7Tietgen Business College Marketing Management Education

PERSONAL SALES
Compendium
Teaching Notes
Fall semester, 2009

Michael Tommerup (joto) July 2004 Revised September 2009

This compendium covers teaching notes for the Marketing Management course in Sales. Reference is mainly made to the textbook The SPIN Selling Fieldbook written by Neil Rackham. This textbook will give you a more detailed insight into the SPIN selling technique, which has only been covered in a limited way in this compendium. This compendium and additional material / overheads available on BlackBoard supplement each other. Combined the mentioned material covers the curriculum for the Sales course. This compendium discusses the following topics (in the table of Contents)

Table of contents
Table of contents....................................................................................2 1: Introduction to Sales: what is sales ? ...........................................................................................................4 1.1 The functions of a salesman...........................................................4 1.2 Classification of sales/ different types of sales ....................................5 Table 1.1: Different types of sales and tasks............................................5 1.3 Key characteristics of a good salesman..............................................6 2. How do organizations make buying decisions ? ........................................9 2.1 The Buying Process........................................................................9 2.2 Buying Situations...........................................................................9 2.3 The Buying Centre - Who makes the buying decisions ?......................11 2.4 Evaluation of supplier and product solution.......................................12 2.5 Relationship selling ......................................................................12 3.1 The Sales Process - as seen from both sides.....................................14 3.2 Milestones...................................................................................15 3.3 Conclusion..................................................................................16 4. Needs the basis for all sales ...........................................................17 4.1 The Buyer's Personal Needs............................................................17 4.2 The Buyers Functional Needs ........................................................19 4.3 Buying Motivation ........................................................................19 4.4 From implied needs to explicit needs...............................................21 Table 5.1: The Fab grid (features, advantages and benefits)......................25 6: Prospecting / Opening .......................................................................26 6.1 Prospecting / qualifying a lead........................................................26 6.2 Prospecting How?......................................................................26 6.3 The "Pre-approach": Planning the Sale.............................................28 6.4 The Opening................................................................................29 6.5 Ten Well-known Opening Techniques...............................................30 7. Need Analysis / Interviewing Technique................................................32 7.1 Introduction................................................................................32 7.2 Interview Technique.....................................................................32 7.3 The SPIN Technique...................................................................34 Table 7.2 Situation Questions (survey or situation).................................34 Table 7.3 Problem Questions (probing or need).......................................35 Table 7.4 Implication Questions (confirmation or consequence /consistency. 36 Table 7.5 Need-Payoff Questions (need-satisfaction or Benefits /need-payoff .......................................................................................................37 8.1 The Sales Presentation .................................................................39 8.2 Communication............................................................................40 8.3 Guidelines when planning your presentation.....................................40 9. Handling Objections..........................................................................45 9.1 The Cause of Objections ...............................................................45 Table 9.1: Causes for the customer's attitudes and his objections ..............45 9.2 How to deal with objections ...........................................................47

9.3 Tactics for dealing with objections...................................................49 9.4 After meeting the objection .what then ?........................................50 10: Closing the sales...........................................................................51 10.1 Closing Signals...........................................................................51 10.2 Closing Techniques.....................................................................52 10.3 Ask for the orderand be quiet.....................................................53 11: The Follow-up................................................................................55 12.1 The Value of Time.......................................................................57 12.2 Motivation and Evaluation of the Sales Force ..................................60

1: Introduction to Sales: what is sales ?

What is Sales ? A definition of Sales could be Employment of people to evaluate and understand potential buyers needs .in order to achieve that these potential customers satisfy their needs though the purchase of products and/or services. Personal sales are ultimately about selling products or services, i.e. getting orders now and in the future. But in order to achieve(raggiungere) this, sale is, first of all, about helping the potential customer to perceive their problems and needs, to solve these problems and satisfy needs through acquiring products and services. In consequence, sales is about developing buying decisions.

1.1 The functions of a salesman..

There are many myths concerning the typical salesman and his functions. A survey in the late 1990s among business leaders helped define some of the functions of modern salesmanship: A professional salesman will among other things today be responsible for some of below mentioned functions: - Assisting customers through sharing knowledge on matters like: new products in the market market characteristics, trends etc. approaching consumer segments, new consumption habits, etc. Acting as a source of intelligence to management market trends / new product possibilities new potential segments/customers (potential) product problems competitive pricing issues Contacting potential customers (creating new business) Providing service to customers BDA ( = Before During - After ) Follow-up on existing orders (securing that production is implemented as scheduled and that delivery takes place according to plan/agreement) Participate in and co-ordinate the sales effort (Team selling)

1.2 Classification of sales/ different types of sales

The sales task what does it actually include? Sales are obviously about selling. But sales is much more that. Sales might be categorized from different angles. As such we see different types of selling. e.g.: - Trade sales (sales to trade customers, e.g. distributors, wholesalers, retail chains, etc.) - Consumer sales / retail sales (sales to final consumers in retail stores) - Missionary sales (typically industrial sales, introducing / promoting use of specific products) - Technical Sales (B2B sales of technical products or systems) - New Business - Tele-selling (typically database selling, contacting prospects by phone) These different types of sales often are distinguished by type of customer and purpose of sale. The different types of sale are presented in below model: Table 1.1: Different types of sales and tasks

TASK
Trade To protect position orto develop? Contacts? Missionary
To Protect To protect/ maintain

Type of Sales
Retail
Both

Technical
Maintain business Typically, industrial buyers High

New-buzz
Develop new business Typically, industrial buyers High

Teleselling
Both

Distributors

Limited Level of technical or product expertise needed ? Source: own make joto

Users or influencers Ultimate (to stimulate consumers demand) Might be high. Limited

B2B or B2C

Moderate to high (in high tech areas)

Other classifications might be:

"Short sales" / straight forward sales process, relatively uncomplicated. o The sales take a relative limited time from initial contact between buyer and seller until order/acceptance by the customer. Examples: Retail sales to consumers "Long sales" / Complex sales o This type of sales is often experienced in B2B sales where the impact of making the wrong decision by the buyer might have drastic negative influence on company performance. And cause a negative evaluation of the buyers personal performance.

Reference is made to the Buy Grid Model, which illustrates the B2B buying process. This model illustrates how differences in customers perceived risk and information need in different buying situations will influence the length and complexity of the buying process. o The buying (and selling) process often takes a relatively long time due to: high information need perceived by buyer feeling of high uncertainty in relation to product benefits and need several people within buyers organisation involved in buying decision. Examples of complex sales: Technical selling (e.g. Sales of machinery, new hardware and software, etc.), Project selling (e.g. sales of turn-key factories involving several suppliers), Industrial Selling of raw materials.

1.3 Key characteristics of a good salesman

It is often discussed what makes a good salesman? Some of the key characteristics might be the following to strive for:

Empathy
Empathy is a persons ability to put himself in the place of somebody else; to understand the problems, barriers and desires that might influence the decisions of another person. Empathy should not be mistaken for sympathy. This ability to understand the customers situation is crucial to be able to define relevant product offers with a relevant combination of pricing, service and guarantees.

Ego drive
The salesmans ego drive is connected to his personal need for achievement. A person with high ego drive will focus on solving the sales task - not for the money involved, but more for the sales itself. The salesman uses the achievement of the sales itself to support his ego.

Self-confidence
Self-confidence is a persons inner belief in own abilities and value as a human being. Self-confidence is a result of inner strengths, giving the person the power to take necessary decisions. (The opposite of self-confidence is the fear of failure. Many salesmen lack success because of their fear of failure, which restricts them in making decisions to bring them forward in their relationships with customers).

Trustworthy (attendibilit)
Many salesmen find trustworthiness one of their most important personal characteristics.

The salesmans ability to convey his message in a way that creates confidence is important for the development of a strong buyer-seller relationship. Customers rely on the salesman to deliver what is promised. If the customers realise that promises are empty and not fulfilled, the negative effect on the buyerseller relationship is swift, leading to relationships being disrupted or to a need for compensation (often in the form of discounted prices) from the salesman to the buyer to regain the lost goodwill. If a salesman one time has proven not to be trusted, it is often very difficult to reestablish a strong relationship with a customer.

Positive thinking / Constructive way of thinking

Being constructive in your way of thinking means that you at all times are searching for a solution and positive thinking indicates a general belief that it is possible. The opposite is when people constantly are looking for excuses why this is not possible. There is no doubt that any potential customer much rather would like to spend time with a salesman that, constructively, is trying to find ways of doing something; to solve the customers problems than to spend time with someone who tends to see problems or obstacles.

Strategic and tactical understanding

Salesmen who are gifted with a structural mind and an insight and ability to predict what might happen in the future obviously has the ability to avoid unwanted issues to come up in the discussion with buyers. Good salesmen act in the offence and seek to avoid being brought into a defensive position. The point is to consider alternatives and possibilities before problems arise - instead of after.

Pragmatic
Any salesman has to accept and function within the strategies and policies as defined by the company that has hired him. These policies might reflect decisions relating to the salesmans target group/types of customers, pricing, ability to customise products according to customer preferences and services offered, etc. The salesman obviously has to work within the limitations defined by the corporate strategies - but the salesman has to use good common sense when needed.

Courage
It takes courage to take the initiative to be the one to contact a prospect, to risk a rejection. Many salesmen have felt the fear of the door handle; the fear of being turned down, the risk of defeat - when you make a call to a customer and your sales performance will mean the difference between getting the order and having to accept (another) rejection.

On the other hand, any salesman will come into a situation where a no is necessary and appropriate; either to your customer or to your superior. But a no also carries a risk of influencing negatively your relationship with the other party.

Humour
In most relations it is a fact that it is preferable to spend time with someone that has a sense of humour rather than someone who always is taking himself very serious or tends to be even boring. In many cultures small talk is important to break the ice and establish a sense of relationship and maybe even closeness. As such humour might help to create a sense of personal safety. In many cases of confrontation, a good sense of humour is the good salesmans safety valve.

Charisma
Charisma is a personal characteristic or personal style of some persons that possess this gift and enormous strengths and inspiration based on their personalities. People with charisma more easily achieve confidence and trust from the people around them. We all know examples of political leaders with charisma, like John F. Kennedy, Charles de Gaulle, and President Clinton.

Enthusiasm or the carry away gift

In brief it is showing your feelings and great interest in your product and the customers situation in a positive way. A mix of characteristics, drive and empathy etc.. Sometimes a sale is not only depending on your product and sales skills, but also about the way you present yourself, the product etc.. In fact enthusiasm can be the competitive advantage that sell a product even if you lack a some product knowledge and are less skilled in sales techniques, enthusiasm might turn the meeting into a sales.

The presence of both of the two first mentioned characteristics (empathy and ego drive) are probably the most crucial characteristics for a good salesman. But it is important to understand that both characteristics have to be present. A salesman with a strong ego-drive and low empathy will focus entirely on closing the deal, but at the same time he might not be aware of the customers problems and needs. As a result he might never be able to get the customers acceptance, since he does not adapt his offer to the customers situation and preferences. A salesman with strong empathy and no ego-drive might feel (too) strong sympathy for the customer, not being able to close the deal when the customer has objections.

2. How do organizations make buying decisions ?

A quick brush-up on organisational buying behaviour. It is outside the scope of this compendium in detail to describe the theory of organisational buying behaviour, as this is expected already to be known from the Marketing classes in this study program. We will, consequently, in this context only include an overall view of buying behaviour as seen from the salesmans perspective; with a few important comments to consider when you are planning your sales effort based on an understanding and anticipation of the prospects buying behaviour.

2.1 The Buying Process

Traditionally, the buying process is described as consisting of a number of steps. As recalled from marketing literature, the steps in organisational buying behaviour are: Step Step Step Step Step Step Step Step 1: 2: 3: 4: 5: 6: 7: 8: Recognising a need or a problem Defining the type of product needed Development of detailed specifications Search for qualified suppliers Acquisition and analysis of proposals Selection of a supplier Placing the order Evaluation of product (and supplier) performance

Many purchase decisions are, however, made without going through all the steps.

2.2 Buying Situations

Based on experience with the specific type of buying situation and the perception of already established supplier relationships the buying situation might be defined as New Task Modified Rebuy Straight Rebuy. New Task-situations occurs when an organisation purchases a product/service the first time and the required capital and/or risk is of some significance to the organisation. Examples of such buying situations might be the purchase of production equipment or OEM products to be used in the production of your finished products. The situation is characterised by a long, complex process covering all abovementioned steps in the buying process. Many/several people in various departments

might be involved, and there is a clear perceived need for relevant information in relation to a products solution and its performance. From the salesmans perspective the initial buying process steps are critical in a new task-situation. During these steps the professional salesman can help the customer define the characteristics of the needed product and develop the purchase specifications. When the supplier has the opportunity to work with the customer in theses situations, the salesman can take advantage of creeping commitment and gain a significant advantage over competition. Straight Rebuy simply repeats earlier purchases where the customers have been satisfied with the already established supplier-relationship. Replenishment of raw materials, reorders of OEM, purchase of general office supplies are examples of straight rebuys. Specifications have already been established, prices are known and the customers perceive little or no risk in repeating the order. Straight rebuy purchases are often triggered by internal events such as low inventory levels. Straight rebuy situations are characterised by the limited number of people involved in the purchase in the buying organisation, in many cases these rebuys are actually computerised, e.g. in the case if replenishment of standards raw materials and components. Any salesman would like to establish straight-rebuy-relationships with his customers. When a company is satisfied it continues to order from the same company it has used before. Satisfied, loyal customers are the source of high profitability in the sales effort. The salesmans focus is, consequently, set on keeping the customer happy by securing that orders are delivered on time and that the product and the suppliercustomer relationship continues to get favourable evaluations. Salesmen from competitive companies trying to break into a straight-rebuyrelationship face a tough sales problem. In such situations the salesperson often hopes the present supplier will make critical mistakes (causing the customer to reevaluate the supplier) or he might be able to present a better proposal in terms of a product solution which is better performing, offering higher level of service and/or lower prices. Presenting such an offer might bring the prospect into perceiving that although satisfied right now with the existing supplier - certain doubts are raised in relation to whether the present suppliers offer is optimum. A key aspect for the potential new supplier is to establish necessary credibility in this alternative suppliers ability to supply the product/service as required. The buyer already has experience with and trust in the existing supplier. Most likely, in order to break the straight-rebuy-routine the alternative supplier has to present an offer with some significant advantages compared to the existing, going offer to counteract the credibility (and perception of security) from the existing supplier.

10

Modified Rebuy situation occur when the customer has some experience in purchasing a specific item, but is interested in obtaining more information on alternative products, suppliers and terms (pricing, financing, service, etc.). This situation often occurs when the existing supplier performs unsatisfactorily, a new (improved) product solution becomes available (and known to the potential buyers) or the buyers needs change. In these situations the present supplier needs to convince the customer to continue the present buying pattern through an adequate response to the cause of the buyers considerations. Successful sales representatives often will try to influence several people in the buyers organisation, understanding that typically several people will participate in such buying decisions; and in changing established buying routines.

2.3 The Buying Centre - Who makes the buying decisions ?

New Task- and Modified Rebuy situations typically involve a number of people participating in the process. This group of people, which is referred to as the Buying Centre (or Decision Making Unit (DMU)), is a formal or informal, cross-departmental group of people, which is involved in the buying decision. The participants either have the formal responsibilities for purchasing or they are important sources of information (and opinions/evaluations). Or they participate in the approval of the purchase or specifications. In certain situations, the buying centre includes experts who are not full-time employed, e.g. consultants, architects, industrial designers, etc. The Buying Centre normally consists of people that participate in different roles: users initiators influencers gatekeepers deciders Since these buying roles are well-described in marketing literature, no further presentation will take place here. The sales representative should keep in mind that the person in charge of purchasing (the purchasing manager) has the formal authority to make some of the technical purchasing activities; e.g. identifying and approving alternative, relevant suppliers, negotiating prices and terms of delivery, signing purchase orders when approved by relevant authority in the organisation, etc. In most cases, he does not, however, have the authority to decide type of required product, including product specifications, which will be decided to match users needs and influencers advise.

11

It is, consequently, of the utmost importance that any sales representative realises that he should reflect on the following questions:

Who are likely participants in the buying centre? How do they participate in the buying; and in which part of the buying process? Who has the authority to make the final decisions on important factors (e.g. product requirements, specifications) ? How can the important participants be reached and influenced?

In many cases, the salesman should realise that the real power to accept or turn down your product often is in the hands of a set of influencers, e.g. technical staff, designers, architects; or by users in the production department or in the administration.

2.4 Evaluation of supplier and product solution

At various steps in the buying process, members of the buying centre will evaluate alternative solutions for the buying problem. The choice of solution will be carried through on the basis of choice criteria which basically are founded in a perception by individual and organisational problems and needs. The needs of the organisation as well as the individuals participating in the buying decision will affect the evaluation and the selection of product solution and supplier. Chapter 3 will in detail discuss the organisational and personal needs that in principle will form the basis for the sales.

2.5 Relationship selling

There has in recent years developed an understanding of the increased importance of relationship selling in personal sales. The sales person is the front line representative of the company with its customers and for that matter, the customers representative within the company. The sales persons responsibility is to implement company strategies and action plans in the market. This is only possible if, simultaneously, the sales person develops trust and long term relationship with the customer. As such the sales person can be seen as the representative of the customer in the company; making sure the orders are delivered on time, specifications are followed as defined, and that the pricing is appropriate.

12

3. The Sales Process

The sales process can often be seen as a process developing through several steps, each bringing the potential buyer closer to the final decision of making a purchase. The seller should anticipate and understand that he will have to plan and implement the following steps (often referred to as the sales ladder):

Fig. 3.1: STEP - BY - STEP IN THE SALES PROCESS

Follow-up. Build relationship Close the deal Handle Objections Present Product (FABs)
Problem analysis / Recognition

Opening Preparation Prospecting

Preparation/prospecting reflect the salesmans planning task of identifying and qualifying customer leads. The Opening relates to the initial contact; when the salesman has contact with the prospect the first time. For on-going sales-relations the opening illustrates basically any contact situation, where the salesman instantly has to develop interest from the buyers side to be allowed to make his pitch. Problem analysis/ recognition covers the sellers analysis of buyers problems and needs and, simultaneously, the development of potential buyers understanding of problems that eventually might be solved though a purchase of a product or service. Presentation of product is the salesmans presentation of his offer which is geared to offer a solution to the potential buyers problems as earlier identified. Through this process the salesman has to be prepared to handle any objections from the potential buyer. When the buyer is ready to reach an acceptance of a deal, the buyer closes the deal. As soon as the deal is closed, the salesmans focus changes to achieving future sales though efficient follow up. Only when the buyer is satisfied with the deal, the salesman can hope for additional future sales. Effective follow-up is, consequently, an

13

important tool to secure a strengthening of sales relations and to establish the sales company as a relevant supplier for future orders. The salesman must plan his actions for each step realising that a well prepared salesman has a much better chance of successfully closing the deal than a salesman that entirely relies on his gift of talking. Many of above steps may be handled using reliable selling techniques, as we will cover in later chapters.

3.1 The Sales Process - as seen from both sides

The figure below illustrates that the seller and the buyer goes through different, but related steps on their way towards the agreement / deal. The seller must realise that he should assist the potential buyer to go through this stages towards making the purchase (accepting the deal).

Table 3.1 The sales process from both sides The seller
The opening Identification of needs

The buyer
Evaluation of the seller Perception of problems / Need assessment Dealing with concerns Why relevant for me ? Evaluate alternatives

Presentation of product Demonstration of offer/benefits Argumentation

Closing the sales - achieve acceptance? SALES (YES / NO) Ref: own make

Purchase decision - accepting?

This model illustrates that the buyer is going through a mental (decision-) process; and that he most likely is not ready to accept the offer before having dealt with the different stages. If the seller tries to force the potential buyer to make a quick acceptance, he might in most cases experience that the buyer rejects the offer maybe caused by lack of understanding or acceptance of own problems and needs or not understanding how the product benefits will help to solve his problems and needs.

14

3.2 Milestones
Milestones represent steps towards reaching the ultimate goal; signing the order. No contact should be made to any existing or potential customer without having a clearly developed goal for each customer interface. Contacts without a clear purpose will only result in time being wasted; on the customers side as well as on the sellers side. And wasting your potential customers time will certainly not help to develop a stronger relationship between buyer and seller. The salesman obviously must set up objectives for each customer contact. These objectives are often referred to as milestones. What could be realistic and operational objectives or milestones for your customer contact ? Typical milestones could be: to agree on a time for the first sales call / interview (typically when making (initial) contact by phone) to be allowed to make a relevant description / analyses of the prospects situation (though an interview) to identify 3 4 important buying motives to prepare in-depth analyses/calculation of one or more of the buyers situations. to identify the buying centre who are the influencers? who has the authority to take the final decision ? who selects suppliers, etc. ? who approves prices ? who finalises the contract ? to present and demonstrate the product to agree on final proposal to be prepared and forwarded to make the customer accept the offer to keep the customer satisfied with you as a supplier !

Following each customer contact the seller should carry through an evaluation of the meeting. This post-evaluation might focus on the following aspects:

15

What was achieved from this contact ? Was the milestone reached ? o why, why not ? - What should be the next steps ? The result of such evaluation often is being distributed to sales management and relevant departments for internal follow-up. -

3.3 Conclusion
Selling is more than fast talking. Selling is about understanding the problems and needs of the potential customer, and being able to help him towards making a purchase decision that can help him solve his perceived problems and needs. A well planned approach to selling will increase the chance of success. The salesman must expect that the buyer has to go through several mental stages before he is able to reach an acceptance. Effective selling has to do with helping the customer to take the necessary steps towards the sellers ultimate goal, closing the deal.

16

4. Needs the basis for all sales

Initially, it is crucial to understand that any salesman is unable to sell any product if the potential buyer does not perceive a problem and a related need that can be solved through the purchase of a product or service. Sowithout needs no sales! Buyers do not buy products they buy need satisfaction (solutions) - or in other words: buyers buy what the products can do for them (= product benefits) not the product itself and whatever features it might have ! The needs we try to satisfy act as motivators for our behaviour. The needs represent in this case our wishes and problems. As such the potential buyer will be in a situation where he is faced with some key questions: What is the consequence to me if this need is not satisfied? What is the value to me of solving this problem?

What is the price/cost to solve my perceived problem (satisfy this need)?

The buyer will look for products with benefits that will help him solve the problem or need. In buying situations it is worthwhile to distinguish between organisational or business needs (functional needs) and personal needs. Sales experts in this relation often differentiate between a business win and a personal win. A business win is what the company gets from acquiring your product. A personal win is what the individual (buyer) will benefit personally, when your product or service is installed and working successfully. Organisational buyers will not buy until they recognise measurable benefits in both areas. Make sure to take the necessary time to identify how the potential buyer will be better of in terms of greater convenience, additional prestige or professional acknowledgement and respect from colleagues and superiors; or for that matter, eventually, in higher income. This understanding might help trigger the buying decisions.

4.1 The Buyer's Personal Needs

We are all acquainted with Maslows hierarchy of basic needs. Some of these needs are reflected in the below list of personal needs, which are universal and valid for everybody; and as such often recognised with professional buyers, too.

17

Security People are motivated by safety, in their job, in their life in general, in their retirement. The need for security includes the elimination of fear of making the wrong decisions. Many buyers might not be motivated by the cheapest price; simply due to fear of making the wrong decisions in choosing a supplier that might not deliver products within specification or at the agreed time of delivery. Anytime that you can show a customer that he or she can be safer as a result of making the decision to buy your product or service, you can create buying desire.

Togetherness The human being is a social animal. Most people prefer company from being alone. Convenience Laziness is a fundamental characteristic of most people. We all try to do everything as easy as possible. If buyers can avoid doing extra work, they will! If your total product- or service offer might include ways of making planning or daily work routines easier and less time consuming for the prospect you might create buying desire.

Acceptance We all have the need to belong to a group, to get accepted and respected at work and in our private lives. Achieving this personal goal satisfies our deep need for belonging and self-worth. Acknowledgement One of the most powerful motivations for individuals is status or personal prestige. We all in varied degrees have the need to be acknowledged for what we do; in our free time and certainly in our jobs. We want to feel and to be perceived as important and valuable, and we want people to look up to us. When you can structure your product offer to enhance the status, respect, and prestige of the prospect, you can touch on a deep human need and, consequently, trigger buying desire. Freedom Freedom to choose; freedom to do what you want and to have the time and money to do so. So perception of "freedom" is about: Availability of "personal time" Your private financial situation Self realisation/ moving personal boundaries/ developing personal competence/leading the field. The desire to have a meaningful job, to have challenges, and to be able to move personal borders are important to many people.

18

When you promote your product or service as something that might help people reach even greater heights of personal success and self-realisation, you might generate a desire to purchase. We want to be considered as up-to-date and be seen as modern. Many people want to be leaders and trendsetters in their work and in their social group. Many people might buy your product or service simply because it is the newest on the market. They are the early adaptors, believed to amount to between 5-10% of the total market. When you tell an interested prospect, You will be the first person in your industry with this product, you might create immediate buying desire among early adapters.

4.2 The Buyers Functional Needs

Organisations have needs for products and services to be able to produce. Functional needs are the need for products and services in organisations; sometimes referred to as Business to - Business needs or Organisational needs. The organisational buyers job function is obvious first of all to act in a purchasing function; to buy products needed by the organisation. This relates to the buyers responsibility in his job. Functional needs and personal needs are, however, often satisfied simultaneously. Functional needs are often characterised as follows: - will necessitate long decision processes - needs are defined by several people; the purchase itself often involves several employees (the Buying Centre) - the purchase need is defined rationally (..we are buying for company money) Three 1. 2. 3. approaches to functional needs are: The customer is dissatisfied with the present situation There is a chance of improving the present situation There is a risk that the present situation will be worse

But often simultaneous satisfaction of personal needs take place - although this often might be justified by rational arguments (I always fly Business Class to be relaxed and better prepared to handle my planned meetings on arrival).

4.3 Buying Motivation

The two major reasons that people buy or do not buy are related to a desire for a gain and a fear of a loss. The desire for gain is obviously focused on an improvement in conditions of some kind.

19

The fear of a loss is related to making buying mistakes, or getting stuck with something you do not want, do not need, cannot use or cannot afford. Since this might have happened to buyers several times before, they are cautious about allowing it to happen again. Everything you do or say that might increase the prospects positive perception of potential gains from making the buying decision, will move you closer to a deal. Simultaneously, everything you do or say that lowers the prospects fear of making a mistake or reduces the potential loss will move you towards the sale as well. Buying motivation is often related to factors that has an economic impact. But motivation is certainly not just a matter of price. In the end, buyers are definitely motivated by a variety of different factors that might have an economic consequence. Strong buying motivation is often related to something missing or a lack of balance in the companies operational system; either in the present situation or in the buyers expectations for the future. Basically, we see four different factors that are scarce in most companies: time money space manpower. Sales to business customers will in most cases be tied to a problem or perceived need that can be described with these factors. As you will notice, in the end all four factors have a cost effect for any company. Buyers desire for achieving a gain might as such be related to factors that will .. increase productivity or decrease cost. Increased productivity can for instance be achieved by: Improved product quality Improved production speed Higher human productivity Improved employee motivation Better, more efficient use of existing capacity / space Achieving higher ROI Similarly the buyer might be motivated by factors that will decrease his cost-level, e.g.: Lower purchase prices Reduced sales cost Reduced personal cost

20

Lower production cost / unit cost Lower maintenance cost Fewer break downs on the production line Lower inventory cost Lower scrap cost Reduced number of customer complaints Less de-motivation among employees Less space requirement.

In conclusion, professional buyers are often motivated by factors with an economic impact in relation to productivity or cost-levels in the buyers organisation. It is up to the seller to identify relevant factors where the product or service in question might be able to represent such benefits to buyer. It is, however, crucial to recognise that the motivational power of the prospects desire for a gain in most cases is weaker than the negative motivational power of his fear for a loss. Or in other words, it is believed that the prospect will be more influenced by his fear of making the wrong decision than by the motivation derived from a potential gain. This is why the salesman should be very focused on reducing the prospects fear of a loss, e.g. through offering guarantees, use of relevant references (satisfied customers) that can support the existence of your product benefits.

4.4 From implied needs to explicit needs

In most businesses you should find a never changing desire to increase productivity and/or to decrease cost of operation in the organisation. In many cases the potential buyers have not identified areas of improvement, but when asked into specific functional areas of their operation, a potential buyer might express his desire to improve the situation based on statements of perceived problems, dissatisfaction or operational difficulties in the actual situation. Such statements, describing general problems or dissatisfactions perceived by a potential buyer, are what we refer to as Implied Needs. Implied needs might develop to Explicit Needs, which are reflected in the potential buyers statement of a desire to act. This development in peoples perception of own specific needs represent a mental process in the head of the potential buyer. We will later discuss how we can help fuel this process through relevant questions that make the potential buyer think about the problem, maybe even talk about the dissatisfaction - and by that letting the perceived problem increase in importance. (Ref. Neil Rackham; S.S. Fieldbook, McGraw Hill, 1996, pages 63-73)

21

5: The Product Analysis / Preparing the FAB

5.1 Introduction
It is the responsibility of salesmen to sell products and services. It is, however, crucial to understand that buyers do not buy products as such, but they actually are motivated by the benefits the products represent. It is basically about what the product does versus what it is. Inexperienced salesmen might present their products citing the many features or product specifications that describe the product in technical terms. But buyers buy what the products do for them; not what the product is! (....they buy benefits). Any salesman must, consequently, spend time to understand his product. What benefits does his product offer the potential buyer, especially compared to competitive offers. Features are data, facts og characteristics of your product or service. They relate to craftsmanship, design, durability and economy of operation. Benefits are whatever gives the costumer an personal (or company) advantage or gain. A general benefit shows how a feature can be helpful to the buyer, but a specific benefit is directly related to the specific need expressed by the buyer. A product analysis involves describing the products FAB, which includes:

Features
Features
-

- Advantages - Benefits.

Characteristics of your product or service: Facts, product data, specifications. What does the product do? What does the product consist of?

Advantages
What is the result of above ? How can the product help? How can the product (and its features) be used? Which advantages does the product offer the buyer?

Benefits
How does your product meet the needs of a buyer? What additional value would your product mean to the buyer? Why would that appeal to the buyer?

22

Which problems (needs) would that help solve for the buyer?

Making a strong FAB description is not something that comes easy. It takes time and thought. Often benefits might not be realised immediately, but the experienced salesman never stops working with his FAB analysis. This analysis is often referred to as a product analysis. He might not think of it as working with his FAB but any interface with customers and dialogues with colleagues in various departments might make the salesman realise new benefit opportunities for his (potential) customer. Manning and Rice (p. 148) define bridge statements as follows; A bridge statement / bridging is when you connect the features to the benefits. You can start your statements with a feature ending up with a benefit or the other way around. Examples: Alternative 1: The product is nationally advertised, which means you will benefit from more presold customers. Alternative 2: "You will have more customers interested in buying this product, since it is already national advertised. When preparing your product analysis (FAB description) you must remember that this analysis and its conclusions must produce a framework to communicate the benefits of the product offer. For each relevant feature you, consequently, must develop a clear, logical link from Feature, through Advantages to the Benefit which is relevant and meaningful to the buyer. Be aware of the fact, that one feature might offer several advantages and potential benefits. Additional, remember that what might be a benefit for one potential buyer, might be totally irrelevant for another. Some authors, like Manning & Reece, use features and benefits, which simplify you FAB analysis. Sometimes advantages and benefits are quite hard to separate, but of course separating them will give you much more insight in your product advantages. When you prepare a product analysis (defining your FAB structure) for the specific product in question, make sure that you find several potential benefits, since you cannot be certain which one(s) might be relevant for the buyer - until you have uncovered the buyers situation (through questioning technique). Work with your FABs and rehearse how to present these to a potential customer in an easily understood way.

23

Be careful about the subject of quality. Many salespeople focus on that they are selling a quality product. But quality itself will never be the primary reason for buying anything. What is more important than quality is "utility". When a salesperson says My product is the highest-quality machine in the business, it does not matter. The only thing that matters to the prospect is, will it do the job for me? Is it adequate for my purpose? Will it do what I need done ? You might claim that Rolls Royce and Mercedes are high-quality automobiles. But if all you need is a car to go back and forth to work, you dont necessarily need to buy one of these brands. Quality itself is not really an argument. If you do feel that the quality aspect is important to your product presentation, then make sure to define what you mean by quality. Which quality aspects would represent a meaningful benefit to the customer? Are we considering durability, sturdy construction, use of specific raw materials, performance aspects or.? Make sure to be precise, because quality itself does not say it all.

24

Here are some examples how different product (and company-) features can be transformed into potential benefits for a prospect.

Table 5.1: The Fab grid (features, advantages and benefits) Features
This food item has the best, natural ingredients possible We have planned a strong introductory advertising campaign

Advantages
High quality finished product. Attractive to many consumers. which will generate high awareness of the new product. which will generate interest in the relevant consumer target group Reduces need to store large quantities in customers warehouse Additional orders can be filled quickly. (short shipping lead time) Knowledge and background in food industry

Benefits
High sales potential / High profit potential Will support / generate high sales. Will result in higher profit for distributors. Requires minimal inventory space; Keeps inventory cost low Prevents out of stock situation No lost sales No stop in production Provides assistance. Helps solve business problems. better decisions will improve efficiency/profit picture High efficiency from first day. Lower cost. Increases your profit Increases your profit

JIT delivery Local distribution center (located close to distributors/retailers) Experienced sales representative

Free training programmes

Quantity discounts Extended payment plans

Will establish technical know-how/competence of your staff. No start up problems Reduces cost Reduces interest cost

Source: of own make joto (See pages 145 154 in Neil Rackham; S.S.Fieldbook)

25

6: Prospecting / Opening 6.1 Prospecting / qualifying a lead

First step that takes place prior to initial contact to potential customers is prospecting. As you will see a lead might be a prospect; when a lead is qualified it becomes a prospect. A lead is a qualified person or organisation who might have the potential to buy your product. A prospect is a qualified person or organisation that has the potential to buy your product. Prospecting is the process of identifying potential customers. There are two major reasons for the necessity of prospecting: - to identify new customers to achieve growth / to increase sales - to identify new customers to replace customers that for various reasons will be lost over time. It is important for the salesman to qualify his leads. The salesman has to establish an understanding of: 1) Does the 2) Does the 3) Does the 4) Does the prospect prospect prospect prospect have have have have the the the the authority to buy ? money to buy ? need for the product ? desire to meet with the salesperson ?

Locating leads and qualifying leads is important to most salesmen. Some salesmen don't have to prospect - but many salesmen rely on prospecting as part of the everyday sales effort to increase their sales and replace lost customers.

6.2 Prospecting How?

This task can be done in different ways here are some suggestions:

Prospecting ---- How??

Cold Canvassing "Orphaned customers" Sales lead clubs Referral from existing customers / networking Get published Exhibitions Direct mail Telephone and telemarketing observation E-prospecting

26

1) "Cold canvas"
This technique is based on the "law of averages". Example: if past experience tells you that 1 out of 10 contacts will buy a product, then 50 calls/contacts might give 5 sales. This sales technique might be relevant for products of general interest, e.g. ..: Office supplies Insurance (B2B and B2C) Book clubs (private customers)

2) Orphaned customers
When the salesman leaves his job to work for other company.their previous customers become orphaned. Some other salesman in the company, obviously, will take over the account; but he might, initially, have to establish the relationships with this customer. These types of customers represent good potential due to the past (and now discontinued) relations to a salesman. Examples are advertising agencies, flower selling (GASA) and many more.

3) "Sales lead clubs" / Networking

"Clubs" of salesmen from different fields often share leads.

4) Referral (referenze)
Referral from existing customers is often an excellent entry into new customers.

5) Have the local paper write an article about you

If possible, the free publicity of being mentioned in the local press obviously might make your company visible in the local area, causing local prospects to contact you. Prospects taking the initiative and contacting you are often highly potential prospects since their contact is a sign that they already have realised a need for your type of product.

6) Exhibitions
Exhibitions and trade shows represent good opportunities to identify potential customers. The seller might attend these exhibitions as an exhibitor or might just be a guest, walking the aisles to study the exhibitors to find prospects. Initial contact might be made at the exhibition to identify the relevant contact persons in the prospects organisation (which most likely might not be present at the exhibition).

7) Direct mail
Direct mail is often used to create visibility, to make potential customers realise your existence hoping that the potential customer will take the initiative to contact you. Be sure to make it easy for the potential customer to make that contact; by phone, by e-mail, by inserted address and stamped coupon/mailer etc.

27

8) Telephone /telemarketing
Contact by phone or e-mail makes it possible to contact many leads in a short time, making it a very cost efficient method. In many cases the initial contact is first made by phone. Primary objective of this initial contact is often to make the prospect accept a meeting.

9) e-prospecting
Searching the Internet is an easy tool to identify potential companies and supply info/background data on the prospect.

6.3 The "Pre-approach": Planning the Sale

Prior to making the initial contact the salesman has to do the necessary planning to increase his chances of success. Step in sales call planning : 1) Determine sales call objectives 2) Develop Customer Profile 3) Develop likely customer benefits 4) Develop sales presentation; with relevant FABs (see Chapter 3)

6.3.1 Determine sales call objectives

Always remember that any contact should take you closer to your final goal. That does not mean that contacting a potential customer cannot be a "survey call" (with the focus on trying to acquire relevant information) - but all calls should not be "survey calls". Then you should have been working in the Market Research Department and not in the Sales Department ! Set SMART Objectives: Specific = be precise; to get an order is not specific enough. Measurable = quantifiable (number, size, etc.) Achievable = must not be too difficult to fulfil Realistic = must not be impossible to fulfil Timed = must define include a clear timeframe, e.g. at this call or before the end of the year. Define relevant milestones and keep those in mind.

6.3.2 Develop Customer Profile

Describe and try to understand the potential customer, even before you have met the prospect the first time. Understanding the potential customer and the company he works for will help to develop the appropriate strategy when contacting the customer. The profile might include information like: - Who makes the buying decisions (DMU)? - The buyer's background. The buyer's organisation? - Desired business terms, purchasing policies of the potential customer? - What competitors are in contact with the prospect?

28

- The history of the account, e.g. past business relations

6.3.3 Trade Sales / Develop likely customer benefits as basis for your sell-in
If you are selling to trade customers, like wholesalers, retailers (chains or individuals stores) or distributors you might consider to prepare a "Customer's Benefit Plan" : Step 1: Select the F-A-B's to present to the prospect. Take time to consider which benefit that would be likely, relevant and important for this specific customer. Step 2: Prepare/consider your "Marketing Plan" involving this specific customer; what is the customers "role" in your strategy? How is your product most effectively used or coordinated with existing equipment. (Example: if your customer is a retailer; how should he promote your products with in-store displays, proper shelf space, and pricing? What other activities (like advertising programmes etc) support the sell-out from this potential customer?) Step 3: Develop your business proposition: pricing, mark-ups, payment plan develop suggested purchase order, trial order ..or ?

6.3.4 Develop sales presentation (with relevant FABs)

-

Prepare the approach, opening, presentation and trial close method.: Prepare relevant SPIN questions (Chapter 5) Prepare how to present / demonstrate the product (Chapter 3 and Chapter Prepare how to deals with objections (Chapter 7)

6)

6.4 The Opening

You might have heard: "You only get one opportunity to make a good first impression? If the immediate impression you create in the prospects mind is negative, it might take you hours or even day to overcome it - if you ever do. When you meet your prospect the initial impression you make is based on primarily on appearance. If this impression is favourable, your prospect is more likely to listen to you; if it is not favourable your prospect may communication barriers that are difficult to overcome. That is why the approach or "opening" is essential for you getting the permission to discuss your product. The approach (Opening) has normally three basic objectives:

29

a) To capture the attention of the prospect b) To stimulate the prospects interest c) To provide a smooth transition into the sales process (the need assessment and product presentation) In most cultures "small talk" is an expected start of the sales call. You may talk about the weather, sports, or almost anything - but you should be cultural aware that certain topics are taboo or less liked in the local culture. In other cultures you are expected to get straight to the point. Act professional, be business focused, and dont waste any time. The situation will obviously have an impact on how you approach the prospect. Some of the common situational variable you might take into consideration is: - The type of product you are selling - Whether this is a repeat call on the same person; have you known each other over a longer time? - Your level of knowledge about the prospect's needs. - The time available to make a presentation (a buyer at a large German discount chain for many years had an alarm clock sitting on the desk. When the salesman started to talk, the buyer would set the alarm for 15 minutes. When the clock rang the salesman's time was up. No matter whether the salesman felt he was finished or not finished!). - Whether the customer is aware of a problem.

6.5 Ten Well-known Opening Techniques

Here are some well-known opening techniques you might consider. 1) The introduction Present yourself, your company, your product.. Negative: This technique lacks the elements of - creating awareness - stimulating interest - opening up for the next selling steps Obviously, neither the worlds most creative nor effective opening !

2) The Referral
Citing a third party, e.g. a satisfied customer, creates initial interest and at the same time helps to establish an immediate element of credibility to your presentation 3) Offering a Benefit Starting up with an expected benefit of your offer. Using this new software will enable you to reduce lead times by . 4) The Product Approach by making the product physical present/hand the customer your product Demonstrate a unique product advantage.

30

5) The Compliment Approach I noticed your new product range at the trade show last week. That is a quite impressive range / you must have high expectation for. "That's a beautiful old building. Have you been here long?" 6) The statement Approach Did you know that we have become the largest supplier of Did you know that Product X experienced the highest growth in the industry last year ? 7) The Question Approach / Getting Agreement on a Problem The market seems to focus on shorter and shorter shelf-life for many products. Would that have an effect or your planning and logistics? 8) The NEWS Approach Did you see the report in Financial Times last week ??? According to 9) May I ask your Opinion - Approach This approach might involve the customer direct in the sales presentation Young people have never had so much buying power as now. Would that have any effects for your industry in the future ? 10) The survey Method Getting permission to ask questions, e.g. I believe that our new ZX 231 could increase your efficiency dramaticallywould you mind answering some questions in this respect?

For Complex Selling Tasks (Project Sales) the opening should help establish that the sales man obtains the right to ask questions; "May I ask you some questions in order to fully understand your organisation's requirements?

31

7. Need Analysis / Interviewing Technique 7.1 Introduction

The Need Analysis focuses on achieving(raggiungere) an understanding of the buyers situation, and to help the potential buyers to understand the consequence of some of the situational factors that might have a negative effect, if not dealt with. This phase in the sales process deals with identification of the potential customers needs/problems, the understanding of the consequence for the buyer of those problems, and the development in the customers perception of own problems and needs. For a deeper presentation of interviewing technique and practical exercises reference is made to the textbook by Neil Rackham; SPIN Selling Fieldbook..

7.2 Interview Technique

The purpose of the interview is to establish an understanding of the potential customers situation, his needs and problems. The key to conducting a basic needs analysis is to question skilfully and listen carefully. Experienced salespeople dominate the listening and let the customer dominate the talking. The more you ask questions and listen carefully, the more the customer will open up and talk to you. As a general rule, the person who asks questions has control. The person who is answering the questions is basically controlled by the person who is asking the questions. Whenever you are asking questions and listening carefully to the answer, you are controlling the information flow of the conversation which is the way it should be. Whenever you are talking in response to a question from the potential customer, the prospect has taken control of the sales conversation. If a prospect asks you a question, rather than answering your question, you might take control of the conversation again by saying: That is a good question. May I ask you something first? You might set up the following objectives for your interview with the potential customer: Objective No. 1

Get relevant information about the customer Get the customer involved Show empathy, understand his situation

Objective No. 2
Analyse / understand the customers needs What are the customer's objectives and policies What are operational problems ?

32

Objective No. 3

Make the customer talk about his own situation and problems Make the customer experience own problems that strong that he wants the problems solved.

Based on the interview, you should have created the platform for presenting your solution in the form of your product offer (see chapter 6). Before this can happen, however, it is important to understand that the salesman must not present his product solution until the customer perceives his problems/needs strong enough. If the customer has not perceived the problem/need to be strong, he will not be able to understand why he should buy your product. There are a number of different techniques to be used to make the customer analysis and to help the customer to realize his problems and needs. One of these interviewing techniques was developed by the Huthwaite Research Group and tested in a comprehensive research project with the help of more than 1000 salesmen and with 35000 sales calls monitored in several countries. Neil Rackham published the findings in his book, SPIN Selling, in 1988. There are different authors, that are using similar techniques, but use different words for almost the same question. This is show in table 7.1 below. Table 7.1: The four Spin questions and their equivalents
1) The Spin Selling by N. Rackham 2) Selling Today by Manning & Rice Survey 3) The New Solution Selling by Eades Open 4) The New Conceptual Selling by Heiman, Sanchez, Tuleja Confirmation New information Problem Need (behovs spm) Implication Confirmation confirming Implication consequence / Commitment consistency (konsekvens spm) Need-payoff NeedBasic issue Solution Benefits / needsatisfaction payoff (gevinst spm) Note: Problem and implication questions are three questions according to Heimann et al. Source: powr of own make and adapted from Selling Today, p 274, Prentice Hall 2007 Attitude Probing Control Issue 5) Secrets of Question Based selling by Freese Status 6) Den effektive slger by Erik Toft

Situation

Situation (baggrunds spm)

33

7.3 The SPIN Technique

As an interviewing technique SPIN is analytical, and requires specific types of questions to be used in a specific order. The SPIN Model suggests 4 different types of questions to help the seller to understand the buyers situation and to help the potential buyer to understand own needs and problems. Table 7.2 Situation Questions (survey or situation)

Type of Question
To establish background facts about the customers existing situation. Typical questions: What? Who? Where? Which? How many? But don't ask too many situation questions, because situation questions might be perceived as boring by the buyer; and, consequently, might eventually course irritation. Looking for background data Describes the customer's overall situation - Will help identify needs that might be fulfilled by seller's product . Remember: - Each question must have a reason ! Situation questions are boring for the potential customer .. .so limit the number of questions

Examples
Who ? What ? Where ? - how many people are employed at this plant ? what products do you produce here? Sales trend ? How large is the warehouse ? Size of production ? Type of machinery in production? How long time have you been using this type of packaging machine ? How do you (normally) finance investments ? Bought or leased ?

What are your requirements / specifications ?

People think about themselves most of the time. All day long, people are thinking about their own problems and concerns. What is of most importance to a person at any given time is on the top of his mind. When you ask relevant questions to the prospect you will trigger these thoughts and concerns. In psychoanalysis this is called a Freudian Slip. Psychologists have found out that if you allow a person to talk freely about himself, eventually he will slip. He will start talking about what he really is thinking, the problems he perceives, and his concerns. The objective of this interview is to identify the customers potential problems and needs and to develop these in the customers own mind from an implied needs (a latent need) to an understanding of more specific explicit needs that are clearly felt (and on top of the mind) and expressed by the potential customer with a desire for a solution.

34

Table 7.3 Problem Questions (probing or need)

Type of Question
To explore problems, difficulties and dissatisfaction Probes customers problems, difficulties and/dissatisfactions. Will describe/uncover problems and risks; Uncovers implicit needs. Asking about specific difficulties, problems, or dissatisfactions perceived by the prospect. Will uncover the prospect's implied needs. Will help to uncover whether you might be able to make the customer perceive: - problems with the present solution (lack of satisfaction) - concern about whether existing solution is sufficient for the future / risk of future problems - a possibility in improving the present situation/achieve better terms; although actually being satisfied NOW! Remember: Make a list of potential problem areas and likely needs before the meeting.

Examples
- Do you have experience an increased amount of product defects during the night shift?

Does this machine have adequate capacity in the season ? Do you have any problems with waste from production ? Are there any odour problems? Have you experienced any break down in production ? Any problems in getting qualified service repairmen on short notice ? Is the machine difficult to repair? Are the employees satisfied with their working position ? any complaints noise problems? What made you mention that, specifically? How does that normally show ???

Is this . satisfactory ?

SPIN actually helps the prospect identify unrecognised problem areas. Often when a salesperson simply asks an open question such as What problems are you having? tie prospect would reply: None!. The prospect isnt lying; he may just not realise that a problem exists. The SPIN model describes four different types of questions to be applied. The different types of questions will bring you from general to particular issues.

35

Table 7.4 Implication Questions (confirmation or consequence /consistency

Type of Question
Implication questions focus on implications, consequences, and effects of the customers problem/difficulty. These questions will help make implied needs/problems larger and more urgent and will help build-up the customers perception of value. Explains / focuses on the effect of a problem Makes buyer talk about problem. Helps making implicit needs into explicit needs - because talking about problems "makes the buyer perceive the problems larger and more urgent Questions addressing the effect or the consequence of the customer's problem(s). This questions will increase the perceived importance of the problem developing implicit needs to explicit needs.

Examples
Example: Have you experienced any negative effect from lack of capacity in the sales season? Like what ? The prospect will evaluate the consequence/implication of no solution against the cost of acquiring this solution. * Why buy ? 1. Lost Turnover 2. Cost of outside work 3. Overtime DKR 4. Higher training cost 5. Loss of quality i.e. seriousness of problem * Why dont buy ? 1. Cost of the solution = DKR 250.000 What is the decrease in terms of cost ?? Does this have a negative effect in other departments ? What does that mean in lost production ? How might that affect your shipping cost? What do the customers say ? Am I correct in assuming? You mentioned..what does that mean ?/ What does that mean on a daily basis?

That is why these questions often are referred to as the sad questions" (describing the negative consequence of the problems) REMEMBER: Preparation / rehearsal is essential!

36

Table 7.5 Need-Payoff Questions (need-satisfaction or Benefits /need-payoff

Type of Question
Encourages the buyer to focus on solutions and to describe the benefits that the solution will bring. As such the questions will be perceived positively by the customer, since the Need-payoff questions are: - Positive - Constructive - Helpful Makes the customer himself express the benefits of a solution (and acute needs). and will, consequently, help to increase acceptability of the solution. Must, obviously, relate directly to your products benefits. When customers talk about the benefits of the solution, it at the same time helps to build the customers confidence in buying the solution. Will help explain the benefit of solving the problem. Will uncover explicit needs. Make the customer talk about explicit needs . This will make the best platform (hook) for the seller's product presentation. These questions will "help" the buyer to present and argue for the solution in relation to the DMU (as part of the buyers "Internal argumentation"). Helps the customer to focus on a solution - without having to consider product proposals.

Examples
- If we could guarantee a quality control system that secures a lower number of defects, what would that mean to your customers ? and to you ? Would it help if? What benefits would it give you if we.? Is that important for you ? What do you consider most important ? What would be the effect if we could increase the output by 14 units per minute If you could increase your storage capacity of say 10% in your existing warehouse, what would be the operational effects ? Would it be important to your customers if we were able to reduce defects by % ? Which of these alternative would make the best solution for you - why ?

These are the happy questions since these questions might help the customer by presenting solutions. These are obviously only illustrations. Your questions should in real life be based on your analysis of the potential buyers specific situation, and keeping the possibilities

37

with your product offer in mind. A further explanation of these tables will follow in class. The result of an efficient interview will be the establishment of one or more explicit needs in the mind of the potential buyer. These explicit needs will be the basis for the salesmans presentation of his product solution. Understanding the customers explicit needs will make it possible for the salesman to present a relevant mix of product benefits - obviously geared to fit to the explicit needs now established in the prospects mind.

38

8:

The Sales Presentation

8.1 The Sales Presentation

When you feel that you have understood the prospect situation, and you have applied the SPIN technique to understand the prospects needs and problems, you have identified the prospects likely motivation to buy your product. The buyer's buying motivation will obviously be linked to the possibility for the buyer to solve his problems by acquiring the benefits that your products offer. Through your interviewing technique you have developed the prospects perception of own needs (and problems) from implicit to explicit. It is now time to make the presentation of your solution; to make the prospect understand that your product represents the right solution for the problems he wants to solve. From what you are telling me, I think we have the product that easily can match what you are looking for. This comment opens up for your presentation. The presentation part of the selling process is your visual and persuasive explanation of your proposal to the prospect - linking the buyer's motivation to some of your products' benefits. Using the FAB model, this presentation will, consequently, link relevant product benefits of your products to his perception of problems and his buying motivation. As an illustration: you could consider his problems or stated explicit needs to be different hooks on a coat hanger. Each of these problems (or hooks) needs a solution in terms of relevant product benefits. During your subsequent product presentation it is your task to match your product benefits to each of the stated explicit needs. You mentioned that your present vans used by your repairmen, have inadequate loading capacity. This should make it impossible for the repairmen to keep in their van all the important spare parts they might need during the day. With our new improved model which does not cost more than the vans you use today your have 20% more loading space which would save your repairmen driving a lot of extra miles back and forth - saving time and cost. When you develop your sales presentation, consider the factors you will use to provide the prospect with the information he will need to make the buying decision.

39

8.2 Communication
Planning a suitable presentation you might make a point out of remembering that all communication normally takes place in 3 levels. a) emotional What your prospect likes/dislikes; Does it appeal to his emotions ? b) physical What your prospect sees, smells, tastes. c) rational Does your prospect find it sensible ? How large, how many, how long time ? .. So, when planning a good presentation try to touch all the customer's senses. It was once argued that the typical human being will tend to remember . Max 5% of what they smell. Approx. 5% of what they taste. Max 10% of what they touch. Max 15% of what they hear. Approx. 33% of what they see. If this is right, it is, obviously, important not only to use your voice to make the presentation, but to apply other techniques, visuals and sensory aids to improve your communication and make it more effective.

8.3 Guidelines when planning your presentation

Here are some key points to remember when you plan your presentation.

Remember the FABs of your offering.

The sales person is the front-line representative of the supplier with its customers. As such the sales person must have an in-depth knowledge of the company he represents, as well as the companys policies, products, etc. In-depth product-knowledge goes beyond knowing the product features. Any product could be described by a large number of features, colour, weight, materials used, price etc, etc. Each of these attributes represents potential advantages and benefits to a potential buyer. The professional salesperson understands that any product feature is meaningless to the customer, if it does not imply a relevant benefit perceived by the buyer. The buyer is motivated by the benefit, only. Effective product presentation, consequently, implies that the seller can explain (translate) each product feature into relevant advantages and benefits.

40

Remember the FABs by heart; do not stumble over your words or you might not sound credible.

Remember your documentation

When preparing your FABs remember to consider your argumentation and proof for the benefits you present. Good argumentation and proof make your presentation stronger, and as such it is important to establish credibility. Examples of proof or documentation you might consider to refer to are: Market research reports / product tests /Test market results Lab tests, research data, graphs of various kinds. Articles, press releases, "Business- or consumer reports", Testimonials / referrals from relevant experts or users

Visualise your arguments

To be effective in the sales presentation a sales person must dramatize the sales message or product presentation. This help to get the message across to the prospect - and to make the message stick to the prospects mind. Visuals or visual aids are devises that appeal to the prospects vision, with the intention to produce mental images of the products features, advantages, and benefits. There are twenty-two times the number of nerves from the eyes to the brain compared to the number of nerves connecting the ear to the brain. If all you are doing is talking, there is a high risk that the potential customer will have difficulties in keeping attention or simply remember what you say. Visuals are extremely important for the prospect to fully understand the product and its relevant benefits, which otherwise might be perceived as abstract. Visuals aids could be e.g.: The Product itself Samples of "what the product/machine" can produce Charts and graphic illustrations (e.g. sales data or performance data) Photographs/videos of product and uses Models / mock ups of product (especially if product is large or not fully developed yet) Sales manuals / product catalogues Letter of testimony from satisfied users Copy of guarantee Sample advertising, posters. The average attention span of an adult is believed to be about three sentences. When you have spoken those three sentences without asking a question, showing a picture, or giving an illustration, there is a high risk that the prospect becomes lost in his own world. He just might be thinking about what he will be doing when you leave.

41

 Demonstrate the product

Most products need to be demonstrated before you realistically can expect a sale. But remember Murphys Law: If anything can go wrong, it will. That is why you should be well prepared for your product demo. You might consider the following principles when you plan a demonstration for a potential customer: 1) Before the demo; tell the prospect what you are about to tell him. After the demo; tell them what you have told him / shown him. 2) Do not oversell; always promise less than you can deliver. If you have promised less, you have a larger chance of succeeding. And you will at the same time reduce the psychological pressure when you make your presentation. 3) Remember, that the primary purpose of your demo is to present your product benefits as part of your argumentation. 4) Start demos by presenting an agenda. This enables you better to be able to control the demo. You might be considering the following agenda for your product demonstration: a) Present the customers present situation (= problems) What I understand is. b) Present the financial implications of this. Which has the following cost implications c) Presentation of your product in general terms d) Presentation of specific FABs of your product that might be of special relevance (maybe 4 - 6 FABs) e) Presentation of specific documentation for your arguments If your competitors have been mentioned during your demo handle this at the end of your demo (May I come back to that). If your competitors have not been mentioned dont mention them! 5) Do not go into unnecessary details If the prospect misses any details, he will let you know. 6) Do not allow destructive questions You might meet prospects that keep asking questions, not giving you a chance to make your presentation. Especially if you present to 2 or more people you might risk that the demonstration turns into a brainstorming meeting.with a bombardment of what if - questions. This might be positive in the sense that it might lead to

42

an understanding of new possibilities with your product - but it might, too, lead to the remark : maybe we should just give ourselves a little more time to think about that. This is when you need to refer to your agenda and the cost implication for the prospects of not solving their problem. 7) Make the prospect participate If it is possible to let the prospect participate in the demo, you increase your efficiency in demonstrating your product. This might convince the prospect through personal experiences with the product. The prospect might participate as follows: - Let the prospect do something simple - Let the prospect work something simple - Have the prospect answer questions throughout the demo. (The prospects questions will give you an understanding of whether the prospect has understood the demo). 8) Limit the number of features you use. Do not present a large number of features during your demonstration. The project primary interest often is related to a relative small number of features and benefits, in many cases as little as 3 6. If you try to cover too many features you might just distract the prospect.

9) Remember to make plus sales, whenever possible.

Prospects who obviously seem to be in favour of your product offer might very well be interested in an extended product offer. This might include aspects like: - extended service programme / repairs - paid hotline - initial inventory of supplies needed to operate product, like: copying paper, ink cartridges, lubricant, spare parts, etc., etc. 10) Sum up on the way and get the prospect to express acceptance / agreement from the prospect. When you have finished your demo you could ad up all the benefits and make the prospect confirm the relevance of each. The next step should in most cases be a closure; getting the agreement of the prospect .

43

You have added up all the benefits of your offer; this might be a good time to ask for the order.

44

9. Handling Objections
The sales doesnt really begin until the customer says No .

9.1 The Cause of Objections

One of the main obstacles felt by salesmen relates to objections; how to deal with them and how to bring the sales process back on the forward track towards a closure. Any experienced salesman knows that objections basically represent an opportunity for the salesman to present a stronger argumentation covering the needs of the customer. But why do potential customers have objections ? Objections might be based on several reasons; Buying resistance The buyer might be resistant to this specific buying decision due to limited /no need for product. Internal company policies might stipulate other solutions e.g. spreading risk of sourcing between several suppliers Perceived uncertainty The buyer might be uncertain about the strength of his own need for this specific product, or he might be uncertain about the sellers ability to deliver what he is promising (e.g. delivering the product (on a continuous basis) within specification and on time). Need for more information. The objection might express an implicit interest in buying (buying signal) The potential buyer is using his objections to get agreement on specifics.

Table 9.1: Causes for the customer's attitudes and his objections

Irrational causes Personal causes

Misunderstandings Misjudgements Lack of info Differences in knowledge and experience - Irritation - "Have heard about " Prestige Dislikes the sales man - Dislikes the sales mans company. - Dislikes the product - Simply a "Bad day" - Own interests Source: joto of own make -

Tactical causes
Price Trying to improve offer (Wheeler-dealer)

Actual / Genuine causes

- Budget - Lacks room or warehouse space - Company policy - Product does not cover an actual need.

Rational objections might be based on a business - or on a personal perspective. Objections based on business perspective might relate to.:

45

The customer's desire to know all the relevant facts about the product. The buyer might already at this point want to prepare later having to defend his decision to colleagues/bosses.

Personal based objections might reflect..: - The customers desire to make the decision himself, without feeling that he is pressured or manipulated by the salesman. The customers desire to be 100% convinced that this purchase represents the right choice, now and in the future. And the objection might be based on a personal dislike in the salesman in front of him.

Objections could often be understood as "buying signals". Often prospects are making objection based on an interest in the product. Typical buying signals might be expressed by the potential buyer with comments and questions along these lines: - The price seems a little high? - But we prefer to lease it? - Is it not available with (feature) ? - The shipping lead time is much too long . - What service back-up is available ? - I don't need (a specific feature). But objections might also be a signal that the buyer is uncertain and not yet convinced. If the customer is basically uncertain you will not reach agreement (and sales). You, consequently, have to remove or reduce the feeling of uncertainty. The reason for the prospects uncertainty is often related to a) Poor communication from the salesman's side b) Poor / inadequate presentation of FAB's (e.g. when benefits are not relevant to the prospect or when benefits are poorly presented). (Remember the benefits you choose to use in your presentation must reflect or correspond to explicit needs perceived by the prospect and most likely identified though the interviewing).

46

9.2 How to deal with objections

Any salesman should expect and accept objections as a natural part of the sales process. Some basic principles to consider on how to deal with objections include:

A)

Plan for the obvious objections

Many objections may be foreseen. As such you might prepare an argumentation against many objections prior to any sales call. As you get more experience as a salesman for a company you will eventually be familiar with many of the objections (that turn out to be very little unique).

B) When you meet the objection;

Smile! It is now you start earning your salary. Welcome the objection. Remember that the objection often shows that the customer is interested in your product. Do not show any signs that you disapprove of the objection (Be careful of your body language). Do not start to argue, but listen carefully (not only to the words but to the tone of voice and to the body language, too).

C)

Repeat the objection

Then, you might consider repeating the objection with your own words. This gives you 3 advantages:

1)

You confirm to the customer that you have understood the objection (maybe in the form of a preliminary acknowledgement of his objection to be followed by."on the other hand). 2) It buys you time to think of how to deal with the objection.

3) You have an opportunity to "soften" the objection or redefining it to a question, which might be easier to handle. Example: The customer: "But this paint is much too expensive". The seller: "Yes, at first look it might appear that way. But it is of very high quality." I guess, what you are saying is that you would like to know why this paint is priced 25% higher than competitive brands that seem comparable. The customer: Yes, that's what I am talking about. The seller: The explanation is that this paint might be 25 % higher priced, but in use actually cheaper. It covers much better,

D)Acknowledge that the customer is right .at least in part.

47

You might avoid almost any objection by admitting that the customer's objection is relevant. When the customer has heard that you acknowledge that he is right, he is much more inclined to listen to your arguments.

E) When should you handle objections:

E Objections might be dealt with before they are mentioned by the customer, as the objection arises, or you might decide to deal with them later. F

1) Anticipate and Forestall / deal with the objection before they are stated by the customer
G
Forestalling an objection involves discussing the issues of an anticipated objection, prior to it being expressed by the customer. Dealing with anticipated objections might be build into the product presentation, and as such it deals in a positive way with the issues of the objections prior to being expressed by the customer.

2)

Handle objections as they arise.

It is most often best to handle objections as they arise. Postponing the answer might cause a negative reaction or mental picture, such as: - the customer might stop listening to you until you have addressed the objection - the customer might start thinking you are hiding something or that you also think this is a problem. - It may seem that you are not interested in the customer's opinion

3)

Handle the objection later.

At times, situations arise where it is best to postpone your answer to an objection, e.g. when the objection is covered later in your presentation. Or when the buyer enquires to the price before even knowing the benefits of your offer.

F) Understand objections / Ask questions to "smoke out" objections.

Many times the prospect appears to make objections when they are actually requesting more information. That is why it is important to listen carefully to the objection. Ask into the objection. Let the prospect explain his objection.

Example:
Prospect: Salesman: "This product does not have the (feature) "If it did have (feature) would you then be interested ?"

This is a good questioning technique to determine the importance of the objection; whether the objection was a "smokescreen" or a real objection.

48

9.3 Tactics for dealing with objections

To sum up, you might consider the following tactics to handle objections:

1) Head-on Method / "Direct denial"

..make the prospect understand he is wrong. Use this method tactfully. Often not recommended! You might win the argument, but loose the customer. If the customer has been misinformed or misunderstood something of importance for his decision, you should of course correct his understanding.without letting him get the impression that "it is his fault".

2) Indirect Denial / The "yes, but-method"

Agree with the prospects way of thinkingand explain why not.

3) Compensation Method
Yes, on the other hand we are offering more value in other areas" Remember your FAB's !

4) The Boomerang Method

You might in certain cases be able to turn the objection into a reason for buying. By convincing the buyer that an objection is a benefit, you might have turned the prospect in favour of your product. "Yes, and that's exactly why." "Yes, but we did that for a purpose.."

5) The question method

consider the objection as a question that gives you the opportunity to explain.

6) "Forestalling" /"Pre - emt" / answer the objection before it is

being expressed by the potential buyer.

When you expect from experience that a specific objection most likely would be used by the prospect, you might decide to pre-empt the objection by responding to the objection at your own initiative; maybe as part of the product presentation. Some people are worried about whether the capacity will be able to handle seasonal demands. This has actually never been a problem for any of our customers, due to.

7) Postpone dealing with objection - Take up later

("Do you mind that I come back to that later"?)

Agree in part with objection and carry on..

49

The "East/West relations"

(answer another question and proceed into a question)

The "Ear-plug".
Disregarding the objection, carry on without reacting to the objection. This tactics is especially relevant if the objection is obviously irrational: For instance if the comment is based on personal dislikes to you or your behaviour (causing objections to your product).

A five-question method of overcoming objections.

Question 1: "There must be some good reason why you are hesitating to go ahead now. Do you mind if I ask you what it is?" "(In addition to that,) is there any other reason for not going ahead?" "Just supposing, you could convince yourself that.then you'd want to go ahead ? If positive response, go to back to selling; if negative go Question 4: to Q4. "Then there must be some other reason. May I ask what it is ?" After the response go either to Q2 or to Q 5. "What would it take to convince you ?"

Question 2: Question 3:

Question 5:

9.4 After meeting the objection .what then ?

After meeting the objection at any time during the interview, you need to know whether you have actually overcome the objection. If you have not overcome the objections, it might pop up again, and if the prospect perceives that you have been unable to deal with this objection, the prospects opinion of you and your product might be influenced negatively. After responding to the objection you should find out whether you have overcome the objection. Ask questions like : - "That's the answer you were looking for, isn't it?" - "That solves your problem, doesn't it?" - "With that question out of the way, we can go ahead, don't you think?"

50

10:

Closing the sales

10.1 Closing Signals

After prospects have dealt with each stage of the mental buying process they might be ready to buy. If so they often tend to give you a signal. Buying signals refer to anything that the prospect says or does that indicates that he is ready to buy. Buying signals indicate that the prospect is in the conviction stage of buying, making the final decisions on the purchase. The buying signal may appear as: - physical actions - comments - questions. If the sales man is not trying to close the deal in time, the customer starts to loose interest. Be careful; you may "talk your way out of the order", if you do not take the initiative to close the deal at this point of time. Listen to and look for buying signals. The best time to close the deal is when the buying interest is still increasing, and not yet maximised. But be careful; be ready to try to close the deal if you see buying signals from the prospect. Do not be tied to making your entire presentation before you try to close. Buying signals could e.g. be: The prospect asking questions, like : - "How much is it / what is the price ?" - "What is your shipping lead time?" - Is it available in other colours ? - "Do you install ?" - "Do you have a hotline?" Comments, like: - I always wanted a boat for the summerhouse. - I actually thought it was more expensive. - Yes, I must admit I really feel good in this dress. The prospect asks for another person's opinion - The purchase manager might call in someone to ask about opinion. - The husband turns around and asks his wife: "What do you think". The prospect picks up the product sample and examines it carefully. . Ask the prospect: "What do you think about the product". If positive response, close the deal. The prospect relaxes and becomes friendly. Once the decision to buy a product is made, the pressure of the buying situation is eliminated. A state of visible anxiety might change to a relaxation for the prospect. Watch the prospects body language.

51

The buyer may send verbal or non-verbal buying signals at any time before or during your sales presentation. Based on your interpretation of the prospects actions you should attempt a trial close. A trial close might include the sales man making a summary of the major selling points desired by your prospect. If the reaction is positive move forwards to final close. It is never too early to make a trial close. I the answer from the prospect is negative, just continue presenting your offer/product. Ad on more benefits ! That is why it always is important to leave some good sales arguments behind to use when the first trial close was not accepted by the prospect.

10.2 Closing Techniques

Some of the most well-known and effective closing techniques are the following

The Direct Closing / "Ask for the Order"

"So, do we have an agreement?"

Take it for Granted / The Assumption Method

"What do you want included in the initial order". "You want the automobile with or without ABS brakes?" "Do you want it with or without the service contract?" use "when" in stead of "if".

Standing Room Only

"This is the last chance at this low price ! Prices will go up early next week". "We only have a few products left. The new shipments coming in will definitely be at higher prices".

The Summary of Benefits - closing

Summarise the major benefits as perceived of importance and relevance by the buyer. Adding up all the benefits will help the buyer in realising the total value of the purchase.

The Balance Sheet Closing

Make up a "balance sheet" with reasons for + against making the decision. Especially good technique to use when the sales process is long and has taken several meetings.

The Trial Order Close

Offer a trial order (at reduced price) to make it possible for the buyer to gain personal experience with the product solution.

Ask for feedback

Some of the most popular trial closing questions are:

52

Does this make sense so far? Is this what you have in mind? Would this be an improvement in your present situation? Above mentioned classical closing techniques might work well in many cases. But be careful, many experienced buyers might perceive the use of these techniques as manipulation. And for large, complicated sales these closing techniques might be less successful. In these cases you might instead consider the following sequence. Focus on your analysis and building up a perception of needs in the eyes of the prospect (you might not need closing techniques when the prospect really wants to buy). Control that all key issues have been covered. - Have we covered everything? - Is there anything else you would like to hear about? Sum up and ad up the benefits. Make a proposal / ask for the prospects acceptance. - I would like to suggest, that we - May I suggest, that? - So, we can agree on?

10.3 Ask for the orderand be quiet.

No matter when and how you close, you must always remember, than after you have asked for an acceptance or asked for the order...be silent ! Don't say anything! Not a word ! If you start talking your probability of loosing the order increases. When having tried to close the sales, you are putting the prospect under pressure; he must now make a decision, speak first and respond to your (closing) proposition. If you speak first, you have removed the pressure on the prospect to make that decision. So, keep quiet; for 30 seconds or as long as it takes. When finally your prospect says YES. . Don't talk more than absolutely necessary. Confirm the order, get the papers done, thank the customer for the order, shake hands, and leave.

53

You have achieved what you want to do, you cannot achieve anymore. But the customer might still change his mind! If you continue to talk, you might supply information that might cause doubt or might even change the buyer's mind. And in spite of the fact, that he has already said yes, he feels that without any problems, on a second thought, he can change his opinion especially if you are still sitting in front of him.. and you might hear him say: "Maybe I should just run this through the Lab, before we make a final decision?". This kills your order! If you have left his office, the buyer will to a higher degree tend to feel bound by your mutual agreement. So, keep quiet and leave the buyer's office as quickly as possible. If your sales efforts do not succeed, be a good looser. Accept the buyers conclusion, and do not burn any bridges. Do not close any doors for you to come back. Do not miss the chance to come back and try again. Yo might consider closing the meeting, by achieving the customers approval that you are allowed to make contact for future opportunities. You might even ask to when new contracts would be coming up, and whether you then may present an offer.

54

11: The Follow-up

After closing the sale and leaving the customer one thing remains; the follow-up. Following-up the sale with additional contacts between salesman and customer is important to develop repeat sales. Depending on the type of business, the first contact after receiving the order might be a written confirmation and thank you for the order. The underlying purpose of the follow-up is to secure that the buyer is as satisfied as possible. If the result of the purchase is dissatisfaction, you will probably not get repeat sales from this customer. In the case of larger orders, it is often good practise to call the customer after a short while to enquire into the satisfaction with the purchase. Some salesmen seem to avoid this follow-up call; maybe due to a fear of facing an unsatisfied customer with additional demands. Anyway, there are basically two potential outcomes of such a follow-up; 1) If the customer is satisfied with his purchase, he will just consider your call polite, and you might just have establish yourself in a stronger position for being consider for later repeat sales. 2) If the customer is dissatisfied with the purchase, the follow-up call gives you an opportunity to react on this dissatisfaction. Dissatisfaction might be caused by a number of reasons: - product is not meeting expectations - operational problems - lack of proper training in implementing product - billing, paperwork - etc. All this represents issues that can be dealt with. As a matter of fact, if the salesman does not solve the issues in a way that is satisfactory to the customer, the salesman will probably never be called upon again from this customer. The follow-up call is, consequently, a good way to secure that there are no barriers blocking future sales opportunities. Your satisfied customers are your best source of resale and referrals. Ask them at some time (and of course not right at the moment you have closed the order), why they have bought from you rather than from someone else. They will most likely tell you, offering reasons that you can bring into your planning of how to acquiring additional customers.

55

You might decide to visit a satisfied customer, who you feel likes you, and tell him that you are conducting a market research study. Then ask him questions like: Why did you decide to buy from us rather than from alternative suppliers? What specific benefits do you feel you get from acquiring out product or service? Do you think there are some types of customers that especially would benefit from our product? Is there any way we could improve our product of service? Do not hesitate to ask. If you listen carefully, your satisfied customers most likely will improve your understanding of how to improve you sales.

56

12: Sales Force Management

- Managing Time and Managing the Sales Force
As part of sales force management we will discuss effective use of the sales persons time and motivation of the sales force.

12.1 The Value of Time

Sales force efficiency is directly related to the time factor. Managing time is a key factor to success for any sales person. The sales person will not only spend time on direct selling time with the customer but most sales people spend even more time on many other activities. The typical key focus areas that consume time are: Actually selling o Direct selling time with the customers o Direct selling time on the phone Planning o Prospecting for new customers o Arranging meetings o Preparing offers o Writing letters o Preparing reports o Internal follow-up o Participating in sales meetings / sales training etc. Other Customer related activities, e.g. o Follow-up at the customer o Service activities o Handle complaints o Training customer's staff Travelling time/waiting time/parking Other activities (personal time/breaks/absence due to illness, etc.).

It is obvious that for many salesmen less time is spent on actually dealing with the customer (face-to-face or by phone) than working with other matters.

12.1.1 What is the cost of a salesman's time ? The cost of the salesmans sales days might be calculated from the formula : Salary + auto expenses + travelling expenses + ? Number of effective sales days

57

The number of effective sales will obviously wary with the type of sales job. However, when deducting vacation, meeting days in the office, training days etc. many salesmen might not have much more than 200 effective days left in a working year. Obviously there will be major differences in different types of selling you might be doing, whether it might be simple vs. complex sales /project sales. Anyway, the effective use of time ought to be an importance concern for all salesmen. The salesman should determine: - Which of my customers do I need to call/visit? - How often ? - For what duration? Going through this planning exercise the salesman can, however, easily make mistakes, like..:

MISTAKE NUMBER ONE

"Spending too much time with smaller accounts" Salesmen should be aware of how they distribute their time between customers. Often sales people tend to visit old customers on a frequent basis (due to personal likes or from established routines), even when these customers might only represent a relative limited sales potential. The salesmans time should be spent where the future potential is remember the 80/20 Rule !

MISTAKE NUMBER TWO

"Over budgeting", i.e. planning for more calls than the salesman realistically can make. Optimistic planning in many cases result in over-budgeting; the sales person bases his budget on an unrealistic expectation to how many sales visits are possible over given time.

12.1.2 The Salesmans Planning

The salesman should use his time on his future profit potential. More precisely: What is the future sales - and profit potential of my existing customers ? Which potential new customers represent good sales- and profit potential? In order to be able to plan efficiently, the salesman must: Know each customers purchase- and profit history Know the profitability by product Prepare a ranking of the customers: Prepare ABC Analyses Allocate future selling time according to

58

o .the customers sales potential/profit potential o .the product profitability Be aware of where any time is wasted.

12.1.3 The Salesmans Key Figures

The sales person deals with the following cost types:

Operative costs:
Salary, pension plan, .. Fringe benefits Automobile cost (depreciation + operating expenses..) Travel expenses, hotels, . Use of office facilities

..

Number of effective sales days ? Number of sales calls per day Sales budget (Turnover/contribution) Order-% (i.e. % of sales calls generating an order)

Calculating these key figures makes it possible to continuously evaluate and make frequent follow-up on e.g.: Cost per effective sales day Cost per sales call Avg. turnover per sales call ? Avg. contribution per sales call ?

12.1.4 Be Effective in Planning your Day

Here are some common, practical rules to improve efficiency for sales men: - start early every day the morning is normally the most efficient time of the day visiting customers do necessary office work/follow- up at the end of each day .then you are ready to get going in the morning use your telephoneit saves travelling time plan internal meetings Friday afternoon. This is in most cases the worst time to visit your customers. plan your dayevery day PRIORITISE YOUR ACTIVITIES make good use of the time "in between" bring your laptop when you have to wait .in airports, ferries, trains, confirm all meetings - take nothing for granted.. never come late to meetings prepare a realistic plan, including:

59

travelling time selling time and be prepared for the unexpected

12.2 Motivation and Evaluation of the Sales Force

When you work in companies your will often experience that office personnel find the sales force "spoiled". The sales might go on trips, have sales conferences at exotic places, they might have special have fringe benefits, they can win various prices through sales contests ..etc, etc. Why is it often felt that it is necessary to give special focus to the motivation of salesmen.. The salesmans working situation is somewhat different from other employees located in the office. 1. The salesman has only limited personal contact with management. 2. Many sales jobs are characterised with extensive travels (this means loneliness, less social contact with colleagues in the office and less convenience) 3. The salesman usually more than any other employee experience emotional swings between getting an order and not getting it. 4. Sales men might personally have strong status and recognition needs. All these factors create a strong need for motivation. But for travelling salesmen this motivation has to take place without the everyday contact with management. But motivation is among other things tied to understanding and accepting responsibility. If the salesman does not understand what his responsibilities are, or he does not accept them (e.g. due to lack of realism) he will not be motivated. It is important to create a organisational structure and working condition that will help to keep the salesman motivated without daily supervision and contact with management. Some of these tools are:

1) Establishing Territories
(= a group of customers or a geographical area assigned to a sales person). A clear definition of sales territories establishes each sales persons responsibilities. It makes it easier to evaluate each sales persons performance. By establishing well defined territories the salesman has a full understanding of responsibility.

2) Set up sales quotas

It is believed that salesmen will work harder if they are working towards a sales target. And they know that there evaluation will be based upon meeting those targets. BUT, targets should be .Realistic and fair. Otherwise they have no effect or even a negative effect.

60

The quotas reflect the potential that is believed to be present in the territory. Realistic quotas reflect the buying potential.

3) Make the salesmen prepare call reports

Knowing that reports / your activities will be reviewed by management will motivate Now new software is available that will make call reports easily available to management + other interested parties

4) Develop relevant compensation plan

Monetary compensation to salesmen is important (although money is not the only motivation factor). Here are some of the well-known alternative compensation schemes:

Straight salary

Fixed salary regardless of performance. (often considered relevant if salesmen are involved in (many) non-selling activities (e.g. offering project help /acting as a consultant /checking stock, etc.) A compensation plan based on a straight salary: provides security develops loyalty ensures better control of non-selling activities decreases the rate of personal turnover.

Straight commission

Directly reflects the the salesman's actions and sales efficiency; provides maximum sales motivation selling cost (the cost of operating a sales force) become a variable cost the salespeople who stay with the company tend to be the most productive BUT working on straight commission might lead to the salesmen skimming their territory, focusing on the easy sales, only. This system might create less loyalty in the sales force.

Combination plan

Combinations of above, e.g. salary plus commission or salary plus a bonus.

Customer satisfaction incentives

Salesmen play an important role in the development of strong relations with customers. Some companies (e.g. IBM) has developed programs to rate customer satisfaction and, subsequently, offer incentives to salesmen based on this result)

61

5) Additional incentives:
Many companies have additional incentives that are offered to the employees

6) Financial motivators - Extra (paid) vacation days

- Club memberships - Use of company resort facilities, summer houses etc - Low interest loans - etc, etc.

7) Sales contests
Might be cash or a gift, trips, etc. Gives excitement and develops focus in the mind of the buyer . Contests are used by many companies selling fast moving products (however, sales contests might be used in a lesser extent in complex sales, e.g. in the case of sales of high cost products to industrial customers, due to the anticipation of a long sales process). And be careful ! A sales contest might make the sales force focus on one part of the assortment, but forget the rest! Or it might motivate the salesman to increase pipeline filling (creating excess stocks in the distribution channel).

8) Non-financial motivators - e.g. announcing "Salesman of the year"

Michael Tommerup, July 2004 / revised July 2006 / revised September 2009 joto/powr ____________________________________________________________________ References:

Charles Futrell, Fundamentals of Selling, McGraw Hill, 7th edition, 2002 David Jobber and Geoff Lancaster, Selling and Sales Management, Prentice Hall, 5th edition, 2000 Ronald B. Marks, Personal Selling, A Relationship Approach, Prentice Hall, 1997 Neil Rackham, SPIN Selling, McGrawHill, 1988 Erik Toft, Den effektive slger, J.H. Schultz Information, 1993 Brian Tracy, The Psychology of Selling, Nelson Business, 2003 Weitz, Castleberry, Tanner, Selling, McGraw-Hill, 2007

62

Gerald L. Manning & Barry L. Reece; Selling Today creating costumer value, 10th edt., Prentice Hall, ISBN: 0-13-186683-4

63