Unit – 1: Introduction to
Sales Management
Concept of Sales Management
Sales management refers to the administration of the personal
selling component of a company's marketing program. It includes the planning,
implementation, and control of sales programs, as well as recruiting, training,
motivating, and evaluating members of the sales force. In a small business,
these various functions may be performed by the owner or by a specialist called
a sales manager. The fundamental role of the sales manager is to develop and
administer a selling program that effectively contributes to the organization's
goals. The sales manager for a small business would likely decide how many
salespeople to employ, how best to select and train them, what sort of compensation
and incentives to use to motivate them, what type of presentation they should
make, and how the sales function should be structured for maximum contact with
customers.
The term Sales Management consists of two words- Sales and
Management. Both the terms are used commonly in our day-to-day business. Before
defining Sales management, we should understand sales and management
separately.
Sales mean selling a product or service in return for money or any
other compensation. Basically, it is an exchange of goods and services between
two parties, the buyer and the seller. The seller gets the monetary reward in
the form of profits by satisfying the needs of the buyer.
Many scholars have defined management. Some of the definitions are
as follows:
“Management is the process of designing and maintaining an
environment in which individuals, working together in groups, efficiently
accomplish selected aims”. (Heinz Weihrich & Harold Koontz)
“Management is an art of getting things done through
people”. (Mary Parker Follet)
The emphasis is on the word management now–a-days to do the sales
exercise with a professional approach by planning, organising and controlling
the prescribed tasks.
The Definitions Committee of the American Marketing Association
(AMA) gives one of the most acceptable definitions of Sales management: “The
planning, direction, and control of personal selling, including recruiting,
selecting, equipping, assigning, routing, supervising, paying, and motivating
as these tasks apply to the personal sales force”.
This definition emphasised on management of sales force. In actual
practice, the Sales Management is much more than that. However, the primary
assignment of the Sales manager is the management of personal sales force.
While the personnel related tasks do not comprise their total responsibility,
as a result, their personnel related responsibilities are called as sales force
management.
Elements
of Sales Management
There are the four basic elements of sales management, discussed below:
(1) Planning: a business cannot be taken as a chance.
Every salespeople or person concerned have to see for the future, in a planned
way like what must be done? And who will do it? The plan must be based on
extensive market research, and the facts must be verified at every stage. The
plan should also be evaluated, after investigating the total-market, for a particular
type of product. Flexibility must be provided by establishing a specialists
production line, to allow for variation in production. The plan should also be subject
to continued review. The details of the plan should be discussed, with all the
departmental heads, concerned, and their sub-ordinates, who bear responsibility
for fulfilling their parts of the plan.
(2) Co-ordination: Co-ordination is all pervasive and
permeates every function of the management-process. For example, ill planning,
departmental-plans are integrated into a master. Plan, ensuring adequate
co-ordination. Similarly, organising starts by co-ordination wholly, partially
inter-departmental and inter-personnel matters. Co-ordination also helps in maximum
utilisation of human-effort by the exercise of effective leadership, guidance,
motivation, supervision, communication etc. The control-system also needs coordination.
Co-ordination does not have any special techniques. Nevertheless, there are
sound principles, on which to develop skills. It has a special need to help the
staff, to see the total picture and co-ordinate their activities, with the rest
of the team. The sales manager has to encourage direct personal-contact, within
the organisation, particularly where there is lateral-leadership.
(3) Controlling: the sales manager has to check regularly,
that the sales activities are moving in the right direction or not. He guides,
leads, and motivates the subordinates, so as to achieve the goals planned for
the business. He has to take steps to ensure that the activities of the people
conform to the plans and objectives of the organisation. The controlling system
should be such that one can study the past, note the pitfalls and take
corrective measures, so that similar problems may not occur in the future. The
controller has to ensure that the set targets, budgets and schedules are attained
or followed in letter and spirit. There must be procedures to bring to light
the failure to attain a target. The control-system has to (i) prepare sales and
market forecasts; (ii) determine the level of sales-budget; (iii) determine the
sales-quotas for each salesman; (iv) determine, review and select distribution-channels;
(v) organise an efficient sales force; (vi) establish a system of
sales-reporting; (vii) establish a system of statistical sales-credit; (viii)
establish stock control system(s); (ix) review of performance of the
salesforce; and (x) establish periodical testing programmes. In a big
organisation, each salesman is assigned a territory (not so big that it cannot
be adequately covered). Each salesman has a target, set for specific ‘period.
From the weekly and monthly sales-reports, the control system is established,
that will prepare records whether a particular salesman is working efficiently
or not.
(4) Motivating: Motivation is essentially a human resource concept.
It aims to weld together distinctive personalities into an efficient team. For
this, knowledge of human psychology is needed, as a means of understanding
behaviour patterns. This is especially important in the case of the
sales-force. Only motivated sales-persons can achieve company’s goals.
NATURE AND
SCOPE OF SALES MANAGEMENT
Sales Management means management of sales force. It is
concerned with the planning, direction and control of the activities of the
sales force. Sales management is a broader sense means the management of all
marketing activities including sales promotion, advertising, marketing
research, physical distribution, product merchandising and pricing the product.
Sales management are responsible for organizing the sales effort, both within
and outside their companies. Within the companies, the sales manager builds
formal and informal organizational structures. He ensures effective
communication in the sales department as well as its relationship with other
departments. Outside the company, the sales manager serves as a key contact
with customers and other external parties. He is responsible for building and
maintaining an effective distribution network. Thus sales manager is both an
administrator in charge of personal selling activity and a member of the
executive group that takes all types of marketing decisions.
With the increasing economic and social pressures to enter
rural markets, the importance of sales management is increasing. The
manufacturers cannot exclusively rely on the trade for developing rural
markets. They have to employ substantial field force to promote and distribute
the production and services; those who assist and service the prospects,
clients and middlemen and those who could report to top management regarding
the changing consumer preference and competitive activities. Thus new and
sophisticated methods of sales management have to be adopted. Further the
responsibilities of sales managers are extending further. They are required to
participate in preparation of information which is relevant for key marketing
decisions e.g. budgeting, sales quota, sales turnover, sales control, cost
analysis etc. Sales management is the key contact with consumers, dealers,
relatives, etc. Sales manager has the onus of constructing and maintaining an
effective system of distribution.
Following are some
dimensions (Scope) of the sales management
1. The
Personal selling.
2. Establishing
sales force objectives.
3. Determining
sales force strategy.
4. Determining
sales force size.
5. Recruitment
and selection of sales force.
6. Training
of sales force.
7. Motivation
of sales force.
8. Compensating
the sales force.
9. Supervising
and controlling the sales force.
10. Performance
evaluation of the sales force.
FUNCTIONS OF SALES MANAGEMENT
Broadly there are three areas that cover the functions of Sales
Management:
1. Managerial Functions: Management is a process. It is the process
of carrying out the essential functions of planning, organizing, and directing and
controlling the personal selling function.
(a) Planning is a fundamental managerial function. Planning is
deciding in advance what to do, how to do it, when to do it and who is to
do it. Planning bridges the gap between where we are and where we want to go.
Planning is concerned with setting of objectives and finalizing the approach
for achievement of the objectives. It is an attempt by the sales manager to
anticipate the
future in order to achieve the sales objectives The demand for products and
services and
profitability of the operations depend upon the sales environment
which comprises of political, economic, social, cultural, technological,
demographic, legal and ecological factors and the sales manager has to design
strategies based on the dynamic environmental conditions.
(b) Organising involves the grouping of activities necessary to
accomplish the goals and plans, the assignment of these activities to
appropriate departments and provision for authority delegation and co-ordination.
It is a managerial activity which is essential for effective use of company’s
resources such as men (sales force), materials (Products) and money to achieve
the sales
objectives. It involves coordination of sales force activities in an orderly
manner and developing
channels of communication between various levels of responsibilities.
(c) Directing involves instructing, guiding, counselling,
motivating and leading the sales force to achieve organizational objectives.
Direction consists of the process and technique in issuing instructions and
making certain that the operations are carried out as planned”.
(d) Control is an important management function that ensures work
is carried out as per plans. Controlling is the process of determining what is
to be accomplished that is the standard, what is being accomplished, that is
the performance, evaluating the performance and if necessary, applying
corrective measures so that the performance takes place according to the plans,
that is, in conformity with the standards”.
(e) Coordination is a process whereby, a manager develops an
orderly pattern of group effort among his subordinates and secures unity of
action in the pursuit of a common purpose.
The main function of sales manager is to coordinate the activities
of sales representatives and executives towards the achievement of sales
objectives. In addition, he has to coordinate with other functions such as
marketing, distribution, finance, HR and production within the organization and
external customers like distributors, dealers, users and opinion leaders.
2. Staff Functions: Of all the “Ms” in management, i.e., money, materials, machine,
market and methods, the most important “M” stands for men, the manpower working
in the organization. While the value of assets depreciates, the value of
trained employees increases over time. An organization that is able to acquire,
develop and stimulate the manpower will be successful in the long run. Sales force
is the backbone of an organization since the ultimate aim of production is
sales. The success of the organization depends upon the effectiveness with
which they sell goods and services to meet the changing needs of the consumers.
Examples: Sales personnel planning,
recruitment, selection, training,
development, motivation, performance evaluation and career planning.
3. Advisory Functions: Sale management provides specialist advice
to the management for taking policy decision in key areas such as Pricing
policies, product performance, quality of products, new product introduction,
distribution policies, advertising and sales promotion plans.
Importance of
Sales Management
Sales management is responsible for organizing the sales
effort, both within and outside their business enterprises. Within the
business, the sales managers develop formal and informal organizational
structure to ensure effective communication related to sales activities. They
serve a key contact role with the customers and other external public for
building an effective distribution network. Thus the sales management play an
important role in analyzing the sales activities, increasing the sales volume,
contributing to profits and continuing growth. Sales managers make major
contribution to enable the management to reach and achieve the ultimate
objectives of increasing profits and continuing growth. Sales management can
use variety of techniques to reach that extra potential or increasing sales
volume by 5-10 percent and this extra sale potential can lead to continued
growth and expansion. Sales management includes more than tracking the business
or proving support to the sales team. It starts with developing the right
product, distributing in the right place at high price and continuing with
improved customer service and other selling efforts. All the selling efforts
must be well-coordinated and monitored to get the desired results by taking
advantages of the market opportunities.
1. Improves Product Development: A sales
management program include keeping and training the sales staff in close
contact with the potential customers and watching the market competition on
continuous basis. Sales executives will determine whether the existing product
line is relevant, do we need to add a new product to the existing line, should
we eliminate or add features in the existing product or drop few items from the
existing product mix. Regular conducts and reviews of what needs to be sold and
what could be the optimal product offer will help in generating high sales
volumes and profit margins.
2. Optimal Distributive Networks: Sales
reports made by sales management provide the information on what is being sold,
how much is sold and where the products are sold more rapidly. The analysis of
distribution networks with the sales reports can be very useful for future
sales promotion plans. For example, if your online sales are more string that
the retail volumes, then you should focus more efforts on retailer training
programmes, in-store promotions, better product packaging in retain stores etc.
to improve the retail sales of your products.
3. Better Financial Decisions: The
ultimate aim of sales management is to increase the profit contribution and
reduce the opportunity and carrying costs of the products and their operations.
It is quite possible that some of the products of the business may be
best-selling in terms of sales volume, but they may provide low profit margins.
Here the retailed sales reports of production, overhead and administration
expenses can be analyzed to find out the cost-of-sales expenses and their
profit margins. A low profit margin with high sales volume may need to be
eliminated and substituted by high profit margin products.
4. Improve Sales Personnel Quality: The
key responsibility of every sales management is to recruit, select and train
the best quality sales staff. This includes developing their product knowledge,
coaching them on calls, improving their presentation skills and motivating them
to work their sales quotas and sales territories more effectively.
Objectives of Sales Management
Every business firm has certain objectives to achieve. These objectives
may be very explicit and definitive, or they may be implicit or general.
Although, firms have different mixes of objectives, and they do place differing
emphasis, on individual ones, the typical objectives include (i) profitability,
(ii) sales-volume, (iii) market share, (iv) growth, and (v) corporate-image.
While all these objectives are important to a business firm, the objectives,
relating to sales-volume, market share and profitability, are greatly affected
by the effectiveness and efficiency, with which the sales-function is managed.
Business firms, have, in fact, found that it is the most effective
management objective of the firm; that must emanate out of its overall business
or corporate objectives. The sales-management objectives of a business firm,
generally relate to the areas of (i) achieving sufficient sales-volume, (ii)
providing sufficient profit, and (iii) experiencing continuing growth.
Generally, objectives of sales-management have to cover various sales-functions,
in an integrated manner. These objectives are to be expressed, as far as possible,
in measurable and quantitative terms, and should also be realistic and
achievable. The main objective of any business firm is to sell effectively its goods
and services to the consumer at reasonable prices. So long as the business
undertaking operates on a small-scale; the proprietor can handle himself, or
with the help of a few salesmen, under his direct control and supervision. But,
as the business grows and expands, the size of the target market, to be covered
to sell large quantities of goods and services becomes too large to be
controlled by the owner of the business firm, personally. Therefore, these
activities arises the need of a sales-organisation.
Generally, an organisation is a structured-process in which individuals
interact with each other for achieving stated-objectives. It is a social and
dynamic system. It emphasises human-values. It is the job of management, to
integrate and co-ordinate all its constituents. Objectives of sales management
are generally divided into quantitative and qualitative objectives.
Quantitative
Objectives
1. To
increase the sales volume.
2. To
enhance the profitability.
3. To
retain and capture market share.
4. To
determine sales volume in ways that contributes to profitability.
5. To
obtain new accounts of given types.
6. To
keep personal expenses within special limits.
7. To
secure targeted percentage of certain accounts of business.
8. To
gather accurate information to base the sales forecasts.
9. To
acquire more market share.
Qualitative Objectives
1. To
do the entire selling job.
2. To
provide technical advice whenever necessary.
3. To
assist the dealers in selling the product line.
4. To
provide advice and assist the middlemen.
5. To
serve existing accounts.
6. To
assist in training of middleman’s sales personnel.
7. To
have maximum customer satisfaction.
8. To
search and maintain customer co-operation.
9. Self
development of the sales personnel.
Emerging trends in sales management
To be successful in a changing marketing environment it is
important that sales managers understand emerging trends in the following
areas:
1) Global
perspective: Global competition is intensifying Domestic companies who never
thought about foreign competitors suddenly find them in their salesforces to
meet foreign competition in their country and improving their company’s
personal selling efforts in other countries. Sales managers selling goods and
services in the global market place face challenges, different requirements for
buying, and different styles of negotiation and so on. Sales managers must also
consider opportunities as many global markets are emerging and growing rapidly.
A company need not be large to sell globally. Small and medium sized
organizations can sell in global niche markets.
2) Revolution
in Technology: Digital revolution and the management of informational have
greatly increased the capabilities of consumers and marketing organizations.
Buyers today can get information on products, compare supplier’s prices and
place orders on the internet in a matter of seconds. They can access online a
great amount of information about almost anything. To compete effectively,
salespeople and sales managers will have to adopt to the latest technology.
Some of the technological innovations for sales management are portable and
desktop computers, mobile phones, video conferencing and videotape
presentations. Technology can make some sales activity efficient and cost
effective.
3) Customer
Relationship management: Combining relationship marketing with information
technology has resulted in customer relationship management or customer
relationship marketing. Interestingly, the concept of relationship marketing
came about earlier by bringing quality, customer service, and marketing
together.
4) Salesforce
diversity: The demographic characteristics of the salesforce are changing and
are becoming more varied. For example, more women are taking up careers in
selling and sales management. In addition, today salespeople are more educated,
with college degree and some of them holding postgraduate degrees. Sales
manager will have to manage a salesforce consisting of women, more educated and
less educated salesperson, as well as senior people. The needs or expectations
of the varied salesforce will be different and consequently the motivational
tools will not be the same.
5) Team
Selling Approach: The practice of team selling is widely followed by most
companies in recent years. Team selling approach is used when a company wants
to build a long term mutually beneficial relationship with major customer, who
have high sales and profit potential. It is also used for selling a technically
complex product or service to a prospective customer. The composition of the
team includes members from top management, technical specialist, customer
service, inside salesperson and salesperson or manufacturer’s representative.
Team selling requires the joint selling effort of several persons, and hence,
designing an effective compensation plan can be a challenging task.
6) Ethical
and Social Issues: Sales managers have social and ethical responsibilities.
Sales people face ethical issues such as bribery, misleading, and high-pressure
sales tactics. Giving payment or gift to get an order, misleading the customer
by exaggerating the benefits of a product and using high-pressure tactics of committing
wrong delivery schedules to a customer needing urgent delivery of a raw
material are example of unethical behavior of salesperson. Today sales manager
have no choice but to ensure ethical standards from the salesforce otherwise
they may be out of business or even land up in legal problems.
7) Sales
Professionalism: Today’s top sales people are largely made, not merely born.
Selling has increased in complexity, because composition is more intense,
customers are more sophisticated and products and services have become more
technical. Success mostly comes to those salesperson who have a combination of
natural ability and acquired skills. A study on what do buyers like most in a
salesperson indicated qualities like reliability, credibility, professionalism,
integrity and product knowledge as most valued. The knowledge, skills and the
right attitudes to meet complex and competitive market conditions of today are
required by the professional salesperson through intensive training and
practice. Some of the successful organizations have their own centers for
training and management development. Today’s companies spend a lot of money
each year to train salespeople in the art of selling and to make them
professional.
The Sales Organization
Sales organization is a structural entity, which executes
sales plans. A sales organization defines the duties, roles, rights and
responsibilities of sales people engaged in the selling activities in order to
execute the sales function. It also undertakes managerial functions like
recruitment and selection of sales force; their induction and training for
better performance; and their supervision and control to get the desired
results. The sales organization also motivates the sales force so that they
remain loyal and committed to achieve the organizational objectives.
The ideal sales organization must have built-in adaptability
to respond to market changes. Shifts in marketing, in competition and in other
business factors call for changes in sales organization. The sales organization
should be able to anticipate and adjusted to fit in the changing market
environment. Further a sales organization serves as a unified contact point
with customers.
Objectives of Sales
Organization
1. To
define the line of authority.
2. To
ensure that all necessary activities are assigned and performed.
3. To
establish effective lines of communication.
4. To
delegate authority and fix the responsibility for the performance of all the
activities.
5. To
provide for co-ordination in order to gain the benefits of synergistic effects.
6. To
motivate the sales force to achieve greater organizational effectiveness.
7. To
provide insights into avenues of advancement.
8. To
harmonize orders and directives for the smooth operation of sales organization.
9. To
economize on executive time by using the principle of management by exception
i.e. higher executives spending less time on operations and more on planning.
Steps of
Developing Sales Organization
Some sales organization always exists in almost all the
companies and it need to be reorganized to make it more effective. So a sales
organization is rarely built entirely from the scratch. It is appropriate,
nevertheless, for any sales executive to approach the organization problem,
each time it arises, as if a completely new organization is to be built.
There are five major
steps in developing up a sales organization:
1) Defining the Objectives: Top management
defines the long term objectives for the company and from them the sales
department derives its objectives. The objectives set the direction for the
selling execute to put sales efforts. Following
could be the objectives of sales management:
a) Sales: A continuous flow a sales volume
and sales revenue is the most important objective of the sales management.
b) Profits: To magnify the level of
profits by not only out of profitable sales but also by controlling
departmental costs and expenditure.
c) Growth: To have long term growth in
sales profits by being ahead of competitors.
2) Delineating the required activities: All
required activities and their volume of performance should be estimated to
determine the executive positions and their relationships to other positions.
It requires an analysis of the sales department’s objectives to determine which
activities should be performed in what volume.
3) Grouping Activities: After identifying
the required activities, they are allocated to different positions. Activities
are classified and grouped so that closely related tasks are assigned to the
same position. Each position should contain a sufficient number of tasks as
well as sufficient vocation to provide for job challenge. The activities of
crucial importance should be assigned to the position high up in the
organization structure and activities of lesser importance be assigned to lower
levels jobs.
4) Assignment of Personnel to Positions: The
next step in the sales organization is to assign personnel to the positions.
Some position requirements may be general and many individuals possess the
required qualification and talent for the position, while other positions may
call for unique talents and abilities. So the top management must recruit
special individuals to fill in the positions or they may need to modify the
positions to fit the capabilities of available personnel.
5) Provision for Coordination and Control:
An effective means for coordination and control must be provided in a sound
organizational structure. No individual should be over-burdened with detailed
and un delegated responsibilities. The span of executive control should also be
limited. Better coordination and control can be achieved by written job
descriptions, providing organizational charts and manuals etc.
Functions of
Sales Organizations
The functions of sales organization can be classified into
four categories:
1) Planning Functions:
a) Setting Sales Objectives: Sales
organization will set sales objectives i.e. what it intends to achieve? The main
objective of sales organization is to increase sales volume by enhancing the
market share. A systematic and careful planning regarding sales promotion
techniques will help in achieving sales objectives.
b) Formulation of Sales Plans: After
setting sales objectives, plans will be made to determine sales territories,
sales quotas etc. Decisions will also be taken regarding credit sales, payment
terms, delivery schedules, return of sold goods, brokerage etc.
c) Determining Organization Structure: The
sales manager sets up the organization structure for his department. He
distributes responsibility to sales personnel and establishes authority
relationships between them. He also coordinates the activities of other related
departments to achieve the organizational objectives.
d) Sales Forecasting: In order to
determine the future course of action, sales organization makes certain
estimates of future events. Sales forecasting is the prediction of future sales
volume on the basis of certain assumptions. The relevant information is
collected and analyzed in order to draw conclusions and then implement the
decisions taken for the sales. Sales forecasting techniques are reviewed and
revised from time to time for better results.
e) Sales Budgeting: The sales budget is
the final point of sales organization. Sales budget is prepared to forecast the
sales revenue and sales expenditure within a stipulated period of time. Sales
budget is prepared after taking into consideration the past trends, the trade
prospects, the potential customers, the changing environment and government
policies etc.
f) Selling Policy: To attract and retain
the customers and to render satisfactory services to them, sales policy is
evolved. The objective of a selling policy is to place right type of goods in
the hands of consumers at the right place and right time. A selling policy includes
methods of sale and distribution, the terms of sale and guarantee and the
service facilities. The after-sale service policy is a strong selling point to
push up the sales. It shows seller’s concern for the convenience and
satisfaction of customers.
2) Administrative functions
a) Recruitment and Selection of Salesman: Once
the sales organization determines the number and kind of salesman, the next
step is to get the right applications and select the potential sales personnel.
b) Training and Motivation of Salesman:
Depending upon the organizational tasks and personnel, a training programme
will be developed by the sales organization. The basic purpose of designing
sales training is to change or reinforce the behaviour of sales people so as to
achieve the sales goals more efficiently. Sales people should be motivated to
encourage them to put their loyal, dedicated and committed sales efforts.
c) Assigning of duties: After giving them
requisite training, sales personnel are assigned their respective duties. They
are supposed to perform selling as well as non-selling duties. Non-selling
duties like recovery of the amount on the credit sales, keeping regular
contacts with old customers and undertaking market research etc. are also
performed by them to enhance the sales.
d) Equipping Sales Personnel: All
necessary equipments like list of products, sample of products, sales slogans,
catalogues, charts, diagrams, introduction forms, order forms etc. are provided
to sales personnel. This helps the sales force to achieve their sales targets
more efficiently and effectively.
e) Remunerating the Sales Personnel: The
methods of payments like commission or salary plus commission are determined
while keeping in mind the expectations of the sales personnel. The remuneration
must be sufficient to enable them to meet their minimum requirements. It must
be justified, motivating and flexible.
f) Supervisions and Control of Salesman:
An effective system of supervision and control becomes essential in order to
execute the sales plans. Selling methods should be analyzed to determine the
most efficient means of reaching to the customers. This calls for marketing and
environmental analysis also.
3) Executive Functions
a) Sales Promotion: Sales promotion is the
most significant executive function of sales organization in today’s
competitive environment. Sales promotion by way of incentives, free samples,
coupons, price-offs, contests and point of sales material etc. have become very
popular due to the increase of number of brands for almost all the products.
b) Sales Routine: To execute the sales
order of the customers, total customer satisfaction by way of prompt and safe
delivery is another executive function of the sales organization. Sales
organization should also ensure defect free delivery of stock to the customers.
4) Other Functions
a) The
sales manager gains the knowledge about the economic conditions of the
customers, through the sales force operating in the fields. This helps the
sales organization in deciding the pricing and product policies.
b) To
know the changes in the market conditions and technology, sales research in
undertaken. This enables the company to judge the marketing and customer
characteristics.
c) To
recovery of outstanding amounts on the credit sales is another function of
sales personnel.
d) Maintenance
and collection of data bank is still another function of sales organization.
This data is very useful for sales forecasting.
e) Sales
manager also looks after the office work like purchase of stationery and other
office equipments for the effective administration of the sales department.
Need
and Importance of Sales Organisation
The sales organisation is required for
the following purposes:
(i) To enable the top-management, to devote to more time in policy
making for the growth and expansion of business.
(ii) To divide and fix authority among the sub-ordinates so that they
may shirk work.
(iii) To avoid repetition of duties and functions so that there
may not be any confusion among them.
(iv) To locate responsibility of each and every employee so that they
can complete the whole work in stipulated time; if not then the particular
person must be responsible.
(v) To establish the sales-routine in the business unit.
(vi) To stimulate sales-effort.
(vii) To enforce proper supervision of sales-force.
(viii) To integrate the individual in the organisation.
Factors influencing the Organization Structure
The size and structure of field sales force is usually based
on some means of specialization like products, customers, geographic divisions,
pricing and distribution strategies etc.
These are discussed below:
a) Product based Sales Organization: The
nature of the product or service determines the structure of the sales
organization. In case of fast moving consumer goods like soaps, oils,
toothpaste etc, the size of sales force organization should be large to cater
to large customer base. The quantity of the products to be marketed per period and
the quantities involved in each sale transaction will decide the structure of
the organization.
b) Customer base Sales Organization: This
structure of organization is more appropriate when nearly identical products
are to be marketed to several types of customers and the problems of selling to
each type are different. Organizations such as Xerox, IBM, Hewlett Packard are
customer based organizations. Customers specialization enables the sales
persons to become more knowledgeable about the unique problems and requirements
of each group of customers.
c) Geographic Sales Organization: The
large company is likely to sub-divide line authority geographically. If there
are large numbers of customers, they vary by geographical location, selling
problems are different in different areas and certain products are more
strongly demanded in some regions than in others. Setting up geographical
divisions is a way of cutting the sales task down to manageable proportions.
However, this type of organization calls for multiple offices and the
administrative expenses go up.
d) Size-based Organization: If the size of the enterprise is small, there
will be limited number of products, and customers, so a simple structure of the
sales organization can serve the market. The enterprises having highly
specialized products and serving niche markets have a smaller and simple sales
organization. On the other hand, large business handling large number of
products and customers will have large and complex organization structure.
e) Distribution-based Organization: Companies with selective distribution channels
prefer to have their own outlets and decide in favour of simple sales
organizations. While the companies with intensive distribution strategy through
various retail channels, serving wider and deeper pockets, have complex and
large sales organizations.
f) Price-based Organizations: The price of the product also influences the
size and structure of the sales organization. In case of low-priced goods,
where the demand and number of customers is large, the company needs to have
large organizational structure. While on the other hand, in case of products
like cars etc. where price of the product is high and size of the market is
limited, the sales organization will be small.
g) External Factors: There could be
certain external factors like customers and traditions and the prevailing
competition which influence the size and structure of the organization. For
instance if the company has the tradition to flow intermediary network, it
becomes difficult to change due to channel conflict. Similarly in case of
intense competition, the company may decide to expand the size of the
organization to enter into new markets or to serve existing customer better.
Formulation of Sales
Strategies
The
art of meeting the sales targets effectively through meticulous planning and
budgeting refers to sales management. Sales Management helps to extract the
best out of employees and achieve the sales goals of the organization in the
most effective ways:
1. Identify
goals and objectives of the sales team. Be clear on your sales targets. Make sure the targets are
realistic and achievable. Also assign a fixed timeline to achieve the targets.
2. Know
your product well. Understand what benefits end-users would get from your brand. The marketers must interact
with customers to find out more about their expectations from the product as
well as the organization. One would not be able to convince the customers
unless and until he himself is clear with the benefits of the products.
3. Identify
your target market.
Selling techniques and strategies can’t be same for all individuals. Each
audience has different needs, interests and requirements.
4. Hire
the right individual for the sales team. Remember the sales professionals have a major role in the
success and failure of organizations. Recruit individuals who are aggressive,
out of the box thinkers and nurture the dream of making it big in the corporate
world. Make the sales representatives very clear about their roles and
responsibilities in the team. Develop a lucrative incentive plan for them.
Incentives and monetary benefits go a long way in motivating the sales team.
5. Don’t
lie to your customers. It is important to maintain transparency. Communicate what all your
product actually offers. It is unethical to make false promises. Only commit to
what you actually can deliver to customers.
6. Know
what your competitors are offering. It is essential to do a SWOT analysis of your
organization to know its strengths, weaknesses, threats and opportunities. A
marketer must know how his product is better than his competitors.
7. Sales
representatives must do their homework before going for a sales call. One should never go
unprepared. Remember the customer can ask you anything and you have to be ready
with your answers. The management must promote training sessions at the
workplace to upgrade the skills of the sales professionals and expect them to
deliver their level best.
8. Devise
strategies as per the target audience. Know your market well. The individuals must be able to
relate to your products. The strategies must be formulated in the presence of
all. Each one should have a say in the same. Let everyone come out with his
suggestions. Be ready with alternate plans if one plan fails.
9. The
management must conduct frequent meetings with the sales team to review their
performances.
Keep a track on their daily activities. The sales team must prepare Daily Sales
Reports (DSR) for the superiors to know what they are up to.
10. One
must assess his own performance. Recall your interactions with the clients and analyze
where you went wrong and where things could have been a little better.
11. Treat
your customers well for higher customer satisfaction and retention. Don’t oversell. Once you
are through with your sales presentation, don’t be after your client’s life.
Give him time to think and decide.
12. The
sales pitch must be impressive for
the desired impact.