SALES AND DISTRIBUTION MANAGEMENT

Rahul Pratap Singh Kaurav

2

WHAT IS SALES

HUMAN RESOURCE MANAGEMENT? / Sales Force Management

SHRM or SFM refers to activities undertaken to attract, develop, and retain effective sales force personnel within an organization.

FIGURE: ACTIVITIES INVOLVED IN MANAGING A SALES FORCE’S HUMAN RESOURCES

Sales H um an R esource M anag em ent

P eo p le P lann ing E m p lo ym ent P lann ing

H ow M any to H ire?

T yp e o f P eo p le?

R ecruitm ent Selec tio n So cializ atio n

FIGURE: FROM INTERVIEW TO TERRITORY: A LONG TIME

D eterm in e H o w M an y

to H ire

F irst I n terv iew

G raduatio n B egin W o rk

T rain in g E n ds

A ssign ed T errito ry

T im e L in e

Selection

What’s a salesperson worth?

A salesperson’s worth depends on what the salesperson costs to the company and on the profits from the products he or she sells.

WHO DOES THE PLANNING?

• National sales manager.• Field sales managers.• Top management.

FIGURE:

SALES FORCE PEOPLE-FORECAST MODEL:

FACTORS TO CONSIDER WHEN DETERMINING HOW MANY TO HIRE

Sales F orce O b jectives

Strateg ic P lan s

T errito rial D esig n

C urren t Sales F orce P erson nel

+H iring , P ro m otions, T ransfers I n

-

Q uits, T erm inatio ns, P ro m o tions, T ransfers O ut, o r R etirem ent

=P eo p le F o recasts

DETERMINING THE TYPE OF PERSON FOR THE JOB

Job Analysis

Job Description

Skills for the job

FORMAL JOB DESCRIPTION, TRANSTEX AUTOMOTIVE SUPPLY CORPORATION

Position: Sales Representative Reports to: District ManagerNATURE OF JOB

Responsible for developing new accounts and reaching profitable sales goals in assigned territory.

PRINCIPAL RESPONSIBLITIES

Meeting total sales goals for product lines and individual products.

Maintaining an average of six daily sales calls.

Maintaining an average of one monthly product presentation to wholesalers.

DIMENSIONS

Develop strong promotional support from retail and wholesale customers.

Plan effective territorial coverage resulting in high sales/call ratio.

Inform management of activities by submitting daily and weekly call and sales reports to district manager.

SUPERVISION RECEIVED

General and specific tasks are assigned for each sales period. Every two months work with supervisor for a minimum of one day.

SUPERVISION EXERCISED

None

RECRUITMENT’S PURPOSE

Recruitment is the set of activities and processes used to legally obtain a sufficient number of individuals in such a manner that the recruits’ and the sales force’s best interests are taken into consideration.

FIGURE: MAJOR INFLUENCES AND COMPONENTS OF SALES RECRUITMENT

Sales H u m an R eso urce P lann ing

R ecruitm ent

I nternal Sou rces

E x ternal Sou rces

A p p lican t P oo l

Q u alifi ed A p p lican t P oo l

E valuate R ecru itm en t R esults

Selection

To be an effective recruiter, a sales manager must have the answer to several questions, including: • How many people do I need to recruit?• Where do I find recruits?• How can I develop a qualified pool of

applicants?• How can recruiting programs be evaluated?

RECRUITMENT OF SALESPEOPLE

• Current Employees.• Promotions.• Transfers.

SOURCES OF RECRUITS – WHERE ARE THEY

FOUND?

INTERNAL SOURCES

Internal recruitment sources come from inside the company:

EXTERNAL SOURCES

• Walk-ins. • The Internet.

• Employment agencies. • Internships.

• Radio and television. • Colleges and universities.

• Newspaper advertisements. • Competitors.

MOTIVATING

SALESPEOPLE TOWARD

HIGH PERFORMANCE

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?

In any discussion about the motivation of salespeople, the following four questions need to be considered:

Motivation refers to the arousal, intensity, direction, and persistence of effort directed toward job tasks over a period of time.

THE SALES MOTIVATIONAL MIX

Motivational Mix – The arousal, intensity, direction, and persistence of people’s behavior.

Extrinsic Outcomes – Rewards obtained from individuals’ environment.

Intrinsic Outcomes – Occur purely from the performance of the task itself.

TRAINING THE SALES TEAM

WHAT IS SALES TRAINING?

Sales training is the effort an employer puts forth to provide sales people job-related culture, skills, knowledge, and attitudes that should improve performance in the selling environments.

PURPOSES OF SALES TRAINING

• Helping salespeople become managers.

• Orienting new salespeople to the job.

• Improving knowledge in areas such as product, company, competitors, or selling skills.

• Positively influencing attitudes in such areas as job satisfaction.

FIGURE: REVISION OF TRAINING PROGRAM BASED ON NEEDS ASSESSMENT

Jo b D escrip tio n

Jo b O b jectives

Jo b E valuatio n

T rain ing R evision

T rain ing O b jectives

T rain ing P rog ram

T rain ing E valuatio n

SOURCES OF INFORMATION FOR

DETERMINING TRAINING NEEDS

• Questionnaires.• Interviews.• Tests given during meetings for diagnostic purposes.• Direct observation in the field.• Analyses of sales, profits, and activity reports.

24METHODS OF TRAINING

TECHNOLOGY-BASED TRAINING METHODS

• Interactive multimedia training.

• Electronic performance support system.

• High-tech customer service.

• Distance learning.

• CBT

ROLE PLAYING

In role playing the trainee acts out an event such as the sale of a good or service to a hypothetical buyer.

ON-THE-JOB TRAINING

The best and most frequently used training takes place on the job.

• Training begins the first day of work.

• It continues throughout the career.

• Sales meetings serve as important training methods.

WHEN DOES TRAINING OCCUR?

29 COMPENSATION

Sales is one of the few jobs where you earn your money – every day.

Any type of sales organization can reward sales performance in three fundamental and interrelated ways:

1. Direct financial rewards.

2. Career advancement and personal development opportunities.

3. Nonfinancial compensation.

COMPENSATION IS MORE

THAN MONEY…

A sales reward system is not the only means of motivating salespeople, but it is the most important.

PURPOSES OF COMPENSATION

• Connect individual with organization.

• Influence work behavior.

• Organizational choice.

• Influence satisfaction.

• Reinforcement.

EFFECTS OF PAY DISSATISFACTION

P a y D issa tisfa ction

D esire for M ore P a y

J ob

Absenteeism

Grievances

Job Dissatisfaction

Turnover

Performance

S tress, A n x iety

P oor M en ta l H ea lth

P sych ologica l W ith dra wa l

35

COMPENSATION AND STRATEGIC PLANNING To get salespeople to aid in successfully implementing the company’s strategic marketing plan,

management needs to coordinate its sales compensation plans with the company’s goals.

36

OBJECTIVES OF COMPENSATION PLAN

i) The Company’s Perspective: To Motivate Salespeople To Correlate Efforts and Results with Rewards To Control Salespeople’s Activities To Attract and Keep Competent Salespeople

ii) The Salespeople’s Perspective A Secure Income and an Incentive Income Fairness: A good compensation plan must treat all salespeople fairly.

STRAIGHT SALARY

TYPES OF COMPENSATION

PLANS

Of all the compensation plans, the straight salary plan is the simplest: The salesperson is paid a specific amount (`) at regular intervals.

PROFILE OF A STRAIGHT SALARY COMPANY

• Dominant market share in mature, stable industry

• Highly defined and stable customer base

• Strongly centralized and closely managed selling effort

• Highly team-oriented sales effort

• Service versus selling emphasis

STRAIGHT COMMISSION PLANS

Two basic types of commission plans exist:

1. Straight commission.

2. Draw against commission.

The straight commission plan is a complete incentive plan. If salespeople do not sell anything, they do not earn anything.

Drawing Accounts

Drawing accounts combine the incentive of a commission plan with the security of a fixed income.

Situations where commission plans can be used:

• Little non-selling, missionary work involved.

• The company cannot afford to pay a salary and wants selling costs to be directly related to sales.

• The company uses independent contractors and part-timers.

PROFILE OF A COMMISSION PLAN COMPANY

• Low barriers to entry into the job

• Limited corporate cash resources

• Small entrant into an emerging market or market segment

• High risk reward sales force culture

• Undefined market opportunity or customer base

• Inability to set quotas or other performance criteria

• Volume-oriented business strategy

• Salary and commission

• Salary and bonus: individual or group bonus

• Salary, commission, and bonus: individual or group bonus

Numerous types of combination salary plans exist. The more popular plans are:

• Established company with growth potential, many products, and active competition

• Need for a variable pay component that will ensure top performers are rewarded commensurately

PROFILE OF A COMBINATION-PAY PLAN COMPANY

1. To motivate the sales force.

2. To attract and hold good people.

3. To direct the sales force efforts in a profitable direction.

When to Use a Combination Salary Plan

SALES FORCE EXPENSES

Expense plans have the same basic objectives as a compensation system, that is, to motivate the salesperson’s behavior in terms of membership, performance, and attendance.

• The company pays all expenses.

• The salesperson pays all expenses.

• The company partially pays expenses.

Types of Expense Plans:

FACTORS TO CONSIDER WHEN

DEVELOPING A NEW PLAN

1. Companies with a sales force on a straight salary may find it highly advantageous to move to a salary-plus-incentive plan.

2. Companies with a sales force on straight commission may sometimes adopt a salary-plus-incentive plan to gain more control over the sales force.

SALES CONTESTS

Sales contests are short-term incentive programs implemented to motivate salespersons to achieve specific goals or activities

A sales contest is a special selling campaign offering incentives in the form of prizes or awards beyond those in the compensation plan.

SALES CONTEST ELEMENTSContest Objectives

To obtain new customers.To secure larger order per call.To overcome seasonal sales slump.To sale more profitable mix of products.To promote seasonal merchandise.

ThemeContests receive a theme to create excitement

Chance of winningCompete against self, others, or as a team? In U.S. salesperson has about a 40% chance of winning

and, in India it 20-30% only.

TYPES OF REWARDSSales contests can offer many types of reward in the form of: Cash, prizes, or travel Perceived value very important as it must be of sufficient value to motivate additional effort

Promotion of contest is more important Launched as a special event with handouts Large scorecards to communicate progress Newsletter articles or interim prizes can keep motivation up

EVALUATION & ANALYSIS OF

SALESPEOPLE’S

PERFORMANCE

EVALUATION & ANALYSIS OF

SALESPEOPLE’S

PERFORMANCE

Numerous specific reasons for performance appraisals exist:

• Compensation• Development• Feedback• Goals• Legal compliance• Motivation

• Penalties• Personnel• Planning• Promotion• Training

FIGURE: THE SALESPERSON PERFORMANCE APPRAISAL SYSTEM WITH ITS NUMEROUS PARTS, PROCESSES, AND PROCEDURES

Jo b A naly sis D im ensio ns

Jo b D escrip tio n

Jo b Sp ecifi catio ns

Jo b R eq uirem en ts

P erfo rm ance C riteria

Im p lem en tin g

P lannin g

E valuating

Purpose of

Performance

Evaluation

Evaluative

• Compensation

• Legal

• Penalties

• Personnel

• Promotion

Developmental

• Development

• Feedback

• Goals

• Motivation

• Planning

• Training

WHO SHOULD EVALUATE

SALESPEOPLE?The primary evaluator should be the salesperson’s immediate supervisor because this person has direct knowledge, having actually worked with the salesperson.

WHEN SHOULD SALESPEOPLE BE

EVALUATED?

Salespeople should be evaluated at the end of each performance cycle.

A performance cycle is a period related to specific product goals or job activities.

Quantitative Performance Criteria

1. Sales volumea. Percentage of increaseb. Market sharec. Quotas obtained

2. Average sales calls per day3. New customers obtained4. Gross profit by product, customer,

and order size5. Ratio of selling costs to sales

6. Sales ordersa. Daily number of orders

1) Total2) By size, customer

classification, and productb. Order to sales-call ratioc. Goods returned

Qualitative Performance Criteria1. Sales Skills

a. Finding selling pointsb. Product knowledgec. Listening skillsd. Obtaining participatione. Overcoming objectionsf. Closing the sale

2. Territorial managementa. Planningb. Utilizationc. Recordsd. Customer servicee. Collectionsf. Follow-up

3. Personal traitsa. Attitudeb. Empathyc. Human relationsd. Team spirite. Appearancef. Motivationg. Care of carh. Self-improvement

• Graphic appraisal scales

• Descriptive statements

• Management by objectives

• Behaviorally anchored rating scales

• 360 degree feedback

PERFORMANCE EVALUATION FORMS

FOR GATHERING INFORMATION