moved away from a transaction orientation Product strategy focuses on building long-term customer relationships Pricing strategy Target market Promotion strategy Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. focuses on delivering value to customers Place strategy focuses on managing customer relationships 1 | 24

Expanding Roles of Sales Managers Based on the new marketing definition, there are three major implications for sales managers: • achieve a continuing dialogue with customers, 1. Manage customer relationships • personalize treatment of valued customers, • increase customer retention. 3. Manage the hybrid sales force • build ongoing relationships and mutually profitable partnerships with customers, • encourage salespeople to go beyond selling and serve as consultants and partners. What sales managers must do work with 2. Serve as customer consultants • telesalespeople, • telemarketers, • e-commerce salespeople, • direct mailers, • manufacturers’ agents. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 25

What Qualities Are Needed to Be a Sales Manager? 6. Improve sales force productivity and profitability 1. Effectively lead and motivate people 2. Make good decisions What a good sales manager can do 5. Monitor competitive offerings 3. Solve problems creatively 4. Provide outstanding communication Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 26

The Field Sales Force and Headquarters Marketing Support Team 1. Advertising 6. Marketing research 2. Sales promotion How H. Q. supports the sales force 5. Product publicity 3. Sales aids 4. Trade shows Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 27

The Field Sales Force and Headquarters Marketing Support Team 7. Marketing and sales planning 12. Internet communications 8. Forecasting How H. Q. supports the sales force 9. Product planning and development 11. Public relations 10. Market development Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 28

Aligning Sales with Marketing • To see an excellent video on aligning sales with marketing, go to – http: //www. sellingpower. com/video/index. asp? date=1 1/29/2007 Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 29

What Marketing Can Learn from Sales • To learn about what marketing can learn from the sales department, go to – http: //www. sellingpower. com/video/index. asp? date=1 1/28/2007 Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 30

Megatrends Affecting Sales Management Sales managers must adapt to three major megatrends to enhance their effectiveness and efficiency: 1. behavioral forces 2. technological forces 3. managerial forces Source: Flying Colours Ltd Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 31

Behavioral Megatrends Affecting Sales Management • Buyers’ attitudes, preferences, and behaviors are changing, necessitating modification of selling strategies and approaches. 1. Behavioral Forces • • • more expert and demanding buyers rising customer expectations micro-segmentation of domestic markets expanding power of giant retailers empowerment of customers globalization of markets Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 32

Technological Megatrends Affecting Sales Management • Today’s successful sales managers are those who can make skillful and efficient use of technology to increase their efficiency and productivity in serving customers. These include: Forces 2. Technological • sales force automation • virtual sales offices (home, automobile, or virtually anywhere) • electronic commerce Source: Digital Vision Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 33

Technological Megatrends Affecting Sales Management Sales Force Automation • • portable computers electronic data interchange videoconferencing multifunction cell phones and satellite pagers • voice mail and e-mail • instant messaging Source: Digital Vision Virtual Sales Offices • Home • Office • Virtually anywhere Electronic Commerce • Internet: • blogs, podcasting • screen-sharing, Web. Ex • Intranet • Extranet Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 34

The Use of Technology (Part 1) • To see a video on the effective use of technology for generating leads to sell, go to – http: //www. sellingpower. com/video/index. asp? date=1 0/20/2006 Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 35

The Use of Technology (Part 2) • To see a video on the effective use of technology for identifying prospects to sell, go to – http: //www. sellingpower. com/video/index. asp? date=1 0/23/2006 Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 36

Using Technology to Sell Better • Salespeople can enhance their productivity by using telecommunication tools – – – Intranets Extranets Computers Fax machines Pages Cell phones Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. Source: Triangle Images 1 | 37

Using Technology to Sell Better • For an interesting article on technology-enabled selling, see – http: //www. computerworld. com/news/1998/story/0, 11280, 43417, 00. html • For an interesting article on how technology can build profitable relationships and deliver increased returns, see – http: //www. infinityinfo. com/Industries. Technology. aspx • Examples of technologies that salespeople are using include – http: //www. cingular. com/blackberry 8700 c_consumer – http: //web. palm. com/promos/treo 700 w_microsoft. jhtml? cid=ms 3 – http: //www. pcworld. com/reviews/article/0, aid, 123867, 00. asp Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 38

Technological Megatrends Affecting Sales Management Sales force automation • portable computers (notebook, handheld, and pocket PCs) • electronic data interchange • videoconferencing (via desktop, laptop, or handheld computers) • multi-function cell phones and satellite pagers • voice mail, e-mail, and instant messaging Technological megatrends affecting sales management Electronic commerce • Internet -- blogs -- podcasting -- screen-sharing -- Web. Ex • Extranets • Intranets Mobile virtual sales offices Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 39

Managerial Megatrends Affecting Sales Management 3. Managerial Forces • efforts to reduce selling costs • shift to direct marketing alternatives • certification of salespeople • shortage of business-tobusiness salespeople • developments in information management Source: Flying Colours Ltd Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 40

Managerial Megatrends Affecting Sales Management Shift to directmarketing alternatives Mobile virtual sales offices • direct mail (catalogs, brochures, and sales letters) • telemarketing • teleselling • personalized email • kiosks • facsimile Managerial megatrends affecting sales management Professional certification of salespeople Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. Developments in Information Management • database marketing • data warehousing • data mining • push technology Selling cost reduction efforts 1 | 41

Managerial Megatrends Affecting Sales Management Efforts to Reduce Selling Costs • Median cost of a business-to-business sales call is more than $250 (varies widely by industry and company). • For some large industrial companies, a sales call can cost $400 to $1, 000 or more because of the unusual complexity of both the selling process and the product itself. • To reduce selling costs, many manufacturers and service providers are aggressively seeking alternatives to large national sales forces (for example, use of middlemen, part-time salespeople, and direct-marketing efforts). Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 42

Managerial Megatrends Affecting Sales Management Shift to Direct Marketing Alternatives • To sell to organizational buyers, several direct marketing alternatives support or bypass field salespeople: 1. direct mail 2. forms of telemarketing – teleselling – kiosks (or computer salespeople) – facsimile – personalized e-mail Source: © Mark Karrass/Corbis Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 43

Managerial Megatrends Affecting Sales Management Certification of Salespeople • Because of the public’s negativism toward selling, efforts have been directed at certifying sales personnel. • Certification usually requires that a salesperson do these things: Source: © Mark Karrass/Corbis – gains a certain amount of practical experience – enrolls in educational seminars and courses – passes a sales competency exam – provides some professional references – agrees to comply with a code of conduct Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 44

Certification of Salespeople • For an interesting article on certification of salespeople, see – http: //www. trainingmag. com/training/headlines/article_ display. jsp? vnu_content_id=1001996079 • Salespeople can attend professional certification programs offered by firms such as – http: //www. davekahle. com/certification. htm Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 45

Information Management Tools • Sales managers and salespeople can adapt to megatrends using various information management tools. • The four key trends in the management of information include these: (1) database marketing (2) data warehousing (3) push technology (4) data mining Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 46

Information Management Tools 1. Database marketing: A database is a large computerized file of customers’ and potential customers’ profiles and purchase patterns. 2. Data warehousing: A data warehouse is a very large, corporate-wide database, built with data from a number of information systems already in place in the company. 3. Push technology: Push technology is the latest iteration of e-mail combined with data warehousing to discern what your customers need and exactly when they need it. 4. Data mining: Data mining is the process of using statistical analysis to detect relevant patterns or relationships between and among variables in a database. Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 47

Information Management Tools Push technology is the latest iteration of e-mail combined with data warehousing to discern what your customers need and exactly when they need it. Database marketing A database is a large computerized file of customers’ and potential customers’ profiles and purchase patterns. Push technology Information management trends Data warehousing Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. Data mining refers to the process of using statistical analysis to detect relevant patterns or relationships between and among variables in a database. Data mining A data warehouse is a very large, corporatewide database, built with data from a number of information systems already in place in the company. 1 | 48

How Well Are Sales Managers Performing? • Some major reasons why some sales managers may fail to perform at higher levels are these: – illogical selection of sales managers – inadequate sales management training – lack of a long-run customer relationship orientation – insufficient blending of sales, marketing, and financial knowledge Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 49

Sales Management Hierarchy: Skill and Ability Requirements Administrative and leadership ability Managerial ability Supervisory ability Selling ability Sales supervisor District sales manager National sales manager Regional sales manager Salesperson Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. Vice president of sales al n o ills k S rs e rp e Int hip A ity l i b rs e d ea L g in p elo v De 1 | 50

Developing Sales Managers for the New Millennium • To succeed in the years ahead, sales managers will need to focus on the following: – developing closer relationships with customers – treating salespeople as newly empowered equals – applying flexible motivational skills in working with a multicultural, hybrid sales force – keeping up-to-date on the latest technologies – learning marketing and financial skills in order to recommend competitive strategies – continually seeking ways to exceed customer expectations Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 51

Ethical Situation: What Would You Do? On a sales call on one of your company’s best customers, the purchasing agent smilingly tells your salesperson: “I had a special arrangement with the salesperson who used to call on me from your company. Every time I placed an order, the sales manager arranged a special gift for me. Are you going to continue that policy? ” Copyright © Houghton Mifflin Harcourt Publishing Company. All rights reserved. 1 | 52