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Sales Management Sales Force Management Subhas C BaralRole & Responsibilities of Sales ManagerDetermining sales force objectives and goalsFinalizing sales organization, territory and targetsSales forecastingSelecting, recruiting, inducting ,and training of the sales forceLeading and motivating the sales teamDesigning compensation package Controlling and coachingPerformance management and career enhancement

Subhas C BaralUnderstand the Sales Management ProcessThree step process:Formulation of strategic sales management programPlanning and goal setting at all levelsFormulating and cascading strategy to achieve those goalsImplementation of sales management programDesigning policy and process Arranging manpower and Enabling and motivating them to contribute higher level of performanceEvaluation and performance management Monitoring and evaluating individual & group performance Deploy tools and techniques for higher level of performance

Subhas C BaralSales Force ManagementAnalysis, planning, implementation, and control of sales force activities Setting and designing sales force strategy; and recruiting, selecting, training, supervising, compensating, and evaluating the firms salespeopleSubhas C BaralSales Force Management Process

Understand the salesman..they make more noise and more mistakes, create more cheer, correct more errors, adjust more differences, spread more gossip, hear more grievances, pacify more belligerence (aggression) and waste more time under pressure, all without loosing their temper, than any other class of professionals including politicians.Subhas C BaralThe salesmanthey live in hotels, cabs and tents on trains, buses, eat all kinds of food, drink all kinds of liquids good and bad- sleep before, during and after business, with no sympathy from the office.They draw and spend more money with less effort, they come at the most inopportune(Unfortunate) time, under the slightest pretext (excuse), ask more personal questions.Yet they are a power in society Subhas C BaralThe SalesmanWith all their faults, they keep the wheels of commerce turning, and the currents of human emotions running. More cannot be said any man. Be careful whom you call a salesman, lest you flatter him.Donald Benenson Subhas C BaralTraits of a Sales PersonDiscuss in a group: List key traits that you look into a candidate while recruiting/selecting for a sales & distribution job?Subhas C Baral

Traits of Successful Sales People EnthusiasmPatienceJob CommitmentCustomer OrientationIndependentSelf-Motivated/Self DrivenExcellent ListenersTirelessDetermined/Confident AttentiveHonestPleasant/Calm

Relationship OrientedDisciplinedHardworkingTeam PlayersSales person is the front face of the organizationSubhas C BaralPersonality TestsBig Five (may be more relevant)Extroversion (talkative, sociable, active, aggressive, excitable)Agreeableness (trusting, generous, tolerant, honest, flexible, cooperative)Conscientiousness (dependable, organized, determined)Emotional stability ( secure, calm, independent, autonomous)Openness to experience (intellectual, creative, curious, insightful)

Subhas C BaralSales Person Recruitment/SelectionKey to success:Company imagePerformance and Work environmentPerson-Job fitJob requirement CultureValue Ethics

Subhas C BaralImportance of Recruitment/Selection of Sales PersonInadequate implementationInadequate sales coverage and lack of customer follow-upIncreased training costs to overcome deficienciesMore supervisory problemsHigher turnover ratesDifficulty in establishing enduring relationships with customersSuboptimal total sales force performanceSubhas C Baral132Recruitment and Selection ProcessJob AnalysisJob QualificationsJob DescriptionRecruitment & Selection Objectives Recruitment & Selection StrategyInternal SourcesExternal SourcesScreening Resumes and ApplicationsInitial InterviewIntensive InterviewTestingAssessment CentersBackground Invest.Physical ExamSelection Decision and Job OfferPlanning for Recruitment & SelectionStep 1Recruitment: Locating Prospective CandidatesStep 2Selection: Evaluation and HiringStep 3Subhas C Baral143Locating Prospective CandidatesInternal SourcesInternshipsPromotionsLateral/Cross Transfers

External Sources AdvertisementsPrivate Employment AgenciesColleges And UniversitiesJob FairsProfessional SocietiesComputer Rosters/Social MediaSubhas C Baral157Selection: Evaluation and HiringScreening Resumes and ApplicationsInterviewsTestingAssessment CentersBackground InvestigationPhysical ExaminationSelection Decision and Job OfferSubhas C Baral168Screening Resumes and ApplicationsEvidence of job qualificationsWork historySalary historyAccomplishmentsResponsibilitiesAppearance and completenessSubhas C BaralTesting: Value and TypesValuesAssists with initial screeningIndicates compatibility with job responsibilitiesIndicates compatibility with organizations culture and personnelTypesPersonalityIntelligencePsychologicalEthical FrameworkSubhas C BaralSales Person SocializationA formal process of orienting the newly selected sales person to the sales organization, function, work station and the jobThe process helps salespeople to acquire/test the knowledge, skills, and values essential to perform their job.AchievingRealism/Practicality Achieving CongruenceImportant during recruitment and selectionSubhas C Baral19Sales Person Socialization Objectives:Make aware of and minimize the possible misunderstanding of the value, culture, work environment and deliverablesAssist to be a valuable member of the organizationBuild up confidence

Three step modelAnticipatory stage --> Encounter stage --> Setting in ( Blocking stage)( come across)

Minimize the gap and let him/her set into the organization system to deliver assigned goals.

Subhas C BaralSocializing Sales Person Pre-arrivalExpectationsAttitudesPerceptionsEncounterIf similar, reaffirmationIf not, socialization to detach from pastTotal disillusionment - resignation

Metamorphosis / TransformationOutcomesProductivityCommitmentTurnoverDiscuss with examples Subhas C BaralSales Force TrainingObjective New sales persons need guidance and technical trainings to perform their assigned sales role efficiently Sales training programs are aimed to improve performance of salespeople there by eliminating deficiencies Further it builds capacity for future markets and carrier enhancement of individuals.A motivational tool

Subhas C BaralTraining ProcessTraining need assessment (the gaps)Organizational level (culture, stricture, objectives, etc.)Task level (task specific, knowledge and skill requirements) and Individual level need (assessment post performance appraisal/self appraisal) Design and conduct of a training programType of training technical, behavioral, cross functional, team building, process trainings, off the job or on the job, contentTraining materials, locations, the trainer, mix of participantsTraining methods delivery options, equipment, participation requirement such as role play, workshop, group discussion, exercise, visual aid, case studies etc.Evaluation of a training programAssessing effectiveness of the training program monetary/non monetary basis , Vs. set objectives.Immediate feedback and short term/long-term resultsEvaluation of methods, materials etc.

Subhas C BaralSales force motivationthe desire to make an effort to fulfill a need is motivationMotivation includes three dimensions: Direction, Intensity and persistence (Determination)Performance = Ability x MotivationSubhas C BaralImportance of Sales Force MotivationDrive to initiate an action.The intensity of effort in an actionThe persistence/determination of effort overSubhas C BaralWhy Motivation?Frequent rejectionPhysical separation from company supportDirect influence on quality of sales presentationIndirect influence on performance

Subhas C BaralThe process of motivationMotive (that prompts sales people to action security, achievements, leadership, loyalty, carrier enhancement)Leads to display certain behavior/activities and

Motivated sales person achieves the goal with lesser tension as if its a process that is automated Motive Behavior GoalTension ReductionSubhas C BaralMaslows Theory for Discussion SelfActualization Esteem needs Social needsSafety needsPhysiological needsFood, clothing, shelter, health careSubhas C BaralMotivation MOTIVATION: Something that energizes, direct, and sustains behaviors.

Subhas C BaralFrederick Herzberg theoryTwo factor theory of motivationHygiene ,maintenance, or job context factors.( dis satisfiers )Achievement, challenge, advancement, growth in the job. (satisfiers )

Examples?Subhas C Baral

Theory Of MotivationEquity TheorySales people tend to evaluate what they get from the organization and what they contribute to the organizationGet and give ratioThe sales persons are motivated to the extent that they feel that they are being treated fairly and equitably by the organization

Expectancy Theory The motivation is an outcome of three factors:Valance how much one wants the reward,Expectancy ones estimated probability that the effort will result into successful performance and Instrumentality ones estimate that performance will result into receiving the reward Motivation not equal to satisfaction or performanceMotivation, a result of perceived positive relationships between effort and performance, and between performance and outcomes

Subhas C BaralSources of MotivesExtrinsic motives (tangible, provided by others, contingent) (Factors external to the individual and unrelated to the Task they are performing. Examples include money, good grades, and other Rewards.)

Intrinsic motives (intangible, self-generated, internal to the job)-(Internal desires to perform a particular task, people do Certain activities because it gives them pleasure, develops a particular skill, or ts morally the right thing to do)

Example : -Intrinsically motivated students are bound to do much better in classroom activities, because they are willing and eager to learn new material. Their learning experience is more meaningful, and they go deeper into the subject to fully understand it. On the other hand, extrinsically motivated students may have to be bribed to perform the same tasks.

Subhas C BaralSelecting Mix of Motivational ToolsSales Manager should understand each sales person and understand her/her individual specific interest and needAnalysis to be done of the individual requirement, customer angle and organization's objective/position.Mix of monitory and non monitory tools:Salary, allowances, commission, incentives, bonus, other direct financial benefits etc.Designation, supervisory role, interesting job, sense of accomplishments, promotion, recognition, training programs, job security, carrier opportunity etc.

Subhas C BaralSales Managers ImplicationsImportance of meeting sales forces needsIdentification of diverse needs and their importance to individualsArrangement for meeting critical needs off all through differentiated motivational packagesChange in traditional management approaches and stylesSharing of responsibility and empowerment of employeesRecognition of achievement

Subhas C Baral34Sales Force Reward and Compensation Subhas C BaralEffective Compensation and RewardsIndividualized to reflect differences in what employees consider important cafeteria compensation (expectancy theory)-The theory states that the intensity of a tendency to perform in a particular manner is dependent on the intensity of an expectation that the performance will be followed by a definite outcome and on the appeal of the outcome to the individual. The Expectancy theory states that employees motivation is an outcome of how much an individual wants a reward (Valence), the assessment that the likelihood /chances that the effort will lead to expected performance (Expectancy) and the belief that the performance will lead to reward (Instrumentality). Perceived as equitable (equity theory)- an individuals motivation level is correlated to his perception of equity, fairness and justice practiced by the management. Higher is individuals perception of fairness, greater is the motivation level and vice versa. While evaluating fairness, employee compares the job input (in terms of contribution) to outcome (in terms of compensation) and also compares the same with that of another peer of equal cadre/category. D/I ratio (output-input ratio) is used to make such a comparison.Visible to be publicly perceivedFlexible to adjust as needed Low cost for administrationSubhas C BaralCriteria for Compensation and RewardsPerformanceEffortSenioritySkills heldJob difficultyDiscretionary/Flexible time

Subhas C BaralCompensationExternal and quantifiable rewardsComponentsBase compensation or pay received on a regular basisPay incentives for good performanceBenefits or services arising out of membership statusA major cost element (up to 80 percent of personnel cost)Needs to be aligned with desired strategic behaviors

Subhas C BaralCompensation Design CriteriaInternal versus external equity perceived fair payFixed versus variable payPerformance versus membership pay (insurance agent)Job versus individual payPay leader versus followerOpen vs. closed pay

Subhas C BaralWhy Compensation Plans Can Fail?Poor perceived link between performance and payToo low level of performance-based pay relative to base payLack of objective, countable results for most jobsFaulty performance appraisal systemSubhas C BaralSteps in Designing Compensation PlanDetermine organizational sales force compensation objectiveGo through the compensation issues internal and externalDesign and implement the long-term and short-term compensation plan Measurement of performance linkages over the period of timeEvaluate the reward and compensation plan

Subhas C BaralControlling and Evaluating Sales Force Subhas C BaralControlling Sales ForceA process of Setting performance standards, recording and evaluating each sales persons performance, and developing & taking actions for higher performance.Achieve organizational goalsMove with market trendsIndividuals growth and motivationTeam building Controlling costs

Without evaluation it is difficult to know what has worked, what has not, and WHY?The purpose of evaluation is to improve salesperson and firm performance

Subhas C BaralDefine Work BehaviourJob description statement Job descriptions are written statements that describe the: duties,responsibilities,most important contributions and outcomes needed from a position,required qualifications of candidates, andreporting relationship and coworkers of a particular job.Performance standards Performance measures or indicatorsPerson/job specificationsA job specification describes the knowledge, skills, education, experience, and abilities you believe are essential to performing a particular job. The job specification is developed from the job analysis. Ideally, also developed from a detailed job description, the job specification describes the person you want to hire for a particular job.A job specification cuts to the quick with your requirements whereas the job description defines the duties and requirements of an employees job in detail. The job specification provides detailed characteristics, knowledge, education, skills, and experience needed to perform the job, with an overview of the specific job requirements.

Subhas C BaralWork Behaviour ExamplesPerformance or productivity sales, cost control, profitability, market share, visibility etc.Job satisfaction - Commitment self control and committed to the assigned sales jobOrganisation citizenship put more efforts that the jobChange works as a change agent at the market placeLoyalty reflected to dedicationAbsenteeism - lowTurnover - lessStress carry a reasonable stress but comfortable

Subhas C BaralEvaluation GuidanceEvaluation allows management to identify substandard performance and take corrective actionAdjust training, compensation, or strategyAssessing personnel in global markets is more complexGlobal evaluations may include technical ability, cultural empathy, adaptability, flexibility, diplomacy, and language abilityCultural skills may be more relevant in global marketsSubhas C BaralEvaluating Sales Force PerformanceSales Managers can evaluate overall sales performance by analyzing sales, cost, and profit dataNo one measure of effectiveness bestMultiple measures are employedThree most common methods are:Sales, Cost, and Profit analysesSubhas C BaralSales AnalysisGathering, sorting, assessing, and making decisions based upon sales dataMust organize data to show market and salesperson deviationsExamine how markets are performing in comparison to one anotherSales force goal is to increase customer demand and reach sales goalsMust define sold and compare in local currency or units soldSubhas C BaralCost AnalysisCompares cost to sales generatedExamine the variance between actual and budgeted expensesAreas where actual costs vary significantly from budgeted should be set aside for further analysisFirms can use to set pricing levels, budgets and commission ratesSales and Cost analysis used most frequentlySubhas C BaralProfit AnalysisWhen sales and costs are combined profitability can be determinedManagers can identify unprofitable territory, unprofitable products, and year-end bonusesProfitability easier to compute with information technology advancementsSubhas C BaralOutcome MeasuresActivities lead to outcomes, such as:Sales revenue generatedProfitsSales per accountSales revenue as a percentage of potentialNumber of ordersNumber of new customersSales to new customersOutcomes higher when time and quality devoted to input activitiesSupported by a study in Singapore

Subhas C BaralProfitability MeasuresFirms now look at profitability measuresNet profit as a percentage of salesNet profit contributionNet profit dollarsReturn on investmentGross marginSalesperson can impact profitability bySpecific products sold and final price negotiatedSubhas C BaralQualitative MeasuresJudgment by the salespersons supervisorTo what the salespersons knowledge and performance compare with an ideal personTo minimize bias, sales managers should follow a systematic assessment processSubhas C BaralPerformance AppraisalA crucial part of evaluation process:Criteria setting for performance measurementPeriodic evaluation of performances- individual and groupRewards and compensation linkagesPerformance management action plan

Subhas C BaralSales Performance Measures - SummaryMeasurement criteriaQuantity (how much/ many of sales achieved in terms of value, volume, geography, brand level performances, has sales quota achieved?)Time (how soon/ by when it was achieved?)Cost (with what resources, has there any cost saving initiatives deployed?)Quality (how well?, example setting, standard of performance)Is the territory managed as expected?

Satisfaction or approval rate (by the supervisor, market, subordinates)Need for supervision (degree of supervision requirement, maturity)Alignment with companys value, culture, leadership etc. the softer side of the performances

Subhas C BaralWho Does the Appraising?RatingCommitteePeersYouSubordinatesYourBoss

Subhas C BaralEffective Appraisal System for Sales forceUse behavior/ outcome based measuresMonitor and documents performance recordsProvide on-going feedbackAvoid perceptual errorsHave both interactive (interview) and written (form) structureHave multiple ratersInvolve the employee in the appraisal processTrain appraisers

Subhas C BaralBias in AppraisalsManagers must minimize bias that creep into evaluation effortsSet standards whenever possibleBased upon behavior or resultsEvaluate from a point of neutralityInformal evaluationsOften subjective in natureResults in differing amounts and quality of informationSubhas C BaralEvaluation and ActionOnce evaluation takes place, it is time for action:Personal developmentReallocation of effortModifying the performance settingChanges may be needed in sales procedures or methodsNew products, selling strategies or credit policies changedMust submit detailed study to upper managementSubhas C BaralSales Force Requirement Decision

Subhas C BaralInterrelatedness ofSales Force Deployment DecisionsHow much selling effort is needed to cover accounts and prospects adequately so that sales and profit objectives will be achieved?How many salespeople are required to provide the desired amount of selling effort? How should territories be designed and salespeople assigned to territories to ensure proper coverage of accounts and to provide each salesperson with a reasonable opportunity for success?Allocation ofSelling EffortSales ForceSizeTerritoryDesignSubhas C Baral614Sales force Size Decision ..Decision on the size of the sales force is complicated because structure of the customers vary in each territory, the level of competition varies across territories, the connectivity for travel varies etc.There are 3 generally accepted approaches: AffordabilityIncremental and Workload methodsSubhas C BaralSingle Factor Model - ExampleMarket PotentialCategories

ABCDAverage Sales Call toan Account LY

25232016Average Sales Calls toan Account NY

3224168Subhas C Baral636Single Factor ModelsEasy to develop and use/low analytical consistency

Accounts classified into categories based on one factor, such as market potential

All accounts in the same category are assigned the same number of sales calls

Effort allocation decisions are based on the analysis of only one factor and differences among accounts in the same category are not considered in assigning sales call coverage: Example: sales volume or population or nos. of markets/outlets in the area and so onSubhas C Baral645Portfolio ModelsAccount Opportunity - an accounts need for and ability to purchase the firms products

Competitive Position - the strength of the relationship between the firm and an account

Product PortfolioSubhas C Baral656Portfolio Model Segments and StrategiesCompetitive PositionSegment 1Segment 2Segment 4Segment 3StrongWeakLowHighAccount OpportunityHigher nos. of strength should deploy for Segment 1 of market.Subhas C Baral666Decision ModelsSimple Basic Concept - to allocate sales calls to accounts that promise the highest sales return from the sales callsOptimal number of calls in terms of sales or profit maximizationSales Productivity - the ratio of sales generated to selling effort usedSales force Turnover - Is very costly, Should be anticipated

Sales force size = Forecasted sales / Average sales per personSubhas C Baral676Sales Force Size: Analytical ToolsThe Incremental Approach- is the most rigorous for calculating sales force size. Its compares the marginal profits and marginal costs associated with each incremental salesperson. The major advantage is that it quantifies the important relationships between sales force size, sales, and costs. Difficult to develop, and it cannot be used for new sales forces where historical data and accurate judgments are not possible.# of SalespeopleMarginal ContributionMarginal Cost100101102103$70,000$75,000$80,000$85,000$75,000$75,000$75,000$75,000Subhas C Baral6816Sales TerritoriesA sales territory consists of existing and potential customers assigned to a sales person. The territory may or may not have geographic boundaries. Subhas C BaralDesigning TerritoriesTerritories consist of whatever specific accounts are assigned to a specific salesperson. The territory can be viewed as the work unit for a salesperson.

Territory ConsiderationsMarkets/geographical coveragePresent effortRecommended effort (objective based)Coverage capacity

Subhas C Baral7019Reasons for territoriesIncrease / improve customer coverageControl selling expensesEffective evaluation of salesmans performance. improve customer relationsSubhas C BaralTerritory Design Implementation Process Main procedural steps:Selection of a basic geographical control unitDetermination of sales potential present in each unitCombining the basic units into tentative territoriesAdjust for differences in coverage difficulty and readjust the tentative territoriesEvaluate the territory as a business unit Subhas C BaralIndividual Assignment 2 While selecting salespersons for their range of household electronics, company decided to adopt the policy of hiring only similar category experienced salesmen (not women). Evaluate the advantages and disadvantages of this policy and propose the appropriate recruitment approach for this company to recruit sales force.Last date for submission : 15th August, 2014 ( Submit the hard copy)

Subhas C BaralSMQExplain the criteria for sales force deployment decision. Which one is more appropriate for manufacturing & marketing of consumer electronics company? (one page) 4 unique/key traits of sales person, explain how important these as compare to the other line function staffs such as finance person.Suggest a mix of motivational tool that is likely to be more effective for a banking product sales force. Explain why perhaps the expectancy theory of motivation may be more relevant to the sales force motivation.Understanding and addressing individual need of the sales person plays key to motivation. explain why it is more important as compare to other function.Explain the territory design considerations. Suggest an appropriate method of sales force sizing/deployment decision criteria for a telecom service providing company in Nepal.

Subhas C Baral