Other Sales Force Strategy and Structure Issues

Sales management also have to decide who will be involved in the selling effort and how various sales and sales support people will work together.

OUTSIDE AND INSIDE SALES FORCES. The company may have an outside sales force (or field sales force), an inside sales foree or both. Outside salespeople travel to call on customers, whereas inside salespeople conduct business from their offices via telephone or visits from prospective buyers.

To reduce time demands on their outside sales forces, many firms have increased the size of their inside sales team, which includes technical support workload approach

An approach Co setting sales force size, where by the company groups accounts into different size classes and then determines how many salespeople are needed to call on them the desired number of times.

Outside sales force

Outside salespeople (or field sales force) who travel to call on customers.

inside sales force

Salespeople who service the company's customers and prospectJrorn their offices via telephone or visits from prospective customers.

telemarketing

Using the telephone to sell directly to consumers.

people, sales assistants and telemarketers. Technical .support people provide technical information and answers to customers' questions. Sales assistants provide clerical back-up for outside salespeople. They call ahead and confirm appointments, conduct credit checks, follow up on deliveries and answer customers' queries when salespeople cannot he reached. Telemarkcters use the phone to find new leads and qualify prospects for the field sales force or to sell and service accounts directly.

The inside sales force frees salespeople to spend more time selling to major accounts and finding major new prospects. Depending on the complexity of the product and customer, a telemarketer can make 20-30 decision-maker contacts a day. compared to the average of four that an outside salesperson can make. For many types of product and selling situation, telemarketing can be as effective as a personal sales call, hut much less expensive. For example, whereas a typical personal sales call can cost well over £200, a routine industrial telemarketing call costs between £5 and £20 depending on the complexity of the call. For example, chemicals company Du Pont uses experienced former field salespeople as telemarketing reps to help sell the company's complex chemical products. The tele-marketers handle technical questions from customers, smooth out product and distribution problems, and alert field sales representatives to 'hot' prospects. According to Du Pont management, the in si de-out side approach pays off, with some 80 per cent of the leads passed on to the field force converted into sales.-1

team selling

Using teams of people from sales, marketing, production, finance, technical support, and even ripper management tu service large, complex accounts.

TEAM SELLING. The days when a single salesperson handles a large and important account are vanishing. Today, as products become more complex, and as customers grow larger and more demanding, one person simply cannot handle all of a large customer's needs any more. Instead, most companies are now using team selling to service large complex accounts. Sales teams might include people from sales, marketing, engineering, finance, technical support and even upper management. For example, P & ('i assigns teams consisting of salespeople, marketing managers, technical service people and logistics and information systems specialists to work closely with large retail customers. In this case salespeople become 'orchestra tors' who help co-ordinate a whole-company effort to build profitable relationships with key customers,4

Companies recognize that just asking their people for teamwork does not produce it. They have to revise their compensation and recognition systems to give credit for work on shared accounts. They must also set up better goals and measures for sales force performance. While honouring the importance of individual initiative, training programmes must also emphasize the value of teamwork.

KEY ACCOUNT MANAGEMENT. Continuing relationships with large customers dominate the activities of many sales organizations. For makers of consumer goods the relationship is with major retailers such as Tengelmann, Carrefour, Tesco or Ahold. As we saw in Chapter 3, the importance of these has changed the way marketing as a whole is being organized. Account managers often orchestrate the relationship with a single retailer, although some will manage several smaller retailers or a class of independent outlet. Any major retailer will probably always be carrying major manufacturers' brands, no the account manager's role is one of increasing die profitability of sales through the channel. In this arrangement a great deal of sales promotions effort and advertising is customized for retailers that want exclusive lines or restrict the wort of promotions that they accept.

The situation is very similar in industrial sales organizations when a supplier has to sell components, raw materials, supplier or capital equipment in the concentrated markets described in Chapter 8. Even when a prospect is not a client, there are regular contacts at all levels between the organizations. When the client or prospect is particularly important, key account managers are responsible. These aim for a mutually beneficial relationship between the seller and buyer. The buyer benefits from traceability of supplies, smart purchasing, and lean supply and facilities management, while the seller receives market knowledge and secure, profitable sales.

In most companies, account managers are like brand managers in not having formal or informal teams working for them. This means the key account managers compete for the resources to serve their client. Their role is to maintain smooth but creative relationships between the buying and selling teams,-1

• Sales lrorc,e Compensation

To attract salespeople, a company must have an attractive compensation plan. These plans vary greatly both by industry and by companies within the same industry. The level of compensation must be close to the 'going rate' for the type of sales job and needed skills. This varies from country to country. To pay less than the going rate would attract too few quality salespeople; to pay more would be unnecessary.

Compensation is made up of several elements - a fixed amount, a variable amount, expenses and fringe benefits. The fixed amount, usually a salary, gives the salesperson some stable income. The variable amount, which might be commissions or bonuses based on sales perfomance, rewards the salesperson for greater effort. Expense allowances, which repay salespeople for job-related expenses, let salespeople undertake needed and desirable selling efforts. Fringe benefits, such as paid vacations, sickness or accident benefits, pensions and life insurance, provide job security and satisfaction.

Management must decide what mix of these compensation elements makes the most sense for each sales job. There are four basic types of compensation plan based on whether these elements are fixed or variable: straight salary, straight commission, salary plus bonus and salary plus commission. The advantages and disadvantages are summarized in Table 21).1.

The sales force compensation plan can both motivate salespeople and direct their activities. If sales management wants salespeople to emphasize new account development, it might pay a bonus for opening new accounts. Thus, the compensation plan should direct the sales force towards activities that are consistent with overall marketing objectives. II the overall marketing strategy is to grow' rapidly and gain market share, the compensation plan should be to reward high sales performance and encourage salespeople to capture new accounts, suggesting a larger commission coupled with new account bonuses. In contrast, if the marketing goal is to maximize profitability of current accounts, the compensation plan might contain a larger base salary component, with additional incentives based on current account sales and customer satisfaction. In fact, more and more companies are moving away from high commission plans that may drive salespeople to make short-term grabs for business. They may even ruin a customer relationship because they were pushing too hard to close a deal. Instead, companies are designing compensation plans that reward salespeople for building customer relationships and growing the long-run value of each customer.6

Recruiting and Selecting Salespeople

At the heart of any successful sales force operation is the recruitment and selection of good salespeople. There can be a big difference in the performance levels

Table 20.1

Advantages and disadvantages of sales compensation plans

SALES COMI'BNSATION PLAN ADVAOTAGES

Straight salary' This pays a fixed salary and expenses.

Easy to explain and administer; can alter sales duties without strong objection; simplifies task of projecting sales payroll; a stable income helps to .secure higher sales force morale.

DISADVANTAGES

Does not induce the sales rep to do a better than average job; does not discriminate between salespeople's abilities; fails to attract or hold the more aggressive sales representatives

Straight commission This pays some fixed or sliding rate related to sales or profits.

Salary plus bonus This gives a fixed salary and payments for extra efforts and results.

Salary plus commission

Stimulates sales reps to work at maximum capacity; ties selling expenses to current revenue; different commissions can be set for different products and sales tasks, thus influencing how the salespeople spend their time.

Advantages for fixed salary as indicated above; also stimulates salespeople to perform desirable tasks which are not normally rewardable through commissions (e.g. generating useful selling ideas, speed in furnishing reports).

The sales plan combines the advantages of each approach; also the firm does not have to absorb inflexible selling costs during sales downswings, and salespeople do not lose all their income.

Salespersons may resist doing tasks that do not generate immediate income; it encourages high-pressure tactics or price discounting; it is costly to administer; it provides little income security; it lowers morale if sales decline through no fault of the salesperson.

(jiven that managerial judgement is involved in determining the bonus, salespersons whose expectations are not met could raise questions about fairness.

Disadvantages of straight salary and commission-only plans apply, although somewhat minimized.

of an average and a top salesperson. In a typical sales force, the top 30 per cent of the salespeople might bring 60 per cent of the sales. Thus careful salesperson selection can greatly increase overall sales force performance.

Beyond the differences in sales performance, poor selection results in costly turnover. When a salesperson quits, the costs of finding and training a new salesperson, plus the costs of lost sales, could be considerable. Also, a sales force with many new people is less productive than one with a stable membership.

• What Makes a Good Salesperson!"

Selecting salespeople would not be a problem if the company knew what traits to look for. If it knew that good salespeople were outgoing, aggressive and energetic, for

Managi-ng the Sales Force

example, it could simply check applicants for these characteristics. Many successful salespeople, however, are also bashful, soft-spoken and laid buck.

Still, the search continues for the magic list of traits that spells sure-tire sales ability. One survey suggests that good salespeople have a lot of enthusiasm, persistence, initiative, self-confidence and job commitment. They are committed to sales as a way <>t' life and have a strong customer orientation. Another study suggests that good salespeople are independent and self-motivated and are excellent listeners. Still another study advises that salespeople should be a friend to the customer as well as persistent, enthusiastic, attentive and, above all, honest. They must be internally motivated, disciplined, hard working and able to build strong relationships with customers. Still other studies suggest that good salespeople arc team players, not loners.7

How can a company find out what traits salespeople in its industry should have? A good start is to look at the job duties involved, which would suggest some of the traits a company should look for. For instance, is a lot of paperwork required? Does the job call for much travel? Will the salesperson face a lot of rejections? Will the salesperson be working with high-level buyers? The successful sales candidate should possess qualities ideally suited to these duties. The company should also look at the characteristics of its most successful salespeople for clues to needed traits.

Continue reading here: Supervising Salespeople

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