Chapter 0

Introduction to
the course
 WELCOME
 My contact

Hand phone:
E-mail: lannt@neu.edu.vn

2
 Lecturer’s expectations

1) No using computer if not required, no mobile phone in

class
2) Feel free to ask even if teacher is talking
Ask repeatedly if you still don‟t understand
3) Do not be afraid of giving the wrong answers
4) Interaction between lecturer and students
5) Study yourself
6) Read and bring your slides at classes
 Study materials

Textbook: Sales management: Analysis and

decision making. Thomas N.Ingram et all, South
Western Thomson learning
Reference books
Hand-outs
Case studies

4
 Course Study Assessment

1. Attendance: 10%
2. Individual Exam : 20%
Multiple choice, True/false question
2. Group Assignment & presentation: 20%
Case study
3. Final Exam: 50%
Multiple choice, True/false question, case study, short essay
 Course Lectures

 Chapter 1: Introduction to sales management

 Chapter 2: Organizing the achievement of Sales
Objectives
 Chapter 3: Sales management leadership
 Chapter 4: Staffing the salesforce: recruitment selection
and training
 Chapter 5: Motivation & reward system management
 Chapter 6: Evaluating the performance of salespeople
 Chapter 7: Sales forecasts and sales planning
Chapter 1

Introduction to
sales
management
 Learning outcomes

1. Personal selling: demonstrate the

understanding of the definition and the role of
personal selling.
2. Salesperson & salesforce: demonstrate the
understanding of types of salesperson, selling
tasks and the selling process
3. Sales management: demonstrate the
understanding of the definition, process of
sales management and sales management
trend.
1. Personal selling
Evolution of Personal Selling

Peddlers selling door Selling function became

to door . . . served more structured
as intermediaries

1800s 1900s 2000s

As we begin the 21 st century, selling continues to develop,
Industrial Post-Industrial War and Modern
becomingRevolution
Revolution more professional and more relational
Depression Era

Selling function became

Business organizations
more professional
employed salespeople
Evolution of Personal Selling:
Production
Production Sales
Orientation
Marketing Partnering
Before 1930 1930-1960 1960-1990 1990-Now

Characteristics: Demand exceeds supply.

Salesperson
Drummer, Peddler.
Titles:

Characteristics of
Negotiate price; barter.
the sales job:

2-11
Evolution of Personal Selling:
Production
Sales Orientation
Sales Marketing Partnering
Before 1930 1930-1960 1960-1990 1990-Now

Supply ≈ Demand;
Characteristics:
limited competition.

Salesperson
Salesman.
Titles:

Characteristics of Get customer to buy; short-term

the sales job: orientation; canned presentations.

2-12
Evolution of Personal Selling:
Marketing
Production Sales
Orientation
Marketing Partnering
Before 1930 1930-1960 1960-1990 1990-Now

Characteristics: Intense competition.

Salesperson Account Executive, Sales Consultant,

Titles: Marketing Rep., Sales Engineer.

Building relationships; adaptive selling;

Characteristics of
solving problems; long-term orientation;
the sales job:
building customer loyalty.

2-13
Evolution of Personal Selling:
Partnering
Production Sales
Orientation
Marketing Partnering
Before 1930 1930-1960 1960-1990 1990-Now

Intense global competition in

Characteristics:
input and output markets.

Salesperson
Value creators, relationship managers.
Titles:

Synergistic relationships with suppliers;

Characteristics of
long-term relationships with customers
the sales job:
and suppliers.

2-14
What is personal selling?

1-15
 Definition

Personal selling is a direct and face-

to-face form of communication
which uses demonstration of the
product, persuation and
negotiation to make the sale

1-16
 Definition

Personal selling is a business activity

involving a person-to-person
communication process during which a
salesperson uncovers and satisfies the
needs of a buyer to the mutual, long-
term benefit of both parties.

1-17
 Contributions of Personal Selling:
Salespeople and the Employing Firm

 Salespeople generate revenue

 Salespeople provide market research and
customer feedback
 Salespeople become future leaders in the
organization
Contributions of Personal Selling:
Salespeople and the Customer

 Salespeople provide solutions to

problems
 Salespeople provide expertise and
serve as information resources
 Salespeople serve as advocates for the
customer when dealing with the selling
organization
The relationship between personal selling
and other marketing activities

Marketing mix

Product Price Place Promotion

Advertising Sales Personal PR

promotion selling
 Personal selling: still important because
both personal and interactive

Personal? Interactive?
Advertising
Sales promotion
Public relation
Personal selling Yes Yes
Internet selling
 Still important
 Explain a complex product/service
 a lack of active selling by intermediaries and the desire to improve
sales
 Inability to persuade intermediaries to accept new products
 High intermediaries profit margins affecting the final sale price to
customers
 A small market with only a few target customers
2.Sales force and its role

 Definition
 Sales force’s responsibility
 Sales force’s classification
 Role of sales force
 What is sale force

• Sales person is an individual who is representative for a company

with its customers by implementing many activities such as finding
potential customers, communication, selling, services delivery,
information collection and creating and maintaining relationship
with customers.
• Sales force‟s responsibilities:
 Selling
 Administration
 Financial responsibility
 Marketing responsibility
 Sales force responsibilities

Selling

How to be successful???
 Be profit, be valuabe

 Keep contact with customers

 Sales force responsibilities

Administration

 Customers‟ problem solving

 Planning: time and location to reach customers, advertising and

marketing plan

 Reports

 Training program participation: seminar and meeting

 Sales force responsibilities

Financial responsibility
 Dependson sales person‟s position
 Accounts receivable management

 Inventory management

 Develop a financial plan

 Sales force responsibilities

Marketing responsibility

 Marketing research

 Gathering information from customers, competitors,…

 Implementation of marketing program

 Forecasting and evaluation: market, customer, new

product
 Role of a sales person
Customer
retention and
deletion

Adding value/ Database and

satisfying needs knowledge
management
Customer

Customer
Problem solving
relationship
and system selling
management
Marketing the
product
Case study

HOANG GIA
Company

1-30
 Sales force categories
Order-Getting/
?????? Order creating

??????
?????? Order-Taking

??????
?????? Supporting

15-4
 Personal Selling Tasks

Order creators Order getters

 Seeking out customers  Account management
 Creative selling
 Pioneering
 Personal Selling Tasks

Order taker
 Routine
 writing up orders
 checking invoices
 assuring prompt order
processing
 Suggestive selling
 Sales force categories

Sale support
 A final group involved in selling mostly assist
with the selling activities of other sales
professionals. These include:
 Technical Specialists
 Office Support

 Cross-functional (cross
functional people)
 Account service rep
 The Sales Process

Initiating Developing Enhancing

Customer Customer Customer
Relationships Relationships Relationships

• Prospecting
• Preapproach and Presentation Planning
• Approaching the Customer
• Sales Presentation Delivery
• Handle objections
•Close the sale
•Follow up activities
 FOLLOWING UP

CLOSING THE SALE

HANDLING OBJECTIONS

MAKING THE SALES PRESENTATION

APPROACHING THE PROSPECT

Pre approach: QUALIFYING PROSPECTS

PROSPECTING: IDENTIFYING POTENTIAL CUSTOMERS

The Sales Process

Creative Selling Process
Identifying likely
Prospecting:
new customers
 Leads
 Developing lists of Potential
Customers

Pre-approach (Qualifying)
Finding and analyzing
information about prospects
Evaluating a prospect‟s
potential
 Steps in the Preapproach:
Planning the Sale

Determine Develop Develop Develop

sales call customer customer sales
objective profile benefits presentation
Approaching The Prospect
HOW DO WE MAKE THE
INITIAL CONTACT & BUILD
RAPPORT

There is only one

time to make a first
impression

Rapport-building
Uncover needs
Attention, interest, transition
Creative Selling Process

Making The Sales Presentation

 Using Persuasive communication, hold
Attention, stimulate Interest & Desire
 “Tell the product‟s story”: focus the
product‟s benefit, demonstrate by
product‟s feature
 What’s in it for your customers?
 How to resell (for reseller), How to
use (for consumers and industrial
user)
Overcoming Objections
IF HE HADN’T TOLD
ME WHAT HIS OBJECTION
WAS, I NEVER WOULD
HAVE BEEN
ABLE TO HELP!

Questions
Reservations
 Understand Concern
 Counterarguments
 Acknowledge concern
 Clues to process
Creative Selling Process
Closing the Sale
 Closing signals
 Trial close
 Asking the prospect to buy
Creative Selling Process

Following Up
 Commitments met

Shipment
Performance
 Reinforce L-R relationship
 Satisfied customers rebuy & recommend
3. Sales management
 Definition
 Sales management is a business discipline which is
focused on the practical application of sales techniques and
the management of a firm's sales operations. It is an
important business function as net sales through the sale of
products and services and resulting profit drive most
commercial business. These are also typically the goals and
performance indicators of sales management.
 Business discipline
 Sales techniques
 Sales operations:
 Net sales
 Product & Services
 Profit
 Performance indicators
 Sales Management Model

Defining Designing Developing Directing Determining

the the sales the the salesforce
strategic organizati salesforce salesforce effectiveness
role of the on and
sales performance
function

 The formulation of a sales program

 The implementation of the sales program
 The evaluation and control of the sales program
 Nature and role of sales
management
 Determining sales force goals and objectives
 Forecasting and budgeting
 Sales force organization, size, territory design and planning
 Sales force selection, recruitment, training and motivation
 Sales force evaluation and control
 Sales management trend
 From  To

Transaction Relationships
Individuals Teams
Sales Volume Sales Productivity
Management Leadership
Local Global
 Transaction-Focused vs.
Relationship Focused
Transaction-Focused Relationship-Focused
• Short term thinking • Long term thinking
• Making the sale has • Developing the
priority over most relationship takes
other considerations priority over getting
• Interaction between the sale
buyer and seller is • Interaction between
competitive buyer and seller is
• Salesperson is self- collaborative.
interest oriented • Salesperson is
customer-oriented
Case study

Hoang Gia Company

1-51
Chapter 2

Organizing the
Achievement of Sales
Objectives
 Learning outcomes

1. Sales Strategy
• The relationship between sales
strategy and corporate strategy
• Sales strategy framework
• Sales strategy and product life
cycle
2. Sales organization concept
1. Sales strategy
Board of
directors
Senior
managers
Department
managers
Staff
 Organizational Strategy Levels
Strategy Level Key Decision Areas Key Decision Makers
Corporate Mission Corporate Management
Corporate Strategy SBU Definition
SBU Objectives
Corporate Growth Orientation

Business Strategy Strategy Types SBU Management

Strategy Execution

Marketing Strategy Target Market Selection Marketing Management

Marketing Mix Development
Integrated Mkt Communications

Sales Strategy Account Targeting Strategy Sales Management

Relationship Strategy
Selling strategy
Sales Channel Strategy
 Setting Sales Objectives

Levels of Strategy:
Corporate Objectives
Senior Management
Corporate Strategy

Marketing Objectives
Corporate Tactics
Marketing Strategy
Middle Management

Sales Objectives
Marketing Tactics
Sales Strategy
Market Share Sales Organization Objectives Primary Sales Tasks Recommended
Objectives Compensation
System
Build Build sales volume Call on prospective and new Salary plus
Secure distribution accounts incentive
Provide high service levels
particularly pre-sale service
Product/market feedback

Hold Maintain sales volume Call on targeted current Salary plus

 Consolidate market position accounts commission or
through concentration on Increase service levels to bonus
targeted segments current accounts
Secure additional outlets Call on new accounts

Harvest

Divest/Liquida
te
Market Share Sales Organization Objectives Primary Sales Tasks Recommended
Objectives Compensation
System
Build

Hold

Harvest Reduce selling costs
Target profitable accounts
Call on and service most Salary plus
profitable accounts only and bonus
eliminate unprofitable accounts
Reduce service levels
Reduce inventories

Divest/Liquida Minimize selling costs and Dump inventory salary

te clear out inventory Eliminate service
 Sales strategy framework
 Account targeting strategy: the classification of accounts within a
target market into categories for the purpose of developing strategic
approaches for selling to each account or account group
 Selling strategy and relationship strategy
 Type of relationship to be developed with different account group
 The planned selling approach for each relationship strategy (stimulus
response, mental states, need satisfaction, problem solving, consultative
selling)
 Sales channel strategy: company salesforce, the internet,
telemarketing, independent representatives, industrial distributor,
etc
 Relationship strategies

Transaction Solutions Partnership Collaborative

relationship relationship relationship relationship

Goal Sell product Add value

Time frame Short Long

Offering Standardized Customized

Number of Many Few

customers
Relationship strategies
High

Collaborative
relationship

Cost to
serve Partnership
relationship

Solution
relationship

Transaction
relationship

Commitment High
Low
Selling strategy Approaches

 Stimulus Response Selling

 Mental States Selling
 Need Satisfaction Selling
 Problem Solving Selling
 Consuntative selling
 Stimulus Response Selling

Continue
Salesperson Buyer
Process until
Provides Responses
Purchase
Stimuli Sought
Decision
 Mental States Selling

Attention Interest Conviction Desire Action

 Need Satisfaction Selling

Present Continue
Uncover and
Offering to Selling until
Confirm
Satisfy Purchase
Buyer Needs
Buyer Needs Decision
 Problem Solving Selling

Continue
Generate Evaluate Selling
Define
Alternative Alternative until
Problem
Solutions Solutions Purchase
Decision
 Consultative Selling

Business Consultant

The process of helping

customers reach their
strategic goals by using Strategic Orchestrator
the products, service,
and expertise of the
selling organization.
Long-term Ally
 The Consultative Selling—
Customer Relationship Model
Customer
strategic Performance
needs Goals

•Costs
Mutual
Long-term
beneficial •Productivity
relationships
agreements
•Sales
Salesperson’s
creative •Profits
solutions
 Matching selling and relationship
strategies
Transaction Solutions Partnership Collaborative

Stimulus response
Mental states

Need satisfaction
Problem solving
Consultative Consultative
Customized
 Sales Strategy and PLC

sales

Profit

t1 t2 t3 t4
 Introduction
 Customer characteristics: the number of new customers are low but
potential
 Sales person needs to decrease the risk perceived of customers by:
 Brand reputation and credibility
 Sample product/ trial product
 Consult carefully
 Best customer service: before and pos-purchase selling
 What about intermediaries?
 Growth

 Customer characteristics: increase of customer

and revenue. They are potential and have
awareness of product.
 Sales person needs to:

 Ensure that maintaining loyalty with company.

 Create new relationships with new customers (do better
than your competitors)
 Mature

 Consumer characteristics: most are repeated

users, new customer is rare
 Sales person needs to
 Maintain relationship with customers
 Responsibilities: create new revenue/ make profit from
existing customers.
 Decline

 Sales forces need to:

 Maintain relationships with customers
 Provide replaced customers into market (upgrade
version, new product)
 Collect feedbacks and comments
 2.The sales organisation concept
 The sales organisation structure is the vehicle through which strategic
plans are translated into selling operations in the marketplace
 The sales organization structure involves

Specialization
Centralization
Span of control versus management levels
Line versus staff position
 Specialization
 Each salesperson could perform all selling tasks for all the
company‟s products to all type of customers (act as generalists) and
each sales managers could perform all management activities 
increase the degree of specialization  certain individuals
concentrate on performing some of the required activities, sell only
certain products or call on specific type of customers (act as
specialists)
Should the salesforce be specialized?
If the salesforce should be specialized, what type of specialization
is most appropriate?
 Approaches to organizing the
sales force
 Geographic sales organization
 Product sales organization
 Market sales organization
 Functional sales organization
 Geographic sales organization
 Salespeople are assigned a geographic area and are responsible for all selling
activities to all accounts within the assigned area
 Characteristics:
 More tall structure/ centralized
 Least specialized
 generalists
 Advantages:
 Salesperson is able to become an „expert‟ on a given region
 Customers know exactly who they need to speak with about their problems
 No duplication of effort
 Lower travel cost
 Disadvantages:
 Difficult for the salesperson to cover a wide spectrum of products
 Difficult for the salesperson to serve different types of customers
 Salespeople may not willing to relocate
 Product sales organization
 Salespeople are assigned for specific product of product lines
 Advantages
 Salespeople become experts in the assigned product category
 Salespeople can better serve the more specific and complex
needs of customers
 Provides the ability to control and monitor the marketing of a
particular product
 Disadvantages
 There may be duplication in the coverage of geographic areas
 Customers may be confused about which salespeople to talk
to
 Increase travel time and travel cost
 The administration is more difficult than others
 Market sales organization
 Salespeople are assigned specific types of customers and are
required to satisfy all needs of these customers
 Characteristics
 Specializing by certain customers or specific type of customers
 Advantages
 Salespeople can work more closely with customers to meet specific needs
of different customer segments
 Allow for greater feedback
 Best when a small number of customers are the most important
 Disadvantages
 Salespeople have to know the entire product line
 Functional sales organization
 Salespeople specialize in performing certain of selling activities
(telemarketing, outside field salesforce, sales engineers, etc)
 Characteristics:
 Specializing by critical selling tasks
 Tend to be more decentralized
 Advantages:
 The strength of individual salespeople
 Concentrate on certain critical tasks
 Allocation of resources
 Disadvantages
 Customers may become confused
 Complex system to administer
 Increase the cost of having more salespeople to perform specialized
function
 Customer needs
different

Market-driven Product/market
specialization driven
specialization
Simple Complex
product range of
offering product
Geography- Product-
driven driven
specialization specialization

Customer need
similar
 centralization
 A centralized structure: authority and responsibilities are
placed at higher management level >< decentralized
structure
 Centralized or decentralized orientation, centralize some
activities and decentralize others
 More decentralized orientation:
 Transactions relationships
 Individuals  teams
 Management  leadership
 Decentralization:
 High level of environmental uncertainty
 Salespeople and sales managers must perform creative and non-
routine activities
 Adaptatibility is critical to achieving performance objectives
 Centralization:
 Low level of environmental uncertainty
 Sales organisation activities are routine and repetitive
 Performance emphasis is on effectiveness
 Span of control versus
management levels
 Span of control: the number of individuals who report to each sale
manager
 Management levels: the number of different hierarchical levels of sales
management within the organisation
 National sales
manager

District District District District District District

sales sales sales sales sales sales
manager manager manager manager manager manager

National sales
manager

Regional sales Regional sales

manager manager

District District District District District District

sales sales sales sales sales sales
manager manager manager manager manager manager
 Line versus staff positions
 Line sales management
 Directly involved in the sales-generating activities
 Perform sales management activities
 Directly responsibility for a certain numbers subordinates and
report directly to management at the next highest level in the
organisation
 Staff sales management
 Not directly involved in the sales-generating activities
 Do not directly manage people
 Responsible for certain functions (recruiting, selecting, training
etc)
Chapter 3

Sales Management
Leadership
 Learning Objectives

 Explain and describe the difference between sales management

and leadership
 Recognize some leadership model for sales management
 Identify the skills and abilities a person needs to become a good
sales manager
1. Sales management and
leadership
 What is Managing?
 Manage sales personnel and work responsibilities in order to
achieve the goals of the organizational unit
 Organize and staff sales force
 Decide how to organize work, divide responsibilities, determine who
handles what tasks
 Train, develop, and coach reps

 Measure and analyze

performance of sales force
 Requires skills in
 Setting objectives,
organizing tasks necessary to
achieve objectives, motivating
10-92 sales force, problem solving
 A New School of Managerial
Thought?
 Transactional leadership: two-factor approach that
focused on an exchange between leaders and followers
(late 20th century)
 Transformational leadership: focuses on needs and
motives of employees, tries to help them reach their fullest
potential
 Emotional intelligence: ability to understand and manage emotions
of other people; includes self-awareness, self-regulation,
motivation, empathy, social skills

10-93
 Managers Versus Leaders
“Not all leaders are managers, nor are all managers
leaders”
 Managers
 Persons whose influence on others is limited to the appointed
managerial authority of their positions
 Leaders
 Persons with managerial and personal power who can influence
others to perform actions beyond those that could be dictated by
those persons‟ formal (position) authority alone
 What is the Difference Between a leader
and a manager?
Manager Leader

 Tasks  Sales planning and  Make orientation and

implementing encourage salespeople for
creating and applying new
ideals
 Salesforce  Staffing the salesforce  Making oriented salesforce
development
 The contact to the  Low emotional level  High emotional level
salesforce  Toward an organized group  Toward individual salesperson
 Make the oriented process  Make an oriented decision
 Tendency in  Seek for the obedience, the  Seeking for the change, the
doing the sales order innovation
task
 Doing plans  Control and solve problems  Motivate and make the desire
for work from the salesforce

 Work  Awareness  Changes

performance
2. Leadership models for sales
management
The situational leadership model for Sales
Management

Situational Environment

Communication

Communication
Sales manager Salesperson Leadership
Charateristics Charateristics behaviour
Experience Need, want, demand Telling
Motivation Selling
Status Participating
Deligating
 Sales person

The combination of PERSONAL

characteristics, capability, experience, work
motivation, emotion, mental status, etc.
 Each sales leadership style and behahiour for
each salesperson
 Sales manager

 Salespeople who decide the success of a sale

manager
 thoroughly understand himself (characteristics,
capbility, experience, etc) and salespeople
Key factors: capbility, experience, social
background, communication skills, quality
(intelligence, trustful…)
 communication

Two-way communication, major in non-verbal

communication
Play an important role in
 Saleperson –sales manager relationship
 Internal relationship in the organization
 Information providing to leadership
 Situation circumtance

Selling tasks, competitive environment, sales

organization structure, changes from customers,
etc.
Directly affect on salesperson – sales manager
relationship
Form leadership style and behaviour
Summary of the Situational
Leadership Model

G.Dessler, 2003
Leadership Model for Sales
Management

Goals & Situation

Objectives Time Constraints
Individual Nature of Tasks
Organizational History and Norms

Sales Needs
Power Manager’s
Sales Manager Leadership Salespeople
Effectiveness Other People

Leadership
Power Skills
Anticipation
Salespeople Diagnostic
Other People Selection
Communication
- Influence Strategy
- Communications
Mechanisms
 Power and Leadership
Five types of power which may be present in interpersonal
relationships:

Expert Power
Referent Power
Legitimate Power
Reward Power
Coercive Power
 Situational factors

 Sales organizational structure

 Organizational culture
 Sales environment
 Nature of selling tasks
 ….
Needs and Wants of Salespeople

 Important when coercive power is not being utilized

 Realize all needs and wants cannot be met
 Not all leadership directives need to be based on needs and
wants
 Consider each salesperson as a unique individual
 Goals and Objectives

• Leadership is easier when personal goals and

objectives of the salespeople are consistent with
those of the organization
• Sales managers strive to seek balance and
consistency between organizational goals and their
salespeople‟s goals.
Either hire people with consistent
goals or educate and train them to
have consistent goals
 Leadership Skills

 The ability to anticipate problems

 The ability to seek and obtain substantive feedback

 The ability to diagnose problems and opportunities

 The ability to select an appropriate leadership behavior and
match it to the situation

 The ability to communicate effectively

 Communication
Influence Strategies
 Threats (coercive power)
 Promises (reward power)
 Persuasion (expert or referent power)
 Relationships (referent or legitimate power)
 Manipulation
 3.What would be a good sales
manager
What makes an effective leader?

 Trait Approach
 Behavior Approach
 Contingency Approach
Manager’s Perspective: Behaviors
Managers Should Demonstrate
1 Clarify the direction your business is taking

2 Set goals and objectives

3 Give frequent, specific, immediate feedback

4 Be decisive and timely

5 Be accessible

6 Demonstrate honesty and candor

7 Offer an equitable compensation plan

Rep’s Perspective: What It Takes
to Be a Good Sales Manager
1 Be flexible

2 Be a good communicator

3 Work for the good of the team

4 Be considered trustworthy

5 Motivate and lead the team

G.Dessler, 2003
 Key thoughts on sales leadership
 Build a strong, trust-based relationship with individual salespeople
 Be an active stimulus for change, and work with sales people and
others to accomplish the mission
 Expect salespeople to take an active role in managing themselves
Selected leadership functions

Coaching
Mentoring
Teamwork
Planning and conducting intergrative
meetings
Meeting ethical and moral
responsibilities
 Coaching
The continuous development of salespeople through supervisory
feedback and role modeling. Suggestions for affective coaching
include:
 Take a we approach
 Address only one or two problems at a time
 Don‟t focus on criticizing poor performance, reinforce good performance
 Foster involvement
 Recognize differences in salespeople and coach accordingly
 Coordinate coaching with more formal sales training
 Encourage continual growth and improvement
 Insist salespeople evaluate themselves
 Obtain agreement with respect to punishments and rewards
 Keep good records
 Coaching Principles
 Let reps know you‟re joining them to observe
Prepare and and offer feedback
observe
 Understand objectives of calls, listen carefully
 Focus on improving skills
Give feedback  Be specific when pointing out good selling skills
and those that could be improved
 Demonstrate desired behaviors, explain how and
Be a Role Model why you did the things you did
 Give reps chance to use same tactics

Follow-up  Do what you say you‟ll do

 Relationships will be more productive with trust

Trust
than without
 Mentoring

 Mentoring: long-term relationship

where senior person supports personal
and professional development of junior
person
 Person who acts as a teacher or
trustworthy advisor
 Formal or informal relationship
 Organizing and Working
Effectively with Teams
 A team might be comprised of representatives from several
functional areas
A group of people with complementary skills who are able to
collectively complete a project in a superior way
 Committed to a common goal
 Members interact with each other and the leader and depend on each
other‟s input to perform their own work
 Self-managed team: empowered to handle an ongoing task
 Project team: organized around a unique task of limited
duration and disbanded when task is complete
 What’s Expected from You as a
Team Member
1 Get involved 6 Stay current

2 Generate ideas 7 Anticipate market changes

3 Be willing to collaborate 8 Drive your own growth

4 Be willing to lead initiatives 9 Be a player for all seasons

5 Develop leaders as you

develop

10-120
Planning and Conducting
Integrative Meetings
 Keep technical presentations succinct
 Use visual aids and breakout discussion
groups
 Keep salespeople informed of corporate
strategy and their role in it
 Minimize operations review
 Set a humane schedule . . . allow time for
sharing and adequate breaks
 Set and communicate the agenda (when?)
 Ask for input from the salespeople
 Generate excitement with contests and
other rewards
Chapter 4

Staffing the
sales force
 Learning outcomes

1. Explain the critical role of recruitment and selection in

building and maintaining a productive salesforce
2. Identify the key activities in planning and executing a
program for salesforce recruitment and selection
3. Explain the importance of sales training and the sales
manager‟s role in sales training
4. Describe the sales training process as a series of six
interrelated steps
1. Sales recruitment and selection
 Value of Hiring Good Employees

$1,400,000

$1,200,000
Average Annual Sales

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0
No Testing Standardized Test Highly-Predictive
Standardized Test

Source: HR Chally Group (2007). 9-125

Average Hire Poor Hire
 Importance of recruitment and selection

• Inadequate sales coverage and lack of customer

follow-up
• Higher turover rates
• Increased training costs to overcome deficiencies
• More supervisory problems
• Lost sales from choosing the wrong person
• Difficulty in establishing enduring relationship
with customers
Recruitment
process
9.1
 recruitment and selection procedures for
new sales staff: step 1

Planning for recruitment Recruitment Selection: Evaluation

and selection and hiring

Job analysis/ the need for recruitment and selection

Recruitment and selection objectives/ strategy
Job analysis/ Job description
Job analysis/ Person specification
Job application form
 The need for recruitment &
selection
 Conduct job analysis to evaluate the need for recruitment & selection
 Current salespeople :be able to undertake incurred selling tasks?
 Retraining the current salespeople?
 Dispatch other staff from other functional part?
 Increase the working time of current salespeople?
 Hire partime salespeople for a certain period?
  Recruit new salespeople
 Recruitment and selection
strategy
 When will the recruitment and selection be done?
 How will the job be portrayed?
 What are the most likely sources for qualified applicants?
 How will efforts with intermediaries such as employment agencies
and college placement centers, be optimized?
 What type of salespeople will be hired when developing an
international salesforce?
 How much time will be allowed for a candidate to accept or reject
an offer?
 Recruitment and selection
objectives
 Determine present and future needs in terms of numbers and types
of salespeople
 Meet the company‟s legal and social responsibilities regarding
composition of the salesforce
 Reduce the number of underqualified or overqualified applicants
 Increase the number of qualified applicants at a specified cost
 Evaluate the effectiveness of recruiting sources and evaluation
techniques
 Recruiting & Selecting Sales
Representatives
 Job description –starting place for recruitment

Should address subjects such as:

 establishing new accounts vs. servicing existing
accounts
 developing long-term relationships vs. short-term
demand
 specific tasks to be performed
 Job analysis
 Initial requirements of the employee (eg aptitudes, qualification,
experience, training required)
 Duties and responsiblities: responsibilities of staff, consequences of
failure, routine or initiative jobs, etc
 Environment and conditions: physical surroundings, benefit
package (wage, income, holidays, canteens, etc), working condition
 Social factors: size of department, teamwork or isolation, the sort of
people dealt with (managers, supervisor, customers, the public), the
amount of supervision
 Job description
 Job title (salesperson, sales trainee, senior sale representative)
 job summary
 Location of the job
 Administrative relationship
 The relationship of the job to other position
 The main duties and responsibilities of the job
 Customer types
 Significant job-related demands: mental stress, physical strength,
stamina requirements, environmental pressures
 The limits to the job holder‟s authority
 Equipments the job holder is responsible for
Person specification

 Personal traits
 Aptitudes
 Skills
 Knowledge
 Qualification
 Career aspiration
 Special abilities
 experience
 recruitment and selection procedures for
new sales staff: step 2

Planning for recruitment Recruitment Selection: Evaluation

and selection and hiring

Locating prospect candidates

Announcing the recruitment
 Step 2: Recruiting Applicants
 Must be well-implemented
 Sources
 Internal:
 External:
 Advertisement
 Employment agencies
 Colleges and universities
 Referrals from other firms, customers, suppliers…
 Internet
 Job fair
 etc
 Internal Sources
 Sources:
Employee referral programs
Announcing sales job opennings through newsletter, in
meetings, on the bulletin board
 Advantages
Established performance records, are a known entity
Require less orientation and training
Bolsters company morale
Must fully inform human resources of sales staff needs
 External Resources

 Classified Ads
 Reaches wide audience
 Tend to over-produce under-qualified candidates
 Internet Resume Sites
 Reaches wide audience
 Will continue to grow in importance because of
screening options and ease of access
 External sources
 Employment Agencies
 best if company pays
 Schools & Colleges
 Poised & easily trained
 Lack experience & become bored
 Customers, Suppliers & Competition
 Legal & ethical issues
 Common: insurance, stock broker, office equipment,
clothing
Announcing the recruitment
 recruitment and selection procedures for
new sales staff: step 3

Planning for recruitment Recruitment Selection: Evaluation

and selection and hiring
Screening resumes and application
Selection tools: Interviews, testing,
Assessment centre, Physical examinations
Reference checks
Final Assessment & final selection
Selection decision and job offer
Hiring
 Screening resumes and
application
 Application form
 Person specification
 Career progress
 The frequency of job change
 Salary history and requirements
 The appearance and completeness of the resume
Selection Tools and Procedures
 Interviews
 Testing
 Assessment centre: group discussion, business game
simulations, presentation, role-playing exercise
 Interviews
 Initial interview
 Intensive interview

Personal interview
Group interview
 Testing
 Intelligence test
 Aptitude test
 Proficiency test
 Psychological test
 Personality test
 Skills test
 Honesty test
 Assessment centre

Assessment centre: a set of well-defined procedure of using

techniques such as group discussion, business game
simulations, presentation, role-playing exercise
 High cost
 Managerial time to conduct the assessment
2. Sales training
 Sales training
 Definition: the effort an employer puts forth to provides
salespeople job-related culture, skills, knowledge and
attitudes that should result in improved performance in the
selling environment
 The role of sales training in sales performance:
 Decrease turnover and staff turnover cost
 Reduce levels of wastage
 Increase employee satisfaction
 Enhance customer relationships
 Reduce employee accident rate and cost
 Increase employees‟ flexibility and acceptance of change toward sales task
 Improved time and territory efficency
 Gain productivity
 Etc
 Sales training process
Assess Set Evaluate Design sales
sales training training training
training objectives alternatives program
needs

Conduct
follow up Perform
and sales
evaluation training
 Step 1:Assess sales training needs
 Discover the gap: the specific performance-related skills,
attitudes, perception and behaviours required for salesforce
success –state of readiness of the salesforce
 Typical sales training needs  sales training topic

 Methods to assess sales training needs:

 Salesforce audit
 Performance testing
 Observation
 Salesforce survey
 Customer survey
 Job analysis
 Step 2: Set training objectives
 Increase sales/ profit
 Create positive attitudes and improve
salesforce morale
 Assist in salesforce socialization
 Reduce role conflict and ambiguity
 Introduce new products, market and
promotion programs
 Develop salesforce for future
management positions
 Ensure awareness of ethical and legal
responsibilities
 Teach administrative procedures
 Ensure competence in the use of sales
and sales support tools
 Minimize salesforce turnover rate
 Prepare new salespeople for
assignment to a sales territory
 Improve teamwork and cooperative
efforts
 Improve morale
 Lower turnover
 Improve customer relations
 Improve selling skills
 Step 3:Evaluate training alternatives
and design sales training program

Select sales trainers

Select sales training locations
Select sales training methods
Design sales training program
 Sales Training Issues
 Who should be trained?
 What should be the primary emphasis in the training
program?
 How should the training process be structured?
on-the-job training
and experience?
formal and more consistent centralized
program?
web-based?
instructor-based?
 Sales training topics
 New employee orientation
 Performance appraisals
 Interpersonal skills
 Team building
 Listening skills
 Time and territory
management
 Product knowledge
 Goal setting
 Personal computer
application
 Motivation
 Stress management
 Problem solving
 Quality improvement
 Public speaking/
presentation
 Planning
 Negotiating skills
 Selling skills
 Creativity
 Customer knowledge
 Competitive knowledge
 Sales Training Topics

 Product or service knowledge

 Market/Industry orientation
 Company orientation
 Selling skills
 Time and territory management
 Legal and ethical issues
 Technology
 Specialized topics
 Training methods
Classroom / conference training
Lectures, Discussion, Demonstration
On-the-job training
Behavioural simulation
Game simulation, Role playing, Case studies
Absorption trainning
Videotapes/ audiotapes/ films, Programmed
training
 Training Methods - How

Mark W. Johnston and Gary W. Marshall, Sales Force Management,

McGraw Hill, 2006
Step 5: Conduct follow up and evaluation

 Asking the trainees

 Measuring what the trainees have learned
 Study the subsequent behaviour of the trainees
 Personal development plan
 Learning contract
 etc
Chapter 5

Motivation &
reward system
management
 Learning Outcomes

1. Explain the key components of motivation: intensity,

persistence, and direction.
2. Discover the importance of realizing that salespeople
have basic needs that, when met are strongly
motivating.
3. Describe the model for a salesperson’s behavior.
4. Describe the primary financial and non-financial
compensation rewards available to salespeople.
5. Describe salary, commission, and combination pay
plans in terms of their advantages and disadvantages.
 Motivation of sale forces

Definition: Motivation
Intrinsic Extrinsic
Motivation is When doing the When rewards
the inner force job is inherently such as pay and
motivating formal
that guides
recognition act as
behaviors and motivators
is concerned
with the
causation of Sense of Pay
specific actions Accomplishment Promotion
Job
Personal Growth
security Recognition
Opportunities
 UNDERSTAND WHAT
MOTIVATION IS ALL ABOUT
• What arouses salespeople‟s behavior?
• What influences the intensity of the
behavioral arousal?
• What directs the person‟s behavior?
• How is this behavior maintained over time?
Definition
Motivation refers to the arousal, intensity, direction,
and persistence of effort directed toward job tasks
over a period of time
Salesforce psychology
 Motivation
The force within us that activates our behavior. It is a
function of three distinct components: Intensity,
Direction, and Persistence.
Motivation

Intensity Direction Persistence

Intensity refers The extent to which The extent to
to the amount of an individual which the
mental and determines and goal-directed
physical effort chooses efforts effort is put
put forth by the focused on a forth over
salesperson. particular goal. time.
 UNDERSTAND THE SALESPERSON‟S
MOTIVATIONAL BEHAVIOR

“What Is “Will I Be “Are the “Are the

the Probability Rewarded Rewards Rewards
of Success?” for Success?” Worth It?” Fair?”

Rewards Equity Satisfaction

Motivation Performance Determination
Intrinsic Intrinsic
to Work Level Inputs vs. Outputs
Extrinsic Extrinsic

Feedback

Expectancy theory is based on the assumption that

salespeople have expectancies about what they
should receive from their employer as a result of
their work efforts.
WHAT‟S IN IT FOR ME?
Expectancy is the salesperson‟s estimate of the probability that expending a
given amount of effort on a task will lead to an improved level of
performance on some dimension.
WILL I BE REWARDED FOR SUCCESS?
The salesperson‟s estimate of the probability that achieving an improved
level of performance dimension will lead to increased attainment of a
particular reward or outcome may be defined as instrumentality.

ARE THE REWARDS WORTH IT?

Valence for rewards refers to the value the salesperson places on the
reward.
ARE THE REWARDS FAIR?
If inequity is perceived, the salesperson may be motivated
to restore equity using one of four methods.

 First, the salesperson may increase or decrease the level of input

that may, in turn, influence outcomes.
 Second, the salesperson could distort the facts by convincing
himself or herself that equity really does exist even though it may
not.
Third, the salesperson could choose another salesperson with whom
to compare the ratio of outcomes to inputs.
 Fourth, the salesperson could influence other salespeople to
decrease the amount of effort they are putting into their job.
 A SALESPERSON’S BEHAVIORAL MODEL HELPS
ILLUSTRATE MOTIVATIONAL PROCESS

9. Past
experience
1. Environmental
factor

2.Organizational 8. Satisfaction
4.Motivation 5.Performance 6. Reward 7. Equity Intrinsic 10. Job 11. Voluntary
factor level
to work Intrinsic Determination Extrinsic Scope Turnover
Extrinsic

3. Personal
factor

9. Past
experience
 Compensation Plans
 Selecting compensation plans

 Differences in territory potential

 Territory potential approach vs. workload approach to territory
management
Differences in professional development of the salesperson
 Ability to attract and retain employees
Competitors‟ compensation plans
….
 Financial-compensation plan

 Salary Straight salary

 Commission
Straight commision
 Performance
bonuses
Salary and commision
Salary and bonus
Commision and bonus
Salary, bonus and
commision
 Financial Compensation:
Straight Salary - fixed cost, planned earning
Advantages
- Salaries are simple to administer
- Planned earnings are easy to project.
- Salaries can provide control over salespeople’s
activities, and reassignments are less of a problem.
- Salaries are useful when substantial development work
is required.
Disadvantages
- Salaries offer little incentive for better performance.
- Salary compression could cause perceptions of inequity
among experiences salespeople.
- Salaries represent fixed overhead.
 Financial Compensation:
Straight Commission
Advantages
- Income is linked directly to desired results.
- Straight commission plans offer cost-control benefits.

Disadvantages
- Straight commission plans contribute little to company
loyalty.
- Problems may also arise if commissions are not limited by
an earnings cap.
Straight Commission: Plan Variations

1. Commission base — volume or profitability

2. Commission rate — constant, progressive, regressive or

a combination

3. Commission splits — between two or more salespeople

or between salespeople and the employer
 Straight Commission: Rates

Constant rates:
 Rates that remain unchanged over the pay period. Pay is
linked directly to performance.

Progressive rates:
 Rates that increase as salespeople reach pre-specified targets.

Regressive rates:
 Rates that decline at some predetermined point.
 Financial Compensation:
Performance Bonuses
 Performance
Advantages
bonuses: - Organization can direct emphasis to what it
considers important in the sales area.
 Personal/ group
- Bonuses are particularly useful for tying
 Direct effort rewards to accomplishment of objectives.
toward relatively
short-term
Disadvantages
objectives - It may be difficult to determine a formula
for calculating bonus achievement if the
objective is expressed in subjective terms.
- If salespeople do not fully support the
established objective, they may not exert
additional effort to accomplish the goal.
 Financial Compensation:
Combination Plans
Advantages
- Combination pay plans are flexible.
- They are also useful when the skill levels of the salesforce
vary.
- Combination pay plans are attractive to high-potential but
unproven candidates for sales jobs.
Disadvantages
- Combination pay plans are more complex and difficult to
administer.
- A common criticism of combination pay plans is that they
tend to produce too many salesforce objectives.
Non Financial compensation

Opportunity for promotion

Sense of accomplisment
Opportunity for personal growth
Recognition
Job security
 Nonfinancial Compensation

Opportunity for Promotion:

 The ability to move up in an organization along one or more
career paths

Sense of Accomplishment:
 The internal sense of satisfaction from successful performance
 Sales managers should facilitate salespeople’s ability to feel
this sense of accomplishment
 Nonfinancial Compensation

Opportunity for Personal Growth:

 Access to programs that allow for personal development (e.g.,
tuition reimbursement, leadership development seminars)

Recognition:
 The informal or formal acknowledgement of a desired
accomplishment

Job Security:
A sense of being a desired employee that comes from
consistent exceptional performance
 Guidelines for Motivating and
Rewarding Salespeople
1. Recruit and select salespeople whose personal motives match
the requirements and rewards of the job.
2. Attempt to incorporate the individual needs of salespeople
into motivational programs.
3. Use job design and redesign as motivational tools
4. Provide adequate job information and assure proper skill
development for the sales force.
5. Concentrate on building the self-esteem of salespeople.
6. Take a proactive approach to seeking out motivational
problems and sources of frustration in the salesforce
THE SEVEN COMPONENTS OF THE SALES
MOTIVATIONAL MIX

1. Sales culture  Challenging work assignments

 Ceremonies and rites  Recognition
 Stories 5. Sales Training
 Symbols  Initial
 Language  Ongoing
2. Basic compensation  Sales meetings
 Salary 6. Leadership
 Commissions  Style
 Fringe benefits  Personal contacts
3. Special financial incentives 7. Performance evaluation
 Bonuses  Method
 Contests  Performance
 Trips  Activity
4. Nonfinancial rewards  Publicity
 Opportunity for promotion
Chapter 6

Evaluating the
performance of
salespeople
 Learning Outcomes

1. Discuss the different purposes of salesperson

performance evaluations and the content of
Salesperson performance evaluation process
2. Differentiate between an outcome-based and a
behavior-based perspective for evaluating and
controlling salesperson performance.
3. Describe the different types of criteria necessary
for comprehensive evaluations of salesperson
performance.
4. Compare the advantages and disadvantages of
different methods of salesperson performance
evaluations.
 Purposes of Salesperson
Performance Evaluations
Sales performance.
Set and archive both individual
and organizational goals

Compensation Salesperson Sales training

and reward performance

system evaluation

sales recruitment and

selection, human
resources planning
 Evaluation approaches
 How long to evaluate sales performance?
 Process evaluation or result evaluation?
 Outcome-based or behavior-based perspective?
 Who will evaluate: oneself, sales managers, team members, internal
customers, external customers?
 Which level of management will evaluate?
 Set techniques of appraisal: overall assessment, guided assessment,
grading, result-oriented schemes, self-appraisal.
 Source of information: call reports, prospect and customer profile,
client and peer feedback, etc
 Salesperson Performance
Evaluation Approaches

1. Most evaluate on an annual basis

2. Most combine input and output criteria which are evaluated
using quantitative and qualitative measures
3. When used, performance standards or quotas are set in
collaboration with salespeople
4. Many assign weights to different objectives and incorporate
territory data.
5. Most use multiple sources of information
6. Most are conducted by the field sales manager who supervises
the salesperson
7. Most provide a written copy of the review and personal
discussion
 360-Degree Feedback System

Sales Manager

Evaluation
 Salesperson is
evaluated by multiple
raters
 Helps salespeople
better understand their Salesperson
ability to add value to
their organization and
their customers
 Salesperson performance
evaluation process
Sales environment evaluation
Set sales performance approaches,
perspective,criteria and method
Information collection
Sales Sales performance
for sales performance
environment measurement
evaluation

Control of sales Evaluation

performance
evaluation
Compensation and reward Do the sales performance
system evaluation
Salesperson termination Evaluation interview
 Key Issues in Evaluating and
Controlling Salesperson Performance

 Outcome-Based Perspective
 Focuses on objective measures of results with little
monitoring or directing of salesperson behavior by sales
managers

 Behavior-Based Perspective
 Incorporates complex and often subjective assessments of
salesperson characteristics and behaviors with considerable
monitoring and directing of salesperson behavior by sales
managers
 Perspectives on Salesperson
Performance Evaluation
Outcome-Based
 Little monitoring of people
 Little managerial direction of
salespeople
 Straightforward objectives
measures of results
Behavior-Based
 Considerable monitoring of
salespeople
 High levels of managerial
direction of salespeople
 Subjective measures of
salesperson characteristics,
activities, and strategies
Dimensions of Salesperson
Performance Evaluation
Behavioral Results

Salesperson
Performance

Professional
Profitability
Development
 Criteria for Performance
Evaluation
Behavior: Consists of criteria related to activities
performed by individual salespeople
• Sales calls,
• customer complaints,
• required reports submitted,
• training meetings,
• letters and calls

Should not only address activities related to short-term sales

generation but should also include non-selling activities
needed to ensure long-term customer satisfaction.
 Criteria for Performance
Evaluation
Professional Development:
 Assess improvements in certain characteristics of
salespeople that are related to successful performance in
the sales job

 Characteristics include - Attitude, product knowledge,

initiative and aggressiveness, communication skills, ethical
behavior
 Criteria for Performance
Evaluation
Results:
 Salespeople measured objectively based on results such as –
sales, market share, and accounts

 A sales quota represents a reasonable sales objective for a

territory, district, region, or zone

 Some research shows that rewards for achieving results

have a negative effect on performance and satisfaction
 Criteria for Performance
Evaluation
Profitability:
 Salespeople have an impact on gross profits through the
specific products they sell and/or through the prices they
negotiate for final sale.
 Salespeople affect net profits by the expenses they incur in
generating sales.
 Criteria Examples
 Net profit dollars
 Gross margin per sale
 Return on investment
 Number of orders secured
 Selling expenses versus budget
Performance Evaluation Methods
Graphic Rating/Checklist Methods

 Salespeople are evaluated using some type of

performance evaluation form
 Especially useful in evaluating behavioral and
professional development criteria
 May be filled out by customers

 Disadvantage is providing evaluations that

discriminate sufficiently
 Performance Evaluation Methods:
Ranking Methods

 Rank all salespeople according to relative

performance on each performance criterion
 These methods force discrimination as to the
performance of individual salespeople
 May be complex

 Rankings only reveal relative performance

evaluation
 Performance Evaluation
Methods: Objective-Setting Methods
Management By Objectives (MBO)
1. Mutual setting of well-defined and measurable goals
within a specified time period.
2. Managing activities within the specified time period
toward the accomplishment of the stated objectives.
3. Appraisal of performance against objectives.
 Performance Evaluation Methods
Behaviorally Anchored Rating Scales
(BARS)
 Links behaviors to specific
results
 Salespeople are used to develop
performance results and
critical behaviors
 Positive feedback about
behaviors may be more
affective than positive output
feedback
Performance Evaluation Bias

 Occurs when a manager’s evaluation of a

salesperson is affected by considerations other
than the specified criteria
 Common sources of bias:
 Personal relationships
 Perceived difficulty of territory
 Outcomes (i.e., ends justifies
the means)
Evaluating Team Performance

• Consider the criteria on which members will be

evaluated and the methods used to evaluate
performance
• Establish a link between team performance and
positive outcomes to promote individual and team
effort
• May be beneficial to allow team to help develop goals
and evaluation criteria
 Framework for Using
Performance Information
Evaluate Salespeople against Relevant Performance Criteria

Compare Salesperson Evaluations to Identify Problem Area

Investigate Problem Areas to Identify Causes of Performance Problems

Determine Sales Management Actions to Eliminate Causes of Future

Problems and to Solve Existing Problems
Chapter 7

Sales forecasts
and sales
planning
 Learning Outcomes

1. Explain the importance of sales forecast,

describe two main forecasting approaches
with forecast methods
2. Describe the importance of sales quota and
the requirement of setting sales quota
3. Discover the definition of sales budget and
illustrate the sales budget process
4. Describe the meaning of sales territory and
discover the territory design procedure
1. Sales forecast
 Sales forecast
Importance of sales forecasting

 Where are our customers and how many products will they buy? 
develop sales programs (sales planning) 
Teritory design Sales
forecast
 Sale quota setting
Sales budget planning

Sales
Sales quota
budget
 Defining the forecast
 Product level
 Geographic area
 Time period

Best possible Expected results

results for given strategy
Industry level market potential market forecast

Firm level Sales potential sales forecast

 Top-down approach Bottom-up approach

Forecast of general economic

and business conditions for
the country as a whole

Forcasting Market potential for relevant Factors

industry affecting
approaches company’s
share of
Sales potential for company as total
a percentage of industry sales industry
sales
Company sales forecast Company sales forecast

Sales manager forecast for Combined into district,

zones, region, district, region and zones forecasts
territories and accounts

Combined into territory

forecasts

Salespersons forecasts of
accounts
 Top- down approach

 Company forecasting methods

 Moving average: develop a company forecast by calculating the
average company sales for previous years
 Exponential smoothing: type of moving average/ company sales
in the most recent year are weigthted differently from company
sales in past years
Ā t = α St-1 + (1- α) Āt-1
 Decomposition method: break down previous company sales
data into four major components: trend, cycle, seasonal and
erractic events.
 The Moving average method
 It is not only useful in smoothing a time series to the trend, it is the
basic method used in measuring the seasonal fluctuation
 This is accomplished by “moving” the arithmethic mean values
through the time series
 The data should follow a fairly linear trend and have a definite
rhythmic pattern of fluctuation
 The moving averages
Year Actual sales 2-year 4-year

1992 $ 8.400.000
1993 8.820.000
1994 8.644.000 $8.610.000
1995 8.212.000 8.732.000
1996 8.622.000 8.428.000 $8.520.000
1997 9.484.000 8.418.000 8.574.000
1998 9.674.000 9.054.000 8.740.000
1999 10.060.000 9.579.000 8.998.000
2000 9.868.000 9.460.000
 The exponential smothing

Year Actual sales α = 0,2 α = 0,5 α =0,8

1992 $ 8.400.000
1993 8.820.000 $8.400.000 $8.400.000 $8.400.000
1994 8.644.000 8.484.000 8.610.000 8.736.000
1995 8.212.000 8.516.000 8.626.000 8.664.000
1996 8.622.000 8.456.000 8.420.000 8.302.000
1997 9.484.000 8.488.000 8.520.000 8.558.000
1998 9.674.000 8.686.000 9.002.000 9.298.000
1999 10.060.000 8.882.000 9.338.000 9.600.000
2000 9.118.000 9.698.000 9.968.000
 The decomposition method
 Sales in 2000 = $ 10.060.000
 Trend: 5% growth in sales (basic development in porpulation, capital
formation and technology)
 Cycle: 10% decrease in sales (business recession)
 Erractic event: 5% decrease in sales (increased tension in the Middle
East)
 Seasonal: 25% higher in the fourth quarter than the others

 Sales in 2001 = [($ 10.060.000 x1,05) x 0,9] x 0,95 = $9.031.365

 The fourth quarter sales = ($9.031.365 ÷ 4) x 1,25 = $2.822.302
 Sales in the other three quarters = ($9.031.365 - $ 2.822.302) ÷3 =
$2.069.688
 Top- down approach
 Breakdown methods
 Once sales managers receive a company forecast, they can use different
market factor methods to break it down to the desired levels.
 market factor methods: identifying one or more factors related to sales
at the zone, region, district, territory or account level and using these
factors to break down the overall company forecast into forecasts at
these levels
 Use the Buying Power Index: An index comprised of weighted
measures of disposable income, sales data and market factors for a
specific region. The index is used by manufacturers and distributors to
determine the revenue potential of a particular region
 Demographic
 Family and individual‟s income
 Sales number of distribution channels
 Bottom-up approach

 The survey of buyer intentions method: Ask customers directly about

their purchase plan in the future
 The Jury of executive opinion method: excutives forecast sales to
individual accounts
 The Delphi method: structured type of jury of executive opinion
method
 The salesforce composite method: salespeople provide forecasts for
their assigned accounts
2. Sales quota
 Sales quota
As a part of total business sales targets assigned to a sales person

Quota based on sales outcomes

• Amount of sales: a part of total that is assigned to a sales person
or a region
• Amount of customer: a part of total that will be implemented over
a group of customers or one customer

Quota based on sales activities

• Amount of calls, visits and introduction
• Amount of sent mails
• Amount of product displays
• ….
 Sales quota
 Objectives of setting sales quota:

 to control the selling task of the salesforce

 to motivate salepeople at their potential, to
implement the reward system
 to evaluate the sales performance of salepeople
 Elements Important in
Assigning Sales Quotas
 The growth and concentration of businesses within the
territory
 Geographic size of the territory

 Commitment by the sales manager to assist the sales

representative
 Complexity of products sold
 Sales representative’s past sales performance

 The relationship and the extent of the product lines

 Financial support (e.g., compensation) the firm provides

 Amount of clerical support

 Sales quota
 Setting the sales quota need to be:

Adaptive to the sales environment and contexts

 highly feasible
 easy to understand
Complete
 the salesforce should get involved in setting the
sales quota
3. Sales budget
 Sales budgeting

 A list of costs that are related to sales activities for a region or a

product or a sales person.
 Fixed cost
 Variable costs

 “A sales budget is essentially set of planned expenses

prepared on an annual basic”
 Setting the sales budget

Sales manager DO
How to budget
Based on sales objectives/ selling tasks and
financial resources which should be spent for
accomplishing the objectives
Based on the past costs and intended sales
amount / sales quota this year
The sales budgeting process
The customer-product matrix
 How to use the sales budget

 A part of sales planning: sales operation

follow the sales budget
The control of sale operation: the model of
the minimum sales outcomes and the
maximum sales expenditure tell the needed
adjustment
4. Sales territory
 Define a sales territory

 Sales territory- a group of customers , located in a specificed

geographic area assigned to an idividual salesperson

Why establish a Sales Territory?

 Why establish a Sales Territory?
 1) To obtain thorough coverage of the market

 2) To establish a salesperson‟s responsibility

 3) To evaluate performance

 4) To improve customer relations

 5) To reduce sales expense

 6) To allow better matching of salesperson to customer

 7) To benefit salespeople and the company

 Benefits of Time and territory Management

 Territory should be more efficiently and effectively covered

 Optimum time should be spent with each class of prospects

 Most important customers should receive the bulk of the service

 Sales costs should be reduced due to better time allocation

 Benchmarks will form

 Optimum results will be yielded

 How to Design New Territories

 What is needed:

 Potential (large enough for a salesperson to make a living covering

it)
 Salesperson should be able to work the territory efficiently and
economically
 Salesperson should be able to maintain his standard of living
 Overnight travel should be held to a minimum
 The territory should have sufficient transportation facilities
(reachable)
 Company can make an adequate return on investment.
Territory design procedures
 Evaluation and revision of sales territories

 Territorial control- the establishment of standards of performance for

the individual territory in the form of qualitative and quantitative
quotas or goals.
 Compare actual performance with goals or benchmarks

 Territorial control depends on:

The salesperson workload

 the work condition
The nature of the sales job
 compensation scheme (commission)