Sales Management

Third edition

by Bill Donaldson

Chapter summaries

Chapter 1: The role of selling

Selling and sales processes have changed in recent years as companies have become more market- and customer-focussed. Sales management practices too have had to change, yet, despite the Internet, call centres and mobile communications, the cost and efficiency of the field sales force still accounts for much of the marketing budget in many companies. It is vital that sales operations reflect the corporate and marketing strategy of the organisation as well as specific sales management objectives. Today, more than ever, there is need to integrate sales, marketing and corporate objectives because of the high costs of personal selling and the limited time that salespeople spend with customers. The management requirement is for a clear definition of the role of selling, the tasks that salespeople must perform and the responsibilities of sales management.

Chapter 2: Theories of buying and selling

For theories to be useful, they need to help marketers and salespeople understand what happens and why in a sales interaction or process. Next, they need to help the seller predict how the buyer will behave and act in the sales process, and what the outcome is likely to be.

Importantly, a theory can also help explain failure as well as success in a selling situation. Theories that have been developed from historical observations should be overlaid by other changes in the environment that also drive buyer behaviour: increased global competition, easily accessible information through the Internet and increased technology enabling e-auctions all have a profound effect, albeit on
some businesses more than others, for example, automotive. This knowledge can improve the planning and management of future sales processes and in sales force training.

All the above theories and models were built from observation and research into how firms sell and customers buy. The ability to put them into practice will depend on the firm’s marketing structure and processes, plus the actual selling situation.

Chapter 3: Types of selling

No one theory or set of principles will apply universally to every selling situation. Care has to be taken to adapt to the product, company or market situation which creates the unique circumstances impinging on the sales interaction. The role and tasks of direct
salespeople, retail salespeople or director-level negotiators are significantly different, creating diverse management problems and solutions. A classification of selling types is suggested in this chapter on the grounds of usefulness rather than infallibility. These similarities and differences in selling will influence the remainder of this book.

Chapter 4: Salespeople and selling skills

The findings on the characteristics of successful salespeople are inconclusive. A priority list of desirable traits is frequently put forward but evidence of their worth is questionable. The best salespeople are those with the highest levels of product knowledge and the best communication skills, who understand their customers. In many cases, the ability to create and build lasting relationships with customers is a source of competitive advantage for the firm. The advice to sales managers is to recruit people who have the required orientation and skills or can be trained to be proficient. This is not the same as traits, intelligence, experience, age, sex, colour or any other similar
factor. It is adequate intelligence, empathy and enthusiasm which are more important.

Chapter 5: Sales force organisation

Organising the sales force attempts to reconcile the principles of good organisational design with the dynamic needs of markets. Personal selling does not operate in isolation. Clear guidelines are required on corporate, marketing and selling objectives, the sales tasks and the degree of specialisation in selling activities. Methods of calculating salesforce size must be used with caution. These methods suffer from a failure to distinguish between quantity and quality in personal selling. Designing sales territories and allocating people to these areas is a key task of sales management. While established procedures can be helpful, the conventional approach is often much less than the optimum. Models of territory response and call-planning schedules offer some improvement over traditional approaches but have not yet been widely accepted. The key factors to consider in designing territories are market potential, account concentration and dispersion.

Chapter 6: Technology and sales

New technology and IT, coupled with the use of management information, provide the sales manager with a powerful means of obtaining and sustaining competitive advantage. The key to more effective management is to use these resources to improve customer contact, enhance service and operate more efficiently. Telemarketing is one route to consider and use of the Internet has already proved a powerful information vehicle but in most cases as a supplement to personal selling rather than its replacement. Although there are some examples of direct marketing and telephone marketing being highly effective, these have so far been confined to limited areas, mostly service businesses. Sales managers must welcome new ways of communicating effectively with customers at lower cost but ensure their sales operation meets the needs of both company and customer.

Chapter 7: Sales forecasting and setting targets

An understanding of the process of sales forecasting and the techniques which are available is necessary if the modern sales manager is to function effectively. The calculation and the detail can be done using current software packages, but the sales manager must realise the importance of accurate sales forecasting throughout the organisation. Sales budgets also must be set and controlled. Salespeople are frequently used as sources of information which can improve management decision-making processes, but such information gathering is time consuming, expensive and may be biased. Sales managers need to understand how to use salespeople effectively in this role. Almost all salespeople are set some form of target to achieve in their job. Most common of these is a sales volume or value target, but many other forms of quantitative and qualitative measures can be used. These measures are useful as a means of evaluation, as a motivator, as a means of control and sometimes for remuneration. Management must be careful that targets set reflect the whole selling job and the key
dimensions which discriminate between success and failure.

Chapter 8: Selling in international markets

Selling in international markets presents new challenges for the firm selling abroad for the first time. The various facets of the international marketing environment directly affect the selling activities of firms. Sales managers need to understand, for example, the role of culture in shaping diverse negotiating styles and the impact of legislation on the selection and management of agents and distributors.

Much of the research on successful exporting supports the view that planning pays. If the firm assesses a market it is interested in and plans how it is going to enter and develop that market, it will increase its chances of success. The research on the management of agents and distributors underlines the unstable nature of some relationships and the necessity to carefully select agents and distributors.

Export sales managers who consciously build close relationships with their agents and distributors will usually have more success in foreign markets. Besides the above, there are many additional issues which the new exporter has to master. These include dealing with export documentation, selecting appropriate Incoterms and setting prices. Some firms may see these issues as a barrier to success but, given the commitment of management, there is no reason why a firm should not sell successfully in international markets.

Chapter 9: The selling process in practice

This chapter introduced Part III of the book by attempting to link sales theory and practice. Four popular approaches to the study of the subject were considered: sales activity, added value, relationship and customer-based selling. Consideration of account management was seen as prominent and the importance of an integrated multi-channel strategy was emphasised. To add realism, the sales process and activities of a salesperson were highlighted to understand what is done in practice. Finally, some legal restrictions on selling activities were considered.

Chapter 10: Recruitment and selection

Recruiting and selecting suitable applicants is one of the most important and difficult jobs the sales manager can undertake. The process of job analysis, manpower planning, job description, job specification, recruitment, screening and selection should be systematic and thorough. Problems of frequency, bias, time and training plague the screening process. Even professional recruiters cannot claim reliability and validity in their selection criteria for salespeople. To reduce costs, improve selectivity and be more effective, sales managers should follow a planned recruitment procedure, enlisting professional help as appropriate. A planned approach will increase your success rate in selection, build a reputation as a desirable, progressive employer and sharpen your competitive edge, thus improving effectiveness and efficiency in your sales operations. As the sales job becomes more complex and strategic the demand for more professional recruitment and selection in sales management will become obligatory.

Chapter 11: Training, coaching and leading the sales team

How to get the best out of the people you employ is the management challenge. One way is through training to improve individual sales force productivity. Good training has a specific purpose, is planned and is aimed at the individual. Various people, locations and content can be used. To be effective, training requires behavioural aspects of buyer–seller interaction to be developed. Another way is through effective leadership but this quality is difficult to define and operationalise. Effective sales managers require leadership skills to guide, coach and develop salespeople to perform better. Various theories of leadership – trait theory, power theory, behavioural theory and contingency theory – help our understanding but do not adequately explain how leadership works or is most effective. Different styles, democratic, autocratic, consultative, paternalistic and laissez-faire, seem to work more effectively in some situations than in others. A combination of conceptual, human relation and technical skills are important in sales leaders. The ability to coach individuals to perform to their best in a coherent way is part of this mystique. More evidence is required to explain the causes and linkages in this process.

Chapter 12: Motivation and rewards

One of the most important factors in sales performance is the motivation of salespeople. Motivation is the amount of effort that a salesperson expends on each of the activities or tasks associated with their job. Theories of motivation such as Maslow’s hierarchy
of needs, Herzberg’s motivation–hygiene theory and Vroom’s expectancy theory help our understanding of why people work and behave the way they do. Pay is important to individuals and companies alike. Both the level and method of payment can affect salespeople’s performance. This relationship is not an easy one to evaluate since people react differently to pay and incentives. As expected, monetary rewards and good management practices seem to be important. Emphasis should not be placed on job satisfaction at the expense of job performance. An integrated managerial approach to the motivational mix, taking cognisance of individual and situational factors, is
recommended.

Chapter 13: Monitoring and measurement

Monitoring and measurement of what is really important in sales and sales force effectiveness is difficult, time consuming and costly. The differences in personal, regional and company characteristics make measurement problems fraught with difficulty. This in turn makes evaluation and control more complex. Information can be collected by salespeople themselves or by management through sales reports, company data, customer surveys or management observation and field visits, normally part of the customer information system. Traditional methods of evaluation, such as sales against target, are simple and direct but neither fair nor accurate. Sales and cost analysis is an important element in management control as is a quality focus and best in class aspirations. Determinants of salesperson performance have to take account of situational factors. While personal characteristics, skill, role clarity, aptitude and motivation are important to all sales jobs, the company-focused solution will help management to deploy the right person more effectively.

Chapter 14: Ethical issues in sales

Today’s customers have greater choice and freedom to purchase what they want from where they want but customers are still conned, cheated and misled. Social causes, the environment and other issues have moved up the agenda and companies that do not
acknowledge these realities, although possibly making short-run profits, will struggle in the longer term. Management involves not only profit and return on investment but also with human and moral issues that concern employees, customers and the public
at large, and these issues will gain in importance. These ethical issues will have to be built into the company’s audit procedure now and in the future. Management is not merely arithmetic but involves human and moral issues.