Business Marketing

Communications:
Managing the Personal
Selling Function

Chapter Topics
Personal selling is the most important demandstimulating force in the business marketer's
promotional mix. In this chapter youll
understand:
.

The methods for organizing the sales force.

The skills and characteristics of high-performing

account managers.

The nature of the sales management function.

Selected managerial tools that can be applied

to major sales force decision areas.

Stay Close to the

Customer
The sales force has a central role in the

firms strategy: managing customer

relationships.
In B2B business, personal selling is the

dominant component and a major

determinant of overall company
success.

Dominance of Personal Selling

Personal selling is dominant because:

Compared to consumers, there arent as many

potential business customers.
2. The dollar purchases are much larger.
3. The products and services are more technical.
4. Salespeople need to know about their customers
businesses and about their customers customers
businesses, too!
1.

Cost of Personal
Selling
Across all industries the average cost of

making a sales call is $200+, although it can

cost more in some industries, less in others.
There is a significant investment in utilizing

personal selling.
To maximize effectiveness and efficiency, the

personal selling function must be carefully

managed and integrated into the marketing
mix.

Selling is Where the

Tire Meets the Road
The

salesperson is the initial link between

the company and the customer.

Personal

selling consists of complex tasks

and is a challenging career.

Successful

salespeople must have broad

knowledge over and above their product.

They

must talk intelligently, know their

competition, understand industry trends, and
be interesting in a worldly and charming way.

SALES FORCE MANAGEMENT

Effective sales force management is

fundamental to the firms success!
Sales management means:
1. Planning
2. Organizing
3. Directing &
4. Controlling the Personal Selling Efforts

SALES FORCE MANAGEMENT

a.
b.

Involves (though not inclusively):

Estimating the forecasts
Determining size of sales force
and
Selecting
Training
Deploying
Establishing activity & financial goals
Motivating, and
Monitoring sales peoples efforts

MONITORING EFFORTS

Sales operations MUST be monitored to:

1.

Identify problems.

2.

Assess the efficiency, effectiveness and

profitability of the salesperson.

B2B Sales Force Management

Functions

Organize the sales force

Manage key accounts

Select high-performing account

managers (salespeople)

Organizing the Personal Selling

Effort
Geographical Organization

Advantages:
1. Most common form
2. Reduces travel distance and time
between customers
3. Usually minimizes costs

Major disadvantages:
1. Each salesperson must perform all
selling tasks for all firms products and
for all customers in territory.
2. Salesperson may not know about all
products or only emphasize certain (high
commission) products.

Organizing the Personal Selling

Effort
Product Oriented Sales Organizations

Salespersons specialize in relatively narrow

components of total product line.
Appropriate with huge product offerings
(e.g., General Electric).

Prime benefit: Enables sales force to

develop deeper product knowledge level-enhances value of firms total offering to
customers.

Disadvantage: Expensive and sometimes

confusing for customers.

Organizing the Personal Selling

Effort
Market-Centered Organizations
Salespeople

learn specific
requirements of industry or
customer type (e.g., specializing
in the banking industry)

Salespeople

are better prepared

to identify and respond to buying
influentials

KEY ACCOUNT MANAGEMENT

Large Accounts are referred to as:

Key Accounts
Major Accounts
National Accounts
Strategic Accounts

Key Account Management

A Key Account:
1. Purchases a significant volume as a

% of sales
2. Involves several organizational
members in the purchasing decision
3. Buys for a geographically dispersed
organization
4. Expects carefully coordinated
response and specialized services
from suppliers such as:
15

1.
2.

Logistical support
Inventory management

UNIQUE VALUE PROPOSITIONS:

CUSTOMER PRIORITIZATION

Research suggest that companies can get

higher returns & profitability by:
Segmenting their customers into tiered groups
from high to low
Developing different value propositions for
each tier

Effects:
This had a positive effect on sales and profits
from top-tier customers, and no adverse effect
on lower-tiered customer relationships.
Reduces sales and marketing costs.

Key Account
Management

Many companies find that 80% or their business

or profits comes from 20% of their accounts.

Large firms have central procurement offices.

Often, selling firms have offices located inside

the buying firms facilities.

Large firms expect their suppliers to provide

coordinated and uniform services for all its
geographically dispersed divisions.

In exchange for large orders, they expect

additional services & support (e.g., JIT).

Key Account Management

Consists

of a Key Account
Manager and a team
composed of Sales, Marketing,
Finance, Logistics,
Engineering and other
Functional Areas.

Key

Account Managers may

work on several accounts, or
on ONE account, and will

Traditional Selling vs. Key Account

Selling

Traditional selling emphasizes

maximizing revenues.

Key account selling is multifaceted, emphasizing:

1.
2.

Closer long term relationships

Partnerships to reduce overall
costs or advance performance for
the customer

Table 14.1

Traditional Selling vs. Key Account Selling

Traditional Selling
Focus

Key Account Selling Focus

Sales Volume

Varies

Large volume of purchases by the customer

often across multiple business of the seller

Nature of Product/
Service Offering

Core product/service

Core product/service plus customized

applications and value-added services

Time Horizon

Short-Term

Long-Term

Benefits to
Customer

Lower prices & higher

quality

Lower total costs; Broader set of strategic

benefits

Information
Sharing

Limited: Narrow focus on

price
and product features

Extensive: Broader focus as firms share

strategic goals

Sales Force
Objectives

Maximize revenue
Satisfied customers

Become preferred supplier; Lower customer

firms total costs; Enhance learning in the
relationship

Structure of
Selling Center

Individual salesperson is
primary
link to customer
organization

Many individuals from multiple functional

areas on the selling side interact with
counterparts in the customer organization

Structure of
Buying Center

Purchasing Manager and

Many individuals within the customer
a few other individuals
organization interact in making decisions
Source: Adapted with modifications
from
Joseph
P.
Cannon
and Narakesari
Narayandas,
are involved in buying
and
evaluating
the relationship
Relationship Marketing and Key Account Management, in Handbook of Relationship Marketing,
decisions
Jagdish N. Sheth and Atul Parvatiyar, eds. (Thousand Oaks, Ca.; Sage Publications, 2000), p. 409; and
Frank V. Cespedes, Concurrent Marketing: Integrating Products, Sales and Service (Boston: Harvard
Business School Press, 1995,) pp. 186-202

Joint Efforts
If uncertainty is high, or
If product adaptation's are required,

then
Customer organization should initiate a
joint effort with the selling
organization

to create the desired solution.

SELECTING KEY ACCOUNTS

Because key accounts

1.
2.
3.

Possess buying power

Demand special services
Are more costly to serve

companies need to consider sales and

profit potential, as well as long-term
resource commitments.

22

3-Phase Approach for Selecting Key

Accounts
1.
a.
b.

Centers on:
Profit potential
Degree customer is willing to pay for extra
services

2.

Select customers from requiring a unique

support function that is marketable to other
customers.

3.

Consider transactions with the customer that

complements the economics of the sellers
business.

Considering these points first allows the seller

the opportunity to consider whether or not to
take on a particular key account.

National Account
Success

Successful programs occur when:

1. There is senior management support.
2. Objectives, assignments and

implementation procedures are well

defined.
3. They are staffed by experienced people
knowledgeable about companys
capabilities.
4. Staff know how to create customer
solutions.

THE ACCOUNT MANAGEMENT PROCESS

The Account Manager is responsible for:

1.

Diagnosing customer needs.

2.

Identifying matching set of internal experts.

3.

Recruiting these experts onto an ad hoc team

as customer or opportunities require.

High Performing Account

Managers:
Assemble the right people and gather

the right information to solve their

customers unique problems.

Excel at building and maintaining strong

relationships.

Use these relationships to design and

align proposals that meet the selling

firms capabilities (solutions) to the
buying firms needs (problems).

The Cycle of Account Management

Success
Internal
Reputation
Enhanced

Prioritize
Relationship
Building as
Key Role

Develop
Strong
Internal
Links
Forge Multiple
Connections in
Client
Organization

Successful
Engagement
Outcome

Manage Client
Relationships at
Multiple Levels

Initiate
Involvement
with Client

Identify Resources
Internally Aligned
with the Client

Knowledge of
Profitability
Drivers

Fig. 14.2

Partner with
Client to
Shape New Business
Proposal

Early Involvement
in Client
Engagement

Knowledge of
Competitive
Strategies

Account Management Success

Building

internal relationships

Aligning

resources to client needs

Forging

relationships with the customer

organization

Managing

the customer engagement

process

Knowing the customer

Build strong relationships within the selling
firm and customer organization

Sales Force Administration

Includes:
Recruitment

and Selection

Training
Supervision
Evaluation

and Motivation

and Control

Recruitment & Selection

Q: Should the company hire experienced

salespeople or hire and train inexperienced
people?

A: It depends upon:
a.
Size of firm
b.
Nature of selling task
c.
Firms training capability
d.
Market experience

Recruiting

Recruiting is a negotiation between two

parties.

A successful process should include

procedures to weed out unqualified
people and assure that good candidates
are considered.

Most selection is done by the 1st line

manager in conjunction with 2nd line
manager.

In larger corporations, the personal

selling function is often used as a
training ground for higher level
marketing and management functions.

Training
Salespeople need knowledge about the:
1.

Firm

2.

Product

3.

Customer(s) & organizational buying behavior

4.

Competition

5.

Market & industry information

6.

Effective interpersonal communication skills

32

Sales Training Skills:

Effective Interpersonal Communication Skills

Includes:
A. Communication skills
B. Listening skills
C. Influencing skills
D. Complaint handling skills
E. Cultural diversity skills

Many companies have found that as training increases,

productivity increases and turnover decreases.

Supervision
Supervisions functions include:
continued training
counseling
assistance
time management verification
setting financial & activity quotas, etc.
Supervision also integrates sales activities

with upper management.

Motivation
Orville Walker Jr., Gilbert Churchill Jr., and

Neil Ford define motivation as:

The amount of effort the salesperson
desires to expend on each of the
activities or tasks associated with his
(her) job such as:
1. calling on potential new accounts,
2. planning sales presentations, and
3. filling out reports.

Motivation
Walker, Churchill & Fords model (fig. 16.3)
hypothesizes that a salespersons
performance is a function of three factors:
1. Level of motivation
2. Aptitude or ability
3. Perception about how to perform the
role

Motivating Rewards
.

A.

B.

Motivation is strongly related to:

Individuals perception of the types
and amounts of rewards from
various degrees of job performance.
The value the salesperson places on
those rewards.

Motivating Rewards
Rewards can be:

Internal: Personal feelings of

accomplishment or self-worth

External: Financial incentives and/or

recognition

See Fig. 16.3 (next frame)

Determinants of Salespeoples
Performances

Fig. 14.2

Incentives
To be effective, incentive rewards:
1. Must be well conceived.
2. Be based on what salespeople
value.
3. Are tied to achieving a desired
behavior.
4. Recognizes the salesperson.
5. Recognizes the team.

Incentives

Usually consist of:

Recognition
Financial rewards

Recognition is usually competitive in nature

and often coupled to a sports theme such as:
Big Hitter of the Month

Financial incentives may include:

Salary
Commission
Bonus
Expenses
Contest winnings
Other perks

WORK ENVIRONMENT

Job dissatisfaction occurs when the

salesperson does not know:

1.

What is reasonably expected

2.

Is subject to conflicting demands that

s/he cannot possibly resolve

3.

Surrounded by uncertainty due to lack of

information concerning expectations

TURNOVER

Turnover is an important issue

because the cost for it is extensive:
A. Cost to hire and train new people
B. Cost due to loss of customer
C. Cost due to non-performance
To reduce turnover, management will
try many things to satisfy, motivate
and reward good people.

Job Satisfaction Increases When:

1. Salespeople perceive that 1st line

supervisors closely direct and monitor

performance.
2. Management provides assistance to
resolve unusual problems.
3. Salespeople feel they have an active
part in determining company policies
and standards.
4. There is a good relationship between
salesperson and manager.
. Customer satisfaction increased as

salespersons job satisfaction

Job Satisfaction
Relationship between job satisfaction and
customer satisfaction is strong when:
a. Customer interactions are frequent
b. Customer assumes a central role in
the value-creation process
c. When innovative products or services
are involved

Evaluation and Control

Managements responsibility is to
monitor and control sales
performance at all levels:
Locally
Regionally
Nationally

Evaluation and Control

Management needs to:
a. Determine if objectives are being
achieved
b. Identify problems
c. Recommend corrective action
d. Keep salespeople informed about
changes (internally) such as new
products or (externally) such as
competitive or market conditions

PERFORMANCE MEASURES
.

1.
2.

Sales managers use both

Behavior-based tools
Performance-based tools

To measure performance.

Behavior-Based Performance
Measures
Include:
Having the sales manager monitor and direct

salespeople activities by using subjective

measures to evaluate performance such as:
1. Application of product and company
technology knowledge.
2. Quality of customer relationships.

Compensation is more salary driven.

Behavior-Based Performance
Measures (cont)
Is good for:
A. Salespeople who lack experience
B. Companies that need to control how

their products\services are

presented
C. When salespeople are asked to

perform non-sales activities

Outcome-Based Performance
Measures

Includes:

Less

direct control

Uses

objective measures such as

activity, sales quotas, % share market
quotas, profits, etc.

Compensation

is more performance
based such as large commission
structure

Outcome Based Performance Measures

cont

It is good for:
A. When sales efforts are a major determinate of
organizational sales success.
. Erin Anderson & Vincent Onyemah state, When
sales reps make that big of a difference to the
bottom line, it is worth it to give them autonomy
and to pay them handsomely to do what they
do.

Balance
.

Successful managements use both behavior

and performance measures to motivate and
control their sales force.
Other things to consider are selling
situations from territories to types of
customers.
Transactional selling is much different than
relationship selling, and measurements need
to be appropriate for the selling situation.

Deploying the Sales Force

The objective of utilizing a sales force

is to deploy them in the most
profitable way.

That means:
1. Effectively allocating resources to
accomplish the task creating sales
territories.
2. Employing sales people to serve
customers within those territories.

PCU
Planning

and Control Units (PCU)

consists of:
Prospects
Customers
Territories
Districts
Products

These

are units where resources and

controls are needed to facilitate
sales.

Critical Sales Management Task:

Deployment Decisions Facing Sales Organizations

Table 14.2

THREE IMPORTANT
SALES TERRITORY TRAITS
Potential: Measure of total business opportunity
(commissions or compensation) for all
salespeople in particular market
Concentration: Degree to which potential
confined to few larger accounts in territory
Geographic Dispersion: If high, sales effort will
be wasted in travel time

Table 14.3

Selected Determinants of Territory Sales Response

1. Environmental factors (e.g., health of the

economy)
2. Competition (e.g., number of competitive
salespersons)
3. Company marketing strategy and tactics
4. Sales force organization, policies and
procedures
5. Field sales manager characteristics
6. Salesperson characteristics
7. Territory characteristics (e.g., potential)
8. Individual customer factors
Source: Adapted from Adrian B. Ryans and Charles B. Weinberg,
Territory Sales Response,
Journal of Marketing Research 16 (November 1979): pp. 453-465.

58

PCU opportunity

includes: total
potential that PCU
represents for all
sellers

Sales
organization
strength

includes:
competitive
advantages or
distinctive
competencies that
firm enjoys within
PCU

Deployment
analysis matches
sales resources to
market
opportunities

Fig. 14.3
Sales resource

Sales Resource Opportunity

Grid: Planning & Control Units
(PCU)

Planning & Control Units

(PCU)

By understanding where PCU potentials

exists on the opportunity grid, marketing
and sales managers can make better
decision on:
a.
Size of territory
b. Allocation of salespeople to customer
segments

This method helps isolate deployment

problems or opportunities worthy of
management attention.

GEs Sales Force Effectiveness Initiative

1. Customer Potential and Prioritization

2. Territory Alignment
3. Variable Incentive Compensation

4. Implementation