Sales Management at Performance-Based Companies - Assignment Example

Sales Management Question For a sales person, building a relationship is crucial as this tool helps him/her to manage and direct marketing activities. Relationship management is one of the popular approaches used by pharmaceutical companies to reach potential buyers. The supplier company approaches customers in a largely passive and reactive manner, confident that it can select, acquire, understand, and readily retain them as desired. Processes for performance measurement are rudimentary, and so is internal and external communication. Some companies engage in evaluating customer needs, training staff to be more proactive with customers, and/or creating teams or assigning individuals to upgrade customer services. In addition, performance-based companies more frequently compensate sales and other staff at least partially on customer satisfaction scores. This type of business requires effective and unique set of management tools in order to reach a customer and retain him. The aim of the paper is to prove, analyze and evaluate success factors of relationships and impact of these strategies on customer relations1. In order to build effective relations with customers, the organization and sales people should investigate preferences and needs of a customer group. In this case, sales persons should deal mainly with motivation, direction, and control. For example, effective communication has great impact on sales, motivation, and direction. If management, therefore, can identify significant traits that indicate sales success, and test applicants for them, sales productivity should be increased2. To do this, some companies compare the characteristics of their most and least successful salesmen. Others start with sales tasks and objectives and impute the traits required. Still others rely on general lists of characteristics of successful salesmen, and try to establish tests that determine whether applicants have these traits. Although guidelines may be developed, particularly by analyzing sales-task requirements, there is no magic list of personal characteristics that assures success, since much depends on the motivation of individual salesmen. Procedures for selecting salesmen vary from simple informal interviews to interviewing committees aided by batteries of psychological tests. Companies are placing increasing reliance on test results, and many industries and firms have developed special psychological tests. To develop valid and reliable tests is a demanding activity3. Moreover, test results are not perfect predictors, and should be considered simply another piece of information to be used in conjunction with other data. When the sales force is organized by customers or markets, it permits salesmen to become specialists in particular customer needs such as the educational market, the oil industry, or the franchise market. Customers may be grouped in various ways by distribution level (wholesalers, retailers), size, industry, method of sales (mail order, retail store), or corporate division4. Since customers are often widely dispersed, management should be sure that the increased costs of duplicate customer coverage are offset by the specialized knowledge salesmen offer. Salesmen may also be given responsibility for handling special product groups in order to build successful marketing relations with target audience and attract repeat consumers5. Question 2 The major purpose of sales motivation is to use scarce sales resources in the best manner. Personal selling is a costly activity, with much of the salesmans time spent in activities other than selling -- traveling, waiting, filling in reports, and planning activities. It is essential, therefore, that sales managers assist salesmen to make the best use of their actual sales time. The degree of sales direction and supervision varies by company, the nature of the sales task, the method of payment, and the type of the salesman. For example, well-qualified, highly trained salesmen, paid on a commission basis, receive less direction and supervision. Salesmen paid a salary, whose job is mainly taking orders from customers on a regular basis, will probably receive close supervision. Salesmen are often directed through call reports. Statistics can be analyzed to determine the number of calls that salesmen should be expected to make per day, month, and year. Calls can then be related to expected sales and profit potentials by customer class. This technique helps salesmen allocate their effort and also guides management in determining the number of salesmen needed6. Although salesmen should be given some guides on the average number of calls to make by customer class, making calls should not be construed as the objective of their job. The standards refer to what is usually desirable in an average situation over a long period of time. Allowances must be made for variations in sales situations. It seems difficult to show empirically that the time spent with customers has a positive impact on sales. Several studies have been done, although adequate data are not usually available for executives to be able to arrive at conclusive results. Also, sales results depend on a host of factors other than time, and both the duration and number of calls made have a cumulative effect7. Effective direction of the sales force is related to stimulation and motivation. For when salesmen are highly motivated, sales and profits should grow, morale and compensation should be high, and turnover of personnel low. The stimulation and motivation of sales representatives are achieved through incentives that are internal and external to the sales force. External incentives include quotas, compensation, sales contests, sales meetings, directives, and supervised actions of the sales supervisor and manager8. Sales effort is directed by both positive and negative incentives. Negative incentives, while less desirable, may be necessary. For instance, salesmen should be checked when performance does not meet standards, accounts are not covered, sales service is inadequate, and new-customer quotas are not met. Management review and control is necessary to guide sales efforts. Sales compensation is a most important motivational ingredient and a significant factor in obtaining, developing, and maintaining good salesmen. It is, in fact, a critical factor in generating sales, having a direct impact on both the kind and the quality of sales effort extended. Compensation arrangements affect the services offered, territorial coverage, products sold vigorously, and new accounts covered. Desirable attributes of good compensation plans are easy to list: reward efforts expended, be fair to all, provide regular income, recognize outstanding performance, be simple to determine, and provide adequate stimulation. Designing compensation plans that encompass such attributes, however, is not a simple task. Diverse and conflicting objectives and divergent perspectives of both management and salesmen are involved. Sales-compensation plans may be separated into three component parts: expense allowances, fringe benefits, and direct income9. Question 3 Telemarketing is a rapidly growing form of retailing and is used both in support of traditional retailers and as a freestanding channel. Once such an inbound telemarketing operation is successfully established, the firm might wish to experiment with an outbound effort to initiate calls and learn if those called have any interest in receiving literature or even attending a party10. Such interest can be followed up by one of the firms salespeople. Direct mail incorporating an 800 number can be used similarly to the Yellow Pages, as can advertising in many other media. «Outbound telemarketing takes many forms, but it most resembles traditional, unsolicited door-to-door sales. Contacts are made through cold calls (random), warm calls (referrals) or hot calls (customer-initiated requests for information)”. For example, manufacturers who were primarily communicating with customers through nonintegrated channels are now finding it is possible to reach them also through telemarketing efforts at a substantially lower cost than other integrated channel alternatives. In this case, manufacturers increase their channel control by adding an additional in-house channel (telemarketing) while keeping cost efficiency high through the application of information technology. At the same time, firms must move with caution as the increase in integration is likely to result in less flexibility. However, the net result is that new technologies allow firms to enter customer segments much more easily than before. In other words, market entry barriers are no longer so high, as new technologies enable firms to enhance market coverage while containing costs. Both direct selling and direct marketing make wide use of telemarketing techniques11. Studies noted earlier show that the public perceives some disadvantages in buying from a telemarketing firm. Major negative factors attributed to telemarketing by a cross section of consumers are high-pressure selling, unreliable salespeople, and loss of contact after the sale. While some instances of these behaviors undoubtedly exist, they are far from endemic to the industry. These image problems should be addressed and alleviated job satisfaction, commitment, and productivity and eventually hasten their termination. Telemarketing can provide firms with cost-efficient means to contact prospective customers. Currently most direct marketers use the same approaches as fixed-location retailers, that is, they attempt to have a fairly wide range of products, although the products may be in a specialized category. They then attempt to sell these products through telemarketing systems to a broad audience. They rely on common offers through catalogs or mailings and seek an essentially immediate response in the form of a purchase. Telemarketers tend to offer a more specialized type of product they hope to serve customers. The offers are more targeted, that is, they are personalized based on information that the marketer has collected or that the customer has provided12. These new technologies and methods have helped to make in-home shopping feasible. Second, they can provide firms with cost-efficient means to contact prospective customers. For example, manufacturers who were primarily communicating with customers through nonintegrated channels are now finding it is possible to reach them also through telemarketing efforts at a substantially lower cost than other integrated channel alternatives. In this case, the company can increases channel control by adding an additional in-house channel (telemarketing) while keeping cost efficiency high through the application of information technology13. Still, the net result is that new technologies like telemarketing allow firms to enter customer segments much more easily than before. List of References Bearden, W. O., Ingram, Th. N., LaForge, L.W. Marketing, Prentice Hall, 2004. Bendremer, E. Top Telemarketing Techniques. Career Press, 2003. Catal, J. Telesales Tips From The Trenches: Secrets of a Street-Smart Salesman. Business By Phone, 2002. Fill, C. Marketing Communication: Contexts, Contents, and Strategies. 2. edn. Upper Saddle River, NJ: Prentice Hall, 2001. Kotler, Ph, Keller, K. Marketing Management. Prentice Hall, 2005. Linchitz, J. The Complete Guide to Telemarketing Management. Phone for Success; 2 Edition, 2000. McDonald M., Christopher M. Marketing: A complete Guide. Palgrave Macmillan, 2003. Paley, N. The Managers Guide to Competitive Marketing Strategies. Thorogood, 2006. Perreault, W.D., Cannon, J.P., McCarthy, E.J. Marketing: Principles and Perspectives. McGraw-Hill/Irwin; 4 edition, 2003 Smith, P.R., Taylor, J. Marketing Communications: An Integrated Approach. Kogan Page Ltd; 4Rev Ed edition, 2004. Yeshin, T. Integrated Marketing Communications. Butterworth-Heinemann; Student edition, 1999. Vanella, A. M. 42 Rules of Cold Calling Executives: A Practical Guide for Telesales, Telemarketing, Direct Marketing and Lead Generation. Super Star Press, 2008. Read More