Sales Force Management

Churchill/Ford/Walker's

Sales Force

Management

Tenth Edition

Mark W. Johnston

Crummer Graduate School

of Business

Rollins College

Contents

Chapter One

Introduction to Sales Management in the

Twenty-First Century 1

Change Is the Central Theme in Sales Management Today 1

Learning Objectives 3

Sales Management in the Twenty-First Century 3

Innovation Fuels Success in Selling Today 4 Sales Effectiveness Is Enhanced through Technology 5

Leadership Is a Key Component in Sales Management Success 7

Sales Management Is a Global Endeavor 8 Ethics Underlies All Selling and Sales Management Activities 8

What Is Involved in Sales Management 9 Selling Process 10

Sales Management Process 10

Environmental Factors Impact Success in Selling 11

External Environment 12 Economic Environment 12 Legal and Political Environment 14 Technological Environment 15

Social and Cultural Environment: Ethics 16 Natural Environment 18

Summary: Impact of the External Environment 19 Internal (Organizational) Environment 20

Goals, Objectives, and Culture 20 Human Resources 21

Financial Resources 21

Production and Supply Chain Capabilities 21 Service Capabilities 22

Research and Development (R&D) and Technological Capabilities 22

Impact of the Environment: The HP Experience 22 Summary 23

PART ONE

FORMULATION OF A SALES

PROGRAM 28

Chapter Two

The Process of Selling and Buying 30

The Case for a Focus on the Sales Process 30 Learning Objectives 31

Drivers of Change in Selling and Sales Management 32

Overview of Selling as a Career 33 Why Sales Jobs Are So Rewarding 34 Key Success Factors in Selling 39 Selling Activities 42

Types of Selling Jobs 45

Selling in Consumer versus Business-to-Business Markets 45

Classifying Types ofB2B Sales Jobs 46 Stages in the Selling Process 46

Prospecting for Customers 47 Opening the Relationship 48 Qualifying the Prospect 49 Presenting the Sales Message 49 Closing the Sale 50

Servicing the Account 51

Participants in the Organizational Buying Process—The Buying Center 52

Selling Centers and Buying Centers 53 Organizational Buying Decision Stages 54

Stage One: Anticipation or Recognition of a Problem or Need 54

Stage Two: Determination and Description of the Characteristics and Quantity of the Needed Item(s) 56

Stage Three: Search for and Qualification of Potential Suppliers 56

Stage Four: Acquisition of Proposals or Bids 56 Stage Five: Evaluation of Offerings and Selection of Suppliers 56

Stage Six: Selection of an Order Routine 57 Stage Seven: Performance Evaluation and Feedback 58

Contents xiii

The Nature of Organizational Buying

Situations 58

Summary 59

Chapter Three

Linking Strategies and the Sales Role

in the Era of Customer Relationship

Management 64

The Importance of Integrating Sales with Other

Business Functions 64

Learning Objectives 66

What Is Customer Relationship Management? 66

From Mass Marketing to One-to-One Marketing 68 CRMProcess.Cycle 70

Toward a Relationship-Based Enterprise 71

The Importance of Market Orientation 72

How Market Orientation Affects Performance 73 Internal Partnering to Create a Market

Orientation 74

The Process of Strategy Development 74

Company Mission and Goals 74 SBU Strategy 76

Personal Selling's Role in Marketing Strategy 80

Role of the Relationship 80

Personal Selling in the Relationship Era 82

Stage One: Exploration 82 Stage Two: Expansion 84 Stage Three: Commitment 85

Personal Selling's Role in the Marketing

Communication Mix 86

Company Resources, Goals, and Marketing Strategy 87

Characteristics of the Target Market 88 Product Characteristics 88

Distribution Practices 88 Pricing Policies 89

Computerized Ordering and Customer Alliances 89

Improving Customer Satisfaction and Loyalty

through Feedback 90

Major Account Teams 91

Summary 92

Chapter Four

Organizing the Sales Effort

97

Organize the Sales Force around Customers,

Not Products 97

Learning Objectives 98

The Increasing Importance of Sales Organization

Decisions 98

Purposes of Sales Organization 99

Division and Specialization of Labor 99 Stability and Continuity of Organizational Performance 100

Coordination and Integration 100

Horizontal Structure of the Sales Force 101

Deciding on a Company Sales Force or Independent Agents 101

Geographic Organization 105 Product Organization 107

Organization by Customer Types or Markets 108 Organization by Selling Function 109

The Role of Telemarketing 109

Organizing to Service National and Key

Accounts 111

Team Selling 113 Multilevel Selling 114 Co-Marketing Alliances 114 Logistical Alliances and Computerized Ordering 115

Vertical Structure of the Sales Organization 116

Selling Responsibilities 117 Sales-Related Functions 117 The Impact of New Technologies 118 Staff Support and Outsourcing 118

Additional Sales Organizational Issues 119

Summary 120

Chapter Five

The Strategic Role of Information in Sales

Management 126

Putting Information Technology into

Perspective 126

Learning Objectives 127

Using Information in Managerial Decision Making

and Planning 128

Introduction to Market Opportunity

Analysis 128

Methods of Sales Forecasting 129

Subjective Methods of Forecasting 130 Objective Methods of Forecasting 133

Purposes and Characteristics of Sales Quotas 139 Purposes of Quotas 139

Characteristics of a Good Quota 139 Setting Quotas 141

Types of Quotas 141 Quota Level 142

Determining Sales Force Size 143 Breakdown Method 144

Workload Method 144 Incremental Method 147 Designing Sales Territories 148

Stages in Sales Territory Design 148

Sales Analysis for Managerial Decision Making 156 Type of Evaluation System 156

Sources of Information for Sales Analysis 157 Type of Aggregation,of Information to Be Used in Sales Analysis 159

Illustration of a Hierarchical Sales Analysis 161 Summary 165

Comprehensive Cases for Part One 173

Case 1.1

The Valley Winery 174 Case 1.2

Health Care Office Solutions, Inc. 179

PART TWO

IMPLEMENTATION OF THE SALES

PROGRAM 182

Chapter Six

Salesperson Performance: Behavior, Role

Perceptions, and Satisfaction 184

The Changing Role of the Sellers 184 Learning Objectives 185

Understanding Salesperson Performance—Why Is It Important for Sales Management? 186 The Model 187

The Role Perceptions Component 187 The Aptitude Component 188 The Skill-Level Component 188 The Motivation Component 189

The Personal, Organizational, and Environmental Variables Component 190

Rewards 193 Satisfaction 193

The Salesperson's Role Perceptions 195

Stages in Developing the Salesperson's Role 195 Stage 1: Role Partners Communicate

Expectations 195

Stage 2: Salespeople Develop Perceptions 195 Stage 3: Salespeople Convert Perceptions into Behaviors 196

The Salesperson's Role is Vulnerable 197 Boundary Position 197

Large Role Set 198 Innovative Role 198

Role Conflict and Ambiguity 200

Common Expectations and Key Areas of Conflict and Ambiguity 200

Consequences of Conflict and Ambiguity 202 Managing Conflict and Ambiguity in a Salesperson 204

Role Accuracy 204

Nature of Role Accuracy 205 Summary 207

Chapter Seven

Salesperson Performance: Motivating

the Sales Force 214

Salesperson Motivators 214 Learning Objectives 216

The Psychological Process of Motivation 216 Major Components of the Model 217

Expectancies—Perceived Links between Effort and Performance 217

Instrumentalities—Perceived Links between Performance and Rewards 220

Valences for Rewards 222

Can the Motivation Model Predict Salesperson Effort and Performance? 223

The Impact of a Salesperson's Personal Characteristics on Motivation 224 Satisfaction 224 Demographic Characteristics 225 i'Job Experience 225 "" Psychological Traits 226 Performance Attributions 227 Management Implications 228

Career Stages and Salesperson Motivation 228 Career Stages 228

The Problem of the Plateaued Salesperson 232 The Impact of Environmental Conditions on Motivation 235

The Impact of Organizational Variables on Motivation 235

Contents xv

Chapter Eight

Personal Characteristics and Sales Aptitude:

Criteria for Selecting Salespeople 244

The War for Talent 244

Learning Objectives 245

Are Good Salespeople Born or Made? The

Determinants of Successful Sales Performance 246

A Review of Past Research 247 The Costs of Inappropriate Selection Standards 248

Characteristics of Successful Salespeople 249

Characteristics Sales Managers Look For 249 Research Concerning the Personal Characteristics of Successful Salespeople 250

Overview of Findings 251

Job-Specific Determinants of Good Sales

Performance 259

Selling Different Types of Products and Services 259 Different Types of Sales Jobs 260

Implications for Sales Management 261

Summary 261

Chapter Nine

Sales Force Recruitment and Selection 268

The Real Value of Hiring Good Employees 268

Learning Objectives 269

Recruitment and Selection Issues, 269

Who Is Responsible for Recruiting and Selecting

Salespeople? 272

Job Analysis and Determination of Selection

Criteria 273

Who Conducts the Analysis and Prepares the Description? 273

Content of the Job Description 274 Determining Job Qualifications and Selection Criteria 276

Methods for Deciding on Selection Criteria 276

Recruiting Applicants 277

Selection Procedures 283

Concerns about the Use of Tests 288

Guidelines for the Appropriate Use of Tests 289

Equal Employment Opportunity Requirements in

Selecting Salespeople 289

Requirements for Tests 290

Requirements for Interviews and Application Blanks 290

Summary 291

Chapter Ten

Sales Training: Objectives, Techniques,

and Evaluation 297

Military Training and Sales Success 297

Learning Objectives 298

Issues in Sales Training 299

Objectives of Sales Training 300

Increase Productivity 300 Improve Morale 300 Lower Turnover 300

Improve Customer Relations 301 Improve Selling Skills 301

The Development of Sales Training

Programs 302

Creating Credibility in Sales Training 303

Training New Sales Recruits 306

Training Experienced Sales Personnel 307

Sales Training Topics 308

Product Knowledge 309 Market/Industry Orientation 309 Company Orientation 310

Time and Territory Management 310 Legal/Ethical Issues 311

Technology 311

Specialized Training Topics 312

Sales Training Methods 313

On-the-Job Training 315 Classroom Training 316 Electronic Training Methods 316

Measuring the Costs and Benefits of Sales

Training 317

Sales Training Costs 317 Measurement Criteria 318 Measuring Broad Benefits 319 Measuring Specific Benefits 319

Recent Trends in Sales Training Evaluation 320

Summary 321

Chapter Eleven

Salesperson Compensation and Incentives 327

Characteristics of Great Sales Compensation

Plans 327

Learning Objectives 329

Straight Salary, Straight Commission, and Combination Plans 332 Straight Salary 332 Straight Commission 333 Combination Plans 334 Sales Contests 337 Contest Objectives 338 Contest Themes 338 Probability of Winning 338 Types of Contest Rewards 338

Contest Promotion and Follow-through 339 Criticism of Sales Contests 339

Nonfmancial Rewards 340 Recognition Programs , 341 Expense Accounts 341

Direct Reimbursement Plans 342 Limited Reimbursement Plans 342 No Reimbursement Plans 343

Making Compensation and Incentive Programs Work 343

Assessing the Relationship Selling Objectives 343

Determining Which Aspects of Job Performance to Reward 345

Deciding on the Most Appropriate Mix and Level of Compensation 346

Dangers of Paying Salespeople Too Much 347 Dangers of Paying Salespeople Too Little 348

Summary 348

Comprehensive Cases for Part Two 355

Case 2.1

California Credit Life Insurance Group 356 Case 2.2

On-Time Package Delivery 364

PART THREE

EVALUATION AND CONTROL

OF THE SALES PROGRAM 370

Chapter Twelve

Cost Analysis 372

Real Cost Analysis Leads to Real Benefits 372 Learning Objectives 373

Cost Analysis Development 375

Full Cost versus Contribution Margin 375 ABC Accounting 379

Procedure 380

The Process Illustrated 384 Direct Selling 387 Advertising 387

Warehousing and Shipping 389 Order Processing 389

Transportation 389 Promise and Problems 391 Return of Assets Managed 391 Summary 394

Chapter Thirteen

Evaluating Salesperson Performance 403

The Case for a Focus on Sales Force Performance Management Systems 403

Learning Objectives 404

Performance versus Effectiveness 405 Objective Measures 407

Output Measures 408 Input Measures 408 Ratio Measures 410

Summary of Objective Measures 412 Subjective Measures 413

Forms Used for Subjective Measurement 414 Avoiding Errors in Performance Evaluation 419

Using a BARS System 421

360-Degree Feedback in Performance Evaluation 422

Summary 424

Comprehensive Cases for Part Three 431

Case 3.1

Wentworth Industrial Cleaning Supplies 432 Case 3.2

Hanover-Bates Chemical Corporation 444