The Sales Function and Multi-Sales Channels：中国经济管理大学 MBA课堂笔记《销售管理：塑造未来的领导者》
The Sales Function and Multi-Sales Channels
中国经济管理大学 MBA课堂笔记《销售管理：塑造未来的领导者》
中国经济管理大学/中國經濟管理大學
The Sales Function and Multi-Sales Channels
Learning Objectives:
After completing this chapter, students will be able to:
· Explain what the sales function consists of and how salespeople affect a firm’s supply chain.
· Identify the various channels in which the sales function can be carried out.
· Explain how effective sales management efforts can align a firm’s sales strategy in a multi-channel environment.
Introducing the Chapter:
This chapter focuses on the sales function, the various channels in which the sales function can be carried out and the aligning of a firm’s strategy in a multi-channel environment.
Salespeople have to take an active role in the supply chain. Selling in the multi-channel environment means that salespeople and sales managers have to integrate their activities with the other channels through which the company sells. Customers want to buy through the channel that is most convenient, and get service in the most convenient way. For that reason, you can start by asking why students buy through the Internet. Is what they bought a product that existed before the Internet? Of course it is, and many also buy the same product category from another channel. So what are the benefits of the channel? In addition, don’t they (the students) expect all channels to operate as one company (a good example is Barnes & Noble)?
This chapter also covers types of salespeople. Since outsourcing sales functions is a form of multi-channel selling, we present agents, reps, and other types of outsourcing options in this chapter. Ask if any students have parents who are salespeople and who they work for. This often uncovers several examples of the different types of salespeople, which you can then use to introduce those positions.
Chapter Outline:
I. The Sales Function
A. Consists of:
1. Locating potential buyers
2. Persuading them
3. Consummating the transaction
B. Can be undertaken by:
1. Salespeople
2. Advertisements to attract customers to a company’s website
3. Service department to take care of post-sales issues.
C. Supply Chain: the complete process of events and people needed to bring a company’s product to the customer
1. Task of Sales force in the supply chain
a. Providing market information to the firm’s strategic planners
b. Creating the sales forecasts: what the salesperson expects to sell in a particular period of time. Used to schedule the firm’s manufacturing, inventory, and shipping functions
II. Selling in a Multi-Channel Environment
A. Multi-channel environment: a number of methods, or channels, to accomplish the selling function.
1. Internet
a. Electronic Data Interchange (EDI): ) takes advantage of the Internet by directly connecting the customer’s inventory management system with the seller’s order entry system
b. Customer Portal: a web site that only customers can enter because it provides them with customized information such as their order history, shipping status, and other personalized data
c. Reverse auctions: customers post their needs on a web site and let companies bid; the company with the lowest bid wins.
2. Call Centers
3. Retail stores
4. Direct mail
5. Trade shows
6. Salespeople
7. Distributors
B. Strategies to reduce costs
1. Purifying the sales job: shift non-selling activities to lower-cost alternatives such as the Web.
2. Outsourcing: hiring another company to carry out a task or set of tasks
3. Break the sales process down into parts and outsource only parts of the process
C. Outsourcing VS not Outsourcing
1. Advantages of company salespeople
a. Company can exert greater control over salespeople’s efforts
b. Greater control over who is hired to represent the company
c. Salesperson will focus on only the company’s products
2. Advantages of Outsourcing
a. Sharing of the firm’s selling costs with other manufacturers
b. Greater coverage of the market for the manufacturer
D. Types of Outsourced Salespeople
1. Manufacturer’s Representative/ Manufacturer’s Agent (Rep): independent contractor who does not take ownership of the product and does not maintain an inventory
2. Distributor: sells for many manufacturers; takes ownership of the products, sells them on consignment, or otherwise maintains an inventory of them
3. Broker: represents either buyer or seller and sometimes both. Can carry an inventory of products but does not take ownership of them.
E. Types of Company-Employed Salespeople
1. Inside Salesperson: Salespeople who work at
a. Company’s facility
b. Distributor’s location
c. Contact/Call Center: an office where customers communicate with salespeople only by telephone or electronically by e-mail or live chat
i. Inbound center: handles calls that customers initiate
ii. Outbound center: salespeople initiate contact
2. Field Representative: sells at the customer’s location
F. Inside Salesperson VS Field Representative
1. Inside salespeople cost less
2. An inside salesperson can see many people without the costs of travel
3. Field salesperson can build personal relationships
G. Account Managers: build sales within specific accounts
1. Geographic rep: builds sales within a specific area.
2. Vertical Market Rep: handles accounts in the same industry
H. Sales Positions
1. Retail Sales Representatives: sell to consumers who come into stores
2. Trade Representatives: sell to organizations in the supply chain, usually retailers
3. Missionary Salespeople/Detailers/Detail Reps: sell to people who recommend or prescribe a product to others but do not personally use it
III. Aligning the Organization
A. Achieving Alignment
1. Technology and Alignment
2. Aligning a Company’s Processes and Goals
B. Sales and Alignment
1. Metric: performance measurement
2. Customer Facing Personnel: people that have frequent and direct contact with customers
3. Suggestive Selling: a suggestion is made to consider an accessory to the main purchase
IV. Chapter Summary
Questions and Problems:
1. In many companies, there is little trust and collaboration between their marketing departments and sales forces. Some salespeople believe that marketing costs money without generating enough leads to cover the costs; some marketing managers believe salespeople are over-paid and want all the credit for any sale, in spite of what marketing has done. What effect would such conflict have on the firm’s alignment?
The departments in the firm are supposed to complement each other and focus on the common goal of selling the way the customer wants to buy. If the departments have a conflict with each other, then the firm’s alignment will be impacted negatively, which will in turn affect sales to the customer and the firm’s efforts to gain a competitive advantage.
2. At EMC, a computer storage company, the joke is that EMC stands for “Everybody Makes Calls,” as in everybody makes sales calls. Similarly, at the Miami Heat (the professional basketball team), every office employee is given a list of season ticket holders to have as their customers. What benefits are there to having everyone in the company call on customers? What possible problems could arise from such a policy?
By having everyone in the company call on customers, all employees have customer contact and understand how customers operate, make decisions, and view the organization. However, not every employee may be a skilled salesperson or even be interested in sales. This could impact negatively on employee morale. Also, the customer may not appreciate every employee trying to make a sale to them, especially when they expect that particular employee to address another issue.
3. Have you ever been on a Web site that seemed to be operated by a separate company other than the one you intended to do business with---either because the prices or service policies were different on the site? Why would such policies occur? Why is alignment across different channels so difficult to achieve?
Student responses will be varied, depending on their experiences. Possible answer: A difference in price and service policies would arise from a change in the marketing and sales strategies. Alignment across different channels is difficult to achieve because different departments might be responsible for maintaining different channels. For instance, in this case, while the Marketing department could be responsible for coming up with the prices of the products, the Information Technology could be responsible for updating the company’s website.
4. Of the types of selling identified in the chapter, which one holds the most appeal for you in terms of a job after graduation? Why? Which has the least appeal? Why?
Student’s responses will vary depending on their interests. A sample answer would be ‘A Manufacturer’s Representative holds the most appeal, because I would like to be an independent contractor selling for several manufacturers ‘or ‘An Inside salesperson job holds the least appeal because I would not like to be tied down to selling for one company’.
5. In the pharmaceutical industry, booking time with doctors to present drug information to them is the most difficult task. Yet, companies seem to continue to invest in salespeople to book doctors’ time instead of other sales methods. Why do salespeople continue to be the most effective method of reaching doctors? What other methods might be used to help pharmaceutical salespeople book time with doctors?
A pharmaceutical company may want to focus more on researching and developing the drugs and finally presenting the information to doctors. Because doctors are busy booking their time is not easy and they may ignore other channels. However a one to one session with a salesperson would have a big impact. If the salesperson is trained well and good at what they do, they will persist until they accomplish the result they want to accomplish. Other than a physical visit salespeople can use telemarketing to book time with doctors.
6. In some companies, customer service is carried out by the salesperson. In others, it is the responsibility of a separate department. When would a separate department make more sense? When would it not?
If the kind of service required is very specialized the salesperson may not be the best person to carry out the customer service as he or she may not be trained for it. In such a case a separate department take care of customer service. If the service needed does not require a specialist, then the salesperson can carry it out
7. How do salespeople affect the supply chains of their firms?
Salespeople can play an active role in the supply chain, for instance by organizing resources inside and outside the firm in order to complete a sale to a customer. They can also affect the supply chain indirectly-for instance by turning in a sales forecast, which is then used by other employees in the supply chain to determine the products that need to be ordered and delivered to customers.
Answers for Chapter Caselets:
Caselet 2-1
Hereford Promotions
Sandy’s promotional products agency is experiencing a lot of customer churn and little growth. She is considering adding a new salesperson so that the company can grow.
Case Question:
What alternatives for growth might Sandy consider? Can you think of some multi-channel options she might pursue?
Sandy might consider how to retain the customers she has as well as how gain new customers. Most students will focus on growth only, because of the question, but if you discuss this in class, encourage students to think about how to free-up current salespeople so they can acquire new business.
Multichannel options:
· Internet: She could pursue the option of having a customer portal, particularly for customer retention and re-ordering, if that can also free up salespeople to make more new account calls. Hiring an additional salesperson would be an expense she cannot afford right now. Customers can order online on a website that provides each customer with customized information. The customers could track their orders online.
· She could also set up a call center to handle customer orders and complaints, as well as possibly bring in new accounts or prospect for the salespeople. Alternatively, she could hire a call center company to perform the function for her, either on a per-call basis or perhaps on some form of performance-based compensation.
Caselet 2-2
Marchetti Machines: One Big Happy Family
Emily is experiencing challenges with a service manager who gave negative information to a customer about the machines he bought. In addition, the company is separating sales forces. This case is about the difficulties in aligning service and sales functions, especially if sales functions are split into separate departments.
Case Questions:
1. How should Emily handle the problem with Louis Ruggieri? What should she do about the account? What should she tell Frank if the account is lost completely?
While Emily would love to reprimand Louis and let him know that what he told the client led to a loss of business for the company, she does not have the authority to do that. She could remind him that in order to support the organization’s goals, his department should be willing to offer quality service to customers. Either way, she should elevate the problem to her boss, to the level appropriate for then taking it to the service area and gaining some resolution. Emily should have someone well above Ruggieri contact the client and assure them of the company’s commitment to offer excellent service to them. Further, the CFO needs to see statistics regarding the system’s reliability, as well as the metrics upon which Ruggieri is evaluated (such as mean time between service calls) in order to demonstrate reliability. Whether or not the account is lost completely, Emily also has the problem of how to keep Frank and others selling that system. The same data provided to the customer should be provided to salespeople so their confidence in the product will be maintained. In addition, Frank needs to know that the problem has been elevated and won’t happen again.
2. What problems are likely to occur because of the reorganization? Did these issues exist before the reorganization and will these issues be better or worse as a result of the change in structure?
There will be alignment problems because of the reorganization. Because inside sales and distributors will be in a different division from direct sales, coordinating their activities will be difficult. There might be conflicts or duplication where the distributors and direct sales team sell to the same accounts. These issues already existed and the reorganization will probably make them worse. In addition, however, compensation should be structured such that no matter who sells, the rep who owns the account is compensated. A distributor who loses compensation for selling to a direct account will not sell to that account for long.
Role Play:
Mechanix Illustrated
Assignment: Break into pairs, with one person taking on the role of Bill and another Sandy. Bill should develop a list of objectives (use the SMART format from Chapter 1) as well as a list of concerns regarding outsourcing the selling effort. Sandy should develop a particular sales format (telephone, field, etc.) and prepare a list of advantages for that format. Once prepared, then role play the sales call by Sandy to Bill.
Bill
Examples of objectives-
· To increase the subscriber base by 10% within the next year
· To increase the advertising sales by 10 % within the next year
Example of concern for outsourcing-
· Fear that Sandy’s company may not focus on Bill’s customers or afford them the same attention that Bill’s company would, leading to customer dissatisfaction and a decline in sales
· A feeling of loss of control over the selling process because Sandy’s firm will be in charge of the sales and subscriber management
Sandy
Sales format
Example of a sales format: Telephone
Advantages
· Reach a large number of people without having to physically visit them
· Good way to maintain a good relationship with existing customers, giving them a more personalized service
Self-Assessment:
In your copy of Sales Management, you will find an Access Code Card. By using this code at www.pearsonhighered.com/tanner, you will gain access to the SAL program. Students will find an Access Code Card in their copy of the book as well. The first SAL instrument is addressed in the text, the second is provided as an additional exercise.
IIIB4 - How Motivated Am I to Manage?
This is a very short, one-dimensional scale that simply attempts to answer whether someone is motivated to manage others.
IIC6 - What’s My Negotiating Style?
There are several dimensions: self-promotion, ingratiation, exemplification, supplication, and intimidation. An interesting class discussion is the degree to which these are only negotiating styles or preferred ways also of dealing with managers, professors, or others in authority.
Using Videos:
Go to the website with videos from Selling Power and consider the two videos selected for this chapter. Listed below are potential ways to introduce each video and questions you might consider to encourage further discussion after you have viewed the videos. To access the videos go to www.pearsonhighered.com/tanner.
Effective E-Marketing: Janine Popick
Janine Popick’s company went from sending 40 emails a day for a client to 4 million emails a day. While the number of emails a day is staggering, her company is very dedicated to avoiding spam and they monitor each email that is sent out so that it does not fall afoul of the CAN-SPAM act. Her discussion is very specific to email and provides tactics for effective email.
Questions to ask are:
1. Popick says you have about 5 words in the subject line of an email to get people to open the email. How would you translate this to how a salesperson gains someone’s attention or permission to present?
2. She also says that testing email is very important – again, how does this relate to other forms of communicating with customers?
3. Finally, Popick talks about the differences in relationship quality and the impact that has on email effectiveness. What does that mean to the sales rep who is looking for a way to generate prospects from a customer list?
A Bad Super Bowl Commercial Wins Big: Monica Messer
In this video interview, Gerhard talks with Monica Messer, the chief operating officer of a company that was moving from just selling lists to more vertical marketing services. The company had no brand identity, so creating commercials was a challenge. The company decided to do the commercials entirely on their own, and produced their commercials just three weeks before the Super Bowl, when the commercials were to be launched.
1. Messer talks about the need to create capacity in case the commercial was a success. Yet, the company didn’t plan for the effect on salespeople. Does that mean that management failed? What options did management have to plan for success so that the sales force could have been prepared?
2. The call to action was noted as important. How does the concept of call to action apply to other forms of marketing communication?
3. What were the benefits in the commercial that were shown? What are the benefits of the planned commercial? How do the benefits differ and how are they similar across the two commercials?
Full Case Recommendations:
Lexington Industries is a case that has multi-channel implications as the company examines different sales force options. The case is essentially an ethics case involving sales in Asia; however, you can also develop the issues of channel choices surrounding market entry decisions.
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Other In-Class Exercises:
If you can display the web in class, bring up www.nationwide.com. Nationwide is an insurance provider with 4500 contract agents. On the site, you can point out that students can request a quote online and even buy their insurance online, they can find the nearest agent, or they can click on “contact us” in the upper right. Click on that and you’ll see an 800 number or the opportunity to email. So here are 4 ways to get insurance. Note that Nationwide agents are contract agents; they have contracts to provide Nationwide insurance but they are not employees of the company. Go back to the home page and click on “Find an agent.” You’ll see that the 800 number is again provided. Ask students which channel would Nationwide prefer you buy your insurance from? (The agent is the most expensive, followed by the 800 number, with online being the cheapest. But you can also talk about an agent’s ability to cross-sell or upsell – don’t let the class assume that cheapest is best. I’ve talked with Nationwide, and their preference is an 800 number due to the balance between cost and value, but the people I’ve talked with will also tell others in the firm the agent channel is the best.) Then talk about which ones they would prefer. What would make a buyer prefer one channel over another? Poll the class as to which channel they buy through.
Another interesting experience is to have students break into small groups and design a channel strategy. Pick a product they may not be familiar with – like plumbing supplies – and ask them to develop channel strategies that include contractors, architects, and the like. Due to time constraints, you can assign different groups to different markets (like one group takes architects, another group takes contractors, and a third plumbers). As they report out on their channels, probe to determine how much of the buyer’s buying process they assumed and took into consideration. Remember things like information search using the web and the use of trade shows – where do those fit into their channels?
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