Chapter 14:
Business Marketing
Communications:
Managing the Personal
Selling Function
PowerPoint by:
Ray A. DeCormier, Ph.D.
Central Ct. State U.
Personal selling is the most important demand-stimulating
force in the business marketer's promotional mix. In this
chapter you’ll understand:

The methods for organizing the sales force.

The skills and characteristics of high-performing account
managers.

The nature of the sales management function.

Selected managerial tools that can be applied to major
sales force decision areas.
Stay Close to the Customer
 The sales force has a central role in the firm’s
strategy: managing customer relationships.
 In B2B business, personal selling is the
dominant component and a major determinant
of overall company success.
Dominance of Personal Selling

Personal selling is dominant because:
Compared to consumers, there aren’t as many
potential business customers.
2. The dollar purchases are much larger.
3. The products and services are more technical.
4. Salespeople need to know about their customers’
businesses and about their customers’ customers’
businesses, too!
1.
Cost of Personal Selling
 Across all industries the average cost of making a sales
call is $200+, although it can cost more in some
industries, less in others.
 There is a significant investment in utilizing personal
selling.
 To maximize effectiveness and efficiency, the personal
selling function must be carefully managed and
integrated into the marketing mix.
Selling is Where the
Tire Meets the Road

The salesperson is the initial link between the
company and the customer.

Personal selling consists of complex tasks and is a
challenging career.

Successful salespeople must have broad
knowledge over and above their product.

They must talk intelligently, know their
competition, understand industry trends, and be
interesting in a worldly and charming way.
SALES FORCE MANAGEMENT


Effective sales force management is
fundamental to the firm’s success!
Sales management means:
1. Planning
2. Organizing
3. Directing &
4. Controlling the Personal Selling Efforts
SALES FORCE MANAGEMENT

a.
b.
Involves (though not inclusively):
Estimating the forecasts
Determining size of sales force
and

Selecting

Training

Deploying

Establishing activity & financial goals

Motivating, and

Monitoring sales people’s efforts

Sales operations MUST be monitored to:
1.
Identify problems.
2.
Assess the efficiency, effectiveness and
profitability of the salesperson.

Organize the sales force

Manage key accounts

Select high-performing account
managers (salespeople)
Organizing the Personal Selling Effort
Geographical Organization
Advantages:

1.
2.
3.
Most common form
Reduces travel distance and time between
customers
Usually minimizes costs
Major disadvantages:

1.
2.
Each salesperson must perform all selling tasks
for all firm’s products and for all customers in
territory.
Salesperson may not know about all products or
only emphasize certain (high commission)
products.
Product Oriented Sales Organizations



Salespersons specialize in relatively narrow
components of total product line. Appropriate with
huge product offerings (e.g., General Electric).
Prime benefit: Enables sales force to develop
deeper product knowledge level--enhances value
of firm’s total offering to customers.
Disadvantage: Expensive and sometimes confusing
for customers.
Organizing the Personal Selling Effort
Market-Centered Organizations

Salespeople learn specific requirements of
industry or customer type (e.g.,
specializing in the banking industry)

Salespeople are better prepared to
identify and respond to buying influentials

Large Accounts are referred to as:
 Key
Accounts
 Major Accounts
 National Accounts
 Strategic Accounts
Key Account Management
 A Key Account:
Purchases a significant volume as a % of sales
2. Involves several organizational members in the
purchasing decision
3. Buys for a geographically dispersed organization
4. Expects carefully coordinated response and
specialized services from suppliers such as:
1.
1.
2.
3.
15
4.
Logistical support
Inventory management
Price discounts
Customized applications
 Research
suggest that companies can get
higher returns & profitability by:
 Segmenting their customers into tiered groups
from high to low
 Developing different value propositions for
each tier
 Effects:
This had a positive effect on sales and profits
from top-tier customers, and no adverse effect
on lower-tiered customer relationships.
 Reduces sales and marketing costs.


Many companies find that 80% or their business or profits
comes from 20% of their accounts.

Large firms have central procurement offices.

Often, selling firms have offices located inside the buying
firm’s facilities.

Large firms expect their suppliers to provide coordinated and
uniform services for all its geographically dispersed divisions.

In exchange for large orders, they expect additional services
& support (e.g., JIT).
Key Account Management

Consists of a Key Account Manager
and a team composed of Sales,
Marketing, Finance, Logistics,
Engineering and other Functional
Areas.

Key Account Managers may work on
several accounts, or on ONE account,
and will report to a senior executive.
Traditional Selling vs. Key Account Selling
Traditional selling emphasizes maximizing
revenues.

Key account selling is multi-faceted,
emphasizing:

1.
2.
Closer long term relationships
Partnerships to reduce overall costs or advance
performance for the customer
Table 14.1
Traditional Selling vs. Key Account Selling
Traditional Selling Focus
Key Account Selling Focus
Sales Volume
Varies
Large volume of purchases by the customer often across
multiple business of the seller
Nature of Product/
Service Offering
Core product/service
Core product/service plus customized applications and
value-added services
Time Horizon
Short-Term
Long-Term
Benefits to Customer
Lower prices & higher quality
Lower total costs; Broader set of strategic benefits
Information Sharing
Limited: Narrow focus on price
and product features
Extensive: Broader focus as firms share strategic goals
Sales Force Objectives
Maximize revenue
Satisfied customers
Become preferred supplier; Lower customer firm’s total
costs; Enhance learning in the relationship
Structure of Selling
Center
Individual salesperson is primary
link to customer organization
Many individuals from multiple functional areas on the
selling side interact with counterparts in the customer
organization
Structure of Buying
Center
Purchasing Manager and a few
other individuals are involved in
buying decisions
Many individuals within the customer organization interact
in making decisions and evaluating the relationship
Source: Adapted with modifications from Joseph P. Cannon and Narakesari Narayandas,
“Relationship Marketing and Key Account Management,“ in Handbook of Relationship Marketing,
Jagdish N. Sheth and Atul Parvatiyar, eds. (Thousand Oaks, Ca.; Sage Publications, 2000), p. 409; and
Frank V. Cespedes, Concurrent Marketing: Integrating Products, Sales and Service (Boston: Harvard
Business School Press, 1995,) pp. 186-202
Joint Efforts
 If uncertainty is high, or
 If product adaptation's are required, then…
Customer organization should initiate a joint
effort with the selling organization…
to create the desired solution.

Because key accounts…
Possess buying power
2. Demand special services
3. Are more costly to serve
1.

…companies need to consider sales and
profit potential, as well as long-term
resource commitments.
22
1.
a.
b.
2.
3.

Centers on:
Profit potential
Degree customer is willing to pay for extra services
Select customers from requiring a unique support
function that is marketable to other customers.
Consider transactions with the customer that
complements the economics of the seller’s business.
Considering these points first allows the seller the
opportunity to consider whether or not to take on a
particular key account.

Successful programs occur when:
1. There is senior management support.
2. Objectives, assignments and implementation
procedures are well defined.
3. They are staffed by experienced people knowledgeable
about company’s capabilities.
4. Staff know how to create customer solutions.

The Account Manager is responsible for:
1.
Diagnosing customer needs.
2.
Identifying matching set of internal experts.
3.
Recruiting these experts onto an ad hoc team
as customer or opportunities require.
High Performing Account Managers:
 Assemble the right people and gather the right
information to solve their customer’s unique
problems.
 Excel at building and maintaining strong
relationships.
 Use these relationships to design and align
proposals that meet the selling firm’s capabilities
(solutions) to the buying firm’s needs (problems).
The Cycle of Account Management Success
Internal
Reputation
Enhanced
Prioritize
Relationship
Building as
Key Role
Develop
Strong
Internal
Links
Forge Multiple
Connections in
Client
Organization
Successful
Engagement
Outcome
Manage Client
Relationships at
Multiple Levels
Initiate
Involvement
with Client
Identify Resources
Internally Aligned
with the Client
Knowledge of
Profitability
Drivers
Fig. 14.2
Partner with
Client to
Shape New Business
Proposal
Early Involvement
in Client
Engagement
Knowledge of
Competitive
Strategies

Building internal relationships

Aligning resources to client needs




Forging relationships with the customer
organization
Managing the customer engagement process
Knowing the customer
Build strong relationships within the selling
firm and customer organization

Recruitment and Selection

Training

Supervision and Motivation

Evaluation and Control
Recruitment & Selection

Q: Should the company hire experienced
salespeople or hire and train inexperienced
people?

A: It depends upon:
a.
Size of firm
b.
Nature of selling task
c.
Firm’s training capability
d.
Market experience
Recruiting

Recruiting is a negotiation between two parties.

A successful process should include procedures
to weed out unqualified people and assure that
good candidates are considered.

Most selection is done by the 1st line manager in
conjunction with 2nd line manager.

In larger corporations, the personal selling
function is often used as a training ground for
higher level marketing and management
functions.
Salespeople need knowledge about the:
1.
Firm
2.
Product
3.
Customer(s) & organizational buying behavior
4.
Competition
5.
Market & industry information
6.
Effective interpersonal communication skills
32
Sales Training Skills:
Effective Interpersonal Communication Skills
•
Includes:
A. Communication skills
B. Listening skills
C. Influencing skills
D. Complaint handling skills
E. Cultural diversity skills
•
Many companies have found that as training increases,
productivity increases and turnover decreases.
 Supervision’s functions include:
 continued training
 counseling
 assistance
 time management verification
 setting financial & activity quotas, etc.
 Supervision also integrates sales activities with
upper management.
Motivation
 Orville Walker Jr., Gilbert Churchill Jr., and Neil
Ford define motivation as:
The amount of effort the salesperson “desires
to expend on each of the activities or tasks
associated with his (her) job such as:
1. calling on potential new accounts,
2. planning sales presentations, and
3. filling out reports.”
Motivation
Walker, Churchill & Ford’s model (fig. 16.3)
hypothesizes that a salesperson’s performance is a
function of three factors:
1. Level of motivation
2. Aptitude or ability
3. Perception about how to perform the role

A.
B.
Motivation is strongly related to:
Individual’s perception of the types and
amounts of rewards from various degrees
of job performance.
The value the salesperson places on those
rewards.
Rewards can be:

Internal: Personal feelings of accomplishment or
self-worth

External: Financial incentives and/or recognition

See Fig. 16.3 (next frame)
Determinants of Salespeople’s Performances
Fig. 14.2
To be effective, incentive rewards:
1. Must be well conceived.
2. Be based on what salespeople value.
3. Are tied to achieving a desired behavior.
4. Recognizes the salesperson.
5. Recognizes the team.
Incentives

Usually consist of:
 Recognition
 Financial rewards

Recognition is usually competitive in
nature and often coupled to a sports theme
such as: “Big Hitter of the Month”

Financial incentives may include:






Salary
Commission
Bonus
Expenses
Contest winnings
Other perks

Job dissatisfaction occurs when the
salesperson does not know:
1.
What is reasonably expected
2.
Is subject to conflicting demands that
s/he cannot possibly resolve
3.
Surrounded by uncertainty due to lack of
information concerning expectations
TURNOVER


Turnover is an important issue
because the cost for it is extensive:
A. Cost to hire and train new people
B. Cost due to loss of customer
C. Cost due to non-performance
To reduce turnover, management will
try many things to satisfy, motivate
and reward good people.
Job Satisfaction Increases When:
Salespeople perceive that 1st line supervisors
closely direct and monitor performance.
2. Management provides assistance to resolve
unusual problems.
3. Salespeople feel they have an active part in
determining company policies and standards.
4. There is a good relationship between
salesperson and manager.
1.

Customer satisfaction increased as salesperson’s
job satisfaction increased.
Job Satisfaction
Relationship between job satisfaction and
customer satisfaction is strong when:
a. Customer interactions are frequent
b. Customer assumes a central role in
the value-creation process
c. When innovative products or services
are involved
Evaluation and Control
Management’s responsibility is to monitor
and control sales performance at all levels:
Locally
Regionally
Nationally
Management needs to:
a. Determine if objectives are being achieved
b. Identify problems
c. Recommend corrective action
d. Keep salespeople informed about changes
(internally) such as new products or
(externally) such as competitive or market
conditions
PERFORMANCE MEASURES

Sales managers use both…
1.
Behavior-based tools
Performance-based tools
2.
…To measure performance.
Behavior-Based Performance Measures
 Include:
 Having the sales manager monitor and direct
salespeople activities by using subjective measures to
evaluate performance such as:
 1. Application of product and company technology
knowledge.
 2. Quality of customer relationships.
 Compensation is more salary driven.
Behavior-Based Performance Measures (con’t)
 Is good for:
A. Salespeople who lack experience
B. Companies that need to control how their
products\services are presented
C. When salespeople are asked to perform
“non-sales” activities

Includes:

Less direct control


Uses objective measures such as activity,
sales quotas, % share market quotas, profits,
etc.
Compensation is more performance based
such as large commission structure

It is good for:
A. When sales efforts are a major determinate of
organizational sales success.
◦
Erin Anderson & Vincent Onyemah state, “When
sales reps make that big of a difference to the
bottom line, it is worth it to give them autonomy
and to pay them handsomely to do what they do.”



Successful managements use both behavior
and performance measures to motivate and
control their sales force.
Other things to consider are selling situations
from territories to types of customers.
Transactional selling is much different than
relationship selling, and measurements need
to be appropriate for the selling situation.
Deploying the Sales Force

The objective of utilizing a sales force is to
deploy them in the most profitable way.

That means:
Effectively allocating resources to accomplish
the task creating sales territories.
Employing sales people to serve customers
within those territories.
1.
2.
PCU

Planning and Control Units (PCU) consists of:
 Prospects
 Customers
 Territories
 Districts
 Products

These are units where resources and controls
are needed to facilitate sales.
Critical Sales Management Task:
Deployment Decisions Facing Sales Organizations
Table 14.2
THREE IMPORTANT
SALES TERRITORY TRAITS
Potential: Measure of total business opportunity
(commissions or compensation) for all
salespeople in particular market
Concentration: Degree to which potential
confined to few larger accounts in territory
Geographic Dispersion: If high, sales effort will
be wasted in travel time
Table 14.3
1.
2.
3.
4.
5.
6.
7.
8.
Selected Determinants of Territory Sales Response
Environmental factors (e.g., health of the economy)
Competition (e.g., number of competitive salespersons)
Company marketing strategy and tactics
Sales force organization, policies and procedures
Field sales manager characteristics
Salesperson characteristics
Territory characteristics (e.g., potential)
Individual customer factors
Source: Adapted from Adrian B. Ryans and Charles B. Weinberg,
“Territory Sales Response,”
Journal of Marketing Research 16 (November 1979): pp. 453-465.
58

PCU opportunity
includes: total potential
that PCU represents for
all sellers

Sales organization
strength includes:
competitive advantages
or distinctive
competencies that firm
enjoys within PCU

Deployment analysis
matches sales resources
to market opportunities

Sales resource
opportunity grid can
classify industrial firm’s
PCU portfolio
Fig. 14.3


By understanding where PCU potentials exists on
the opportunity grid, marketing and sales
managers can make better decision on:
a.
Size of territory
b.
Allocation of salespeople to customer
segments
This method helps isolate deployment problems
or opportunities worthy of management attention.
GE’s Sales Force Effectiveness Initiative
1. Customer Potential and Prioritization
2. Territory Alignment
3. Variable Incentive Compensation
4. Implementation