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Chapter 15: Personal Selling

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Sales Is Important!

Weak Revenues = No FirmSales is often the largest marketing expenseSelling mistakes increase costs and lose

revenues1 in 10 workers are in salesSales is the #1 job of AU gradsSalespeople can earn very high incomes

Pay is often a function of risk-return

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Personal Sales works better than Ads

Salespeople get more attention than adsSalespeople can adjust to cultural or

situational factorsSalespeople can ask questionsSalespeople can adjust to customer

questionsSalespeople can take the order - now!Salespeople can act to make sure the

customer is satisfied - fix problems

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Salespeople are marketing managers for their territory

Identify which customers to aim atWhich products to emphasizeWhich customers to call on and work

hardestHow to use promotions/sales support

moneyWhen and how to adjust prices

Good salespeople help the customer buy.

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Critical Selling Skills

Product/marketing knowledgeListeningAsking good questionsAsking for the orderBeing OrganizedBeing able to handle failureKeeping promises and being dependable

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SupportingSupporting

Order-TakingOrder-Taking

Order-GettingOrder-Getting????????????????????????????????????????????????????????????

15-4

Basic Sales Tasks

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Supporting Salespeople

MISSIONARY SALESPEOPLESupporting salespeople who work for

producers—calling on their middlemen and the middlemen's customers

TECHNICAL SPECIALISTSSupporting salespeople who provide

technical assistance to order-oriented salespeople

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Business Telemarketing

Growing fast because of cost per contact ($250 vs $1 - $20 per contact).

Very helpful to identify prospects who are ready to buy

Calls & letters can often handle routine tasks without the cost of a face to face call

Remember, time is a critical resource for salespeople!

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Consumer Telemarketing

Outbound Calling Industry Killed by “Do Not Call” legislation

Only exceptions are for charities & politicians

Inbound calls still very important to many companies

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Limitations of Telemarketing

1] Very difficult to sell complex products2] Very difficult to sell when there are

multiple decision makers3] Very difficult to sell when customer

needs are complexHowever, telemarketing can often cover the

basics and a face to face call can close the deal.

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Effective Telephone Communication

1. Keep mouth clear and voice wet2. Smile!3. Have a long cord so you can use your

normal gestures4. Eliminate distractions. Clear desk.5. Chose effective words. No jargon.6. Confirm any action by reading it back.

Also read back critical information7. Be an active listener

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Some Ways to Set Sales Territories

Geographic areasCustomer typesAccount sizeProduct to be soldAny combination of the above

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Salesforce Turnover

Salesforce Turnover =(# of salespeople who leave the company in

a time period) / (Total Number of Salespeople)

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Salesforce Turnover Example

A company starts the year with 100 salespeople

During the year, 5 are fired, 6 leave the company and 1 dies. Another salesperson has a heart attack and is on medical leave for 90 days.

12 people are hired during the year.What is the salesforce turnover?

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Turnover Answer

5 Fired + 6 Leave + 1 death / 100 =12% turnover

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Salesforce Turnover is Costly

Not covering customersNot covering them well (stretching)Hiring Costs

Most firms underspend on hiring costs or just “make do” with weak people. This is very costly in the long term.

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Very Low Turnover May Indicate

Salesforce is over paidSalesforce is not challenged

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Sales Recruiting

A written job description lays the groundwork—by specifying what tasks the salesperson needs to be able to do

Commonly used selection tools are best when used in combinationmultiple interviews—with several different peoplepersonnel and psychological testsbackground checks

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Training

Initial and ongoing training can help both experienced and inexperienced salespeoplecompany policies and practicesproduct informationselling techniques (and customer

knowledge)

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Sales Compensation

3 Main TypesStraight SalaryStraight CommissionCombination Plan

They differ in: Degree of fixed costsMotivationControl over salesperson activities

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Sales Compensation Example

Company 1, 2 & 3 each have 10 salespeopleCompany 1 pays each salesperson $80,000 in

salary and benefits annuallyCompany 2 pays salespeople a flat 4%

commission on salesCompany 3 pays their salespeople $30,000 in

salary and a 2% commissionWhat is total salesforce compensation for

each company at sales of $10, $20 and $40 million?

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$10 Million in Sales

Company 1 = 10 salespeople x $80,000 each = $800,000

Company 2 = $10 million in sales x .04 = $400,000

Company 3 = 10 salespeople x $30,000 and $10 million in sales x .02 = $500,000

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$20 million in Sales

Company 1 = $800,000Company 2 = $20 million x .04 = $800,000Company 3 = $300,000 + ($20 million

x .02) = $700,000

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$40 million in Sales

Company 1 = $800,000Company 2 = $1,600,000Company 3 = $1,100,000

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Prospecting

Prospecting = following all the leads in the target market to identify potential clients (415)

Salespeople who are effective at prospecting:Follow up on inquiries quickly (when customer

is “Ready to buy”Rapidly Identify: buying center, decision

makers, ability to pay, customer needs