Sales

Chapter 1:
Introduction to Sales Management
2
Learning Objectives
When you finish this chapter, you should

be able to:
1. Summarize the basic responsibilities and evolving
roles of sales management.
2. Describe how sales managers can better integrate
their roles with marketing management.
3. Identify and prepare for megatrends that will
affect your future in sales management
4. Evaluate the selection criteria for sales force
management and compare them with your present
and potential qualifications.
5. Analyze how the sales manager’s job is expanding
and what it might mean for your career.
Copyright ©2020 John Wiley & Sons, Inc. 3

Introduction
What exactly does a sales manager’s job entail?
What are the responsibilities and duties of sales managers?
How is the role of sales managers expanding?
What are the types, titles, and hierarchical levels of sales managers?
What qualities are needed to be a successful sales manager in the

new millennium?
What role does a sales manager play in the management of a firm’s

sales department?
Question
The role of sales management?

Question
The role of sales and sales management?

ÞThe health, performance and growth of a
corporate organization depend on, or are
determined by, its sales or sales turinover
ÞThe growth of a company is defined or
measured in terms of growth of total revenue

Distinguish between selling and sales management?

Selling and Sales management
Selling: a job or a task or one silde of a transaction, the

other side being buying
Sales management: is a process, involve almost

everything which makes possible a sale, increase in
sales, improvement in sales performance, sustaining or
increasing market share, better customer service…
Sales Management: is the activities required to lead,
direct, or supervise the personal selling efforts of an
organization.
=> Contribute to better results or success in selling
Types, Titles, and Hierarchical Levels
of Sales Managers
V.P.
Sales managers are also known to Sales As subordinates, these individuals
have other titles, such as: who report to sales managers
1. National Account Manager National include, but are not limited to:
(NAM), 1. Marketing
Sales Manager
2. Key Account Manager (KAM), Representatives
3. Senior Account Executive, 2. Sales Representatives
4. Account Manager, and Zone, Division, Or 3. Account Managers, and
5. Assistant Sales Manager Regional Sales Manager 4. Sales Engineers
District, Branch or
Field Sales Manager
Sales Supervisor
10
Expanding Roles Of Sales Managers
Sales management is uniquely challenging
1.
Manage Customer
Relationships
Sales Managers
Must:
3. 2.
Manage the Hybrid Serve as Customer
Sales Force Consultants

What Qualities Are Needed To Be A Sales Manager?
Discuss in group

What Qualities Are Needed To Be A Sales Manager?
• Successful sales managers today need to have some important qualities, such as:
1.
Effective leaders and
7. motivators of people
Improving sales force 2.
productivity and Good decision makers
profitability
Qualities of Sales
6. Managers: 3.
Monitoring competitive Creative
offerings problem solvers
5.
Work with other 4.
Outstanding
functional areas communicators
of business

Sales Management Hierarchy:
Skill and Ability Requirements
Skill-set required of a ADMINISTRATIVE
sales manager is quite AND LEADERSHIP
ABILITY
different than that of a
salesperson. Vice
President
of Sales
MANAGERIAL
Sales managers require: ABILITY National
Sales
Manager
1. Supervisory ability at
lower levels Regional
Sales s
Manager kill
2. Managerial ability at SUPERVISORY al
S
District n
intermediate levels, ABILITY
Sales ers
o
ilit
y
p
and administrative and Manager
ter Ab
In hip
SELLING s
3. Leadership ability at ABILITY
Sales
der
Supervisor a
the helm of the sales Le
g
pin
department Salesperson
vel
o
D e
17
Megatrends Affecting Sales Management
Sales-related megatrends fall into

three major categories. These
include:
1. Behavioral forces, 1. Behavioral forces
2. Technological forces, and
3. Managerial forces. 2. Technological forces
3. Managerial forces

Behavioral Megatrends
Affecting Sales Management
Some behavioral forces that impact sales force

management are:
1. Rising customer expectations for greater
service and quality of products and services.
2. Micro-segmentation of domestic markets due
to multicultural and multilingual buyers.
3. Giant retailers have gained power. They now
dictate terms including lower prices from their
suppliers in the value chain.
4. The globalization of markets has led to
intensification of competition, so new ways to
attaining a competitive advantage needed.

Technological Megatrends
1. 2.
Mobile Virtual 3.
Electronic
Sales Offices Sales Force
Commerce
Technological forces Automation
include, but are not • Internet • Portable
-- Blogs Computers
limited to: -- Podcasting (notebook,
-- Screen Technological handheld, and
1. Virtual sales offices Sharing pocket PCs)
-- WebEx
Megatrends
(home, automobile, -- Zoom Affecting • Electronic Data
Interchange
or virtually Sales •Videoconferencing
• Extranets Management
anywhere) • Intranets
• Multi-function Cell
Phones
2. Electronic commerce •Voice Mail, E-mail,
and Instant
3. Sales force Messaging
automation

Information Management Tools
The four key trends in the management of information are:
Push Data
technology mining
Information
Management
Trends
Database Data
marketing warehousing

Managerial Megatrends
Some of these 1.
Selling Cost
managerial forces are: Reduction 2.
Efforts Shift to Direct
5.
1. Efforts to reduce Developments in Marketing
selling costs Information Alternatives
Management • Direct Mail
2. Shift to direct Managerial
(catalogs,
• Database brochures,
marketing methods Marketing Megatrends and sales
• Data Affecting
3. Certification of Warehousing Sales
letters)
• Telemarketing
salespeople • Data Mining Management • Teleselling
• Push • Personalized
4. Shortage of business- Technology E-mail
to-business • Kiosks
• Facsimile
salespeople, and
5. Developments in
3.
information 4.
Professional
Few B2B
management Salespeople
Certification
of Salespeople

Developing Sales Managers For The New
Millennium
Sales managers will need to focus on:

1. Developing closer relationships with
customers
2. Treating salespeople as newly empowered
equals
3. Learning marketing and financial skills in
order to recommend competitive strategies

Major differences between marketing and selling
Marketing Selling
Focus on customer needs preferences Focus on company’s product(s)
The customer is the starting point in The customer is the last link in the
marketing planning selling business
The company manufacturers the The customer is offered the product(s)

product(s) the customers want the company manufactures
Market/customers determine price, price The company’s cost determines the

determines cost selling price
The prime objective is market share and The prime objective is sales
profit maximization maximization
Planning is long term: product/market Planning is short term: today’s products

diversification and growth and markets

The selling approach vs. The marketing approach
Starting point Focus Means/Method End results Final

objectives
• Production • Product • Sales • Sales • Profit

promotion/ Volume
Distribution
Starting point Focus Means/Method End results Final

objectives
• Market • Customer • Advertising/ • Sales/ • Profit

Sales Market
promotion/ share
Distribution

Case study discussion

Chapter 4:
The Selling Process
1
Warm-up question
Have you ever worked as a sales person?
Share the selling process you followed to successfully
close a sale.
What is the most important step?

Learning Objectives
When you finish this chapter, you should be

able to:
1. Distinguish between consumer selling and organizational
selling
2. Describe the seven stages of the selling process (SP).
3. Use various searching methods to find new prospects.
4. Apply several sales presentation strategies.
5. Overcome the prospect’s objections and resistance through
negotiation.
6. Demonstrate closing techniques from each of five closing
categories.
7. Explain how to empower salespeople for customer
relationship management roles.

Stages of the Selling Process (SP)
There are 7 interacting, overlapping

steps in the selling process:
1. Prospecting and qualifying
2. Planning the sales call (preapproach)
3. Approaching the prospect
4. Making the sales presentation and
demonstration
5. Negotiating sales resistance or buyer
objections
6. Confirming and closing the sale, and
7. Following up and servicing the account
5 5
Copyright ©2020 John Wiley & Sons, Inc.
Step 1: Prospecting and Qualifying
The initial stage of the SP is

known as prospecting and
qualifying.
Prospects: Potential new

customers
Prospecting requires salespeople

to first obtain leads.
A lead or potential buyer refers

to a person or organization that
may have a need for a product or
service.
Step 1: Prospecting and Qualifying
The initial stage of the SP is

known as prospecting and
qualifying.
Qualifying: 4 screens
N: need or want
A: authority to buy
M: money to buy
E: eligibility to buy

Step 2: Planning for the Sales Call—
Seven Steps to Preapproach Success
1. Prepare the prospect for the initial sales call
2. Sell the sales call appointment by prenotification
3. Gather and analyze all relevant information about the prospect
4. Identify the prospect’s problems and needs
5. Identify the product features, advantages, and benefits
6. Choose the best sales presentation strategy
7. Plan and rehearse your approach

1. Prepare the prospect for the initial sales call
To prepare the prospect for the sales
call, salespersons can use “seeding,”
which refers to prospect-focused
activities carried out several weeks or
months before a sales call.
2. Sell the sales call

Salespeople “sell the sales call” and ask
for an appointment to meet with
prospective buyers by using pre-
notification methods that include:
1. E-mail
2. Fax
3. Mail, and
4. Telephone
3. Gather and Analyze Information
Prepare for meeting by Salespersons should also gather

gathering information on information about target firms,
such as:
prospective clients by:
1. Trade Associations
1. The prospect’s name and 2. Chambers of Commerce
pronunciation
3. Credit Bureaus
2. Job title 4. Mailing List Companies
3. Duties 5. Government and Public
4. The prospect’s senior manager Libraries, and
5. Education 6. Investment Firms
6. Work experience
7. Level of technical expertise
8. Purchasing authority
9. Personality
10
4. Identify the prospect’s problems and needs
Salespersons identify prospects problems by:

1. Products previously purchased
2. Production difficulties, and
3. Productivity inefficiencies
Salespersons should also identify prospects needs and goals, such as:
1. Increase market share, and
2. Lower the cost of production.
5. Identify the product features, advantages, and benefits (FAB)

Salespersons can use the FAB approach to convince prospects into buying products of
their firm, which encompasses:
1. Identify Features: them
2. Enumerate Advantages, and
3. Stress Benefits (discussed later in detailed)
6. Choose the best sales presentation strategy
Customer-oriented salespeople identify and solve customer problems
by skillfully observing, listening, and asking probing questions.
7. Plan and rehearse your approach
Finally, make it a point to rehearse, rehearse, and

rehearse until you have mastered your total sales
presentation and feel comfortable and confident about
it.

Step 3: Approaching the Prospect
The third stage of the SP entails

approaching the prospect.
Strategies that can be used for

approaching prospects include:
1. Non-product-related approaches
2. Piquing interest approaches
3. Consumer-directed approaches, and
4. Product-related approaches

Non-Product Related Approaches
Four non-product-related
approaches include:
1.
Self-
1. Self-introduction Introduction
2. Mutual acquaintance or
reference
3. Free gift or sample, e.g., free
4. Non-product 2.
financial planning for a Related
Dramatic Free Gift Or
prospect, and lunch invitation Act
Approaches
Sample
4. Dramatic act: Do something
memorable or even dramatic in
a positive way to demonstrate 3.
key product benefits e.g., Mutual
Acquaintance
setting a carpet on fire to show Or Reference
safety.
Piquing Interest Approaches
Piquing interest approaches include:
1. 2.
Piquing
Curiosity Approach Customer-Benefit
Interest Approaches
Approach
1. Customer-benefit, e.g., our computer will increase employee

productivity
2. Curiosity, e.g., Would you be interested in learning about our hi-tech

steel smelter which has a low carbon footprint?

Consumer-Directed Approaches
Three consumer-directed approaches are:
1. Consumer-Directed 2.
Question Approaches Compliment or praise
3.
Survey
1. Compliment or praise approach, e.g., I read about the award you

recently received in the New York Times. Congrats!!!
2. Survey approaches, e.g., a short study to ascertain, say, environmental

remediation costs based on amount of clean-up.
3. Question approaches, e.g., “I am aware your company buys a lot of

steel. Would you be interested about our high-tensile steel products?”

Product-Related Approaches
Product-related approaches include:
1. Product-Related 2.
Product demonstration Approaches Product or Ingredient
1. Product or ingredient approach: Show the customer the product or a

model of the product. e.g., Demonstrate product or statistical software
for CRM or Data Mining.
2. Product demonstration approach: Begin demonstrating the product upon

first interacting with the prospect. e.g., Carry sample that shows how
product works, such as demonstrating a software package.

Overall Sales Call Objectives
1.
Generate
sales
Overall
Sales calls should achieve one or Sales Call
Objectives
more of three overall objectives. 2. 3.
Develop Protect
the market the market

Step 4: The Sales Presentation and Demonstration
The fourth stage and “heart” of the SP is

the Sales Presentation and Demonstration
§ Critical center stage or “showtime”
Remember the following issues during the

presentation:
1. Ask the customer qualifying questions to
uncover specific needs,
2. Present the products and services that will
best satisfy those needs,
3. Stimulate desire for the offerings with a
skillful demonstration, and
4. As using the F A B approach can be very
powerful during a presentation.

Features Advantages and Benefits (FAB) Approach
Discuss products’ features, advantages, and

benefits:
1. F—Features are the obvious
characteristics of the product. 1.
• Remember to highlight features! Features
2. A—Advantages are the performance
traits of the product that show how it
can be used to help the customer better FAB
Approach
solve a problem than present products
3. 2.
can. Benefits Advantages
• Don’t forget to enumerate advantages
relative to competitors’ products.
3. B—Benefits are what the customer
wants from the product.
• And don’t fail to stress benefits of the
product to the prospect.
Sales Presentation Strategies
Several sales presentations strategies,

but employ that will best “fit” the
audience. 1.
Stimulus-
Response
1. Stimulus-response, in which the salesperson
6. 2.
asks a series of positive leading questions. Team Selling Formula
Sales
2. Formula approach where the salesperson Presentation
leads the prospect through the mental states of Strategies
3.
buying that include attention, interest, desire, 5.
Need
and action (AIDA) Depth Selling
Satisfaction
4.
Consultative
Problem
3. Need satisfaction, in which the salesperson Solving
tries to find dominant needs of the buyer.
21
Sales Presentation Strategies
4. Consultative problem solving is considered to be

the most successful sales presentation strategy.
§ Focus on buyers problems, not seller's products.
1.
§ Emphasize partnership and "win-win" Stimulus-
outcomes. Response
6. 2.
Team Selling Formula
4. Team selling presentations are made to a group Sales
of decision makers from different functional areas, Presentation
e.g., when selling the new state-of-the art Boeing Strategies
3.
B-787 Dreamliner, the sales group will consist of 5.
Need
Depth Selling
various experts from avionics, jet engines, flight Satisfaction
4.
training, and commercial managers, who work as Consultative
Problem
a sales team. Solving
5. Depth selling employs a combination of several

sales presentation methods discussed above.
How adaptive are you in deadling with prospects
and customers? – Evaluate yourself

Step 5: Negotiating Sales Resistance
or Buyer Objections
The fifth stage of the SP deals with negotiating
sales resistance or buyer objections.
Objections are statements, questions, or actions by

the prospect that indicate resistance or an
unwillingness to sign a purchase agreement.
Indeed, without sales resistance, there would not be

any need for salespeople. What’s more, objections
should be seen as a sign of buyer interest.
Forms of
1. Valid Objections 2. Invalid Objections
Objections
Sincere concerns that the Used by prospects to stall the
prospect needs answered sales process
before making the commitment
to buy Irrelevant, untruthful,
delaying, or latent reasons
Copyright ©2020 John Wiley & Sons, Inc. negotiate 24
Different Forms of Valid Objections
There are at least seven types of

valid objections.
1.
Product
1. Product objections usually concern the Objections
features, advantages, and benefits 7. 2.
Needs Price
associated with a product or service. Objections Objections
When prospects use this form of
resistance to purchasing, salespeople
should provide additional information Valid
6. Objections
to reassure them. Source
3.
Promotion
Objections Objections
2. Price objections are the most

frequently raised form of initial 5. 4.
Capital Distribution
resistance. To counter price resistance, Objections Objections
salespeople must show that their
product or service offers the prospect
higher value per dollar spent than
competitive offerings.
3. Promotion objections are commonly
used as a resistance tactic when the
seller is known not to promote products
aggressively. 1.
Product
Objections
7. 2.
4. Distribution objections typically Needs Price
Objections
involve the physical movement of Objections
products through the channels of
distribution. These forms of buyer Valid
resistance include concerns about long 6. Objections 3.
delivery time, high delivery costs, and Source Promotion
Objections
Objections
large-quantity stocking requirements.
5. 4.
5. Capital objections generally revolve Capital Distribution
around budgetary issues that Objections Objections
prospects give as an excuse for not
purchasing products now. This
resistance tends to increase with the
price of the product or service.
1.
Product
6. Source objections may result from Objections
negative publicity about unethical, 7. 2.
Needs Price
illegal, or inefficient business practices Objections Objections
by the seller.
Valid
7. Needs objections are raised by 6. Objections 3.
prospects who feel they simply do not Source Promotion
currently need or have use for the
products or services being offered.
5. 4.
Capital Distribution

Different Forms of Invalid Objections
Stalling objections are

usually delaying tactics
Latent objections are hidden articulated by such
and sometimes too personal 1. 2. comments as “Around here,
or embarrassing for the Latent Stalling all decisions are shared, so
prospect to reveal, so they Objections Objections just leave your product
remain unspoken. literature for us to look over,
and we’ll get back to you if
Invalid we’re interested.”
Objections
Unethical objections are Time objections are delaying
actions or attitudes that 3.
tactics that usually surface in
4.
seem unprincipled or prospect statements such as
Unethical Time
immoral, such as resistance “I’ve got to prepare for a
to buying include excuses meeting in ten minutes, so I
about soliciting bribes or don’t have time to talk now,”
kickbacks. or “I’m just too busy for the
next several weeks with a
special project to meet with
Copyright ©2020 John Wiley & Sons, Inc. you.” 28
Discussion
Discuss about techniques for negotiating buyer objections
Role play: act as salesperson and prospect, then negotiate.

Specific Techniques for
Negotiating Buyer Objections
• “I’m coming to that”
• Pass-off
1. • Alternative product
Put-Off strategies.
• Feel, felt, found
strategies
• Case history 5. 2. • Comparison or
• Demonstration Provide Switch contrast
• Propose trial use Proof Buyer Focus • Answer with a
Objections question
Techniques • Humorous strategies
• Agree and neutralize
strategies
4. 3.
Denial Offset
• Indirect denial • Compensation or counterbalance

• Direct denial • Boomerang
Step 6: Confirming and Closing the Sale
The sixth step of the SP concerns

Confirming and Closing the Sale,
where the salesperson tries to obtain a
purchase order from the prospect.
The close is that stage in the selling

process where the salesperson tries to
obtain a purchase order from the
prospect.
The more closing strategies the

salesperson knows and can effectively
apply, the greater the chances for
closing the sale.
Step 6: Confirming and Closing the Sale
• Assumptive close • Boomerang close
• Choice close • Future order close
• Success story close • If-when close
• Contingent close • Probability close
• Counterbalance close • Suggestion close • Stimulus-response close
1. • Minor points close
• Standing-room-only
Clarification
• Impending event close
Closes
• Advantage close
• Puppy dog close
• Turnover close 2.
5.
Psychologically
• Compliment close
• Pretend-to-leave close Lost Sale • Reserve advantage close
Oriented
• Ask for help close Closes
Closes • Dependency close
Closing
Categories
• Ask for the order close
• Order form close
• No-risk close 4. 3. • Summary close
• Management close • Repeated-yes close
Concession Straightforward
• Special-deal close • Benefits close
Closes Closes
• Takeaway close • Action close
• Negotiation close
• Technology close 32
Step 7: Following Up and Servicing the Account
The seventh and final step of the SP concerns

Following Up and Servicing the Account, which
will help you retain your customers.
After making the sale, top salespeople don’t

disappear, instead they maintain close contact
with the customer to handle any complaints.
Recall, CRM—it’s less costly to keep present

customers satisfied than to search out and
acquire new customers.
Frequent and comprehensive follow-up is a

primary means of retaining long-run, satisfied,
loyal, and profitable customers.
Consumer selling vs. Organizational selling
All sales differ
Selling to consumers and organizations differ more..
How different do you think?

Consumer selling vs. Organizational selling
All sales differ
Selling to consumers and organizations differ more..
How different do you think?
Selling to consumers is playing wit emotions and lifestyles
Selling to business organizations is deadling with orders, contracts,
deliveries…

Consumer Market vs. Business Market
Characteristic Consumer Market Business Market
Individual sale (volume) Small Big
Number of buyers Many Few
Size of individual buyers Small Large
Location of buyers Disffused Concentrated
Buyer-seller relationship Less direct Direct/Close
Buying process Short Long
Nature of channel(s) More indirect More direct
Nature of buying More personal More professional
Nature of buying influence Single/Simple Multiple
Role of human emontions significant Almost nil
Primary promotional method Advertising Personal selling
Type of negotiations Simple/Nil Complex
Payment system Simple Can be complex

Consumer selling vs. Business selling
Role of factors Consumer selling Organizational selling

Product knowledge General Detailed
Company knowledge Useful Essesntial/Vital
Buyer knowledge Not relevant Vital/essential
Negotiation skills Simple Sophisticated
Relationship building skill Sale to sale Regular/long-term
Interactive ability simple Sophiticated/complex
Marketing intelligence skill usefull essential
Managing payment simple Can be complex
Closing a sale On the spot Longer process

Applying CRM to the Selling Process:
Empowering Salespeople for CRM
Empower salespeople to:

1. Accept returns of unsatisfactory
products
2. Negotiate price discounts
3. Provide purchase incentives, and
4. Resolve customer complaints.


Case 4.1: Negotiating Strategies at Micronix-Digital
Case4.1-NegotiationStrategies

Note
This Electronic Presentation To Be Used With:
Hair, Joe, Rolph Anderson, Rajiv Mehta, & Barry Babin (2020), “Sales
Force Management,” 2nd Ed. Hoboken: John Wiley & Sons.
(ISBN-13: 9781119702832)
Text/images may not be modified or reproduced in any way without

prior written permission of the publisher. www.wiley.com/go/permissions

Copyright
Copyright © 2020 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond that

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herein.

Market Analysis and Sales Forecasting
3
Learning Objectives
When you finish this chapter, you

should be able to:
1. Relate sales forecasting to operational
planning
2. Know the most popular quantitative
and qualitative sales forecasting tools
3. Evaluate the various sales forecasting
techniques
4. Identify the purpose and benefits of
sales budgets, and
5. Prepare an annual sales budget

Introduction
What is market analysis?
What is sales forecasting?
What is the purpose of sales forecasting?
What is sales and operational planning?
What are the different types of sales forecasting methods?
How can sales forecasts reduce uncertainty in making operational and

strategic business decisions?
Market analysis
Dimensions of a market
2. Market
potential
1. Market 3. Market
size growth
Market
6. New
4. Market
trend/devel
opment competition
5. Market
profitability

Porter’s Five Force Model

Sales Forecasting and Its Relationship To
Operational Planning
Let’s make you familiar with forecasting terminology, such as:
1. Sales forecast
2. Market potential, and
3. Sales potential
A sales forecast is a Market potential is a Sales potential is
prediction of the quantitative estimate, in the portion of
future market either physical or monetary market potential
potential for a units, of the total sales for a that one among a
specific product. It product within a market. set of competing
sets the sales firms can
expectations for a reasonably expect
given time period to obtain.
and can indicate
what types of
products customers
are likely to want.

Sales Forecasting And Its Relationship To
Why do we need sales forecasting?
How would inaccurate sales forecasts influence other business areas?
Discussion.

Forecasting is important because it
becomes the basis for:
1. Sales and marketing planning
2. Production scheduling
3. Cash flow projections
4. Financial planning
5. Capital investment
6. Procurement
7. Inventory management
8. Human resource planning (hiring
salespeople), and
9. Budgeting

Examples of how inaccurate sales forecasts
can influence other business areas.
Sales forecasts help develop a production

schedule based on which raw material is
procured and labor is scheduled, but:
§ Overestimated sales forecasts lead to excess
inventory, which can cause plant shutdowns,
employee layoffs, and deteriorating raw
materials and opportunity costs.
§ Underestimated sales forecasts lead to
stockouts, which cause lost sales resulting in
losing customers permanently as they are
forced to seek products from competitors.

Sales and Operational Planning Process (S&OP)
Sales and operational planning (S&OP) refers to an organized
process that uses sales inputs to forecast business for upcoming
periods of varying length, which can be used to adjust purchasing,
labor schedules, and capital requirements.
The S&OP process steps are:

1. Analyze sales records
2. Develop a preliminary forecast
3. Have managers review and adjust the forecast
4. Build a sales plan around the forecast, and
5. Make adjustments to operating plans
Have
Build A Make
Managers
Analyze Develop A Sales Plan Adjustments
Review
sales Preliminary Around To
And
records Forecast The Operating
Adjust
Forecast Plans
Forecast
Characteristics of Successful S&OP Programs
Successful S&OP programs contain five components:
1.
Supportive
People
5.
2.
Performance Successful Process
Measures S&OP
Programs
4. 3.
Strategy Technology

Characteristics of Successful S&OP Programs
Successful S&OP programs contain five components:
Support from
managers, other
departments
Metrics from goals, Regular meetings,
1.
assessment, metrics, sales
Supportive
feedback… analytics
People
5.
2.
Performance Successful Process
Measures S&OP
Programs
4. 3.
Strategy Technology
Align supply Eg: software,

and inventories autonomation…
with demand support decisions

Estimating Industrial and Consumer Demand
Two ways of estimating industrial demand are based on:
1.
Estimating
Industrial
Demand
Estimating
Demand
2.
Estimating
Consumer
Demand

Forecasting Approaches and Techniques:
Breakdown and Build-Up Approaches
Sales forecasts can be developed using two approaches:
1. Forecasting 2.
Breakdown Approaches And Build-up
approach Techniques approach
Discussion:
Advantages and Disadvantages of each method?

Model of break-down approach
Forecast general economic Estimate industry market Estimate company sales

condition potential potential
Broken down by:

- Product
- Territory Forecast company sales
- Customer
- Time period

Breakdown and Build-Up Approaches
Sales forecasts can be developed using two approaches:
1. Forecasting 2.
Breakdown Approaches And Build-up
approach Techniques approach

Non-Quantitative and Quantitative Methods
Sales forecasting techniques can be dichotomized into:

1. Non-Quantitative (or qualitative) methods, and
2. Quantitative methods.
1. Forecasting 2.
Non-Quantitative Approaches And Quantitative
Methods Techniques Methods

A. Non-Quantitative Forecasting Methods
The two major types of non-quantitative forecasting methods are:
1. Judgment methods, and
2. Counting Methods
1. A.
2.
Judgment Non-Quantitative
Forecasting Counting
Methods Methods
Methods
Discussion:
Advantages and Disadvantages of each method?

A. Non-Quantitative Forecasting Methods
The two major types of non-quantitative forecasting methods are:
1. Judgment methods, and
2. Counting Methods
1. A.
2.
Judgment Non-Quantitative
Forecasting Counting
Methods Methods
Methods

B. Quantitative Forecasting Methods
Two broad categories of quantitative forecasting techniques include:
1. Time-Series Methods, and
2. Causal/Association Methods.
B. 2.
1.
Time-Series Quantitative Causal or
Methods Forecasting Association
Methods Methods

Broad categories of Time-Series Methods include:
1. Moving averages
2. Exponential smoothing
3. Other methods: Eg: ARIMA (autoregressive integrated moving average)
B. 2.
1.
Time-Series Quantitative Causal or
Methods Forecasting Association
Methods Methods

Simple Moving Average Formula
24
Exponential Smoothing Model
26
Three broad categories of causal/association methods include:
1. Correlation-regression analysis
2. Econometric models, and
3. Input-output models
1. Causal or 2.
Correlation- Econometric
Association
Regression Models
Analysis Methods
3.
Input-Output
Models

Evaluating Forecasting Methods
Criteria for selecting the right forecasting method are:

1. Comprehensibility: Must understand basic methods of
developing forecasts
2. Accuracy: Method must provide results that are
sufficiently accurate for purpose
3. Timeliness: Must generate forecasts in time for
managers to use them
4. Quality and quantity of information: “Garbage” input
leads to “garbage” output (GIGO)
5. Qualified personnel: Experts can give opinions on
qualitative techniques
6. Costs/Benefits: Must offset costs of generating sales
forecast

Using the sales potential approach, how many salespeople
will be needed if the company sales forecast is $22 million,
annual sales volume productivity for the average
salesperson is $400,000, and the anticipated annual rate
of sales force turnover is 25 percent?

Sales Budget Planning
A sales budget is a financial sales plan outlining how to allocate
resources and selling efforts to achieve the sales forecast.
Sales budgets are used for planning, coordinating and controlling tasks.
2.
1.
Sales Budget Uses Coordinating
Planning
Function
Function
3.
Controlling
Function
30
Budget Preparation Steps
There are six steps for developing the sales budget.
1.
Review and Analyze
the Situation
6. 2.
Implement the Budget Communicate Sales
and Provide Periodic Goals and
Feedback Objectives
Budget
Preparation
Steps
3.
5.
Identify Specific Market
Prepare a Budget
Opportunities and
Presentation
4. Problems
Develop a Preliminary
Allocation of
Resources

Step 1: Review and Analyze
the Situation
§ Step 1 begins with a review of
past budget performance helps
the sales manager avoid
variances in the coming period.
§ Common line items in sales
budgets include:
1. Salaries
2. Direct selling expenses
3. Commissions and bonuses
4. Benefit package
5. Office expenses
6. Promotional materials, and
7. Advertising
Step 2: Communicate Sales Goals and
Objectives
§ Here, all management levels must be fully
informed about sales goals and objectives.
Step 3: Identify Specific Market Opportunities

and Problems
§ At this point, sales managers and salespeople
should use budget resources to pursue specific
market opportunities and deal with problems on
a timely basis.
Step 4: Develop a Preliminary Allocation of

Resources
§ At this point, sales managers assign resources to
particular activities, customers, products, and
territories. Copyright ©2020 John Wiley & Sons, Inc. 33
Step 5: Prepare a Budget Presentation

§ Here, a succinct, well-reasoned written and
oral budget presentations can be used to ask
for increased allocation of funds.
Step 6: Implement the Budget and Provide

Periodic Feedback
§ At this last step of the budget preparation
process, sales managers must provide early
warning of budget overruns, and ensure that
sales revenue and cost ratios remain within
reasonable budget limits.


Note
(ISBN-13: 9781119702832)


Copyright

herein.

Chapter 6:
Sales Force Planning and Organizing
5
Learning Objectives

able to:
1. Understand the purpose and levels of
organizational planning
2. Apply the sales planning process, including
strategic and tactical sales planning
3. Avoid unsuccessful sales planning
4. Describe different ways to organize the sales
force, including calculating its optimal size

Introduction
But what is planning?
What is the planning process as it applies to sales force management?
What are strategic and tactical sales planning?
What are the different methods of organizing the sales force?

Introduction
What is sales force planning? Benefits of planning?
Discuss

Levels of Organizational Planning
Planning occurs at many sales

management organizational levels:
1. CEO, president, senior VPs—strategic
planning
2. General sales managers and
marketing directors—tactical
3. Regional sales managers—plans and
budgets
4. Sales supervisors and sales reps—
day-to-day tasks

Purpose of Organizational Planning
As administrators, 6 broad tasks sales managers must perform are to:
1. 3. 6.
2. 4. 5.
Define Establish Develop
Set Devise Direct
Goals and Procedures and Enforce
Policies Strategies Tactics
Objectives Controls
Goal: general, long-term oriented

1. Objectives: specific results desired within a time frame
2. Policies: predetermined approaches for handling routine matters
3. Procedure: detail description of specific steps
4. Strategy: overall program of action for using resources to achieve value-creating
goals or objectives
5. Tactics: day-to-day action that make up strategic plan
6. Control: develop performance standards

The Sales Management Planning Process
Sales management planning is a continuous,

non-ending process seeks to address the
following 6 questions:
1. DIAGNOSIS—Where are we now?
2. PROGNOSIS—Where are we headed if no
changes are made?
3. OBJECTIVES—Where should we be
headed?
4. STRATEGY—What is the best way to get
there?
5. TACTICS—What actions need to be taken
by whom, and when?
6. CONTROL—What measures must be
monitored so we know how we’re doing?
Purpose of Organizational Planning
As administrators, 6 broad tasks sales managers must perform are to:
1. 3. 6.
2. 4. 5.
Define Establish Develop
Set Devise Direct
Goals and Procedures and Enforce
Policies Strategies Tactics
Objectives Controls
Goal: general, long-term oriented

1. Objectives: specific results desired within a time frame
2. Policies: predetermined approaches for handling routine matters
3. Procedure: detail description of specific steps
4. Strategy: overall program of action for using resources to achieve value-creating
goals or objectives
5. Tactics: day-to-day action that make up strategic plan
6. Control: develop performance standards

The Sales Management Planning Process
1. Analyze the Situation
The seven stages in the sales

2. Set Goals and Objectives
management planning process include:
1. Analyze the situation
3. Determine Market Potential
2. Set goals and objectives and Forecast Sales
3. Determine market potential, and
forecast sales 4. Develop Strategies
4. Develop strategies
5. Allocate resources and develop budgets 5. Allocate Resources and
Develop Budgets
6. Implement the plan, and
7. Evaluate and control 6. Implement the Plan
7. Evaluate and Control

The Sales Management Planning Process:
Step 1—Analyze the Situation
1. Analyze the Situation.
• The planning process begins with a
situation analysis of where the Discussion: what kind of
organization is today and where it is information we should analyze?
headed if no changes are made.
1.
Market
Characteristics
6.
Distribution 2.
Systems Competition
Analyze The
Situation
5. 3.
Promotional Sales, Cost, And
Mix Profit Data
4.
Benefits
Offered
14
Step 1—Analyze the Situation
1. Analyze the Situation. No. and type of
potential customer,
Channels of demographic and
Type of competitors,
distribution, channel behavioral profiles,
strength & weakness,
partners, storage & attitude, service need..
their products, prices,
transportation facility, 1.
brands, market
intensity of distribution.. Market shares,..
Characteristics
6.
Distribution 2.
Systems Competition
Analyze The
Situation
5. 3.
Promotional Sales, Cost, And
Mix Profit Data
4.
Personal selling, Benefits By product,
advertising, social Offered brandnames, prices,
media, sale promotion, packages, and service
As perceived by
digital marketing
customers
strategy…
15
Step 2—Set Goals and Objectives
2. Set Goals and Objectives.
• Organizations usually have multiple
goals and objectives that must be
spelled out explicitly and in order
of priority.
1. Set Goals 2.
Sales Goals and Objectives Sales Objectives

Step 3—Determine Market Potential & Forecast Sales
3. Determine Market Potential and Forecast Sales.
• Using the skills developed in the previous lesson, determine:
1. Market potential
2. Sales potential
3. Market capacity
1. Determine 2.
Market Market Potential Sales
Potential and Forecast Sales Potential
Maximum Maximum
possible sale 3.
Market possible sale
for an industry for a company
Capacity
Units the
market will
absorb if the
product/service
is free
17
Step 4—Develop Strategies
4. Develop Strategies.
The next step is to determine the

best way to achieve the targets,
while remembering that the
strategies are consonant with the
firm’s mission statement as
delineated in the strategic plan.

Sales managers can attain their

strategic objectives by using:
A. Growth Strategies, and
B. The Business Portfolio

Approach.

Four Types of Growth Strategies

Current Product New Product
A. Growth Strategies
• Four types of growth
Current Market
A. B.
MARKET PRODUCT
strategies include: PENETRATION DEVELOPMENT
1. Market penetration
2. Product development New Market
C. D.
MARKET PRODUCT
3. Market development, and
DEVELOPMENT DIVERSIFICATION
4. Diversification

B. The Business Portfolio

Approach.
Two major business portfolio

concepts are:
1. Strategic Business Units

(SBUs), and
2. The Market Share/Market

Growth Matrix.

1. Strategic Business Units (SBUs)
are divisions of major firms within
multiple product companies.
§ Each division has become so large that
it is allowed to operate as a separate,
but related entity
§ A division, product line, or single
product may classed as an SBU
§ Each SBU has its own management
§ SBUs are evaluated on their profit and
growth potential as standalone firms
Each SBUs has it’s own:

§ Distinct mission
§ Separate management
§ Unique customer segments, and
§ Competitors
2. The Market Share/Market
Growth Matrix.
• To evaluate a company’s SBUs, the Boston Consulting Group’s Market
Share/Market Growth Matrix
most popular approach is the
Relative Market Share
Market Share/Market Growth
High Low
Matrix (or business portfolio
STARS PROBLEM CHILDREN
matrix) developed by the Boston
Relative Market Growth

Have potential to become
High
Generate considerable
Consulting Group (BCG). income stars or cash cows
• The BCG matrix evaluates a Strategy? Strategy?
company’s businesses based on CASH COWS Dogs
market share and market growth Low Generate strong cash flow Generate little profits or
make losses
and then puts them in one of four
Strategy? Strategy?
quadrants labeled cash cows,
stars, dogs, or problem children
(also referred to as question
marks).
Discussion
Give example of a company.
Based on BCG Market share/Market growth matrix to propose
strategies for the company.

Boston Consulting Group’s Market Share/Market Growth Matrix
Relative Market Share
High Low
Based on the BCG matrix, STARS the PROBLEM CHILDREN

Generate considerable income Have potential to become stars or cash cows
growth strategies suggested
High
for each of the four quadrants

Relative Market Growth
Strategy: Invest funds for future growth Strategy: Invest more funds for growth or divest
appear in the black boxes.
CASH COWS Dogs
Generate strong cash flow Generate little profits or make losses
Low
Strategy: Milk profits to help stars and question marks Strategy: Consider divesting SBU or product

Step 5—Allocate Resources and Develop Budgets

5. Allocate Resources and
Develop Budgets.
and Forecast Sales
Given detailed sub-plans and
tactics, managers must allocate 4. Develop Strategies
resources—money, people,
materials, equipment, and time— 5. Allocate Resources and
to carry out the plans. Develop Budgets
6. Implement the Plan

Step 6—Implement the Plan

6. Implement the Plan.
and Forecast Sales
Sales managers often use
management by objectives (MBO)
4. Develop Strategies
to involve subordinates in planning
and budgeting.
5. Allocate Resources and
A Program Evaluation and Review Develop Budgets
Technique (PERT) network
6. Implement the Plan

Step 7—Evaluate and Control
7. Evaluate and Control.
An effective planning process requires a built-in monitoring device for management
evaluation and control to measure and check progress toward specific objectives and
signal deviations in time to take corrective actions and get back on track.
Internal Measures External Measures
1.
Industry
Averages
1.
Customer
Satisfaction
2. Performance
Past Standards and
Performance
Measures
2.
Societal
3. Satisfaction
Managerial
Responsiveness
Expectations

Organizing The Sales Force
The reason to organize the sales
force is to accomplish marketing
and sales objectives by:
1. Shortening the time a sales

manager needs to evaluate
and respond to changing
market needs,
2. Arranging activities efficiently,

and
3. Establishing and maintaining

open channels of
communication with customers,
salespeople, support staff, and
concerned stakeholders. 30
Copyright ©2020 John Wiley & Sons, Inc.
Types of Sales Department Organization Structures
Sales departments, however, are 5.

Combination
organized into five basic types: of 1-4
1. Geographic Sales Organization
1.
4.
2. Product-Oriented Sales Market
Geographic
Sales
Organization -Oriented Types of Sales Organization
Department
3. Function-Oriented Sales Organizations
Organization
4. Customer/Market-Oriented Sales 2.
3.
Organizations, and Function
Product-
Oriented
-Oriented
5. Combination of the preceding
four
36
Geographic Sales
Organization

Product-Oriented
Sales Organization
38
Function-Oriented
Sales Organization
39
Customer/Market
Oriented Sales
Organization
40
Combination Sales
Organization—Organized
by Geography, Products
and Customers
41
Size of the Sales Force
The methods to determine optimum sales force size include:
1. Equalized workload
2. Incremental productivity, and
3. Sales potential
1. 2.
Size of the Sales Force
Equalized Workload Incremental Productivity
3.
Sales Potential
43
Sales Potential

Equalized workload
45
46
Incremental Productivity

Group discussion
If a sales firm has 200 “A” customers and 200 “B” customers.
Each sales call to an ”A” customer takes 1 hour and each sales call to a
“B” customer takes 2 hours.
The firm expect 75 sales calls per year to “A” customers and 100 sales
calls per year to “B” customers.
The sales people spend 20% of their time on non-selling tasks and
25% of their time traveling from sales call to sales call. Remaining time
for selling tasks.
How big of a sales force is needed?

Chapter 7:
Time and Territory Management
51
Learning Objectives

able to:
1. Describe the basic reasons for establishing sales
territories.
2. Apply procedures for setting up sales territories.
3. Evaluate when and why to revise sales territories.
4. Apply the concepts of self-management to sales
and sales management.
5. Use the techniques of scheduling and routing for
sales success.

Introduction
What are time and territory management strategies?
Which, when, and how often should accounts be called on?
How do we improve sales productivity?
How do we set-up sales territories?
How should sales territories be revised?
What are the methods for scheduling and routing?

Improve Sales Productivity
by Establishing Sales Territories
A sales territory is usually a
specific geographic area that
contains present and potential
customers and is assigned to a
particular salesperson.
Time and territory management

strategies help determine:
§ Which accounts are called on,

§ When accounts are called on,
and
§ How often accounts are called
on.

Reasons for Sales Territories
Reasons to assign sales territories are:
1.
Enhance Market
6. Coverage
Coordinate Selling with 2.
Other Marketing Minimize Selling Costs
Functions
Reasons for
Sales Territories
3.
5.
Strengthen Customer
Better Evaluate Sales
Relations
4.
Build a More Effective
Sales Force

Discussion
Disadvantages of Sales Territory?

Procedure for Setting Up Sales Territories
The procedure for initially

1.
setting or revising geographic Select a
sales territories is as follows: geographic
control unit
5. 2.
1. Select a geographic control unit Assign Conduct an
salespeople Procedure account
2. Conduct an account analysis to territories For Setting-Up analysis
3. Develop a salesperson workload Sales
Territories
analysis
4. Combine geographic control units 4. 3.
into territories, and Combine Develop
geographic a salesperson
5. Assign salespeople to territories control units
into territories
workload
analysis

1. Selecting a Geographic Control Unit
• As small as possible because it:
1.
• Helps management pinpoint Select a
geographic location of sales potential geographic
control unit
• Makes adjusting territories much
easier 5. 2.
Assign Conduct an
• Political units, include: salespeople Procedure account
to territories For Setting-Up analysis
• States Sales
• Counties and zip codes Territories
• Cities and metropolitan statistical

4. 3.
areas (MSAs) Combine Develop
• Trading areas: geographic regions control units workload
including city and surrounding areas into territories
analysis
serving as retail or wholesale center
for the region
2. Conducting an Account Analysis
1.
Select a
geographic
control unit
5. 2.
Assign Conduct an
salespeople account
• Entails an audit of each to territories
Procedure
For Setting-Up analysis
geographic unit Sales
Territories
• Estimate sales potential
4. 3.
Combine Develop
control units workload
into territories
analysis

3. Developing a Salesperson Workload Analysis
1.
Select a
geographic
control unit
5. 2.
Assign Conduct an
• Sales call frequency salespeople account
Procedure
• Sales call length to territories For Setting-Up analysis
Sales
• Travel time Territories
• Non-selling time 3.
4.
Combine Develop
into territories
analysis

Conducting an Account Analysis
Competitive Assessment
Strong Weak
Sometimes called the
Quadrant 1 Quadrant 2
Sales Account Call Attractiveness: Attractiveness:
Grid Analysis, to Accounts are viewed as very attractive, Accounts are potentially attractive based
on high opportunity, but sales
High
offer high opportunity, and sales
conduct an account organization has strong position. organization has weak position.
analysis, the business Account Opportunity

What Sales Call Strategy Would You What Sales Call Strategy Would You
portfolio approach, a Suggest For This Segment? Suggest For This Segment?
variant of the BCG Quadrant 3

Attractiveness:
Quadrant 4
Attractiveness:
matrix, that you were Accounts are somewhat attractive since Accounts are very unattractive since
Low
exposed to in the sales organization has strong position, but

future opportunity is limited.
they offer low opportunity and sales
organization has weak position.
previous chapter can

be used. What Sales Call Strategy Would You
Suggest For This Segment?
What Sales Call Strategy Would You
Suggest For This Segment?

Conducting an Account Analysis
Competitive Assessment
Strong Weak
Attractiveness: Attractiveness:
Accounts are viewed as very attractive, offer high opportunity, Accounts are potentially attractive based on high opportunity,
but sales organization has weak position.
High
and sales organization has strong position.

Account Opportunity
What Sales Call Strategy Would You Suggest For This Segment? What Sales Call Strategy Would You Suggest For This Segment?
Call Strategy: Frequent sales calls. Call Strategy: Frequent sales calls to strengthen
position.
Attractiveness: Attractiveness:
Accounts are somewhat attractive since sales organization has Accounts are very unattractive since they offer low
Low
strong position, but future opportunity is limited. opportunity and sales organization has weak position.
What Sales Call Strategy Would You Suggest For This Segment? What Sales Call Strategy Would You Suggest For This Segment?
Call Strategy: Moderate frequency to maintain Call Strategy: Minimal sales calls and migrate
current position personal sales calls to telephone or Internet.

4. Combining Geographic Control Units into Sales Territories.
1.
Select a
geographic
control unit
5. 2.
§ After setting up sales Assign Conduct an
territories either by state, salespeople Procedure account
county, MSA, identify and to territories For Setting-Up analysis
prioritize territories that Sales

Territories
have a higher sales potential
than others. 4. 3.
Combine Develop
into territories
analysis

5. Assigning Salespeople to Territories
1.
§ Before assigning them to Select a
territories, sales managers geographic
control unit
should rate and rank sales
personnel according to: 5. 2.
Assign Conduct an
1. Relative ability salespeople account
Procedure
2. Product and industry knowledge to territories For Setting-Up analysis
3. Energy level Sales

Territories
4. Persuasiveness
4. 3.
Combine Develop
into territories
analysis

Revising Sales Territories:
Signs Indicating The Need For Revisions
Some signs that are indicative of

territorial modifications include:
1. A company grows and gains in

experience in important territories.
2. The firm needs a larger sales force.
3. If territorial sales potential is inaccurate.
4. Morale problems emerge due to wide
territory potential variations.

Revising Sales Territories:
Impact of Territory Revision on Salespeople
Before making revisions, sales

managers should consult their
salespeople for suggestions that
might avoid or reduce problems

Group assignment
Research about sales territory of a business unit/shop surround you.
Prepare short ppt file and present to the class.

Self Management:
How Salespeople Spend Their Time
1.
Sales
Generation
Effective and efficient use of

time is critical to successful 5. 2.
performance for salespeople. CRM/Database How
Communication
Salespeople
Spend Their
Time
3.
4. Developing
Team support Customer
Relationships

Self Management:
Achieving Effectiveness and Efficiency
Some ways to help salespeople
manage time, thus increasing their
productivity are:
Effectiveness is results oriented and

focuses on achieving sales goals.
Efficiency is cost oriented and focuses

on making the best possible use of the
salesperson’s time and efforts.
Together, the two equal selling success:

S1 (Selling Success) = E1 (Effectiveness) + E2 (Efficiency)
Self Management:
Measuring Return on Time Invested
Second, salespeople should know that ROTI, or return on time invested,

is a financial concept that helps them spend their time more profitably
with prospects and customers.
ROTI = Designated return/Hours spent

Self Management:
Setting Priorities
Third, sales professionals set priorities in

their work, based on two principles:
a. Parkinson’s Law indicates that work tends to
expand to fill the time allotted for its
completion, so stick to deadlines and complete
assigned tasks within the time you are
allocated.
b. Concentration Principle, which is often called
the “80-20 rule,” states that most of a
salesperson’s sales, costs, and profits come
from a relatively small proportion of customers
and products.

Examples of the 80/20 Principle
20% of Customers 80% of Sales
20% of Time 80% of Selling
20% of Products 80% of Profits
20% of Sales Force 80% of Revenues
72
Time Management and Routing:
Managing Salesperson Time
Two ways to keep productivity high and

sales costs low:
1. Managing Salesperson Time
2. Routing.
1. Managing Salesperson Time

• Some ways to allocate time are:
a. Deciding which accounts to call on
b. Dividing time between selling and
paperwork
c. Allocating time between present customers,
prospective customers, and service calls

Routing and Routing Patterns
2. Routing
Territorial routing refers to devising a

travel plan or pattern to use when
making sales calls to efficiently cover a
territory.

The major types of 1.

routing patterns include: Straight-line
Route
1. Straight-Line Route 5. 2.
Outer-Ring Circular
2. Circular Patterns Approach Territorial Patterns
Routing
3. Cloverleaf Route Patterns
4. Hopscotch Pattern, and
4. 3.
5. The "Outer-Ring" Hopscotch Cloverleaf
Approach. Pattern Route

1. Straight-line Route
§ In this routing method, a salesperson
starts at the office and makes calls in
one direction until reaching the end
of the territory.
2. Circular Patterns
§ In this routing method, a salesperson
starts at the office and moves in a
circle of stops until ending up back
at the office.

3. Cloverleaf Route
§ This routing method is similar to
the circular pattern.
§ However, as shown in the

diagram, rather than covering an
entire territory, the route circles
only part of a territory.
§ The next trip is an adjacent circle

and the pattern continues until the
entire territory is covered.

4. Hopscotch Pattern
§ This routing technique calls for

the salesperson to start at the
farthest point from the office
and hop back and forth calling
on accounts on either side of a
straight line back to the office.

5. The "Outer-ring" Approach
In this routing method, the salesperson first draws an outer ring

around the customers to be called upon.
Those customers inside the ring are connected to the outer ring route
using angles that are as obtuse as possible.

Group assignment
Research about sales territory of a business unit/shop surround you.
Prepare short ppt file and present to your friends.

Note
(ISBN-13: 9781119702832)


Copyright

herein.

Chapter 8 & 9:
Recruiting, Selecting, and Training the Sales Force
3
Learning Objectives

able to:
1. Follow the steps in the sales force recruitment
process
2. Identify sources of sales applicants
3. Follow the steps in the sales force selection
process
4. Apply the criteria used to make the final
selection decision, and
5. Implement the sales force socialization process

Introduction
What is the recruiting and selection process?
What are the sources of salespeople?
What are the steps of sales force selection?
How do firms make the selection of salespeople?
What is sales force socialization and why is it important?

Importance of Recruiting and Selection
Most confuse recruitment and

selection as being one and the
same—when, in actuality, they
are not.
Recruitment refers to finding

potential job applicants, telling
them about the company, and
getting them to apply.
Selection refers to activities

involved in choosing qualified
candidates that have the
greatest aptitude for the job.

Importance of Recruiting and Selection
Sales departments experience the

highest turnover rates, which is
expensive to a company for due to
recruiting, selecting and training costs.
Ineffective recruitment and selection

can result in:
1. Wrong salespeople being hired
2. Cost a company thousands of
dollars a year in training
3. Lost productivity

The Recruitment Process
The 5 steps in the recruitment process are:

1. Conduct a job analysis
2. Prepare a job description
3. Identify sales job qualifications
4. Attract a pool of sales recruits, and
5. Select best recruits
1. 2. 3. 4. 5.
Conduct Prepare Identify Attract a Pool Select
a Job a Job Sales Job of Sales Best
Analysis Description Qualifications Recruits Recruits
1. Conducting a Job Analysis
A job analysis entails steps to identify the duties, requirements,
responsibilities, and conditions of the job.
1. 2.
Steps in
Analyze the Determine duties and
environment in which Conducting a responsibilities
the salesperson Job Analysis expected from
is to work the salesperson
3.
Observe and
record sales tasks
being performed
9
2. Preparing a Job Description
A job description explains the duties and responsibilities of the sales position, the skills
needed on the job, and on what basis the employees will be evaluated.
=> used in recruiting, selecting, training, compensating, and evaluating sales force
=> determine whether each salesperson has a reasonable workload
1.
Sales
Activities
6. 2.
Goodwill Servicing
Functions
Checklist for Preparing a
Job Description
5. 3.
Executive Account/Territory
Activities Management
4.
Sales
Promotion

3. Developing a Set of Job Qualifications
Responsibilities of the job incumbent detailed in the job description should be
converted into a set of job qualifications:
Developing
1. 2.
Personality Traits a Set of Job Qualifications
Qualifications

3. Developing a Set of Job Qualifications
Responsibilities of the job incumbent detailed in the job description should be
converted into a set of job qualifications:
Developing
1. 2.
Personality Traits a Set of Job Qualifications
Qualifications
Intelligence Eg:
Decisiveness Two years of college
Energy and Enthusiasm At least… years of
Results orientation experience
Maturity Technology literacy
Assertiveness Specific product
Sensitivity knowledge
Openess …
Tough-mindedness

4. Attracting a Pool of Applicants
§ Next, sales managers need to

continuously identify, locate,
and attract salespeople.
§ Applications are invited, which

then then become the pool from
which new salespeople are
screened and chosen for
interviews.
1. 2. 3. 4. 5.
Sources of Salespeople
Which sources?
Advanages and disadvantages of each source?

Sources of Salespeople
1.
Some of the many places to find Persons
within the
sales recruit are: Company
6.
1. Persons within the company Professional 2.
Recruiters Competitors
2. Competitors
Sources of
3. Non-competing companies Salespeople
4. Educational institutions 3.
5. Non-
5. Advertisements—both Ads Competing
traditional and Internet Firms
4.
Educational
Institutions

5. Selecting Best Recruits
§ Then candidates become the

pool from which the best, most
suited new salespeople are
finally selected to work for the
firm.
1. 2. 3. 4. 5.
The Sales Force Selection Process
The steps in the process for selecting successful salespersons include:
1. Initial screening
2. Reference checking
3. In-depth interviewing
4. Employment testing
5. Follow-up interviewing, and
6. Making the selection
1. 2. 3. 4. 5. 6.
Initial Reference In-Depth Employment Follow-Up Making the
Screening Checking Interviews Testing Interviews Selection

1. Initial Screening
Initial screening eliminates undesirable

recruits as soon as possible.
Initial screening may start with:

a. Application Forms
b. Initial Screening Interviews and Tests
c. Automated Screening Techniques, and
d. Online profiles
1. 2. 3. 4. 5. 6.

a. Application Forms
Application items that predict performance

§ Current employment
§ Prior sales experience
§ Few residential moves, and
§ Education level
Application items associated with low turnover:

§ Employment
§ Prior sales experience, and
§ Employment length

b. Initial Screening Interviews and Tests

are conducted in person or over the
telephone with the best candidates being
invited back for in-depth interviews.
c. Automated Screening Techniques speed

the gathering and analysis of data from
applicants.
1. 2. 3. 4. 5. 6.

d. Online Profiles
§ Screen social media like Facebook,
Instagram, and Twitter for applicant profile
§ Ensure it is positive, or at least neutral
§ Check for unacceptable behavior, such as:
1. Excessive drinking
2. Drug usage
3. Photos of questionable activities
4. Racist comments against protected groups
1. 2. 3. 4. 5. 6.

2. Reference Checking
§ Reference checking is a screening tool that

enables a company to obtain information from:
1. Former and current bosses
2. Coworkers
§ In addition to reference checks, standard reviews

on all applicants should also be conducted, which
include:
a. Physical examinations
b. Background checks.
1. 2. 3. 4. 5. 6.

3. In-Depth Interviews
In-depth interviews help

determine issues such as:
§ If a person is right for the job
§ Why does the candidate want to
change sales positions?
§ Has the candidate worked alone or
as a team member?
1. 2. 3. 4. 5. 6.

Types of In-depth Interviews
1. Types of 2.
Structured In-depth Unstructured
Interview Interviews Interview

Applicants’ Responsibility in an Interview
Applicants should prepare for interviews by

learning about the company and trying to
anticipate questions that may be asked.
Some questions candidates typically ask

interviewers:
1. What percentage of the job will require travel?
2. What is the likelihood of relocation?
3. What are the starting salaries for a particular
position?

Applicants’ Responsibility in an Interview
Applicants should be aware of the negative

factors that frequently lead to rejection
during employment interviews include:
1. Poor appearance
2. Overbearing, overaggressive, conceited
attitude
3. Inability to express self clearly; poor voice,
diction, and grammar

4. Employment Testing
Six basic employment tests are

used in selecting sales personnel: Personality tests measure
1. Intelligence tests behavioral traits, such as:
2. Knowledge tests 1. Emotional intensity
3. Sales aptitude tests 2. Intuition
4. Vocational interest tests 3. Motivation
5. Attitude and lifestyle tests 4. Sensitivity
6. Personality tests
1. 2. 3. 4. 5. 6.
28
5. Follow-Up Interviews.
Strong candidates often go

through initial and follow-up
interviews with other members of
the sales team, such as other
sales managers, division
managers, and sales reps.
1. 2. 3. 4. 5. 6.
29
6. Making the Selection
Some key points to cover upon

making a formal offer are:
1. Duties of the salesperson
2. Compensation, such as salary,
draw, bonus, commission and
expenses
3. Termination of employment
terms
1. 2. 3. 4. 5. 6.

Role play exercise
Asume that you are a sales manager of one of following organizations:
1. Real estate company
2. Export company
3. Retail company
4. Logistics company
5. Insurance company
6. Pharmacy company
7. Beauty salon
8. University
Make an interview to find your most potential candidate for sales

position.

Sales Training Development Process
The sales training development process consists of the following steps:
1. Conduct a Training Needs Assessment

2. Determine Training Objectives
3. Determine Training Program Content
4. Determine Responsibility, Method, Delivery, Timing and Location for Training
5. Prepare Trainees
6. Motivate Trainees
7. Reinforce Training, and
8. Evaluate Training.
3. 4.
1.
2. Develop Determine 5.
Conduct 6. 7. 8.
Determine Content Responsibility, Prepare
Training Motivate Reinforce Evaluate
Training of the Method of Trainees
Needs Trainees Training Training
Objectives Training Delivery, Timing,
Assessment
Program and Location
Step 1: Conduct A Training Needs Assessment
At this initial stage of conducting a training

needs assessment, sales managers should
review a salesperson’s:
1. Background
2. Previous job experience, and
3. Identify gaps between their qualifications and
the required job activities
3. 4.
1.
Conduct 6. 7. 8.
Assessment
Step 2: Determine Training Objectives
As a consultant to buyers, a salesperson should

be taught how to:
1. Develop a long-term relationship with clients
2. Identify the client’s problems and suggests solutions
3. Provide helpful information and service to secure
business
4. Work as a member of a team of specialists
3. 4.
1.
Conduct 6. 7. 8.
Assessment
Step 3: Determine Training Program Content
In determining training program content, be advised

that two types of sales training programs are:
a. Initial sales training programs are designed for
newly hired salespeople.
b. Continuing sales training programs are
designed for experienced salespeople.
3. 4.
1.
Conduct 6. 7. 8.
Assessment
The third step entails determining training program content and scope,
which includes six basic elements:
a. Company knowledge
b. Product knowledge
c. Knowledge of competitors and the industry
d. Customer and market knowledge
e. Selling skills knowledge, and
f. Technology training
1. Sales Training 2.
Company Knowledge Program Content Product Knowledge
3.
Knowledge of Industry
and Competitors
36
1. Sales Training 2.
Company Knowledge Program Content Product Knowledge
3.
Knowledge of Industry
and Competitors
37
4.
Customer and Market
Sales Training 5.
Knowledge Program Content Selling Skills Knowledge
6.
Technology Training
38
Step 4: Determine Responsibility, Method of Delivery, Timing, and Location
To make training delivery responsibility decisions, decide:

1. Who will conduct the training?
2. Will it be for individuals or a group?
3. What method of delivery should be used?
Depending on the situation, responsibility for training can belong to:

1. Line executives
2. Staff trainers, or
3. Outside training specialists
39
a. Line sales executives, such as sales managers, senior sales representatives,

field supervisors, and division managers often train new as well as
experienced salespeople.
b. Staff trainers are either members of personnel, production, or office

management areas, or they are company employees hired specifically to
conduct sales training programs.
c. Outside training specialists can be retained to enhance knowledge on:

i. Motivating salespeople
ii. Leading salespeople
iii. Sales forecasting, among other topics
40
1. Emerging 2.
Conferencing Training Methods Internet
3.
Intranet
Others training methods:

Lectures
Literature
Group discussion
Role playing
Simulation games
Demonstrations
On-the-job training (and mentoring)
Personal conferences
Audiotapes
DVDs
…
41
1. Location of 2.
Centralized Training Sales Training Decentralized Training

Step 5: Preparing Trainees for Training
Conduct a pre-training briefing,

which tells participants the
training’s purpose and objectives,
why they were selected to attend.
3. 4.
1.
Conduct 6. 7. 8.
Assessment
Step 6: Motivate Trainees for Training
Several ways trainers can motivate

salespeople to learn are:
1. Use positive reinforcement
2. Use active training formats and variety
3. Encourage social interaction
4. Facilitate expertise sharing
5. Include realistic examples and situations
3. 4.
1.
Conduct 6. 7. 8.
Assessment
Step 7: Conducting Post-Training Reinforcement
Post-training sessions can be conducted to

reinforce learning.
Coaching or developmental feedback between

sales managers and salespeople can reinforcing
training concepts, solving selling problems, and
improving basic selling skills.
3. 4.
1.
Conduct 6. 7. 8.
Assessment
Step 8: Evaluate Training
After completion of the sales training program, evaluate how well it met the overall
objectives and specific goals for the program.
1. 2.
Reaction Learning
Evaluating
Sales
Training
Programs
4. 3.
Results Behavior

Continuous Training Programs
Sales managers also must develop continuous training interventions necessitated by
changes in the company’s policies, products, marketing strategies as well as market
conditions and economic changes, thus helping the sales force quickly adapt to
changes.
1. 2.
Continuous Training Programs
Refresher Training Retraining
3.
Managerial Training
47
Sales Force Socialization
Sales force socialization refers to

the proper introduction of the new
recruit to:
1. Company practices, procedures,

and philosophy, and
2. Social aspects of the job

Sales Force Socialization
Benefits of socialization programs include:

1. Greater job satisfaction
2. Increased employee commitment
Socialization contributes to person-

organization fit (POF), which describes how
consistent a salesperson’s value system is with
those of the firm.
Positive job outcomes of POF include:

1. Higher job satisfaction
2. Lower stress

Types of Socialization
Types of Socialization
1. Types of 2.
Initial Extended
Socialization Socialization Socialization

Initial Socialization
1. Initial Socialization
a. 1. b.
Recruiting Initial Socialization Selection
c.
Introductory Training
51
Extended Socialization
2. Extended Socialization: Is used as a means to build esprit de corps in
the sales organization.
a. 2. b.
Long-Term Training Extended Socialization Job Rotation
c.
Corporate Social Activities
52
Note
(ISBN-13: 9781119702832)


Copyright

herein.

Role play exercise
Asume that you are a sales manager of one of following organizations:
2. Export company
3. Retail company
6. Pharmacy company
7. Beauty salon
8. University
Prepare a job description

Identify job qualitifcation
Make an interview to find your most potential candidate
Chapter 10:
Sales Force Leadership
3
Learning Objectives

able to:
1. Understand the dynamics of leadership
2. Contrast supervision, management, and leadership
3. Identify the different sources of power for leaders
4. Know the classic theories of leadership
5. Apply the major contemporary theories of leadership
to sales force management
6. Communicate effectively with the sales force
7. Overcome barriers to communication with the sales
force.

Introduction
What exactly is leadership?
Is there a difference between supervision, management, and

leadership?
Is there a difference between leadership and power?
What are the sources of power?
How can classical and contemporary leadership theories be applied to

twenty-first century sales force management?

Introduction
What exactly is leadership?

leadership?

Supervision, management, and leadership
leadership?
Supervision is closely monitoring the daily work activities of sales
subordinates
Management deals with administrative activities that include planning,
organizing, staffing, directing, and controlling the operations of a firm
toward the attainment of its goals and objectives
=> Primarily focus on the non-people, policy, and decision-making
functions
Leadership is an emotional process of exercising psychological, social,
and inspirational influence on the people employed by the firm.
=> Get people to do willingly what they would not readily do on their
own

Foundations Of Leadership
Key features of leadership is that it is:

1. Interpersonal
2. Relies on influence
3. Guide individual and organizational goals
4. Espouse ethical and moral values
5. Relies on communication to achieve goals.

Sources Sales Manager Power and Influence
on the Sales Force
Being leaders, sales managers exercise psychological, social, and inspirational
influence over the sales force through their use of power.
SALES MANAGER POWER
Legitimate Power Reward Power Coercive Power Referent Power Expert Power
Derived from the The ability of the The ability of the Ability to inspire Based on leader
position occupied sales manager to sales manager to followers based skills, knowledge,
on the provide obtain salesperson on charisma, intelligence, job-
organizational subordinate compliance loyalty, and related expertise
structure, the sales salespeople with through fear of identification with and proficiency.
manager has various benefits, punishment, the leader’s vision.
formally including money, sanctions, or by
delegated praise, or withholding
authority to seek promotion and rewards (includes
salesperson incentives such as being fired from
compliance. commissions and the job).
bonuses.
P O S I T I O N P O W E R P E R S O N A L P O W E R
10
Applying Contemporary Leadership Theories To
Twenty-first Century Sales Force Management
Five prominent contemporary leadership approaches that are
germane to sales force management are:
1.
Transformational
1. Transformational leadership Leadership
2. Pygmalion leadership, and

3. Empowerment 5. 2.
4. Servant leadership, and Shared Pygmalion
Leadership Contemporary Leadership
5. Shared leadership Leadership
Theories
Classic theories are based on 4.

Servant 3.
transactional leadership. Leadership Empowerment

Transactional Leaders
The rewards transactional leaders provide to the

sales force include:
1. Commissions, bonuses, and salary increases, and
2. Promotions to higher-level positions.
In sum, transactional sales leaders take a short-

term perspective and are not “forward” looking
leadership behaviors!!!!!
What’s next, then?

Transformational Leadership
(AKA Charismatic and Visionary Leadership)
A theory that holds considerable promise is known as
transformational leadership, which adopts a long-term
orientation by focusing on future needs.
Transformational sales leaders activate their

subordinates’:
1. Higher-order needs and
2. Encourage them to substitute company needs for
their own.
Transformational sales leaders:

1. Raise salespersons’ awareness of value of their jobs
2. Consequences of their actions, and
3. Salesperson importance to the organization.

Transformational Leadership
(AKA Charismatic and Visionary Leadership)
4.
Transformational sales Charismatic
managers gain extraordinary and
Visionary
commitment from their Leadership
salespeople using the following

four key facets:
3. Transformational 1.
Individualized
1. Inspiration Consideration
Leadership Inspiration
2. Intellectual stimulation
3. Individualized consideration, and
4. Charismatic and visionary
leadership 2.
Intellectual
Stimulation

Pygmalion Leadership
Pygmalion leadership is based on the principle that

positive thinking begets positive results.
Sales managers can set high, but realistic

expectations to their sales force.
Result: A self-fulfilling prophesy as sales managers

get what they expect, which is known as the
“Pygmalion” effect.

Leadership and Empowerment: Distributive Power
Sharing Through Participative Management
Empowerment focuses on distributing power to

lower-level employees, who often experience low
levels of self-efficacy, or feelings of powerlessness
and the belief that their work does not make any
meaningful contribution to organizational
performance.
Empowering employees allocates decision-making

authority to better resolve problems, which can help
alleviate employee powerlessness.

Leadership and Empowerment: Distributive Power
Sharing Through Participative Management
Low EMPOWERMENT CONTINUUM High
No Sales Force Sales Force Sales Force Sales Force Sales Force
Involvement in Consultation in Participation in Involvement in Self-
Decision Making Decision Making Decision Making Decision Making Management
Sales manager Sales manager Sales manager Sales manager Power and
makes all decisions makes all and salespersons delegates power authority
jointly provide and authority to distributed
decisions, but input and salespeople for between sales
Salespersons have periodically suggestions in decision making manager and
no decision making elicits input to or decision making salespersons
authority or suggestions from Equal power
Some power sharing on Sales manager
discretionary salespersons sharing, but sales decisions, but and salespersons
power manager is still sales manager equally involved
superior due to implements in formulating and
position in firm decisions implementing
hierarchy and strategy
implements
decisions
Low SALES FORCE SKILL LEVEL High
Low SALES MANAGER-SALES FORCE COOPERATION LEVEL High
Low SALES FORCE LOCUS OF CONTROL High
Low SALES FORCE POWER High

29
Implementing an Empowerment Program
for the Sales Force
2. Salesperson
Character Development
• Commitment to firm and
sales team success
• Trust, honesty,
adaptability, flexibility,
and accountability
• Desire to grow
• Ethics, values, and morals 3. Developing an
1. Salesperson Skill
Empowerment Culture
Development
• Cooperation
• Technological skills • Collaboration
• Time and Territory management • Mutual trust
skills Sales Force • “Win-win” mindset
• Communication skills (verbal and Empowerment • Open communications
nonverbal) Program • Access to critical information
• Self management skills • Holding salespeople accountable
• Team dynamics skills and tying rewards to meeting
• Statistical analysis of sales data goals
4. Providing
Empowerment
Opportunities
• Distributing power
• Delegating decision making
authority
• Shared participation in
decision making
• Developing and
implementing sales
strategies
30
Servant Leadership
Servant leadership refers to striving in decision-making to consider and serve the

needs of people first ahead of everything else.
Organizational leaders focus first on the well-being of the employees and

stakeholders including the communities they serve.
Servant leadership is not about acting submissive, but serves to proactively involve
exhibit the following key behaviors:
1. Empowering and developing people
2. Humility and authenticity
3. Stewardship and high moral values

Shared Leadership
The (re)emergence of contemporary empowerment, servant, and shared
leadership theories represents a major paradigm shift that has moved away
from relying on "vertical," "hierarchical," or the “traditional” narrow “top-
down” leadership styles towards the adoption of alternative “bottom-up”
leadership approaches.
Indeed, shared leadership—like empowerment and servant leadership—

embody very similar philosophical underpinnings that seek to focus on the
well-being and attempt to satisfy employees’ needs.
1. Shared Leadership 2.
Dimensions
Shared Purpose Social Support
3.
Voice

Communication
To influence subordinates, leaders must

use communication, which is a two-
way process that includes:
1. Speaking
2. Writing
3. Listening, and
4. Reading body language

Listening
Differing not only in purpose, but in the level of feedback or interaction that
occurs, there are four basic types of listening.
4.
Active
Listening
3. 1.
Empathic Listening Content
Listening Listening
2.
Critical
Listening
34
Understanding Nonverbal Communication
Studies show that 70 percent of human

communications is nonverbal, i.e., body
language and gestures communicate to other
people.
Nonverbal communication or kinesics takes

place largely through body language and is
conveyed through actions, such as:
1. Professional attire and behavior
2. Movements of the face, arms hands, and legs
3. General appearance and personal hygiene, and
4. Voice characteristics

Role-play excersise
You are the national sales manager for a large financial services firm, and one of
your regional sales managers has asked you for some advice. She is anticipating
problems in one of her districts primarily because of the leadership style of one of
her district sales managers. He is a highly successful sales veteran who believes in
gaining compliance from his salespeople through fear and punishment He makes it
very clear to his salespeople that if they don't perform up to his standards, they will
not receive bonuses and might even be fired. He firmly believes every sales person
can be replaced and salesperson turnover in his district is higher than in other district.
Nevertheless, his sales district is one of the most profitable in the company. However,
recently, she has heard rumors that some of the salespeople in his district have
started deliberately ignoring his communications to them, and are making negative
comments and spreading rumors about him to customers and other salespeople. None
of the salespeople in his district have complained directly to her yet. But,
nevertheless, she's worried that the salespeople in his district are becoming so turned
off by his management style that some major sales force and customer problems may
erupt soon and hurt the company's sales and reputation.
Discuss: What should National Sales Manager, Regional Sales Manager, District
Sales Manager do?
Role-Play Participants and Assignments
National Sales Manager - must give her regional sales manager
advice on how to handle the situation.
Regional Sales Manager - feels the district sales manager's

salespeople are nearing the point of open rebellion and that their
behavior may harm the company's reputation with customers. Before
discussing the situation further with the . national sales manager, she
needs to gather more facts and perspectives by first talking to the
district sales manager
District Sales Manager not fully aware and maybe not even
particularly concerned that his salespeople are becoming totally
turned off by his management-leadership style.

Chapter 11:
Sales Force Motivation
38
Learning Objectives

able to:
1. Understand the nature of motivation
2. Apply contemporary theories of motivation to
sales management
3. Use reward and incentive programs to motivate
salespeople
4. See how sales contests and sales meetings can
motivate salespeople and learn basic guidelines
for coordinating them
5. Apply organizational commitment, career stage,
and empowerment to motivating salespeople.

Introduction
But what is motivation?
What is the nature of motivation?
What motivation theories can sales managers use to augment

salesperson performance?
What reward and incentive programs, can be used to motivate

salespeople?
What strategies and tools can be employed for sales force motivation?

Foundations of Motivation
Key features of motivation include:
§ Direction, which means tasks on which

the individual will focus effort.
§ Intensity, which refers to the amount of
physical and mental effort expended
on a given task, and
§ Persistence, which refers to the duration
of the effort an individual will exert.

Applying Contemporary Motivation Theories To
Twenty-first Century Sales Management
There are three broad classical schools of thought about motivation
that are germane to sales force management:
1. Contemporary 2.
Content Theories Motivation Theories Process Theories
• Hierarchy of Needs • Equity Theory

Theory 3.
Reinforcement • Expectancy Theory
• ERG Theory Oriented Theories • Attribution Theory
• Needs Theory • Also known as Organizational • Goal-Setting Theory
• Dual Factor Theory Behavior Modification Theory
42
Maslow’s Hierarchy of Needs
Higher Self-
Level Actualization
Maslow’s well-known hierarchy Needs
Esteem
of needs theory contends that Needs
people are motivated by a
Social
hierarchy of psychological Needs
growth needs.
Safety
Needs
Lower
The gratification of needs at one Level Physiological
level in the hierarchy activates Needs Needs
needs at the next higher level. Can you think how this theory can be
used by sales managers to motivate
salespeople?

Maslow’s Hierarchy of Needs
Physiological needs for human survival,
food, drink, shelter, warmth, clothing, etc.
Higher Self-
Level Actualization
Safety needs for security, such as Needs
medical and fear. Esteem
Needs
Social needs and involve feelings of Social

belongingness to a family, group or Needs
community. Safety
Needs
Self-esteem needs involve dignity, Lower
Physiological
achievement, desire for reputation and Level Needs
Needs
respect.
Can you think how this theory can be
used by sales managers to motivate
Self-actualization: Realization of a salespeople?
person's potential, self-fulfillment, and
personal growth. Copyright ©2020 John Wiley & Sons, Inc. 44
ERG Theory
Three need categories are posited by ERG theory:

1. Existence, which is similar to Maslow’s physiological and safety needs
2. Relatedness, which is similar to social and esteem needs, and
3. Growth, which is similar to self-actualization needs
Like hierarchy of needs theory, ERG proposes that individuals focus on

higher-level needs as lower-level ones are satisfied; unlike need
hierarchy theory, though, it suggests that people can move up and
down the three-part hierarchy.
1. ERG Theory 2.
Existence Relatedness
3.
Growth
45
Needs Theory
Needs theory focuses on the following to motivate salespersons:
1. The need for power reflects the drive to dominate, influence, and have
authority to control others.
2. The need for achievement is the strong urge to master and accomplish
difficult tasks.
3. The need for affiliation consists of the desire to establish friendships, to

have close working relationships with peers as well as customers, and to
avoid conflict.
1. 2.
Need For Needs Theory Need For
Power Achievement
3.
Need For
Affiliation 46
Dual Factor Theory
(AKA Motivation-Hygiene Theory)
Dual Factor theory focuses on motivation factors and hygiene factors to
motivate salespersons:
Sources of satisfaction are called motivators because they are

necessary to stimulate individuals to make superior efforts. They
include responsibility, achievement, recognition, and opportunities for
growth and advancement.
When present, they motivate salespeople; if lacking, they demotivate

them.
1. 2.
Dual Factor Theory Hygiene Factors
Motivation Factors
47
Dual Factor Theory
(AKA Motivation-Hygiene Theory)
The other half of the Dual Factor theory of motivation consists of
hygiene factors.
These are the extrinsic aspects of the job, such as company policies,
pay, benefits, working conditions, and job security.
When perceived as adequate or better, hygiene factors do not

actually induce positive motivation in salespeople. Their absence,
however, leads to salesperson dissatisfaction and demotivation.
1. 2.
Dual Factor Theory Hygiene Factors
Motivation Factors
48
2. Process theories, which emphasize the kind of goals and rewards that
motivate people and explain the thought process of employees and
identify actions that fulfill their needs, are:
a. Equity theory
b. Expectancy theory
c. Attribution theory, and
d. Goal-setting theory
1. Contemporary 2.
3.
Reinforcement
Oriented Theories
49
Equity Theory
Equity theory of motivation suggests that

salespeople compare their relative work
contributions and rewards with those of other
individuals in similar situations.
Salespeople experience inequity when they

feel either under- or over-rewarded for their
contribution relative to that of others.
Salespeople who feel under-rewarded

decrease their work efforts.
Salespeople who feel overpaid tend to

increase theirs.

Expectancy Theory
Expectancy theory proposes that

individuals contemplate the
consequences of personal actions
in choosing different alternatives
to satisfy their needs.
Motivation (or effort) is a function

of three elements:
1. Expectancy
2. Instrumentality, and
3. Valence

Expectancy Theory
Motivation or Effort is symbolically it is
expressed as:
n
Motivation = [ Ei ´ ( å Ij ´ Vjk ) ]
j=1
Where:
Ei = Expectancy is the salesperson’s perception that
exerting a given level of effort will lead to higher
achievement.
Ij = Instrumentality is the salesperson’s estimate of
the probability that achieving a certain level of
improved performance will lead to the attainment
of certain rewards.
Jk = Valence is the desirability of a potential
outcome or reward that the salesperson may
receive from improved performance.
Expectancy Theory
Basically, what this implies is that sales

managers need to ensure salespersons that:
1. Exerting effort will leads to higher

achievement
2. Improved performance will lead to the

attainment of certain rewards, and
3. Most importantly ensure that the rewards

that are offered are actually desirable, if
not salespersons will not expend higher
effort

Attribution Theory
Attribution theory explains that people

want to know why an event occurred and
why they succeeded or failed at a certain
task.
An internal attribution is a reason within the

salesperson that could affect performance
(ability, effort, skill, and experience).
An external attribution is an explanation

that lies beyond the salesperson’s realm of
control (luck, territory or task difficulty).
The outcome: salespeople can choose

either to work harder or to work smarter.

3. Reinforcement-oriented theories (or OBM)—rely on systematic
application of rewards or punishments to strengthen, maintain, or
eliminate behaviors.
Sales managers can use the following four OBM approaches:
1. Positive reinforcement or a reward for a desired behavior.
2. Negative reinforcement or avoiding an undesirable outcome.
3. Punishment or sanction for displaying an undesired behavior.
4. Extinction or no positive reinforcement after an undesirable behavior.
1. Contemporary 2.
3.
Reinforcement
Oriented Theories
55
Using Rewards and Incentive Programs for
1.
Extrinsic
Rewards
2.
5.
Sales Incentive
Recognition Reward and Programs
Incentive Programs
4. 3.
Intrinsic Promotion
Rewards Opportunities
56
Sales Force Motivation Strategies and Tools
Sales managers can use other sales motivation strategies and tools
that go above and beyond rewards.
But the two most popular motivational strategies are:

a. Sales contests, and
b. Sales meetings
1. Motivation 2.
Sales Contests Strategies Sales Meetings

Sales Contests
1. Sales Contests: Purposes, Goals, and

Objectives.
The purpose of a contest may be to motivate
salespeople to:
a. Increase the number of new customers
b. Develop sales of a new product
c. Counteract sales slumps due to seasonal
variations
d. Clear overstocked inventory

Sales Contests
2. Contest Themes.
Sales managers should ensure that
contest themes are:
a. Creative
b. Novel
c. Timely
The theme can be a:

a. Summer contest, or
b. Holiday contest

Sales Contests
3. Contest rules.
Formulate contest rules to clarify
goals and prevent abuses.
Rules should also be phrased so
that they discourage salespeople
from holding back orders before
the contest, applying undue
pressure on buyers during the
contest, or suggesting that buyers
can cancel their orders after the
contest.

Sales Contests
4. Contest rewards and prizes.

Contest prizes should include items
that most of the participants want,
or the contest will not be
motivating.
Examples of rewards include:

a. Glamorous trips
b. Luxurious boats and cars
c. Sporting equipment
d. Home entertainment systems

Sales Contests
5. Salesperson participation.
Most contests don’t pit one salesperson against
another, but award prizes for achieving
certain standards of performance.
Prizes must be at least attractive enough to
motivate because token prizes with little
recognition value may kill the motivational
effects of the contest.
6. Contest duration.
Usually last between one and five months.
Contests that occur too regularly (at the same
time each year) may come to seem routine
and lose their incentive value.
Sales Contests
7. Promoting the contest.

To build enthusiasm, the contest
should be promoted with personal
letters, and e-mails from
management can announce and
reinforce the imminent contest.
The letters should announce the

exact nature and rules of the
contest to all salespeople
simultaneously.

Sales Contests
8. Assessing contest effectiveness.
Management should assess whether the
contest objectives were achieved, such as
those identified earlier under the purposes of
the contest.
9. Potential pitfalls of contests.

Sales managers should recognize that
contests can become so routine that they are
expected, and sales reps consider awards as
part of their yearly compensation.
Contests can temporarily increase sales and
thereby provide a means of disguising sales
force shortcomings or sales management
deficiencies. Copyright ©2020 John Wiley & Sons, Inc. 64
Why Some Sales Contests Are Losers
Evidently, a lot goes into planning sales

contests. Even so, some sales contests fail
because of:
a. Overestimating goals
b. Neglecting to publicize the contest
c. Rewarding only the top salespeople

Sales Meetings
1. National, regional, and local

meetings.
a. National meetings held once a

year
b. Regional meetings held 3-4 times

a year, and
c. Local meetings are regularly held

Sales Meetings
2. Planning sales meetings.
Planning sales meetings involves

several tasks, such as:
a. Establish meeting goals
b. Select a theme on the purpose of
the meeting
c. Develop a tentative agenda or
program for the meeting
d. Develop and finalize the program
and budget

Sales Meetings
3. Competitive spirit.
The sales meeting is an excellent
opportunity for management to
recognize sales accomplishments, to
announce the names of sales leaders,
and to award prizes to outstanding
salespeople and sales managers.
4. Specialized training.
National or regional sales meetings
offer management an excellent
opportunity to train all salespeople
simultaneously (e.g., regarding how to
introduce a new product or customer
strategy). Copyright ©2020 John Wiley & Sons, Inc. 68
Sales Meetings
5. Change of pace.
Getting away helps salespeople unwind.
Many firms hold their sales meetings at
resort sites, where salespeople can enjoy
golf, tennis, swimming, and health club
facilities between business meetings.
6. Video conferences.
Setting up a video conference is an
efficient way to link several different
locations together for an interactive sales
meeting rather than bringing the entire
sales force of an organization together
under one roof.
Additional Perspectives In Twenty-First Century
Additional perspectives in 21st century sales force motivation, are:
4.
Salesperson’s
Career Cycle
3. Additional 1.
Learning vs. Motivation Organizational
Performance Perspectives and Job
Orientation Commitment
2.
Organizational
Climate

Salesperson’s Career Cycle/Stages
► Salespeople need to be managed according to four career stages they pass
through.
4.
Decline or
Disengagement
Stage
3. Salesperson 1.
Maturity or Career Preparation or
Maintenance Exploration
Cycle/Stages
Stage Stage
2.
Development or
Establishment
Stage
Career Plateauing
Career plateauing occurs for three major

reasons:
1. The salesperson’s performance is
deficient.
2. Few opportunities for promotions or
augmented responsibility are available
in the firm.
3. The individual has a preference or some
constraint that prevents him or her from
taking on added responsibility.

Group excercise
Using an Internet search engine find a firm that specializes in
motivational training. Share with the class.
Suggested issues to discover:
What type of motivational training do they seem to be
advocating?
Is the focus on B2B selling, B2C selling, or both?
Do they imply that one motivational approach will fit the entire
sales force?
What are the length and cost of each program?
Where it is the training held?
Who does the training, that is, what are their qualifications?
What innovative topics will the sales force motivation training
cover?
Note
(ISBN-13: 9781119702832)


Copyright

herein.

Chapter 12:
Sales Force Compensation
3
Learning Objectives

able to:
1. Explain the reasons for regularly reviewing
sales force compensation plans.
2. Describe the basic steps in developing
compensation plans.
3. Compare the advantages and disadvantages
of different methods of sales force
compensation.
4. Be aware of developing trends in sales force
compensation.
5. Understand the efficient and effective use of
expense accounts and fringe benefits in
compensation planning.

Introduction
What are sales force compensation plans?
How should sales force compensation plans be developed?
What are the advantages and disadvantages of different

compensation methods?
What are the trends in sales compensation?
What are expense accounts and fringe benefits?

Sales Force Compensation Plans
Compensation is defined as “all monetary payments and benefits used to
remunerate employees for their performance.”
As extrinsic rewards, compensation plans and financial packages are

recognized as the greatest motivator of salespeople.
1. Methods of 2.
Compensation
Straight salary Straight commission
3.
Combination

When is Straight Salary Best?
Discuss advantages and disadvantages of straight salary

When is Straight Salary Best?
Straight salary is best suited for:

1. Team selling
2. If there are long negotiating
periods
3. During periods where a salesperson
is learning the job
4. For missionary selling

Straight Salary Advantages and Disadvantages
Straight salary has the advantages of:

1. Providing security
2. Developing a sense of loyalty
3. Providing more control over
salespeople, and
4. Being simple to administer
The disadvantages straight salary are:

1. It may cause a lack of incentive
2. Increase selling costs, and
3. Lead to adequate but not superior
performance

When is Straight Commission Best?
Discuss advantages and disadvantages of straight Commission

When is Straight Commission Best?
Straight commission is best suited when:

1. Strong incentives are needed to increase
sales
2. Selling costs need close control
3. Service is less important

Straight Commission Advantages and
Disadvantages
Straight commission has the advantages of:

1. Relating income directly to sales
2. Basing income strictly on accomplishments
with no ceiling, and
3. Ensuring that costs are proportional to sales
The disadvantages of straight

commission include:
1. An overemphasis on sales
2. Neglect of non-selling activities
3. Erratic earnings, and
4. Loss of control by sales managers

When Combination Compensation Plans Should Be
Used
Salary plus commissions is best suited when:

§ New salespeople are hired since it provides more
security than straight commission.
Salary plus bonus is best suited for:
§ Achieving long-run objectives, such as selling large
installations.
Commission plus bonus is best suited for:
§ Team based efforts, in which some salespeople call
on buying committees.
Salary plus commission plus bonus is best when:
§ There are seasonal sales and frequent inventory
imbalances

Combination Plan Advantages and Disadvantages
Combination plans advantages of are

that they offer:
1. Greatest flexibility and control
2. Provide security plus incentive, and
3. Frequent, immediate reinforcement of
desired behaviors
Combination plans disadvantages are:

1. Be complex and difficult to understand.
2. Be expensive to administer, and
3. Fail if not carefully developed.

Sales Force Compensation Plans
Types of Sales Compensation Plans

Another way of looking at Nature of Reward
compensation plans is based on Non-Incentive Incentive Based Benefits
the nature of the reward. Based Based
Hourly wage Straight Health
commission insurance
Along with examples of each Straight salary Performance Dental
that are shown in the table, bonus insurance
Merit Pay Pension
compensation plans are:
plans
Profit sharing Social
1. Incentive based security
Pay-for-
2. Non-incentive based, and knowledge
3. Benefit based Stock options
Flexible pay
compensation
Combination
15
Developing The Compensation Plan
The seven distinct stages in the process of developing a compensation

plan include:
1. Prepare job descriptions
2. Establish specific objectives
3. Determine general levels of compensation
4. Develop the compensation mix
5. Pretest the plan
6. Administer the plan, and
7. Evaluate the plan
3. 4.
1. 2.
Determine Develop 5. 6. 7.
Prepare Establish
General the Pretest Administer Evaluate
Job Specific the Plan
Levels of Compensation the Plan the Plan
Descriptions Objectives
Compensation Mix
1. Preparing Job Descriptions

Develop meaningful job descriptions before
they can develop a compensation plan.
Systematically compare job descriptions—

including responsibilities and performance
criteria—to other sales positions in terms of their
importance to the organization.
3. 4.
1. 2.
Prepare Establish
Compensation Mix
2. Establish specific objectives
Compensation plans are designed to

achieve organizational objectives, such as:
a. Larger market share
b. Higher profit margins
c. Introducing new products or services
3. 4.
1. 2.
Prepare Establish
Compensation Mix
Features of Good Compensation Plans
Standpoint of the Firm
Control: Economic: Motivational: Simplicity:

Over how Balancing For To administer,
salespeople sales costs salespeople to explain, and
allocate their time and increase effort flexible to adjust
sales results
Features of Good
Compensation
Plans
Reward for
Income
Superior Fairness
Regularity
Performance
Standpoint of Sales Representatives

20
3. Determining General Levels of Compensation
Compensation should be competitive to attract and retain competent

salespeople
Basic pay level should be based on:

a. Skills, experience, and education required for the job
b. Income for comparable jobs in the company
c. Income for comparable jobs in industry
3. 4.
1. 2.
Prepare Establish
Compensation Mix
4. Developing the Compensation Mix
Six factors for developing the compensation mix:

a. Costs for alternative compensation mixes
b. Proportion for salary
c. Proportion for incentives
d. Fixed, progressive, or regressive incentives
e. Splitting commissions, and
f. Types of incentives
3. 4.
1. 2.
Prepare Establish
Compensation Mix
a. Costs for Alternative Compensation Mixes
§ Straight-commission plans are most efficient at
lower sales volume levels.
§ Shift from commissions to salary at higher volumes
b. Proportion for salary
§ Salaries should enable salespeople to meet living
expenses.
c. Proportion for Incentives
§ Commission and bonus are based on achieving a
sales quota (dif. industries have dif. level, Eg:
consumer products: 20%, industrial product: 25%,
service: 50%-70%)
3. 4.
1. 2.
Prepare Establish
Compensation Mix
Developing the Compensation Mix
d. Fixed, Progressive, or Regressive Incentives
§ Fixed commissions do not offer incentives for

higher sales.
§ Progressive incentive rates step up the

percentage of commission or bonus awarded as
sales volume grows past designated levels.
§ Regressive incentives decline as sales increase

(used if there are windfall sales and a propensity
to overload customer inventories).
3. 4.
1. 2.
Prepare Establish
Compensation Mix
e. Splitting Commissions
§ If two or more salespeople worked on closing
a sale, the commissions should be split.
f. Types of Incentives
§ Different incentives offered to salespeople
are:
1. Supplemental life insurance
2. Supplemental medical insurance
3. Low- or no-interest loans
4. Business-class air travel
3. 4.
1. 2.
Prepare Establish
Compensation Mix
5. Pretest the Plan

Managers must pretest and evaluate any
compensation plan before adopting it in one or
more sales divisions.
A committee of key employees should help

develop, approve, and implement any proposed
new plan.
3. 4.
1. 2.
Prepare Establish
Compensation Mix
6. Administer the Plan
A compensation plan should be fair, easy

to understand, simple to calculate, and
flexible.
As market conditions and organizational

objectives change, the plan may need to
be altered.
3. 4.
1. 2.
Prepare Establish
Compensation Mix
7. Evaluating the Plan
Sales managers should continually evaluate the

plan’s potential for:
a. Attracting desirable people
b. Retaining salespeople
c. Motivating salespeople
3. 4.
1. 2.
Prepare Establish
Compensation Mix
Role play exercise
Asume that you are working for one of following organizations:
4. Retail company
5. Advertising company
6. Automobile company
7. Health and beauty care service company
Think about your expected compensation if you are (1) a sales person
and (2) a sales manager.

Features of Good Compensation Plans
Standpoint of the Firm
Control: Economic: Motivational: Simplicity:

Over how Balancing For To administer,
salespeople sales costs salespeople to explain, and
allocate their time and increase effort flexible to adjust
sales results
Features of Good
Compensation
Plans
Reward for
Income
Superior Fairness
Regularity
Performance
Standpoint of Sales Representatives

30
Expense Accounts and Fringe Benefits
Expense accounts enable sales

representatives to carry out necessary
selling activities,
Fringe benefits help provide them with

personal security and job satisfaction.
The costs associated with supporting

salespeople in the field include:
1. Meals
2. Travel (air, train, auto)
3. Auto Rental, and
4. Lodging
31
Designing the Expense Plan
A well-designed expense plan requires the following building blocks:
1.
Flexibility
5. 2.
Affordability Designing the Equitability
Expense Plan
4. 3.
Simplicity Legitimacy
32
Controlling Expenses Through Reimbursement
For controlling expenses through reimbursement, sales managers can
use three basic reimbursement plans that include:
1. Types of 2.
Unlimited Reimbursement Limited Reimbursement
Plans Reimbursement Plans
Plans
3.
Combination Reimbursement
Plans
33
Chapter 13:
Sales Analytics and Performance Evaluation
3
Learning Objectives
able to:
1. Understand the framework and process for carrying
out a sales force organization audit.
2. Identify and describe the sources of information for
conducting analytics on sales volume, costs, and
profitability by market segments.
3. Explain the overall process and procedures for sales
analytics on volume, costs, and profitability by
territories, products, customers, and salespeople.
4. Describe the procedure for marketing costs and
profitability analyses.
5. Provide the reasoning in sales analytics for using
contribution costs versus full costs.
6. Illustrate the concept and explain ways to improve
return on assets managed (ROAM).
Introduction
What exactly is a sales force organization audit?
What are the procedures for conducting sales analytics on volume,

costs, and profitability by territories, products, customers, and
salespeople?
What are the procedures for marketing costs and profitability

analyses?
What is the reasoning for using contribution costs versus full costs?

Sales Volume, Costs, and Profitability Analysis
To get a comprehensive picture

1.
of a firm’s sales patterns that Sales Volume
reveal strengths and weaknesses Analysis
of the company’s different

marketing units, sales managers
Analysis of
should evaluate: Metric Data
2.
3.
Marketing
Profitability
Costs
1. Sales volume analysis, Analysis
Analysis
2. Selling costs analysis, and
3. Profitability analysis.
7
Because selling costs are really 1.

a subcategory of marketing Sales Volume
Analysis
costs, and because a
combination of selling and
marketing costs are required Analysis of
to produce sales, using the Metric Data
2.
3.
more general term marketing Profitability
Marketing
Costs
costs analysis may be more Analysis
Analysis
appropriate.
8
1.
And because sales managers are Sales Volume
Analysis
more interested in profitability
than in costs, the term marketing
profitability analysis is used to Analysis of
describe the overall process of Metric Data
2.
3.
sales volume, costs, and Profitability
Marketing
Costs
profitability analysis. Analysis
Analysis
9
Marketing profitability analysis

reclassifies the traditional
1.
accounting statement expenses Sales Volume
into cost centers according to Analysis
the purposes or functions for
which the expenses (costs) were
Analysis of
incurred. For example, salaries Metric Data
paid to sales reps can be 2.
3.
Marketing
further allocated to territories, Profitability
Analysis
Costs
products, or customers. Analysis
10
Sales Volume Analysis: Key Considerations
Collecting, classifying,
comparing, and evaluating an
1.
organization’s sales figures is a Sales Volume
process referred to as sales Analysis
volume analysis.
Analysis of
Metric Data
Sales analyses are used 2.
3.
regularly to compare current Profitability Marketing
Costs
performance to past sales, Analysis
Analysis
competitors’ sales, or forecasted
sales to judge how well the
organization is performing.
11
A sales volume analysis attempts to identify deviations between actual and
expected sales performance of some marketing unit, and then recommends
action based on that identification.
1.
How will we
6. define a sale? 2.
What information sources How will we
will we use? Sales Volume measure sales?
Analysis
5. Considerations 3.
What basis will we use At what level will
for comparison? 4. we conduct the
How will we break sales analysis?
down the sales
analysis?
12
A sales volume analysis attempts to identify deviations between actual and
expected sales performance of some marketing unit, and then recommends
action based on that identification.
when get an order, when
ship, or when customer pay?
Invoice, sale call report, 1. By dollar, units, or by %
financial record… How will we of total sales
6. define a sale? 2.
What information sources How will we
will we use? Sales Volume measure sales?
Analysis
5. Considerations 3.
What basis will we use At what level will
for comparison? 4. we conduct the
prior period, sales quotas,
How will we break sales analysis?
down the sales
competitor, average sales By region, district, territory,
analysis?
for period whole company…
Territory, product line, customer
group, customer size, type,
method of sales (online / offline),
order size, salesperson,
distribution method 13
Sources of Sales Information
To conduct a sales analysis,

information can be found from the
following sources:
1. Sales invoices
2. Salesperson’s call reports
3. Salesperson’s expense accounts
4. Individual prospect/Customer
records
5. Internal financial records

Major Types of Sales Analysis
In addition to looking at
historical trends, the major ways
to analyze sales is by:
1. Territory (e.g., north, south, east

and west),
2. Product/product line (e.g.,

autos, motorcycles, generators,
lawn mowers, jet skis), and
3. Customer type (e.g., airlines,

banks, chemical firms).

Total sales volume figures are usually the first

ones studied to gauge the trend of sales over
the past several years in terms of units and
constant (un-inflated) dollars, which is an
excellent indicator of performance.
CENTREX Company Sales versus Industry Sales (in thousands of dollars)*

Year Industry Sales Company Sales Company Market Share
2014 $15,689 $2,359 15.04%
2015 16,912 2,782 16.45
2016 17,776 3,373 18.98
2017 18,234 3,519 19.30
2018 18,982 3,712 19.56
2019 19,871 3,916 19.71
2020 20,466 4,231 20.67

Sales analysis by territory enables you to

ascertain if certain regions are performing
better than others.
CENTREX Company 2020 Sales Analysis by Territory (in thousands of dollars)

Territory Quota Actual Index Performance
(actual sales/quota)
Northeast 845 848 1.00
Southeast 820 840 1.02
Midwest 890 870 .98
Northwest 815 843 1.03
Southwest 830 830 1.00
Totals 4,200 4,231 1.01

Sales analysis by sales reps can help discern

which salespeople perform better than others.
CENTREX Company, 2020, Midwest Territory: Sales by Sales Representative

Sales Representative Quota Actual Index Performance
Kim 106 110 1.04
Johnstone 95 93 .98
Merrill 110 112 1.02
Schwartz 115 117 1.02
Peabody 110 109 1.02
Lawrence 130 106 .82
Diaz 116 116 1.00
Gupta 108 107 .99
Totals 890 870 .98
Sales analysis by product line allows you to

discern if certain product categories are
performing better than others.
CENTREX Company Sales Representative Lawrence’s 2020 Sales by Product Line ( $10,000’s)
Product Line Quota Actual Index Performance
Lathes 53 52 .98
Milling machines 44 49 1.11
Band saws 60 12 .20
Grinders 37 44 1.19
Punch presses 46 47 1.02
Totals 240 192 .82

Sales analysis by different customers can help

discern if revenues generated from different
buyers are better than predicted.
CENTREX Company Sales Representative Lawrence’s 2020 Sales by Customer

Customers Quota Actual Index Performance
Masson’s Machinery Co. 1 1 1.00
Vinson & Gore Fabricators 2 2 1.00
Gearhart’s Foundry 1 1 1.00
Levitt’s Metal Works 1 1 1.00
Babson & Hines 24 0 0.00
Dalton Tubing Co. 1 1 1.00
Totals 30 6 .20

Marketing Profitability Analysis Procedure
Sales analysis does not give a complete picture of the
sales organization’s effectiveness.
Cost and profitability analysis goes beyond sales

volume analysis.
Marketing costs analysis goes beyond sales volume

analysis.
Subtracting costs identified with the sales revenue from

various market segments or organizational units, profit
contributions of the segments and units can be
determined.
Two methods to do this include:

1. Input-output efficiency, and
2. Minimum average costs analysis 21
An Illustration of Input-Output Efficiency
The relationship between inputs (marketing efforts) and outputs (sales
goals) is known as input-output efficiency.
Input-output efficiency is illustrated using data of MicroComputer

Solutions Corporation.
The analysis readily shows that an input (or sales effort) of $320,900
generates an output (sales goal) of $1,000,000.
MicroComputer Solutions Corporation: An Illustration of Input-Output Efficiency

Sales Efforts (inputs) $ Sales Goals (outputs) $
3,000 sales calls @ $100 $300,000 Sell 2,000 new computers ($1,000 each) $1,000,000
600 telephone calls @ $1.50 900 @ $500
20 trade magazine ads @ $1,000 20,000 Gross margin
Totals $320,900 $1,000,000

An Illustration of Minimum Average Costs
Revenues could be more efficiently derived if different sales methods

are used (e.g., making 3,000 sales calls versus mailing 6,000 sales
promotion brochures). We can illustrate this using data of
MicroComputer Solutions Corporation.
The analysis shows that by reallocating the mixture of direct selling

and marketing support activities achieves the same sales goal with
greater efficiency ($1,000,000/$186,900 = 5.35) using this
approach.
MicroComputer Solutions Corporation: An Illustration of Minimum Average Costs
Sales Efforts (inputs) $ Sales Goals (outputs) $
1500 sales calls @ $100 $150,000 Sell 2,000 new computers ($1,000 each) $1,000,000
600 telephone calls @ $1.50 900 @ $500
1 market survey @ $10,000 10,000 Gross Margin
6,000 sales promotion brochures @ $1.00 6,000
20 trade magazine ads @ $1,000 20,000
Totals $186,900 $1,000,000

Benefits of Marketing Costs and
Profitability Analysis
The benefits of marketing costs and

profitability analysis include:
1. Allocating sales force efforts and sales

department resources
2. Preparing sales department budgets,
and
3. Obtaining support for the sales force
from other elements of the headquarters
marketing mix
24
Profitability Analysis Procedure
The 5 steps to conduct a marketing costs (or profitability) analysis are:
3. 4. 5.
1. 2.
Convert Allocate Determine
Specify the Identify Functional
Natural Profit
Purpose of Functional
Expenses Into Costs to Contribution
the Analysis Cost Centers Segments
Functional Costs of Segments
1. Specify the Purpose

Costs—also known as production costs—tend to be specific and directly
related to volume output.
Expenses—also known as marketing expenses—are more general or indirect

expenditures.
Based on the previous discussion, sales managers are able to classify

expenses as direct or indirect costs and as fixed or variable costs.
25
3. 4. 5.
1. 2.
Natural Profit
2. Identify Functional Cost Centers

Functional costs refer to natural expenses reclassified into the activities or
functions for which they were incurred (e.g., salary expense reclassified into
direct selling, transportation, or advertising function salaries).
Functional cost centers for sales organizations can be categorized into:

a. Order-getting costs, and
b. Order-filling costs

Order-getting costs, include: Order-filling costs, include:

a. Sales promotion a. Product packing and shipping
b. Product and package design b. Transportation and delivery
c. Advertising c. Customer service
d. Sales discounts and allowances d. Warehousing

3. 4. 5.
1. 2.
Natural Profit
3. Convert Natural Expenses into Functional Accounts

In marketing costs analysis, natural accounting expenses (traditional
expense categories like salaries, rent, depreciation) must be reassigned to
expense categories
A basic profit-and-loss (or income) statement, can be calculated using:

Sales
– Cost of goods sold
Gross margin
– Expenses_______
Net Profit (Loss)
3. 4. 5.
1. 2.
Natural Profit
4. Allocate Functional Costs to Segments

To ascertain the profitability of separate organizational units or particular
market segments, the sales manager must allocate the functional costs
incurred by the unit or in serving the segment.
Since marketing costs contain direct, indirect, fixed, and variable amounts,
allocate full costs or only marginal costs (direct and variable) to segments.
The contribution margin (the sales price less direct costs and variable costs
equals the amount the sale contributes to profits) approach entails allocating
uncontrollable costs, thus not considered in marketing decisions.

3. 4. 5.
1. 2.
Natural Profit
5. Determine Profit Contribution of Segments.

The next step entails identifying unprofitable customer accounts, products, or
territories that can be served less frequently or even dropped.
Profit contributions can be examined by segments in two basic ways:
a. By individual segments, or
b. By cross-classification of segments.

Return on Assets Managed (ROAM)
ROAM is calculated using the following formula:
ROAM = Net Profit X Sales______

Sales Total Assets Used
When applied to segment analysis on the basis of the contribution

margin, the formula becomes:
Segment Segment
ROAM = Contribution Margin X Sales _____
Segment Additional
Sales Assets Used By
The Segment

Improving Return on Assets Managed (ROAM)
Three options for increasing
the return on assets
1.
managed (ROAM) for Raise the
profit
specific segments include: margin
on sales
1. Raise the profit margin on

sales
3. Improving 2.
Decrease ROAM Increase
relative dollar
2. Increase total sales while value of assets
total sales
while
maintaining profit margins, necessary to
achieve
maintaining
profit
and sales margins
3. Decrease the relative dollar

value of assets necessary to
achieve sales
32

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Chapter 1:

Introduction to Sales Management

When you finish this chapter, you should

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What are the responsibilities and duties of sales managers?

How is the role of sales managers expanding?

What qualities are needed to be a successful sales manager in the

What role does a sales manager play in the management of a firm’s

The role of sales management?

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The role of sales and sales management?

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Selling: a job or a task or one silde of a transaction, the

Sales management: is a process, involve almost

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Sales-related megatrends fall into

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Some behavioral forces that impact sales force

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Sales managers will need to focus on:

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The company manufacturers the The customer is offered the product(s)

Market/customers determine price, price The company’s cost determines the

Planning is long term: product/market Planning is short term: today’s products

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Starting point Focus Means/Method End results Final

• Production • Product • Sales • Sales • Profit

Starting point Focus Means/Method End results Final

• Market • Customer • Advertising/ • Sales/ • Profit

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When you finish this chapter, you should be

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There are 7 interacting, overlapping

The initial stage of the SP is

Prospects: Potential new

Prospecting requires salespeople

A lead or potential buyer refers

The initial stage of the SP is

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2. Sell the sales call appointment by prenotification

3. Gather and analyze all relevant information about the prospect

4. Identify the prospect’s problems and needs

5. Identify the product features, advantages, and benefits

6. Choose the best sales presentation strategy

7. Plan and rehearse your approach

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2. Sell the sales call

Prepare for meeting by Salespersons should also gather

Salespersons identify prospects problems by:

5. Identify the product features, advantages, and benefits (FAB)

7. Plan and rehearse your approach

Finally, make it a point to rehearse, rehearse, and