sales

SALES MANAGEMENT Every module consists of three to five units. Structure of a unit is as under:1) 2) 3) 4) 5) 6) 7)

Introduction & objectives 2-5 sections Short answer questions(SAQ) Summary Keywords References Suggested readings

Module I- Sales Process and its Management 1) Introduction to sales management

1 - 17

2) Sales Process

18 - 32

3) Personal selling

33 - 47

4) Computer applications in sales management

48 - 63

Module II- Selling Skills 5) Communication skills

64 - 80

6) Sales Presentation

81 - 109

7) Negotiation Skills

110 - 123

8) Retail communication

124 - 140

Module III-People Issues in Sales management 9) Job analysis, recruitment & selection

141 - 159

10) Training the sales force

160 - 174

11) Compensation and motivation of sales force

175 - 187

12) Monitoring and performance evaluation

188 - 204

Module IV- Sales Organization and Planning 13) Sales Planning

205 - 218

14) Sales Organization

219 - 235

15) Sales forecasting and sales quotas

236 - 249

16) Sales Budgeting and control

250 - 261

UNIT 1 INTRODUCTION TO SALES MANAGEMENT Structure 1.1 Introduction Objectives

1.2 Marketing Approaches 1.2.1 Production Concept 1.2.2 Product concept 1.2.3 Selling Concept 1.2.4 Marketing Concept

1.3 Marketing and Sales 1.3.1 Good Selling Process 1.3.2 Sales approaches 1.3.2.1 Direct Sales 1.3.2.2 In-direct sales

1.3.3 Types of personal sales

1.4 Evolution of sales department 1.5 Components of the Marketing Mix 1.5.1 Personal Selling and Other Promotional Tools

1.6 Functions of the sales manager 1.7 Sales Management Model

1.8 Summary 1.9 Glossary/ Keywords 1.10 References 1.11 Suggested Readings 1.1 Introduction “Sales management” as the term implies means management of sales. Often it is considered synonymous with the management of personal sales. It involves an understanding of the effort that goes into the management of the sales force and the various processes of sales. Sales management initially was meant to be the direction of sales force personnel. Later the term took on a broader significance apart from personal selling and the term “sales management” included managing of all the sales related activities including below the line

advertising,

sales

promotion,

physical

distribution,

pricing

and

product

merchandising. The Definitions Committee of the American marketing association defined sales management as “ the planning , direction and control of personal selling, including recruiting, selecting, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personal sales force”. However, we shall also include indirect sales through channels within the ambit of sales management. Objectives After studying this chapter you will be able to:1) Identify clearly the differences between the functions of marketing and sales 2) Describe various marketing and sales approaches 3) Describe the marketing mix and the sales management model

4) Identify the various functions of a sales manager and his/her objectives

1.2 Marketing Approaches Marketing is defined by the American Marketing Association [AMA] as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large." Marketing deals with the company orientation towards the market place. It deals with mainly four concept’s namely the production concept', product concept, marketing concept and the selling concept.

Marketing Concepts

Production Concept

Product Concept

Selling concept

Marketing Concept

1.2.1 Production concept The production concept founded on the belief that the customers favor those products that are highly available and affordable to them. So the concept assumes that the cheap products are sold well and relies on the improved production and distribution activities. Companies try to attain profits by exploiting economies of scale. Improved production and distribution are emphasized rather than the quality or features of the product/service. This concept is also known as the manufacturing concept. This type of strategy for a business works well in the developing countries where the demand is more than the supply. Important questions the firm has to address in this process are:1) Can the product be produced?

2) If the product can be produced, can it be done in required quantities? China has oft practiced the production concept in making the goods/services available at all times at very low prices and increased efforts to compete in international markets. This concept is perfectly suitable when the company distributes the products/services for the masses and not to a specific target group. This concept works well when the demand for the product is high and the customer preference doesn’t change for a long period of time. Production concept works perfectly fine for some companies especially in the fast moving consumer goods (FMCG) sector. However it was found later that some products did not sell adequately irrespective of all the measures taken by the production concept. Then this situation demanded another concept known as the product concept. 1.2.2 Product concept Product concept relies on the assumption that the customers buy those products that offer the most quality, performance, and innovative features. This concept suggests that the quality of the product is an important factor in the customer buying process and customers would always prefer to buy products of superior quality. Computer industry is a good example where the production concept worked earlier but later on product concept took over. Customers required more and more features and quality while choosing a computer/ laptop. As more and more companies joined this business and the foreign brands came in the local players had to adopt the product concept. Quality however needs to be defined. Attributes of quality may differ from customer to customer. To some customers quality means faster processing technologies and to some it may be some other features in the product. So companies must take enough care in designing a product which would be in accordance with the quality parameters of the target group. Timing of the product in the market also plays a vital part in the success of a product. Sometimes technological or innovational products fail when they

are introduced in the markets and the customers are unaware of the benefits. So educating the customers before introducing a product is important. For instance the Golden Eye technology in televisions was introduced by Videocon but the customers were clueless about what benefit it provides. After some time, when the customers understood about that technology, it was introduced by LG and it became a marketing success for its products. In some industries the customer would not be able to understand the product benefits or may be lacking a little motivation to buy the product even if they know it’s necessary. In such cases product concept might fail to make the customer buy the product. Hence the “Selling Concept” was adopted by some companies. 1.2.3 Selling Concept This concept relies on the assumption that “We need to compel the customer to buy the product”, so the customer will buy the product only if the company aggressively promotes/sells their products/ services. This concept believes that customer is usually inert and would not buy the product/service if the choice is left to them. So the company would push its products/services towards the customers and push them to buy. Hence a strong network of sales force is created for this purpose and they convince the customers to buy the products/services through advertising and personal selling. This kind of approach worked well with products/ services like insurance, vacuum cleaners, water purifiers, and various other household items etc. Important questions the firm has to address in this process are:1) Can the product be sold? 2) How much can we charge for the product or what can be the maximum discount that can be given and still have a decent profit? This concept would work well for the first time sale to a customer who might take the product/service when persuaded by the sales representative. After buying the

product/service if the customer is not satisfied then he/she might not be interested in entertaining the sales person for the next time. It was later realized that most of the customers will buy the products which they need and want. Hence the marketing concept has come into the picture. 1.2.4 Marketing concept The marketing concept underlines the following principles:1) Identify the needs and wants of the customer 2) Design the products and services to fulfill the same 3) Use various promotion techniques to communicate the benefits of the product 4) Realizing the profit by satisfying customer needs over a long term The marketing concept then is the management belief that customers will long those products that they need and what and that the key task of the management is to identify customer needs and wants and design products accordingly. SAQ 1 1) Identify any two products for which you would prefer to follow the production concept? 2) Explain which concept would work well in selling a cell phone to a CEO of the company and to a small farmer? 3) Identify which model does Dell follow in selling the computer products and explain how it has benefited them?

1.3 Marketing Vs sales Sales as a process implies exchanging the products or services in exchange for money in such a manner that what you get from it is more than what you put into it. In other

words, the difference between the realized sales price and the cost of manufacturing is the profit for the organization from sales. Marketing on the other hand includes understanding the value proposition in the minds of the customer and designing the products and services accordingly. 1.3.1 Good Selling Process Good Marketing makes sales easy. However, even when the marketing process is good, the sales process needs to be handled carefully. Good selling implies:1) Identifying the right customer 2) Communicating the product benefits to the customers and 3) Exchange of goods/ services for money Sales are the culmination of all the marketing efforts and in a nut shell, it is the exchange of good and services, for money. It may be said that marketing is all the activities conducted to prepare for sales. Sales are all the activities required to close the deal. Clearly customers will buy those products which they need and also where the perceived value of the product is greater than the selling price of the product. The task of marketing is to enhance the value proposition in the minds of the customer and increase the perceived value. It would be ideal if the customers came and demanded the product/ service. However the customers may not do so because of several reasons such as:1) He/ She doesn’t know that the product is available 2) May not know where the product is available 3) And have no idea of whom to contact

4) Have no clear idea of the value proposition and the benefits 5) May not be clear of the utility of the product in solving his / her problem The sales force then plays an important role such as:1) To reach out to the customer and inform him/ her about the product benefits 2) Make the product easily available to the customer The product can be made easily available by the following methods:1) Meeting the customer on a one-one basis and delivering the product at the door step. This is referred to as personal sales. 2) Make the product available at place which is easily approachable by the customer. This is refereed to Indirect or channel sales. Sales management then begins with identifying the process of sales. The sales strategy determines the route the sales would take. 1.3.2 Sales Approaches Two possible approaches by which the sales would take place can be classified as follows:Direct sales Approach Sales Approaches In-Direct sales Approach

Depending upon the product and the approachability, needs and a affordability of the customer one of the above approaches would be followed by sales personnel 1.3.2.1 Direct sales approach may be:1) Selling to offices- (for examples, Office Automation Products)

2) Selling to Industries- (business to business –B2B) 3) Door-to-door selling 1.3.2.2 In-Direct sales approach 1) Company to retailer to customer 2) Company to wholesaler and then to retailer to customer 3) Company to wholesaler to distributor and then to retailer to customer An attempt is made to introduce these various sales approaches, but the following text is primarily focused on personal selling. The issues of channel management/ indirect sales approaches are also covered in the course work of “Distribution& Logistics” and “Supply Chain Management”. 1.3.3 Types of Personal Sales Personal sales can be classified into broad areas like:1) Office sales 2) Industrial/ Institutional sales (In some countries like India there is significant difference in the approaches to be followed for Industrial/ Institutional sales and the government sales) 3) Door-to-door sales The kind of sales strategy to be adopted is the function of the product / service, the market, buying process, and the competition. SAQ 2 1) If you were a sales person for agricultural products like fertilizers, quality seeds etc., which sales approach would best fit in and why?

2) In the above question, what steps would you follow if the customer has no knowledge about the benefits of your product?

1.4 Evolution of the sales department As described by Richard (2001), before the Industrial revolution the small scale industries were the leaders of the market and selling the products / services was not much of a problem. More emphasis was given on manufacturing activities. The orders were in hand before the actual manufacturing process of those orders had started. Meeting the demand was a major problem. In many firms a small team used to supervise all the business activities. There was no need of seperate teams for different functions like selling, marketing and manufacturing. All the tasks were performed by the team or sometimes, by a couple of individuals. Most of the time was spend on manufacturing. It was an ideal situation for most of the firms not to bother about the marketing and selling activities until the Industrial revolution began. With the Industrial revolution, which began in 1760 in England and shortly after the American Revolution, in United States, the companies had started to focus on the expansion of their territory by finding new market places. Factories were producing huge quantities of goods with the improved technology and machinery. The production process had become simple and now the main problem was what to do with excess surplus after meeting the domestic demand in nearby markets. The situation demanded for the expansion of their presence in new markets, crossing the boundaries of the cities, countries & continents. With increasing presence in many countries, it became difficult to manage all the departments by a single individual as was the case before the industrial revolution. The size and volume of business had increased to such an extent that it became necessary to delegate the authority to others. This process encouraged in establishment of various

functional units like manufacturing, finance, marketing etc. Each and every department was to function independently and be supervised by a separate authority. The creation of the marketing department has solved the problem of understanding the market place & helped in performing all activities to improve the market dominance of the products. With increasing markets and customers various sales divisions were setup. However a major issue of how to communicate with customer has to be perfected. This is where the roles of marketing mix and personal selling as a function came into the picture. Let us understand what marketing mix is and the importance of its various components.

1.5 Components of the Marketing Mix As you have already studied in marketing, marketing mix involves several components which can be understood by the following diagram.

Marketing Mix

Product

Advertising

Price

Public Relations

Promotion

Personal Selling (Sales management)

Sales Promotion

Place

Internet Based promotions

The marketing mix consisting of various components plays an important role in establishing the market place/ dominance of a product. According to the market needs the type of product, the pricing of product, the various promotion mechanisms to be used and the type of distribution network followed (place) should be decided. Various tools of promoting a product include advertising, public relations, personal selling, sales promotion and Internet based promotions. Personal selling can be understood as the one to one oral communication between the sales personnel and the target group in such a way that both the parties benefit from each other. The oral communication could be a personal meeting, a telephone conversation or by using latest trends in technology such video conferencing. The benefits for a sale personnel would be in terms of financial reward for closing the sale successfully & the customer would be benefitted by the product/ service received. Often the objective of personal selling may not be to close a sale. Most of the time, objective may be to pass on the information about the products/ services to the target group. Maintaining a good relationship with the customer is often treated as one of the important objectives of the sales team. 1.5.1 Personal selling Vs Other Promotional tools Let us now understand how the personal communication differs from other tools such as advertising, public relations, sales promotion and internet based promotion. We shall also understand the situations in which the personal selling would be preferred over other promotion tools and finally we shall discuss the disadvantages of the personal selling. Personal selling is preferred in cases where the customer cannot be reached or communicated easily about the company product / services by other means, such as the rural areas where the television or internet is not available. Secondly in the cases where the target group might be a CEO of a company or a head of the institution, such customers cannot be communicated easily with other tools as compared to personal selling.

1.6 Functions of the sales manager Any organization that has the sales people demands a sales manager. What does every sales manager have in common? They accomplish the tasks through their people and organizations. The sales manager is responsible for generating sales, profits & meeting the customer satisfaction levels as per the company objectives. One manager, John Rozurat of W.W.Grainger, described management as “the art of getting things done through people”. Charles Futrell(1998) describes the functions of the sales manager as follows:1)

Planning :- Building a profitable customer oriented team

2)

Staffing:- Hiring the right people to sell and lead

3)

Training:- Educating sales personnel according to company objectives

4)

Leading:- Guiding average people to perform at above average levels

5)

Controlling:- Evaluating the past to guide the future

The outcome of these several functions would be the attainment of objectives such as:1)

Achieving defined goals

2)

Product sales and profits

3)

Better Customer satisfaction levels

4)

Efficiency and

5)

Effectiveness

Sales management has several functions like planning, budgeting, recruiting and selection, training, motivating, compensation, designing territories & evaluating performance.

1.7 Sales Management Model The 1st step “describing the personal selling function” deals with understanding the job activities and the sales process involved in personal selling

The 2nd step “Defining the strategic role of sales function” will deal with the corporate, business and marketing level strategic decisions which typically provide guidelines within which the sales manager and salespeople must operate.

Describing the personal selling function

Defining the strategic role of the sales function

Designing the sales organization

Developing the sales force

Directing the sales force

Determining sales force effectiveness and performance

Source: Thomas N. Ingram (1989) The 3rd step “Designing the sales organization” deals with the importance of designing an effective sales organization which is necessary to implement the strategies successfully. The 4th step “Developing the sales force” highlights the importance of right recruitment and selection methods and the need for proper training of the sales force personnel The 5th step “Directing the sales force” presents that hiring the best people for sales is one thing and directing their efforts to meet the sales organization goals and objectives is another. Sales managers spend a great deal of time in motivating, supervising and leading members of the sales force.

The 6th step “Determining sales force effectiveness and performance” deals with monitoring the progress of sales force to determine the effectiveness and performance. Developing forecasts, assigning quotas and budgets provides necessary information for the performance evaluation.

1.8 Summary In this unit we understood the definition of sales management and the differences between marketing and sales. We highlighted various marketing approaches starting with the production concept, product concept, selling concept and finally the marketing concept and their role in sales generation. A good selling process is essential in making the sales easier by identifying the customer, communicating the benefits and exchanging the goods/services for money. For the sales process to be effective the sales force plays an important role in identifying the right approach to reach out to customers and make the sale. Later in this chapter we have studied the importance of the components of the marketing mix in establishing the market place and the critical role of personal selling played for the same. This unit also helped in understanding the role of the sales manager in planning, staffing, leading, training and controlling the sales force personnel. Finally in this unit we understood the sales management model which helps in managing the sales.

1.9 Glossary/ Keywords 1) Sales Promotion

Activities, techniques and incentives that are directed towards customers with an intention to create consumer demand.

2) AMA

American

Marketing

Association

is

a

professional association for marketers. 3) FMCG

Fast

moving

Consumer

Goods

are

the

products used by individuals or households which are used or replaced very fast by the

customers over a period of weeks, months of within a year. Some examples would be soft drinks, toiletries etc.

1.10 References 1. Tyagi C.L., Arun kumar (2004), “Sales Management”, Atlantic Publishers and Distributors, New Delhi, India. 2. Charles Futrell. (1998), “Sales Management: Teamwork, Leadership, and Technology (6th Ed.)”, The Dryden Press, Florida, USA. 3. Richard R. Still, Edward W. Cundiff, Norman A. P. Govoni (1998), “Sales management: decisions, strategies, and cases (5th Ed.)” Prentice-Hall International, New Jersey, USA. 4. Thomas N. Ingram, Raymond W. LaForge (1989), “Sales management: analysis and decision making”, The Dryden Press, New York, USA.

1.11 Suggested Readings 1. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo. (2004), “Sales Management”, John Wiley & Sons, New Jersey, USA. 2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”, Prentice Hall, New Jersey, USA.

UNIT 2 SALES PROCESS Structure 2.1 Introduction Objectives 2.2 Marketing Strategy 2.2.1 Segmentation and Target Marketing 2.2.2 Determining Potential buyer and buyer group 2.3 Sales Approach 2.3.1 Typical Purchasing Process 2.3.2 Essential activities of Sales Process 2.3.2.1 Interest creation activities 2.3.2.2 Pre-purchase activities 2.3.2.3 Purchase activities 2.3.2.4 Post-purchase activities 2.4 Summary 2.5 Keywords 2.6 References 2.7 Suggested Readings

2.1 Introduction The previous unit dealt with the introduction to “Sales management”. It highlighted the functions of marketing and sales, described various sales approaches and presented functions of the sales manager. We will begin the unit by understanding various steps in marketing strategy and then deal with the sales personnel skills set and the various steps in the sales process. In this unit we will discuss about the sales process activities. We shall discuss some essential activities which need to be performed by the sales personnel in the sales process. The sales personnel help in creating customer value and competitive advantage to the product/service. Irrespective of the nature of sale and the type of customer, the sales personnel should follow certain basic activities for successful closing of a sale. We will discuss the essential activities of the sales personnel in general and later on find out in depth how the sales process changes for different types of sales like direct and indirect sales. Objectives After studying this unit you will be able to:1) Define segmentation, potential buyer and buyer group for the product/ service 2) Understand the typical purchasing process of the customer 3) Identify essential activities involved in a sales process 4) Explain the critical role played by the sales person in handling the sales process

2.2 Marketing Strategy Marketing strategy can be thought of as all the activities performed to use the company‟s limited resources to achieve the objectives marketing and sales and attain competitive advantage.

The first step includes identifying the product/ service. The product/ service is developed as per the company goals and the market needs. After identifying the product/ service, the next step is analyzing the market. This is where we begin to identify the customer for the product/service. 2.2.1 Segmentation and Target Marketing Market segmentation is defined as “the process of dividing the heterogeneous market into homogeneous sub-units”. If we take the population of a country say India, it would be around 113 crores. For a consumer product let‟s say the tooth paste, the market is huge. However, the entire population would not be looking for the same type of features in the toothpaste. So we need to convert this heterogeneous group into homogeneous sub groups. Let us say, we can divide the entire population into two categories, with one category preferring ayurvedic/herbal toothpaste and the other category preferring nonayurvedic toothpaste. This categorization will give an idea of the market segment which prefers your toothpaste. The need for segmentation is that the marketer is clear about where to compete and place the product/ service. There are different bases for segmentation, namely:a) Customer-based Segmentation b) Product-based segmentation and c) Competition based segmentation Generally there are two important factors before selecting the target segment. They are:a) Attractiveness of a market segment and b) The strategic fit between the segment and the firm‟s objectives, resources, and capabilities. Market Research will play an important role in finding the answers to the above two factors. You can learn more about this in the module on marketing management.

Once the segmentation has been carried out for the product/service, we can define the strategy using one or a combination of the following approaches:a) Standardization: - In this strategy, the firm maintains the same product, same price and same communication medium to all the segments. e.g.:- Cold drinks will be priced same to either the rich people or the poor people.

b) Differentiation: - In this strategy the firm differentiates the product to cater the needs of different segment. The pricing would be different in this case. E.g.:- The Indian Railways differentiates its service into several categories like AC 2-tier, 3-tier, Sleeper and general coaches depending upon the various segment needs.

c) Focus: - This is the combination of the above two strategies. In this the basic product remains the same with additional features for various segments to be added at an extra cost. E.g.:- A given model of laptop will be priced same for all segments, but if the segment needs an up-gradation of features it would be done at an added cost. So using the above approaches, we market the product/ service. 2.2.2 Determining Potential Buyer and Buyer group Determining potential buyer is more a marketing task than the function of a sales process. The potential buyers for a product/service can be arrived by market segmentation. The buyer group may be different for the product category and a brand. For example, if we take the cell phone. Every person in the segment is a potential buyer of the cell phone. But the buyers are different for high end mobiles and low end mobiles within the segment. Another example can be thought of as a photo copier. Every office is a potential buyer of a photocopier but when it comes to brand the offices might go for a cheaper brand an expensive brand.

This is where the sales team comes into the picture in determining who the potential buyers for the brand are and the products associated with it. The marketing group or the brand management should identify the potential buyers. They ought to give certain marketing inputs in the form of promotions. It helps in creating the awareness of the supplier and the brand to the potential buyer before the sales person contacts the buyer. All these activities are a part of marketing policies and approaches of the firm. The firm also has to provide the support material to the sales people in terms of brochures, literature etc This is where the sales team begins its activities. When the sales team takes their responsibilities the first task is to find the customer, a process which we generally refer as “Suspect to Prospect through MAN approach”. MAN stands for Money, authority and Need respectively. Every potential buyer may not be an actual buyer of the product. The potential buyer cannot purchase the product if he doesn‟t have the money, authority and the need. It is written in this order because it is easier to identify whether the person is having the money followed by whether he has the authority to buy and finally whether he has the need to buy, it. Sales team needs to know how to assess whether the potential buyer has the money, authority and need. One cannot just ask the potential buyer whether he/she has the money. So, some parameters such as education, occupation, family status etc. needs to be analyzed to arrive at a conclusion whether the potential customer has the money to buy the product. Similarly, the salesperson has to assess whether the potential buyer has the authority to buy the product/ service and does he/she have the need for the same. Marketing would do this job at a macro level and sales would do this job at the micro level. Marketing identifies the target segment or potential buyers of the product/ service but at the level of individual potential buyers it the task of sales person to identify the needs and wants of the individual potential buyer.

SAQ 1 1) If you are the sales manager in your city for a firm selling laptops, what method would you follow in identifying the segments for your product and why? 2) Explain the importance of MAN approach in identifying the actual buyer for selling a high priced product like a luxury car.

2.3 Sales Approach Once the sales team identifies the prospect, it‟s time to decide on the sales approach. The first step in the sales process is the pre-approach. Pre-approach would include the attire, presentation material, fixing an appointment and deciding what to do in the appointment like opening remarks etc. The objective of the pre-approach is the often data collection, knowing more about your prospect, the team involved in buying the product, the customer history and so on. The sales team will always be able to sell better if they talk customer needs and not the features of the product/ service. This is referred to as term “FABing” which means converting features to attributes and attributes to benefits. If you are selling the photocopier it would be advisable to talk about the customer benefits. You may start your discussion by saying “Last year the expense on photocopy is „X‟ amount, if you install the machine you would end up saving „Y‟ amount per annum”. Now let us understand the typical purchasing process. 2.3.1 Typical Purchasing process Every purchase has a process which can be understood by the following diagram.

Recognition of needs

Evaluation of options

Purchase decision

Implementation and evaluation

Most of the customers do not buy a product unless there is a need for it. The problem is that the customer often does not know what he/she needs. So in the first step of purchasing process one has to identify what the problem or need is. In the second step “Evaluation of options” the customer would look for various competitive products or solutions for his problem. There might be a different criteria used by different customers. Some of them might be:a) Price: - Many customers use price as the differentiation criteria. Customers might go for a cheaper product rather than a costly one. This is seen more often in developing countries and less in developed countries. In this the sales person may be actively negotiating for a better price or give some discounts. Discounts play a major role in the successful closing of sale. But the sales person should have a clear idea of what could be the maximum discount allowed by the company for the product/service. Some customers go on with the higher price products or some may buy the medium priced products. The choice would depend on the customer mindset.

b) Quality: - Here the customer would be preferring the best quality product and does not mind paying a little more. Quality might be different for different customers. For the customer, Quality may be associated with long life of the product, more features, best designs, better after sales service, and so on. Most of the customers associate quality with the brand. It is the role of the sales person to know what the customer means by a quality product and carry on with the sales process. In the third step the purchasing decision will be taken by the customer. The role of a sales person is to make the purchasing process hassle free and convenient. And the final step “Implementation and Evaluation” deals with the installation of the product and evaluating the value. If the customer evaluation is positive it would lead to another sale in the future.

These are the four steps in a typical purchasing process for every sale. The level of activities involved in each step differs for different types of sales like direct and indirect sales. For instance more activities might be involved in the first step (recognition of needs) for an industrial sale while compared to door-to-door sale. It is very important to know the kinds of activities involved in each of the steps for different types of sales. 2.3.2 Essential Activities of Sales Process The sales process can be categorized into four main activities. Interest creation activities, pre –purchase activities, purchase activities and post activities. To convert the suspect to a prospect, each and every activity is important and needs to be performed successfully. These activities aim at serving customer better. The process is called sales process cycle. Every sale has some essential activities to be performed by the sales team. Let us understand those activities with the help of the following chart. Interest Creation Activities

Post Purchase

Pre-Purchase

Activities

Activities

Purchase Activities Source: Sales Management, by Andris A. Zoltner , Prabhakant Sinha, Greggor A. Zoltners, page no: 41

2.3.2.1 Interest Creation Activities The first activity is interest creation. Once a potential customer is identified, he/she needs to be educated about the product/service you are offering. It is the job of the sales person to be prepared with the necessary literature, brochures and or presentations. If the product is a technical in nature, the aim of the sales person should be in explaining the benefits of the product to the customer and not its technical features. In this activity, creating awareness about the brand or product should be the main aim than pushing for sales. The sales person needs to understand the customer in this phase and identify his/her problem and provide the necessary information documents which the customer may request. Various promotional techniques can be used for interest creation. Some of the ways in which companies create interest in the product/service would be: Giving full access to the software features and capabilities for a limited time period like 1 month. During this time the customer can evaluate the product and then buy it. This is usually prevalent in firms selling software products.  Distributing fee trial packs are along with other products. This is the case with firms selling products like soaps, shampoo, toothpaste etc.  Offering free test drive option to the customer, so he/she can purchase only if they are satisfied in case of high – value product like automobiles.  Coining motivational quotes. “Why should boys have all the fun” (Hero Honda‟s “Pleasure”) implies that girls are entitled to same freedom as men and driving the scooter is symbol of freedom and liberty. 2.3.2.2 Pre-purchase Activities Having created interest in the brand/ product in the first activity, it is time for moving on to the next activity by the sales person. In this process we assume that the customer is actively considering various product offerings and comparing them. This activity aims at describing the product or service features to the extent possible. Much emphasis is laid on demonstrating the capabilities of the company and or the product. Here, the sales

person takes on an active role in assessing the customer needs and helping them in problem solving. 2.3.2.3 Purchase Activities Having presented a solution to the customer problems, it is time for the sales person to push for closing. Here a lot of activities happen both, from the sales person‟s end and the customer‟s end. Sales person‟s role lies in negotiating, bidding, finalizing the terms and condition of the sale. The customer evaluates various proposals, negotiates and finalizes the payment. It is not necessarily required that the same person or company who initiated the pre-purchase activities would be involved in purchase activities. Some of the processes may be outsourced to other agents. Interest Creation

Pre-purchase

Purchase

Post-purchase Business

IBM

IBM

direct Business

sales person

(reseller)

partner

does

Partner delivery and installation IBM may provide technical support

Source: The complete guide to accelerating sales force performance, by Andris A. Zoltner , Prabhakant Sinha, Greggor A. Zoltners, page no: 31 This table explains how the different stages in sales process are handled by the company sales force and the selling partner. To sell an IBM product, an IBM sales representative is involved in interest creation and pre-purchase activities like explaining the features, capabilities and benefits of the product and how the product would be an advantage to the customer in solving his problems. In the later stages like purchase activity, the IBM sales person would handover the lead to a reseller business partner to complete the purchase and post-purchase activities and technical support may be provided by IBM team when required. Companies may also decide to handle all the activities from interest creation to postpurchase. Most of the companies who adopt the outsourced model that have several advantages and disadvantages.

Advantages of Outsourced selling (Partner, reseller & distributor) Customer relationships: If the reseller or partner has good communication and negotiating skills, the chance of closing a sale is high. Financial Costs: If the partner charges a percentage of sales made, the financial and selling risk of the firm is reduced. Product variety: A distributor can acts as a one-stop solution for all customer requirements. If your company is good in manufacturing microphones/headsets only, then you can take the help of the distributor who would be dealing with the computer products. The chance of your product sale is higher when the customer comes for purchasing a computer/laptop and buys your key board as an accessory.  Variable capacities: If demand of a product/service increase, company can‟t increase the sales force to sell the products and fire them when demand decreases. So, in peak demand season the distributors can help in selling your products/service to the customers. Disadvantages of Outsourced selling (Partner, reseller & distributor)  Conflicts: Conflicts can arise when deciding which customers to be served and which territories should be assigned. The company may not be able to force the reseller to follow its sales strategies.  Control: Outsourced selling cannot be controlled like personal sales team of the company. Companies may not be able to keep track of the reseller performance in selling the goods/services. Reseller may be interested in his own profit and may encourage the customer to buy other products as he/she may receives more share/profit/commission by selling other products.

2.3.2.4 Post-purchase Activities The post purchase activity begins after successful closure of the sale. This phase includes delivery of the product/ service, installation (if required), providing more

information about the features and finally collecting the payment. This phase can also include after-sales service. The primary objective of this phase is to win customer loyalty so that he/she would be a regular customer of the brand/product. As discussed earlier, some functions in this stage like providing information, delivery of product and installation can be done by the company itself or with the help of a reseller. After sales service plays an important role in creating the customer loyalty. It can be as simple as addressing the customer problem on the telephone line or may be a personally visiting the customer premises to resolve an issue. In B2B deals, postpurchase activities can include installing the product or service and then providing training for the uses of the product/service of the company until they understand the new product/service. Understanding the post-purchase behaviour by the sales team is an important task if the company looks for repeated business for a long term relationship with customer.

Post-purchase Dissonance “Did I buy the right one?”

Negative Evaluation “It doesn’t work well”

Consumer Complaints “I’m calling the store.”

No Purchase Purchase “This is the one I want” .

Usage “I found another for use…”

Product disposal “Can I trade this in?”

Repurchase

Positive Evaluation “It works well”

Source: Small business management: an entrepreneurial emphasis By Justin Gooderl Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich, page no: 298 This model explains that activities like post purchase dissonance is a type of cognitive dissonance which would arise after the purchase decision is made and customer has

thoughts of other products as an alternative. This can create a negative effect on the evaluation and satisfaction level with the product/ service. So, sales people should try to find ways of maintaining this cognitive dissonance among customers. SAQ 2 1) If you are in need of an anti-virus product, identify the typical purchasing process you would follow. 2) If you are a sales representative for kitchen chimney products, what sort of interest creation activities would you employ if the customer is not interested?

2.4 Summary In the previous unit, we discussed various marketing and sale approaches followed by the companies. In this unit we have understood the importance of segmenting and targeting in identifying the customers. We have understood how the customer would purchase the product/service starting with the recognition of needs, evaluating options, making the purchase decision and finally implementation and evaluation of the product after it is delivered by the sales representative. It is the job of the sales person to help the customer in handling the purchasing process of the customer. We studied the essential activities of the sales person in handling the customer and making a deal. We understood how interest can be created in the product/service in various ways. After the interest is created it is time for the sales representative to handle the pre-purchase activities like giving sufficient information about the product/service and describing the benefits. The next stage would be purchase activities where the sales representative would be aiming at closing the deal successfully by negotiating and finalizing the payment terms. Finally the post purchase activities would include delivering the product/service, collecting the payment as per the terms and providing after sales service. Finally, we discussed that for repeated business with customers, it has become extremely important to handle the post-purchase behaviour of the customer as more and more alternative products/services are available for customer.

2.5 Keywords

1) Reseller

Company or an individual who purchases the products/ service with an intention of selling them to other customers on behalf of the company.

2) Potential Buyer

Buyer who is interested in buying your product/service, but may not necessarily buy it.

2.6 References 1. Andris A. Zoltners, Prabhakant Sinha, Greggor A. Zoltners (2001), “The complete guide to accelerating sales force performance”, Amacon, New York, USA. 2. Justin Gooderl Longenecker, Carlos W. Moore, J. William Petty, Leslie E. Palich (2006), “Small business management: an entrepreneurial emphasis (13th Ed.)”, South Western, USA. 3. Rajan saxena (2006), “Marketing Management (3th Ed.)”, Tata Mcgraw-Hill, New Delhi, India. 4. William L. Cron, Thomas E. Decarlo (2006), “Dalrymple’s Sales Management (9th Ed.)”, John wiley & Sons, New Delhi, India.

2.7 Suggested Readings 1. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”, Prentice Hall, New Jersey, USA.

UNIT 3 PERSONAL SELLING Structure 3.1 Introduction Objectives 3.2 Personal selling as a marketing communication tool 3.2.1 Personal selling and other communication tools 3.2.2 Advantages and Disadvantages of personal selling 3.3 Personal selling activities 3.3.1 Pre-approach activities 3.3.2 Approach activities 3.3.3 Presentation activities 3.3.4 Objection Handling 3.3.5 Closing the sale 3.3.6 Follow up activities 3.4 Summary 3.5 Keywords 3.6 References 3.7 Suggested Readings

3.1 Introduction In the previous unit, we examined a typical purchasing process of the customer and the essential activities of a sales process. In this unit we will study about the steps involved in handling the personal sales. We first define personal selling and understand how it is differs from the other marketing communication activities like advertising, public relations, sales promotions and direct marketing. Personal selling is one of the oldest communication techniques practiced by companies. Personal communication involves a person-to-person communication and is considered to be one of the best marketing tools due to the involvement of human element which helps to build up a long-term relationship with the customer understand the various activities involved and understand the importance of customer relationship management for future sales potential. Not every marketing communication tool is the best at all times. In this unit we shall understand the advantages and disadvantages of personal selling. Personal selling would achieve success easily when it is supported by other marketing tools like advertising or Public Relations. Objectives After studying this unit you will be able to:1) Define personal selling and how it differs from other marketing communication tools 2) Explain the advantages and disadvantages of personal selling 3) Understand various activities involved in handling personal sales. 4) Understand the importance of customer relationship management, in obtaining future sales opportunities.

3.2 Personal Selling as a marketing communication tool Definition: Personal selling can be viewed as a marketing communication tool that involves a one-to-one communication, which can happen in the form of face-to-face communication, over the telephone line, through video conferencing or by an email. 3.2.1 Personal selling vs. other communication tools Personal selling is different from other marketing tools such as advertising, sales promotions etc. Advertising is a communication tool which targets many consumers simultaneously. Unlike advertising, personal selling is targeted at an individual prospect and develops the relationship. Advertising aims at a group and is non personal where the communication primarily relies on the media. AMA defines sales promotion as “Media and non-media marketing communication employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improves product availability”. The major difference between sales promotion and personal selling is that the latter is a non-personal way of communicating with the customer. 3.2.2 Advantages and disadvantages of personal selling Every communication tool serves the purpose of the company’s objective to increase its sales. However, in doing so, some communication tools work better than others for the business. Each and every tool like personal selling, advertising, sales promotions etc have their advantages and disadvantages. Advantages of Personal Selling a) Flexibility in delivering the message If the customer doesn’t understand the message conveyed by the sales representative, then the message can be modifies and conveyed to the customer again. Since a sales representative interacts with one potential customer at a

time the messages can be tailored and delivered as per the customer needs. This flexibility is not available in advertising which happens through the television, newspapers, magazines, window displays etc.

b) Efficient way of communication Personal sales is a two way communication process which allows for the efficient dialogue between the customer and the sales representative. It would be easy to know whether the customer has really understood the communicated message about the product/ service. The feedback would be immediate by the customer in personal selling, which would helps the sales representative to know whether the sales approach is working or not change the approach accordingly. In other promotional tools like advertising which rely on one way communication, would not guarantee that the customers have understood the communicated message.

c) Building long term relationships Being a two-way & one-to-one communication, personal selling certainly has an added advantage over other communication tools in building long lasting relationships of customer.

d) Better access to various target segments Not all the target groups can be reached with advertising, sales promotions, and public relations. In such cases personal selling would help to reach out to the customer and inform about the product/ service. For instance if the company deals with B2B markets or with the CEO of a company, personal selling would be a better communication tool than advertising or sales promotion. In B2B markets, the sales process involves a lot of communication time and hence a high level of two way interaction is required making the personal sales a practical communication tool.

e) Complex information delivery

In personal selling, greater amount of complex information like technical features of the product can be conveyed easily in comparison to other communication tools. Since numerous meetings can happen between the customer and the sales representative, there is ample time available to explaining all the features of the product. Disadvantages of Personal Selling a) High costs per sale Personal selling can’t be applied to all the products even though it might be efficient in building the long lasting relationship with the customer. Cost per sale plays an important role in deciding the personal selling as a communication tool by the companies. Personal selling would be applied if the cost per sale is justified like Insurance products, loan products, credit card sales, personal banking products, high value kitchen appliances like dish washers, water purifiers, chimneys etc., in which the benefits from the customer to the company are more than the costs that are incurred for the sale to happen. Low value products can not be dependent on personal selling unless it is a repeat purchase by the customer and long-term profit is justified for the cost incurred.

b) Misunderstanding by the customer Many people prefer to buy the product/service from a store rather than buying it from a sales representative who visits home. These customers might have experienced the aggressive behaviour of sales people in the past and may be determined not to buy any product from them. Customer might lose trust on the sales people due to this aggressive behaviour, Hence, it is the responsibility of the sales people to focus in making the customer happy rather than pushing aggressively for the sale. SAQ 1 1) Explain the benefits of using personal selling as a communication tool for selling loan products.

2) If you are the sales manager for a FMCG product like tooth paste, which one would you prefer among personal selling or advertising to increase the sales? Explain the reason for your preference.

3.3 Personal Selling process activities Sales representatives of a company would have to follow a sales method, which help in dealing better with the customer. Various stages are involved in conducting a prospect to a buyer of the product/ service. Personal selling generally involves six steps as described below:a) Pre-approach activities b) Approach activities c) Presentation d) Objection handling e) Closing the deal f) Follow up The above mentioned steps are just a general way of understanding and the number of steps may vary from company to company. Let’s understand these in detail. 3.3.1 Pre-approach activities This includes all the activities a sales representative would perform before actually meeting the prospect. These activities may include the following: Knowing the details about the product/ service which is to be sold  Knowing about the company which the product/ service represents  Knowing the details of the prospect like name, family background, income status, employment, credit history etc  Knowing the right place and time to meet the customer  Knowing the right approach in getting an appointment with the prospect

 Identifying which products/ services are to be presented to the prospect and keeping sufficient manuals/ technical documents

The level of activity depends upon the type of customer or market. If the sales are for the B2B market, then sales representative needs to have all the necessary documents which clearly explain all the technical details or benefits about the product/ service. If the sales are for the high value products like loan products, then knowing the credit history of the prospect is an important task. Knowing the right time, place and approach will be important if he/she is selling to top-level corporate like CEO of a company. Often people encounter sales representatives who come to sell the product/ services without even knowing the complete benefits or technical details. It is the job of the sales representative to clearly know the benefits or details of the product and also the about the company which they work for. We already studied in the previous unit that the actual closing of the sale may not be necessarily handled by company’s sales representative. The sales process may be outsourced where the reseller will sell you the product/ service. In such cases the reseller must have a clear idea about the company for which he/she is selling the product/ service.

3.3.2 Approach activities After identifying the prospect and gathering necessary information, it is time to interact. It is said that the first impression would last longer and is critical for any future meetings. The aim of the sales representative should be in gaining attention of the customer and stimulate his interest in the product/ service. Opening remarks would play a major role interest creation. Sales representative start introducing his/her name and the company which they represent. Later on, they proceed with the product/ service which the sales representative have in to offer. Interest can be created by citing product benefits, giving referrals, repeated calling etc. In B2B markets, if you are the sales representative selling a workstation to the IT firm, a single meeting wouldn’t be enough in getting to the presentation stage, so repeated calling would be required. It is the aim of the sales

representative to create enough interest to transit to the presentation stage. In brief the task of a sales representative in this stage can be summed up as following: Gaining prospect attention  Interest creation in the product/ service  Gathering more information about the prospect  Successful transition to the presentation stage

3.3.3 Presentation activities This is the stage where the sales representative will work to his level best to convert the prospect to a customer. The desire for the product/ service needs to be created by handling the presentation carefully. So this is a critical stage and if the presentation is not done effectively, the prospect might not be interested in listening to the presentation. We need to set the environment in the first few minutes of the presentation and get a positive impression. Often when we walk into an office for presentation, the prospect would be busy in middle of some work, so it’s very important to get his attention in the first few minutes. Just as people often judge the book by its cover, in the same way looking at the sales representative people decide sometimes whether to entertain the presentation or not. Attire and grooming of the sales representative like clothing and grooming are very important. It is important to deal with a positive attitude while making the presentations. If you are dealing with PowerPoint slides, then there are some general guidelines which you have to follow in making the slides. We shall discuss more about this stage in subsequent units. Finally, to sum up, the important activities that you as a sales representative would perform in the presentation stage are as follows: Introduce yourself and the company by giving a business card  Create an atmosphere for gaining the attention of the prospect  Deal ethically with a positive attitude and never give any negative comments like those who didn’t buy this product/ service are suffering and so on

 If you require more information about the prospect company then state the reason for the same. For instance, if you want to know the number of staff or the type of customers handled by the prospect, then provide a reason for the same.  Ask some interesting questions in between just to check whether the prospect is really listening to what you say in the presentation In most of the cases, presentation stage would is not said to be successfully completed if the objections that arise from the prospect side are not handled properly. So in the next stage we understand about the objection handling.

3.3.4 Objection Handling Handling sales objections is as important as making a good presentation for the prospect. Objection handling is about handling the objections of the prospect when he/she says no the product/ service stating a reason. The prospect may say no, due to some of the following reasons: The product/ service which is offered is more expensive than other similar products in the industry  Prospect may not interested in particular feature of the product/ service  Prospect may not have fully understood the benefits  Prospect might not be interested in making a decision in buying a product in the first meeting itself  Prospect might be willing to test you or need more information on the product/ service to be satisfied

It is the job of the sales representative to know the exact reason for the objection and handle it carefully. “Prevention is better than cure”, it makes sense in this context as it is better to handle the presentation well, before discussions lead to the above mentioned objections by the prospect. So it is important that the sales representative have a check-list of the possible objections which can arise during the presentation. It is also important that the companies provide the checklist and train its sales persons in handling situations when the objections arise.

Sometimes even a well trained sales person might go wrong in handling the objections as he/she might lose temper or may be for some other reason. So it is very important to know the ways in which the objections can be handled. Darryl Davis in his book “How to be a power agent in real estate” describes Ten Commandments of handling objections. Some of them are as follows: Objections shouldn’t be taken personally  Objections should be looked as an opportunity to increase your skill set in handling them. As Warren Buffet who is the greatest investor and one of the richest persons in this world says in his autobiography, “ success is a terrible teacher, because you only learn from your failures”  Take your time when handling objections and do not rush into giving an answer for the objection.  The better you present, the less number of objections arise in the later stage of your presentation.

So objections should be thought of as an opportunity in gaining more attention of the prospect and should be handled carefully. After the objections are handled properly there should a smooth transition into the next stage “closing the deal”

3.3.5 Closing the deal After successful presentation and effective objection handling it is time for the sales representative to close the deal by obtaining a purchase commitment from the customer. Various closing techniques can be employed by the sales representative in requesting an order for the product/ service. Sales representative must know the right time for closing the deal during the presentation. If closing technique is used at an appropriate time during the presentation, an objection may arise from the prospect. Sales representative can know the right time by observing the prospect carefully and looking for some buying signals from prospect such as: Positive statements about the product/ service  Enquiry about other customers who are using the product/ service  Willingness to test the product/ service

 Discussion with finance team about the product  Enquiry about the warrant period, price, installation time, after sale service etc  Playing with the company order form and a pen  Enquiry about the discount rates  Enquiry about the terms, mode of payment and any installments provided.  Enquiry about any loan facility is available with the product

The list can include many more items and it is the job of the sales representative to know the right time for closing the deal. After identifying the right time, we can apply some of the closing techniques as described by Ralph W Jackson and Robert D Hisrich in their book “sales and sales management". Some of them are as follows: Trial close: This technique can be used at any stage during the presentation. Once some buying signals are identified, the sales representative should attempt a trial close and see if a positive response is received from the prospect. If a positive response is received then he can go for closing the deal. If he is selling a car to the customer, the trial close can be “Would you be interested in buying a Maruti Alto or Zen”. If the prospect says any one of them, you can proceed with the actual closing and discussing the terms and payment methods of the product.  Asking for an order: This includes directly or indirectly requesting the prospect to make the purchase.  Assumption close: In this the sales representative assumes that the decision to buy is already made by the customer and proceeds to close the deal. For example he can say “Having found the product/ service to be beneficial, when would you like it to be delivered?”  Summary-of-benefits close: Here the sales representative summarize the benefits of the product/ service and then go for the sale.  T-account close: This includes describing the advantages and disadvantages of the product/ service by putting them side by side in a T-table format. This form can help the prospect easily understand about the product/ service.

 Special deal close: Here the prospect would be given a one-time special offer on the product/ service such as “We would like to offer a 15 percent discount if you place an order for the product/ service today”.

If you are interested in various other closing techniques, you may refer to the books listed in references and suggested readings. Various problems might arise during closing, such as the sales representative having no idea of how many times does he/she have to attempt a closing technique. Another problematic situation would be a “No” from the customer after using a closing technique. After using a trial close, if you find the prospect is not giving enough response or says no, then try to use another trial close. There isn’t any fixed number but another two to three times can be reasonable after the first trail close. This wouldn’t offend the prospect if it is done professionally. Most of the sales wouldn’t happen in the first closing, especially if it is for B2B markets. So, maintaining a calm and positive attitude would work for the sales representative in closing the deal. After closing the deal, the next activity in the personal sale would be follow-up after the sale.

3.3.6 Follow-up activities If you are a sales representative, your duty doesn’t finish once the deal is closed and the order is received by the customer. It is your job to ensure that the customer is fully satisfied with the product/ service. If there are any problems faced by the customer, it has to be resolved by identifying it and referring to the right team in the company. We face such problems a lot when we deal with technical products. You might have promised certain features of the products and those features might be interpreted differently by the technical team in the company. As a result, some of the features wouldn’t be made as per the customer requirement, resulting in low customer satisfaction levels. It is your duty as a sales representative to ensure that these problems are resolved and make sure the customer is satisfied. It is very important to understand that customer satisfaction is very important, because it has direct effect on

loyalty and trust. Low customer satisfaction levels may make it difficult for you to have future sales possibilities and repeated business. Companies do know the value of a customer when he/she is lost. In most of the businesses, making a sale to a new customer is a costly affair when compared to making the sale for an existing customer. So the follow up techniques plays an important role in maintaining the relationship between the customer and the company. Repeated calling to know how the products/ services have benefited the customer would work in keeping up the relationship. During these calls, you can describe the new products/ services launched by your company and try to get a sales opportunity. Let’s understand with an example, some of the important follow-up activities that can be associated after closing the sale. If you are selling a software product to the telecom company, like a billing management software which would help in managing the bills of the subscribers, various follow up activities may include as follows: Checking the date of delivery and ensuring the product is delivered.  Ensuring that the product is installed properly in the required number of systems  Making a call to find out how comfortable are the employees with the product  Identifying if any training is required for the employees in handling the product  Providing necessary information on who to contact if any technical problems arise in future  Repeated calling after some period as per the company guidelines, to know for any problems and try to describe about any new products/ services launched

SAQ 2 1) Explain various pre-approach activities you would perform, in selling a post paid mobile connection to a corporate employer. 2) If a customer says that he/she would consider buying the product/ service, if the price is decreased, then as a sales representative what type of closing techniques would you use? 3) If customer appreciates the product and has some problem with the high price of the product, then what type of closing techniques would you use as a sales representative?

4) Having successfully closed the deal for a washing machine with the customer, what type of follow-up activities would you perform?

3.4 Summary In this unit, we have understood the importance of personal selling as a communication tool for the company. We have understood how advantageous it would be in improving the customer relationships with personal selling. As every communication tool has certain disadvantages, we have looked into various disadvantages of the personal selling. It is essential that every sales person would follow certain steps in making a sale, so as to create standardization in the sales method. Hence, we have understood step by step, the various activities that involve in a personal selling. We studied how pre-approach and approach activities would help in getting an appointment for presentation. During the presentation, it is important to grab the attention of the prospect in the first few minutes and handle objections carefully. We have discussed various objecting handling techniques and then discussed about closing techniques which help in closing the deal. Getting an order doesn’t end the job as follow up is very important to gain the customer trust and loyalty which would help a repeat business. We have finally understood the importance of existing customer to the company, as it would be difficult and costly to sell the product to the new customer rather than selling to an existing customer.

3.5 Keywords

1) Prospect

A prospective buyer in short a prospect, is an individual or a company who has the potential

to become your potential customer if handled properly by the sales representative. 2) Public Relations (PR)

Activities that are performed by the company to maintain

relationship

with

its

employees,

investors, customers and general public.

3.6 References 1. Darryl Davis (2003), “How to be a power agent in real estate”, Tata McGraw-Hill, USA. 2. Ralph W. Jackson, Robert D. Hisrich (1996), “Sales and Sales Management”, Prentice Hall, New Jersey, USA.

3.7 Suggested Readings

1. William L. Cron, Thomas E. Decarlo (2006), “Dalrymple’s Sales Management (9th Ed.)”, John wiley & Sons, New Delhi, India. 2. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo (2004), “Sales Management”, John Wiley & Sons, New Jersey, USA.

UNIT

4

COMPUTER

APPLICATIONS

IN

SALES

MANAGEMENT Structure 4.1 Introduction Objectives 4.2 Customer Information Management 4.2.1 Traditional ways of maintaining information 4.2.2 Contact management softwares 4.2.3 Sales Force Automation 4.3 Customer Relationship Management 4.3.1 Microsoft Dynamics CRM 4.3.2 Open Source CRM Applications 4.4 Summary 4.5 Keywords 4.6 References 4.7 Suggested Readings

4.1 Introduction In the previous unit, we understood the advantages of personal selling and its various activities involved in making a sale. We understood the importance of knowing the customer before approaching him for a presentation. We also discussed about the

various steps which can ensure a successful closing of a sale. In this unit we examine how computer applications can improve the effectiveness of the sales method and generate more leads to the business. Due to continuously expanding nature of business, it is very important to keep track of customers, an activity which used to be performed with pen and paper. With increasing size of business and the competitors, it is advantageous to speed up the activities in the sales process, so that more leads can be generated to the company. This is where computer technology comes in, to make the processes effective and also to help in increasing the efficiency of sales representatives in generating leads. Various technologies have been discussed in this chapter to give you an idea of what are the current practices followed up in using technology as an important tool in sales process. We shall also discuss what type of computer applications are used by the sales representatives in the field, while interacting with the customers and types of applications that are used by the sales managers in monitoring their sales team and measuring the goals. It is identified in many companies that sales representatives spend only 20-30 percent of their time in selling activities. Most of the time ends up in performing administrative functions like coordinating the day to day meetings, checking the status of product that needs to be delivered, travelling, training etc. So it is very important for the companies to use the computer applications in reducing wastage of the resources in non productive functions.

Another major problem which companies face in today’s

world is attrition. We shall discuss how computer applications can help in resolving of the problems which arise when a sales representative leaves the company. Finally we shall identify if there are any disadvantages associated in with use of these computer applications that to help sales activities. Objectives After studying this unit you will be able to:1) Identify the importance in maintaining the updated database of the customer

2) Understand the role played by contact management software in improving customer relationships. 3) Explain the role of SFA in managing sales activities 4) Explain the benefits of the CRM software with the help of Microsoft Dynamics and Sugar CRM.

4.2 Customer Information Management Maintaining customer information is an important task to every business. Customer information may include some of the details like: Name of the customer  Address of the customer  Mobile/ landline/ fax numbers, e-mail, website address etc  Last date of meeting  Minutes of meeting  Future meeting schedules or follow up activities  Products/ services used  Products interested in future  Preferred time of calling  Any problems faced in the past  Customer rating about your company products/ services if provided The list can be much more depending upon the customer, so maintaining such list is an important task of the sales representatives. Let us understand some of the

disadvantages and preventive measures to be taken in the case of improper management of customer information. Some of them include: Address of the customer: If the address is not properly updated time to time, the sales representative might find difficult in locating the customer when needed to send some promotional offers or information about the new products/ services launched by the company. So he should try to get both the residential and office addresses.  Mobile/ landline/ fax numbers, email: This information helps us in giving choice to the customer for contacting

him the customer. The sales representative

should try to get as many contact details as possible, so if mobile numbers is changed then we can use landline as an alternative in contacting the customer.  Minutes of meeting: Improper entry or no entry about the minutes of meeting can create many problems such as frequently asking the same questions for customers which you have already discussed in previous meetings or you may try to sell the same product/ service which the customer refused earlier. So maintaining proper minutes of meeting can resolve such problems.  Preferred mode and time of contact: Nowadays customers are too busy and prefer to interact in a particular time on a particular number. Some of the customers prefer only emails. It is your job to maintain such information to avoid any contact during their inconvenient times and places. These mistakes can be very serious which can make you lose the customer permanently. 4.2.1 Traditional ways of maintaining information The way how customer information is maintained may vary from business to business. The traditional way of maintaining customer information is by noting it down on a paper. This way of recording the information worked well when the business were small, having few customers and few competitors. But today as the business grows with both customers and competitors increased in the market, companies can’t just rely on the

traditional way of maintaining information. Some of the problems which can arise by this method are: If you are having the data of customers, it would take lot of time in converting that data into information such as who is my potential buyer? By the time you identify them, customers might be using your competitor’s products/ services.  There is every chance of misplacing the papers containing customer information and to add for this problem, if your sales representative quits, then the contact information would be difficult to retrieve  More and more sales force would be required to maintain the database as the customers increase. Hence it’s important to find an alternative way to for maintain the data. Customers expect faster processing of their requirements. So, it would be better to use the computer applications that are available to speed up the sales process and maintain the customer information effectively. 4.2.2 Contact Management Software To decrease the workload in maintaining customer information, various contact management softwares are available in the market. These softwares help the sales representatives in getting a complete picture about the customer with a single touch. You get access to all the critical data of the sale such as customer contact information, minutes of meeting, relevant technical documents if any, partners associated with the sale, future meeting schedules, important deadlines etc. in a single screen. These softwares provide easy updating and avoid any discrepancies in data such as multiple entries. These softwares can help in minimizing the mistakes that can happen during the customer interaction and help in building stronger, long-lasting relationships. If you are interacting with customer on the phone, you may use simple contact management software in your computer, such as the address book provided by windows. Sometimes it wouldn’t be practical to carry your computer especially when

you are at customer premises. Keeping this in mind, many software vendors providing software applications which can be used in your mobile or PDA. Contact management software can be used by the off-site sales representatives who are in the company and also who are on-site at the customer premises. Most of the times companies buy contact management software which would suit for their requirements. Some features which you must check while buying such software products are: User friendly screens  Faster access to customer information  Easy-to-understand the functions by sales representatives i.e. less training requirement for adoption  Having multiple views of the data, such as the total customer list, elite or platinum customers, prospect list, recent customers list etc.  In today’s world every customer is having an email facility, so it is important that the software would support email, fax, and call facility as per the scheduled time with customer, group mailing when new products/ services launched etc.  Required information access in a single touch The picture below helps us in understanding how a contact management application looks like. This is Microsoft outlook new contact entry screen when you can enter customer information like name, phone numbers, mailing address and much more. You can see the call facility provided where you can call the customer, business card and pictures can also be updated, you can add up reminders and schedules with the customer in the follow up tab, you can locate the customer address suing the “map” button and so on. This interface provides you a clear picture how contact management software looks like. There are also many custom made contact management softwares where you can approach the software vendors and create one for you.

4.2.3 Sales Force Automation In today’s competitive world, managing the sales representatives is as difficult as managing the customers. Contact management softwares can be very useful if the customer is handled by the same sales representatives all the time. In reality this is not the case, as companies face high attrition rate due to more opportunities for sales representatives in the industry. Some companies have 100% attrition within a year. What would happen with the customer if the sales representative leaves the company and the customer is handled by other sales representatives? The problem can be severe if the sales representative leaves the company without notifying and company has no idea with the latest customer information the sales representative was handling. Many problems may arise when the customer faces a new sales team. Customers would have to state all the requirements, budgets, features, payment details to the new

sales team, a process which can be time consuming and creates dissatisfaction among customers. This scenario demands a computer application which will not just maintain the customer information in the sales representative computer, but can also report the latest information to the sales manager in the company. This is where the implementation of sales force automation (SFA) software is required. SFA connects all the sales representatives contact management software with a central database for reporting. Various advantages of SFA include: Centralized data base for retrieval and updating customer information  Information sharing is the biggest advantage  Company has access to all the latest information about the customers  Sales team can be more responsible in entering right data, as company can track when the data was updated and by whom  Data can be accessed anywhere irrespective of the location either using wired networks like LAN, WAN or wireless networks like Wi-Fi.  Sales team can work from home whenever required as data can be accessed anywhere  Since all the customers data stored at one place, it would be easy to know the efficiency of the sales teams, status of the targets and less duplication of the data  Due to centralized data, many departments can access the customer data so multiple sales to the same customer by different teams can be avoided thereby using the time more efficiently.  Matching the new products/ services to the entire customers can be done easily as the data is centralized

Having discussed with many of the advantages, let’s look at some disadvantages mentioned below: Complex screen may not be user-friendly for all the sales representatives and they may find it difficult to work  Require continuous management and back-up facilities if the data crashes.  SFA applications may be costly for the company where the investments need to be justified implementing one.  May be difficult to integrate with other legacy systems in the company SFA applications are integrated and became a part of another system namely customer relation management system which aims to be the ultimate solution to manage the entire sales process. SAQ 1 1) Explain the benefits of using contact management software over traditional ways of maintaining information. 2) Explain how SFA car help your company if attrition rate is high

4.3 Customer Relationship Management (CRM) SFA can be thought as a subset of CRM. SFA deals with data of the customer during sale interaction where as CRM deals with automating all the customer related data related to the sales, marketing, customer care, technical, finance, human resource departments. CRM systems highlight the importance of integrating sales with other business functions. “Sales force management” written by Johnston and Marshall (2009) provides more insights into the use of CRM systems for an organization. In their book CRM is defined as “ any application or initiative designed to help your company optimize interactions with customers, suppliers, or prospects via one or more touchpoints such as

call

center, sales person, distributor, store, branch office, web or e-mail for the purpose of acquiring, retaining, or cross-selling”. Sales and marketing have goals in common, yet marketing blames sales for not performing duties effectively, in turn sales blames marketing for their poor strategies and lack of knowledge about the situations in real world or it may blame HR department for not providing sufficient man power. So, it is time to stop this blame game and work collectively to deliver growth by focusing on the customers. CRM aims at putting the customer at the center of the business process. In a client meeting you see not only the sales representative but also may see members from marketing, finance, technical departments participating. A system is required to be in place where all these business operations need to be aligned. This is where the CRM applications come into picture. Let’s now look at some of the CRM applications which are used by the companies. 4.3.1 Microsoft Dynamics CRM

Source: http://en.wikipedia.org/wiki/File:Microsoft_Dynamics_CRM.gif

Microsoft Dynamics CRM provides applications which focuses on sales, customer service and marketing departments. Let’s understand the benefits of these applications in brief as stated in their website http://crm.dynamics.com:a) Sales Department: The CRM application for sales department is the SFA which provides the following benefits: Improved sales planning and management  Automating the lead system  Managing sales opportunities effectively  Streamlining account management  Boosting sales productivity  Enhancing sales pipeline management  Simplifying workflow processes  Mobility in accessing customer data in real-time  Analytics for improved decision making b) Customer care: The CRM benefits provided for customer service include the following: Improved account handling  Managing or resolving customer cases efficiently  Simplifying contract management  Knowledge management to store the staff experiences as a repository  Streamlining the schedules  Automating workflows

 Mobility features for data  Analytics for customer service c) Marketing Department: Some of the CRM benefits provided for marketing department include the following: Streamlining campaign planning  Managing events efficiently  Improved response management  Automating workflows  Analytics for marketing  Pinpointing the marketing efforts by instantly segmenting customers or prospects  Managing data effectively  User - friendly  Require continuous management and back-up facilities if the data crashes. For more information you may refer the website. We have discussed this Microsoft Dynamics CRM to give you a clear idea of benefits of the CRM in general. Disadvantages of CRM would be in similar with SFA systems as SFA is the heart for CRM of sales. Some disadvantages include: CRM applications may be too costly for an organization to implement  It might take time to implement the system  Difficult to integrate with legacy systems Since cost can be a major factor for most companies in implementing CRM, let’s now look at some open source softwares which are there in the market.

4.3.2 Open Source CRM applications Open source is defined by Cambridge dictionary as “software that is free to use, and the original program can be changed by anyone”. Many opensource applications flooded the market promising better CRM applications than the proprietary softwares. According to David Hakala (2008), Top 10 CRM applications designed in opensource platform are as follows:i) Sugar CRM Inc ii) SplendidCRM software Inc iii) CentricCRM iv) Hipergate v) Compiere Inc vi) Vtiger CRM vii) CentraView Inc viii)XRMS CRM ix) Cream CRM x) Tustena CRM More details about these products can be refereed from their respective websites. Let us now understand about various uses of Sugar CRM for the organizations:a) Sales Force Automation Sugar CRM applications helps the sales manager in handling various functions such as contact management, forecasting the revenues, managing accounts etc. The following diagram is a snap shot of how the contact information such as name of the employee, his/her designation or title, the account name handled and the contact information about the account.

Source: http://www.sugarcrm.com/crm/products/capabilities/sales/contacts.html This is just one of the view in which the data is represented and there would be multiple views such as arranging the list by the account name which displays the list of employees who are handling the account. The information can be viewed by the region or area wise which would display the list of customers according to the region and so on.

b) Marketing Automation Sugar CRM provides several functions to handle the various marketing activities like campaign management, email marketing, lead management, marketing analytics etc. The following picture would help us in understanding how the leads are managed. In the figure we can see that the entire leads the organization generated is categorized into different categories by the lead source like cold calling, purchases from existing

customer, public relations, direct mail etc. This sort of representation would gives us an idea of which lead source is more profitable and identify the lead source which is generating lowest revenue and plan according to improve the operations at that lead source. Opportunities by lead source by outcome would help the manager in understanding what part of the revenue is in qualification stage, proposal stage, closed or won stage, negotiation stage etc. Such a view will help us in understanding the performance of the lead source better.

Source: http://www.sugarcrm.com/crm/images/content_images/screens/marketing.jpg

Apart from sales and marketing automation sugar CRM also helps in providing and developing the customer support, reporting, platform and collaboration capabilities. For more information you may refer to the Sugar CRM website.

SAQ 2

1) Explain the importance of CRM in creating a customer centric organization.

2) Which one would you prefer among proprietary or opensource if you have a small organization and explain the reasons for the preference

4.4 Summary In this chapter we have understood the traditional ways of maintaining customer data. This way of recording worked perfectly fine when there were few customers and the business is small. With growing customer base, companies looked for computer application which can manage the customer information and present it back in a single touch. As the job opportunities improved, attrition became the major problem with some companies having 100 percent attrition rate within a year. In order to maintain customer information more effectively, companies started using sales force automation applications which as contact management software at its heart. In SFA the customer information is maintained at a central database rather than just in the computer of the sales representatives. This increases accountability as any wrong entry of data can be traced. We have discussed several advantages of SFA over just using contact management applications. Later on, the need for integrating all the business operations started with the use of CRM applications, which transformed the way how we used to see various departments like sales, marketing, human resource, finance, customer care and technical separately. Customer has become the center for all the business operations and we see today that in a sales meeting with customer, we find employees not only from sales teams but also from technical, finance, customer care, and marketing whenever necessary. We have finally understood clearly the benefits a Microsoft Dynamics CRM and opensource software Sugar CRM for the organizations.

4.5 Keywords 1) Analytics

It is the science of analyzing the data to arrive at meaningful decisions with the existing data.

2) Legacy systems

It is old or traditional methods, technology or computer softwares continued to be in use and are outdated as per today’s standards.

3) Proprietary Software

According to Cambridge dictionary proprietary means “relating to ownership, or relating to or like an owner. So, proprietary softwares are those made by the company and are sold under the legal rights of the owner.

4.6 References 1. David

Hakala

(2008),

“The

top

10

Open-Source

CRM

Solutions”,

http://www.insidecrm.com/features/top-open-source-solutions-121307/ 2. Haag, Stephen; Maeve Cummings, Donald J. McCubbrey, Alain Pinsonneault, Richard Donovan (2006), “ Management Information Systems for the Information Age (3rd Ed.), McGraw-Hill Ryerson, Canada 3. http://crm.dynamics.com 4. http://dictionary.cambridge.org/dictionary/british/open-source 5. http://en.wikipedia.org/wiki/File:Microsoft_Dynamics_CRM.gif 6. http://www.insidecrm.com/features/top-open-source-solutions-121307/ 7. http://www.sugarcrm.com/crm/products/capabilities/sales/contacts.html

8. http://www.sugarcrm.com/crm/images/content_images/screens/marketing.jpg 9. Mark W Johnston, Greg W Marshall (2009), “Sales force management (9th Ed.)”, Tata McGraw-Hill, New Delhi, India.

4.7 Suggested Readings

1. Bryan P. Berg(2002), “Essentials of CRM: a guide to customer relationship management”, John Wiley & Sons Inc, New York, USA 2. Douglas J. Dalrymple, William L. Cron, Thomas E. DeCarlo. (2004), “Sales Management”, John Wiley & Sons, New Jersey, USA.

UNIT 5 COMMUNICATION SKILLS Structure 5.1 Introduction Objectives 5.2 Communication Defined 5.2.1 Definitions of Communication 5.2.2 Forms of Communication 5.3 Communication Process Models 5.3.1 Aristotle communication model 5.3.2 Lasswell’s Communication model 5.3.3 Shannon and Weaver communication model 5.3.4 Schramm’s Interactive communication model 5.3.5 Transaction communication model 5.4 Effective Communication Process 5.4.1 Identifying the sender 5.4.2 Identifying the receiver 5.4.3 Identifying the right messages 5.4.4 Identifying the right channels 5.5 Summary 5.6 Keywords 5.7 References

5.8 Suggested Readings

5.1 Introduction In the previous four units, we have understood functions of the sales manager, activities that are performed by a sales person in handling the sale, comparison between various types of sales and the computer applications which assist the sales person in handling sales effectively. An important factor which can improve the efficiency of the sales team and increase the chances of successful closing of the sale is the “Communication Skills” of the sales person. Good communication also helps in faster relationship building with the customers. We all know how important communication plays in making the customer knowledgeable about the products/services. We ourselves end up many-atimes buying the products/services when felt satisfied with the communication of the sales people without even looking for all the advantages and disadvantages about the products/services. A lot of excellent products/services end up with not many customers when the sales people lack the required communication skills. Hence, for the sales manager it is advisable to know the good communication skills that are required by the sales people for selling the product/services and provide necessary training. However small or big the product/service is, in terms of cost or features, communication skills of the sales people will play a major role for success in the market place. In this unit, we shall identify different forms of communication that are used in today’s world by the sales representatives. We shall do a study on advantages and disadvantages of using various forms of communications. We shall examine what constitutes an effective communication process. We shall also discuss various communication models described by various scholars. Objectives After studying this unit you will be able to:1) Understand the definition of communication

2) Understand the advantages and disadvantages of verbal and nonverbal forms of communication. 3) Explain various communication models 4) Identify various issues in selecting the right sender and receiver 5) Identify various issues while creating the right message for the receiver/customer 6) Explain the importance of selecting the right channel during the communication process

5.2 Communication Process Communication is the process in which the sender tries to convey a message to the receiver. Let’s see some of the definitions of communication from oxford dictionary and by various scholars as mentioned by Sri Jin Kushal (2009). 5.2.1 Definitions of Communication 1) Communication as explained by “Oxford dictionary” is the imparting or exchanging of information by speaking, writing, or using some other medium. 2) According to Louis A. Allen, “Communication is the sum of all the things which a person does when he wants to create understanding in the mind of another. It involves a systematic and continuous process of telling, listening and understanding.” 3) According to Newman and Summer, “ Communication is an exchange of facts, ideas, opinions or emotions by two or more persons” 4) According to Theo Haimann, “ Communication is the process of passing information and understanding from one person to another….It is the process of imparting ideas and making oneself understood by others”

What we understand by the above definitions is that the communication is a process of exchange of the information between sender and the receiver. In sales the communication would be between the sales representative and the customer. 5.2.2 Forms of Communication Sri Jin Kushal (2009) explains that there are two main basic forms of communication, namely Verbal communication and the non-verbal communication.

Basic forms of communication

Non-Verbal Communication

Verbal Communication

Oral

Written

a) Oral Communication & written communication There can be many forms of oral communication as mentioned by the author, namely:face-to-face conversation, lecturers, meeting and conferences, interviews, telephone talks, grapevine, social and cultural affairs, seminars, radio and television. In sales call we mostly make use of meetings and conferences, face-to-face conversation, telephone, seminars etc. On the other hand written communication deals with sending letters, emails, faxes, sms on phone etc. Each form of verbal communication has its advantages and disadvantages and so it is advisable to use the right mix of both oral and written communication during the communication process for the sale.

b) Advantages and disadvantages of verbal communications (Oral and Written) Some of the advantages of verbal communications include: The ideas can be conveyed easily with oral and written communication  The ideas can be expressed without any misunderstanding between the sender and receiver using oral and written communication  Lengthy messages can be stated out accurately with the help of written communication  The feedback can be very quick while compared with non-verbal communications  It works well for technical presentations which involve lot of communication between the sender and the receiver c) Disadvantages of verbal communications (Oral and written) Some of the disadvantages include: Oral communication will not be suitable for lengthy messages, in such cases we have to make use of written communication  Oral communication may take long period of time  Oral communication may involve a lot of expenses  Oral communication cannot be performed when the sender and receiver are not available personally  Written communication cannot be deemed fit for visually challenged people and uneducated people  Feedback would take a lot of time in written communication

d) Types of Non Verbal Communication As mentioned in the book by Sadhana Gupta (2008), G.W.Porter divides non-verbal communication into four broad categories as shown below:Non-Verbal Communication

Physical

Aesthetic

Signs

Symbolic

 Physical category includes facial expressions, voice tone, sense of touch, sense of smell and body motions  Aesthetic includes conveying message through creative art like painting, music, dance movements, dramatics, sculpture  Signs include the sign language which is used for disabled people.  Symbolic implies making use of religious or status symbols e) Advantages of Non verbal communication There are various advantages and disadvantages of using the non verbal form of communication. Some of the advantages include: This form of communication works well with the hearing disabled people  The communication process can be done in brief and in shorter time  This form of communication will be useful if there are any language barriers  During this communication process, we can easily judge the personality of the??  This communication process helps to convey emotions easily by facial expressions

 If performed well using this communication process, there is a high chance of building a long-lasting relationship with customer f) Disadvantages of Non verbal communication Now let us look at some of the disadvantages of this non-verbal form of communication: If the sale is a technical product or service which involves lot of explanation, you may not do it just with the non-verbal communication process  The customer may misinterpret your communication process in non-verbal communication  This type of communication cannot be used everywhere  Customers might not be interested to communicate with you in the non-verbal communication process  It would be difficult to follow when there are cultural differences between the sender and the receiver  This form of communication can only be done when both the sender and receiver are engaged in personal communication. It would be possible on the phone or mail For more information on forms of communication you can refer to the books mentioned in reference section at the end of this unit.

5.3 Communication Process Models Various models have been designed to understand the communication process and to identify any areas of improvement by reducing the errors that occur in the process. Let us understand some of the models:-

5.3.1 Aristotle Communication model This can be considered as the basic and simplest communication model which has only three components as show below:Speaker

Message

Audience

This model mainly considers communication as a one way process from the speaker who tries to convey the message to the target audience.

5.3.2 Lasswell’s Communication model Lasswell introduce two concepts namely channel and effect into the model when compared with Aristotle model. This model is same as Aristotle which is delivered to the multiple audiences. This communication model has five major components as shown below:Who

Says What

To whom

In what channel

With what effect

In the model Lasswell included other channels apart from speech as the communication channel. Another new term is added “Effect” which acts like a feedback mechanism in which the receiver reacts to the message sent by the sender. 5.3.3 Shannon and Weaver communication model This communication model helps us to study the communication scientifically. It has five components as shown below:Information Source

Transmitter

Received Signal

Signal

Noise source

Receiver

Destination

This is a one way transmission and reception of messages. This model explains that during the process of sending the message from the sender to the receiver some distortions may takes place in the message, which is referred to as Noise. This model aims at knowing the source of such distortions and tries to minimize them for effective communication. 5.3.4 Schramm’s Interactive communication model In this model the communication process is described as an interactive process where the feedback from the receiver helps in altering the message accordingly by the sender and this process is endless. This model defines communication process as a circular process.

Source: Julia. T Wood (2010) Even though this model is an improvement over linear models, it still assumes that the sender and the receiver are different persons from each other. 5.3.5 Transaction communication model This model states that both the participants during communication process can be the sender and the receiver. It also explains that the level of communication varies over time when participants face new experiences and changing relationships during the communication process. It can be understood further with the following diagram:-

Source: Julia T. Wood (2010)

For more information on various other communication models you may refer to the books mentioned in the further reading section. Let’s now understand the various components of the communication process in detail.

SAQ 1 1) Define Communication 2) Write short notes on non verbal communication explaining its advantages and disadvantages. 3) Explain what are the advantages of verbal communications over non verbal communications 4) Explain Lasswell’s Communication model and its drawbacks

5.4 Effective Communication Process We have already studied various communication models and understood various components described in those models. Let’s now understand them in detail with the help of following communication process diagram:Sender

Message

Receiver

Sender receives

Message feedback

Becomes Sender

Fig: Communication model incorporating feedback Source: Chris Rose (2005) Here we must understand that the message and the feedback message are sent by some appropriate channel. Channel

Message

Message feedback

5.4.1 Identifying the Sender In business scenarios, sender can be an individual, group or the company who want to convey some message to the receiver. In a communication process, the first step would be to identify the sender. It appears that a sender will be sales representatives for the

sales process, but identifying the right sales persons for the customer is a difficult task. Depending upon the nature of sale, the sender will vary as follows: If the sale is for an individual customer and low priced product like FMCG good like shampoos, cooking items etc., then the company may appoint individual sales representatives as the sender in the communication process.  If the sale is for high priced products like washing machines, laptops, LCD TV’s etc, then the sender can be a single or team of sales representatives.  If the sale is for a high net worth individual like CEO of the company, then the sender will be a highly qualified person or team who can handle all sorts of objection handling during the communication process  If the sale involves an IT product for the company which may run into millions of rupees, then the sender will be mostly a team of members from various departments like technical, marketing, sales, finance, HR etc. Hence it is understood that the sender can be a single person or a team depending upon the complexity and value of the sale. 5.4.2 Identifying the receiver The receiver in business is audience which the company would be targeting to make the sales. In sales management, identifying the right audience is a complex task. Several steps will be followed by the company in identifying the receiver for the communication process.  The first step is to identify the market place i.e. the state or country or continent in which the company wants to do business.  After identifying the market, the next step would be to segment them into various categories appropriate to the product/service.  Customers or target audience are identified from the preferred segment and are involved in the communication process.

Often, companies end up giving promotional offers, advertising, sales calls to the wrong target audience/receiver in the communication process and end up with poor sales results. So identifying the right customer will be a challenging task. Once the right customer is identified he/she can be involved in the communication process for successful closing of the sale. 5.4.3 Identifying the right Message Message is the information which will deliver your idea to the receiver/customer. Message is what you communicate to the customer which will be explained during the communication process. The right message should be able to address the needs and wants of the customer. Various issues have to be addressed in creating the right message. Some of the issues include: Identifying the needs of the customer/receiver  Planning for the ideas which can resolve the customer/receiver issues. For example, if the customer problem is increasing printing costs in the company due to inkjet printer in use, then the idea would be why not upgrade the printer to a LaserJet which save time and cost per page.  After the idea generation, it is time to fabricate the idea into messages. In the above example, once you have identified installing LaserJet as an idea, you need to create appropriate presentations or any documents proving that it is the right solution for the problem of the company. This would be the message creation part of the communication process.  Now in some models you identify encoding as a part of message sent by the sender. Here encoding involves identifying the right amount of slides and text for the presentations, using the right amount words in the slides, appropriate number of slides in presentation, avoiding any words which can create misunderstanding due to any language and cultural gaps etc. We shall learn more about this in the next unit “Presentation Skills”.

 Try to design the message in such a way that you will make use of both the verbal and nonverbal communications.  While creating the message, it is important to understand the decoding part at the receiver end. When you convey the message to the receiver, they use their own style of decoding the message. It will be better to anticipate and know the thinking process of customer and move according while creating the message. For example, if you come to know that customer is looking more into the reliability and multi-functional capability in the printer like scan, automatic dual printing etc, then when you create the presentation or documents on the capabilities of your LaserJet printer it would be better to incorporate such details which the customer is interested and will be looking for.

5.4.4 Identifying the right channel You will come across two terms namely medium and channel in some communication models. The medium and channel in the communication process refers to the method and means by which the message will be communicated between the sender and the receiver. For example, if the message is to be conveyed by a written document, then the letter becomes the medium and the fax or postal service becomes the channel. In general channels can be fax, email, postal service, PowerPoint presentation, telephone etc. Identifying the right channel is very important as improper selection might lead to the complete failure of the communication process. Some of the issues that need to be addressed include: Before selecting the channel, try to find out whether the customer/receiver has the necessary facilities to use that channel. For example, if you plan to send a letter by email, check out whether the customer is having internet facility in his/her premises.  The right channel selection should depend upon the type of message you want to convey. For example, if you want to convey a very detailed technical document

which runs for more than hundred pages then the PowerPoint presentations would be a very bad choice. So in such cases it is advisable to use the written documents and send them through appropriate channels like email or postal service  Nowadays, many sales representatives rely heavily on PowerPoint presentations during the communication process. If this channel is appropriate for the message then make sure that you use not only the verbal codes but also the visual and vocal codes. Verbal code means the right text in the slide and vocal code means the right language you use while speaking and visual code includes any diagrams, animations or videos in the slides.  According to Cheryl Hamilton( 2000) , while interpreting the message the receiver/customer will rely more heavily on visual and vocal codes rather than the verbal code as illustrated in the below diagram:-

Source: Cheryl Hamilton (2008) SAQ2 1) Explain various issues which need to be addressed while selecting the sender for effective communication process. 2) Explain various issues which need to be addressed while creating the message for effective communication process. 3) Explain various issues which need to be addressed while selecting the channel for effective communication process.

5.5 Summary In this unit, we understood the various definitions of the communication as stated by different scholars. We identified various basic forms of communication namely verbal and nonverbal communications. We have also studied the advantages and disadvantages of these forms of communication. Hence it is advisable to use the right mix of appropriate verbal and nonverbal forms during the communication process. Later we have studied how the communication process models have evolved from a linear way into an interactive process to take care of the changing level of relationships and communications over time. Later in this unit we have examined how an effective communication process can be implemented. We have understood the critical nature in selecting the right sender to take

part in

the communication process. We also

studied

how the

right

receiver/customer will be identified by the company. We understood the role the message creation plays in the communication process and various issues that need to be addressed in his stage. We also understood that the comfort level of the receiver/customer should be kept in mind while designing the message. Finally in this unit we have identified how an improper channel can make the entire communication process a failure and identified various factors that need to be taken into account while selecting the communication channel.

5.6 Keywords 1) Channel

It is the means by which the message will be transmitted from the sender to the receiver and vice-versa.

2) Grapevine

Grapevine means “Gossip”. It is an informal way of communication which exists in every organization in almost all the departments.

3) Noise

Noise

in

communication

is

any

wrong

interpretation of the words and phrases used during the communication process by the receiver or sender. Noise distracts the actual meaning

of

the

messages

during

the

communication process

5.7 References 1. Cheryl Hamilton (2008), “Communicating for results: A guide for business and the professions”, Thomson Wadsworth, USA. 2. Chris Rose (2005), “How to win campaigns: 100 steps to success”, Earthscan, USA. 3. Julia T. Wood (2010), “Interpersonal Communication: everyday encounters (6th Ed.)”, Wadsworth, USA. 4. http://www.oxforddictionaries.com/definition/communication 5. Sadhana Gupta (2008), “Communication skills and functional grammar”, University Science Press, New Delhi, India. 6. Sri Jin Kushal, Sunitti Ahuja (2009), “Business Communication”, V.K. Enterprises, New Delhi, India.

5.8 Suggested Readings 1. Uma Narula (2006), “Communication models”, Atlantic publishers, New Delhi, India. 2. Lesikar, Flatley (2005), “Basic business communication: Skills for empowering the internet generation (10th Ed.)”, Tata McGraw-Hill, New York, USA.

UNIT 6 SALES PRESENTATION Structure 6.1 Introduction Objectives 6.2 Pre-presentation activities 6.2.1 Knowing about your company 6.2.2 Knowing about your customer 6.2.3 Knowing your competitors 6.2.4 Defining the presentation objectives 6.2.5 Other essentials activities for presentation 6.3 Presentation design Guidelines 6.3.1 Guidelines for preparing your PowerPoint presentation or paper slides 6.3.2 Guidelines for preparing a word document 6.4 The sales presentation process 6.4.1 Sales presentation methods 6.4.2 Objection handling and closing the sale 6.5 Summary 6.6 Keywords 6.7 References 6.8 Suggested Readings

6.1 Introduction In the previous unit we have understood various definitions of communication and the communication models. We have also analyzed the issues that need to be addressed for effective communication. We saw that presentation skills are one of the important factors which determine the success of the sale. In this unit we shall understand about what are the issues that need to be addressed in making a successful sales presentation which helps in building a long lasting relationship with the customer. The quality of presentation is an important factor which will determine how well the prospect will understand your product/service. Presentation should be motivating enough to the prospects to make them participate in the process. In this unit we shall understand that before going for the presentation there are some pre-presentation activities that one must follow. One has to keep in mind that his/her presentation should be better that the competitors and therefore, some background work needs to be done in deciding what goes into the presentation to make it look better than the competitors. In this unit, we shall understand that knowing your company should be the first task before knowing your customers. Many-a-times prospect may not know what the problem is and so identifying the problem is the first task for the sales representative. Once the sales representative and the prospects understand the right problem, it would be easy to concentrate on the solution part of the presentation. This unit also highlights the basic concepts on how to make a better looking presentation in terms of presentation of content. Finally in this unit, we shall understand that the presentation wouldn’t be complete if the objections aren’t handled well. We shall also look at about some of the objection handling techniques where you can handle the objections effectively. Objectives After studying this unit you will be able to:1) Importance of Knowing your customer, company and competitors

2) Various functions of sales team and pre-sales team in preparing an effective and efficient presentation 3) Define the presentation objectives 4) Enumerate various guidelines for preparing slides and documents 5) Explain various presentation methods and scenarios where they can be applied. 6) Address various objections and use appropriate objection handling techniques

6.2 Pre-presentation activities Pre-presentation activities include all the activities that are performed to ensure a successful presentation design. The list of pre-presentation activities would generally include the following:-

Knowing about your company Knowing about your customer Pre-presentation activities

Knowing your competitors Defining the presentation objectives Other essentials activities

Several issues have to be addressed such as the objective of the presentation, content that goes into presentation, gathering information about the customer, your company and the competitors and so on. 6.2.1 Knowing about your company Knowing about your company is vital because during the presentation customer may ask you anytime about your company and the products/services. Anytime if the customer is interested to know about your company, you should be able to explain about your company in not more than 30 sec to 1 min during the presentation. So it is important for you to write a brief summary about your company which includes the following: Company’s objective  mission and vision statement  List of product/services  Areas of expertise  Previous and present customers of your company  Number of employees working  Company turnover and growth  Your seniors and heads in your department Knowing your company’s employees or various domains of expertise would be very important when you are responding to the customer requirement. In situations like when the customer sends the problem and request you for the solution, you should be able to know whether your company will be able to handle that problem. For example, if the customer is in a telecom company and the problem is low network connection speed, then the solution would be to upgrade the entire network to a faster platform which requires huge amount of investment. As a part of your sales team it’s important for you to know the following before making the presentation for such customer:-

 whether your company has such expertise in handling big projects  If yes, are there any customers in the past where such projects have been implemented  What should be the profit margin in such projects  What could be the time-limit for project completion  How many number of employees would be required to work in such projects  What are the other resources required by your employees (travel tickets, internet bandwidth, laptops, living expenses in other countries etc). In many companies, there would be a sales team and a pre-sales team to handle huge volumes of customers. The main function of the sales team would be to meet the customer, take the requirements of the customer and make the necessary sales presentation. Most of the times, the sales team will be on-site i.e. at the customer place. The pre-sales team will be mainly at the company’s office which may not necessarily be at customer premises. The pre-sales team would be responsible to address all the questions which we have discussed earlier and make the presentation. It is the job of pre-sales team to correctly optimize the profit margins and the number of employees required to implement the solution for customer. If you are a part of the presales team it is very important to know that the customer solution may not be handled by a single technical team. For example, if there is a telecom problem of low network speed, the solution team may involve the networks/hardware team, software team, testing team etc. It is important to know that every team will try to put as many employees as possible in the projects so that their employees will have maximum work and profits. As a part of pre-sales team it is your job to keep optimizing the number of employees such that not too many or too less employees are involved. Coming to the cost part, it is always advisable to check the number of days employees need to stay at on-site with the customer and try to optimize these days so as to reduce some of the living expenses in other countries.

The important objective apart from developing a long-lasting relationship with customer is to have a decent profit margin in the project. It is the job of the sales team to get a clear picture of the profit margin and then decide to go on with the presentation or not. You cannot make the presentation for the solution which brings loss instead of profit for the company. Most of the time sales team may have to get approval from the finance team who monitors the financial status of the company before going ahead with the presentation with the customer. Even in door-to-door sales, most of the times the sales representatives will be instructed by the sales manager about the maximum discount he/she can give to the customer in order to close the deal effectively. Now let’s look at the information that is necessary to known about the customer before the presentation process. 6.2.2 Knowing about your Customer Customer is the key to any business, hence knowing the customer will be an important task for any business. Your customer may be a multi-national company or a government institution or even a single customer in door-to-door sales. A due diligence would be required to know your customer well. If it’s a door-to-door sale, some of the parameters you should be willing to look are: Income level of the family or head of the family  Gender and age of the family members  Educational level of the family members  Occupation of the family members Most of the parameter can be known easily except the income level. One can never ask the customer what his income is esp. when selling some door-to-door products like chimneys, water purifiers and some other household items. If it is a loan product or insurance products you may ask the customer directly to fill the income in the required column in the application. Age can be known approximately when you look at the

customer. The important thing to know is who is the decision making authority in the home, is it the male head or the female head or the children. If the customer is the Government or Institutional organization some of the parameter you should be looking at include: When was the organization established  How many employees or departments there in the organization  Who is the decision making authority or individual in the organization  What are the areas which the organization serve  How good is the organization in clearing the payments in time  What can be the future sales opportunities with the organization In Government and institutional sales the important task for sales people would be to get timely payments. Since the organization deals with many other responsibilities your payments may get late, so knowing the credibility of the organization for timely payments is important task. One way of finding this is by looking at the previous customers and any problems they have faced. You cannot go and ask directly your competitors about the organization but what you can do is to take a look at the growth of the organization over time. Finally if your customer is a big multinational, then the list of parameters you must have a look are: Time of establishment  Number of employees and departments  Turnover and the profit margin of the company  Year-on-year growth of the company  Rank of the company in the market place

 Previous experiences with the company if any The biggest problem with big multinationals is to know whether the customer will be able to fund the project successfully in time. If necessary funds are not released in time then the time period will increase and so do the costs. So it’s very important to look at the financial health of the customer and then proceed for sales presentation. 6.2.3 Knowing your Competitors Customer prefers the company who serves them according to his needs. However, if there is more than one company which is able to serve the customer according to his needs and expectations, then the customer will choose the best one according to his/her criteria. This leads to the competition between the companies to prove themselves that they are the best according to the customer criteria. Hence it is an important task for any company or you as the sales representative to correctly analyze the competitor movements towards the customer. Your presentation may fail if the analysis of your competitors is not done well. We have already discussed that there exists two functions in sales namely sales and pre-sales in the company. The competitor analysis is primary function for sales rather than pre-sales. It is the duty of the sales team who is on-site to know who the competitors are and what are their strength and weakness? Once the information is known it can be passed on to the presales team who will prepare the presentation accordingly to reflect that they are much better than the competitors. No matter how well the presentation is prepared, it won’t close the deal unless the sales teams have a clear idea about their competitors. For example, let’s assume that you have prepared a wonderful presentation which clearly highlights the benefits of your products/services to the customer. But if you have quoted the price much higher than your competitors, your solution may not be preferred by the customer. You must understand that in today’s competitive world there is a pressure on profit margins and growth of every company and so your customers too.

You customers always look for the company which provides best or reasonably good solution at the least cost for the solution. So as a sales representative it is very important to know approximately how much cost the competitors would quote for the solution. This cannot be known easily as every company maintains the bid amount secretly and will be given strict instructions to the employees not to disclose it. But you should be able to get an approximate idea by looking into their past project costs. So the important parameters which you should be looking in knowing the competitors include the following: Domain of expertise and the number of employees  Years of expertise i.e. is the competitor a new entrant or an established player in the market place  Type of solution offered to the customer i.e. the product/services  Amount quoted for the solution in the bidding process for the customer  Competitors advantage areas over your company’s products/services Having discussed much about knowing your company, customer and the competitor, it’s time for us to look at some of the other pre-presentation activities in subsequent sections. 6.2.4 Defining the presentation objectives Many sales presentation ends up without any results due to improper planning of the presentation and no measurable results. It is always better to have the list of objectives that you want to achieve by the sales presentation. One must remember that the objective of the first sales presentation with the customer shouldn’t always be the successful closing of the sale. Initiating a dialogue to involve the customer in the presentation and help in decision making should be the first objective. We see lot of presentations where the customer doesn’t take part much or remains to be a silent participant. So, one should plan the presentation such that necessary dialogues would happen between the customer and the sales representative which will help in building

the rapport. Some of the general objectives one would look for the presentation would be as follows: Developing a good rapport with the customers  Explaining about your company expertise  Building trust in the customer  Creating enough interest to make the customer participate in the presentation process  Identifying problems of the customer  Identifying the right products/services for the customer  Successfully handling objections  Setting the stage for next meetings  Maintaining the time allotted for the presentation  Closing the deal effectively whenever it’s appropriate Most of the sales presentation starts with the introduction of the company. You should be able to clearly highlight the strengths of your company like a strong workforce, various domains of expertise, level of employees i.e. the educational and experience levels of the employees and so on. Once you have created a positive image about your company, the next objective would be to develop a good rapport where the presentation process would become a two way communication between the customer and the sales representative rather than a one way communication with only sales representative involvement. A two way communication process will always helps in quickly identifying the problem and then identifying the right solution for the problem. Following the time limit is very important as the customers will be busy with their daily work and may not show enough interest if presentation takes too long. The final objective before ending the presentation should be to set the stage for the next presentation. You should be

able to get another appointment where you can carry on with your further presentation activities which can help in closing the deal effectively. It is very important to have a check-list of the objectives such that they will be followed by all the sales representatives during presentation. It is important to measure the objectives in terms of their level of achievement and should plan better in future presentations. For e.g. if the objective of maintaining the time limit is not achieved as the time for presentation overshoots, then it’s important for you to ensure that at least from now onwards in next meetings you will take care of that objective with utmost importance. 6.2.5 Other essential activities for presentation Till now we have discussed about a lot of pre-presentation activities like maintaining an objective check-list for every presentation and important parameters in knowing your company, customer and the competitors. Now let’s look at some other issues which must be addressed before going for the presentation. Some of them include as follows: Having sufficient number of hard copies of your presentation, preferably with the name of the customer on it.  Dress appropriately  Have your own tools for presentation  Ensure your tools are working perfectly fine  Choose appropriate team for presentation  Ensure every team member is present for the presentation  Have the necessary check-lists You may never know how many people from the customer side will participate in the presentation. So an important requirement in any sale, it door-to-door or institutional or industrial sale, it is advisable to have adequate number of hard copies of your presentation and any other supplements like company brochures, previous customer list

etc. It is always better to have individual copies in decent folders with the names of the customers. The next issue is about the dressing for the presentation. It is better to have a formal dressing in any sales presentation with or without a tie depending upon the circumstances. Make sure you have a tie with you if you see everybody wearing a tie in the presentation. For door-to-door sales tie may not be an important requirement. Dressing should be in such a way that you are not over dressed or neither underdressed. In absence of any clue a plain blue shirt and black trousers are recommended for use. The next issue would be having tools for your presentation. Make sure that you have necessary tools which make the presentation process easier without any interruption. If it is a PowerPoint presentation, the tools may be your own laptop with the necessary software to run the presentation, your own project and your own audio system. You will never know whether the customer premises will be having all these facilities. So it is better to carry one yourself. Nowadays you get projectors with audio system embedded in them. The next task is about choosing the appropriate team for presentation. If it’s a door-todoor sale of some FMCG products or consumer care products, then there would be no team as it will be handled by one sales representative most of the times. But in case of institutional or industrial sales, generally a group of sales team goes for the presentation. In such cases it is important for you to choose the appropriate team which has the technical, financial, HR and sales persons whoever is required for the presentation. Most of the times, the presentation may happen over the videoconferencing or over the phone where the sales person will be with the customer and rest of the team members on the call. So it’s an important task to ensure that every team member is committed and be present in the required time, keeping their regular daily duties of their departments aside. In companies lot of time it happens that one of the team members will be busy in his/her department activities and may not be able to participate in the presentation. So, it is very important for you as the part of the sales team to keep reminding the other team members about the sales presentation. Again in

many companies this work of engaging all the team members in right time is the duty of the pre-sales team in the organization. The final task is to have necessary check-lists for every activity that leads to a successful presentation in time. For example, preparing the presentation itself is a biggest task that needs regular monitoring and feedbacks. For example, we have discussed the problem faced by the customer in Telecom Company due to low network connection speed, and then the solution team involves various departments like the networks/hardware team, software team, testing team etc. So getting the appropriate solution slides from these teams and checking for the compatibility between these solutions is a time taking process. The solution given by the software team may not be compatible according to the networks or hardware team. Hence such complications have to be resolved and the presentation should be prepared with involvement of all the team members. So maintain the check-list and monitoring the progress is important for presentation preparation. Any other required check-lists must be in place before the presentation process. SAQ 1 1) Explain various issues you have address to know your competitors better in an industrial sale 2) Explain the important objectives you will layout for your sales presentation 3) If you are in door-to-door sales selling a vacuum cleaner, then what information you would like to gather from the customer

6.3 Presentation Design Guidelines In the earlier times, sales representatives had presented their products/services on a paper slides which were either printed or hand written. But now with advances in computer technology and print media, many of the companies prefer the PowerPoint presentations in industrial and institutional sales and printed slides in case of door-to-

door sales. PowerPoint slide are considered as an excellent way of communication since you can easily incorporate the graphics, pictures, videos in it and make the presentation interesting enough. But there are some limitations to it in terms of content. A lot of content in terms of text make the presentation cumbersome, hence any text matter it is advisable to give the customers in a printed word document format, so that they can refer to it whenever needed. We often wonder what makes the presentation to be presentable to the audience, (i.e. customers). Are there any steps which we can follow so that the presentation would be appealing enough to draw the attention of the audience? Even in case of word document the audience should be willing to read it rather than preserving it for later use or just misplacing it. So in this section, we shall understand some basic guidelines which will help you in preparing effective presentations and word documents which are presentable enough to the audience. Remember these are general guidelines which can not only be used to the sales presentation but most of the guidelines can also be used for your project presentations in your class. Let’s look at the guidelines proposed by Krieger (2007) and some other guidelines as well for the PowerPoint or paper slides and as well as word document.

6.3.1 Guidelines for preparing your PowerPoint presentation or paper slides The main objective in preparing a PowerPoint slides or paper slides presentation is to grab the viewer’s attention. The challenging task is to decide the appropriate number of slides you will be presenting in the given time limit by the customers. The presentation should be in such as way that it doesn’t complete too early or too late that the prescribed time by the customers. We often find that presentations may be prolonged up to 50 percent of the time limit of even finish when 50 percent of the time is still left. So how to decide how many slides to present in the given time? A simple rule can be that “the number of slides