Sales Management

Pro's

- lowest costs

- sales administraion and overhead costs kept low

- travel time and expenses minimized

- no geographic/customer overlap

cons:

- does not provide benefits associated with specialization of labor

- lack of management control over product or customer emphasis

Seperate sales force for each product (or category) in the line

Pro's

- salespeople master effective selling methods for single or related products

- closer alignment of sales and production

- sales management controls allocation of selling effort across the line

con's

- duplication of effort (regarding customer and geography)

- low geographic efficiency

- lack of cross selling

Pro's

- better understanding of customer needs

- increased familiarity with certain businesses

- increased control over allocation of selling effort

- enhanced cross selling efforts

con's

- possible higher selling and administrative costs

- duplication of effort

- less product knowledge

Salespeople specialize in performing different selling functions, e.g. prospecting and developing new accounts vs. maintaining and servicing existing customers

Pro's

- skills matched to sales function

- developmental salespeople often a successful alternative

con's

- coordination

- duplication of effort

- customer objections to switch to maintenance salesperson

- feelings of rivalry between the sales forces

- Core Selling Team

- Selling Center

- Matrix Organization

- Multi-level selling

- Team selling integrates functional specialists with customer relationship specialists

- Benefits:

Customer questions answered faster

Customers can speak directly with desired specialist

Core selling Team is permanently assigned to specific customer (e.g. Key Account Team)

Selling center brings together individuals from around the organization to help salesperson on a temporary basis (project)

Matrix organization employs direct-reporting salespeople who support internal consultants with specialized expertise

sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization

Pro's

- greater control/responsiveness due to fewer management layers

- lower admin costs

con's

- reduced one-to-one communication due to larger number of subordinates

- management may be less effective

- sales task is complex

- profit impact of each salesperson's performance is high

- salespeople are well paid and professional

- at higher levels in the organization

- Little numerical data & information 

- predict sales revenues for new products

- utilized when markets have been disrupted by strikes, wars, natural disasters, recession etc. 

- Best used when access to historical data

- helpful if time series is stable and does not frequently change direction

- advantageous in situations where you must make frequent forecasts for hundreds or thousands of products

- Current customers are considering switching suppliers

- new customer development is down

- your salespeople feel overworked, but costs seem under control

- Overall, your customers seem to be getting plenty of attention

- your salespeople seem to have considerable free time

- your salespeople don't seem to be sufficiently stimulated

1) Expected Sales * Field sales expense ratio = Sales budget

2) Sales budget * Percent of budget for sales force = Budget available for Salespeople

3) Budget Available for Salespeople / Wages & expenses per person = # salespeople

- Most rigorous approach

- compare the marginal profit contribution with the marginal selling costs for each incremental salesperson

Advantage: it quantifies the relationships between salesforce size, sales and costs

- possible to assess the potential sales and profit impacts of different salesforce sizes

Disadvantage:

- difficult to develop (complex response functions to predict sales)

- requires historical data or management judgement

--> approach cannot be used for new salesforces

Number of Salespeople = Total selling effort needed / average selling effort per salesperson

Number of Salespeople = (number of accounts * frequency of sales calls * length of a sales call) / selling time available for one salesperson

\( n_{opt} = {{g * S_{opt} * \beta} \over C}\)

g= gross margin

Sopt = sales volume in the optimum

nopt = number of salespersons in the optimum

C = average renumeration costs for a salesperson

The carryover is the amount by which sales will rise in the future due to efforts made in the present. 

- high switching costs

- long selling cycles

- mature products

- strong brand and/or company loyalty

- many promotion vehicles in addition to the sales force

example product: car

- Initiate action on a task

- Expend a certain amount of effort on the task 

- Persist in expending effort over time

- frequent rejection

- physical separation from company support

- direct influence on quality of sales presentation

- indirect influence on performance

Self-actualization needs

Esteem needs

Social needs

Safety needs

Physiological needs

- motivation factors

- hygiene factors

- Sources of satisfaction are called motivators, becuase they are necessary to stimulate individuals to superior efforts

- they include responsibility, achievement, recognition, and opportunities for growth and advancement

- when present, they motivate salespeople, if absent, they demotivate them

- Hygiene factors are extrinsic aspects of the job, such as company policies, pay level, finge benefits, working conditions and job security. 

- When present, hygiene factors do not actually induce positive motivation, their absence, however, leads to salesperson dissatisfaction and demotivation. 

Effort --> Performance --> Reward

from Effort to Performance: Expectancy: Likelihood that increased effort will lead to greater performance

from Performance to Reward: Instrumentality: Likelihood that greater performance will lead to more rewards

Reward: Valence: Importance of receiving more of certain awards

- a more complete theory

- focuses on the process of motivation

- maslow & herzberg focus only on one aspect of the process: reward importance

- systematic approach with multiple reasons for a lack of greater effort

- indicate where management should direct its attention to sales force as a whole or to an individual