Sales Strategies

McGraw-Hill

Pragya Sachdeva

The McGraw-Hill Companies, Inc., 2000

Sales Management Formulation of Sales Strategy

The following are key decision areas in sales management which are
particularly relevant to strategy formulation:
Determining the size of the sales force
Decision regarding type and quality of sales force required
Designing the sales organization
Territory designing
Recruitment and training procedures
Task allocation
Compensation of sales force
Performance appraisal and control system
Feedback mechanism to be adopted

Managing channel relationships

Coordination with marketing departments.

Pragya Sachdeva

Different Sales Strategies

Relationship Strategy

In this strategy, a major key to success in selling is the ability to establish

working relationships with customers in which mutual support, trust and
goals are nurtured over time.

The sales force that builds effective relationships with the customer and
provides valuable service are usually high performers and top achievers.

Cont
.

Pragya Sachdeva

A Selling Partner
P

Prepares strategically for a long-term, high-quality relationship that

solves customers problems.

A

Asks questions to get on the customers agenda.

Restates customer needs with confirmation questions.

Teams with support people to provide the customer with solutions.

Negotiates double-win solutions with joint decision making.

Exceeds customer expectations whenever possible.

Re-examines the ongoing quality of the relationship frequently.

In this model, a customer is treated as a partner. Therefore, maintaining a good

relationship with the customer is important.
Cont
.

Pragya Sachdeva

The Double-Win Strategy

In this strategy, both the customer and the salesperson come out of the sale
with a sense of satisfaction. The salesperson not only obtains the order but
sets the stage for a long-term relationship, repeat business and future
referrals.

They both come out of the sale feeling satisfied, knowing that neither has
taken advantage of the other and that both have profited, personally and
professionally, from the transaction.

However, some salespeople have still not accepted the merits of the win-win
approach. They have adopted a win-lose approach which means that the
salesperson wins at the buyers expense.
Cont
.

Pragya Sachdeva

Win Lose approach vs. Win Win attitude

The starting point to the development of a double-win philosophy is to compare
the behaviour of persons who have adopted the win-lose approach with that of
persons who have adopted the win-win approach (Figure).
Double-Win Strategy
Win - Lose People

Win - Win People

See a problem

Help others solve their problem

Fix the blame

Fix what caused the problem

Let life happen to them

Make life a joyous happening for others

and themselves

Live in the past

Learn from the past, live in the

and set goals for the future

Make promises they never keep

Make commitments to themselves and

to others and keep both of them
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present

Cont
.

Instant Service

It is in this context of providing almost instant service to the customer that

the concept of supply chain management has caught the imagination of
managements the world over.

No matter how efficiently and effectively goods/services are produced, if they

cannot be delivered to the customer in the quickest possible time, all efforts
made earlier are in vain, particularly in the context of very short product life
cycle counted in months rather than years.

As depicted in Figure below, a combination of effective process plus supply

chain management is what is required to cope with the challenges of the
international market-place.

One cannot survive in a highly competitive market without conforming to the

so called Q-C-D triangle Highest Quality, Lowest Cost and Least Delivery
times.
Cont
.

Pragya Sachdeva

Simplified Model for Ensuring Customer Delight

After sales service

Unique selling
propositioning/brand
equity

Customer
Delight

SUPPLY CHAIN
management

Exceeding customer
expectations
On time delivery
Competitive price
Reliability of product
or service

PROCESS
management

Novelty/uniqueness
of product/service

leading to customer loyalty

and lasting relationship

Cont
.

Pragya Sachdeva

Hard Sell Versus Soft Sell Strategy

Strategies for Identifying Customers

Hard Sell

Soft Sell

Concern for self

Concern for customer

Canned presentation

Questions for discussion

Talking

Listening

Pushing product

Providing buying opportunities

Presenting features

Presenting benefits

Advocating without acknowledging

Acknowledging needs

Cont
.

Pragya Sachdeva

Product-centered Selling and Client-centered Selling

Product-centred Selling

Client-centred Selling

1.

Seller puts in efforts for research and

development of product.

1.

Seller puts in efforts on research and

development of relationship with clients.

2.

Product centred selling emphasises

knowledge of product.

2.

Client centred selling emphasises

knowledge of client.

3.

Selling strategies and tactics tend to be

most influenced by past performances of
products and competition and present
situations.

3.

Strategies and tactics tend to be directed

more to considerations of future growth and
developments in the clients world.

4.

Representative seeks to be accepted as a

reliable, credible source of information and
service.

4.

Representative strives to raise clients

expectations of personal excellence.

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Selling Process
The selling process is defined as a process by which a salesperson
identifies
and locates the prospects, separates the prospects from
the suspects
approaches them and makes a sales presentation,
handles their objections. He also follows up the existing customers to
identify further sales leads and
measures the success and customer
satisfaction level of the current
products and service offerings.
Selling concept refers to the exchange of goods or services for an
amount of
money or its equivalent in kind. Selling helps an
organization achieve its
organizational goals. Thus, managing sales in
an organization is a critical
activity. A sales manager needs to
ensure that the salesman are motivated
to
give
their
best
performance.
The sales team continuously look out the changes taking place in the
external environment regarding competitors, customers, government
policy and other regulatory agencies, advances in technology, and
industry trends. This provides the sales personnel a vital information
regarding trends in
product sales, product development, and
budgets.

Pragya Sachdeva

Cont
.

The economic slowdown is receding and budgets of companies are

increasingly receptive to alternative direct marketing tools to sell their
products.
Telemarketing (TM), that is marketing products and services on the
telephone, a direct marketing tool, which has touched a high in the last three
years.
Apart from professional TM service outfits, many companies, including
MNCs, have set up their in-house TM cells.
A TM outfit works through a well networked team of trained telemarketers
who make calls to potential clients and customers and establish direct
contact with them. The key lies in convincing the customer about the value of
the product or service and fixing up an appointment.
Direct customer marketing system allows customers complete flexibility to
purchase our products. Orders can be placed via the Internet, over the
phone, by mail, through our catalogue or through the company personnel.
Pragya Sachdeva

Cont
.

Mail Order Sales

Mail order houses are retail trading organisations engaged in the mail order
business.

This is also known as carrying on business through post or mail. In this

method, customers do not visit the sellers business premises, nor do they
make a personal examination of the goods before they are purchased. In this
system, orders are received from customers by post and the goods are
dispatched usually by VPP (Value Payable Parcel) or registered post.

Cont
.

Pragya Sachdeva

In case of the mail order business, the selling function is performed without the
intervention of the personal salesman.

The goods should be known for their utility so that there is no need of
convincing prospective buyers about their usefulness.

They must fetch a sufficient price to have a wide profit margin.

They must command wide demand.

They must not be easily perishable.

They should be available in large quantities throughout the year.

Cont
.

Pragya Sachdeva

Sales through Large Scale Fixed Shop Retailers

Concentration of population in urban areas, increasing flow of manufactured
goods and improved methods of organising business have led to the expansion of
retail business. This expansion was effected in different ways, giving rise to
different types of retail establishments, which operate on a large scale. More
prominent among them are the following:

Departmental stores

Chain stores

Mail order houses

Hire purchase shops

Super markets

Fixed price shops

Cooperative stores

Cont
.

Pragya Sachdeva

Sales through Wholesalers and Retailers

Wholesalers perform a number of functions in the marketing of goods as listed

below

Assembling and buying

Storing or warehousing

Transporting

Financing

Risk-bearing

Grading, packing and packaging

Providing market information.

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Cont
.

In the process of acting as a link between the wholesaler and the consumer, a
retailer performs many functions. The more important of them are given below:

Buying and assembling

Warehousing or storing

Selling

Grading and packing

Financing

Supply of market information

Advertising.
Cont
.

Pragya Sachdeva

Direct Selling

Direct selling identifies the unfulfilled needs of ordinary customers.

Direct marketing companies have an advantage over conventional marketers

in that the relationship between the company and the customer starts
building even before a sale is made.

Lessons From Direct Selling

THE STRATEGY: Eureka Forbes structures its demos according to the time
at the customers disposal.

The Lesson: Keep the process flexible enough to accommodate individual

needs.

Cont
.

Pragya Sachdeva

How to Add Value Through Direct Selling

Create direct
selling
process

Identify the
customer

Make
appointment
with customer

Choose suitable
time for demo
and pitch

Ensure product
Performance
at demo

Close deal
quickly

Follow up sale
with prompt
service

Is the
process clearly
structured?
Yes

Ensure
increase in
customer value

Is salesman
empowered to be
flexible?

Yes
No

Yes
Cont
.

Pragya Sachdeva

THE STRATEGY: Modi Telstra uses a clearly structured sales call process to
market its cell phone services.

THE LESSON: Simplify the process of negotiation to save the customers

time.

THE STRATEGY: Oriflame uses multilevel marketing to enlist direct sales

agents from its customer base.

THE LESSON: Use your customer to sell your product to other customers.

THE STRATEGY: INDAL empowers its sales force to take pricing decisions
on the spot when closing sales.

THE LESSON: Ensure that your direct seller can conclude a deal
immediately.
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National Sales Manager

In carrying out these responsibilities, sales mangers do the following things:
1.

Prepare sales plans and budgets

2.

Set sales force goals and objectives

3.

Estimate demand and forecast sales

4.

Determine the size and structure of the sales force organization

5.

Recruit, select and train sales people

6.

Design sales territories, set sales quotas and define performance standards

7.

Compensate, motivate and lead the sales force

8.

Conduct sales volume, cost and profit analysis

9.

Evaluate sales force performance

10. Monitor the ethical and social conduct of the sales force.
Cont.

Pragya Sachdeva

Sales Manager

Regional Manager
(North)

BM BM

BM BM

Field Staff

Regional Manager
(South)

BM BM

BM BM

Field Staff

Regional Manager Regional Manager Regional Manager

(East)
(West)
(Staff)

BM BM

BM BM

Field Staff

BM BM

BM BM

Field Staff

BM BM

BM BM

Field Staff

Cont.

Pragya Sachdeva

Stand Points of Sales Representative

The stand points of sales representatives and the managers are as follows:
1.

To protect drastic fluctuations in income so that regular monthly expenses for

home mortgage, food and utilities can be paid/balanced without hardship.

2.

Expenses in direct relations to the amount of effort

3.

Earnings to be equitable in terms of experience, ability, cost of living.

Cont.

Pragya Sachdeva

Organization uses two types of compensations:

1.

Financial

2.

Non-Financial

Financial includes compensation, salary, incentives and fringe benefits.

Non-financial includes motivation and its implications to sales management.
But monetary compensation is one of the most direct and least ambiguous ways
of communicating to sales people about their performance.

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Reasons for Providing Financial Compensation

The compensation plan is undoubtedly to reward the salesman for his
performance. The plan includes.
1.

The plan should provide a regular income at least at minimum level. In

addition to this regular income, it should provide adequate incentive to
induce minimum performance from the salesman.

2.

The plan should be simple and easy to understand for the salesman.

3.

It should be economical and should induce competition amongst salesman.

4.

It should be fair to both the sales force and management.

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Methods of Remuneration
The sales force can be remunerated in the following ways:
1.

A straight salary

2.

A straight commission on sales

3.

Salary and commission on sales

4.

Salary and commission on sales above a certain amount

5.

Salary and different rate of commission on varying totals or for different types
of goods

6.

Salary and share in the profits

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Expenses Accounts
The major sales expenses accounts are categorized as follows:
1.

Salary accounts

2.

Commission accounts

3.

Bonuses

4.

Meals and entertainment

5.

Air travel

6.

Automobiles rentals

7.

Lodging

8.

Travel accounts

9.

Tour expenses accounts (Advance accounts)

10. Communication and services expenses accounts.

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Fringe Benefits
Types of fringe benefits are:
1.

Company Car

2.

Supplemental life insurance and medical insurance

3.

Tax-return preparation

4.

Personal tax and financial planning

5.

Low or no interest loans

6.

Deferred compensation

7.

Supplemental retirement benefits

8.

Air travel and First class A.C. for Train Travel

9.

Relocation allowance

10. Stationary facilities

Cont.

Pragya Sachdeva

11.

Laundry benefits, while on the tour

12.

Special perquisites for outstanding performance by getting travel prizes

recognition for outstanding performance

13.

Medical expenses

14.

Special business associations membership

15.

Exclusive developmental programs by IIM, Ahmedabad, by Shiv Khera,

etc.

Pragya Sachdeva