04 Sales Force Management 05. Recruitment & Selection Of Sales .

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SALES FORCEMANAGEMENT Sales force management is aspecialised type of personnelmanagement. Sales managers perform the salesforce management function. They execute the entire humanresource management function in anorganisation.

Sales managers recruit, select, train, motivate, lead, control and compensate the sales staff

Decisions on what to sell (productpolicies) and to whom to sell(distribution policies) are importantdeterminants of the two componentsof personal selling strategy– the kind of sales personnel(qualitative objective) and- their total number (quantitativeobjective).

Qualitative Analysis Product market analysis, Analysis of salesperson’s role insecuring orders, and Choice of basic selling styles.

Product market analysisProduct specialists, Market specialists, and Combination

Analysis of salesperson’s role Salespeople may be either active orpassive forces in securing orders. The encyclopaedia salesperson callingon households must often function asan order getter. The driver-salesperson for a softdrink bottling company is primarily anorder taker.

In consumer goods marketing, themissionary salesperson’s major role is toassist middlemen in making sales totheir consumers. In industrial-goods marketing, the salesengineer plays two major roles: advisorto customers on technical productfeatures and applications, and designconsultants to industrial users oninstallations or processes incorporatingthe manufacturer’s products.

Choice of basic selling styles Trade selling,Missionary selling,Technical selling, andNew-business selling.

Quantitative Analysis Work-load method, Sales potential method, and Incremental method.

Work-load method Classify customers, both presentand prospective, into salesvolume potential categories.Assume that there are 880 present andprospective customers, classified bysales volume potential asClass A, Large150AccountsClass B, Medium 220 AccountsClass C, Small510 Accounts

Work-load method Decide on the length of time persales call and desired callfrequencies on each class.Class A: 60min/call X 52 calls/year 52hours/year.Class B: 30min/call X 24 calls/year 12hours/year.Class C: 10min/call X 12 calls/year 3hours/year.

Work-load method Calculate the total work loadinvolved in covering the entiremarket.Class A: 150 accounts X 52 hours/year 7800 hours.Class B: 220 accounts X 12 hours/year 2640 hours.Class C: 510 accounts X 3 hours/year 1530 hours.Total: 11,970 hours.

Work-load method Determine the total work timeavailable per sales person.Suppose that management decides thatsalespeople should work 40 hours perweek, 48 weeks per year, allowing 4weeks for vacations, holidays,sickness etc.)40 hours/week X 48 weeks 1920hours/year.

Work-load method Divide the total work timeavailable per salesperson by task.Assuming that the sales personnelapportion their time as follows:Selling tasks45%864 hoursNon selling tasks 30%576 hoursTravelling25%480 hoursTotal:100%1920 hours

Work-load method Calculate the number of salespeople needed.This is a matter of dividing the totalmarket work load by the total sellingtime available per sales-person:11,970 hours/ 864 hours 14 salespeople needed.

Sales potential method N S/P T (S/P); this reduces toN S/P (1 T);N number of sales personnel units,S forecasted sales volume,P estimated sales productivity of each unit,T allowance for rate of sales force turnover

Sales potential method Consider a firm with forecasted saleof Rs.1million, estimated salesproductivity per sales personnel unitof Rs.1,00,000/-, and an estimatedannual rate of sales force turnover of10 percent. Inserting these figures inthe equation, we have: N Rs.10,00,000/Rs. 1,00,000 X1.10;or N 11 sales personnel units.

Incremental method A company has found that its total sales volumevaries directly with the number of salespeople it hasin the field. Its cost of goods sold holds steady at 65percent of sales. All sales personnel receive astraight salary of Rs.20,000/- annually as well as afixed travelling allowance of Rs.12,000/- annuallyand in addition are paid commissions of 5% on theirsales. The company now has 15 people on its salesforce. Its sales executives estimate the followingincreases in sales volume, cost of goods sold, andgross margin that would result from the addition ofthe 16th, 17th, 18th, and 19th sales persons.

Incremental method

Incremental method Thus, the optimal size of sales forcehere is 18 people.

Activities involved in SalesForce Management

The Hiring Process tmentSelectionSocialization

Stage 1 – Planning Analysis of the annual turnoverTurnover is defined as the average percentage of thesales force that leaves a sales organisation in a givenperiod of time. The manpower forecast determinesthe number of salespeople requiredby the organisation.

Stage 1 – Planning A sales organisation has two types ofhiring objectives. The first objective isto plan the replacements of people whohave left or would leave in the nearfuture, and the second is therecruitment for expansions and for newmarket coverage. strategic position analysisdetermines the number and type ofsalespeople required by theorganisation.

Stage 2 – RecruitmentInternal Sources of Recruitment Lateral or upward moveInternal transfersInterns and cooperative studentsEmployee referral programmes

Stage 2 – RecruitmentExternal Sources of RecruitmentAdvertisingWalk-in-interviewsDirect unsolicited applicationsEducational institutions and campusrecruitments Other industry sources Employment agencies Networking

Stage 3 – Selection

Stage 4 – Socialization anticipatory stage encounter stage settling in stage



COMPENSATION OF SALES FORCE Motivational Roles Objectives Characteristics or Requirements Devising A Sales Compensation Plan Types Of Compensation PlansH

COMPENSATION - MotivationalRoles (1) provide a living wage, (2) adjust pay levels to performance,thereby relating job performance andrewards (in line with expectancymotivation theory), andT (3) provide a mechanism fordemonstrating the congruency betweenattaining company goals and individualgoals (also in line with expectancytheory).H

COMPENSATION - Objectives attract quality salespeople. help to improve the productivity level of theexisting salespeople in the organization. helps in optimizing the sales effort by thesalespeople maximizes the sales, Reduces the sales expenses and also theproduction cost. helps in retaining quality manpower andreducing the attrition rate in the organization. establishes a good rapport between the salesforce and the sales supervisors and managers inthe company.TH

COMPENSATION - Characteristicsor Requirements Should address the short-term as wellas the long-term issues of thesalesperson.While survival is a short-term issuefor the salesperson, recognition andgrowth in the company and careerare the long-term issues.TH

RequirementsT provides a living wage should have future orientation. should take care of the salesperson's housingneed, dearness allowance, conveyance, pension,provident fund, and medical needs. The plan fits with the rest of themotivational program The plan is fair It is easy for sales personnel to understand adjusts pay to changes in performance. economical to administer. helps in attaining the objectives of the salesorganization.H

DEVISING A SALES COMPENSATIONPLAN Define the Sales Job Consider the Company's General CompensationStructure Consider Compensation Patterns in Communityand Industry Determine Compensation Level Provide for the Various Compensation Elements Special Company Needs and Problems Consult the Present Sales Force Reduce Tentative Plan to Writing and Pretest It Revise the Plan Implement the Plan and Provide for Follow-UpTH

Compensation Structure TSimple rankingClassification or gradingPoint systemFactor-comparison methodH

Various Compensation Elements (1) a fixed element, (2) a variable element (3) an element covering the fringe or"plus factor," and (4) an element providing forreimbursementTH

TYPES OF COMPENSATION PLANSFinancial CompensationNon-financial Straight-Salary Plan Straight-CommissionPlanDrawing accounts Combination Salaryand-Incentive Plan Use of Bonuses Allied Methods Promotions RecognitionProgrammes Fringe Benefits Expense Accounts Perks Sales ContestsProfit Sharing PlanSpecial Remuneration planExpense allowance planTH

All sales personnel receive a straight salary of Rs.20,000/- annually as well as a fixed travelling allowance of Rs.12,000/- annually and in addition are paid commissions of 5% on their sales. The company now has 15 people on its sales force. Its sales executives estimate the following increases in sales volume, cost of goods sold, and

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