SALES RESPONSIBILITY AND PREPARATION.
The primary responsibility of a salesperson is to conclude a sale successfully. This task will involve the identification of customer needs, presentation and demonstration, negotiation, handling objections and closing the sale. These skills will be discussed later in details. In order to generate sales successfully, a number of secondary functions are also carried out by most salespeople. Although termed secondary, they are vital to long-term sales success. These are:
- Database and knowledge management;
- Handling complaints;
- Providing service; and
- Relationship management.
Salespeople are also responsible for implementing sales and marketing strategies. This issue will be considered later. The Figure below illustrates the key responsibilities of salespeople.
Prospecting is the searching for and calling upon customers who, hitherto, have not purchased from the company. This activity is not of uniform importance across all branches of selling. It is obviously far more important in industrial selling than retail selling; for example, a salesperson of office equipment may call upon many new potential customers, whereas a furniture salesperson is unlikely to search out new prospects – they come to the shop as a result of advertising and, perhaps, high street location.
Sources of prospects
1. Existing customers. This is a highly effective method of generating prospects and yet tends to be under-used by many. A wealth of new prospects can be obtained simply by asking satisfied customers if they know of anyone who may have a need for the kinds of products or services being sold. This technique has been used successfully in life insurance and industrial selling, but also has applications in many other areas.
Having obtained the names of potential customers, the salesperson, if appropriate, can ask the customer if they may use the customer’s name as a reference. The use of reference selling in industrial marketing can be highly successful since it reduces the perceived risk for a potential buyer.
2. Trade directories. A reliable trade directory such as Kompass or Dun and Bradstreet can prove useful in identifying potential industrial buyers. The Kompass directory, for example, is organised by industry and location and provides such potentially useful information as:
• Name, address and telephone number of companies;
• Names of board members;
• Size of firm, by turnover and number of employees;
• Type of products manufactured or distributed.
3. Enquiries. Enquiries may arise as a natural consequence of conducting business. Satisfied customers may, by word-of-mouth create enquiries from ‘warm’ prospects. Many companies stimulate enquiries, however, by advertising (many industrial advertisements use coupon return to stimulate leads), direct mail and exhibitions. This source of prospects is an important one and the salesperson should respond promptly. The enquirer may have an urgent need seeking a solution and may turn to the competition if faced with a delay. Even if the customer’s problem is not so urgent, slow response may foster unfavorable attitudes towards the salesperson and their company’s products.
The next priority is to screen out those enquiries that are unlikely to result in a sale. A telephone call has the advantage of giving a personalized response and yet is relatively inexpensive and not time consuming. It can be used to check how serious the enquiry is and to arrange a personal visit should the enquiry prove to have potential. This process of checking leads to establish their potential is known as qualifying. For potential business customers the internet can be useful in qualifying customers. For example, online financial ratings services can be used to check on the prospect’s financial resources. Salespeople may also inspect the prospect’s corporate website and blogs.
4. The press and the internet. Advertisements and articles can provide clues to potential new sources of business. Articles may reveal diversification plans that may mean a company suddenly becomes a potential customer. Advertisements for personnel may reveal plans for expansion, again suggesting potential new business.
The internet is also a vast resource for identifying new potential customers. For example, salespeople may use electronic versions of product directories (e.g.Thomson Register) to identify companies that carry out certain types of operations and therefore may need specific products or services. Also, online databases (e.g. ABI Inform) can be used to gather detailed data on industries together with information on trends for products and industries.
5. Cold canvassing/cold calling. These terms are used interchangeably and as the words suggest involve calling on potential new customers ‘cold’ i.e. without prior contact or even an appointment. Although widely used in some forms of selling, such as ‘door-to-door’ or telephone selling, it can be an ineffective and thus frustrating approach to generating sales. In fact, only a relatively small number of individuals are able to cope with the stresses, strains and challenges of cold canvassing, making them very special and valuable types of salespeople. Indeed, the process of cold canvassing can be so stressful that someone once suggested that it was ‘God’s punishment’ for the salesperson.
So why is cold canvassing potentially so ineffective and stressful, and, come to that, is it always so?
The major problem in cold canvassing lies with the potential reaction, or perhaps lack of it, on the part of the customer. Cold canvassing means approaching customers who at the extreme have never heard of the company, have never heard of its products, have never met or spoken to the salesperson before and may have no conceivable interest in, or need for, the product or service in question. Imagine the difficulties of trying to sell in this situation.
Furthermore, the customer may strongly resent being approached without prior warning or permission. This is particularly the case where customers are approached in their own time and/or in their own homes as is the case with much consumer product cold canvassing.
In fact, there are major potential ethical and regulatory issues associated with some types of cold calling, especially where the approach to the potential customer is made via the internet or by telephone. Consequently, any marketer intending to use these contact methods for cold calling must be familiar with, and careful to adhere to, any legal or industry regulations and guidelines pertaining to the cold calling process.
Resentment and possible anger on the part of the customer at being cold called obviously make it much more difficult for the sales person to initiate the selling process, never mind make a sale. In addition, the lack of pre-qualification on the part of the seller with regard to the customer’s needs, wants and circumstances often means that, even if the customer does not resent being approached in this way, they may simply have no need of the product or service under any circumstances.
But if cold calling is potentially so ineffective and stressful, why do many companies continue to practise it? Is there anything to recommend it? The answer is, quite simply, yes!
Cold calling allows a company the potential to expand its customer base. If companies restricted their sales efforts to existing customers, they would find it much more difficult to grow. In addition, cold calling evidences a proactive approach by a company towards its markets. Some argue that the marketer should wait for the customer to come to the company before trying to sell to them, on the basis that if somebody wants something they will ask. However, we all know that this is not always the case – customers often want marketers to present them with solutions to their purchasing problems. Finally, for at least some salespeople cold calling represents the challenge they need to keep them motivated. Especially where they are suitably rewarded for success.
All in all, it would be a mistake to rule out cold calling as a way generating new sales. However, cold calling activity does need to be carefully planned and managed. Some of the ways in which cold calling can be made more effective include the following:
1. Try to make cold calling as unintrusive as possible for the customer. For example,do not cold call at what are known to be busy or inconvenient times for the customer.
2. Related to the above, in the case of domestic customers try to avoid cold calling very early or very late in the day.
3. At all times respect the privacy of the customer and always respect their wish not to be bothered.
4. Do not ever try to bully a customer into speaking to or seeing you.
5. Use cold calling to secure a future appointment, or to gain an agreement to send further information, rather than immediately trying to secure an order.
6. Find out as much as possible about the prospective customer and use this to plan the cold call approach and content. In particular, the effectiveness of cold canvassing can be improved where information is used to identify customers who are more likely to buy because of some attribute or characteristic that can be identified in advance. For example, we might select only companies over a certain size, or perhaps consumers in a certain income bracket or lifestyle group.
6. Endless chain method/family tree method. Works on the principle of multiplication.
7.Centre of influence method-the selected persons are either customers, influential friends of customers e.g. ministers, MPS, MCAS, doctors, lawyers, bankers, professors, club officials, business leaders, social workers and community leaders.
8. Personal observation method-what happens on the ground.
9. Spotters method-Junior sales men are employed, many at a time to locate the prospects, in a particular territory of a specific social status.
10. Direct mail and telephone method.
11. Exhibitions and demonstration-Takes place from time to time at city, regional, national or international level.
12. Bird-dog method-Closely related to spotters method. A nick name given to those persons who visit the houses at a definite interval e.g.
• Electric /water meter readers.
• Gas boys.
• Milk suppliers
• Newspaper boys
2. Database and knowledge management
Databases and customer knowledge are not just essential for prospecting. A systematic approach to customer record-keeping is also to be recommended to all repeat call salespeople. An industrial salesperson should record the following information:
1. Name and address of company;
2. Name and position of contact(s);
3. Nature of business;
4. Date and time of interview;
5. Assessment of potential;
6. Buyer needs, problems and buying habits;
7. Past sales with dates;
8. Problems/opportunities encountered; and
9. Future actions on the part of salesperson (and buyer).
This aspect of the sales job is of particular importance, since a salesperson often works alone with the minimum of personal supervision. A salesperson may have to organise their own call plan, which involves dividing territory into sections to be covered day by day and deciding the best route to follow between calls. Often it makes sense to divide a territory into segments radiating outwards, which the salesperson’s home at the centre. Each segment is designed to be small enough to be covered by the salesperson during one day’s work.
Many salespeople believe that the most efficient routing plan involves driving out to the furthest customer and then zigzagging back to home base. However, it can be shown that adopting a round-trip approach will usually result in lower mileage.
Such considerations are important with respect to efficiency, as an alarming amount of time can be spent on the road as opposed to face-to-face with buyers. A survey conducted on behalf of the Chartered Institute of Marketing into UK selling practice found that, on average, only 20–30 per cent of a salesperson’s normal working day is spent face-to-face with customers. Although this study was conducted almost 30 years ago, matters have not improved since.
4. Handling complaints
Handling complaints may seem at first to be a time-consuming activity that diverts a salesperson from the primary task of generating sales. A marketing orientation for a salesforce, however, dictates that the goal of an organisation is to create customer satisfaction in order to generate profit. When dissatisfaction identifies itself in the form of a complaint, this necessary condition for long-term survival is clearly not being met.
Complaints vary in their degree of seriousness and in the authority that the salesperson holds in order to deal with them. No matter how trivial the complaint may seem, the complainant should be treated with respect and the matter dealt with seriously.
5. Providing service
Salespeople are in an excellent position to provide a ‘consultancy’ service to their customers. Since they meet many customers each year, they become familiar with solutions to common problems. Thus an industrial salesperson may be able to advise customers on improving productivity or cutting costs. Indeed, the service element of industrial selling is often incorporated into the selling process itself, e.g. computer salespeople may offer to conduct an analysis of customer requirements and produce a written report in order to complete a sale. The salesperson who learns solutions to common problems and provides useful advice to their customers builds an effective barrier to competitive attacks and strengthens buyer–seller relationships.
6. Relationship management.
Another key responsibility for salespeople is relationship management.. This coverage examines relationships between salespeople and customers. There is, however, another set of relationships that a salesperson must master in today’s complex selling environment: those between the salesperson and other people in their company who are vital to ensure a smooth sales process and efficient delivery and service of the product. Particularly with key accounts, selling is performed by a team of players (e.g. from engineering, production, marketing, finance and senior management). Key account managers must be able to manage these relationships both within their firms and between those players and members of the customer’s DMU.
7. Implementing sales and marketing strategies.
8. Sales and profit success-Will be discussed later.
The sales force is also charged with the responsibility of implementing sales and marketing strategies designed by management. Misunderstandings regarding strategy can have grave implications.
PREPARATION FOR SALES
The ability to think on one’s feet is of great benefit to salespeople, since they will be required to modify their sales presentation to suit the particular needs and problems of their various customers and to respond quickly to unusual objections and awkward questions. However, there is much to be gained by careful preparation of the selling task. Some customers will have similar problems; some questions and objections will be raised repeatedly. A salesperson can therefore usefully spend time considering how best to respond to these recurring situations.
In many selling situations, buyers and sellers may negotiate price, timing of delivery, product extras, payment and credit terms, and trade-in values. These will be termed sales negotiations.
PREPARATION FOR PURE SELLING AND SALES NEGOTIATIONS
PREPARATION FOR PURE SELLING
A number of factors can be examined in order to improve the chances of sales success in both sales negotiations and pure selling.
1. Product knowledge and benefits
Knowledge of product features is insufficient for sales success. Because people buy products for the benefits they confer, successful salespeople relate product features to consumer benefits; product features are the means by which benefits are derived. The way to do this is to look at products from the customer’s point of view
Knowledge of competitors’ products and their benefits
Knowledge of competitors’ products offers several advantages:
1. It allows a salesperson to offset the strengths of those products, which may be mentioned by potential buyers, against their weaknesses. For example, a buyer might say, ‘Competitor X’s product offers cheaper maintenance costs’, to which a salesperson might reply, ‘Yes, but these cost savings are small compared to the fuel savings you get with our machine.’
2. In industrial selling, sales engineers may work with a buying organisation in order to solve a technical problem. This may result in a product specification being drawn up in which the sales engineers have an influence.
3. Sales presentation planning
Although versatility, flexibility and the ability to ‘think on one’s feet’ are desirable attributes, there are considerable advantages to presentation planning:
- The salesperson is less likely to forget important consumer benefits associated with each product within the range they are selling.
- The use of visual aids and demonstrations can be planned into the presentation at the most appropriate time to reinforce the benefit the salesperson is communicating.
- It builds confidence in the salesperson, particularly the newer, less experienced, that they are well equipped to do the job efficiently and professionally.
- Possible objections and questions can be anticipated and persuasive counterarguments prepared.
4. Setting sales objectives
The temptation, when setting objectives, is to determine them in terms of what the salesperson will do. The essential skill in setting call objectives is to phrase them in terms of what the salesperson wants the customer to do rather than what the salesperson will do. As with all objectives, sales objectives should, wherever possible, fulfill the SMART criteria for objectives that were discussed An important factor affecting the setting of sales objectives is the so-called sales cycle.
5. Sales Cycle
The sales cycle refers to the processes/steps between first contact with a customer and the placing of the actual order and the amount of time this takes. With regard to the process/steps in the sales cycle, once again this should always be considered from the point of view of what processes/steps the customer undertakes rather than from the perspective of the steps involved in selling, though clearly the former should determine the latter.
6. Understanding buyer behavior
Many organizational buying decisions are complex, involving many people whose evaluative criteria may differ, and that the purchasing officer may play a minor role in deciding which supplier to choose, particularly with very expensive items.
The internet can provide a wealth of information on the buying organisation. The buyer’s website, online product catalogues and blogs are useful sources of information.
Customer relationship management (CRM) systems allow salespeople to access customer information held by their company via the internet. For example, Orange,the telecommunications company, enables their field salespeople to access their CRM databases using personal digital assistants (PDAs) equipped with wireless modems.
PREPARATION FOR SALES NEGOTIATIONS
In addition to the factors outlined in the previous section, a sales negotiator will benefit by paying attention to the following additional factors during preparation.
1. Assessment of the balance of power
In the sales negotiation, seller and buyer will each be expecting to conclude a deal favorable to themselves. This balance will be determined by four key factors:
- The number of options available to each party. If a buyer has only one option – to buy from the seller in question – then that seller is in a powerful position. If the seller, in turn, is not dependent on the buyer but has many attractive potential customers for the products, then again they are in a strong position. Conversely, when a buyer has many potential sources of supply and a seller has few potential customers, the buyer should be able to extract a good deal. Many buyers will deliberately contact a number of potential suppliers to strengthen their bargaining position.
- The quantity and quality of information held by each party. (‘Knowledge is power’, Machiavelli.) If a buyer has access to a seller’s cost structure then they are in a powerful position to negotiate a cheaper price, or at least to avoid paying too high a price. If a seller knows how much a buyer is willing to pay, then their power position is improved.
- Need recognition and satisfaction. The greater the salesperson’s understanding of the needs of the buyer and the more able they are to satisfy those needs, the stronger their bargaining position
- The pressures on the parties. Where a technical problem is of great importance to a buying organization, its visibility high and solution difficult, any supplier who can solve it will gain immense bargaining power. If, on the other hand, there are pressures on the salesperson, perhaps because of low sales returns, then a buyer should be able to extract extremely favorable terms during negotiations in return for purchasing from them.
- Determination of negotiating objectives-It is prudent for negotiators to set objectives during the preparation stage. This reduces the likelihood of being swayed by the heat of the negotiating battle and of accepting a deal which, with the benefit of hindsight, should have been rejected
It is useful to consider two types of objective:
- ‘Must have’ objectives. The ‘must have’ objectives define a bargainer’s minimum requirements; for example, the minimum price at which a seller is willing to trade. This determines the negotiating breakpoint.
- ‘Would like’ objectives. These are the maximum a negotiator can reasonably expect to get; for example, the highest price a seller feels they can realistically obtain. This determines the opening positions of buyers and sellers.
2. Concession analysis
Since negotiation implies movement in order to achieve agreement, it is likely that concessions will be made by at least one party during the bargaining process. Preparation can aid negotiators by analyzing the kinds of concession that might be offered to the other side.
The kinds of issue that may be examined during concession analysis include the following:
• Timing of delivery;
• The product – its specification, optional extras;
• The price – ex works price, price at the buyer’s factory gate, installation price,in-service price;
• Payment – on dispatch, on receipt, in working order, credit terms;
• Trade-in terms, e.g. cars.
The aim of concession analysis is to ensure that nothing that has value to the buyer is given away freely during negotiations. A skillful negotiator will attempt to trade concession for concession so that ultimately an agreement that satisfies both parties is reached.
3. Proposal analysis
A further sensible activity during the preparation stage is to estimate the proposals and demands the buyer is likely to make during the course of negotiation, and the seller’s reaction to them. This is analogous to the anticipation of objections in pure selling – it helps when quick decisions have to be made in the heat of the negotiation.