Advanced Sales Management Handbook and Cases

Analytical, Applied, and Relevant

Linda Orr

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136647000
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Advanced Sales Management Handbook and Cases: Analytical, Applied, and Relevant will fill the need in the market for a solid case work, role play, and activity book. It has been written by sales teaching professionals and sales executives. The life experiences of professionals with varied experiences will provide students with a solid foundation for learning. This will give college professors from around the world a better opportunity to ensure quality of learning. The book is intended to be supplemental to any other sales management text on the market, but could be used alone in an advanced sales management or marketing analytics course in which the students already have the base theoretical knowledge.

The various cases, role plays, and experiential exercises in this book will follow the same topical structure of other sales management texts so that any sales management instructor can readily adopt this supplemental book. For many of the cases, actual data has been given so that students are required to use and understand analytical software.

1

Introduction to Sales Management

What is Sales Management and How Does it Relate to other Aspects of Marketing?

Sales management is a small subsection of the broader “parent” discipline of marketing and marketing management. While the official definition of marketing has changed throughout the years, the latest definition as of 2007 is that “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large” (American Marketing Association, 2010). The new definition reflects a few key changes in the field of marketing, namely that marketing is moving from a transaction orientation to a customer relationship building orientation. Furthermore, the new American Marketing Association definition shifts the perspective more to the customer side by focusing on delivering value and managing customer relationships.

The duties of a marketing manager normally encompass what are typically referred to as the “4 P’s” (see Figure 1.1). The marketing manager must understand the customers – their buyer patterns and behaviors, as well as their wants and needs. This understanding is gained by the use of research and analytics. Then, a marketing manager must incorporate these pieces of research and findings into broader plans on how to develop the right product and/or service offering, how to distribute it, how to price it, and how to promote it. For the last element mentioned, the promotional element, a marketing manager must decide the best way to communicate with the customer groups and how to build brand awareness and loyalty. A manager has many promotional tools at their disposal, but these generally range from mass-market techniques all the way to very personalized and customizable techniques. Professional selling is of course probably the most personal of these tools.

Figure 1.1 The relationship between marketing and selling.

The management of the sales force that conducts these sales activities is the responsibility of the sales manager. One caveat is necessary here: none of these aforementioned elements, whether they be 4 P elements or individual promotional mix elements, exists in a vacuum. They all affect and interact with each other. For example, while a sales manager is deciding on how to best manage their sales force, they are also concerned with the effects of social media on their efforts.

Thus, sales management by definition has a fairly narrow scope of responsibility and includes the planning, leading, and controlling of the selling activities of the sales manager’s organization. The management tasks are usually directed around strategic planning, recruitment, selecting, training, equipping, assigning, routing, supervising, paying, and motivating the sales force. Sales managers must continually monitor and adjust their marketing strategies to dynamic technological, competitive, economic, legal, and cultural factors. Likewise, they also have to consider the interests of the company’s stakeholders, such as employees, suppliers, financial community, media, stockholders, special interest groups, and governments. Different managers have different responsibilities depending on where they are in the organizational hierarchy. A typical hierarchy is depicted in Figure 1.2. Generally, the higher in the structure a manager is, the fewer sales duties they take on and the more they are responsible for leading, strategizing, and controlling.

Figure 1.2 Hierarchy of sales management positions

However, this basic definition and description hardly covers the true duties and needs of sales managers in today’s world. As sales situations and customers become increasingly complex, a better-trained, more analytical sales force is no longer a nice thing to have, but a necessity. Likewise, a better-trained, more analytical sales manager is equally important and crucial to the success of an organization. With increased globalization, competition, increasingly enhanced technology, and instantaneous communication, buyers are becoming more knowledgeable and informed. They expect more from the sales representatives calling on them. In order to meet these increased demands from buyers, sales representatives need to have business acumen like never before, and understand how to think and act like a consultant who is solving a business problem for a client, not just selling a product or service.

The Complexities of Sales Management Today

The following are some daunting statistics about how hard a sales manager’s job has become. On average, 13% of a sales force delivers 80% of the revenue (Bosworth & Holland, 2004), 47% of salespeople admit to having no clue about their customer’s biggest concerns, and 65% of sales managers focus on building volume instead of wooing profitable customers. Many salespeople and sales managers think price is a legitimate objection and let price dictate their success in sales, and sometimes even go so far as to reduce product quality.

Many of the problems that a sales manager must deal with are results of decades of downright pitiful sales training, both at the corporate level and in universities for the past few decades. One of the most common example clichés is “A good salesperson could sell ice to an Eskimo,” when in reality a good salesperson could not (or would not) sell ice to an Eskimo. Why would they? An Eskimo does not need ice! Another bad sales principle that has made the sales manager’s job more difficult is the idea that the sales force simply is not making enough sales calls – it’s all a numbers game – and that is why sales are down. Even the ABCs (Always Be Closing) of sales or other trainers’ hard closing techniques are still being practiced in companies today. Other salespeople were trained to ask four fact-finding questions then start dumping product features, utilize memorized objection responses, or use flashy visual aids as a crutch.

These false principles have created a few generations of completely incompetent salespeople. This, coupled with the fact that the environment and the industries are changing so dramatically, means that a sales manager’s job is far removed from the simplistic black-and-white definition given previously. Today, some of the key questions a sales manager must ask are:

• How do you differentiate yourself and position yourself as uniquely valuable?
• How do you protect your value proposition against inroads from your competition?
• How do you manage information as working capital? How do you take and utilize and process this information analytically?
• How do you establish credibility, awareness, and loyalty among your buyers?
• How do get your salespeople to gain and maintain access to key people? How do you understand the key decision makers and what they want?
• How do you coach, train, and manage generation X and generation Y salespeople and buyers? How do you apply flexible motivational skills in working with a multicultural, hybrid sales force?

Owing to the fact that the sales manager’s job has become so complex, and also because of downright poor hiring practices, currently the average tenure of a Vice President of Sales is 24–32 months (Baldwin, 2010). Major reasons why some sales managers may fail to perform at higher levels include illogical selection of sales managers, inadequate sales management training, lack of a long-run customer relationship orientation, and insufficient blending of sales, marketing, and financial knowledge.

However, all that having been said, sales management is a wonderful career to enter. Few jobs are more crucial to the ultimate success of a business than sales management. Sales managers oversee the sales force – the direct income producers who determine the financial health of their organizations. If the front line is not producing, the company is not making money. Sales management shapes and determines nearly all the firm’s interactions with customers. Sales managers are perhaps the most vital link to marketing and sales research and analytics. They see the data firsthand and are in the best position to shape business strategy in terms of how to please customers. In short, it is one of the most vital careers to any organization and the economy as a whole.

Sales Management Trends

Before we begin a detailed discussion in regard to the specific details of how to make analytical sales management decisions, it is important to cover in more detail how drastically different sales management is today in comparison to sales management a few decades ago. As briefly mentioned, the changing dynamics between buyers and sellers are being driven by larger societal, economic, cultural, technological, and political trends that are affecting us all. Some of these changes are the proliferation of information, the deep recession and subsequent downsizing and reorganization of companies, the growth of social media, the mobility of the workforce, the ease of communication, the explosion of other world economies, and the tighter government regulations in many industries such as the toy industry and the financial industry. The overriding, most fundamental principle that companies need to recognize now is that they must add value to the customer’s business or they will not get the sale.

Changing Corporate Cultures

To overcome the hurdles that exist as a result of the changing environment, companies need to refocus their corporate culture. Creative engineers or other technical experts who invent new products are not enough to sustain a competitive advantage. Typically, organizations have survived on the basis of this continual flow of new products. Innovation and “how to have an innovative culture” have become buzzwords in recent times. However, all too frequently, innovations are not really needed and do not truly match customers’ needs. A major challenge is moving a selling organization to become “customer driven” from whatever driving force had previously dominated corporate strategy. As Table 1.1 demonstrates, a change in corporate culture dictates much about how well an organization will succeed today. Corporate managers who are rewarded for quarterly profit, for example, have little prospect of investing the time needed to develop “customers for life” relationships or partnerships. Grandiose products and services with more capacity, features, or options are often just seen as overpriced. The focus must change from product to benefit or business result.

Table 1.1 Changes in buyers

Then	Now
Static, dated information	Dynamic, real-time information
Many place, time, and space barriers (limited hours)	No place, time, or space barriers (open 24/7/365)
Few customer alliances or communities	Many customer alliances and communities –explosion of social networking
Few customized products	Many customized products
Narrow selection of products	Large selection of products
Limited price sensitivity (bonuses based on cost reductions – higher accountability)	High price sensitivity
Limited access to competitors’ offerings	Instant access to competitors’ offerings
High switching costs	Low switching costs
Seller initiates the offer	Customers initiate the offer – detached buyer cycles
Short decisions	Longer sales cycles
More time to spend with salespeople	Almost no time to spend with salespeople

Many new products come out simply because no one in a company understands an organization’s mission statement. When Jeffrey Hayzlett first became Chief Marketing Officer (CMO) of Eastman Kodak, he went around asking everyone what Kodak’s mission statement was (J. Hayzlett, personal communication, 2010). While nobody really gave him a good answer, most people said something along the lines of “To take pictures?” He then realized that no one in the company knew what the real focus should be and everyone was thinking about a product that would soon be, and now is, almost completely dead. He led a huge turnaround of the company and got it away from being a product-driven organization. He turned Kodak into an organization whose vision focused around one product. This one product was one that people will run into a burning building to save, namely their memories. He made the focus the customer and helping the customer capture and save their memories in the best way Kodak could.

To institute these types of turnarounds, sales managers now must have a completely different focus as compared with a sales manager just five years ago. They must be leaner and more analytical. They must understand how important coaching is and that a manager cannot be fully effective in coaching or developing more than four or five salespeople. They must provide a top-notch sales training program and matching compensation system which encourage the culture. More specific aspects of these changes and what is causing these changes are detailed in the three sections that follow, which are about changing customer expectations and the necessary changes that sales managers must make.

Changing Customers

As was mentioned in the introduction to this chapter, buyers and their needs have completely changed, much of the change having been caused by rapid changes in technology. As far as the industries in which sales managers operate are concerned, they are more competitive than ever; many are “hypercompetitive” and “saturated.” New products and services come out faster than ever and change more frequently. Customers know more about price, quality, capability, reliability, and alternatives. Customers are also more demanding: they want more information, more options, bigger discounts, better service. In fact, the top three complaints of salespeople by B2B customers are: (1) the salesperson is not following my company’s buying process, (2) the salesperson did not listen to my needs, and (3) the salesperson did not bother to follow up (Iacobucci, 2009). Moreover, buying and selling cycles are detached, thus causing salespeople to face different sales processes.

With detached sales cycles, by the time a buyer encounters a salesperson today, the buyer has probably already educated themselves on the alternatives and begun to narrow their choices. They have already asked other colleagues in the industry for their opinion on their preferred supplier and, depending on the industry, have already begun to research the product online and with social media. With the increased complexity of the products and saturation of markets, buyers have usually amassed a long list of technical questions that they will expect the salesperson to answer with great authority and confidence. Compared to just a few years ago, buyers are more educated and more sophisticated. Consequently, they are more demanding. Buyers expect salespeople to be skilled and knowledgeable, and, above all, to offer value added. If salespeople cannot demonstrate in a very brief amount of time that they can understand and resolve a buyer’s concerns, that buy...