Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=1377 CHAPTER 14 Selling and sales management BILL DONALDSON Introduction The role of selling is continuing to change and evolve in response to dramatic moves in the way buyers and sellers interact. Individual knowledge, skills and abilities are still required, perhaps more than ever, but teamwork and technology are also vital ingredients in an effective organizational response to the needs and demands of customers. The salesforce have always been ambassadors for their firm, but in a turbulent business environment the informa- tion and persuasion role of salespeople is being absorbed into their relationship role. Sales- people must take responsibility for creating, developing and maintaining profitable relation- ships with their customers. This being so, the need is paramount to focus on how to win, develop and retain customers to achieve the marketing and sales objectives of the firm. This puts the spotlight once again on the role of selling in the marketing mix and on the management of sales operations. Sales opera- tions are the revenue generation engine of the organization and thus have a direct impact on the success of the firm. In this chapter, we consider how selling is changing and evolving. We examine the new role of salespeople and redefine the sales encounter in different exchange situations. We then address some of the key issues in managing the salesforce as they relate to marketing. The changing role of salespeople Consider the following statistics. In 1970, 80 per cent of grocery products were sold to 1656 buying points, the remaining 20 per cent to thousands of smaller units. By 1980, 80 per cent of grocery products were purchased from only 656 buying points. Today, 80 per cent is bought from only five major buying points (Keynote, 1998). Less dramatic but similar trends can be found across industries, and the effects on salespeople and on the efficiency of sales operations has been radical. These changes imply a new perspective for integrating sales and other forms of communication with the operational side of the business. Driven by an urgency arising from more complex supply chains, fewer and larger purchase points, the availability and use of IT in customer contact operations, relative increased costs of labour, and the continuing internationalization of busi- ness, sales operations are now different. These factors contribute positively to the need for more efficient exchange and communication Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=1377 Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=1377 Selling and sales management 361 systems between firms and their customers, predicated by increases in the costs of acquiring new customers, and the need to retain the existing customer base and stimulate the pur- chasing power of those customers already on the books. Personal selling can be defined as the personal contact with one or more purchasers for the purpose of making a sale. To be effective, marketing management needs to integrate per- sonal selling with other promotional elements, with other organizational functions such as distribution and production, and with the customer and competitive structures prevailing in the market. The importance of personal selling is such that expenditure on the salesforce usually exceeds the budget for all other market- ing communications activities added together, with the possible exception of advertising in large, fast-moving consumer goods companies or direct marketing organizations. Personal selling has several interrelated roles within the communications mix. The information role is part of a two-way process whereby information about the company’s product or offer needs to be communicated to existing and potential customers and, in the reverse direction, customers’ needs are cor- rectly interpreted and understood by manage- ment. Salespeople impart knowledge about products or services which provide benefits to customers, and also a range of information on promotional support, finance, technical advice, service and other elements which contribute to customer satisfaction. Salespeople are also the face-to-face contact between purchasers and the company, and for good reason are referred to as ‘the eyes and ears of the organization’, since senior management’s customer contact may be limited. A second role salespeople must fulfil is persuasion. The importance of correctly identi- fying customers’ needs and market opportun- ities cannot be overstated. Nevertheless, in competitive markets, prospective customers are usually faced with an abundance of choice. As a result, adoption of the marketing concept can be no guarantee of competitive advantage. Purchasers will have to be convinced that the company has correctly identified their needs and that the offer provides benefits over any other firm. Salespeople are part of this process through persuasion and service. A third role is relationship building, and salespeople must initiate, build and develop relationships between the firm and its custom- ers. Owing to their boundary-spanning role, the salesforce of a company has traditionally been a vital link between the firm and its customers, and a prime platform for commu- nicating the firm’s marketing message and the voice of the customer to the firm. In the high- tech world, it is easy to overlook the impor- tance of personal relationships and how the interaction with customers has changed, if at all. Salespeople have always realized the importance of relationships, but there is now evidence that salespeople’s and customer’s understanding of each other may not be accu- rate (Sharma, 2000). Therefore, the manage- ment task is to re-engineer sales practices to maximize the salesforce potential in this new environment. The nature of the personal selling task is continuing to change in that selling to custom- ers has been replaced by co-operating with customers. The goals and objectives for the salesperson have also changed from achieving or exceeding target, selling X products in Y period and maximizing earnings, to that of building repeat business with the firm’s exist- ing and potential customer base. The emphasis has shifted from ‘closing’ the singular sale to creating the necessary conditions for a long- term relationship between the firm and its customers that breeds successful sales encoun- ters in the long run. This shift renders obsolete many of the currently available sales manage- ment practices, and the sales philosophy and culture that has driven the development of the sales management field for decades. It also questions sales performance measures based on individual criteria and sales management prac- tices which reflect recruitment, training and Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=1377 Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=1377 362 The Marketing Book rewards based on sales volumes rather than relationship performance. The role of the sales- person seems to have moved away from tradi- tional aggressive and persuasive selling, to a new role of ‘relationship manager’ and, in practice, we are witnessing a tendency to change the sales lexicon from salesforce to sales counsellors, professional representatives or sales consultants (Manning and Reece, 1992; DeCormier and Jobber, 1993). Perhaps the change in the title is designed to facilitate the transition of the salesforce’s tasks from selling to advising and counselling, from talking to listening and from pushing to helping, as suggested by Pettijohn et al. (1995). Recent evidence suggests that often the idea of syner- gistic relationships and partnerships is slower than hoped for by participants. The expected benefits from developing closer relationships also fail to materialize in the ways expected (Marsh, 2000). This transition is not only a matter of title. The new reality of relationship marketing directs salespeople and sales man- agers to develop long-lasting relationships with their customers based on mutual trust and commitment (Morgan and Hunt, 1994). The costs of personal selling According to a 2001 survey, the average cost of an outside salesperson is in excess of £55 000 per annum (Reward Group/Institute of Sales and Marketing Management, 2001). Yet the time actually spent face to face with customers is typically around 20–30 per cent of working hours. This raises the question of what form of communication is both effective and efficient in today’s marketplace. The most significant dif- ference between selling and other elements in the marketing communications mix is the per- sonal contact, but this comes with a relatively high price tag. The need for this personal contact will vary depending on such factors as the scale of risk, size of investment, type of customer, frequency of purchase, newness of product and many other factors. In some situations the information or persuasion role can be achieved by impersonal means of communication, particularly advertising. Advertising is impersonal, indirect and aimed at a mass audience, whereas selling is individual, direct and much more adaptable. With advertising the message is more limited, cheaper per contact but unidirectional, relying on a pull approach rather than personal selling, which is two-way, but employs a push strategy and is relatively expensive per contact. Today, yet another dimension needs to be considered. This is the role and position of direct marketing as a form of communications. In Table 14.1, we compare advertising, direct marketing and personal selling. Therefore, a primary task of management is to be clear on the role of personal selling and what exactly it is we want salespeople to do. Information technology (IT) is the set of tech- nologies related to the processing and commu- nication of information, including computer and electronic databases, advanced telecommu- nications, CD-ROMs and the Internet. These technologies have led to new and powerful ways to reach customers and are changing the way firms interact. The use of marketing databases, telemar- keting and the Internet is having a significant impact on how sales operations are managed and will continue to do so. For example, the Internet is a powerful tool for providing infor- mation and will be an important means of buyer–seller communication. Many traditional intermediaries, particularly those who do not stock a physical product, will find that con- sumers empower themselves to collect infor- mation and make the purchase decision. This changes the information role of salespeople, and travel agencies, car dealerships and finan- cial intermediaries are likely to be most affected by such a process. The demand for secondary sources of information is passing from a num- ber of individual and independent sources to software programs which can browse the Inter- net and report the findings directly to users Buy this file from http://www.download-it.org/learning-resources.php?promoCode=&partnerID=&content=story&storyID=1377 The publisher detailed in the title page holds the copyright for this document All rights reserved. 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This puts the spotlight once again on the role of selling in the marketing mix and on the management of sales. philosophy and culture that has driven the development of the sales management field for decades. It also questions sales performance measures based on individual criteria and sales management