Breaking News

Wednesday, October 18, 2017

Sales Management Notes: Management of Sales Force

Unit – 2: Management of Sales force
Role of a sales manager
Sales manager occupies middle level position and is influenced by the expectations from both the levels externally and internally. They need to perform other functions of marketing too along with sales management functions which includes planning, directing, controlling, organizing, recruiting, selecting, training and motivating, allocating resources and territories, routing and scheduling etc.
a)      Forecasts sales in the role of a sales forecaster.
b)      Devices strategies as a strategic planner.
c)       Observes the behavior of prospective and existing customers in order to plan future strategies as an observer of buying behavior.
d)      He is a role model for the sales personnel as a super sales person Role of a sales manager.
e)      Analyses the cost and profit involved in segments as a cost and profit analyst Plays the role of communicator internally and externally Role of a sales manager.
Functions of a sales manager:
a)      Hiring: right people and giving careful job description
b)      Training: Formal / Informal, techniques, simple issues to handling objections
c)       Exhibit: Training results – No longer an ROI
d)      Coaching: observing, correcting, make sales person identify the problem ending up with a solution, follow up and remedial measures
e)      Motivating: Setting targets and tracking the results: new accounts, amount to be generated, ratio of sales per customer etc. .
f)       Additional targets for the prospecting efforts.
g)      Setting realistic and achievable targets and publicizing on achievement of targets

h)      Recognizing & rewarding performance: tangible incentives (trophy / extra leave / paid vacation / memberships etc.) or public appreciation at sales meeting
i)        Providing leads and sales support: hurdles of sales people are to be cleared (lack of secretarial support / sales aids etc) .
j)        Continuous development of new businesses, identify leads make the sales task easier for his team
k)      Organizing sales effort: ensures that sales people plan their calls in advance and follow a systematic process of call reporting and filing expense reports. By organizing sales efforts of sales peoples their efficiency in meeting targets can be increased.
l)        Conducting sales meetings: prime responsibility as it works as great morale booster, Frequency depends on the requirements.
m)    Agenda to be sent before hand to ensure participants come prepared.
n)      Review of organizational, individual sales performance, recognize and reward excellent performers,
o)      Organizing guest lectures (motivational) .
p)      Ensure that all the issues and problems are resolved by the end of the meeting.
q)      Some times sales meetings become ineffective, so the sales manager needs to ensure that such things do not happen.
r)       Allocation of scarce resources: aid of sophisticated technology can be taken e.g. general mills uses “what – if” analysis Responsibilities of a sales manager.
Role of a sales executive
It is a multi faceted job with a variety of roles to be played. They are
a)      A Persuader
b)      A service provider
c)       An information gatherer and reporter
d)      An advocate
e)      A traveler
f)       A coordinator & scheduler

g)      A problem definer
h)      A customer ego builder
i)        A display arranger for wholesalers and retailers
j)        A merchandiser who gives customized products to industrial customers
k)      An ombudsman who acts as customer's representative when the former faces any problem Interacts with several role partners from production worker to CEO Links 4 groups of people they are, own sales team, customers, other departments and other sales persons.
Fulfilling the demands of all the above mentioned groups is needed but, often expectations of one group may be in conflict with that of the other group. And the sales person needs to balance all of them. With the advances in technology their role extended to business strategy too, where establishment of mutually beneficial relationship is needed with important customers E.g. P&G
Functions of a sales executive/Person
a)      Identify potential customers from currently available data bases like yellow pages.
b)      Identifying prospective accounts and deciding upon the priority and frequency of making calls.
c)       Deciding upon the selling approach (presentation)
d)      Administering the sales order (deliver in time)
e)      Service provider (installation / warranty problems)
f)       Information gathering and reporting relevant data
g)      Skill up gradation by attending sales trainings and trade shows
h)      Administrative responsibilities like attending sales meetings and conferences, fill in call and expense reports etc.
Sales management in a business organization has come to be recognized as the primary and most significant factor in the success of any business enterprise. This has created new avenues and responsibilities for sales executives. They are required to participate in the preparation of information which is important in key marketing decision e.g. budgeting, sales quota, sales territories etc. Moreover, they are required to participate in decision-making relating to product marketing channels and distribution policies, promotion, pricing etc. There is now greater need for the sales executive to have a broader outlook and more alertness to face the challenge of the vast changing markets and their buyers.
According to the American Management Association’s Definition Committee, sales management is “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.” Thus sales management means management of sales force. However, sales management is not confined to the personal related tasks only (although this is the primary task), but it has to build formal and informal organizational structure for effective communication within the department itself and with other departments as well. Sales management is the key contact with customers, dealers and retailers. It has to maintain an effective system of distribution also.
To be effective, a sales manager must understand customers, appreciate the role of the sales persons and have the respect of the sales force. Sales force management starts with a qualified sales manager. It is not easy to find a right person for this job. In many organizations, the common practice, when a sales management position becomes available, is to reward the most productive sales person with promotion. This is done with the assumption that, as a manager, an effective sales person will be able to impart the necessary wisdom to make others equally successful.
Management of sales force consists of six steps:
a)      Recruitment of Sales Personnel.

b)      Selection of Sales Personnel.
c)       Training of Sales Personnel.
d)      Motivation of Sales Personnel.
e)      Compensation of Sales Personnel.
f)       Controlling of Sales Personnel.
Recruitment of Sales Personnel: Recruitment is the process of locating and attracting job application. Recruiting a new sales force is an important aspect of the sales manager’s job and part of sales planning. Recruitment includes all activities involved in securing individuals who will apply for the job. Recruitment involves identification of the potential sales persons and attracting them to the company. Management must be aware of the best sources for sales recruits. One of the greatest challenge being faced by sales management today is to convince the qualified candidates that selling is an attractive professional career field. Sales management must strive to attract and retain the qualified personnel for the various selling jobs.
The sales executive should prepare the job description before recruiting the new sales force. A systematic job analysis and job description provides the focal point for the hiring process.The sales job description should cover the following components:
a)      Title of the job.
b)      Duties and responsibilities expected from the new sales persons.
c)       Technical requirements.
d)      Experience and Qualification.
e)      Reporting methods.
f)       Territory to be covered.
g)      Degree of authority
Job description acts as a blue print for the personal specifications which describe the type of applicant the company is looking for. A detailed job description will save both the company and job applicants’ time and money. Some applicants will eliminate themselves if the job description and their own expectations do not coincide. A comprehensive job description also provides the sales executive with a good understanding of what to look for in an application. This saves time in preparing for interviews and often results in more organized interviews.
Sources of sales Recruits: Many sources for sales recruits exist. Some frequently used recruiting sources are being discussed:
1.       Current Employees: Employees within the company should not be overlooked as potential sales recruits. Those already working in manufacturing, maintenance or warehouse job may have latent sales latent. The employees are well acquainted with the products and company’s policies. Their values fit with the company culture. The company also knows the candidates much more intimately that any outsider or external candidate. Further hiring sales persons from within the company can also be a great morale booster.
2.       Referrals: A referral is a recommendation by one individual that another may be hired for a position. Most referrals come from someone who works for the company. They know the job requirements and the recruit. Referrals are preferred sources of sales recruits because chances of such recommended candidates to fit within the company culture are pretty good.
3.       Educational Institutions: All types of institutions for higher training – colleges, universities, business schools etc. – are fertile source of sales recruits. This is a very cost effective method of recruiting because college campuses provide large number of individuals who are educated and looking for jobs. To stimulate student’s interest in sales opportunities, many companies place recruiting ads in college newspapers and other college media. They also offer internships or part time jobs in selling to prospective students.
4.       Suppliers and Customers: Company’s distributors, dealers or customers may provide potential candidates looking for sales career. If the sales persons of suppliers and customers and dissatisfied with their current jobs, they can always offer themselves before the recruiters as the potential salesman.
5.       Competitors: Some of the best candidates may be there working for competitors. These people can be contacted at conventions, trade shows and customers locations. Having competitors salesperson in our company has the advantage that they require less training. Being already in field sales, they have a knowledge of the company’s products, the over all industry and the customer base.
6.       Internet: Many companies are using Internet Recruiting Sites to fill sales positions. The largest such site is Monster.Com, a non-profit recruitment and human resource database for jobs. Many voluntary applicants submit their resumes on website. Here the company has to put significant efforts in sorting out large number of applications to find those who qualify for the job.
7.       Advertisements: Advertisements placed in newspapers, professional news letters and trade journals may produce many qualifies sales applicants. Advertisement in trade and professional publications should usually be located in their employment sections. Sales recruitment ads must be appealing and informative. The body of ad should include information about the company, the nature of the job, the specific qualifications required, the amount of compensations offered and any opportunity for advancement.
8.       Employment Agencies: Employment agencies provide bio-data of potential candidates for a fee. Many agencies specialize in sales jobs and render a valuable recruiting service. Normally, these agencies screen applicants for their suitability to various levels of sales position. If the employment agency is carefully selected by the company and goods long term relationships are established with it, it pays the recruiters by getting the most potential candidates.
9.       Professional and Trade Associations: Technical, trade and professional associations usually maintain informal employment listings for their members. They also publish and distribute listings of job opportunities. Their data profile can be a potential source of recruitment.
10.   Job fairs and seminars: Job fairs and seminars are organized and sponsored by chambers of commerce, government agencies, professional organizations and civic groups. They provide a large number of initial contacts at a very little cost. Interested candidates are provided with general and specific job information and are screened for further consideration. The more serious candidates express their interest in the job through their questions and are likely to pursue the opportunity further.
Selection of Sales Personnel
Recruitment and selection are closely related terms. Yet, there is sea of difference between the two. Recruitment is the process to find out potential candidates and encourage them to apply for jobs. On the other hand, selection is the process of choosing the required candidate out of the large reserviour provided by recruitment. Selection is the process of offering jobs to one or more candidates from among those who have applied for jobs in the organization. Selection is the process of weeding out or rejecting the misfits. Thus recruitment is positive in its approach while selection is negative. Recruitment builds the reserviour of potential candidates and the selection matches the main specifications with job specifications.
Good selection is vital to the firm. Good sales personnel bring revenues for the company. Selecting sales personnel is the most important managerial activity in any organization. The selection process should be strategically integrated with all aspects of sales force management. Selection system for sales personnel range from simple one-step system consisting of nothing more than an informal personal interview, to complex multiple-step systems incorporating diverse mechanism to gather information about the potential of the candidates. Each company designs its selection system to fit its own information needs and to meet its own budgetary limitations.
Selection Process
Selection process involves several steps to be followed in a sequence. As the applicant passes through each successive step, the chances of his selection become brighter. But the applicant must be aware of this fact that he can be rejected at any stage. From the highest step of the ladder, he can fall down in the rejection sea. The various steps in the selection process:
1.       Application Blank and Resume: The application blank or resume is an important source of information about the candidate’s background and qualifications. It enables sales manager to review the applicant’s background without being influenced by the individual’s appearance or personality. It also provides insights to the sales managers, to prepare for the personal interviews.

2.       Preliminary Interview: Preliminary interview is conducted to eliminate obviously unqualified applicants to save the time of both the interviewers and applicants. The basic purpose of preliminary interview is to weed out those applicants whose qualifications do not meet the job’s basic requirements. This can be done by briefly describing the job and by asking each applicant a few pertinent questions. Such interviews are often handled by personnel specialists and higher level sales executives enter the selection process only after the initial screening.
3.       Selection Interview: After candidates have progressed through the preliminary selection steps, they are interviewed in depth. Interview is conducted to judge an individual as to his ability in oral communication, his attitude toward selling and life in general, his personal impact upon other, his personal appearance and manners etc. The interviewer should review the completed application blank before the interview and refrains from asking same questions already answered in the resume. The interviewer should begin interview by asking questions on the candidate’s family and educational background and subjects about which people talk freely. Then he should go ahead by judging his intelligence, education and experience to do the job. There are several techniques used for selection of a candidate at the time of interviews. The most common are:
a)      Background Interview: Hence the interviewer asks the questions like the education, work experience, interest and outside activities of the applicant.
b)      Job-Question Interview: It involves posing a job problem to the applicant and asking him how it should be handled.
c)       Stress Interview: Stress is placed on the applicant through criticism, interruptions or silence. Then the reaction of applicant is studied by the interviewer to determine how the applicant respond to the stress on the job. The interviewer must be experienced and well prepared in advance to get the maximum results out of the interview.
4.       References: References provide information about the applicant not available from other sources. References are usually checked while the application form is being processed and before the final interview takes place. The information provided by application form can be verified by checking the applicant’s references. References check may also provide some indication of the candidate’s future sales performance. Reference checks also have public relations value. They indicate that a company has a sincere interest in picking up right people for job openings. The company’s name becomes familiar to key persons in the community. References from teacher and former employees are generally more helpful that other types of references.
5.       Psychological Testing: A psychological test is designed to measure such skills and abilities in a sales person as are found to be essential for successful job performance. It is an attempt to measure the candidate’s behaviour. Psychological testing is considered to be a representative of the person’s past behaviour and a valid predictor of future employment behaviour. Following tests are used by sales executives while selecting the prospective sales persons:
a)      Intelligence Tests: To determine the reasoning, thinking and understanding power of sales persons, certain types of intelligence tests (like speed of learning, fluency of ideas, verbal skills and accuracy of memory etc.) are used by the executives.
b)      Aptitude Tests: Aptitude tests judge the interest and desire of the applicant to succeed in selling. These tests measure whether or not an individual has the capacity or latent ability to learn a given selling job quickly and efficiently.
c)       Interest Tests: Interest tests determine whether a person is willing to do a job or not. An applicant who has little interest in selling as a career can not be expected to perform up to the potential.
d)      Stimulation Tests: A stimulation exercise is a test which duplicates many of the operations and problems confronting the sales job.
6.       Physical Examination: Since good health is important to a sales person’s success, most companies require physical examination to be conducted for the sales recruits before offering them jobs. Sales persons often travel for long periods of time, make numerous calls and may be required to perform stressful physical work. Physical examination test reveals whether or not a candidate possesses the required stamina, strength and tolerance needed under hard working conditions. The basic purpose of a physical examination is to place selected candidates on jobs which they can handle without any delay on health grounds. Many companies also require physical examinations because the insurance companies handling their group insurance programmes offer lower rates of premium if such examination are performed.
7.       Job Offer: Once the candidate passes through all the steps in the selection system, the company must offer him a job. The applicant’s goals and ambitions must match with the present and future opportunities and rewards offered by the job and the company. When the job offer is made, it is wise to review the details like compensation, benefits, company vehicles etc,. as well as the job’s starting date, time, place and training program schedule.
Training of Sales Personnel
The purpose of sales training is to achieve improved job performance. In the absence of training, job performance improves with experience. Training substitutes for job experience to enable trained sales personnel to achieve high job performance faster. Virtually, all companies put new and inexperienced sales people through an orientation towards sales training program. Even experienced sales people need continual training to improve their selling skills, learn about new products and improve their time and territory sales management practices. There are two distinct forms of sales training: formal and informal. Formal sales training involves carefully planned programs complete with training schedules, lesson plans, visual aids and other teaching devices. Informal sales training involves continual professional development of sales people. Sales persons are guided on their daily activities and advised to improve their selling skills.
Objectives of Sales Training
Both new and experienced sales people must be trained in order to develop right work habits. If sales recruits are trained properly, they learn the right work habits and patterns, at the right time and from the right learning sources. Effective training serves number of objectives:
a)      It motivates salespersons to develop their skills and raise their morale.
b)      It makes salespersons more adaptable and creative and enables them to meet changing competitive conditions.
c)       It improves salespersons’ relationships with the customers by showing them the right way to do business.
d)      It reduces the cost of supervision and controlling sales activities. Well trained sales persons require less attention from their executives.
e)      It helps in increasing sales revenue.
f)       It reduces high turnover of sales people.
Training Techniques
Since sales people have varied educational backgrounds, experience levels, learning abilities and so forth, they have different training needs. Different training techniques can be adopted to meet the special purposes and applications. A combination of training techniques can also be used.
Following are the commonly adopted training tools:
1.       Lectures: A lecture is a formal verbal presentation of information to be trainees by expert company executives or professional lecturers. It is very effective in transmitting straight factual information. It is economical in terms of time required to cover a given topic. The version of lecture increases attention, retention and comprehension if supported by demonstrations, visual aids projectors, screens etc. To get better results out of lecture method, the lecture must be prepared, planned and rehearsed.
2.       Demonstrations: Demonstrations become essential while introducing new products or new selling techniques. Physical characteristics of the product are described to gain attention and to arouse desire for the product being offered. To be more effective, demonstration aids, like booklets, flip charts, slides, moving, product samples etc. can be adopted by the trainers.
3.       Discussions: Group discussions and panel discussions can be arranged for the trainees. Discussions should be thoroughly planned to ensure due success. Group discussions involve 15-25 persons coming together to exchange their ideas, pool their experiences and work out solutions to the common problems. As far as possible, the attendance to group discussions should be voluntary and only experienced sales personnel should be allowed. In a panel discussions, there will be a leader and 4-6 salesmen who follow planned discussions of a sales problem in response to questions set by the leaders. The leaders presents the sales problem, calls upon each member to comment. Then he closes the discussion and summarizes the views of the panel.
4.       Role Playing: Role playing is an excellent method of training a group of salespersons. In role playing, a realistic situation is stated and several trainees play out the buyer and salesmen roles in the situation, other trainees, trainers and sales executives observe the role playing session and give their comments and suggestions at the end. Here trainees get better understanding of the dynamic of a sales situation. Those p-laying roles must become actively and emotionally identifies with the characters they portray and audience interest must be maintained throughout. The free-wheeling nature of role playing is conductive to generate new ideas and approaches.
5.       Visual Aids: Learners retain more when they both see and hear instead of hearing only. Various visual aids are available to the sales executives to train their sales persons. They include films, tapes, flip charts, closed circuit and playback television, personal computers overhead slide projectors etc. Visual aids also add colour, motion and drama to the training sessions. The message can be rechecked and re-enforced by the trainees.
6.       Video-Conferences: The use of high technology provides time saving and reduced selling expenses techniques like video-conferences. It enables participants of one location to interact with the participants of other locations. Video conferences combine the advance of telephone and tele-communication technologies. It is the latest and innovative training technique which allows interaction between trainees and trainers, both working at different destinations. Video-conferencing is also known as “business TV” (BTV) and does improved transmission of views at lower prices.
Contents of Good Sales Training Programme
The contents of sales training programme are derived from the training needs of the sales persons. The training program of sales persons must cover all key aspects of the sales person’s job, products to be sold, market to be covered and the selling policies of the company. A comprehensive training programme aims at giving knowledge about the products, about the market, about the selling techniques and about the company.
1)      Knowledge of Products: Product knowledge is almost inevitable to any training programme. New sales persons must know enough about the products, their uses and applications to serve customer’s information needs. Product knowledge also builds self-confidence and enthusiasm of the salesperson. The product knowledge covers general information about the product, its physical dimensions, product performance and after-sale services.
2)      Knowledge of Market: The new sales person must know who the customers are, their locations, their motives and buying habits, the particular products in which they are interested etc. He needs to have demographic profile of the consumers along with psychological, sociological and economic factors influencing such markets. He also needs to have clear-cut picture about the strengths and weaknesses of this competitors.
3)      Knowledge of Selling Techniques: The sales personnel need basic instructions in how to sell. Training fills the gaps of inexperience. To meet the challenges of every changing line of sales, the sales persons must get training about the various selling techniques he might use.
4)      Knowledge of the Company: Knowledge about the company is a must. The sales person must know about the past history, current affairs, structural patterns, procedures of sales activity, sales-distribution, redressal of customer’s grievances, sales promotion techniques etc. to project the right image about the company to the prospective customers.
Motivation of Sales Personnel
Sales people, especially field sales forces, require high degree of motivation. Motivation is goal-oriented bahaviour fulfilling certain needs or desires. Motivation is the force within us that directs our behaviour. Sales personnel’s require motivational help from management as individuals and as group members to reach and maintain acceptable performance levels. Consequently, management faces a challenge in motivating sales people. People differ in what motivates them and the motivations change over a person’s life. The motivational needs of different sales persons may be different. A your sales person is more likely to be motivated by money, while an older salesperson may be more interested in status and recognition.
To motivate sales personnel, a sales executive is expected to understand the needs and emotions of his sales force: Why do they work? What do they want to get from their work? What are their attitudes towards the company? And so forth. Motivation involves providing sales personnel with incentives to influence their motives and enable them to contribute their best.
Need for Motivation
The need for motivating sales persons arise from a variety of reasons. These are:
1.       The Inherent Nature of Sales Job: All sales jobs are a succession of ups and downs. They interact with many pleasant and courteous people as well as rude and unpleasant personalities. They spend considerable time away from their families. These conditions cause sales persons to become discouraged, to achieve low performance levels or even to seek non selling positions. Hence there is a need for motivation.
2.       Role Conflicts: As members of sales force, they have divergent interests. They have different abilities and perceptions towards the company, the sales management positions and the customers. To reconcile different rules, the sales personnel play towards the customers, the sales management and the company a strong motivation becomes essential.
3.       Tendency towards Apathy: The sales persons who cover the same territory and same customers may loose interest and enthusiasm after few-years. Gradually, their sales calls degenerate into routine order-taking. So they need to be motivated for creative selling.
4.       Group Identity: In some cases, sales persons work alone and there is lack of team spirit, which is very much required for success. So to improve the entire group’s performance, sales people must be motivated to develop and maintain team-spirit.
What Motivates Sales Force

To gear up the productive effort and enthusiasm, the motivational urges behind the sales persons must be identified. The world-side studies have been conducted to reveal the following most significant motives:
a)      Recognition and Honour Awards: Salesmen, like any other human beings, seek commendation and recognition for their achievements. Plaques, certificates or awards can be used to recognize the accomplishment levels of sales persons. The policy for awards must be constructively framed. If too many people receive them, the awards lose their value, if too few receive them, the awards may be viewed too hard to achieve. The awards should be publicized and presented in public ceremonies, to get more motivational effects.
b)      Fair Pay-Packet: Money is often considered as an effective incentive for sales people. Surveys have shown that sales people prefer pay raises and cash incentives over any other type of motivational program. Fair pay-packet is a dominant motive, because every sales person is to earn a decent living for himself and his dependents. His pay-packet must be comparable with his colleagues in his own organization and the competitive organizations.
c)       Opportunity for Advancement: Promotion and high status can be another source of motivation. Ambitious and efficient sales persons give top priority to promotion. Promotions fulfil their accomplishment needs and add to their salary and job security. A company that fails to provide opportunity for advancement will be responsible for high sales-force turnover.
d)      Job Enrichment: Increase in responsibility as well as variety is known as job enrichment. Salespersons thrive on challenge. Challenge can be given by assigning them more responsibility, authority and control over their activities. Further, most sales people like to do variety in the job-related tasks. They find bored in doing same things again and again. Varying sales jobs can provide them stimulus for increased levels of motivation.
e)      Social Acceptance: Every human being has social and emotional feeling of belongingness to the organization. He wants to have the satisfaction of being accepted as a member of sales team and sales organization. His active participation, his voice in company’s affairs, his cooperation in matters of mutual interest give him the motivation to continue with selling career.
f)       Desire to Excel: Desire to excel implies increasing sales volume, cutting costs and improving profitability of the organization. Salesmen must find their jobs as creative, gainful and respectful. The strong desire of excelling better then others in performance and achievement is a big motivational tool to the salespersons.
Compensation of Sales Personnel
Designing and administering an effective sales compensation plan is a big part of sales manager’s job. Establishing a compensation system calls for decisions concerning the level of compensation and the method of compensation. No compensation plan is said to be satisfactory in absolute terms as it involves conflicting objectives of the pay-masters and pay-receivers. An ideal compensation plan must reconcile these conflicting objectives. It should try to meet the expectations and aspirations of the sales-force on the one hand and the overall objectives of the sales organization, on the other. Sales-force compensation stands for monetary and non-monetary rewards given by the organization to its sales-force in return for the services rendered. Though, compensation stands for contractual payments, there can be non-contractual and adhoc payments also.
Objectives of Compensation Plans: A compensation plan for the sales persons serves the following objectives:
1)      To motivate sales persons: Compensation plans are designed to motivate sales persons to perform better. Companies want to encourage sales persons to reach and exceed their goals. The companies reward them by offering various monetary and non-monetary incentives so that they become contended or satisfied with their jobs.
2)      To correlate efforts and results: The results should commensurate with the efforts. Correlating efforts and results with rewards is an ideal form of compensation plan. But it is hard to achieve in real life. We all know the situations where seemingly little efforts has brought big results and consequently big awards. While in reverse, a sales person may work very hard but get few results and therefore little rewards. So equating efforts with results should be a social objective for any compensation plan.
3)      To have longing loyalty: Good compensation plans attract loyal, trust-worthy and dependable sales force to serve the organization for longer time. They nourish and flourish the selling house by being life time associated with the company. Only satisfactory compensation plants can retain the competent staff for life time.
4)      To have sound employer-employee relations: Brickering, misunderstandings and drags arise mostly due to money matters. The sales force will be more satisfied when they get adequate monetary and non-monetary incentives. A sound compensation plan must reconcile the conflicting interests of management (to pay less and thereby increasing profits) and sales force (by getting more to be retained and effective).
5)      To control sales person’s activities: A good compensation plan can act an unseen supervisor of the sales force. Sales persons can cover such varied tasks as full-time selling, missionary work etc. if they are satisfied with their compensation. Satisfied sales people can put more balancing selling efforts which can enhance their productivity.
6)      To provide customer satisfaction: A good compensation plan is one that motivates sales people to treat customers properly, thus providing customer satisfaction. A seller’s ability to maintain strong, long-term relationships with customers depends upon his satisfaction out of compensation plans.
Designing a Sales Compensation Plan
Sales organization must develop a sound compensation plan to meet its varied objectives as well as to meet the aspirations of the sales force. Following are the steps in sales compensation plan:
1)      Defining the Sales Job: The first step in designing a new compensation plan or revising the existing one is to carefully define the detailed job descriptions. The exact nature, scope and probable difficulties in each job should be defined and analyzed. These job descriptions indicate the services and abilities for which the company is paying to its sales force.
2)      Identifying specific objectives: The next step is to identify what each individual sales person is expected to accomplish. Do we want him to increase the sales volume or improve customer service or stimulate missionary task or develop a new sales-territory etc. Compensation plans should be formulated on the basis of the expected performance of the sales persons in achieving the specific objective assigned to them. 
3)      Establishing the level of compensation: The level of compensation means total rupees income that a sales person earns over a given period of time. The level of compensation is influenced by the type of persons required for the job and the competitive rate of pay for similar positions. To the company, the level of compensation is the direct selling cost. Management is interested in the compensation level because that is what attracts most sales persons.
4)      Developing the method of compensation: The method of compensation is the plan or system by which the sales persons reach to the desired level. Basically there are three method of sales compensation:
a)      Straight Salary Method: A fixed payment of salary is given to the salesman. A straight salary plan provides security and stability of earning for a salesman. This plan becomes more suitable when the selling job requires extensive missionary or educational work; when the technical or engineering advice needs to be given to the prospects; or when salespersons do considerable sales promotion task. A straight salary plan is a fixed cost to the company, unrelated to the sales volume. It does not offer any incentive for sales people to increase their sales volume.
b)      Commission Method: A commission is a payment tied to a specific unit of accomplishment. It provides considerable incentive for sales people to sell. It is related directly to the sales person’s volume of sales or gross margin i.e. say 5 per cent of every rupee of sales or 8 per cent on each rupee of gross margin.  Commission to sales persons is paid according to productivity. Sales volume is the best productivity measure. Straight-commission plans work very well when a strong incentive plan is needed to generate sales or when a company is financially weak and must relate its compensation expenses directly to sales volume or gross margin. A heavy emphasis on commissions can cause employees to lose sight of the importance of customers.
c)       Combination Plans: The ideal method of compensation is to have the best features of both the straight salary and straight commission plans, with as few as their limitations as possible. Depending upon the nature of selling job and the company’s marketing goals, the salary portion and commission portion must be worked out by the sales executives. Combination plans introduce a component of bonus also. Bonus is a lump sum payment for an above normal performance. Sales bonuses stimulate sales force to accomplish given tasks more quickly and efficiently.

5)      Pretest the Plan: After selecting the appropriate method of compensation, the sales executives should pre-test the sales compensation plan. The expected cost and the generation of income should be estimated and evaluated. By assuming various levels of sales for each line of products, sales executives can compute the cost of compensation plan.
6)      Introduce the Plan: After determining the efficiency of proposed plan, the executives will introduce and install the compensation plan. The reasons for change in the existing plans must be crucially evaluated before introducing the proposed plan. The proposed plan may be tested in one or two territories and then installed throughout the entire sales force. The final step will be to make sure that the entire plan will be evaluated frequently to prevent it from being outmoded.
Controlling of Sales Personnel
The last but not the least aspect of sales force management is the control or performance appraisal of sales personnel. Sales executives must know what the sales force is doing in order to reward them or to make constructive proposals for improvement. The performance evaluation of sales personnel should lead to correct action if deficiencies are spotted in the activities of sales persons. The goal of evaluation is to improve future sales profitability and productivity. Few sales persons view control process as negative attempt on the part of executives to weed out inefficient salesmen. But performance evaluation should be taken as positive activity for the personal development of sales people.
Control or evaluation of performance is a very sensitive issue. A sales evaluation program must be tailored to the individual company’s sales goals and strategies. For one company, opening of new accounts may be an important criterion of sales performance, while for another calls per day may be more critical standard of performance. One company may evaluate its sales personnel annually, while another may do quarterly. So each company must design its sales evaluation program based on some generally accepted principles of good sales evaluation programs.
Sales Control Process: A sales force control system comprises a set of procedure for monitoring, directing and evaluating sales personnel. The following outline summarizes the different phases in the sales control process:
1.       The goals for the company and sales management should be precisely defined.
2.       To facilitate the achievement of objectives, selling plans are designed and policies formulated.
3.       Various activities of sales department are co-ordinated with each other and other related activities of the organization.
4.       Quantitative as well as qualitative standards of performance are set for each selling personnel.
5.       Actual performance of sales personnel is measured and compared with the set standards to determine deviations, if any.

6.       Corrective actions in the right direction are taken to improve the sales performance. This phase is the most crucial and significant from control point of view. Sales executives will take certain policy decisions on the basis of their performance evaluation. 

Popular Posts for the Day