MANAGING SALES FORCE
SUBMITTED BY: UMAR ARSHAD
SUBMITTED TO: SIR JAMSHAID
SUBJECT: PRINCIPALS OF MARKETING
BUSINESS MANGEMENT (S III)
Management of the Sales Force
A large proportion of employees of companies are engaged in sales activities. Efficiency and
effectiveness of a sales force are very strong determinants of competitiveness of a company.
Managing a sales force is an intricate task because most salespeople work away from the direct
supervision of their managers.
Setting Objectives
In order to achieve aggregate sales objectives, individual salespeople need to have their own
sales targets, but increasingly profit targets are being used, reflecting the need to guard against
sales being bought cheaply by excessive discounting. To gain commitment to targets, individual
salespersons should be consulted. Sales managers can also set input objectives such as time spent
developing new accounts or time spent introducing new products. They may also specify number
of calls expected per day and precise customers who should be called upon.
Recruitment and Selection
High caliber salespeople should be recruited. If a company’s most successful salespeople were
put in a territory by replacing the average ones, a 20% increase in sales should be expected in
two years. Work practices of the company and independence are more important than earnings as
the key attraction to a selling career. Sales managers need to discover the reasons why people
want to become salespeople in their industry so that they can develop recruitment strategies that
reflect those desires.
Recruitment process follows five stages:
Preparation of job description and personnel specifications
Top ten qualities sought in salespeople by sales managers of large companies are communication
skills, personality, determination, intelligence, motivation/self motivation, product knowledge,
educational background, confidence, appearance, resilience and tenacity. Research has reduced
the above ten qualities to two – empathy and ego drive.
Empathy is the ability to feel problems and needs of the customer in the same way and with the
same intensity that the customer does. Ego drive is the need to make a sale in a personal way i.e.
the salesperson will feel miserable if he is not able to make the sale, and not merely for money.
Job description will include job title, duties and responsibilities, technical requirements,
geographic area to be covered and degree of autonomy given to salespeople.
Identification of source of requirement and method of communication
Sources of hiring salespeople include company personnel, recruitment agencies, educational
institutes, competitors, unemployed people, other industries. Advertising is the most common
method of communication. Size of advertising correlates with impact. The ad should contain a
headline which attracts the attention of possible applicants.
It allows sales managers to check if the applicant is qualified in the light of personnel
specifications. It provides a common basis for drawing up a short list of candidates, provides a
foundation for interview and is a reference point for the post-interview decision making stage.
Screening and selection interview is employed. Overall objective is to form a clear and valid
impression of strengths and weaknesses of each candidate. Following requirements may be used:
Physical requirement (speech, appearance), attainments (educational attainment, previous sales
success), personal qualities (drive, ability to communicate), disposition (maturity, sense of
responsibility), interests (any interests that may have positive impact on building customer
relationship).
The interview should start with easy-to-answer questions that allow the candidate to talk freely
and relax. The interviewer should be courteous and appear interested in what the candidate says.
Open questions like ‘can you tell about your experiences selling automobiles’, encourage
interviewers to express themselves. Probes can be used to prompt further discussions. At the end
of the interview the candidate should be told when a decision will be made and how it will be
communicated.
Training
Training should include product knowledge and development of selling skills. Success at selling
comes when the skills are performed automatically without consciously thinking about them. A
training program should include knowledge about the company, products, competitors and their
products, selling procedures and techniques, work organization including report preparation and
relationship management.
Training in management of long term customer relationship as well as context specific selling
skills should be given. This should be followed by in-the-field training where skills can be
practiced face to face with customers. The best salespeople do not always make the best sales
managers as other skills like teaching and motivating others are needed.
Motivation and Compensation
Motivation is based on understanding of salespersons as individuals, their personalities and value
systems. Managers should provide the enabling conditions in which salespersons motivate
themselves.
Tasks of sales managers in motivating salespeople
• Get to know what each salesperson values and what each one is striving for.
• Be willing to increase responsibility of salespersons.
• Realize that training can improve motivation as well as capabilities by strengthening link
between effort and performance.
• Provide targets that are believed to be attainable yet provide a challenge to salespersons.
• Link rewards to performance that the salesperson wants to improve.
• Recognize that rewards can be financial and non-financial, and both can motivate.
• Convince salespersons that they will sell more by working harder or by being trained to
work smarter i.e. more efficient call planning, developing selling skills.
• Convince salespeople that rewards for better performance are worth the extra effort.
Managers should give rewards that are valued and attempt to sell the worth of those
rewards to salespeople.
Types of salespersons
• Some salespeople have decided the type of life they want. They try to maintain their
standard of living by earning a predetermined amount of money.
• Some of them are satisfiers. They perform at a level just sufficient to keep their jobs.
• Some salespersons make trade-offs. They allocate their time based upon personally
determined ratio between work and leisure that is not influenced by the prospect of higher
earnings.
• Some of them are goal oriented. They prefer recognition as achievers by peers and
superiors, and tend to be sales quota oriented, with money mainly serving as recognition
of achievement.
• Some of them are strictly money oriented. Their aim is to maximize their earning. family
relationships, and leisure may be sacrificed in pursuit of money.
• Managers must categorize their salespeople before deciding their motivational and
compensation plan. The first three will not be motivated by commission opportunities but
the last two will be.
Three types of compensations plans
Fixed salary: Because payment is not linked to sales, salespeople ore willing to carry out such
tasks as technical bock-up, completing information feedback reports and prospecting. It provides
security but opportunity to increase income by increasing sales is lost. There may be perceived
injustice if higher performance salespeople are not paid more than low achieving ones.
Commission only: This provides a strong incentive to sell, too strong at times leading to
overbearing salespeople desperate to close the sales. There is unwillingness to take time off form
direct selling tasks to attend training courses or fill in reports and there is high turnover.
Salary plus commission: A hybrid system provides some incentive to sell with an element
of security. Salary makes about 70 % of the income. The system is attractive to ambitious
salespeople who wish to combine a base level of income with the opportunity to earn more by
greater effort and ability. This is the most commonly used method of payment. Bonuses are
usually paid on achievement of some task such as achieving a sales target or opening a certain
number of new accounts.
Evaluation of Salespeople
Evaluation provides information to check if targets are being achieved and provide information
to guide training and motivation. By identifying strengths and weaknesses of individual
salespeople, training can be focused on areas in need of development and incentives can be
aimed at weak spots such as poor prospecting performance.
Quantitative measures of performance
Output criteria: Sales revenue, profits generated, sales per active account, number of new
accounts opened.
Input criteria: Number of calls, calls per active account, calls on new account, number of
prospects visited.
Size of the Salesforce:
The second dimensions of selling strategy is the size of the salesforce. An organisation first
decides what type of salespeople it requires and then how many of them are necessary so as to
meet the sales and profit objectives. Too few salespeople mean loss of opportunities and too
many of them, unnecessary expenditure. The exact number of salespeople a company must have
is difficult to pinpoint.
Three basic approaches are used to compute the salesforce size:
(i) Workload Method:
The basic workload is to be distributed equally amongst the salespeople. Here, we have to divide
the total workload by the workload an individual salesman can possibly handle.
The above described approach is appealing to sales managers, as it is conceptually easy to
follow. This approach, however, neglects the profit as an objective, though the number of calls
and frequency of calls do have some consideration for profit. Another fallacy is the assumption
of equal distribution of workload amongst the salespersons. Some salespeople achieve in lesser
time what others achieve taking far longer. The quality of time does matter as much as the
quantity of time spent.
Sales Potential Method:
In a job description of salesman, we list several activities. The performance of one set of
activities represents one sales personnel unit. An individual salesman does not always equal to
one sales personnel unit. He may represent more than one unit or less than it, depending upon his
effectiveness. We have to consider the number of sales personnel unit required and the number
of salespersons required to perform them.
These two equal if salespeople were to perform all the activities listed in the job description. Job
descriptions are based on average performance of average salesmen. The sales volume in rupee
terms that each sales personnel unit (or salesman) would generate can be estimated from this.
This amount is divided by sales forecast or sales volume objective. The figure is adjusted for
salesforce turnover. The answer indicates the number of salespeople needed.
Consider the following equation:
The above model does not consider the time for recruitment, selection, training and development
of the salespeople. All these factors contribute to the sales productivity. A salesperson who
attains a desired productivity by a training period of 5 months, requires a lead time for recruiting
him of 5 months. The above model makes one more assumption. It assumes all sales territories
have equal potential, while in reality this is not so.
Sales job description must be sharply drawn to estimate the correct sales productivity. Salesforce
turnover is a matter for reviewing the experiences, retirements and promotions.
Sales forecast itself is also dependent upon the size of the salesforce. In the planned period, we
take a realistic account of sales personnel units available (manpower inventory) at our disposal.
Any addition to the salesforce takes some time. Manpower inventory available enables a realistic
sales forecast.
Sales volume potential of a growth-oriented company is a function of the effectiveness and
number of salespersons it has got. Sales forecast is a product of the number of salespersons and
the average sales productivity. Geographical expansion and slowing down of the growth rate, we
reverse the above and calculate manpower required by determining the sales forecast first, and
then dividing it by sales productivity of an individual salesman.
Incremental Method:
This is the soundest method conceptually. The proposition here is that net profits rise up when
additional sales hands are recruited provided that the additional sales revenue exceeds the
additional cost of employing the new hand. The application of this method requires two essential
inputs – additional revenue and additional costs.
Suppose there is a company which has experienced an increase in sales turnover with an increase
in the number of salespeople. Its cost of goods remain more or less the same at 60 per cent of
sales. All salespeople receive the same salary of Rs. 1.5 lakh per annum. They get in addition a
commission of 7 per cent in sales they generate.
A travelling allowance of Rs. 2,000 per month is paid to the salespeople. The company has now
10 salespeople on its pay roll and wants to consider whether it can add new hands. The increases
expected in sales volume, cost of goods sold and gross profit by adding eleventh to sixteenth
salespeople.
The net profit contribution of each additional salesperson is calculated. Till we add 15th
salesperson, we get additional net profit contribution of Rs. 24,000. However, if we add the 16th
person, there is a negative net profit contribution of Rs. 35,000. Thus, the optimum size of the
salesforce for this company is 15 salespersons.
This method is sound conceptually, but is difficult to apply in practice. The sales response to a
particular selling effort function needs to be established to apply this method. It is necessary for
applying this model that sales responds to the number of salesperson employed. Sales response
function is not so easy to establish, unless a company has got the capability to conduct
sophisticated research. In addition, other promotional methods apart from personal selling may
affect the sales. This model also ignores the competitive activity, and the investment effect of
personal selling expenditure.
