Developing the Sales

Force
The Sales force staffing method:
This process consists of the following
steps

1.Analysis of Sales personnel needed

(Sales personnel planning)

2.Recruiting Sales Personnel

3.Screening and selecting applicants

1. Analysis of Sales personnel
needed (Sales personnel planning)
This process consists of the following:
Determining the number of Sales people
required

Identifying the type of sales people

required
a) Determining the sales force size
Semlows Method (Thumb rule)
Uses the principle of marginal analysis
In this system the company would add
salespeople until the cost of adding the last
additional person equals the profit of the sales
volume he or she is expected to obtain. This is
given by the formula:
(S * P) C = 0 where
S = Sales volume that each additional
salesperson will be expected to produce.
P = The expected profit margin on the sales
volume.
C = Total cost of maintaining the salesperson in
the field.
 Other quantitative models to determine
sales force size
Model linking market penetration, selling
costs and manufacturing costs for
determining the optimum sales force
required
Model based on sales response functions
for geographical sub-areas or territories.
Model linking sales force efforts to products
and various market segments or customers
served by the company
 Cost Based
Model
Market
Penetration

Number of
Salesmen
Sales cost

Manufacturing
Cost
 Territory Oriented
Model

Geographical area
development needs:
Market expansion. Number of sales men
Higher delivery frequencies
Adding new routes
CUSTOMER ORIENTED
MODEL

Customer based approach:

1) Better servicing
2) Psycho graphically
specialized sales force Number of sales men
3) Higher CRM
Predicting sales force personnel needed

The general approach to determine the

number of sales people is given by the
equation

(Sales people needed - Sales people

available = Additional sales personnel
required)
Determining the Sales Personnel needed
Calculated from historical data based on the
firms long term sales figures

Usually a minimum of 5-10 years forecast is

an appropriate planning base

Eg.Dexter Corporation collected data on

sales turnover and number of sales
representatives over the last 20 years. By
projecting the trend line the management
can derive the sales personnel requirements
for future sales level
 Defects of Trend analysis
Trend analysis has two major weaknesses
Assumption that future operating conditions
will remain the same as they were in the
past. This assumption in unrealistic in
todays fast changing business world.

Also assumes a linear relationship between

the sales force size and sales generated.
 Sales personnel available
Inventory of sales personnel should be
taken

The figures of availability of sales

personnel for the future has to be
calculated carefully

The abilities, promotability and the

retirement status of sales people are
considered on an individual basis.
 Trend analysis can also be used to predict
the number of sales people available within
the firm at some future date.

Historical data on the retirement, turnover

and the promotion rates of the salespeople
are assembled

Then a total loss rate is calculated and

projected into the future
 Other factors which can influence
Internal factors - changes in company
policy - promotion policies, retirement
plans and transfer procedures will affect
sales personnel planning

External factors - level of economic

activity, competitive conditions, labour
relations, government policies etc.
b) Determining the type of sales
personnel needed

This involves three activities

Job analysis
Preparation of a job description
Identification of job specifications
 Job analysis
The following issues are analyzed

Environmental factors

Performance factors
 Environmental factors
Analysis of competition, the business and
social framework within which salespeople
have to sell

Also how will they be supervised and

evaluated.
 Performance factors

How do salespeople have to spend their

time - traveling, selling, filling out reports,
securing sales promotion support, waiting,
entertaining
 Critical analysis

This process involves a critical analysis of

the environmental and the performance
factors to develop a meaningful summary
of the selling job
 Preparation of job description

Statement of the specific functions that

the salesperson must perform, with
guidelines on the relative importance of
each function.
 A good job description must be
Written: Should be formal and committed to
paper.
Accepted: Should be known and accepted by
salespeople, their immediate managers and
other sales executives.
Specific: The functions should be defined in
measurable terms .
Detailed but terse: The job description should
not be too short or too descriptive so that it
becomes too difficult for the salesperson to
follow.
Identification of job specifications
Job specification consists of the
characteristics or traits that one looks
for in candidates when recruiting and
hiring sales personnel

Some of the universal job specification

factors for a sales personnel are -
 Initiative ness: self starter, interested in selling,
strong personal desire for success, able to
motivate self, enthusiastic, ego drive.
Intelligence: Problem solving ability, technical
competence (when necessary), willingness and
ability to learn, well organized.
Balance: versatile, flexible, variety of interest,
well rounded, experienced.
Poise: Confidence in self, ability to handle
pressure situations, sociability.
Communication skills: Articulate, persuasive,
able to establish rapport with others, empathy,
high verbal skills.
 2. Sales recruiting guidelines
Plan and coordinate sales recruiting:
Do not limit recruiting to fill vacancies, this
is called crisis hiring and will lead to poor
selection decisions
Do not hire the best of a bad lot
Start with a well-organized campaign that
produces a good pool of applicants
Common reasons for poor sales recruiting

Deficiencies in the overall organization

of the program.
Lack of feedback to sales recruiters
Little continuity in the recruiting staff
Lack of status of the recruiting function
within the company
 Some tips to successful recruiting
Avoid a hurried search for sales personnel
Always maintain a file of potential sales
personnel
Always screen the above file and shortlist
the best among the lot
Insist on getting a feedback on the
previously selected candidates
Use several recruiting sources
Select and train qualified recruiters
Review the recruiting program
 Sources of sales recruits
a) Company sources:
There are the other employees within
the company.
There may be employees in other
departments who have a latent talent
for sales.
b) Company sales people:
Sales people are in touch with the
market and are acquainted with many
potential sales recruits. This method is
also favorable for building loyal teams.
c) Suppliers and customers
Other sales people calling on ones
company may be another source of sales
recruits.
It is possible that they might be
dissatisfied and looking for a change.
d) Job fairs:
With the growing popularity of job fairs, it
have become a good opportunity to meet
potential recruits face to face with
minimum cost. The number of people who
can be met is also considerable.
Other sources of sales recruits:
Advertisements:
They may be placed in newspapers,
magazines, professional newsletters and
trade journals. The ad must be appealing
and informative. Also sufficient information
about the company, job description and
definitions should be provided. E-mail,
postal addresses and telephone numbers
should be provided to enable the recruit to
respond well in time.
Employment agencies:
The service of a suitable employment
agency may be availed to utilize their
source of data
Select only reputed and highly
recommended recruitment agencies
Educational institutions:
All types of institutions of higher learning
like colleges, universities, business
schools may be used for campus
recruitments
 3. Sales selection process
In the past, selection of sales personnel used
to be entirely in the hands of the sales
department.
This had many defects. The busy sales
manager often failed to devote sufficient time
and attention to check the real personnel
worth of the recruits.
The role has been rightly handed over to the
HR department with close cooperation of the
Sales department.
Revising the selection programme
This has to be done either if the sales
employee turnover is excessive

or if the sales personnel selection

programme is appearing to be too time
consuming and bothersome
 Excessive employee turnover
It cannot be eliminated entirely

There will always be employees who quit

the company for various reasons or who
are considered unfit for selling and must
be discharged

Some companies lose more than half of

each years incoming sales recruits over a
three year period
 Sales employee turnover rate
SET rate = number of sales people
who quit or are discharged / average
size of companys sales force during a
given period of time (usually 1 year)

It is normal to expect sales employee

turnover ratios of around 15 to 25 %
in the case of companies involved in
fast selling products
 The downside of employee
turnover
There is a high cost factor
The costs of sales labour turnover is
startling and includes costs in -
Time
Energy
Expenses related to recruiting
Training
Supervising non performing sales personnel
 Turnover causes sales losses
Immediate impact of departure of a sales
personnel on the sales
Switching of sales personnel to a competitor
leads to losing some of his customers
Different salesmen every month, customers
lose faith in the reputation and stability of the
company
Affects buyers ordering rhythm when
salesmen are missing or are being replaced.
 Systematic selection process
In most professionally run companies there
is the presence of a systematic selection
process which consists of :
Application forms/Curriculum Vitae
Interviews
References
Psychological tests
Medical examinations
Trial periods
 Application forms / CV
If properly constructed a written application
form is an important source of information
about a candidates background and
qualifications.
Most companies use application forms for
two purposes:
To collect pertinent information
To aid personal interviewing
Application form - source of background review

The application form provides the sales

manager with a means of reviewing the
applicants background without being
influenced by appearance or personality
Other facts pertinent to job success can
also be included
The information can also be used to
eliminate undesirable or inefficient
prospects.
 Application forms - aid to interview
The information provided on the application
form/CV provides insight needed to
prepare for personal interviews
The application form points out possible
difficulties that should be pursued in the
personal interview. Is there any gaps in
employment? Has the applicant changed
jobs several times during his career?
 Interviews
Types of interviews:
1) Screening interviews: for the sake of
filtering or group discussions
2) Selection interviews: this includes
background interview, discussion
interview, job-situation interview, stress
interview
 Psychological testing
This is an attempt to measure a
persons intelligence.
Types of tests -
Intelligence tests
Sales aptitude tests
Personality tests
Interest tests
Simulation exercises
 Final steps to recruiting

Final interview
Medical examination
Trial periods (probation)
Training/on job or external
 Sales training and development
Sales training is comprised of two processes:
Formal training: this forms part of
educating the sales personnel with regular
class schedules, lesson plans, visual aids,
other teaching devices and systematic
reviews and evaluations.
There are three distinct phases
Designing the sales training programme
Managing its operation.
Evaluating its success.
Informal training:
Informal training is part of the on-job
training and is also called field coaching
This involves working with individual
salespeople, guiding their daily activities,
and advising on improvements that should
be made
Though it does not utilize formal training
methods, field coaching forms a very
important part of on-line or on-the-spot
performance improvement system
 Training and the salespersons
career needs
Sales people have different educational
backgrounds, experience levels,
learning abilities and thus have different
training needs.
A major training determinant is where
the sales person is in his or her career
development
Thus a salespersons career cycle is
critical for designing his training
programme
 Different training needs for salesmen
belonging to different stages of the life cycle

1.Preparation stage is the first stage in the

sales persons career. As he is new to the
company the stress is on orientation and
training. New recruits must be made aware
of their duties and functions. They have to
have company, product and selling
technique knowledge imparted. Even an
experienced salesman who is new to the
company needs some introduction to
selling the specific products.
2. Development stage:
This stage occurs when a sales persons
productivity begins to rise. The emphasis at
this stage is on supervision. The
developing salesman needs field coaching
to identify and correct sales problems and
to prevent him/her from acquiring bad
habits.
3. Maturity stage
This happens when a salespersons
productivity begins to level off. It has been
said that mature salesmen work smarter
than harder. many salesmen begin to take
shortcuts that hurt them in the long run.
Thus many mature salesmen have to be
retrained and reminded of the selling skills
required, often transferring them to a new
challenging location with a promotion will
do the needful.
4. Decline stage:

This is the final stage and represents the

difficult stage to sales management.
It is very difficult to reverse the steady
decrease in productivity but efforts can be
taken to impart some training on retraining
and motivation.
Reasons for training sales person

To develop the right work habits

To offset the effects of detraining
To equip them with new selling tools
To train them to respond to the new
challenges of the ever changing
markets
How sales training can benefit the company:

Improves sales representatives relationship

with their customers by showing them the
right way to do business.
Raises the quality and morale of the
salesforce as they realise that the company
considers them valuable.
Reduces sales force turnover costs.
Makes sales people more flexible and
innovative.
Reduces cost of supervision.
Territory management in sales function:
A sales territory is a configuration of current
and potential accounts for which responsibility
has been assigned to a particular sales
representative.although geographic
considerations play a role in determining
sales territory boundaries,sales territories are
promarily customer groupings than
geographic locations.Thus the primary
consideration for sales territory is as
customer grouping.
 Scope of territory management:

The salespersons may be viewed as scaled

down sales managers as they bear the
ultimate burden of managing parts of the
customer base.territory management means
managing oneself as well as the financial and
physical Resources at ones disposal.This
includes:
Territory development.
Opening new accounts.
Scheduling time for best results.
Coordinating with the headquarters.
Maintaining personal development and
enhancing company and brand equity.
Territory management problems:
Evaluating sales employee performance:

Employee performance improves if it is measured

and monitored.Sales management has to set territory
performance standards and compare actual result
with these norms.
By observing the territory performance determinants
a general relationship may be postulated:
T=f(P,W,S,C,O)
Where T=sales territory performance
f=functions of
P=territory potential,
W=workload(territory characteristics),
S=salesperson characteristics,
C=companys reputation in the territory,
O=other factors.
 Sales Incentives:

Incentives are tools to motivate sales

personnel.The sales manager is the best
person to implement the incentives to the
salesmen due to his knowledge of the sales
force aspirations and aso due to his familiarity
with the sales personnel.There are different
types of sales incentives that can be offered:
Non financial incentives(mainly linked to the
companys short term objectives)
Financial incentives.(financial incentives in
combination with the salary has become a
regular source of income for the salesmen.
 Non Financial incentives:
These include:
Sales meetings and conventions:
This has become a regular feature with most
companies.Monthly sales meetings
Annual conventions,are looked forward to
by most salesmen.Rewards,gifts etc are
distributed on such occassions and there is
scope for meeting colleauges and
socialising.A good sales meeting/convention
is often linked to some important event like a
product launch,new training scheme etc in
order to make it technically interesting as
well.
 Non financial incentives:
Sales contests:

Sales contests are very popular with companies

which are involved in the sale of FMCG
products.Sales contests vary according to the prizes
awarded,methods of determining winners and
themes.Sales contests help to achieve companys
goals by satisfying some of the salespersons
personal goals.eg..recognition from ones
peers,rewards for performance,personal
esteem,respect from ones family.Winning a sales
contest satisfies a salespersons need for recognition
and helps the person gain self-confidence.Thus sales
people are stimulated to improve their performance.
 Sales contests:

There is a complaint that sales contests sometimes

distort the normal sales pattern,and provides only
short term sales expansion.sometimes they distract
the salesmen from their main job of core selling.In
reality Sales contest fail only when the sales
manager has not planned the contest.The timing may
be off,the wrong prizes may be on offer,and the goals
may be unrealistic.
Too often the prizes may be too few for only the top
winners.
A successful sales contest should be able to provide
1) recognition.
2) Excitement and
3) Rewards.
Other forms of non financial incentives:

Honours and awards

Special privileges eg the best salesman

Can bring their family along for a days
vacation at the sales conference.
 Sales compensation:

Compensating sales personnel is more

difficult than for other employees as the
conditions that the sales personnel work in
are less standardised and less controlled.thus
in sales it is common to have salaries based
on combination plans which uses sales salary
plus commission and /or bonus .Incentives
can also be based on special problem solving
issues by giving financial rewards for solving
case to case problems with innovation and
hard work.
 Criteria for a sound compensation plan:

Incentive:
a sound compensation plan will stimulate
salespeople to achieve the firms goals.In
particular it must motivate sales people to
generate net profit rather than mere sales
volume.
Simplicity:
An effective compensation plan is easily
understood and is relatively simple to
operate. A plan that the sales personnel
cannot understand will lose its value as a
motivator.
 Effective sales compensation:
Fairness: an essential element for any sales
compensation plan is equity.The plan must be
fair to both the company and its sales
force.The company should be able to keep
the selling costs in line with volume.The
compensation plan should also protect
against windfall gains in abnormal times.
Flexibility: A plan should be sufficiently flexible
to take into account the rapidly changing
needs of the company and its salespeople.
 Effective sales compensation:

Control: Sales people should do what the

management pays them to do.The sales
compensation plan should provide control
and direction over the sales force activities.A
sound compensation plan will strengthen the
sales managers supervision of sales
personnel.
Competitiveness:the levels of compensation
should be competitive with the levels offered
by other companies.Attractive pay is needed
to attract,keep,and develop effective
salespeople.
 Dangers of overpaying:

Overpaying the salespersonnel is a bad

practise.One result of overpaying salespeople
is adverse effect on company profits.sales
compenation is usually the largest single
element of selling cost ,so excessive pay
levels will unnecessarily reduce profits.
In some companies sales officers may earn
more than the salesmanagers which is
demoralising.Also it may be difficult to
convince top officers to take up managerial
positions if it amounts to taking a pay cut.
 Dangers of underpaying:

It is also important to guard against

underpaying of Sales personnel.two
conditions will result if the salesmen are
underpaid:
1) The company will attract only poor sales
personnel which will result in poor
performance.
2) If good salesmen are hired at low pay there
will be excess employee turnover.
3)Good salesmaen will be vulnerable for
pirating by other firms.
Features of the different modes of compensation:

When choosing a method of compensation three

factors must be considered:
Motivation:Different methods of compensation will
stimulate salespeople in different ways.Commissions
and bonuses provide a direct incentive to achieve
,whereas salaries are less directly related to sales
performance.
Control: when salespersonnel are on direct salary then
they are directly responsible to the company for their
daily performance.sales people on commision only
consider themselves as more independent than
salaried salesmen and perform only those actions that
are immediately related to their sales success The
bonus form of compensation provides control by
inducing sales people to point their efforts towards a
particular goal.
Features of the different modes of compensation:

Cost:

The various methods of compensating the sales

force affect selling costs in different
ways.salaries are a fixed expense;
commissions and bonuses are variable
expenses.When business is good a straight
salary plan may provide higher
profits.However in a business slump, fixed
selling expenses vary with performance.they
will be high when sales are good and low
when sales are poor.
 Methods of compensating sales personnel:

Salary:A salary is a fixed sum of money

paid at regular intervals.The amount
paid is related to time rather than to the
work achieved.A straight salary is used
when a salespersons actual work
function is not directly related to the
sales volume or to other quantitive
measures of productivity.This is often
true when salespeople are expected to
perform nonselling activities such as
market research,servicing,CRM etc.
 Salary:
Salaries are common in selling of highly
specialised products where the time taken per
sale is very high.
Salaries are appropriate when a new product
is introduced,when a new market is
developed,or when a new peson is being
trained.These situations are all characterised
by uncertainity for the salesperson.
Salary payment entitles the management to
have rigid control on the employee.
 Commission:
A commission is the payment for the
performance of a unit of the work.eg..
a sales person may be paid 35 of net sales,5%
of gross profits etc.Here sales people are
paid only for results.
Loss of control on the sales activity is
the major limitation of the straight
commission.The strong incentive to sell may
encourage overstocking ,misrepresentation of
goods,and other selling practices.
 Commission:

Sliding commission plans: This uses a system

of progressive commisssion rates where the
earnings of sales persons increase more than
proportionately with increase in sales volume.
Regressive commission plan: works in
reverse and is used only to promote the initial
sale of a product.
Varied commission plan: to promote different
kind of products to maximise the profitable
product mix.
 Bonus:

A bonus payment is made at the

discretion of management for a
particular achievement.It is usually a
reward for special efforts and provides
direct motivation.Unlike commissions
bonuses are less directly related to
sales volume.they are considered an
additional incentive than part of the
basic compensation plan.
 Combinations:

In reality a combination of
salary,commission and bonus coupled
With suitable incentives are used by
different indian companies
 Fringe benefits:

Insurance
Paid leave
Retirement pans.
Educational assistance.
Personal use of company vehicle and
mobile phone.
Club or association membership.