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  1. 1. Chapter 3: Sales Planning 3.1. Nature and Methods of Forecasting • Forecasting means “A statement made about the future”. So, Sales forecasting is the estimation of sales made for the future. • A sales forecast is the prediction of sales volume that a company can estimate to achieve in specified period of time in future. • It is the estimated birr or unit sales for a specific future time period based on a proposed marketing plan and an assumed market environment.
  2. 2. …Cont’d • According to American marketing Association, “Sales forecast is an estimate of sales in dollars (Birr in Ethiopia) or physical units for a specified future period”. • According to Matthew, Buzzles, Lovitt, Frank, ‘A sales forecast is an estimate of sales of a company’s product that are expected to be achieved during a given future period, in a given place’. • Sales forecasting for a new business is more problematical as there is no baseline of past sales.
  3. 3. 3.2. Periods of Forecasting There are different periods when we need to predict some results • Short term forecasts – there are usually for periods up to three months ahead and are really of use for tactical matters such as production planning. • Medium term forecasts – these have direct implication for planners. They are of most importance in the area of business budgeting, the starting point for which is sales forecast. Thus if the sales is incorrect then the entire budget is incorrect. • Long term forecasts – these are usually for periods of three years and upwards depending upon the type of industry being considered.
  4. 4. 3.2 Methods of Sales Forecasting There are two types of forecasting techniques: 1. Qualitative forecasting technique 2. Quantitative forecasting technique 1. Qualitative forecasting technique: qualitative forecasting techniques are sometimes referred to as judgmental or subjective techniques because they rely more upon opinion and less upon mathematics in their formulations. • Qualitative forecasting techniques are used in the not predictable environment and when we don’t have enough data. • These techniques are usually used when managers forecast for launching a new product line or new technologies. • The absence of past sales means that you have to be more creative in coming up with prediction in the future. • Sales forecast for new products are often based on executive judgments, sales force projection, surveys and user’s expectation.
  5. 5. 3.3. Qualitative Forecasting Techniques • Jury of Executive Opinion Method: This is the oldest method of sales forecasting. This method is also called Executive Judgment Method. • Under this method, a jury or committee is formed. The jury consists of high ranking executives from different departments such as marketing, finance, production etc. • Here, the jury members sit together and each member of the jury is asked to give the sales forecast for a given period of time based on his/her experience and information. • Like this each members gives his/her opinion and then the opinions are collected, analyzed, and discussed. After that a collective decision is made about the future.
  6. 6. 3.4. Delphi method • is a structured type of jury of executive opinion technique. The main difference is the members do not meet in committee. The basic procedure involves selection of a panel of managers from the company. Each member of the panel submits anonymous forecasts for each account. These forecasts are summarized in to a report by the project leader that is sent to each panel member. • The report presents descriptive statistics concerning the submitted forecasts with reasons for the lowest and highest forecasts. Panel members review this information and then again submit individual anonymous forecast. • The same procedure is repeated until the forecast for individual accounts converge into a consensus. Because this procedure involves a written rather that verbal communication, such negatives as domination, undue conservatism, and argument are eliminated, while team members benefit from one another’s input.
  7. 7. Cont’d . . . • Customer expectations use customer’s expectations of their needs and requirements as the basis for the forecast. The data are typically gathered by a survey of customers or by the sales force • Sales force composite combines the individual forecasts of salespeople. This technique involves salesperson making a product-by-product forecast for their particular sales territory. Such a method is a bottom-up approach. • Expert Opinion Method: Under this method, the organization collects the opinion from outside experts who are engaged in the field of sales. The opinions given in the newspapers, journals etc are also taken. • The opinions are then collected, analyzed and evaluated and then the sales forecasting is done.
  8. 8. 3.4. Quantitative Forecasting Techniques • Managers apply quantitative forecasting techniques when the environment is predictable and if they have data from past period about sales. • These techniques are good when we want to predict existing products and technologies. They often used mathematics’ techniques for forecasting. • Quantitative techniques are sometimes termed objective or mathematical techniques as they rely more upon mathematics as less upon judgment in their computation. • These techniques are now very popular as a result of sophisticated computer packages. • There are many quantitative techniques: • Generally, quantitative methods of forecasting fall in to two categories. They are: • Time series analysis • Causal methods
  9. 9. i. Time Series Analysis • A time series is a set of some variable (demand) overtime (e.g. hourly, daily, weekly, quarterly annually). Time series analyses are based on time and do not take specific account of outside or related factors. • Forecasting techniques based on time series data are made on the assumption that history follows a pattern that will continue. Time series analysis is a time-ordered series of values of some variables. • The variables value in any specific time period is a function of four factors
  10. 10. 3.4.1. Some of Time Series Methods are listed Hereunder: a. Trend - Accounts for the gradual shifting of the time series over a long period of time. long-term movement in data b. Seasonality - Accounts for regular patterns of variability within certain time periods, such as over a year( short-term regular variations in data) c. Cyclical – Wavelike variations of more than one year’s duration. Any regular pattern of sequences of values above and below the trend line is attributable to the. d. Irregular variations - Series is caused by short-term, unanticipated and non- recurring factors that affect the values of the time series. One cannot attempt to predict its impact on the time series in advance since it is caused by unusual circumstances.
  11. 11. 3.5. Types of time-Series Forecasting 1. Simple Moving Average : a simple moving average is obtained by summing and averaging values from a given number of periods repetitively, each time deleting the oldest value and adding the new value. 2. Weighted Moving average takes an average of a specified number of past observations to make a forecast. As new observations become available, they are used in the forecast and the oldest Observations are dropped. 3. Exponential smoothing makes an exponentially smoothed weighted average of past sales, trend and seasonality to derive the forecast. 4. Decomposition breaks the sales data into seasonal, cyclical, trend and noise components and projects each into the forecast 5. Straight-line projection is a visual extrapolation of the past data which is projected into the future as the forecast
  12. 12. 1. Simple Moving Average • A simple moving average is obtained by summing and averaging values from a given number of periods repetitively, each time deleting the oldest value and adding the new value. • SMA = Ft = Where; SMA – simple moving average Ft - Forecast for period t At-i - Actual demand in period t-i n - Number of periods (data points) in the moving average
  13. 13. Example Required: a. Compute a simple 5 month moving average to forecast demand for month 9 b. Find a simple 5 month moving average to forecast the demand for month 10 if the actual demand for month 9 is 123. a) SMA9 = F9 = =120.6 Therefore, the forecasted demand for month 9 is 120.6. Month 1 2 3 4 5 6 7 8 Actual demand 105 106 110 110 114 121 130 128
  14. 14. b) SMA10 = F10 = = 123.2 • Therefore, the 5 month moving average forecasted demand for month 10 is 123.2. • Note: In moving average, as each new actual value becomes available, the forecast is updated by adding the newest value and dropping the oldest value and computing the average. • Consequently the ‘forecast’ moves by reflecting only the most recent values.
  15. 15. 2. Weighted Moving Average • In weighted moving average, forecasts are calculated by Ft = WMA = W1At-1+W2.At-2+… +Wn.At-n Where; Ft =forecast in time t WMA = weighted moving average W = weight A = Actual demand value
  16. 16. Example • Example: A department store may find that in a four month period the best forecast is derived by using 40% of the actual demand for the most recent month, 30% two months ago, 20% of three months ago and 10% of four months ago. The actual demands were as follows. Required: a) Compute weighted 4-month MA for month 5 b) Suppose the demand for month 5 actually turned out to be 110. Compute forecast for month 6. Solution F5= WMA = 95x0.4+105x0.3+90x0.2+100x0.10 F5= 97.5 units F6 =WMA = 0.4x110+0.30x95+0.2x105+0.1x90 F6= 102.5 units Month Month 1 Month 2 Month 3 Month 4 Demand 100 90 105 95
  17. 17. 2. Casual Methods of Forecasting Regression and Correlation Methods • Regression and correlation techniques are means of describing the association between two or more variables. More specifically, regression and correlation methods are related to the following issues: - Bringing out the nature of relationship between any two variables, say X and Y - Measuring the rate of change in one (the dependent) variable associated with a given change in the other (independent) variable. • Evaluating the strength of the relationship and quantifying the closeness of such relationship.
  18. 18. Regression • It is concerned about the first two issues, i.e. - Bringing out the nature of relationship between any two variables. - Measuring the rate of change in one (the dependent) variable associated with a given change in the other (independent) variable. • Regression means ‘dependence’ and involves estimating the value of a dependent variable, Y, from an independent variable X. • There are two types of regression: simple regression and multiple regression
  19. 19. 3.6. Sales Quota • Also referred to as sales target • It is a quantitative goal assigned to a sales unit for a specific period of time • It is the amount/volume sales that is aimed to be achieved within specific period of time and territory • It indicates the level of performance that is target to achieve • It could be done in two ways:- a. imposed (sales managers allocate the quota without discussing with the salespersons) or b. co-operative (the sales manager and the salespersons discuss about the sales quota)
  20. 20. 3.6.1. Uses of Sales Quota • It is used as an input to plan, and control selling activities • Serve as a base for:- - sales target - incentive - payment • Sales quota can be assigned based on product line, territory and/or sales volume/income • Sales Performance indicator (SPI) Sales x 100 Sales quota
  21. 21. 3.7. Sales Budget • Is part of sales plan that deals with financial plan for profit of a given period of time • Sales budget can be prepared using either of the following two techniques A. Percentage of sales method: the sales budget is determined by sales volume and also some percentage of the previous sales volume will be taken as base to set the sales budget B. Objective and Task Method: under this method, objective of the firm will be defined and then, the tasks to be performed to achieve the sales objectives will be indentified. Finally, the budget to accomplish the tasks in order to achieve the sales objective will be assigned.
  22. 22. 3.8. Sales Plan • Is the road map/blue print that enables to answer who, when, where, how and what of the sales activity • Is the process of setting sales goal • It also a process of preparing tomorrow's sales on today
  23. 23. 3.8.1 Contents of A sales Plan • Cover page • Preliminary pages (table of contents, list of tables, list of figures…) • Executive summary/Abstract • Introduction • Situation analysis/SWOT, market audit, competitors analysis, sales performance analysis/ • Marketing Plan • Marketing Objective /awareness creation, increase market share, increasing profit and so on/ • Sales objective • Sales forecast • Sales target/Quota • Sales Budget • Timetable
  24. 24. Chapter 4: Planning for and Recruiting Successful Salespeople • Manpower Planning: it deals with staffing aspect of sales force management. It includes activities such as: Determine replacement of lost salesperson Determine the need for new salesperson Determine the abilities/skills required for the efficient performance Preparing manpower inventory/manpower audit Identifying man power gaps Formulate manpower plans/Determine the number of sales forces required Conduct job analysis Prepare job description
  25. 25. 4.1. Job Analysis and Job Description • Job specifications and job descriptions are part of manpower planning prepared to determine job requirements and the quality of needed personnel. • Job specification is a formal statement of minimum qualification required for the successful performance of a job. • Job description is an organized, written and factual statement of job contents in the form of duties and responsibilities of a particular job.
  26. 26. 4.2. The recruitment process • It is the process of searching for prospective employees and stimulating them to apply for jobs. • Recruitment is the process of obtaining a good number of sales forces with required capability • The purpose of recruitment is to attract talented employees with the needed knowledge, skill and attitude in the proper quantity and quality for the jobs available. • It is generally viewed as a positive process.
  27. 27. 4.3. Sources of Recruitment • There are many options a sales manager can go to find recruits. • Sales managers should analyze each potential source to determine which ones will produce the best recruits for the sales position. • Some firms will use only one source; others will use several. Using various options is recommended to get appropriate candidates. • The most frequently used sources of recruitment are:- 1. Internal sources: transfer (shifting one sales person from one territory to the other or from other profession to sales post ), promotion (up grading an employee from lower position to the higher) 2. External Sources: competitors, non competing firms, advertisements, on campus/direct recruitment, unsolicited applications, referral, employment agencies, placement broacher and the like
  28. 28. 4.4. Problems in Screening Applicants • Corruption • Nepotism • Lack of clear yardstick • Absence of teamwork during screening • Lack of know how on sales profession • Lack of standardization
  29. 29. 4.5. Selecting Applicants • The selection process involves choosing the candidates who best meet the qualifications and have the greatest aptitude for the job. • It can be done through written exam, physical examination, quality of CV, information from references, application form, interview of short listed applicants, skill test, demonstration and so on • Selection is described as a negative process. • The proper selection of employees will go a long way towards building a stable work force and eventually reducing labor costs. • Putting the right sales staff on the right position increases efficiency, job satisfaction, morale and productivity. Absenteeism and labor turnover will be reduced highly.
  30. 30. 4.6. Some Major Activities After Selection A. Placement • Placement is the process which involves putting or posting the selected candidates on appropriate jobs. • It involves assigning specific jobs and work places to the selected candidates. • In placement, employees are assigned to jobs that are most suitable to them. • The purpose of placement is to match the employee and the job, or to place right person on the right job. The advantages of correct placement are:  Placement improves job satisfaction and productivity  Placement reduces labor turnover  Placement reduces absenteeism
  31. 31. B. Induction • Induction: is a socializing process by which the organization seeks to make an individual its agent for the achievement of its objectives • The purpose of induction is to provide the new employee with necessary information about the company that may include:- Company history Company products/services Organization structure General company policies The duties and benefits of employment Location of departments and employee facilities Personnel policies and practices
  32. 32. C. Orientation • Orientation is a socializing process by which new employee is provided with information about work environment. • Specifically, orientation involves: Rules, regulations and daily routines Grievance procedures Safety measures Standing orders Employee activities, benefits and services
  33. 33. 4.7. Qualities of a Good Sales Person 1. Physical Qualities (first impression) • Brushed teeth • Combed hair • Appropriate dressing • Optimum voice
  34. 34. 2. Mental Qualities Planning skill Problem solving skill Decision making skill Confidence  Resourcefulness Alertness Imagination Memory Eagerness to learn Gathering up to date information 
  35. 35. 3. Character Qualities Honesty Loyalty Team work Hard working Well mannered Determination Showing respect
  36. 36. 4. Social Qualities  Eagerness to know new clients  Counting clients as family  Tact  Treating clients with equal eyes  Accommodating clients very warmly  Respecting the culture if the client  Applying the golden rule of selling
  37. 37. 4.8. Selling Styles There are four distinct selling styles. Each style is characterized by certain behaviors and tendencies. Keep in mind that successful salespeople can and do use all four styles, but they primarily use a combination of the first three styles. • Collaborative Sellers: tend to ask questions, listen actively, brainstorm with the customer, strive for partnerships, and value long-term relationships. They genuinely solicit input and suggestions from the customer. In a phrase, "We are together." • Technical Sellers: view themselves as the expert, like to talk about features and benefits, make recommendations and are perceived as rational and objective. In a phrase, "Let me tell you about my product or service." • Closers: are good at closing and generating results. They tend to make aggressive offers, sometimes try to close too soon, and are satisfied to make an immediate sale even at the expense of a long-term relationship. In a phrase, "What do I have to do to get your business today?" • Reluctant Sellers: are sensitive to signs of rejection or failure. If Closers are at one extreme on the fight-or-flight continuum, reluctant Sellers are at the other extreme. In a phrase, "Look this over and we'll talk again next time."
  38. 38. Customer Handling
  39. 39. According to Mahatema Gandhi “A customer is the most important visitor on our premises, he/she is not dependent on us. We are dependent on him/her. He/she is not an interruption in our work. He/she is the purpose of it. He/she is not an outsider in our business. He/she is part of it. We are not doing him/her a favor by serving him. He/she is doing us a favor by giving us an opportunity to do so.”
  40. 40. Selling Philosophy of ‘Good’ Salespeople: • Selling is problem solving • Selling is a helping, caring activity • A customer is a person to be served, not a prospect to be sold • Treat people as human beings, not $ signs • Unique products, relationships, cultures are important • Be customer driven, not product driven
  41. 41. Cont’d . . . • Focus on customer needs • The customer is the reason a salesperson exists • Long-term success depends on pleasing others • Selling is a ‘win-win’ activity • A commitment to self improvement and life-long learning essential for long-term success • Adherence to a strict code of ethics emphasizing, among other things, mutual trust, respect, and honesty is essential
  42. 42. Why do buyers object? • Tendency of natural aversion to new or unfamiliar product • Due to partially convinced salesmen • To test the salesmen knowledge and patience • Lack of understanding • Pressure/unfair means of selling product from the salesperson • To postpone current purchase • To secure more information • To avoid disgraceful sellers
  44. 44. Knowledge- about what? • Customer • Company knowledge • Product knowledge (selling point) • Competition knowledge • Selling Process Also be aware of the following . . .
  45. 45. Buyers dislike salespeople that are: • Pushy • Late • Deceitful • Disorganized • Unprepared
  46. 46. Buyers appreciate salespersons who are: • Good listeners • Empathetic • Honest • Dependable • Thorough • Follow-up types
  47. 47. Listening skills Sales people need to be good listeners
  48. 48. Questioning skills Ask right questions to the prospect
  49. 49. Identifying buying signals Based on these signals, a sales person can plan his next move or question.
  50. 50. Negotiating and closing skills Creating a win-win situation for both the customer and themselves
  51. 51. Confident Confidence helps them to take rejections in their stride and bounce back with enthusiasm.
  52. 52. Persistent and determinant The determined person refuses to accept defeat and goes on to attain what he wants.
  53. 53. Maintain a long-term relationship with customers Need to view each sale as a stepping stone towards earning the goodwill of their customers.
  54. 54. Having a friendly personality
  55. 55. Accountable for themselves, their customers and their organization
  56. 56. Thumb Rule to Handle Customer • Rule 1: Customer is always right. • Rule 2: If Customer is ever wrong, • Rule 3: Reread Rule 1
  57. 57. Ways of Handling Clients  Showing smiling face  showing respect  Listening (golden rules for listening) – Put yourself in customer’s shoes – Stop chatting inside your head – Concentrate on what is being said – Show that you are listening – Check details if you are in doubt – Be aware of what is being missed by customer – Write down the details..
  58. 58. Cont’d . . .  Being part of the solution  Personal and office hygiene  Having Badge  Politeness  On time delivery  Empathy
  59. 59. Cont’d . . .  Equity  Call clients by name  tolerance  hard work  loyalty  Honesty  Transparency  Give small gifts
  60. 60. Dealing with difficult customers.. • Don’t return anger to anger • Take control- assert yourself • Never promise what you can’t deliver • Let them vent their anger • Show concern and sympathy • Apologize, even if it is not your fault • Offer solution
  61. 61. Customer Service Slogans • Customer Service - part of the solution • Customer Service - we make a difference • Customer Service - because we care • Customer Service - simply the best
  62. 62. Why do customers quit ? • 1% Die • 3% Move away • 5% Form other friendship • 9% For competitive reasons • 14% Due to product dissatisfaction • 68% due to indifferent attitude by the staff towards customers.
  63. 63. Benefits of Satisfied Clients  Spread of good word of mouth for 3-4 prospects  Source of satisfaction for the provider  Excels its contenders  Minaye PLC secures good image
  64. 64. Consequences of Dissatisfied Clients  Bad words of mouth for 12-15 prospects  2/3 of existing clients loss trust on us  Gives room for competitors to beat us  Switch of current clients  Losing Job  Shutdown of the organization
  65. 65. When Does a customer satisfy? • Service performance = Client's expectation, the client wil be satisfied • Service performance < Client's expectation= the client will be dissatisfied • Service performance > Client's expectation= the client will be delighted
  66. 66. Chapter 5: Organizing the Sales Force • Organization is the back bone of management. It is the foundation upon which the whole structure of management will build and also resources assigned. Without organizing manager cannot function as a manager. • Organization is concerned with the building, developing, and maintaining of structure of working relationship in order to accomplish the objectives of the enterprise. • It is concerned with determination and assignment of duties to people and also the establishment and the maintenance of authority relationship among this grouped activities and people. • The ideal sales organization has a built in adaptability allowing it to respond appropriately to diverse marketing environments.
  67. 67. 5.1. Types of Sales Organizational Structures • If sound practices are followed in setting up the sales department, the resulting structure takes on features of one or more of four basic types: line, line and staff, functional, and committee. • The first two types (line and line and staff) are the most common. • Functional and committee organization are rare. • Most sales departments have hybrid organizational structures
  68. 68. … Cont’d • The grouping of activities into positions and the charting of relationships of positions causes the organization to take on structural form. • No two companies have identical sales organizations, because no two have identical needs. • The customers the marketing channels, the company size, the product or product line, the practices of competitors, and the personalities and abilities of the personnel are a few of factors affecting the organizational structure of the sales department
  69. 69. 5.2. Line Sales Organization • In this type, each subordinate is responsible only to one person on the next higher level. • The line sales organization sees its greatest use in companies where all sales personnel report directly to the sales executive • The line organization is the oldest and simplest sales organizational structure. • It is widely used in smaller firms and in firms with small numbers of selling personnel and in companies that cover a limited geographic area or sell a narrow product line. • The chain of command runs from the top sales executives down through subordinates.
  70. 70. Example
  71. 71. 5.3. Line and Staff Sales Organization • The line and staff sales department is often found in large and medium sized firms, employing substantial numbers of sales personnel, and selling diversified product lines over wide geographic areas. • The line and staff organization provides the top sales executive with a group of specialists in dealer and distributors relations, sales analysis, sales organization, sales personnel, sales planning, sale promotion, sales raining, service, traffic and warehousing, and similar fields. • This staff helps to conserve the top sales executives time and frees them from excessively detailed work, they make it possible for their chiefs to concentrate their efforts where they have the most skill.
  72. 72. Example
  73. 73. 5.4. Functional Sales Organization • Some sales departments use functional organization. • This type, derived from the management theory developed by Frederick W. Taylor, is based upon the premise that each individual in an organization, executive and employee, should have as few distinct duties as possible. • The principle of specialization is utilized to the fullest extent. Duty assignments and delegation of authority are made according to function.
  74. 74. Cont’d … • In the functional sales department, salespeople receive instructions from several executives but on different aspects of their work. • Provision for coordinating the functional executives is made only at the top of the structure; executives at lower levels do not have coordinating responsibilities. In contrast to the line and staff organization, all specialists in a functional organization have line authority of a sort or, more properly, they have function authority. • Instructions and even polices can be put into effect with or without prior approval of the top level coordinating executive
  75. 75. Example
  76. 76. 5.5. Committee Sales Organization • The committee is never the sole basis for organizing a sales department. It is a method of organizing the executive group for planning and policy formulation while leaving actual operations including implementation of plans and policies to individual executives. • Thus, many firms have a sales training committee (comprised of the general sales manager, his or her assistants, the sale training manager, and perhaps representative divisional or regional sales managers) that meets periodically to draft training plans and formulate sales training policies. • Implementation of these plans and polices, however is the responsibility of the sales training manger, if the company has one, or of the line and or staff executives responsible for sales training in their own jurisdictions. • Other committees found in sales organization include customer relations, operation, personnel, merchandising, and new products. • The use of committees in the sales department has advantages. Before policies are made and action is taken, important problems are deliberated by committee members and are measured against varied viewpoints.
  77. 77. 5.6. Schemes for Dividing Line Authority in the Sales Organization 1. Geographic Division of Line Authority • The large firm with far-flung selling operations is likely to subdivide line authority geographically. • This is particularly applied if the characteristics of large numbers of customers vary by geographic location and if certain products are more strongly demanded on some regions than in others. • But there is an even more compelling reason for dividing line authority geographically as more customers are added and as a wider area is cultivated, the size of the sales task increases enormously. • Geographic division is usually made first in top regions or division. • However, this system calls for multiple offices so administrative expenses increases. Then, too, the top sales executive faces coordinating several regional operations. Unless this coordination is effective, different regions may develop conflicting policies.
  78. 78. Example
  79. 79. 5.7. Product Division of Line Authority • A second scheme for dividing line authority is to split the sales task among subordinate line executives, each of whom directs sales operation for part of the product line. • Some companies product lines are too and others sell both highly technical and non technical product, thus some salespeople need specialized training and some do not.
  80. 80. Example
  81. 81. 5.8. Customer or Marketing Channel Division of Line Authority •This is appropriate when nearly identical products are marketed to several types of customers and the problems of selling to each type are different. •Some companies, especially in consumer-goods field pattern their sales organizations after the marketing channels although ultimate consumers may be substantially alike, they frequently must be reached in different ways.
  82. 82. Chapter 6: Training and development • Very often the terms "training" and "development" are considered as synonymous. Really speaking, there is a difference between the two. • Training: It is the process of increasing the knowledge and skills of an employee for doing a particular job. • It implies imparting technical knowledge, manipulative skills, problem solving ability and positive attitude. • The purpose of training is to enable the employees to get acquainted with their present/prospective jobs and also to increase their knowledge and skills and to modify their attitude. • Training is not a one-stop process, but continues throughout the career of an individual. Training is job-oriented (job-centered). • Development: It refers to the growth of an individual in all respects - physically, intellectually, and socially. Development is career bound. Development of individuals is the consequence of training. In other words, training is the cause whereas development is the consequence.
  83. 83. 6.1. Importance of Sales Training • To increase increases the efficiency and productivity of a sales person • To upgrade the knowledge and skill of sales forces • To create high performing business organization • To handle customer better • To build and maintain organizational reputation • To win market competition • improves the organization’s ROI/Return on Investment • Serve as tool of motivation
  84. 84. 6.2. Nature of Effective Sales Training • It should be need based • Reward specific achievement • Limit the size of trainees (25-30) • It should be practical • It should be participatory • Use technology and real life stories • Better to retreat to some other place during the training • Don’t forget accommodation and other facilities to capture trainees’ attention • Hire/assign experienced trainer
  85. 85. 6.3. Types of training Training may of several types. Some of them are: • Orientation training: it seeks to adjust newly appointed salesperson to the work environment • Job training: it refers to the training provided with a view to increase the knowledge and skills of an employee for improving performance on the sales job. • Safety training- it is intended to provide training to minimize accidents and damages to machinery. • Promotional training: it involves training of existing employees to enable them to perform higher level jobs (positions) • Refresher training - it involves training given to employees in the use of new methods and techniques. This type of training is given when existing techniques become obsolete due to development of better techniques • Remedial training- it is designed to correct the mistakes and shortcomings in the behavior and performance of employees.
  86. 86. 6.4. Methods of training 1. On-the-job Training (OJT): under this method, the worker is trained by his immediate supervisor or by an experienced employee in a real work situation. The trainee is told (explained) the method of handling tools, operating the machines etc. 2. Apprenticeship Training: it refers to giving instruction, both on and off the job, in the practical and theoretical aspects of the work required in a highly skilled occupation. Apprenticeship program contains both on-the-job and classroom training. The theoretical aspect of the job is learnt in the classroom, but its skills will be learnt on the job. 3. Vestibule Training: is a training in which the trainee learns the job in an environment that simulates the real working environment as closely as possible. 4. off- the -Job Training: includes all over training other than apprenticeship, vestibule training, and on-the job training. It can be done in organizational classrooms, vocational schools or elsewhere.
  87. 87. 6.5. Compensating (Remunerating) Salespeople • Compensation can be defined as all of the rewards earned by employees in return for their good performance. • Reward for employment in the form of pay, salary, or wage, including allowances, benefits (such as company car, medical plan, pension plan), bonuses, cash incentives, and monetary value of the noncash incentives. It can be summarized in three ways:- •
  88. 88. 6.6. The Purpose of Compensation in an Organization • Attract & retain employees • Motivate workforce • Sustain high morale • Motivate personal growth • Brings about sense of belongingness • Increases sales forces initiation • Contributes to organizational growth
  89. 89. 6.7. Methods of Sales force Compensation • Direct financial compensation: consist of a pay received in the form of wages, salaries, bonuses, incentives and commissions provided at regular and consistent intervals • Indirect financial compensation: includes all financial rewards that are not included in direct compensation and can be understood to form part of the social contract between the employer and employee such as leaves, retirement plans, education, and employee services • Non-financial compensation: refers to topics such as career development and advancement opportunities, opportunities for recognition, as well as work environment and conditions
  90. 90. 6.8. Factors Affecting Compensation Plan • Labor market • Experience of sales persons • Performance of sales persons • Competition • Company performance • The management • Country's economy
  91. 91. Chapter 7: Evaluation and Control of Salespeople • Performance appraisal and Controlling are directly related to planning. • The controlling process ensures that plans are being implemented properly. • Controlling is the final link in the functional chain of management activities and brings the functions of management cycle full circle. • Control is the process through which standards for performance of people and processes are set, communicated, and applied. Effective control systems use mechanisms to monitor activities and take corrective action, if necessary. • The supervisor observes what happens and compares that with what was supposed to happen. He or she must correct below-standard conditions and bring results up to expectations.
  92. 92. …Cont’d • Controlling: is the process in which management appraises the performance of sales force performance using predetermined standards and in light of the results makes a decision regarding corrective action. • Controlling: is the process of establishing and implementing mechanisms to ensure that objectives are achieved. • Controlling: is one of the basic managerial functions, which deals with evaluating how well an organization is achieving its sales goals and taking action to maintain or improve performances. • Controlling: is a managerial function, which involves comparing actual performance with standard, identifying and analyzing deviations, finding causes of deviations, if any, takes corrective actions to meet the standards in subsequent periods.
  93. 93. 7.1. Performance Appraisal Processes and Procedures • Establishing standards of performance • Communicating the standard to the sales forces • Measuring actual performance • Comparing actual performance with the set (established) standards • Taking corrective action
  94. 94. 7.2. Types of Performance Appraisal Techniques Types of Performance Appraisal Techniques Management by Objectives Ranking Graphic Rating Scales Behaviorally Anchored Rating Scales
  95. 95. A. Graphic Rating Scales Semantic differential graphic rating scale product knowledge poor ___ ___ ___ ___ ___ _X_ ___ excellent 1 2 3 4 5 6 7 Likert-type graphic rating scale product knowledge ____________ _______ ___X__ ______ __________ unsatisfactory below average above outstanding average average
  96. 96. B. Behaviorally Anchored Rating Scales Salesperson will always cooperate in any way with other sales force team members, even if such effort is personally inconvenient or requires self-sacrifice. Salesperson is generally antagonistic toward other team members and frequently undercuts group efforts. Salesperson seldom helps others and tends to resent contributing to group effort. Salesperson will occasionally help team members with field sales problems Salesperson is usually willing to help other team members on field sales problems. Salesperson can be expected to go out of his or her way to help other team members with any work-related problem. 9 8 7 6 5 4 3 2 1 10 0 Cooperation with sales team members Categories of performance Observed behavior Very high indicates strong willingness to cooperate with other members of the sales team Moderate indicates an average amount of cooperation with other team members Very low indicates generally no team effort, which often hurts group performance
  97. 97. C. Management by Objectives Step 1 Set sales objectives. Step 4 Conduct annual performance evaluation of salespeople. Planning phase Control phase Modify and adjust MBO cycle Step 2 Develop sales plans and implement them. Step 3 Periodically monitor performance and alter sales tactics to stay on track.
  98. 98. D. Ranking Method • In the ranking method, the supervisor ranks the sales person according to relative performance basis, rather than evaluating performance against a set of performance criteria. • This method provides a more consistent approach to evaluate performance by judging each individual on relative basis considering his/her overall performance. • Ranking also permits comparison by providing ranks to all the sales persons in an organization.
  99. 99. Sales subordinates Accounts payable managers Self- appraisal Sales manager Sales team peers Purchasing managers (clients) 360-degree salesperson performance appraisal Internal customers External customers Other departmental coworkers Emerging Perspectives in twenty-first century Sales Force Performance Appraisals: 360-Degree Performance Appraisal
  100. 100. 7.3 Some Basic Rules of Performance Appraisal • Set clear criteria • The employees should agree on the criteria • Have formal performance evaluation periodically • Give chance for employee to evaluate themselves against their own goals • Coach, and not dictate the employee to better performance • Evaluate the performance, not the individual
  101. 101. 7.4. Characteristics of Effective Performance Appraisal • Accuracy- information that is received from control system should be accurate or real. If the information is not correct, the resulting decisions are likely to make things worse rather than solving problems. • Timely- the information being feedback must be provided on time to allow managers to obtain full benefits from the data. • Economical- the cost of control system must be weighed against its benefits. If the resources expended on the control don’t return equal or greater value, the control is better left un implemented. • Focus on critical points- a manager does not have time to control every aspect of operations. As a result a control system should single out specific and major areas that provide overall comprehensive control. • Acceptability- employees must agree that controls are necessary and the controls will not have negative impacts on individuals or their efforts to achieve personal goal
  102. 102. END OF THE COURSE!