MARKETING AND SALES MANAGEMENT
CHECK POINT 93: THE SALES MANAGEMENT PROCESS (OVERVIEW)
Please Select Any Topic In Check Point 93 Below And Click |
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DO I NEED TO KNOW THIS CHECK POINT?
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WELCOME TO CHECK POINT 93 |
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HOW CAN YOU BENEFIT FROM CHECK POINT 93? |
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The main purpose of this check point is to provide you and your management team with a brief Sales Management Process Overview included in Tutorial 5 - Marketing And Sales Management which contains twenty check points. |
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In this check point you will be introduced to: |
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• The connection between marketing and sales management.
• The basic steps in the sales management process.
• Financial statements and financial performance evaluation.
• Sales planning and budgeting.
• Sales organization.
• Sales force recruitment, selection, and training.
• Personal selling.
• Sales force compensation.
• Sales force management and motivation.
• Sales force allocation and sales quotas.
• Sales force performance evaluation and control... and much more. |
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LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 93 |
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You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point. |
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You and your team should adhere to basic lean management guidelines on a continuous basis: |
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Treat your customers as the most important part of your business. |
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Provide your customers with the best possible value of products and services. |
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Meet your customers' requirements with a positive energy on a timely basis. |
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Provide your customers with consistent and reliable after-sales service. |
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Treat your customers, employees, suppliers, and business associates with genuine respect. |
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Identify your company's operational weaknesses, non-value-added activities, and waste. |
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Implement the process of continuous improvements on organization-wide basis. |
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Eliminate or minimize your company's non-value-added activities and waste. |
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Streamline your company's operational processes and maximize overall flow efficiency. |
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Reduce your company's operational costs in all areas of business activities. |
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Maximize the quality at the source of all operational processes and activities. |
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Ensure regular evaluation of your employees' performance and required level of knowledge.
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Implement fair compensation of your employees based on their overall performance.
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Motivate your partners and employees to adhere to high ethical standards of behavior. |
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Maximize safety for your customers, employees, suppliers, and business associates. |
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Provide opportunities for a continuous professional growth of partners and employees. |
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Pay attention to "how" positive results are achieved and constantly try to improve them. |
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Cultivate long-term relationships with your customers, suppliers, employees, and business associates. |
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1. THE CONNECTION BETWEEN MARKETING AND SALES MANAGEMENT |
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SALES MANAGEMENT |
Business owners and sales managers must be fully familiar with all elements of sales management which represents one of the most critical functions in every business organization. Please remember that without sales there are NO customers, and without customers there is NO business!
The Sales Management is really all about how to sell products and services to prospective clients in the marketplace, while Marketing Management is all about how to identify markets and to approach prospective clients in the marketplace. Sales management is, in essence, a pro-active extension of marketing management and the connection between both functions is illustrated below. |
THE COMMUNICATION MIX |
Implementation of Marketing Mix Strategies related to products, pricing, promotion, and distribution represents a central part of a sound marketing plan. This plan requires further development of Promotional Strategy and control of the Communication Mix. The communication mix consists of five components illustrated below. |
THE COMMUNICATION MIX COMPONENTS |
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Advertising |
Personal
Selling |
Sales
Promotion |
Public
Relations |
Direct
Marketing |
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WHERE DOES THE SALES PROCESS REALLY BEGIN? |
One of the main elements of the Marketing Management Process is the Communication Mix, which is discussed in detail in this Tutorial.
Two main components of the communication mix, Personal Selling and Sales Promotion, create an underlying need for establishing a sales organization to meet the company's marketing objectives. This, in fact, is the main connection between marketing and sales management, and it represents the beginning of the Sales Management Process as described below. |
THE MARKETING MANAGEMENT PROCESS |
Implementation Of The Marketing Mix Strategies
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Product
Strategies |
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Pricing
Strategies |
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Promotional
Strategies |
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Distribution
Strategies |
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Development And Control Of Communication Mix
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Advertising |
Personal
Selling |
Sales
Promotion |
Public
Relations |
Direct
Marketing |
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Communication Mix is discussed in detail in Tutorial 5. |
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ADDITIONAL INFORMATION ONLINE |
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2. STEPS IN THE SALES MANAGEMENT PROCESS |
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THE SALES MANAGEMENT PROCESS
The Sales Management Process, established as the direct result of personal selling and sales promotion requirements, imposed by the marketing management process, entails a number of steps outlined below.
Business owners and sales managers must pay serious attention to the sales management process, because the company’s successful performance is totally dependent upon the cost-effective implementation of this process.
The latest trends in sales management indicate a high effectiveness of a Consultative Selling Approach, instead of trying to “hard-sell” products and services to customers the old-fashioned way. Thus, the entire sales management process should be developed on the basis of cultivating consultative selling approach to secure successful organization performance. |
STEPS IN THE SALES MANAGEMENT PROCESS
Step 1: Preparation Of Sales Plans And Budgets.
Step 2: Building An Efficient Sales Organization.
Step 3: Sales Force Recruitment, Selection, And Training.
Step 4: Management Of Personal Selling Activities.
Step 5: Sales Force Compensation.
Step 6: Selection And Design Of Sales Territories.
Step 7: Sales Force Management And Motivation.
Step 8: Sales Force Performance Evaluation And Control.
Each step in the sales management process is discussed next. |
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ADDITIONAL INFORMATION ONLINE |
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3. SALES PLANNING AND BUDGETING |
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STEP 1: SALES PLANNING AND BUDGETING
The sales management process starts with the preparation of detailed Sales Plans and Sales Budgets for the forthcoming fiscal period. These must be carefully prepared by the sales manager in accordance with the company's overall marketing objectives, strategies, and plans.
Accurate sales plans and budgets provide the company with a key to effective guidance of the sales force and control of their performance. Preparation of sales plans and sales budgets entails a certain number of activities outlined below. |
SALES PLANNING AND BUDGETING ACTIVITIES |
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Marketing and sales analysis of relevant markets for the company’s products or services. |
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Evaluation of past sales related to the company’s products or services in various markets. |
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Evaluation of the company’s competition in the marketplace regarding its existing and new products or services. |
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Measurement of the sales potential of the company’s products or services in various markets. |
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Sales forecasting of the company’ products or services for various markets. |
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Development of sales strategies for various markets regarding the company’s current and new product or service ranges. |
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Formulation of sales objectives for each product or service range in defined sales territories or markets. |
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Determining sales force requirements for meeting the company’s marketing and sales objectives in defined sales territories or markets. |
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Determining sales force composition for meeting the company’s overall marketing and sales objectives. |
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Completion of the company’s sales budget. |
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Sales Planning And Budgeting is discussed in detail in Tutorial 5. |
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4. SALES ORGANIZATION |
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STEP 2: SALES ORGANIZATION
Once the sales plans and budgets are approved by the business owner and the management team, the sales manager must begin, or continue with, the process of building an efficient Sales Organization.
The prime purpose of a sales organization is to attain the company's marketing objectives by selling its products or services, and thus satisfy the customers’ needs. The process of building the sales organization entails a number of activities outlined below. |
ACTIVITIES RELATED TO BUILDING A SALES ORGANIZATION |
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Determining the tasks that must be performed to implement the sales plan. |
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Classification of tasks and grouping them into related sets of activities on the basis of product, customer, or sales territory requirements. |
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Assigning a set of activities to individual positions within the sales organization. |
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Establishing supervision and reporting relationships between positions within the sales organization. |
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Developing a specialized sales organizational structure in accordance with the overall sales plans and objectives. |
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Business owners and sales managers may consider several types of Sales Organization Specialization, depending upon the nature of the company’s products or services, markets in which the company wants to operate, and the types of customers in the marketplace. These options are summarized below. |
TYPES OF SALES ORGANIZATIONAL SPECIALIZATION
• Geographic Specialization.
This type of sales organization is suitable for companies that offer their products or services in widespread geographic markets.
• Product Or Service Specialization.
This type of sales organization is suitable for companies that offer specialized types of products or services in the marketplace.
• Customer Specialization.
This type of sales organization is suitable for companies that offer products or services to specific industries, types of customers, or markets.
• Functional Specialization.
This type of sales organization is suitable for companies that that offer relatively narrow product or service lines to non-segmented and geographically concentrated markets. |
Sales Organization is discussed in detail in Tutorial 5. |
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5. SALES FORCE RECRUITMENT, SELECTION, AND TRAINING |
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STEP 3: SALES FORCE RECRUITMENT, SELECTION, AND TRAINING
Sales Force Recruitment And Selection represents the next phase in the sales management process. This process entails a number of activities, which must be carried out by business owners and sales managers, as outlined below. |
SALES FORCE RECRUITMENT AND SELECTION PROCESS ACTIVITIES |
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Analysis of sales jobs in accordance with particular market requirements. |
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Determining the qualifications and preparing job descriptions and job specifications for each sales position. |
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Recruiting a pool of potentially suitable candidates. |
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Selecting suitable sales people. |
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Providing orientation to every new sales person. |
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THE SALES FORCE TRAINING PROCESS
Subsequent to their selection, all new employees must undergo a thorough sales training process. One of the prime objectives of Sales Force Training is to ensure effective implementation of personal selling techniques, and sound understanding of buying behavior in various markets, where the company conducts its business activities.
The sales force training process within a company may be accomplished by a variety of means, such as specialized in-house training programs, sales lectures and seminars, audiotapes, videotapes, one-on-one instructions, role playing, case studies, and self-study courses.
Sales Force Recruitment, Selection, And Training is discussed in detail in Tutorial 5. |
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6. PERSONAL SELLING |
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STEP 4: PERSONAL SELLING
Effective management of Personal Selling activities represents the cornerstone of a successful sales department in every company. It is essential therefore that business owners and sales managers pay maximum attention to the development of professional skills by each member of their sales team. |
STEPS IN THE PERSONAL SELLING PROCESS |
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Understand the interaction between buyers and sellers. |
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Locate and qualify potential customers. |
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Develop a suitable approach to each potential customer. |
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Analyze each potential customer’s specific requirements. |
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Make a formal presentation to the potential customer. |
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Overcome the potential customer’s objections. |
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Convert the potential customer into a real customer, i.e. close the sale. |
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Follow-up the sale with the customer. |
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IMPORTANCE OF UNDERSTANDING
THE BUYING BEHAVIOR AND THE PSCYCHOLOGY OF SELLING
Since personal selling is geared toward meeting the customers’ requirements, it is essential to understand their Buying Behavior and various reasons for making Buying Decisions. Moreover, it is very important for sales people to understand the Psychology Of Selling and the underlying dynamics during the Selling Process.
Sales people must also be prepared to undergo transformation from “regular sales people” to Sales Consultants and learn to approach their customers from the consulting point of view. Such transformation may produce substantially improved sales results and generate a higher level of company profitability.
Personal Selling is discussed in detail in Tutorial 5. |
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7. SALES FORCE COMPENSATION |
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STEP 5: SALES FORCE COMPENSATION
The first step in the Sales Force Management And Motivation Process entails the development of an equitable compensation package for all sales employees. Sales Force Compensation represents, therefore, an essential element in the overall sales management process.
Compensation is one of the most important factors that motivates every employee. It is essential, therefore, that business owners and sales managers design a suitable sales compensation plan which may consist of various elements, depending on the company’s specific requirements.
The prime purpose of a sales compensation plan is to ensure maximum motivation of the sales force to satisfy the customers' needs in the most efficient manner. The development of the sales compensation plan entails a number of steps outlined below. |
STEPS IN THE SALES COMPENSATION DEVELOPMENT PROCESS |
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Establish compensation objectives. |
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Select compensation plans. |
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Set appropriate pay level for sales people. |
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Summarize sales expense account and employee benefits. |
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Implement the sales compensation plan. |
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There are several Sales Compensation Plans, which can be used by business owners and sales managers and these plans are summarized below. |
SALES COMPENSATION PLANS
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Straight
Salary |
Sales
Commission |
Salary
Plus
Commission |
Salary
Plus
Bonus |
Salary Plus
Bonus Plus
Commission |
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Sales Force Compensation is discussed in detail in Tutorial 5. |
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8. SALES FORCE MANAGEMENT AND MOTIVATION |
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STEP 6: SALES FORCE MANAGEMENT AND MOTIVATION
The next step in the Sales Force Management And Motivation Process requires evaluation of target markets selected by the company and Design Of Sales Territories.
The design of sales territories entails evaluation of several Sales Territory Planning Factors illustrated next. |
SALES TERRITORY PLANNING FACTORS |
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Type Of
Account |
Marketing
Objectives |
Workload
Allocation |
Time
Allocation |
Sales
Strategies |
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The selection and design of sales territories offers a number of options to the business owner and the sales manager. These options are based on four different Types Of Sales Territories presented below. |
TYPES OF SALES TERRITORIES
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Geographically-
Based
Sales
Territory |
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Product-
Based
Sales
Territory |
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Customer-
Based
Sales
Territory |
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Combined
Sales
Territory |
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IMPORTANCE OF THE SALES TERRITORIES DESIGN
The design of sales territories is particularly significant because it will enable the business owner and the sales manager to develop a cost-effective method of servicing all target markets with the existing sales force.
Sales Force Management And Motivation is discussed in detail in Tutorial 5. |
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9. SALES FORCE ALLOCATION AND SALES QUOTAS |
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STEP 7: SALES FORCE ALLOCATION AND SALES QUOTAS
An effective implementation of the Sales Force Management And Motivation process entails sub-dividing all sales territories in the most suitable manner and allocating them to individual sales people. The allocation of sales people to various sales territories is based upon specific Sales Force Allocation Factors outlined below. |
SALES FORCE ALLOCATION FACTORS |
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Number of sales people in the company at present. |
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Past performance of each sales person. |
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Company's specific needs and opportunities in the marketplace. |
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Market potential in a particular sales territory. |
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Experience and preferences of each sales person. |
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SALES QUOTAS
Subsequent to the sales force allocation, the sales manager must prepare Sales Quotas, or Sales Targets, in accordance with the company's sales budget and allocate them to each member of the sales team.
Sales people, in turn, will be expected to use their respective sales quotas in planning individual activities, designed to meet the company's overall sales objectives.
Sales Force Allocation and Sales Quotas are discussed in detail in Tutorial 5. |
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10. SALES FORCE PERFORMANCE EVALUATION AND CONTROL |
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STEP 8: SALES FORCE PERFORMANCE EVALUATION AND CONTROL
Sales Force Performance Evaluation represents another important element in the sales management process. The sales manager is required to analyze and evaluate performance of the sales force, the level of sales achieved by various product or service groups in the marketplace, and the volume of sales generated by various customers.
Sales force performance evaluation entails a number of tasks outlined below. |
SALES PERFORMANCE EVALUATION TASKS |
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Preparing monthly sales reports. |
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Analyzing sales performance results. |
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Evaluating performance of individual sales people. |
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Comparing actual results with the planned objectives and determining variances. |
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Taking corrective action and adjusting the sales planning process. |
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SALES PERFORMANCE CONTROL
Finally, the Sales Performance Control will enable the sales manager to maintain constant control over sales force performance to ensure that customers receive all required products and services on time and in an acceptable condition.
Sales Performance Evaluation And Control is discussed in detail in Tutorial 5. |
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11. WHY IS SALES MANAGEMENT SO IMPORTANT? |
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THE IMPORTANCE OF THE SALES MANAGEMENT PROCESS
The importance of the Sales Management Process cannot be underestimated. After all, with deterioration of sales, the company may potentially undergo the following cycle as illustrated below. |
CONSEQUENCES OF NOT HAVING SALES |
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No customers... |
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No revenues.... |
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No profits... |
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No continuity of the business cycle... |
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No money to pay employees... |
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No employees... |
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No business... |
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No company... |
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No income... |
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No money... |
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Unhappy wife... |
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Expensive divorce attorney... |
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Boring therapy sessions... |
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Hitting rock bottom... |
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Discovering the Lean Business 2100 Management Program... |
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Turning around in a positive direction... |
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Starting new business and learning from the past experience... |
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Making lots of sales....again...and again... |
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IMPORTANCE OF A CONTINUOUS SALES MANAGEMENT PROCESS
It is essential to ensure that the Sales Management Process is established, planned, and controlled in a professional manner to secure the success and continuity of the company.
All information pertaining to company sales performance must be collated on a continuous basis and used as feedback for future sales plans and budgets. This feedback will help business owners and sales managers to adjust the planning and budgeting process and ensure maximum flexibility of operational activities.
In addition, this information is instrumental in reviewing and modifying the overall marketing strategy, thus contributing to improved future organizational performance. |
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12. FOR SERIOUS BUSINESS OWNERS ONLY |
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ARE YOU SERIOUS ABOUT YOUR BUSINESS TODAY? |
Reprinted with permission. |
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13. THE LATEST INFORMATION ONLINE |
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LESSON FOR TODAY:
Make Your Customers Number One - And They Will Make You Number One!
Joe Griffith |
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