Unit 12: Public Relations, Sales Promotion, and Personal Selling

 

 

Public Relations and Publicity:

 

Public relations is an organization’s communications that seek to build good relationships with an organization’s publics, including consumers, stockholders, and legislators. It includes obtaining favorable publicity, building up a good “corporate image,” and handling or heading off unfavorable rumors, stories, and events. Publicity is unpaid communication about an organization that appears in the mass media. Public relations may consist of writing press releases, holding special events, conducting and publishing consumer surveys about a product or the company, and efforts to put a positive spin on negative company news. Unlike sales promotions, public relations activities do not usually seek a short-term increase in sales. Instead, they try to craft a long-term positive image for the product or the organization. Compared with personal selling, advertising, and sales promotions, expenditures for public relations are usually low in most organizations. Since companies do not pay for publicity, they have less control over the publication of good or bad company news. But this often means that consumers find this type of news source more believable than if the information were disseminated directly by the company.

 

Marketing and Nonmarketing Public Relations:

 

The basic rule of public relations is to do something good and then talk about it. Public relations is crucial to an organization’s ability to establish and maintain a favorable image.

 

Nonmarketing public relations refers to a company’s messages about general management issues. When a company makes a decision that affects any of its publics, input from public relations specialists can help to smooth its dealings with those publics. A company, for example, that decides to close a plant would need advice on how to deal with the local community. Other examples include a company’s attempts to gain favorable public opinion during a long strike or an open letter to Congress published in a newspaper during congressional debates on a bill that would affect a particular industry.

 

Marketing public relations refers to narrowly focused public relations activities that directly support marketing goals. Marketing public relations involves an organization’s relationships with consumers or other groups about marketing concerns and can be either proactive or reactive. With proactive marketing public relations, the marketer takes the initiative and seeks out opportunities for promoting the firm’s products, often including distribution of press releases and feature articles. It is a powerful marketing tool since it adds news coverage that reinforces direct promotion activities. Although some publicity happens naturally, more typically a “buzz” needs to be created by a firm’s publicists. Reactive marketing public relations responds to an external situation that has potential negative consequences for the organization. The goal in this case is to manage the flow of information to address concerns so that consumers don’t panic and distributors don’t abandon the product.

 

The Internet has expanded the capabilities of the traditional public relations function. Corporate websites post testimonials from customers, make new product announcements, and respond quickly to important events. News releases posted on the company website may double as sales vehicles. The Internet can also be very effective in handling company crises. With a host of Internet news sites, companies can respond to a crisis online in far less time than other forms of communication such as press releases or conferences.

 

Public Relations Objectives:

 

Public relations specialists need to operate at many levels to ensure that various publics of a company receive coordinated, positive messages about the firm. These groups include customers, suppliers, employees, the media, stockholders, and government regulators.

 

Companies that practice integrated marketing communication strategies know that public relations strategies are best used in concert with advertising, sales promotion, and personal selling in order to send a consistent message to customers and other stakeholders. As part of the total IMC plan, public relations departments may perform any or all of the following functions to achieve communications objectives:

 

 

Public Relations Tools:

 

Public relations professionals use several tools. They use:

 

 

One of the major tools is news. PR professionals find or create favorable news about the organization and its products or people. Speeches can also create product and company publicity. Increasingly, company executives must field questions from the media or give talks at trade associations or sales meetings. Another common PR tool is special events, ranging from news conferences, press tours, grand openings, and fireworks displays to laser shows, hot air balloon releases, multimedia presentations and star-studded spectaculars, and educational programs designed to reach and interest target publics. Recently, mobile marketing—traveling promotional tours that bring the brand to consumers—has emerged as an effective way to build one-to-one relationships with targeted consumers. Public relations people also prepare written materials to reach and influence their target markets. These materials include annual reports, brochures, articles, and company newsletters and magazines. Audiovisual materials, such as films, slide-and-sound programs, and video- and audiocassettes, are being used increasingly as communication tools. Corporate identity materials can also help create a corporate identity that the public immediately recognizes. Logos, stationery, brochures, signs, business forms, business cards, buildings, uniforms, and company cars and trucks—all become marketing tools when they are attractive, distinctive, and memorable. Finally, companies can improve public goodwill by contributing money and time to public service activities.

 

Planning a Public Relations Campaign:

 

A public relations campaign is a coordinated effort to communicate with one or more of the organization’s publics. This is a three-step process of:

 

1.       Developing Objectives,

2.       Executing, and

3.       Evaluating.

 

The organization must first develop clear objectives for the PR program that define the message it wants people to hear. The PR specialists must develop a campaign strategy that includes:

 

 

Execution of the campaign means deciding precisely how the message should be communicated to the targeted publics and implementing the decisions. An organization can use a variety of public relations tools: news conferences, special events, written materials, etc.

 

One of the barriers to greater reliance on public relations campaigns is the difficulty encountered when trying to gauge their effectiveness. It is possible to tell if a PR campaign is getting media exposure, though it’s more difficult to gauge bottom-line impact. In-house assessments, awareness and preference research studies, and the measurement of print and broadcast coverage generated by PR activities as well as impression counts can be used in the PR campaign evaluation.

 

Sales Promotion:

 

Sales Promotion is the use of short-term incentives to encourage the purchase or sale of a product. Sales promotions are programs such as contests, coupons, displays, trade shows, samples, premiums, product demonstrations, or other incentives that marketers design to build interest in or encourage purchase of a product during a specified time period. Sales promotions are intended to stimulate immediate action, often in the form of a purchase, rather than to build long-term loyalty.  Whereas advertising and personal selling offer reasons to buy a product, sales promotion offers reasons to buy now.

 

Sales promotion geared to marketing intermediaries is called trade promotion. Companies actually spend about as much on trade promotion as on advertising and consumer-oriented sales promotion combined. Trade promotion strategies include offering free merchandise, buyback allowances, and merchandise allowances along with sponsorship of sales contests to encourage wholesalers and retailers to sell more of certain products or product lines.

 

Sales promotion tools are used by most organizations, including manufacturers, distributors, retailers, trade associations, and not-for-profit institutions. They are targeted toward final buyers, retailers and wholesalers, business customers, and members of the sales force. Several factors have contributed to the rapid growth of sales promotion, particularly in consumer markets. First, inside the company, product managers face greater pressures to increase their current sales; and sales promotion is viewed as an effective short-run sales tool. Second, externally, the company faces more competition; and competing brands are less differentiated. Increasingly, competitors are using sales promotion to help differentiate their offers. Third, advertising efficiency has declined because of rising costs, media clutter, and legal constraints. Finally, consumers have become more deal oriented, and ever-larger retailers are demanding more deals from manufacturers. The growing use of sales promotion has resulted in promotion clutter, similar to advertising clutter, however. Consumers are increasingly tuning out sales promotions, weakening their ability to trigger immediate purchase. Manufacturers are now searching for ways to rise above the clutter, such as offering larger coupon values or creating more dramatic point-of purchase displays.

 

Sales Promotion Objectives:

 

Sales promotion objectives differ widely:

 

 

Sellers may use consumer promotions to increase short-term sales or to help build long-term market share. Objectives for trade promotions include getting retailers to carry new items and more inventory, getting them to advertise the product and give it more shelf space, and getting them to buy ahead. Sales force promotion objectives include getting more sales force support for current or new products or getting salespeople to sign up new accounts.

 

Sales promotions are usually used together with advertising, personal selling, or other promotion mix tools. Consumer promotions must usually be advertised and can add excitement and pulling power to ads. Trade and sales force promotions support the firm’s personal selling process.

 

In general, rather than creating only short-term sales or temporary brand switching, sales promotions should help to reinforce the product’s position and build long-term customer relationships. Increasingly, marketers are avoiding “quick fix,” price-only promotions in favor of promotions designed to build brand equity.

 

Consumer-Oriented Sales Promotion:

 

The main consumer promotion tools include samples, coupons, cash refunds, price packs, premiums, advertising specialties, patronage rewards, point-of-purchase displays and demonstrations, and contests, sweepstakes, and games. Consumer-oriented sales promotions can be classified as either price-based or attention-getting consumer promotion.

 

Price-Based Consumer Promotion

Price-based consumer promotions emphasize short-term price reductions or refunds, encouraging consumers to choose a brand while the deal is on. If used too frequently, however, consumers become conditioned to purchase the product only at the lower promotional price.

 

Coupons

A coupon is a certificate that gives buyers a saving when they purchase a specified product. Coupons can stimulate sales of a mature brand or promote early trial of a new brand. Redemption rates have been declining in recent years, however, as a result of coupon clutter. Most major consumer goods companies are issuing fewer coupons and targeting them more carefully. They are also cultivating new outlets for distributing coupons, such as supermarket shelf dispensers, electronic point-of-sale coupon printers, or “paperless coupon systems.”

 

Cash Rebate Offers

A cash rebate is an offer to refund part of the purchase price of a product to consumers who send a “proof of purchase” to the manufacturer.

 

Price Packs

A price pack is a reduced price that is marked by the producer directly on the label or package. Price packs can be single packages sold at a reduced price, or two related products banded together. Price packs are very effective—even more so than coupons—in stimulating short-term sales.

 

Patronage Rewards

A patronage reward is cash or other award for the regular use of a certain company’s products.


Special Packs

A special pack is a package that gives the shopper more product instead of lowering its price. A special pack also can be a separate product given away along with another product.

 

Attention-Getting Consumer Promotion

Attention-getting consumer promotions stimulate interest in and publicity for a company’s products.

 

Samples

A sample is a small amount of a product offered to consumers for trial. Sampling is the most effective—but most expensive—way to introduce a new product. About 84 percent of consumer packaged-goods marketers use sampling as a part of their promotion strategy. Some samples are free; for others, companies charge a small amount to offset its cost. The sample might be delivered door-to-door, sent by mail, handed out in a store, attached to another product, or featured in an ad. Samples can also come with the morning newspaper, in a sample pack, or via the Internet.

 

Premiums

A premium is a good offered either free or at low cost as an incentive to buy a product. A premium is not the product being promoted. It is used as an incentive to encourage purchase of the featured product. A premium may come inside or outside the package, or through the mail.

 

Advertising Specialties

An advertising specialty is a useful article imprinted with an advertiser’s name, given as a gift to consumers. Typical items include pens, calendars, key rings, matches, shopping bags, T-shirts, caps, nail files, and coffee mugs. In a recent study, 63 percent of all consumers surveyed were either carrying or wearing an ad specialty item. More than three-quarters of those who had an item could recall the advertiser’s name or message before showing the item to the interviewer.

 

Point-of-Purchase (POP) Promotions

A point-of-purchase promotion is a display or demonstration that takes place at the point of purchase or sale. Unfortunately, many retailers do not like to handle the hundreds of displays, signs, and posters they receive from manufacturers each year. Manufacturers have responded by offering better POP materials, tying them in with television or print messages, and offering to set them up.

 

Contests, Sweepstakes, and Games

Contests, sweepstakes, and games are promotional events that give consumers the chance to win something—such as cash, trips, or goods—by luck or through extra effort. A contest calls for consumers to submit an entry—a jingle, guess, or suggestion—to be judged by a panel that will select the best entries. A sweepstakes calls for consumers to submit their names for a drawing. A game presents consumers with something—bingo numbers, missing letters—every time they buy, which may or may not help them win a prize.

 

Trade-Oriented Promotion:

 

Manufacturers direct more sales promotion dollars toward retailers and wholesalers (78 percent) than to consumers (22 percent). Trade promotion can persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers. Shelf space is so scarce these days that manufacturers often have to offer discounts, allowances, buy-back guarantees, or free goods to retailers and wholesalers to get products on the shelf and, once there, to stay on it. Manufacturers use several trade promotion tools. Many of the tools used for consumer promotions—contests, premiums, displays—can also be used as trade promotions.

 

Discounts

A discount is a straight reduction in price on purchases during a stated period of time. This is also called price-off, off-invoice, or off-list. The discount could be based on the volume of the product ordered. 


Allowances

An allowance is promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way. An advertising allowance compensates retailers for advertising the product. A display allowance compensates them for using special displays.

 

Conventions and Trade Shows

Many companies and trade associations organize conventions and trade shows to promote their products. Firms selling to the industry show their products at the trade show. A trade show is an event at which many companies set up elaborate exhibits to show their products, give away samples, distribute product literature, and troll for new business contacts. Trade shows are major vehicles for manufacturers to show off their product lines to wholesalers and retailers. More than 4,300 trade shows take place every year, drawing as many as 85 million people. Vendors receive many benefits, such as opportunities to find new sales leads, contact customers, introduce new products, meet new customers, sell more to present customers, and educate customers with publications and audiovisual materials. Trade shows also help companies reach many prospects not reached through their sales forces. About 90 percent of a trade show’s visitors see a company’s salespeople for the first time at the show. Business marketers may spend as much as 35 percent of their annual promotion budgets on trade shows.

 

Other Programs

Manufacturers may offer free goods, which are extra cases of merchandise, to resellers who buy a certain quantity or who feature a certain flavor or size. They may offer push money—cash or gifts to dealers or their sales forces to “push” the manufacturer’s goods. Most retailers also charge manufacturers slotting fees—payments demanded by retailers before they will accept new products and find “slots” for them on the shelves. Manufacturers may also give retailers free specialty advertising items that carry the company’s name, such as pens, pencils, calendars, paperweights, matchbooks, memo pads, and yardsticks. For more expensive and highly complex products, manufacturers often provide specialized training for retail salespeople. This background helps salespeople explain features, competitive advantages, and other information to consumers. Training can be provided in several ways: A manufacturer’s sales representative can conduct training sessions during regular sales calls, or the firm can distribute sales literature and videocassettes.

 

Sales Force Promotion:

 

Sales force promotion is directed at the company’s own sales force (oftentimes the manufacturer’s sales force)—rather than a business customer’s sales force which is in the distribution channel, such as a retailer’s sales force. Contests, for example, could be used to urge the sales force to increase their efforts, with prizes going to the top performers. A sales contest is a contest for salespeople to motivate them to increase their sales performance over a given period. Sales contests motivate and recognize good company performers, who may receive trips, cash prizes, or other gifts. Sales contests work best when they are tied to measurable and achievable sales objectives. Other incentives could also be provided to encourage the sales force to increase new accounts in addition to boosting sales.

 

Personal Selling:

 

Personal selling is promotional presentation by the firm’s sales force conducted on a person-to-person basis with the buyer for the purpose of making sales and building customer relationships. Personal selling is the oldest form of promotion. This direct form of promotion may be conducted face-to-face, over the telephone, through videoconferencing, or through interactive computer links between the buyer and the seller. This direct contact with the customer gives the salesperson the opportunity to be flexible and modify the sales message to coincide with the customer’s needs. The salesperson can get immediate feedback from the customer. This form of promotion has a high cost per contact with the customer. The average sales call costs about $300. It is difficult to ensure consistency of message when it is delivered by many different company representatives. The credibility of salespeople often depends on the quality of their company’s image, which has been created by other promotion strategies. About 14 million people in the U.S. are employed in personal selling.

 

Today, most salespeople are well-educated, well-trained professionals who work to build and maintain long-term customer relationships by listening to their customers, assessing customer needs, and organizing the company’s efforts to solve customer problems. The term salesperson covers a wide range of positions. At one extreme, a salesperson might be largely an order taker, such as a department store salesperson standing behind a counter. At the other extreme are order getters, whose positions demand the creative selling of products ranging from appliances, industrial equipment, and airplanes to insurance, advertising, and information technology services.

 

The Role of Personal Selling:

 

Generally, a personal sales effort is more important when a firm engages in a push strategy, in which the goal is to push the product through the distribution channel so that it is available to consumers. Personal selling also is likely to be crucial in B2B contexts when direct interaction with upper-level management is required to secure an important sale—and often when intense price negotiations occur before the sale is made. In addition, inexperienced buyers may need the hands-on assistance that a professional salesperson can provide. Firms selling products that consumers buy infrequently, such as computers, lawn mowers, and college educations, often rely heavily on personal selling, as do firms selling complex or very expensive products that need a salesperson to explain, justify, and sell them.

 

Personal selling, however, has some disadvantages that limit the role played by personal selling in the promotion mix. First, when the dollar amount of individual purchases is low, it isn’t economically feasible to use personal selling. The cost per contact with a customer is high compared to other forms of communication, such as advertising. Salespeople can also only make a limited number of sales calls a day. Reliance on personal selling is effective only when the success ratio is at its highest. Because the cost of utilizing salespeople is high, telemarketing is growing in popularity.

 

The types of salespeople and their functions vary considerably. The person who processes a computer purchase over the phone is an order taker, a salesperson whose primary function is to facilitate transactions that the customer initiates. Order takers include both inside and outside salespeople. Most retail salespeople are inside order takers, but often wholesalers, dealers, and distributors employ salespeople to wait on customers. In contrast, a computer technician is a technical specialist, a sales support person with a high level of technical expertise who assists in product demonstrations, recommendations for complex equipment, and setup of machinery. The technical specialist’s job is to provide sales support rather than actually closing the sale. The technical specialist promotes the firm and tries to stimulate demand for a product to make it easier for colleagues to actually make the sale. Sometimes a person whose job is to lay the groundwork is known as a missionary salesperson. This is a salesperson who promotes the firm and tries to stimulate demand for a product, but does not actually complete a sale. Many firms find that the selling function is best handled by team selling, using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts. Finally, the person who actually convinces the customer to buy is an order getter, a salesperson who works creatively to develop relationships with customers or to generate new sales.

 

Approaches to Personal Selling:

 

Personal selling is one of the oldest forms of promotion, but its image has been tarnished by smooth-talking pitchmen who have sometimes said anything to make a sale. In more recent years, personal selling has begun to redeem itself as a profession and has moved from a transactional, hard-sell technique to a relationship marketing approach.

 

Transactional Marketing

The hard sell is a high-pressure process. Hard-sell tactics are a form of transactional selling, a form of personal selling that focuses on making an immediate sale with little or no attempt to develop a relationship with the customer. As customers, the hard sell makes us feel manipulated and resentful. This technique also contributes to the negative image many of us have of obnoxious salespeople.


Relationship Marketing

Today’s professional salesperson is more likely to practice relationship selling, a form of personal selling in which the salesperson seeks to develop a mutually satisfying relationship with the consumer. Relationship selling involves winning, keeping, and developing customers. Winning a customer means converting an interested prospect into someone who is convinced that the product holds value for him or her. Keeping a customer means ensuring that the customer gets what he or she paid for. Developing a customer means satisfying the customer so that he or she will be counted on to provide future business. The professional salesperson who genuinely adheres to the principles of relationship marketing is a relationship builder and a customer problem solver.

 

The Creative Selling Process:

 

Selling is seldom boring. Every customer, every sales call, and every salesperson are unique. Some salespeople are successful primarily because they know so much about what they sell. Others are successful because they have built strong relationships with customers who look forward to their visits. Most salespeople understand and engage in a series of activities necessary to bring about a transaction. Complex or expensive sales require careful planning, and successful selling in these cases is more likely if the salesperson undergoes a systematic series of steps known as the creative selling process. These steps require the salesperson to seek out customers, analyze their needs, determine how product attributes provide benefits, and then decide how best to communicate this to the prospects. The steps in the process include prospecting, qualifying, preapproach, approach, sales presentation, demonstration, handling objections, closing, and follow-up.

 

Prospecting

Prospecting is the step of the selling process that includes identifying and developing a list of potential or prospective customers. Prospects or sales leads can come from existing customer lists, telephone directories, or commercially available databases. Sometimes companies generate sales leads through their advertising or sales promotions by letting customers request more information. One way to generate leads is through cold calling, when the salesperson contacts prospects without prior introduction or arrangement. Salespeople also rely on referrals. Current clients who are satisfied with their purchase often give referrals.

 

Qualifying

Salespeople next need to qualify their prospects, the step of the selling process that determines how likely prospects are to become customers. Prospects can be qualified by looking at their financial ability, volume of business, special needs, location, and possibilities for growth.

 

Preapproach

The preapproach is the step in the selling process in which the salesperson learns as much as possible about a prospective customer before making a sales call. Salespeople try to learn as much as possible about qualified prospects early on. They may probe prior purchase history, current needs, or information about their interests. The salesperson can consult industry and online sources, acquaintances, etc. to learn about the prospect. Another task is to decide on the best approach, which might be a personal visit, a phone call, or a letter. The best timing should be considered carefully because many prospects are busiest at certain times. Finally, the salesperson should give thought to an overall sales strategy for the account.

 

Approach

The approach is the step in the selling process in which the salesperson usually meets the customer for the first time. He or she should start building the relationship during the approach. The salesperson should know how to meet and greet the prospect and get the relationship off to a good start. This step involves the salesperson’s appearance, opening lines, and the follow-up remarks. The opening lines should be positive to build goodwill from the beginning of the relationship. If the salesperson made contact with the prospect through a referral, the salesperson should probably say so up-front. This opening might be followed by some key questions to learn more about the customer’s needs or by showing a display or sample to attract the prospect’s attention and curiosity. As in all stages of the selling process, listening to the customer is crucial.

 

Sales Presentation

The sales presentation is the step in the selling process in which the salesperson seeks to persuasively communicate the product’s features and the benefits it will provide after the sale. Proof statements, such as data on past sales, testimonials, guarantees, or research results, help to make the salesperson’s presentation credible. Some sales presentations are canned, meaning a script has been written in advance, and the same message is delivered to many prospects. This technique often provides a series of verbal prompts to which there are expected customer responses. A similar approach called a formulated approach identifies a prospect’s needs and then provides a scripted sales pitch keyed to that kind of prospect. These standardized approaches work fine in some cases, but the most effective sales presentations are those that are tailored to the specific customer.

 

Increasingly, sales presentations are going high-tech. Computer-based multimedia presentations are considered the next wave in sales-force automation. With a multimedia-ready notebook computer or LCD projection computer, salespeople can bring color, animation, video, audio, and interactivity—as well as the latest product and pricing information—to their presentations.

 

Demonstration

One important advantage of personal selling over most advertising is the ability of salespeople to provide a demonstration of the product to the potential buyer. Many firms use new technologies to make their demonstrations more effective. Multimedia interactive demonstrations are now common. The key to a good demonstration—one that gains the customer’s attention, keeps his or her interest, is convincing, and stays in the customer’s memory—is planning. The salesperson should check and recheck all aspects of the demonstration prior to its delivery.

 

Handling Objections

Handling objections is the step in the selling process in which the salesperson seeks out, clarifies, and overcomes customer objections to buying. Customers almost always have objections during the presentation or when asked to place an order. The problem can be either logical or psychological, and objections are oftentimes unspoken. The salesperson should handle objections using a positive approach, by seeking out hidden objections, asking the prospect to clarify any objections, and taking objections as opportunities to provide more information—turning the objections into reasons for buying. Every salesperson needs training in the skills of handling objections.

 

Closing

Closing is the step in the selling process in which the salesperson asks the customer for an order. Some salespeople do not get around to closing or do not handle it well. They may lack confidence, feel guilty about asking for the order, or fail to recognize the right moment to close the sale. Salespeople should know how to recognize closing signals from the buyer, including body language, comments, and questions. Salespeople can use several closing techniques. They can ask for the order, review points of agreement, offer to help write up the order, ask whether they buyer wants this model or that one, or note that the buyer will lose out if the order is not placed now. The salesperson may also offer the buyer special reasons to close, such as a lower price or an extra quantity at no charge.

 

Follow-Up

Follow-up is the last step in the selling process, in which the salesperson follows up after the sale to ensure customer satisfaction and repeat business. Right after closing, the salesperson should complete any details on delivery time, purchase terms, and other matters. The salesperson then should schedule a follow-up call when the initial order is received, to make sure there is proper installation, instruction, and/or servicing. This visit should reveal any problems, assure the buyer of the salesperson’s interest, and reduce any buyer concerns that might have arisen since the sale. Follow-up also allows the salesperson to bridge to the next purchase. Once a relationship develops, the selling process is only the beginning. Even as one cycle of purchasing draws to a close, a good salesperson is already laying the foundation for the next one.

 

Sales Management:

 

Sales management is the process of planning, implementing, and controlling the personal selling function of an organization. Personal selling is a team effort that requires careful planning and salespeople in the field when and where customers need them.

 

Sales Force Objectives

Sales force objectives state what the sales force is expected to accomplish and when. These goals could include acquiring new customers, generating specific amounts of sales volume, reducing sales expenses, improving customer satisfaction, gathering new-product suggestions, training goals, and community involvement goals. Sales managers also work with their salespeople to develop individual goals. Performance goals are measurable outcomes, such as total sales and total profits per salesperson. Behavioral goals specify actions salespeople must accomplish, such as the number of prospects to identify, the number of sales calls, and the number of sales presentations.

 

Sales Force Strategy

A sales force strategy specifies the structure and size of a firm’s sales force. Each salesperson has the responsibility for a set group of customers—the sales territory. The territory structure allows salespeople to have an in-depth understanding of customers and their needs through frequent contacts. The most common way to allot territories is geographically, minimizing travel and other field expenses. A geographic sales force structure usually is sized according to how many customers are found in a given area. If the product line is diverse or technically complex, a better approach may be to structure sales territories based on different classes of products to enable the sales force to provide more expertise to a set of customers with similar needs. Still another structure is industry specialization, in which salespeople focus on a single industry or a small number of industries. Putting a salesperson into the field is expensive, so the number of people in the sales force has an impact on a company’s profitability. Determining the optimal number of salespeople is an important decision.

 

Recruiting, Selecting, & Training the Sales Force

Because the quality of a sales force can make or break a firm, a top priority for sales managers is to recruit and select the right set of people to do the job—people who are strategic thinkers, who have technical knowledge pertaining to the industry, and who have excellent interpersonal skills. Companies screen potential salespeople to reveal these skills, along with useful information about interests and capabilities. Pencil-and-paper tests can determine quantitative skills and competence in areas not easily evaluated through interviews.

 

Sales training teaches salespeople about the organization and its products and how to develop the right skills, knowledge, and attitudes. New salespeople may spend anywhere from a few weeks or months to a year or more in training. The average initial training period is four months. Then, most companies provide continuing sales training via seminars, sales meetings, and the Internet throughout the salesperson’s career.

 

Compensating, Motivating, and Supervising the Sales Force

One way to motivate salespeople is to pay them well, oftentimes by tying compensation to performance. A straight commission plan is based solely on a percentage of sales the person closes. Under a commission-with-draw plan, earnings are based on commission plus a regular payment, or “draw,” that may be charged against future commissions if current sales are inadequate to cover the draw. With a straight salary compensation plan, the salesperson is paid a set amount regardless of sales performance. Sometimes straight salary plans are augmented by use of a quota-bonus plan, in which salespeople are paid salary plus a bonus for sales above an assigned quota.

 

In addition to basic compensation, many managers find that a variety of other incentives can also enhance the sales force effort tremendously. Such incentives can range from free vacations to extra cash.

 

Although many salespeople like to work independently, supervision is essential to an effective sales force. Sales managers often require salespeople to develop monthly, weekly, or daily call reports, a plan of action detailing which customers were called on and how things went. These reports allow the sales manager to track what the salespeople are doing in the field, and they provide marketing managers with timely information about customers’ responses, competitive activity, and any changes in the firm’s customer base.

 

Evaluating the Sales Force

The job of sales managers is not complete until the total effort of the sales force is evaluated. First, it is important to determine if the sales function is meeting its quantitative objectives. If not, the sales manager must figure out the causes. Individual salesperson performance is normally measured against sales quotas for individual sales territories, even when compensation plans do not include bonuses or commissions based on quotas. Other quantitative measures, such as number of sales calls and sales reports, may also be used in the evaluation.

 

Many firms also evaluate their sales force on qualitative indicators of performance such as salesperson attitude, product knowledge, and communication skills. Increasingly, as firms focus on relationship management, the level of customer satisfaction is a strong qualitative measure of superior salesperson performance.

 

Finally, the salesperson’s expense account for travel and entertainment (T&E) may be considered since the best sales record can mean little to a company’s bottom line if the salesperson is gouging the company with outrageous expenses.

 

Note: The above lecture notes were compiled by David Gerth. These materials are a composite of quotations, paraphrases, and ideas from Marketing: Real People, Real Choices, Solomon & Stuart, 2003, Prentice Hall; Contemporary Marketing, Boone & Kurtz, 2004, Thomson; Principles of Marketing, Kotler & Armstrong, 2004, Prentice Hall; and David Gerth. They are only intended for the noncommercial use of students in David Gerth’s marketing classes for educational purposes.