Sales ManagementSales Management

• Personal selling oftentimes is a key marketing variable.Personal selling oftentimes is a key marketing variable.

• Quality of the salesforce can determine the success of Quality of the salesforce can determine the success of the company.the company.

• Sales and distribution and advertising tactics should be Sales and distribution and advertising tactics should be complementary and synergistic.complementary and synergistic.

• Cost of one salespersonCost of one salesperson Varies from moderate to expensive.Varies from moderate to expensive.

Salary, travel expenses, office expenses, sales support, Salary, travel expenses, office expenses, sales support, benefits, etc.benefits, etc.

Total cost per salesperson = $250,000 or more.Total cost per salesperson = $250,000 or more.

• Cost of making a sales callCost of making a sales call Cost of one sales contactCost of one sales contact

based on 5 calls per day, 200 days per yearbased on 5 calls per day, 200 days per year

total of 1000 sales calls per yeartotal of 1000 sales calls per year

= $250 per sales call= $250 per sales call

but cost is actually much more in many situations!!!but cost is actually much more in many situations!!!

• Plus management, training costsPlus management, training costs V.P. of sales, district managersV.P. of sales, district managers

recruiting, hiring, and trainingrecruiting, hiring, and training

turnover = 20% or moreturnover = 20% or more

support staff and servicessupport staff and services

materials: catalogs, brochures, swatchesmaterials: catalogs, brochures, swatches

All in all, maintaining a salesforce is a capital and human All in all, maintaining a salesforce is a capital and human resource intensive investment!resource intensive investment!

• # of Salespeople Needed: Objective and Task Method# of Salespeople Needed: Objective and Task Method Who is to be called on?Who is to be called on?

How many of these customers are there?How many of these customers are there?

How many times do you need to call on each customer?How many times do you need to call on each customer?

How long is the typical sales call?How long is the typical sales call?

• Example: How many salespeople are needed?Example: How many salespeople are needed? assume 5000 customersassume 5000 customers

call on each customer once per month (12 times per year) call on each customer once per month (12 times per year)

assume that each salesperson can make 5 calls per dayassume that each salesperson can make 5 calls per day

200 “selling” days per year200 “selling” days per year

• Solution:Solution: 5000 x 12 = 60,000 total calls per year to be made5000 x 12 = 60,000 total calls per year to be made

each salesperson can make 1000 sales calls per yeareach salesperson can make 1000 sales calls per year

• 5 calls per day x 200 days per year 5 calls per day x 200 days per year

60,000/1000 = 60 salespeople needed60,000/1000 = 60 salespeople needed

• Compensation Issues: Salary vs. CommissionCompensation Issues: Salary vs. Commission SalarySalary

• Provides securityProvides security

• Compensates for non-selling tasksCompensates for non-selling tasks

• High level of control for sales managerHigh level of control for sales manager

• But, motivation? (or lack thereof)But, motivation? (or lack thereof)

• CommissionCommission

The great motivator (the more you sell, the more you earn)The great motivator (the more you sell, the more you earn)

Compensation linked to performanceCompensation linked to performance

Performance Performance Properly Rewarded Properly Rewarded Motivation Motivation

But some tasks are non-selling (customer service, attending But some tasks are non-selling (customer service, attending tradeshows, training new hires)tradeshows, training new hires)

If economy If economy then compensation also then compensation also

• Satisfaction, Motivation, Performance, and RewardsSatisfaction, Motivation, Performance, and Rewards Does satisfaction Does satisfaction performance ??? performance ???

Or does performance Or does performance satisfaction?? satisfaction??

What role does rewards play?What role does rewards play?

• Cherington, Reitz, & Scott studyCherington, Reitz, & Scott study

Experiment: 2 sessionsExperiment: 2 sessions

Hi performers vis-à-vis low performersHi performers vis-à-vis low performers

Additional rewards: bonus after first session.Additional rewards: bonus after first session.

Looked at performance after second session. Did the most Looked at performance after second session. Did the most satisfied workers perform best during second session? NO!satisfied workers perform best during second session? NO!

• Satisfaction, Motivation, Performance, Rewards.Satisfaction, Motivation, Performance, Rewards.

Performance Performance Properly Rewarded Properly Rewarded Motivation and Satisfaction. Motivation and Satisfaction.

Ability & Motivation + Training & Sales Management Ability & Motivation + Training & Sales Management Performance. Performance.