Sales force goes to

1
Scope of Personal Selling
TM1-1 (Fig. 1-1)
Sales force goes to the customer
Inside salespeople contact by mail,
tele- marketing internet
Customers come to the salespeople
In-Person Sales calls
Primary producers and wholesaling middlemen
selling to business users, but also
some Producers Household
consumers Retailers Household
consumers Business
users Nonprofit organizations Household
consumers
Inside-selling across-the-counter
Primarily retail-store selling
2
TM 1-2 (Fig. 1-2)
Types of Sales Jobs
Driver sales person
Sales maintenance
Inside order-taker
Outside order-taker
Missionary sales person
Sales support
Sales engineer/consultant
Consultative sales person tangible products
Sales development
Consultative sales person services and other
intangible products
3
Selected Activities of
Salespeople
TM 1-3 (Fig. 1-3)
4
Sales Jobs are Different than Other Jobs
TM 1-4

• Salespeople are largely responsible for
  implementing a firms marketing
• strategies in the field.
• Salespeople represent their company to
  customers.
• Salespeople represent their customers to their
  company.
• Salespeople operate with little or no direct
  supervision.
• Salespeople are alone a large part of the time.
• A sales person needs more tact and social
  intelligence than other
• employees on the same level in the
  organization.
• Sales people are among the few employees
  authorized to spend company
• funds.
• Sales jobs frequently require considerable
  travel and time away from
• home and family.
• Salespeople are responsible for revenue
  generation.

5
(No Transcript)
6
TM 1-6a
Managing is a distinct activity which requires a
unique set of skills, knowledge, and attitudes
7
TM 1-6b
Some skills are the same many are different

• motivating
• planning
• training
• delegating
• recruiting
• administration

8
The Executive Ladder in Personal Selling
TM 1-7 (FIG. 1-6)
President
Vice president of sales
National sales manager
Regional/divisional sales manager
District sales manager
Sales supervisor
Staff assistants available for advice and support
at any step along the ladder
Sales person
9
TM 1-8 FIG. 1-7
The Executive Ladder in Team Selling
President
Vice president of marketing
Distribution logistics specialist
Client-team leader
Product engineer
Customer sales/service representative
10
TM 1-9
Promotional Mix Product Life Cycle, Type of
Business and Product
Product Manufacturers
Wholesalers
Retailers Life-Cycle Industrial
Consumer All Products Durable
Nondurable Introduction
Personal selling Advertising
Personal selling Personal selling
Advertising
Personal selling
Advertising Sales promotion

Personal selling Advertising
Personal selling Personal selling
Advertising
Personal selling
Sales
promotion Sales promotion
Growth
Sales promotion
Advertising
Personal selling Sales promotion
Personal selling Personal selling
Advertising
Advertising Sales promotion
Sales promotion Sales promotion
Maturity
Personal selling Sales promotion
Personal selling Personal selling
Sales promotion
Sales promotion
Sales promotion
Decline
11
A Companys Complete Marketing System
A Framework of Internal Sources
TM 2-1 (Fig. 2-1)
Operating within a Set of External Forces
Macroenvironmental forces Demography
Economic conditions Sociocultural factors
Political-legal factors Technology
Competition
Companys marketing mix Product planning
Price structure
Distribution system Promotional
activities
Marketing inter-mediaries

Marketing inter-mediaries
Suppliers
The market
Nonmarketing resources in the firm
Production Financial Personnel
Public image Research and Development
Location
12
Company Organization Chart Embracing the Concept
of Marketing Management
TM 2-2 (Fig. 2-3)
President
Production Manager
Marketing Manager
Financial Manager
Personnel Manager
Manager of Marketing Planning and
Facilitating Staff Services
Chief Sales Force Manager
Management of field
Advertising Sales promotion Marketing
research Sales training Sales analysis and
control (sales statistics)
Sales budgeting Sales forecasting Planning for
channels, territories, and quotas Product
planning Inventory control Production
scheduling Physical distribution
sales organization
activities including customer service and
product service
Management of sales office
13
Strategic Planning for the Total Company
TM 2-3
Organizations mission
top
Broad goals
down
Strategy and tactics to achieve goals
14
Relationship Between Objectives, Strategies and
Tactics
TM 2-4 (Fig. 2-4)
Set Goals
Formulate Strategies
Develop Tactics
15
TM 2-5
Relationship Marketing

• Long-term commitment
• Understanding customer expectations
• Building service partnerships
• Empowering employees
• Total quality management

16
TM 2-6
Company Strategy-Marketing Goals and Strategy
Company
Marketing
Goals
Earn 20 ROI

Strategy
Goals
Increase market
Increase marketing share 10
share 10
Strategy
Increase share of customer business
17
TM 2-7
Marketing Strategy-Sales Force Goals, Strategy
and Tactics
Marketing
Goals
share 10
Increase market
Sales Force
Strategy
Goals
Increase share of customer business
Increase share of customer business
Strategy
Build long-term
customer relations

Tactics

Develop sales teams

Provide bonuses for greater customer share


18
TM 2-8 (FIG. 2-5)
Multiple relationship strategies
High
Partnership
Commitment to the customer
Relationship oriented
Transaction oriented
Low
High
Low
Cost of serving the customer
19
TM 3-1 FIG. 3-1
Salespersons Average Time Allocation
(5.3 hrs) 18
(8.5 hrs) 18
(7.2 hrs) 15
(14.3 hrs) 31
(11.6 hrs) 25
SOURCE Christem P. Herde, Dartnells 29th
Sales Force Compensation Survey 1996-1997, (The
Dartnell Press Chicago, IL), p. 177.
20
TM 3-2
THE EIGHT STEPS OF THE SALES PROCESS
Follow-up
Gaining Commitment
Meeting objections
Presentation
Need Assessment
Approach
Preapproach
Prospecting
21
TM 3-3 FIG. 3-2
Lead Conversion Ratio Inquiry to Decision 12
Months After Inquiring
Plan to buy 25
Purchased 45
No longer in market 30
SOURCE Bob Donath, James K. Obermayer, Carolyn
K. Dixon, and Richard A. Crocker, When Your
Prospect Calls, Marketing Management, Vol. 3,
No. 2, 1994.
22
TM 3-4 (FIG. 3-3)
The Value of Inquiry Follow-Up
Share of buyers business if not followed up 40
Share of buyers business if followed up 83
Source Bob Donath, James K. Obermayer, Carolyn
K. Dixon, and Richard A. Crocker, When Your
Prospect Calls, Marketing Management, Vol. 3,
No. 2, 1994
23
TM 3-5
Buying Center Members
Type of influence Job position
Influence description
User Production line workers and Use
the product in the their supervisors
production process Influencer
Engineers, research Write
specifications supply development
specialists information Gatekeepers
Purchasing agents, reception- Limit
access to others and ists, secretaries,
research control the flow of
assistants information to
others Deciders Purchasing agents (small
or Make actual choice between
reorder items), management
suppliers Buyers Purchasing agents
Formally give the order to
a supplier arrange terms of
sale
24
NEED ASSESSMENT
TM 3-6

• Situational questions
• How often do you change the cutting oil in
  your drill presses?
• In addition to the hospital administrator,
  who else has an influence on the decision?
• Problem discovery questions
• Have you experienced any delays in getting
  repair parts?
• In which part of the production process is
  quality control the most important.
• Problem Impact questions
• How do these delays in getting parts affect
  your production costs?
• What impact do the quality consistency
  problems have on your production costs?
• Solution value question
• If your inventories could be reduced by 20,
  how much would that save you?
• If your rejection rate on final inspection
  was reduced to under one percent, how much would
• Confirmatory questions
• So, you wold be interested in an inventory
  control system that reduced your inventories by
  20?
• If I can provide evidence to you that our
  products would lower your rejection rate to under
  one
• percent, would you be interested?

that save you?
25
Presentation of Product, Features, Benefits,
Advantages
TM 3-7
Product Features
Benefits Advantages
Camera Telephoto lens Take pictures
Able to capture from longer images
of animals distances.
or people from a
distance. Bicycle Attached water Can
hold a water Dont get dehydrated.
bottle holder bottle. Dont have to
stop for water. Feel
more refreshed. Drill Press Multiple
drill Can change bits Saves time.
bits attached without shutting Saves
money. down the machine. Motor Oil
Rust inhibitor Oil and engine Saves
money. have longer life.
26
TM 4-1

Characteristics of a Good Organizational Design
Market orientation
Effective informal organization
Activities organized
Organizational Design
Balanced and coordinated activities
Authority and responsibility aligned
Stable, but flexible
Responsible span of control
27
Geographical Organization
TM 4-2 (Fig. 4-5)
Chief Marketing Executive
Sales Promotion Manager
General Sales Manager
Marketing Research Manager
Advertising Manager
Sales Analyst
Western Regional Sales Manager
Eastern Regional Sales Manager
4 District Sales Managers
4 District Sales Managers
Salespeople each with own territory
Salespeople each with own territory
28
Sales Organization with Product Specialized Sales
Force
TM 4-3 (Fig. 4-6)
Chief Marketing Executive
Sales Promotion Manager
General Sales Manager
Marketing Research Manager
Customer Relations Manager
Advertising Manager
Sales Manager Product A
Sales Manager Product B
Sales Manager Product C
Salespeople Product A
Salespeople Product B
Salespeople Product C
29
Sales Organization Specialized by Type of
Customers
TM 4-4 (Fig. 4-8)
Chief Marketing Executive
Sales Promotion Manager
General Sales Manager
Director of Marketing Research
Advertising Manager
Sales Manager Transportation Industry
Sales Manager Petroleum Industry
Sales Manager Steel Industry
Salespeople
Salespeople
Salespeople
30
TM 4-5
The Relationship Between a Sales Team and a
Buying Center
Selling firm
Buying firm
Sales Team
Exchange processes
Purchasing agent
Organizational buying center
Salesperson
Marketing Sales Manufacturing RD Engineering Phys
ical distribution
Purchasing Manufacturing RD Engineering Marketing
Information Problem Solving Negotiation Friendsh
ip,trust Product/services Payment Reciprocity
31
TM 4-6

• Uses of Telemarketing
• Identify prospective customers
• Screening, qualifying leads
• Sales solicitation small customers, re-orders
• Order processing
• Product service support
• Account management
• Customer relations

32
TM 5-1
RECRUITING AND SELECTION PROBLEMS

• Lack of resources
• Lack of job specification and qualifications
• Qualifications not objectively established
• Lack of managerial training
• Personal prejudices
• Search for managerial talent

33
TM 5-2
KEY LAWS AND REGULATIONS AFFECTING A SALES FORCE

• Civil Rights Act of 1964
• Federal Contract Compliance, Executive Orders
• Age Discrimination in Employment Act (1967)
• Fair Employment Opportunity Act (1972)
• Rehabilitation Act of 1973
• Vietnam Era Veterans Readjustment Act (1974)
• Uniform Guidelines on Employment Selection
  Procedures (1978)
• Americans with Disabilities Act (1990)

34
TM 5-3 (Fig. 5.2)
Sales Force Staffing Process
Plan for Recruiting Selection
Determine Number of People Wanted
Establish Responsibility for Recruiting,
Selection and Assimilation
Conduct Job Analysis
Prepare Job Description
Determine Hiring Qualifications
Recruit Applicants
Select Applicants
Design a System For Measuring Applicants
Measure Applicants Against Hiring
Qualifications

Make Selection Decisions
Hire The People
Assimilate New People
Into Sales Force
35
TM 5-4
Workload Analysis
Number of reps needed Total workload
in market

Workload one rep can handle
Market workload
Customer Number of Calls
Total
x

class accounts per year
calls
A 400 20
8,000 B 600
10 6,000

14,000

One reps workload
Calls/day x Selling days/week x Working
weeks/year Annual workload 5
x 5 x
50 1250
Number of reps needed
14,000 1250
112 reps
36
TM 5-5 (Fig. 4-3)
Determining the Number of Salespeople
Needed
Strategic Plans
New - Eliminated/ Promotions
Retirements Terminations/ Total new
territories combined

resignations reps needed

territories
Expansion MN and RI 2 promotions 2
retirements 1 termination
into Texas. Territories expected
expected expected
reps needed
Total new
4 - 1 2
2 1
8
37
TM 5-6
CONTENT OF THE JOB DESCRIPTION

• Title
• The nature of the product or service to be sold
  
• Type of customers to be called on,
• frequency of calls, and types of personnel to
  be contacted
• Specific tasks and responsibilities to be
• carried out
• Organizational relationships
• Mental and physical demands of the job
• Environmental pressures and constraints
• that might affect the job

38
TM 5-7
RECRUITING FOR THE TEAM

• Willingness to share
• Cooperative
• Trusting
• Empathetic
• Accepting of others
• Receptive to others ideas
• Selflessness
• Leadership skills

39
TM 5-8
RECRUITING SOURCES OF SALES REPRESENTATIVES
Source Comment Referrals Candidates and
position are known to person making
referral. Within company Office and factory
employees Company employees know the company and
its products. Sales force leads Current
salespeople know their job requirements and can
possibly identify
candidates who could be a good job match. Other
Companies Competitors Competitors know the
customers and are familiar with your products.
Customers Customers know your products and your
company. Suppliers Suppliers know your
company and your products. Educational
institutions Primarily used when recruiting
inexperienced people. Students are usually
actively involved in a job search, and this
provides an efficient place to screen large
numbers of available candidates. Advertisements P
roduces the greatest number of candidates, but
the average quality is sometimes
lower. Employment agencies The agency is often
more costly than other methods, but it will do a
large part of the initial screening. Voluntary
applicants These applicants are interested in
your firm and probably possess a high
degree of self-confidence,
self-reliance, and initiative. Part-time
workers These workers are easy to contact,
readily available, and can work flexible
hours. This is a good source for
in-home selling.
40
TM 5-9 (Fig. 5-8)
Recruiting Evaluation Matrix
Evaluation Criteria
Consistent with strategic planning?
Percent retained after 3 years
Reps per-formance after 2 yrs.
Number recruits
Number hired
Cost
Frequency of use
Recruiting sources
Within company
Sales force Other departments
Other companies
Competitors Customers Noncompetitors
Educational institutions
Advertisements
Employment agencies
Voluntary applicants
Women
Minorities
41
TM 6-1

Salesperson Selection Tools
References and credit reports
Psychological tests
Application blanks
Organizational Design
Personal interviews
Assessment Centers
42
TM 6-2
Application Blank Information
Personal Experience
Physical Environmental Name
Work Ability
to perform Membership in
job-related
social and service Address Phone
Education physical activities
organizations Health
Outside interests Reason for seeking


particular job Personal goals References
43
TM 6-4
Suggestions for Improving Interviewing
Effectiveness

• Have specific job specifications and
  qualifications clearly in mind
• Establish specific interviewing objectives
• Provide some degree of structure (guidelines,
  probing questions)
• Allow adequate time
• Be very familiar with application or resume
  information
• Use standardized rating sheets after each
  interview
• Use multiple interviews
• Provide training and practice for the
  interviewers
• Remember, the interview is an opportunity to
  learn more about the

• candidate as well as to sell your company

44
TM 7-1
Selection and Hiring are Not Synonymous
COMPANY A DISLIKES ANN
ANN DISLIKES COMPANY A
NO OFFER EXTENDED
COMPANY B LIKES ANN
ANN DISLIKES COMPANY B
OFFER EXTENDED, BUT NOT ACCEPTED
ANN LIKES COMPANY C
COMPANY A LIKES ANN
OFFER EXTENDED ACCEPTED
45
Details of the Job
TM 7-2 (Fig. 7-2)
Office practices
Paycheck
Company eating facilities
Expense account
For the new sales representative Details of the
job
46
TM 8-1
Phases of Developing and Conducting Sales Force
Training

• Establish program objectives

• Identify who should be trained

Training assessment

• Identify training needs and specific goals

• How much training is needed?

• Who should do the training?

• When should the training take place?

Program design

• Where should training be done?

• Content of training

• Teaching methods used in training program

Reinforcement

• Determine how training will be reinforced

• What outcomes will be evaluated?

Evaluation

• What measures will be used?

47
Objectives of Sales Training Programs
Increased Sales Productivity
TM 8-2 (Fig. 8-3)
Improved Self-Management
Lower turnover
Sales training program objectives
Improve customer relations
Improve morale
Improved communica-tion
48
Examples of Specific Training Objectives Company
orientation and Understand company goals and
objectives administrative skills Understand
company selling philosophy Understand
organizational structure Understand company
policies and procedures
Improve call reports
Improve call patterns
Improve time
management Knowledge Existing products -
features, benefits, and applications
New products -
features, benefits, and applications Industry
trends Competitive products - features,
benefits, and applications Specific customer
applications and problems Promotional
programs Selling skills Improve pre-call
planning Improve prospecting
methods Improve strategy selection Impr
ove presentation skills Improve
closing techniques Improve understanding of
and handling objectives Improve customer
sensitivity
TM 8-3
49
TM 8-4
Who Should Train Sales People?
Source Advantages Disadvantages Line
executive Greater credibility Lack of
time Clearer expectations Lack of
teaching ability More
thorough evaluation of candidates Staff
trainer Greater time Additional
expense More resources Lack of
authority Better training skills Less
credibility Outside specialist Greater
specialization Additional expense and
expertise Program content is not
specific to companys needs
50
TM 8-5
Training Content and Methods Matrix
Lectures Discussion Demonstra-
Programmed Interactive Audio
On-the-Job Videos Bus. T.V.
Role tion
learning simulation cassettes

Playing
Company knowledge Product knowledge Market/Indus
-try knowledge Selling skills Time Manage-ment

































51
TM 9-1
MOTIVATION IS THE CHOICE OF AN INDIVIDUAL TO
1. Initiate action on a certain task
choice 2. Expend a certain amount of effort on
that task intensity 3. Persist in
expending effort over a period of time
persistence. The amount of effort the sales
person desires to expend on each activity
associated with the job.
52
TM 9-2 (Fig. 9-2)
Motivational Conditions
Does better performance lead to greater rewards?
Are the rewards worth the effort?
Does more effort lead to better performance?
YES
YES
YES
GREATER EFFORT
NO
NO
NO
The same or less effort
53
Maslows Hierarchy of Needs and Possible Sales
Managers Actions
TM 9-3 (Fig. 9-3)
Fulfilled through
Self-actualization needs
Self-development,
challenge.
Managerial actions
Provide/offer advanced
training, assignments to special
projects, more responsibility and
authority.
Esteem needs
Fulfilled through Status, recognition.
Managerial actions Recognize sales rep
achievements
personally and publicly through title changes,
commendation
Social needs
letters, promotions.
Fulfilled through Affiliation, friendship,
acceptance.
Managerial actions Use team selling, hold
social functions, distribute
employee newsletters, hold sales meetings,
mentoring.
Safety needs
Fulfilled through Job security, safety, income
security.
Managerial actions Provide safe work
environment, set mutually agreed-upon
performance standards, communicate job
performance expectations and consequences
of failure to perform.
Physiological needs
Fulfilled through Food, shelter, clothing,
health care.
Managerial actions Provide/offer adequate
income and good benefits package.
54
TM 9-4
Herzbergs Motivation-Hygiene Theory
HYGIENE FACTORS
MOTIVATION FACTORS

• pay
• company policies
• supervision conditions
• work

• recognition
• responsibility
• challenge
• growth opportunities

55
TM 9-5 (Fig. 9-5)
Salespeoples Perceived Reasons for Failure and
Their Motivational Impact
Motivational impact
Perceived reasons Positive
Negative Ability Seek help get
Become frustrated
additional training and
discouraged ask for supervisors
give up
assistance increase effort Effort
Work harder make No change in
behavior more calls work

longer hours Strategy Change
selling No change in
behavior strategy
adapt the presentation Task
difficulty Work harder
Become frustrated change
strategies and discouraged
or seek help
give up Luck No change in
behavior Avoid the situation


56
TM 9-6
CAREER STAGES
EXPLORATION

• Primary concern is finding a suitable
  occupation
• Underdeveloped skills and knowledge
• Many drop out or are terminated
• Low expectancy instrumentality, high valence
  for personal growth

ESTABLISHMENT

• Primary concern is improving skills and
  performance
• Lack of promotion may cause disengagement or
  quitting
• New commitments make pay important
• High expectancy instrumentality, high valence
  for promotion and pay

MAINTENANCE

• Primary concern is maintaining position,
  status, and performance
• Have highest sales volumes and percentage of
  quota and pay
• High valence for recognitions, respect, and pay
• Low valence for promotion

DISENGAGEMENT

• Primary concern is preparing for retirement
  and/or developing outside interest

• Low valence for higher order and lower order
  rewards
• Low instrumentality

57
Sales Contest Design Elements
TM 9-7

• Promote Publicize

Sales Contest Design
Attractive Variety of Prizes
Equally Attainable Goals
58
TM 9-8
CAUSES OF PLATEAUING

• No clear career path
• Not managed adequately
• Bored
• Burned out
• Economic needs met
• Discouraged with company
• Overlooked for promotion
• Lack of ability
• Avoiding risk of management job
• Reluctance to be transferred

59
TM 10-1 (Fig. 10-1)
What a Good Sales Compensation Plan should Do
Efforts Results Rewards
Control
Treat customers properly
Attract and keep good people
Sales representatives
activities
Good sales compensation plan
Motivate the sales person
Economical yet competitive
Flexible and Stable
Security and incentive
Fair
Simple
60
Potential Conflicts in Compensation Plan Design
TM 10-2
Characteristics of Plan
Characteristics of Plan 1 2 3 4
5 6 7 8 9 10 11 12
1. Reward results __ 2. Reward
efforts C __ 3. Provide steady
income C __ __ 4. Provide
incentive __ C C __ 5.
Fair C C C C __ 6.
Flexible __ C C __ __ __
7. Simple C __ __ C C C
__ 8. Economical __ C C __
C __ C __ 9. Competitive __
C C __ __ __ C C __ 10.
Controls and directs C __ __ C
C C __ __ __ __ 11. Consistent
with company objectives C C C C __
__ C __ __ __ __ 12. Stable
C C __ C C C __ C __
C C __ C Potential for conflict
61

• TM 10-3

• Steps in designing a sales compensation plan

Include job elements controllable by sales force
and measurable
Review job description
Identify plans objectives
Decide on indirect monetary compensation
Develop the method of compensation
Establish level of compensation
Pretest and install plan
62
TM 10-4 Fig. 10-4
Building Blocks for a Sales Compensation Plan
Others
Company Car
Pension
Profit Sharing
Moving Expenses
Bonus

Other Business Expenses
Insurance
Drawing Account
Commission
Paid Vacation
Travel
Salary
SECURITY
INCENTIVES
BENEFITS
EXPENSES
63
TM 10-5
Methods of Compensation
Method Advantage Disadvantage
Best Used
Straight salary
Provides security and stability for reps Better
for directing and controlling sales
activities Ensures proper treatment of customers
Direct incentive is easily lost if not
administered properly Represents a fixed
cost Requires supervision to direct, control, and
evaluate
For products that require a lot of presale and/or
post-sale service For building long-term customer
relationships When supervision is available for
new recruits For new territories For missionary
sales
Difficult to direct and supervise sales
people Customers best interests may be
ignored Sales peoples earnings may fluctuate
widely
Straight commission
When a strong incentive is needed to attain
sales For products that require little presale
and/or post-sale service The sale is a one-time
sale Adequate field supervision is not
available Company is in a weak financial
position Company uses part-time or independent
sales people
Provides a strong incentive Sales people have
more freedom Acts as a screening method
Bonus
Added incentive Can be used for specific
activities - flexible
To encourage above-normal performance of specific
activities
Added cost May be seen as inequitable if not
administered properly
64
TM 10-6
Possible Combination Compensation Plans
COMMISSION
BONUS
SALARY
65
Drawing Account Examples
TM 10-7
Non-Guaranteed Plan Month Draw Sales Volume
Commission Earned End-of-Month Payment
to Rep
January 1,800 40,000 4,000
2,200 (4,000 - 1,800 2,200) February
1,800 15,000 1,500 0
(rep owes 300) March 1,800
30,000 3,000 900 (computed as
follows) Commission 3,000
Less draw - 1,800 Less
February debt - 300
Net 900
Guaranteed Plan Month Draw Sales Volume
Commission Earned End-of-Month Payment to
Rep
January 1,800 40,000 4,000
2,200 (4,000 - 1,800
2,200) February 1,800 15,000
1,500 0 (rep
owes 0) March 1,800 30,000
3,000 1,200
(3,000 - 1,800 1,200)
66
TM 10-8
COMPENSATING
CROSS-FUNCTIONAL TEAMS

• Shared reward
• Role-reward congruence
• Team-member input
• Peer evaluations

67
Factors Influencing Sales Force Expenses
TM 11-1
Office supplies
Transportation
Entertainment
Expenses
Gifts
Meals
Communication
Lodging
68
TM 11-2
Characteristics of a Sound Expense Plan

• No net gain or loss
• Equitable treatment
• No curtailment of beneficial activities
• Simple and economical
• Avoidance of disputes
• Company control of expenses and elimination

of padding
69
TM 11-3
Salesperson Expense Options
Method Reimbursement Advantages
Disadvantages Salespeople pay
None Simple, no costs Reps may
not spend Unlimited All legitimate
Flexible and fair, Encourages excessive
their own expenses enough
on customers

payment plan business expenses allows for
territory spending

• differences

Limited Specific amounts Limited and
predictable Inflexible
Possibility for 80/day
- lodging switching expenses
45/day - food
between categories 0.26/mile -
transportation Sales may
resent

• payment plan allowed
  expenses

e.g.

• Flat allowance 700 per week Limited and
  predictable Inflexible
  expenses
  Sales may resent

70
TM 11-4
Factors Influencing Automobile Ownership
Decision Company Owned, Company Leased, or
Salesperson Owned
Maintenance
Special design
Size of sales force
Control
Mileage
Operating
Personal preference
Investment
Administrative problems
71
TM 11-5
Automobile Allowance Plans

Method Example Flat amount 400 /month Fixed
mileage rate .28/mile Graduate mileage
rate .25/mile, first 15,000 miles .15/mile,
second 15,000 miles Combination flat
and 200/month .16/mile mileage
rate
72
TM 11-6
Other Methods of Expense Control

• Training and enforcement
• Credit cards
• Expense bank account
• Change in nature of entertainment
• Telemarketing
• Careful travel planning

73
TM 12-1 (Fig. 12-1)
Leadership Effectiveness
Personal characteristics
Leadership effectiveness
Managerial behaviors
Managerial skills
S I T U A T I O N
74
TM 12-2 (Fig. 12-2)
Leadership Behaviors and Styles
RELATIONSHIP-ORIENTED
TASK-ORIENTED
Planning Problem solving Informing Delegating Clar
ifying Monitoring
Supporting Coaching Mentoring Team
building Representing
Persuading Recognizing
Rewarding Conflict management

75
TM 12-3 (Fig. 12-3)
Basic Leadership Styles
High
low task and
high task and
high relationship
high relationship
Relationship behavior
low task and
high task and
low relationship
low relationship
Low
Low
Task behavior
High
76

• TM 12-4

Charismatic Leadership

• Words and actions which transform the basic
  values, beliefs, and attitudes of employees in
  such a way that they are willing to perform
  beyond the standards levels expected by the
  organization.
• Articulate a vision
• Challenge the status quo
• Provide a role model

77
Reasons for Supervision
TM 12-5
Training
Sales assistance
Improved morale
Reasons for Supervision
Better performance
Enforcement
78
Amount of Supervision Needed

• TM 12-6

High
Optimal
Performance
Under
Over
Low
High
Low
Amount of Supervision
79
(Fig. 13-1)
Factors Shaping Sales Force Morale
Personal characteristics
Corporate Culture
Individual perceptions and beliefs
Satisfaction with The job/individual morale
Effects of morale
Organizational and work climate
SOCIAL INTERACTION
Sales force morale
80
Dimensions of Job Satisfaction
(Fig. 13-2)
Nature of the job
Performance
Pay
Promotions
Company and management
Dimensions of job satisfaction
Recognition and status
Co-workers
Security and benefits
Working conditions
Supervision
81
TM 13-3
Effects of Sales Force Morale
Low Morale High Morale Excessive
turnover Organizational commitment Unsatisfactor
y performance Citizenship behavior Increased
expenses Improved performance Increased
complaint behavior Development of outside
interest Disloyalty Unionization
82
Morale Building Process
TM 13-4
Integrate interests match the person with the
job
Foster open and frequent communica-tion
Develop a strong corporate culture and a
supportive organizational climate
83
Sales Forecasting Methods
TM 14-1
Forecasting Advantages Disadvantages
Best Used
Executive opinion Quick, easy, and
simple Subjective For new
products Lacks analytical rigor Sales force
composite Relatively simple Sales people
are sometimes When reps are of a
overly optimistic high caliber
Usually fairly accurate Sales
people may sandbag When each rep has a
Involves those people who (estimate
low) in order to small number of
are responsible for the results look better
customers Time
consuming Survey of buyers Forecast is
done by those who Time consuming For
new products intentions will
buy the product, so accuracy is
good Cost When there are a
small number of
customers Customer may not be
cooperative Trend projections moving
Objective and inexpensive No consideration for
major For established products average
exponential product or market changes
regression analysis Use smoothing
historical data When market factors
are Require some statistical
predictable analysis For
aggregate company
forecasts Analysis of market factors
Objective Unforeseen changes When
market factors are stable and
predictable Fairly accurate
Fairly simple Test markets Very
accurate Time consuming For new
products which do not require
large Cost investments
84
TM 14-2 (Fig. 14-8)
Sales Forecast Trend Projection Using Least
Squares Method
Time Period Sales (millions) Year
(x) (y)
1996 1 7.2 1997
2 9.6 1998 3
12.8 1999 4 16.3 2000
5 21.9 2001 6
26.0 2002 7 27.9 2003
8 30.0 2004 9
32.1 2005 10 33.3
_ _
N 10 ?x 55 ? y 217.1
x 5.5 y 21.7 (?x)
2 3025 ?xy 1452.7
N ?x y - ?x ?y N(?x2 ) - (?x)2
10(1452.7) - (55)(217.1)
b

• 3.13

10(385) - 3025

a y - bx 21.7 -
3.13(5.5)
4.48 y a bx
4.48 3.13(x)

• Forecasted Sales

Forecast for 2006 (10-yr base)
would be 4.48 3.13(11) 38.9 million
Forecast for 2006 (4-year base) would be
35.4 million (calculation not shown)
85
TM 14-3 (Fig. 14-7)
Projection of Sales Trend by Least Squares Method

40 35 30 25 20 15 10 5
2006 forecast 10-year base
Y

2006 forecast 4-year base

1996 1997 1998 1999 2000
2001 2002 2003 2004 2005
2006
86
Market Factor Forecast Dryever Diapers

• TM 14-4

Next Year Second Year
Projected population, ages 0-18
months 4,850,000 4,800,000 Percentage
using diapers 100
100 Number using diapers 4,850,000 4,800,000
Average daily diapers per child
2.55 2.55 Diapers daily, ages 0-18
months
12,367,500 12,240,000 Projected
population, ages 19-30 months 3,300,000 3,200,
000 Percentage using diapers 80
80 Number using diapers 2,640,000 2,
560,000 Average daily diapers per child
2.19 2.19 Diapers daily,
ages 19-30 months 5,781,600 5,606,400 Projected
population, ages 31-42 months 3,500,000 3,300,
000 Percentage using diapers 40
40 Number using diapers 1,400,000 1
,320,000 Average daily diapers per child
1.10 1.10 Diapers daily,
ages 31-42 months 1,540,000 1,452,000 Total
daily diapers, all ages
19,689,100 19,298,400 Percentage
disposable diapers 95
95 Number disposables daily
18,704,645 18,298,400 Dryever
market share percentage 20
20 Expected daily sales (units)
3,740,929 3,666,696 Wholesal
e price per diaper
0.07 0.07 Annual
sales forecast in dollars
95,580,736
93,684,083
87
Procedure for Designing Sales Territories
TM 15-1 (Fig. 15-1)
Determine Basic Territories
Select a Control Unit
Determine Location and Potential of Customers
Assign Salespeople to Territories
Set Up Territorial Coverage Plans
Evaluate Effectiveness of Design
88
Territory Size and Workload
Factors
TM 15-2
Workload Factor Territory Size
Increase/Decrease
Nature of Job Lots of presale and
post-sale activity Decreases Nature of
product A frequently purchased
product Decreases A limited repeat-sale Increa
ses Market development stage New
market--fewer accounts Increases Established
market--more accounts Decreases Market
coverage Selective coverage Increases Ex
tensive coverage Decreases Competition
Intensive Decreases (unless market is
oversaturated Limited Increases
89
Buildup Method of Territorial Design
TM 15-3 (Fig. 15-3)
Management must determine
Desirable call patterns
Call frequency per account per year
Total calls needed
in each control group
Workload capacity
Total calls possible per rep per year number of
daily calls x days selling
Tentatively set territorial boundary lines by
combining control units until total calls needed
total calls possible
Modify territories as needed
90
Territory Design Build-Up Method Worksheet
TM 15-4
Control Units
Illinois Iowa Kentucky
Customer Call Calls
Calls
Calls
class frequency Accounts per year
Accounts per year Accounts per year
A 2 per month 10
240 7 168 5 120 B
1 per month 30 360
17 204 10 120 C 1 every
2 months 68 408 55
330 27 162 108 1,008
79 702 34 402 Distribution of
one reps calls 1,008
491 or 402 year (1,500) Possible control
combinations 100
70 or 100 Illinois
Iowa Kentucky
Alternative territories 100 Illinois
100 Kentucky 100 Illinois 70
Iowa 6 calls/day x 5 30 calls/week x 50
1,500 calls/year
91
Breakdown Method of Territorial Design
TM 15-5 (Fig. 15-5)
Management must determine
Company sales potential
Sales potential in each control unit
Sales volume expected from each sales person
Tentatively set territorial boundary lines by
combining control units total sales potential
total sales volume expected
Modify territories as needed
92
TM 15-6
Territory Design Break-Down Method Worksheet
Company sales potential 200,000,000
Targeted volume rep 10,000,000 Number of
reps needed Company sales potential
200,000,000 Targeted volume/rep
10,000,000 Territory volume as
Targeted volume/rep 10,000,000
Company sales
potential 200,000,000

20
5


Each territory should comprise 5 of sales
potential or 10,000,000 Combine adjacent control
units until each sales potential of 10,000,000
93
TM 16-1
Functions of Budgeting
Sales budget
Planning of performance
Coordination of performance
Evaluation of performance
94
TM 16-2a
Sales Budget, 1998 Colorado Ski Company
95
Sales Budget, 1998 Colorado Ski Company
TM 16-2b
96
TM 16-3 (Fig. 16-1)
Flow of Information from Sales Budget to Other
Budgets
Sales budget
Sales department expense budgets (advertising,
selling costs, administration)
Administrative expense budgets
Production department budgets
Profit and loss budget
Cash budget
Revenues
Revenues
Expenses
Expenses
97
Purposes of Sales Quotas
TM 16-4 (Fig. 16-2)
Indicate strong/weak spots in selling structure
Evaluate sales contest results
Furnish sales force goals/ incentives
Sales quotas are used ...
Control selling expenses
Control sales force activities
Improve compensation plan effectiveness
Evaluate sales force productivity
98
Examples of Various Quota Bases
TM 16-5
Quota Base Quota Actual
Percent of Quota
Attained Sales volume, product
line A 200,000 200,000
110 Gross margin, product line
B 30,000 25,000
83 Product demonstrations 120
135 117 Orders from new
accounts 15 17
113 Expense quota 50,000
45,000 -10 or
110 Combination of
all the above using
equal weights 106.6
For the expense based quota, the objective is to
come in below quota rather than above, or 10
below quota can be interpreted as attaining 110
of the goal.
99
TM 17-1
Bases for Analyzing Sales Volume and Profit

Total gross margin
Total sales volume
?
?
District sales volume
District gross margin
?
?
?
?
Territory volume
Territory gross margin

By customer group
By product
By customer group
By product
100
TM 18-1 (Fig. 18-5)
Income and Expense Statement, by Sales Region,
Colorado Ski Company, 1998 (000).
Mid- Total Eastern western
Western
Net sales 27,000 9,000 4,500
13,500 Less cost of goods sold 18,900
6,300 3,150 9,450 Gross margin
8,100 2,700 1,350 4,050
Less operating expenses Personal
selling 3,847 1,070 802
1,975 Advertising 1,220 420
220 580 Warehouse/shipping
480 190 125
165 Order processing 240
79 56 105 Administration
513 171 171
171 Total operating expenses
6,300 1,930 1,374
2,996 Net profit (loss) 1,800
770 ( 24) 1,054 Net
profit (loss) as percentage of
sales 6.7 8.6
(0.53) 7.8
101
Income and Expense Statement, by Sales Region,
Colorado Ski Company, 1998 (000), using
contribution-margin approach
TM 18-2
Mid- Total
Eastern western Western

Net sales 27,000 9,000
4,500 13,500 Less cost of goods
sold 18,900 6,300
3,150 9,450 Gross margin
8,100 2,700 1,350
4,050 Less direct operating
expenses Personal selling
3,082 845 595 1,642 Advertising
732 254 127
351 Warehouse/shipping 160 64
42 54 Order
processing 130 43 30
57 Total direct operating
expenses 4,104 1,206
794 2,104 Contribution margin
3,996 1,494 556
1,946 Less indirect operating
expenses Personal selling
765 Advertising
488 Warehouse/shipping
320 Order processing
110 Administration 513
Total indirect expenses 2,196
Net profit