Sales Management

Analysis and Decision Making

Thomas N. Ingram, Raymond W. LaForge, Ramon A. Avila, Charles H. Schweper Jr, Michael R. Williams

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000651942
• Topic: Business
• Subtopic: Sales
• Edition: 10

This tenthedition of Sales Management continues the tradition of blending the most recent sales management research with the real-life "best practices" of leading sales organizations. The authors teach sales management courses, and interact with sales managers and sales management professors on a regular basis. Their text focuses on the importance of employing different sales strategies for different customer groups, as well as integrating corporate, business, marketing, and sales strategies. Sales Management includes coverage of the current trends and issues in sales management, along with numerous real-world examples from the contemporary business world that are used throughout the text to illuminate chapter discussions.

Key changes in this edition include:

• Updates in each chapter to reflect the latest sales management research, and leading sales management trends and practices;

• Revised end-of-chapter cases;
  
  

• Revised ethical dilemma boxes;
  
  

• All new chapter opening vignettes about well-known companies that illustrate key topics from that chapter; and
  
  

• New or updated comments from sales managers in "Sales Management in the 21st Century" boxes.

An online instructor's manual with test questions and PowerPoints is available to adopters.

CHAPTER 1

Changing World of Sales Management

Personal selling is an important component of the marketing strategies for many firms, especially those operating in business-to-business markets. The 500 largest U.S. salesforces employ almost 25 million salespeople, with the 200 largest manufacturing salesforces consisting of over 528,000 salespeople. Each manufacturing salesperson produces an average of about $7.8 million in annual sales and supports over 15 other jobs in their company.¹ These statistics illustrate the large size and significant impact of personal selling in today’s business world.

Sales Management is concerned with managing a firm’s personal selling function. Sales managers are involved in both the strategy (planning) and people (implementation) aspects of personal selling, as well as evaluating and improving personal selling activities. Research indicates that sales managers can increase profitable sales growth by 5 percent to 20 percent or more by moving from average to excellent salesforce effectiveness.² Sales managers are involved in a variety of activities and must be able to interact effectively with people in the personal selling function, with people in other functional areas in their firm, and with people outside their company, especially customers and other business partners.

Most sales organizations employ sales managers at various levels within the sales organization. These sales managers have different titles and may not have direct responsibility for specific salespeople, but all perform sales management activities that affect the salespeople in a sales organization. Illustrative titles for sales managers include chief sales officer, vice president of sales, divisional sales manager, regional sales manager, sales leader, branch manager, area director, and field sales manager.

Our objective in this chapter is to introduce the exciting world of sales management. We begin by identifying challenges in the sales organization environment and suggesting effective sales management responses to these challenges. Then, the characteristics of the best sales organizations and most effective sales managers are discussed. We conclude by presenting a general sales management model that provides a framework for the book, describing the format of each chapter, and introducing the members of our Sales Executive Panel. The goal is to “set the stage” for your journey into the dynamic and exciting world of sales management.

Challenges in the Sales Organization Environment

Sales organizations operate in a complex and turbulent environment. Political, social, and economic trends in the global business environment and rapid advances in technology have produced an extremely competitive marketplace. Many of these changes have had an especially significant impact on organizational purchasing. The purchasing and supply function has increased in importance at many firms, because it is viewed as an effective way for firms to lower costs and increase profits. Therefore, organizational buyers are more demanding, better prepared, and more skilled. Sales organizations must understand this situation to be able to generate business with new customers and to keep and expand business with existing customers.

Several significant changes in the organizational purchasing process are directly relevant to sales organizations. Organizational buyers have higher expectations in terms of customized products and services that solve their problems and improve their business performance. More organizations are using a formalized purchasing process, with more individuals from different functional areas and management levels involved at different stages of the process. Many buyers do not want to talk to a salesperson until they have gathered the relevant information about their purchasing situation and expect sales-people to provide information and insights they do not have. The net result is a much longer purchasing process.³

The costs of maintaining salespeople in the field are escalating, and a longer purchasing process increases selling costs even more. Thus, a critical challenge for sales organizations is to increase sales while decreasing selling costs. Sales organizations must find effective ways to facilitate the emerging buying process of organizational buyers in a manner that generates profitable sales growth. Achieving this objective typically requires many sales organizations to make appropriate adjustments to their personal selling process and in sales management practices.

Sales Management Responses

Sales organizations are responding to these challenges in different ways. Many firms are implementing a marketing orientation with the sales organization viewed from a more strategic perspective. Market-oriented firms typically develop customer-centric cultures and focus efforts more toward customers rather than just products. Market segmentation and prioritizing customers within target markets becomes increasingly important. Sales is also viewed more as a core business process rather than a tactical activity. This strategic perspective considers the sales organization as critical in delivering value to customers and generating profits for the firm. Salespeople, sales managers, and other business functions need to change many of their activities to be successful in implementing a more strategic role.⁴

One emerging approach guiding many firms is to create and implement a sales enablement perspective. The sales enablement area is in the early stage of its development, so there is no universally accepted definition. However, most discussions of a comprehensive sales enablement program include several key elements:

• A buyer-focused function driven by a firm’s top-level executives.
• An alignment of the steps in the sales process to deliver value at each stage of the buying process.
• An integration and coordination of the efforts of executives, sales managers, sales-people, and personnel from other business functions that directly impact customers to create value in all interactions with buyers.
• An incorporation of the appropriate training, technology, performance metrics, and reward programs to guide and support the execution and achievement of sales enablement and sales organization objectives.

There is increasing evidence that firms creating and executing a sales enablement function perform better than firms without them.⁵

Sales enablement is beginning to develop as a discipline. The Sales Enablement Society (sesociety.org) was established in 2015 as a volunteer organization of professionals from diverse industries, companies, and business functions. The organization provides a variety of networking opportunities for members. The major purpose is to increase the knowledge base and identify the best practices for a successful sales enablement function. One ongoing effort is to establish an official definition of sales enablement.

Firms employing a comprehensive sales enablement function are making dramatic changes in their sales operations and transforming most aspects of sales management. Others are focusing on improving a few sales management areas to increase sales organization effectiveness. As indicated in Figure 1.1, these sales management responses emphasize ways to create customer value, increase sales productivity, and/or improve sales leadership.

Figure 1.1 Sales Management Responses

Many sales organizations are responding to the challenges facing them by making changes in their sales operations.

Create Customer Value

Many sales organizations are moving from an emphasis on merely selling products to solving customer problems and adding value to customer businesses over the long term. The key is to identify value as defined by the customer and then to create, communicate, and deliver this value. For example, RS Medical sells physician-prescribed home electrotherapy devices. Salespeople typically focused on the key features of their products when meeting with physicians, because they thought this information was of most interest to the physicians. However, the physicians had more interest in information that would help improve their practice as a business. Once RS Medical salespeople identified what was really of value to physicians, they began to educate physicians on how to make their practices more efficient and more profitable by using RS Medical products. The value provided by this approach led to an increase in device sales for RS Medical.⁶

Changes in the business environment often result in changes in how customers define value. Salespeople and sales managers must identify the new value definitions and deliver the value desired by customers. For example, customers of Minnesota Thermal Science (MTS) used to be most interested in the technology of pharmaceutical packaging. The introduction of strict and costly regulations in the pharmaceutical industry drove many firms to become more interested in ways to reduce their costs. MTS sales-people responded to this change in value and began to present a much stronger business case for their packaging solutions, such as showing customers how their packaging and distribution costs could be reduced by using MTS packaging.⁷

The importance of creating customer value is likely to increase in the future. But, how customers define value is likely to change as well. The most successful sales organizations will be those that are able to identify how their customers define value over time and then communicate and deliver this value to them. Changes in value creation will typically require changes in many aspects of sales management.

Increase Sales Productivity

Even as sales organizations try to create more value for customers, sales managers are under pressure to increase sales productivity. The basic role of a sales organization has typically been to sell with sales managers and salespeople normally evaluated and rewarded for growing sales volume. Generating sales is still important, but the profit-ability of these sales is increasingly more important. Therefore, the focus for sales managers has moved from sales volume only to sales productivity. Sales productivity includes the costs associated with generating sales and serving customers and emphasizes producing more sales for a given level of costs. Sales managers must “do more with less” by being more effective and more efficient throughout the sales organization.

Many sales organizations are employing different types of technology to increase sales productivity. Improvements in existing technologies, the development of new technologies, and the opportunity to integrate different technologies provide many opportunities to automate some of the tasks currently performed by salespeople and sales managers. The use of salesforce automation (SFA), customer relationship management (CRM), and data analytics tools represent effective technologies for increasing sales productivity. The rapid development of artificial intelligence (AI) and more effective use of social media are especially likely to have important impacts on sales productivity in the future.

Existing and emerging AI technology products are expected to drive sales productivity improvements. AI technologies analyze data and learn from the ongoing data-analysis process to provide better results and guidance for salesperson and sales management actions.⁸ AI applications can free salespeople and sales managers from spending time on many different tasks, such as providing price quotes, creating sales reports, data input to CRM systems, sales forecasting, and prescriptive insight for personalized sales presentations. By performing different tasks, AI technology can act as an efficient assistant for salespeople and sales managers.

Take prospecting as an example. Many salespeople spend large amounts of time identifying sales leads, qualifying the leads, prioritizing the prospects, and then making an appointment to talk with the prospect. This is a time-consuming process. Conversica offers an AI virtual Sales Assistant product that promptly responds to website inquiries, personalizes every message, asks questions to qualify the lead, and then sets up a time for a salesperson to call the prospect.⁹ This use of AI automates many of the prospecting tasks with the salesperson only directly involved when a qualified prospect has been identified and an appointment established. The time a salesperson has saved by not having to be involved in most of the prospecting process can be used more productively, because the salesperson can spend more time interacting with qualified prospects, engaging in the sales process, and generating more sales.

The use of social media in sales organizations has increased significantly in recent years. Many salespeople are engaged in social selling, using social media to identify, understand, engage, and network with prospects and customers. Studies indicate that the best performing salespeople are involved in social selling.¹⁰ Social selling is also being integrated with other technologies, such as CRM and AI, to increase sales productivity. For example, SAP has integrated social media with a variety of other technologies to identify and pursue selling opportunities by listening, learning, and engaging with prospects and customers throughout the sales process. This approach has produced large sales increases and efforts to continuously improve social selling efforts in the future.¹¹

The pressure for sales organizations to increase sales productivity is likely to intensify in the future. Emerging technologies are expe...