S A L E S F O R C E UNIT 3 RUZIMAS AYU RAZALI M A N A G E M E N T
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali UNIT 3 SALES FORCE MANAGEMENT General Objective To understand salesforce management. Specific Objectives At the end of this unit, you should be able to: • Various types of sales job • Salesforce management process o Recruiting o Selecting o Training o Evaluation o Compensation
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali 3.0 INTRODUCTION TO SALES FORCE MANAGEMENT. Sales force management means planning, directing and controlling of the sales force. These include recruiting, equipping, assigning, routing, supervising, paying and motivating the sales personnel. It also includes determining corrective action when needed. 3.1 Types Of Sales Jobs. A sales job is an occupation that involves selling a product or service to customers. Many businesses rely on salespeople to sell their products and services, so several different sales jobs are available to those who want to pursue a career in this field. 3.1.1 There are several types of sales jobs. Sales job can be categorized into three a) Selling in Retail • A retail salesperson sells goods or service to consumers for their personal nonbusiness use. • Three common types of sellers who sell at retail are: i. In-store salesperson (bakeries, banks, hotels, travel agents and etc) ii. Direct seller who sells face-to face away from a fixed store location (Amway has 3 million salesperson) iii. Telephone salesperson b) Selling for a Wholesaler • Wholesaler (also called distributor) buy products from manufacturers and other wholesaler and sell to other organization • A wholesale salesperson sells products to parties for: i. Resale, such as grocery retailers buying items and selling to consumers ii. Use in producing other goods and services, such as a home builder buying electrical and plumbing suppliers iii. Operating an organization, such as schools buying suppliers
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali c) Selling for a Manufacturer • Manufacturers salesperson work for organizations producing the product • The types of manufacturer’s sales representative positions range from people who deliver milk and bread, to specialized salespeople selling highly technical industrial products. • There are five main types of manufacturers sales positions: i. Account representative: calls on a large number of already established customers in for example the food, textile, and apparel industries. This person asks for the order ii. Detail salesperson: concentrates on performing promotional activities and introducing new products rather than directly soliciting orders. Example a medical detail salesperson seeks to persuade doctors, the indirect customers to specify a pharmaceutical company’s trade name product for prescriptions. The actual sale is made through a wholesaler or directly to pharmacists and hospitals that fill prescriptions. iii. Sales Engineer: sells products that call for technical know-how and an ability to discuss technical aspects of the product. Expertise in identifying, analyzing and solving customer problem is another critical factors. This type of selling is common in the oil, chemical, machinery and heavy equipment industries because of the technical nature of their products iv. Industrial product salesperson: (non-technical) sells a tangible product to industrial buyers. Packaging materials manufacturers and office equipment sales representatives are non-technical salesperson. v. Service salesperson: sells the benefits of intangible or non-physical products such as financial, advertising or computer repair services. Selling services is ordinarily more difficult than selling tangibles. This makes them more challenging to sell.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali Order takers versus Order Getters • Sales jobs vary widely in their nature and requirement • Some sales jobs require salesperson only to take order. Order takers may ask what the customer wants or wait for the customer to order. They do not have a sales strategy or sales presentation. Order takers must be employed to bring in additional business that the employer probably would not obtain without their efforts • Order getters: they get new and repeat business using a creative sales strategy and well executed sales presentation. 3.2 Sales force management process. 3.2.1 Explain Recruiting a) Recruitment Recruiting is one way of obtaining a pool of qualified candidates Define: • The process of finding and hiring the best-qualified candidate (from within or outside of an organization) for a job opening, in a timely and cost effective manner. Definition: • According to Edwin B. Flippo, “It is a process of searching for prospective employees and stimulating and encouraging them to apply for jobs in an organization.” Before recruiting, several decisions and policies must be established to ensure that people who are likely to be most compatible with the job requirements will be recruited, screened and selected. In recruitment process, a firm prepares job description and job specifications. • Job Description Describing the duties, responsibilities and the characteristics of a specific positions. • Job Specification Describing of qualifications, experiences, educational required for the job.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali Job Advertisement
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali A company may obtain its candidates from several sources. i. Internal (from inside) • Company’s Own staff - A firm present employees two sources of salespeople. - (i) Present employees may wish to be candidates for a specific sales job: Generally present employees are good sources of candidates. This is because their job histories are readily available and can help in assessing both their potential. They already familiar with the firm and probably are royal to it. (ii) They may recommend friends and for such positions. ii. External 1. Competitors - A major advantage of obtaining sales people from competitors is that these people are already trained, are experienced and should be ready to sell almost immediately. - They may even be able to transfer some of their present customers to their new firms. 2. Non Competing Companies Or Organizations - Non competing firms can provide a good sources of trained and experienced salespeople although these applicants may be unfamiliar with the particular industry and its products. 3. Advertisements - Classified advertisement in local newspaper and in trade journals are good sources that sales managers both praise and condemn. - Classified advertisement with a large audience which can give firms with applicants, most of whom are second-rated.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali - These advertisement seldom attract the top candidates who often can make moves through personal contacts. - Local newspaper advertising is a good sources in recruiting a low-level sales positions. The advertisement should well describe job qualifications to reduce the likelihood of attracting many unsuitable. 4. Schools And Collages - Many large firms look to educational institutions for high-level candidates. - Although most graduates lack specific sales experience, they have the education and perspectives that employers seek not solely for sales positions but as potential managers. - Smaller firms are less likely to recruit on campus and tend to be less successful when they do because many graduates prefer large well know companies with definite programmes and benefits. 5. Employment Agencies - Employment agencies can perform a highly useful service by screening candidates so that a firm needs to spend time only with the most highly qualified. - Unfortunately, some agencies lack the ability or the resources to produce eligible candidates. - Sometimes the faults lies with the firm in not communicating sufficient information about specific needs and job requirement. • Walk-In Applicants - Some sales managers view walk-in and write-ins favourably as aggressive and self reliant individuals. - The best actions is to eliminates the unqualified from further considerations and to evaluate the qualified along with eligible candidates from other sources.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali - The biggest drawback in relying on voluntary as an important recruiting source, is that this source tends to dry out in tight labour markets and to be more productive when a surfeit of candidates already exists. • Miscellaneous - The few other occasionally worthwhile recruiting sources include sales executive clube, chambers of commerce and service clubs such as the Malay Chambers of Commerce. - These can help by providing a sales manager with personal contacts who either are interested themselves or know of others who might be. 3.2.2. Explain Selecting Processes a. Define Selecting - Selecting is a process whereby a company choose the most qualified and capable candidates for the post. - Salespeople who have the best characteristics, and who fit the company ethos, should be chosen during the recruitment process - The selection process varies usually depending on: i) the company sizes, ii) the number of prospects and iii) the importance of the job. The sales manager of a small company looking for a sales representative may simply travel to that area and work out of a hotel room, interviewing the available candidates and making the decisions at the end of the day or even without talking to all the applicants. Most firms however find the most effective selection will result from the following sequence.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali b. Selecting Process i. Preliminary Screening Interview - If a firm has a large number of applications either for particular advertised position or as walk-ins, preliminary screening is particularly important. - It is used to eliminate those candidates who do not meet the minimum eligibility criteria laid down by the organization. (eliminate unsuitable or unqualified candidates) - The skills, academic and family background, competencies and interests of the candidate are examined during preliminary interview. - Preliminary interviews are less formalized and planned than the final interviews. The candidates are given a brief up about the company and the job profile; and it is also examined how much the candidate knows about the company. ii. Formal Application Forms - Candidates passing the preliminary screening usually are required to complete the formal application form although the candidate may have submitted a resume, most firms also want their forms to be completed for standardization purposes. - Commonest device for getting information from a prospective candi-date and almost all organizations require job seekers to fill up an application. - The application form becomes part of the employee’s permanent record if he is hired. - Among the items of information needed for selection decisions are present employer, education, previous positions, memberships in organizations and references.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali iii. References Check - Conducting reference checks can be one of the most important steps in the selection process. - Since past performance is often the best indicator of future performance, references allow you to talk to past supervisors in order to determine if the applicant being considered is suited for the role. - Information you have received in an interview is biased and typically includes only what the applicant wishes you to know. - A thorough reference check may produce additional information to help insure that the most suitable candidate is hired. - It is a way to clarify, verify and add data to what has been learned in the interview and from other portions of the selection process. Never reveal the information received from a previous employer to the candidate. - This information should be kept confidential or your sources for references will dry up quickly. - Reference checking should not be neglected because the few falsehoods that may be detected can alerted a firm to more serious discrepancies and dishonesty that might result if the person is hired. iv. Tests Tests should be reliable and valid. There are several types of tests. They are: • Measuring Mental Ability With Intelligence Tests - To measure mental ability it is necessary to know what is being measured and to define a set of units to differentiate between people. - Following the approach of psychologists, we conceive of mental ability in terms of the capacity to retain ideas and comprehend and solve abstract problems.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali • Mechanical Aptitude Tests - These tests are suitable for technical jobs. Therefore they have little relevance to selling except perhaps in a few cases involving industrial goods - Most mechanical aptitude tests include questions about mechanical tools and equipment. • Vocational Interest Tests Interest tests are commonly used in the selection process. These tests assume that the person will be more effective and stable if he has a strong interest in that type of work. • Sales Aptitude And Social Intelligence Tests A person acquired social skills and selling can be tested. In these types of tests, the candidates are given selling situations where they must select the best solution or alternative presented to them. • Personality Tests - Some commonly measured personality traits in work settings are extraversion, conscientiousness, openness to new experiences, optimism, agreeableness, service orientation, stress tolerance, emotional stability, and initiative or proactivity. - Personality tests typically measure traits related to behavior at work, interpersonal interactions, and satisfaction with different aspects of work. v. Selection Interview By Line Executives - In the selection of salespeople, one interview or more is conducted of the most desirable candidates. It is widely thought that top candidates should be able to sell themselves to be effective. - The ability to express oneself, confidence and even aggressiveness are believed to be readily ascertained through an interview.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali - In the final interview situation with highly qualified candidates, the interviewer must sell the company or at least define the jobs duties, the benefits and the salary range. There are several types of interviews. They are: • Patterned Interview A guided or patterned interview is highly structured. Questions are predetermined and each person interviewed is asked the same questions in the same sequence. With such a standardized format, the job of the interviews become easier. • Non-Directive Interview Candidates are encouraged to do most of the talking to speak freely about themselves, their interests, their accomplishments and so forth. Although non directive interviews can provide information about a candidate’s fluency, poise and confidence, much time may be spent dealing with irrelevancies. • Stress Interview Some firms used stress interviews that put candidates under severe emotional strains to observe their reactions. In theories, the interviews stimulate the stresses that might be encountered in selling but its effectiveness in evaluating candidates is contradictory. The selling stress is probably far less than that of trying to land the job and the person brings more experience in coping with selling. • Group Interview It is a type of interview where a number of candidates/interviewers are involved. This is the interview where a number of candidates are interviewed together. This is used extensively for screening the candidates in an organization. It is preferred over the one to one interview as it saves time. It also helps the
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali interviewer understands how the candidate behaves in group. It also generates a stress situation, which tests the candidates. Some of the common failings in the interview selection are: • Wording Of Questions Questions may be ambiguous suggesting or stated poorly so that mutual understanding is difficult. • Halo Effect This is a tendency to judge the total worth of a person on the basis of a specific trait. (people are good or bad according to how they look or some aspect of their lifestyle) A candidate with tattoos may be considered bad even if he is clean-cut and well dressed. Another less smartly dressed candidate who is physically attractive and has a winning smile could be thought of as good before she has even spoken. Yet there is no evidence that either assumption is correct. • Stereotypes Stereotypes are based on generalizations and social conditioning rather than actual facts about the person. .( women are not as physically strong as men) Employers need to be especially careful about stereotypes of minority groups, as discrimination based on such stereotypes can lead to legal action. Employees should be aware of any obvious stereotypes that could be formed about them in the interview and prepare to dispel them through professional presentation and positive, proactive answers to questions.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali • Personal Bias Of The Interviewer The interviewer may tend to make about the candidate based on some personal mannerism or characteristics. Personal traits that are objectionable to many interviewers are interrupting, talking with cigarette in mouth, biting fingernails, using the word “I” continuously, chewing gum, talking non-stop and avoiding looking interviewer into the eye. • Lack Of Rapport The interview tends to be a stressful situation. If the interviewer is not able to establish a friendly relationship with the applicants, the interaction can be strained and communication poor. Differences in rapport can result in different conclusions about the same candidate c. Qualities Of A Good Salesperson Integrity - A salesperson should be honest and truthful about himself, his company, and the products he is offering. • Loyalty - It is important for the salesperson to be loyal to the company, its products, its management, his colleagues and customers. • Genuine Enthusiasm - A salesperson should be enthusiastic in his work. Having a deep interest and be sincere helps in gaining customers trust and make sales. • Self-Motivation - He should be able to work hard to achieve his sales target as well as for personal reasons such as satisfaction, money, job satisfaction, status, security or opportunity.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali • Believe In The Value Of The Job - A salesperson must be proud of his job. • Empathy - Empathy is the ability to identify with customers, to feel what they are feeling and make customers feel respected. - Empathy is NOT sympathy, which involves a feeling of loyalty with another individual. - It is more than understanding their concerns from an objective standpoint. A salesperson showing empathy can gain trust and establish rapport with customers by being on their side and not appearing judgmental. - Empathy allows the salesperson to read the customers, show concern, and clearly demonstrate his or her interest in providing a proper solution. A salesperson should be able to understand the other person’s (buyer’s) point of view. • Resilience - A salesperson should not give up when prospective buyers say “no”. He should be able to “get up” and have the patience even after being declined many times. - Top sales achievers have a unique ability to cope with difficulty, to negotiate obstacles, to optimize performance in the face of adversity. - At the heart of resilience is this fact: Top sales professionals are pros at denying that a lost sale is a failure. They take rejection as a personal challenge to succeed with the next customer • Acceptable To People - A salesperson should be one that is acceptable by the customers. For example, a salesperson should dress right for the occasion, avoid unhealthy habit (such as smoking) and taking care of his personal hygiene.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali • Good Communication - Communication skill is very important to a salesperson. It allows him to deliver the message effectively and enable customers to understand him. • Effective Hard Work - Effective hard work means working hard that brings sales. The salesperson should make the right calls to the right prospective buyers to avoid wastage. • Good Health - Keeping fit – both mentally and physically, alert is essential. A salesperson should avoid over eating, over-smoking and under-exercise. • Responsibility - A person with a strong sense of responsibility does not place blame on other people when placed in a difficult situation. - This type of person, referred to as an “agent”, gets things done and when obstacles arise, accepts any errors or omissions that have occurred. - He or she does not get defensive nor do they try to blame the situation on circumstances or on other people by making statements. • Good listener - Listening skills are another critical piece for hiring a great salesperson. You have to listen to the customer's pain point before you start selling your product or service. - Great sales people sell solutions to problems and they do that by understanding and listening to the customer. If a candidate talks more than they listen.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali 3.2.3. Explain Sales Training a. Categories of sales training Training salesperson is normally done in the first days or weeks on the job. There are four categories of sales training: • Initial Training. - Training given to new salesperson in the organization. • Refresher Training - Training given to present or experienced salesperson. • Sales personnel of distributor and dealers are trained by manufacturer who is most knowledgeable about the products. • Customers are trained by the manufacturer. Customer is given adequate information so that they may correctly use and maintain the product and achieve better satisfaction with it. b. Benefits Of Training Program • Deficiencies of Trial – And – Error Learning - Some sales managers believe that training is not really necessary saying that these people can learn on their own by trial and error. - Trial and error learning however has several disadvantages. Sales are lost before the desire level of competence is reached and trial and error is not an effective learning method. - Sales will be lost and potential business missed during the learning period. Many firms develop more formal training programs to avoid business losses. - Continued trial and error efforts may only reinforce bad habits unless a firm has such a high turnover of salespeople that formal would be largely wasted. - Even for firms with high turnover, a better training programs might create stability.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali • Faster Development - The new salesperson requires initial training to learning the right way to present the products, its specific features, its capabilities and limitations, price information and included servicing or warranties. - Furthermore, certain procedure for handling orders and promising deliveries must be communicated to the salesperson. - The more complex product lines and order processing system generally require more time for initial training before the new representatives can use training to help them develop selling techniques as quickly and thoroughly as possible. - Even experienced salesperson sometimes find aspects of their performance falling below par and can overcome these with refresher training. • Improved Morale - Confidence given better morale and it contributes directly to increase sales. Confidence also accompanies knowledge. - Successful experience and minimal training gives confidence but adequate training speeds up knowledge acquisition. - Good morale results in lower personnel turnover and more enthusiasm about the job and the employer. Better training would probably result in more stability. • Better Customer Relations - Some firms fail to consider the consequences of a training programs on customer relations. - A well trained sales representatives should be oriented to identify customer needs and presenting products and services that effectively satisfy those needs. - Few firms now use training programs with high pressure technique , because high pressure selling is incompatible with customer goodwill and loyalty. - Knowledge of the firm’s products and policies is important in achieving customer satisfaction.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali - The salesperson who has more than a passing knowledge about the customer operation and problem, can better match products and services to the customer’s needs. - Rapport and confidence gained from past satisfactory service instill loyalty and give a competitive advantage over the firm with a high level personnel turnover and a constantly changing sales force. c. Topic covered under training program a) Product and company knowledge - Some companies send the trainees to the factory to observe production so that they get sufficient information on the products. The trainees may be transferred to various departments to gain sufficient information. However, trainees may not receive the kind of product knowledge necessary as they spend a lot of time in the factory on technical matters. i) The Product Line The sales person should know the product he is required to sell. There may be many kinds and variations of products available so the salesperson need to spend time studying about the products. He can use brochures, samples and catalogues, however a more detailed knowledge is required which include product characteristics, their and users and their differences. ii)Special Provisions The salesperson should know the available product options, delivery conditions, servicing and maintenance standards and any special problems or requirements.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali iii) Relative Profitability Relative profitability of the various products in the line should be stressed in the training programs. This is an additional information which is often neglected in the training programme but is important to produce the most profitable business. b) Customer And Industry Orientation - A customer orientation means knowing about the customer’s needs, wants and problems and the practices of their industry. This is very important in order to market a product effectively. The salesperson job sometimes involves showing how a particular and service can help solve some of the customer’s problems. Sales people must have information about the competitors and competitive products to answer customer objection and present their own product effectively. i) Sales Technique A firm may show trainees how the prospect for the customers, how to gain attention and interest and the best responses to the more common objections. Training also included discussion and demonstration of effectively initiating the close of the sale. In addition to lectures and demonstrations of proper sales techniques, trainees may also role play in simulated sales situations. ii) Territory Management Training programmes should give some attention to helping individual salesperson better manage their selling. Advice can be given for making the best use of time to minimizing waiting time to see customers, and routing effectively. Trainees should be taught how to plan sales calls, materials and handouts to use in presentations and how to record important information about each customer. The need to field reports can be explained as well as best time for making such reports to minimize the loss of productive selling time.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali d. Method and procedure of training Those methods can be classified as a group or individual. Group methods include those commonly used in education of any kind such as lecture, case and panel discussion. Individual training methods include on the job training, company sponsored home study and self-development programme which the company subsidized. a) Group methods i)Lecturer - The most common method of teaching is the lecture. - It is the most efficient method in terms of time because one trainer or lecturer can handle almost any size of group. - The lecture method is ideal for information such as company and industry characteristics, planned advertising and promotional strategies or sales expectations if conducted properly. - The lecturer or speaker must be competent, have a good voice a be well prepared. - For sales training, the lecture method has some limitations. It is not suitable for training in sales technique. Words cannot convey the final points of selling time. Some modifications of the lecture format can increase interest and learning. - However it may be used to introduce certain points that the trainees may then discuss in small groups. A movie or slide demonstration might supplement the lecture material. ii) Discussion - Discussion can be effective for training in sales technique and problems by providing an in depth development of certain topics. - Cases are commonly used to give practice both in finding creative alternatives and in solving problems. The discussion technique therefore can be useful for fresher training.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali iii) Demonstration - Demonstration includes visual aids such as movies and slide presentations. Corrects and incorrect sales technique can be shown and analysed. - Demonstration are particularly effective in sales training and retention is enhanced because both the eyes and the ears are involved. - Demonstration can be important in both sales training and customer presentations. iv) Role Play - Role play can be one of the most effective training technique for the art of selling. In role playing, one trainee play the role of salesperson and one or more persons take on the role of customers. - The result is a simulated selling situation the conveys the buyer-seller interaction although it can criticized as artificial. - Videotapes in the role playing can be a powerful learning tool. The participants can see and their actual performance repeatedly to identify weak points for corrective actions. b) Individual methods i)On – the – Job Training - In the some on the job training sessions, in the beginning a sales person may accompany an experienced one and observe. In the some on the job training, the sales manager accompanies the trainees on sales calls. - The sales manager then should remain as an observer simply observing trainees skills or lack of skills to offer constructive advice later. - The major disadvantages of supervised on the job training is the managerial time involved.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali ii) Home Study - Home study involves correspondence training. It requires self-motivation and willingness to study. - It is also suitable when the selling task and the products are standardized and when the selling is routine. - Home study is therefore generally limited to situations requiring little training, especially for some firms the recruit by mail. - If recruit work on a straight commission, home training is practical because it provides basic information and orientation at a minimal cost. iii) Self-Development - Some firms encourage their sales representatives and other employees to take self-development courses which may be formalized undergraduates or graduate level instruction, or may consist of more shorter sessions on topics such as public speaking of all the programme fees but the employees contribute her time in nonworking hours. - The company expects training to result in a more effective employee, more strongly motivated to performance excellence. 3.2.3 Determine Evaluation Procedure a. Evaluation - Evaluating and supervising are concerned with monitoring the balance between standards and actual performance both are instrumental in achieving sales force control. - In general, if an evaluation process is systematic, objective and well defined, it should help improve sales force performance. This is achieved as follows • Weak performance can be corrected or eliminated.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali • Actions of sales personnel can be guided in the desired directions. • Performance evaluation can improve motivation. • Feedback on the acceptability and effectiveness of past performance is provided. • Persons with potential for management positions can be identified. b. Benefits of Performance Evaluation • Translating job duties into specific performance expectations (goals/strategies). • Describing the agency’s mission and showing how the employee’s job contributes to it. • Prioritizing and clarifying the employee’s job duties, goals, and roles. • Providing a formal opportunity to inform the supervisor about barriers to work accomplishment. • Outlining the expected performance standard and how the employee will be evaluated. • Identifying resources and tools needed to improve performance. • Providing meaningful job performance feedback. • Providing an opportunity to give feedback or present new ideas to the supervisor. • Recognizing work achievements and strengths. • Laying out a plan for future career development. • Serving as an assessment on which to base a pay increase decision.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali c. Problems in evaluating performances 1. Effects on morale - Evaluations usually affect promotions and pay increases. It is therefore important to job satisfaction, career advancement and even continuing employment. - The poorer performers are singled out and criticized more often than the better ones. But the performance evaluation and the accompanying interview often focuses more on the employees faults that need improvement rather than their strong points and accomplishments. - It is not surprising that morale and motivation can be diminished far from being improved by recognition and feedback about one’s performance - In some firms the morale of the entire workforce may decline for several weeks after the rounds of interviews. This should not happen. - A proper balance between support and acknowledgement of good performance and constructive exploration by both parties of ways to improve areas of weak performance. - The procedure is likely to be more beneficial if mostly objective criteria can be used rather than subjective ratings. 2. Drawbacks of subjective judgements - Although objective standards are preferred in evaluating performance some firms rely more on subjective judgements and experienced sales managers. When subjectivity is used exclusively, the judgement’s validity may be suspect and create problems in the following areas. i) Irrelevant personal traits • Initiative, aggressiveness, personal appearance are often considered to be important and even essential to selling competence. But their actual relationship is suspect.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali ii) Halo effect • A rating assigned to one or a few characteristics whether good or bad significantly influences the ratings assigned to all others. iii) Leniency or harshness • Supervisors tend to differ considerably in their overall ratings either rating most subordinates as high in most attributes or the opposite. This results in a serious lack of uniformity in overall company appraisals. iv) Central tendency • Some managers never rate subordinates at the extreme of the scale but rather rate everyone as average. The evaluations tend to be meaningless because they do not differentiate between the better and worst performers. v) Bias • Some managers are biased positively or negatively towards certain subordinates perhaps based on their personalities, appearances or social or racial backgrounds. The degree to which managers personally like or dislike the subordinate will affect the evaluation. vi) Time and effort • A systematic procedure of performance evaluation takes time and effort. If the company relies more on objective standards, more time is generally required to compile and analyse records. Evaluation interviews take time away from productive selling activities. However the evaluation interview must be conducted for constructive and goal directed performance appraisal.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali d. Procedures for evaluating performances Generally performance can be evaluated on two bases. • Quantitative Performance can be evaluated by either efforts or results. For example performance of the salesperson is based on the sales volume the sales person achieved. • Qualitative Performance can also be evaluated on the bases of personal factors. For example cooperation, aggressiveness, enthusiasm, leadership or emotional stability. 3.2.5 Explain Compensation a. Definition compensation Compensation is the total cash and non-cash payment offered by an employer to an employee in return for the services rendered to the company. Apart from salary and wages, compensation also includes: ▪ Sales commision, ▪ Overtime pay, ▪ bonuses, ▪ Profit sharing, ▪ Recognition checks and rewards, ▪ Non-cash benefits, such as company-paid accommodations, certain stock options, a company-financed car and other non-cash taxable items. The value of compensation received by an employee depends on a number of factors such as the availability of relevant skills, the employer’s desire to retain the employee, the profitability of the company, and salaries for comparable jobs in the marketplace.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali b. Characteristic of good Compensation Plans i) It should be fair - The compensation package should be at least equal with that offered by other companies for similar work. - The company should not only compensate its salespeople based on sales generated but also other factors such as servicing customers or helping new salespeople. ii) Direct effect towards company objectives - The compensation plan should be designed to direct effort to the firm’s highest priority selling and servicing activities. - The compensation plan that is compatible with an emphasis on such activities would not be straight commission, which provides remuneration only on sales production, not on servicing and other non-selling activities. - If performing missionary work and customer service, training junior salespeople and prospecting for new accounts are factors on which raises and promotions are based then this objective should be well communicated to the employees so that they can give these activities adequate attention. iii)Flexibility - The compensation plan should be flexible enough to acknowledge territorial differences that make one person’s job much more difficult than another’s. - The plan should be flexible enough to reward outstanding performance that is not tied directly into the compensation plan. - For example the sales person who is outstanding in gaining new accounts should be rewarded although his sales do not realistically reflect his contribution because of the time spent in developing accounts.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali iv) Provide incentive and motivation - The compensation plan can be the major stimulating or motivating factor in maximizing sales force production. Reward in the forms of increased compensation for higher sales production can be powerful except in the following situations: o A sales force is engaged solely in missionary work in which no sales are made directly. o In highly technical selling in which a number of company representatives will be involved then some forms of commission or bonus arrangement should be provided for greater incentive. v) Give security - In contrast to the opportunity to maximize rewards most sales people prefer some assurance of steady income. - In situations where sales are infrequent but sizable or highly seasonal sales can fluctuate to the extreme with no sales in one period and high productivity in the next, it seems best to design a compensation plan that guarantees a minimum level of pay. - This give some security for the sales force and their families. vi) Easily administrated and understood - A plan should be simple that individual salesperson can understand it and keep track of their commissions and bonuses. - Bonuses and commissions should be paid promptly both to provide immediate rewards for the work performed and also to allow easier calculation. - A relatively simple compensation plan which avoids complicated and varied computations of commissions earned is also easier to administer and less costly to operate.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali c. Types of compensation plan Compensation may include base pay, variable pay, or a combination of both. Requirements regarding base pay may be dependent on the classification of the position under federal, state, and local wage and hour laws. i) Straight salary - Is simplest compensation plan. Salesperson receive fixed sums as regular intervals (usually each week or month sometimes every 2 weeks), representing total payments for their services. - A straight salary compensation plan does not involve any form, obviously, of incentive payment. Salespeople are simply paid a flat hourly, weekly or monthly rate. - This approach is often used when salespeople are essentially order takers, sales are the result of a group effort or customer service is critical. Advantages: 1. Offers the greatest security for the salesperson. 2. In addition to offering maximum security which tends to minimize employee turnover. 3. Enables management to exercise better direction and control because the salesperson do not depend on sales for their pay. Disadvantages: 1. Least incentive for the salesperson 2. A straight salary plan may drastically affect the profits of a firm during periods of declining sales. 3. Can lead complacency among some employees whereas it may frustrate eager and capable new employees who feel that the firm bases maximizing compensation more on longevity and perhaps friendship than ability and effort.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali ii) Straight Commission - The theory supports the individual sales personnel should be paid according to productivity. As sales volume rises to different levels, the commission rates differ for different products, categories of customers, or during selling seasons. - Salesperson compensation method in which only a percentage of the sales volume, but no fixed salary, is paid. - This method is particularly useful when the selling is on a part time or irregular schedule as moonlighter who sells mutual fund. Advantages: 1. Providing maximum incentive and 2. Foster independence of actions 3. All variable cost Disadvantages: 1. Providing minimum security for salesperson 2. Pay low when business is week 3. Low cost when salesperson is low i. A combination of salary and commission - A compromise between maximum and minimum security and incentive to attain some balance between incentive and security, a multiplicity of combination plans are used, involving a base salary and a commission or bonus arrangement in a various proportion. - Salary + commission / salary + bonus / salary + communication + bonus. - It is a lump sum payment as a reward for individual or group performance which may be attainment of a sales quota or goal. Advantages: 1. Economic security. In a job with a base salary, you know you'll always have a paycheck and paying your bills will never be an issue.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali 2. Stability. Along with the steady paycheck, most jobs offering a base salary generally expect you to stick around for the long-term. ACTIVITY 3A TEST YOUR UNDERSTANDING BEFORE YOU CONTINUE THE NEXT INPUT. 1. Explain several types of sales job. 2. Define recruitment, job description and job specification. 3. Identify qualities of a good presentation. 4. Explain categories of training programme.
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali PAST YEAR QUESTION DECEMBER 2015 QUESTION 4 (a) Based on picture 1 above, determine the company’s i. Job description ii. Job specification [4 marks] (b) Explain FIVE (5) qualities of a good salesperson. [10 marks] JUN 2015 QUESTION 3 (a) Compare TWO (2) types of sales job. [5 marks] (b) Describe FOUR (4) benefits of training programme. [10 marks]
DPM30053 SALES MANAGEMENT DPM30053 SALES MANAGEMENT | Ruzimas Ayu Binti Razali DECEMBER 2014 QUESTION 4 (a) Cik Kyra Lydia is a Human Resource Manager in Casa Impian Boutique. As a sales Manager, you are required to advise Cik Kyria Lydia in obtaining the suitable Sales Executive candidates. Explain FOUR (4) external sources of recruitment. [12 marks] JUN 2013 QUESTION 2 (a) There are several types of sales jobs based on the functions of salesperson. Differentiate THREE (3) types of sales job. [9 marks] (b) Training salesperson is normally done in the first few weeks on the job. Determine FOUR (4) benefits of training. [16 marks]