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Sales Management: Shaping Future Sales Leaders
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-1Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
The Sales Function and Multi-Sales Channels
Chapter 2
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-2Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Learning Objectives
Explain what the sales function consists of and how salespeople affect a firm’s supply chain
Identify the various channels in which the sales function can be carried out
Explain how effective sales management efforts can align a firm’s sales strategy in a multichannel environment
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-3Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
The Sales Function
Locating potential buyers
Persuading them
Consummating the transaction
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-4Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
The Supply Chain
Complete process of events and people needed to bring product to the customer
Key term Sales forecast: what the salesperson expects to sell in a particular period of time
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-5Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Managing the Supply Chain: Active vs. Passive
Passive
Example: salesperson turns in sales forecast
Sales forecast influences what happens in supply chain, but salesperson is not taking active role in influencing chain’s activity
Active
Salesperson actively seeks to influence what supply chain does
Example: buyer that needs special payment terms will need the salesperson’s help in securing those terms from the company
Example: salesperson might need to arrange expedited delivery in order to meet a buyer’s needs
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-6Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Multichannel Environment
Using a number of methods, or channels, to accomplish the selling function
S o u th A tlan tic O ce an S o u th P ac if ic O c ea n
N o rth P ac ific O c ea n
N o rth A tlan tic O ce an
In d ia n O c ean
A rc tic O ce an A rc tic O ce an A rc tic O ce an
N o rth P ac ific O c ea n
U n ite d S ta te s o f A m e ric a
U .S .A .
C an a d a
M e x ic o
B ra z il
U . S . A .
F re n c h P o ly n e s ia (F r.)
A rg e n tin a U ru g u a y
P a ra g u a y
C h ile
B o liv ia
P e ru
E c u a d o r
C o lo m b ia
Ve n e z u e la F re n c h G u ia n a (F r.)
S u rin a m e G u y a n a
T h e B ah am a s
C u b a D o m in ica n R e p u b lic
P a n am a C o s ta R ic a
N ica ra g u a
H o n d u ra s G u ate m a la
E l S a lv a d o r
T rin id ad a n d To b ag o
Ja m . H a iti P u e rto R ic o (U S )
G re e n la n d (D e n .)
Ic e la n d
M a d a g a sc a r
S o u th A fr ic a L e so th o
S w a z ila n d
M o z a m b iq u e
Ta n z a n ia
B o tsw a n a N a m ib ia Z im b a b w e
A n g o la
Z a ire
Z a m b ia
M a la w i
B u ru n d i
K e n y a R w a n d a
U g a n d a
C o n g o
G a b o n
S o m a lia
E th io p ia
S u d a n
D jib o u ti
B e liz e
E g y p t L ib y a
C h a d
N ig e r
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M a li
T u n is ia
N ig e r ia
C a m e ro o n C . A . R .
B e n in
To g o G h an a
B u rk in a F a so B a rb a d o s
D o m in ica
C ô te D ’Iv o ire
L ib e r ia
S ie rra L e o n e
G u in e a G u in e a -B issa u
S e n eg a l T h e G a m b ia
M a u rita n ia
W este rn S ah a ra (M o r.)
M o ro c c o
F in la n d N o rw a y
S w e d e n E sto n ia L a tv ia
L ith u a n ia
P o lan d
R o m a n ia
B u lg a r ia
T u rk e y G re ec e
C z ec h .
H u n g .
I ta ly A lb an ia
P o rtu g a l
F ra n c e
S p a in
A u s. S w itz .
U n ite d K in g d o m
Ire la n d
D e n .
G e rm an y N e th .
B e l.
C y p .
Ye m e n
O m a n S a u d i A ra b ia U . A . E .
Q a ta r
I ra n I ra q
S y ria
Jo rd a n
Isra e l L e b . C h in a
M o n g o lia
R u ss ia
A fg h a n is ta n
P a k is ta n
In d ia
S ri L an k a M a ld iv e s
N e p a l B h u .
M y a n m a r (B u rm a ) B a n g .
A n d a m a n Is la n d s (In d ia )
T h a ila n d
In d o n e s ia
M a la y s ia
B ru n e i
P h ilip p in e s
Taiw an
C a m b o d ia
V ie tn am
L a o s
A u stra lia
P a p u a N ew G u in e a
N e w Z e ala n d
F iji
N e w C a led o n ia
S o lo m o n Is la n d s
K ir ib a ti
M a rs h a ll Is lan d s F e d e ra te d S ta te s o f M ic ro n es ia
G u am (U S A )
Ja p a n
N . K o rea
S . K o rea
K u ril Is la n d s
W ra n g e l Is la n d
A leu tian Is lan d s (U S A )
N e w S ib e ria n Is la n d s
S e v e rn ay a Z e m ly a
N o v a y a Z e m ly a
F ra n z Jo se f L a n d S v a lb a rd (N o r.)
Ja n M ay en (N o r.) B a n k s Is lan d
V ic to ria Is la n d B a ff in Is la n d
E lle sm ere Is la n d
Is lan d o f N ew fo u n d lan d
A n ta rc tic a
Î le s C ro ze t (F ra n ce )
Tas m an ia
S o u th G e o rg ia (a d m . b y U K , c la im e d b y A rg e n tin a )
F a lk la n d Is la n d s ( Is la s M a lv in a s) (a d m . b y U K , c la im e d b y A rg e n tin a )
K u w a it C a n a ry Is la n d s (S p .)
S a o To m e & P rin c ip e
S in g a p o re E q . G u in e a
F a ro e Is . (D en .)
K a z a k h s ta n
B e la ru s
U k ra in e
M o ld o v a
G e o rg ia A rm e n ia A z e rb a ija n
T u rk m e n is ta n
U z b e k is ta n K y rg y z sta n
Yu g o .
M a c.
S lo v. C ro .
B o s .
S lo v a k .
E ri tre a
Ta j ik is ta n
H aw aiian Island s
G a la p ag o s Is lan d s (E cu a d o r)
M a u ritiu s
S e y ch e lle s
6 0 °
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-7
Global Sales Management: Outsourcing to India
EDS manages some 500 call centers worldwide
Indian call center employees selling to US must Learn to speak with American accent Learn American slang
EDS must Set appropriate metrics Write scripts for salespeople Match its customer tracking system to the client’s
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-8
Global Sales Management: Why Outsource?
Lower cost
Willing and highly educated workforce availability
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-9Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Strategies to Reduce Sales Force Costs Without Sacrificing Performance
Purifying Shifting non-selling activities to lower-cost alternatives
Outsourcing Hiring another company to carry out a task or set of
tasks
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-10Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Advantages of Company-Employed vs. Outsourced Sales Force
Company-Employed
Company can exert greater control over their efforts
Greater control over who is hired
Focus on only the company’s products, whereas an outsourced representative might be free to sell many companies’ products
Outsourced
Firm’s selling costs can be shared with other manufacturers, reducing cost per sales call
Established relationships with customers from which the manufacturer can benefit
These can yield greater coverage of the market for the manufacturer
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-11Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Types of Outsourced Salespeople
Mfg RepMfg AgentRep
Independent contractor who does not take ownership of product and does not maintain an inventory
Broker Represents either buyer or seller and sometimes
both, carries an inventory of products but does not take ownership of them
Distributor Sells for many manufacturers and take
ownership of products, sell them on consignment, or otherwise maintain an inventory
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-12
A Few Manufacturer’s Reps Organizations
Foodservice Sales & Marketing Association
Mfr. Rep’s Educational Research Foundation
United Association of Manufacturer’s Reps
Manufacturers’ Agents National Association
Association of Independent Manufacturers’ Reps
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
All offer certification to upgrade professionalism
Most specialize in industries
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-13Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Types of Company-Employed Salespeople
Inside Salesperson
Sells at a company’s facilities, either by telephone or in person
Account Manager
Has responsibility for building sales within specific accounts or accounts within a specific area (geographic rep)
Field Representative
Sells at the customer’s location
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-14Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Types of Company-Employed Salespeople (continued)
Vertical MarketRep
Accounts all operate in the same industry
Trade Rep Sells to organizations in the supply chain,
usually retailers
Retail SalesRep
Sells to consumers who come into stores
Missionary Salesperson(detail rep)
Sells to people who recommend or prescribe a product to others but do not personally use it
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-15
More on Outsourcing
Can outsource Call Centers
Can outsource parts of the sales cycle To different sales organizations
Often used to Enter new markets Keep costs variable (no overhead) Leverage market coverage costs (share with others)
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-16Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Seamless Integration
Seamless integration: a firm’s customers can easily shift transactions across various channels
Goal: all areas have all the customer information they need so the customer is treated properly
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Alignment
Getting all of functional areas of a firm to work together This includes the company’s various salespeople–its inside
reps, geographic reps, customer service reps, etc.
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Alignment
Alignment occurs at 3 levels
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-19Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Areas to Align
TechnologyProcessesand Goals
SalesMetrics
CRM system used by salespeople also supports marketing
Lead management
Marketing & sales have same sales targets for a new product
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-20
Self-Assessment Library
Go to http://www.prenhall.com/sal/ Access code came with your book
Click the following Assessments Life in Organizations Careers How Motivated Am I to Manage?
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-21
Ethics in Sales Management: Stuck in AOHell
Customer tried to cancel his AOL service 21 times Recorded the call and posted the conversation on the Web
Customer claimed moving to France, still had to talk to manager in order to cancel
AOL: “…every Member that calls in to cancel their account is a hot lead”
State of New York fined AOL $1.25 million for hassling customers who wanted to cancel and then billing them anyway
Source: Keith Dawson, “Your Call is Not Particularly Important to Us,” Call Center Magazine (Oct. 2006), p. 4; Anonymous, “Customers Complain of Cancellation Problems,” FinancialWire (July 2, 2006), p. 1.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-22Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Role Play: Mechanix Illustrated
Family-owned magazine serving diesel mechanic shops
5000 subscribers, 10% increase over past 2 yrs
Advertising sales stagnant
Bill North, editor Does advertising sales
Sandy Lake, Lake Sales Wants to sell advertising Wants to take over subscriber management
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Role Play (continued): Action Steps
Bill List objectives List concerns regarding outsourcing advertising sales
Sandy Develop particular sales format (phone, field, etc.) List advantages for that format
Role play the sales call
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-24Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Caselet 2.1: Hereford Promotions
Promotional products company with 3 sales people
In past year, sales up 8%, but customer complaints have doubled
In past quarter, 12 new customers, 15 lost
Company’s net income averaging ~$1000 / month
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Caselet 2.1 (continued): Running the numbers
Salespeople paid 10% commission on each sale Earn an average of
$10,000 /month
Each rep earning $10,000 /month adds $5000 profit margin to the company
New salespeople won’t work for straight commission, they expect a salary ($3000) until sales are high enough to cover expenses
Company averages 40 large customers per salesperson Large customer bills
$20,000 / year
Small customers account for $20,000 /month for each rep Each rep might have 100 small
customers
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Caselet 2.1 (continued): Making decisions
What alternatives for growth might Sandy consider?
What multichannel options might she pursue?
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Caselet 2.2: Marchetti Machines, Problem 1
Salesperson Frank McCaslin is close to landing a large account, one of the biggest sales of the year
Account’s CFO plays golf with Marchetti service manager Louis Ruggieri
Ruggieri says the service team hates to work on the system Frank proposed
Account’s CFO emails, “…if that is the case, we’re going to have to open our search up to some other companies to try to find something more reliable”
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Caselet 2.2 (continued): Marchetti Machines, Problem 2
Sales division is reorganizing Bottom 10% of accounts moving to inside sales Inside sales moving to new division with Web sales and
distributor sales Distributors are only allowed to sell to
Accounts under $100,000 in annual revenue Accounts that require engineering that Marchetti doesn’t do Accounts they find first Cannot sell to government or accounts already on Marchetti’s
customer list
Current issue: distributors sell to Marchetti accounts Company names are not obvious or divisions operate under different
names Difficult to know who owns the account
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Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.2-29Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
Caselet 2.2 (continued): Marchetti Machines, Questions
1. How should Frank’s boss, Emily, handle the problem with Louis Ruggieri? What should she do about the account? What should she tell Frank if the account is lost
completely?
2. What problems are likely to occur because of the reorganization? Did these issues exist before the reorganization? Will these issues be better or worse as a result of the
change in structure?
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