Chapter 15: Personal Selling

1. Chapter 15: Personal Selling

2. Sales Is Important! • Weak Revenues = No Firm • Sales is often the largest marketing expense • Selling mistakes increase costs and lose revenues • 1 in 10 workers are in sales • Sales is the #1 job of AU grads • Salespeople can earn very high incomes • Pay is often a function of risk-return

3. Personal Sales works better than Ads • Salespeople get more attention than ads • Salespeople can adjust to cultural or situational factors • Salespeople can ask questions • Salespeople can adjust to customer questions • Salespeople can take the order - now! • Salespeople can act to make sure the customer is satisfied - fix problems

4. Salespeople are marketing managers for their territory • Identify which customers to aim at • Which products to emphasize • Which customers to call on and work hardest • How to use promotions/sales support money • When and how to adjust prices • Good salespeople help the customer buy.

5. Critical Selling Skills • Product/marketing knowledge • Listening • Asking good questions • Asking for the order • Being Organized • Being able to handle failure • Keeping promises and being dependable

6. Order-Getting ?????? ?????? ?????? ?????? ?????? Order-Taking Supporting Basic Sales Tasks 15-4

7. Supporting Salespeople • MISSIONARY SALESPEOPLE • Supporting salespeople who work for producers—calling on their middlemen and the middlemen's customers • TECHNICAL SPECIALISTS • Supporting salespeople who provide technical assistance to order-oriented salespeople

8. Business Telemarketing • Growing fast because of cost per contact ($250 vs $1 - $20 per contact). • Very helpful to identify prospects who are ready to buy • Calls & letters can often handle routine tasks without the cost of a face to face call • Remember, time is a critical resource for salespeople!

9. Consumer Telemarketing • Outbound Calling Industry Killed by “Do Not Call” legislation • Only exceptions are for charities & politicians • Inbound calls still very important to many companies

10. Limitations of Telemarketing • 1] Very difficult to sell complex products • 2] Very difficult to sell when there are multiple decision makers • 3] Very difficult to sell when customer needs are complex • However, telemarketing can often cover the basics and a face to face call can close the deal.

11. Effective Telephone Communication • 1. Keep mouth clear and voice wet • 2. Smile! • 3. Have a long cord so you can use your normal gestures • 4. Eliminate distractions. Clear desk. • 5. Chose effective words. No jargon. • 6. Confirm any action by reading it back. Also read back critical information • 7. Be an active listener

12. Some Ways to Set Sales Territories • Geographic areas • Customer types • Account size • Product to be sold • Any combination of the above

13. Salesforce Turnover • Salesforce Turnover = • (# of salespeople who leave the company in a time period) / (Total Number of Salespeople)

14. Salesforce Turnover Example • A company starts the year with 100 salespeople • During the year, 5 are fired, 6 leave the company and 1 dies. Another salesperson has a heart attack and is on medical leave for 90 days. • 12 people are hired during the year. • What is the salesforce turnover?

15. Turnover Answer • 5 Fired + 6 Leave + 1 death / 100 = • 12% turnover

16. Salesforce Turnover is Costly • Not covering customers • Not covering them well (stretching) • Hiring Costs • Most firms underspend on hiring costs or just “make do” with weak people. This is very costly in the long term.

17. Very Low Turnover May Indicate • Salesforce is over paid • Salesforce is not challenged

18. Sales Recruiting • A written job description lays the groundwork—by specifying what tasks the salesperson needs to be able to do • Commonly used selection tools are best when used in combination • multiple interviews—with several different people • personnel and psychological tests • background checks

19. Training • Initial and ongoing training can help both experienced and inexperienced salespeople • company policies and practices • product information • selling techniques (and customer knowledge)

20. Sales Compensation • 3 Main Types • Straight Salary • Straight Commission • Combination Plan • They differ in: • Degree of fixed costs • Motivation • Control over salesperson activities

21. Sales Compensation Example • Company 1, 2 & 3 each have 10 salespeople • Company 1 pays each salesperson $80,000 in salary and benefits annually • Company 2 pays salespeople a flat 4% commission on sales • Company 3 pays their salespeople $30,000 in salary and a 2% commission • What is total salesforce compensation for each company at sales of $10, $20 and $40 million?

22. $10 Million in Sales • Company 1 = 10 salespeople x $80,000 each = $800,000 • Company 2 = $10 million in sales x .04 = $400,000 • Company 3 = 10 salespeople x $30,000 and $10 million in sales x .02 = $500,000

23. $20 million in Sales • Company 1 = $800,000 • Company 2 = $20 million x .04 = $800,000 • Company 3 = $300,000 + ($20 million x .02) = $700,000

24. $40 million in Sales • Company 1 = $800,000 • Company 2 = $1,600,000 • Company 3 = $1,100,000

25. Prospecting • Prospecting = following all the leads in the target market to identify potential clients (415) • Salespeople who are effective at prospecting: • Follow up on inquiries quickly (when customer is “Ready to buy” • Rapidly Identify: buying center, decision makers, ability to pay, customer needs