Personal Selling Strategies

Selling Strategy

There was a time when the problems of selling were simpler than they are today. Recent years have produced a variety of changes in the selling strategies of businesses. The complexities involved in selling as we approach the next century are different from those in the past. As an example, today a high-principled style of selling that favors a close, trusting, long-term relationship over a quick sell is recommended. The philosophy is to serve the customer as a consultant, not as a peddler. Discussed below are objectives and strategic matters pertaining to selling strategies.

Objectives. Selling objectives should be derived from overall marketing objectives and should be properly linked with promotional objectives. For example, if the marketing goal is to raise the current 35 percent market share in a product line to 40 percent, the sales manager may stipulate the objective to increase sales of specific products by different percentage points in various sales regions under his or her control.

Selling objectives are usually defined in terms of sales volume. Objectives, however, may also be defined for (a) gross margin targets, (b) maximum expenditure levels, and (c) fulfillment of specific activities, such as converting a stated number of competitors' customers into company customers.

The sales strategist should also specify the role of selling in terms of personal selling push (vis-à-vis advertising pull). Selling strategies depend on the consumer decision process, the influence of different communication alternatives, and the cost of these alternatives. The flexibility associated with personal selling allows sales presentations to be tailored to individual customers. Further, personal selling offers an opportunity to develop a tangible personal rapport with customers that can go far toward building long-term relationships. Finally, personal selling is the only method that secures immediate feedback. Feedback helps in taking timely corrective action and in avoiding mistakes. The benefits of personal selling, however, must be considered in relation to its costs. For example, according to the research department of the McGraw-Hill Publications Company, per call personal selling expenditures for all types of personal selling in 1994 came to $205.40, up 15.4 percent from 1991.23 Thus, the high impact of personal selling should be considered in light of its high cost.

Strategic Matters. As a part of selling strategy, several strategic matters should be resolved. A decision must be made on whether greater emphasis should be put on maintaining existing accounts or on converting customers. Retention and conversion of customers are related to the time salespeople spend with them. Thus, before salespeople can make the best use of their efforts, they must know how much importance is to be attached to each of these two functions. The decision is influenced by such factors as the growth status of the industry, the company's strengths and weaknesses, competitors' strengths, and marketing goals. For example, a manufacturer of laundry detergent will think twice before attempting to convert customers from Tide (Procter & Gamble's brand) to its own brand. On the other hand, some factors may make a company challenge the leader. For example, Bic Pen Corporation aggressively promotes its disposable razor to Gillette customers. The decision to maintain or convert customers cannot be made in isolation and must be considered in the context of total marketing strategy.24

An important strategic concern is how to make productive use of the sales force. In recent years, high expenses (i.e., cost of keeping a salesperson on the road), affordable technological advances (e.g., prices of technology used in telemarketing, teleconferencing, and computerized sales have gone down substantially), and innovative sales techniques (e.g., video presentations) have made it feasible for marketers to turn to electronic marketing to make the most productive use of sales force resources. For example, Gould's medical products division in Oxnard, California, uses video to support sales efforts for one of its new products, a disposable transducer that translates blood pressure into readable electronic impulses. Gould produced two videotapes—a six-minute sales presentation and a nine-minute training film—costing $200,000. Salespeople were equipped with videorecorders—an additional $75,000 investment—to take on calls. According to Gould executives, video gives a concise, clear version of the intended communication and adds professionalism to their sales effort. Gould targeted its competitors' customers and maintains that it captured 45 percent of the $75 million transducer market in less than a year. At the end of nine months, the company had achieved sales of more than 25,000 units per month, achieving significant penetration in markets that it had not been able to get into before.25

Another aspect of selling strategy deals with the question of who should be contacted in the customer organization. The buying process may be divided into four phases: consideration, acceptance, selection, and evaluation. Different executives in the customer organization may exert influence on any of the four phases. The sales strategist may work out a plan specifying which salesperson should call upon various individuals in the customer organization and when. On occasion, a person other than the salesperson may be asked to call on a customer. Sometimes, as a matter of selling strategy, a team of people may visit the customer. For example, Northrop Corporation, an aerospace contractor, assigns aircraft designers and technicians—not salespeople—to call on potential customers. When Singapore indicated interest in Northrop's F-5 fighter, Northrop dispatched a team to Singapore that included an engineer, a lawyer, a pricing expert, a test pilot, and a maintenance specialist.

A manufacturer of vinyl acetate latex (used as a base for latex paint) built its sales volume by having its people call on the "right people" in the customer organization. The manufacturer recognized that its product was used by the customer to produce paint sold through its marketing department, not the purchasing agent or the manager of research. So the manufacturer planned for its people to meet with the customer's sales and marketing personnel to find out what their problems were, what kept them from selling more latex paint, and what role the manufacturer could play in helping the customer. It was only after the marketing personnel had been sold on the product that the purchasing department was contacted. Thus, a good selling strategy requires a careful analysis of the situation to determine the key people to contact in the customer organization. A routine call on a purchasing agent may not suffice.

The selling strategy should also determine the size of the sales force needed to perform an effective job. This decision is usually made intuitively. A company starts with a few salespeople, adding more as it gains experience. Some companies may go a step beyond the intuitive approach to determine how many salespeople should be recruited. For instance, consideration may be given to factors such as the number of customers who must be visited, the amount of market potential in a territory, and so on. But all these factors are weighed subjectively. This work load approach requires the following steps:

1. Customers are grouped into size classes according to their annual sales volume.

2. Desirable call frequencies (number of sales calls on an account per year) are established for each class.

3. The number of accounts in each size class is multiplied by the corresponding call frequency to arrive at the total work load for the country in sales calls per year.

4. The average number of calls a sales representative can make per year is determined.

5. The number of sales representatives needed is determined by dividing the total annual calls required by the average annual calls made by a sales representative.

Sales Motivation and Supervision Strategy

To ensure that salespersons perform to their utmost capacity, they must be motivated adequately and properly supervised. It has often been found that salespeople fail to do well because management fails to carry out its part of the job, especially in the areas of motivation and supervision. Although motivation and supervision may appear to be mundane day-to-day matters, they have far-reaching implications for marketing strategy. The purpose of this section is to provide insights into the strategic aspects of motivation and supervision.

Motivation. Salespeople may be motivated through financial and nonfinan-cial means. Financial motivation is provided by monetary compensation. Nonfinancial motivation is usually tied in with evaluation programs.26

Compensation. Most people work to earn a living; their motivation to work is deeply affected by the remuneration they receive. A well-designed compensation plan keeps turnover low and helps to increase an employee's productivity. A compensation plan should be simple, understandable, flexible (cognizant of the differences between individuals), and economically equitable. It should also provide incentive and build morale. It should not penalize salespeople for conditions beyond their control, and it should help develop new business, provide stable income, and meet the objectives of the corporation. Above all, compensation should be in line with the market price for salespeople. Because some of these requisites may conflict with each other, there can be no one perfect plan. All that can be done is to try to balance each variable properly and design a custom-made plan for each sales force.

Different methods of compensating salespeople are the salary plan, the commission plan, and the combination plan. Exhibit 17-3 shows the relative advantages and disadvantages of each plan.

The greatest virtue of the straight-salary method is the guaranteed income and security that it provides. However, it fails to provide any incentive for the ambitious salesperson and therefore may adversely affect productivity. Most companies work on a combination plan, which means that salespeople receive a percentage of sales as a commission for exceeding periodic quotas. Conceptually, the first step in designing a compensation plan is to define the objective. Objectives may focus on rewarding extraordinary performance, providing security, and so on. Every company probably prefers to grant some security to its people and, at the same time, distinguish top employees through incentive schemes. In designing such a plan, the company may first determine the going salary rate for the type of sales staff it is interested in hiring. The company should match the market rate to retain people of caliber. The total wage should be fixed somewhere near the market rate after making adjustments for the company's overall wage policy, environment, and fringe benefits. A study of the spending habits of those in the salary range of salespeople should be made. Based on this study, the percentage of nondiscretionary spending may be linked to an incentive income scheme whereby extra income could be paid as a commission on sales, as a bonus, or both. Care must be taken in constructing a compensation plan. In addition to being equitable, the plan should be simple enough to be comprehensible to the salespeople.

Once compensation has been established for an individual, it is difficult to reduce it. It is desirable, therefore, for management to consider all the pros and cons of fixed compensation for a salesperson before finalizing a salary agreement.

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