Personal Selling Essays

Personal Selling Essays Personal Selling Paper Personal Selling Paper In the past few tutorials we saw how marketers can use advertising, sales promotion and public relations to reach a large number of customers. While these methods of promotion offer many advantages, they each share one major disadvantage: they are a non-personal form of communication. And whether a company is in retailing or manufacturing, sells goods or services, is a large multinational or a local startup, is out to make a profit or is a non-profit, in all probability at some point they will need to rely on personal contact with customers. In other words, they will need to promote using personal selling. Unfortunately, personal selling is widely misunderstood. For instance, many customers think salespeople possess traits that include being manipulative, arrogant, aggressive and greedy. While many marketers believe salespeople are only out to make a quick sale intended to increase their income and that they often do this by making unscrupulous deals undermining the marketer’s attempt to build strong brands. While there certainly are some salespeople that fit these descriptions, today the most successful salespeople are those who work hard to understand their customers’ needs with the ultimate goal of ensuring that customer’s needs are satisfied at a high level. And, more importantly, personal selling holds a key role in the promotional activities of a large number of organizations. In fact, in the business market where one company sells products to another company, money spent to support the selling function far exceeds spending on advertising. In this part of our highly detailed Principles of Marketing Tutorials, we begin a two-part look at personal selling. We will continue our coverage of personal selling in the next tutorial when we discuss the selling process used to obtain a customer order. What is Personal Selling? Personal selling is a promotional method in which one party (e. g. , salesperson) uses skills and techniques for building personal relationships with another party (e. g. , those involved in a purchase decision) that results in both parties obtaining value. In most cases the value for the salesperson is realized through the financial rewards of the sale while the customer’s value is realized from the benefits obtained by consuming the product. However, getting a customer to purchase a product is not always the objective of personal selling. For instance, selling may be used for the purpose of simply delivering information. Because selling involves personal contact, this promotional method often occurs through face-to-face meetings or via a telephone conversation, though newer technologies allow contact to take place over the Internet including using video conferencing or text messaging (e. . , online chat). Among marketing jobs, more are employed in sales positions than any other marketing-related occupation. In the U. S. alone, the U. S. Department of Labor estimates that over 14 million or about 11% of the overall labor force are directly involved in selling and sales-related positions. Worldwide this figure may be closer to 10 0 million. Yet these figures vastly under-estimate the number of people who are actively engaged in some aspect of selling as part of their normal job responsibilities. While millions of people can easily be seen as holding sales jobs, the promotional techniques used in selling are also part of the day-to-day activities of many who are usually not directly associated with selling. For instance, top corporate executives whose job title is CEO or COO are continually selling their company to major customers, stock investors, government officials and many other stakeholders. The techniques they employ to gain benefits for their company are the same used by the front-line salesperson to sell to a small customer. Consequently, our discussion of the promotional value of personal selling has implications beyond marketing and sales departments. Advantages of Personal Selling One key advantage personal selling has over other promotional methods is that it is a two-way form of communication. In selling situations the message sender (e. g. , salesperson) can adjust the message as they gain feedback from message receivers (e. g. , customer). So if a customer does not understand the initial message (e. . , doesn’t fully understand how the product works) the salesperson can make adjustments to address questions or concerns. Many non-personal forms of promotion, such as a radio advertisement, are inflexible, at least in the short-term, and cannot be easily adjusted to address audience questions. The interactive nature of personal selling also makes it the most effective promotional method for building relationships with customers, particularly in the business-to-business market. This is especially important for companies that either sell expensive products or sell lower cost but high volume products (i. e. , buyer must purchase in large quantities) that rely heavily on customers making repeat purchases. Because such purchases may take a considerable amount of time to complete and may involve the input of many people at the purchasing company (i. e. , buying center), sales success often requires the marketer develop and maintain strong relationships with members of the purchasing company. Finally, personal selling is the most practical promotional option for reaching customers who are not easily reached through other methods. The best example is in selling to the business market where, compared to the consumer market, advertising, public relations and sales promotions are often not well received. Disadvantages of Personal Selling Possibly the biggest disadvantage of selling is the degree to which this promotional method is misunderstood. Most people have had some bad experiences with salespeople who they perceived were overly aggressive or even downright annoying. While there are certainly many salespeople who fall into this category, the truth is salespeople are most successful when they focus their efforts on satisfying customers over the long term and not focusing own their own selfish interests. A second disadvantage of personal selling is the high cost in maintaining this type of promotional effort. Costs incurred in personal selling include: High cost-per-action (CPA) – As noted in the Promotion Decisions tutorial, CPA can be an important measure of the success of promotion spending. Since personal selling involves person-to-person contact, the money spent to support a sales staff (i. e. , sales force) can be steep. For instance, in some industries it costs well over (US) $300 each time a salesperson contacts a potential customer. This cost is incurred whether a sale is made or not! These costs include compensation (e. g. , salary, commission, bonus), providing sales support materials, allowances for entertainment spending, office supplies, telecommunication and much more. With such high cost for maintaining a sales force, selling is often not a practical option for selling products that do ot generate a large amount of revenue. Training Costs – Most forms of personal selling require the sales staff be extensively trained on product knowledge, industry information and selling skills. For companies that require their salespeople attend formal training programs, the cost of training can be quite high and include such expenses as travel, hotel, meals, and tr aining equipment while also paying the trainees’ salaries while they attend. A third disadvantage is that personal selling is not for everyone. Job turnover in sales is often much higher than other marketing positions. For companies that assign salespeople to handle certain customer groups (e. g. , geographic territory), turnover may leave a company without representation in a customer group for an extended period of time while the company recruits and trains a replacement. Objectives of Personal Selling Personal selling is used to meet the five objectives of promotion in the following ways: Building Product Awareness – A common task of salespeople, especially when selling in business markets, is to educate customers on new product offerings. In fact, salespeople serve a major role at industry trades shows (see the Sales Promotion tutorial) where they discuss products with show attendees. But building awareness using personal selling is also important in consumer markets. As we will discuss, the advent of controlled word-of-mouth marketing is leading to personal selling becoming a useful mechanism for introducing consumers to new products. Creating Interest – The fact that personal selling involves person-to-person communication makes it a natural method for getting customers to experience a product for the first time. In fact, creating interest goes hand-in-hand with building product awareness as sales professionals can often accomplish both objectives during the first encounter with a potential customer. Providing Information – When salespeople engage customers a large part of the conversation focuses on product information. Marketing organizations provide their sales staff with large amounts of sales support including brochures, research reports, computer programs and many other forms of informational material. Stimulating Demand – By far, the most important objective of personal selling is to convince customers to make a purchase. In The Selling Process tutorial we will see how salespeople accomplish this when we offer detailed coverage of the selling process used to gain customer orders. Reinforcing the Brand – Most personal selling is intended to build long-term relationships with customers. A strong relationship can only be built over time and requires regular communication with a customer. Meeting with customers on a regular basis allows salespeople to repeatedly discuss their company’s products and by doing so helps strengthen customers’ knowledge of what the company has to offer. Types of Selling Roles As we noted above, worldwide millions of people have careers that fit in the personal selling category. However, the actual functions carried out by someone in sales may be quite different. In general there are four major types of selling roles: Order Getters Order Takers Order Influencers Sales Support The objectives of each role are often very different and within each role there are serveral subclassifications. A detailed discussion of each role can be found in the Types of Selling Roles tutorial. Trends in Selling While the basic premise of personal selling, building relationships, has not changed much in the last 50 years, there are a number of developments that are impacting this method of promotion including: Controlled Word of Mouth Customer Information Sharing Mobile and Web Computing Electronic Sales Presentations Electronic Sales Training Use of Customer Teams Selling Trends: Controlled Word of Mouth One of the most influential forms of promotion occurs when one person speaks highly of a product to someone else, particularly if the message sender is considered an unbiased source of information. Until recently, marketers have had little control over person-to-person promotion that did not involve salespeople (i. e. , biased source). However, marketers are beginning to experiment with new methods of promotion that strategically takes advantage of the benefits offered by word-of-mouth promotion. Unlike salespeople who attempt to obtain an order from customers, controlled word-of-mouth promotion uses real people to help spread information about a product but do not directly elicit customer orders. With controlled word-of-mouth promotion a marketer hires individuals to spread positive information about a product but in a way that does not make it obvious to others that they are being paid to do so. The technique is especially useful when building awareness of new products and this approach has been dubbed â€Å"buzz† marketing as a way to describe its objective of building a high level of awareness for a product. For example, a brewer may form a team of word-of-mouth marketers who visit local taverns and night spots. As part of their job these marketers may talk up a new beer sold by the brewer and even purchase the product for some customers. But in the course of doing so they do not directly disclose that they are being compensated by the brewer for their efforts. Controlled word-of-mouth has received a great deal of publicity though much of it has focused on potential ethical concerns. Some have expressed concern that paying people to act as if they are interested in a product without any indication of their relationship with the product breaches ethical standards. As more companies explore controlled word-of-mouth marketing it is expect to become an even more scrutinized form of personal selling. Selling Trends: Customer Information Sharing Possibly the most dramatic change to occur in how salespeople function on a day-to-day basis involves the integration of customer relationship management (CRM) systems into the selling arena. CRM is the name given to both the technology and the philosophy that drives companies to gain a better understanding of their customers with the goal of building stronger long-term relationships. The essential requirement for an effective CRM system is the need for all customer contact points (e. g. , salespeople, customer service, websites) to gather information so that this can be shared with others in the company. But CRM has faced some rough times within the sales force for the exact reason it is important: salespeople must share their information. Salespeople have historically been very good at developing relationships and learning about customers, but often loath sharing this since, in effect, information is what makes them important. In the minds of some salespeople, letting go of the information reduces their importance to the company. For example, some salespeople feel that sharing all they know about a customer will make them expendable as a salesperson since a company can simply insert someone new into their spot at anytime. While the attitude toward CRM has made its implementation difficult in many companies, salespeople should understand that it is not going away. CRM and information sharing has proven to be critical for maintaining strong customer relations and salespeople must learn to adapt to it. Selling Trends: Mobile and Web Computing The move to an information sharing approach is most effective when salespeople have access to information sharing features when they need it most. Mobile technologies, such as wireless internet (WiFi) and cellular Internet access, allow salespeople to retrieve needed information at any time. For example, if a salesperson takes a customer to lunch, the salesperson can quickly access company material to respond to questions such as how long it may take to receive product if an order is placed. Additionally, there is a growing trend to make key business applications available through a browser rather than having programs loaded on a salesperson’s computer. This allows for the application to be accessed from anywhere at anytime. For example, many companies have moved to web-based CRM systems where simply having Internet access allows salespeople to enter and retrieve information. Also, many new office productivity applications, such as word processing and spreadsheets, are now becoming web-accessible. New generation cellphones or smartphones along with other handheld devices, such as personal digital assistants (PDA), lighten the burden of carrying laptop computers. But because these handheld devices are web-enabled they provide access to much of the same information as a standard computer. While the computing power of handheld devices is still underpowered compared to conventional computers, the move to web-based computing may some day make the handheld the main instrument for inputting and outputting information. Selling Trends: Electronic Sales Presentations Technology is also playing a major role in how sales professionals reach prospects and existing customers. While audio/video conferencing has been available for many years using high-end telecommunication hookups, it has only been within the last few years that improvements in Internet access speeds, computing power and meeting software have made this method for reaching customers a practical alternative to face-to-face sales meetings. These options include: Online Video Conferencing – Online conferencing essentially acts in the same way as telecommunications videoconferencing, with one big exception; it is delivered over the Internet. Anyone who has an Internet connection knows that trying to deliver video over the Internet can be a trying experience as video often appears to be slow, jittery and sometimes not even recognizable. But these problems are quickly disappearing and while real time Internet video conferencing (i. e. , television quality video and audio) is still not routinely accessible to most salespeople, this is expected to change. Web/Phone Conferencing – To offset the problems associated with Internet delivery of real time audio and video, many companies deliver sales presentations using a combination of web and elecommunications. The most widely used services use the Internet, to deliver visual material (typically a slide presentation) and telecommunications, to allow for voice conversation. The process has a salesperson arrange for a conferencing time with a prospect who enters the conference by: 1) using their web browser to gain access to the visual presentation and 2) using their teleph one to call into an audio conference. Splitting the visual and audio feeds allows for smoother presentations since the conference participants’ computers need only process the visual material. It should be noted, that while audio access is now being carried out over telephone connections, the emergence of telephone over the Internet (i. e. , VOIP voice over Internet Protocol) may soon help resolve some of the problems that have been encountered when delivering both. Online Text Chat Online chat allows for real time communication between multiple participants using text messaging. While this form of buyer-seller communication may not be very effective at getting customers to agree to make a purchase, it has proven very effective in building initial product nterest. For example, potential customers visiting a website may use the chat feature to ask a few questions about the company’s products. Engaging a customer this way can then lead to the customer agreeing to receive a phone call from a salesperson to further discuss the product. Selling Trends: Electronic Sales Training Developing the skills and techniques needed to be successful at selling requires an extensi ve commitment by the individual seller and the sellers company to sales training. Sales training is the hallmark of professional selling. If there is one thing that separates the truly successful salesperson from those who are not, it is the amount of training and preparation they engage in. Most organizations that employ a sales force offer new salespeople an extensive formal training program often held at dedicated training facilities. These training programs can range from a few days to many months depending on the industry. But once a salesperson has made the move to the field, training does not stop. Those involved in selling must continue to stay abreast of their products, customers, markets and competitors. While many companies may continue to employ the same methods used when they first trained their salespeople, a large number of firms are finding that ongoing training can be just as effective using electronic options such as delivering training over the Internet, through downloadable computer programs or through interactive CDs or DVDs. While feedback using electronic means is not as personal as it might be with in-person training, sophisticated electronic training programs are effective in educating and testing trainee’s knowledge. Also, a live trainer can be contacted very quickly via e-mail, online chat or by a phone call if a question does arise. Using electronic delivery, the cost to the company for adding or updating training material is inexpensive and quick compared to the cost and time needed to produce and ship paper-based materials. Additionally, the use of RSS feeds or email enables salespeople to be quickly notified when new training material is available. This is useful when the sales force must be made aware of a recent change that will impact how products are promoted such as a price change, new information to be used as comparison to competitor’s products, a potential problem that has arisen when installing or using a product or some other adjustment. Selling Trends: Use of Customer Teams As we noted in our discussion of technical specialists, salespeople may require the assistance of others in their organization to effectively deal with prospects. In fact, many companies are moving away from the traditional sale force arrangement, where a single salesperson handles nearly all communication with an account, in favor of a team approach where multiple people are involved. Teams consist of individuals from several functional areas such as marketing, manufacturing, distribution, and customer service. In some configurations all members share bonuses if the team meets sales goals. Clearly to be effective a team approach requires the implementation of customer relationship management systems that we discussed earlier. (From nowthis. com/principles-of-marketingtutorials/personal-selling/selling-trends-use-of-customer-teams/) (From udel. edu/alex/chapt20. html) Scope and Importance of Personal Selling In the US, 14 million people are employed in sales positions, according to the department of labor. Sales personnel include stockbrokers, manufacturing sales representatives, real estate brokers etc. Most students in this class will have been employed as a sales person. Nature of Personal Selling Gives marketers: The greatest freedom to adjust a message to satisfy customers informational needs, dynamic. Most precision, enabling marketers to focus on most promising leads. vs. advertising, publicity and sales promotion Give more information Two way flow of information, interactivity. Discover the strengths and weaknesses of new products and pass this information on to the marketing department. Highest cost. Businesses spend more on personal selling than on any other form of promotional mix. Goals range from finding prospects convincing prospects to buy keeping customers satisfiedhelp them pass the word along. Types of Sales Persons Order Takers Seek repeat sales, make certain that customers have sufficient product quantities where and when they need it. Do not require extensive sales effort. Arrange displays, restocks them, answer phone calls. Low compensation, little training required. High turnover of personnel. 2 types: Inside Order Takers receive orders by mail/phone, sales person in a retail store. Field Order Takers travel to customers. Use laptop computers to improve tracking of inventory and orders etc. Order Getters Sell to new customers and increase sales to present customers, sometimes called creative selling. Generate customer leads, provide information, persuading customers and closing sales. Required for high priced, complex and/or new products. High pressure, requires expensive, time consuming training. Support Personnel Facilitate the selling function. Primarily business to business products. Missionary Salespeople Distribute information regarding new goods or services, describes attributes and leaves materials, does not close sales. Assist producers customers in selling to their own customers. IE call on retailers and persuade them to carry the product. Pharmaceuticals may go to doctors offices and persuade them to carry their products. Trade Salespeople May perform order taking function as well. Spend much time helping customers, especially retail stores, to promote the product. Restock the shelves, set up displays. Technical Salespersons Offer technical assistance to current customers. Usually trained engineers etc. Service Salespeople interacts with customers after sale is comp lete. Team selling entire team of selling professionals in selling to and servicing major customers, especially when specialized knowledge is needed to satisfy different interests in customers buying centers. Elements of the Personal Selling Process No 2 salespersons use exactly the same sales method, but it is generally a seven step process: Prospecting and Evaluating Seek names of prospects through sales records, referrals etc. , also responses to advertisements. Need to evaluate if the person is able (Undergraduate degree to attend a graduate program), willing and authorized to buy. Blind prospecting-rely on phone directory etc. Preapproach (Preparing) Review key decision makers esp. for business to business, but also family assess credit histories prepare sales presentations identify product needs. Helps present the presentation to meet the prospects needs. Approaching the Customer Manner in which the sales person contacts the potential customer. First impression of the sales person is Lasting and therefore important. Strive to develop a relationship rather than just push the product. Can be based on referrals, cold calling or repeat contact. Making the Presentation Need to attract and hold the prospects Attention to stimulate Interest and stir up Desire in the product so the potential customer takes the appropriate Action. AIDA Try to get the prospect to touch, hold or try the product. Must be able to change the presentation to meet the prospect needs. Three types of presentations: Stimulus Response Format: Appropriate stimulus will initiate a buy decision, use one appeal after another hoping to hit the right button Counter Clerk @ McDonalds Would you like fries with your burger? Formula Selling Format: (Canned Sales Presentation) memorized, repetitive, given to all customers interested in a specific product. Good for inexperienced sales people. Better with heavily advertised items that are presold. Telemarketing a credit card!! Need Satisfaction Format: Based on the principal that each customer has a different set of needs/desires. , therefore the sales presentation should be adapted to the individual customers needs, this is a key advantage of personal selling vs. advertising. Sales person asks questions first, then makes the presentation accordingly. Need to do homework, listen well and allow customers to talk etc. Must answer two types of questions: for more information overcome objections. Overcoming Objections Seek out objections and address them. Anticipate and counter them before the prospect can raise them. Try to avoid bringing up objections that the prospect would not have raised. Price objection is the most common Need to provide customers with reasons for the $s, build up the value before price is mentioned Must be convinced of price in own mind before you can sell to customer. Get budget info. on buyer before you try to sell, and must know what they want, must sell service on top of product augmented productto create value!! Must know value of product, provide warranties etc.!! Closing Ask prospect to buy product/products. Use trial closes, IE ask about financial terms, preferred method of delivery. 20% sales people generally close 80% sales. , Avon, over 1/2 US $1. 4 bn business from 17% of 415,000 SRs. Need to be prepared to close at any time. The following are popular closing techniques: Trial Close (Minor decision close) Assumptive close (Implied consent close) Urgency close Ask for the sale close If prospect says no, they may just need more reasons to buy!! Following Up Must follow up sale, determine if the order was delivered on time, installation OK etc. Also helps determine the prospects future needs. Accomplishes four objectives: customer gain short term satisfaction referrals are stimulated in the long run, repurchase prevent cognitive dissonance Old school, sell and leave!! Quickly before customer changes her mind!! Now: Stay a few minutes after salereinforce, make them feel good, made wise choice, leave small gift (with co. name on it!! ), call office at any time etc!! Follow up, reinforce, know birthdays, new year etc, friendly correspondence relationship building!! Handout Toyota Calling In Japans Car Market Half of cars are sold door-to-door. This is shrinking due to environmental changes. Toyota has more than 100,000 door-to-door sales people. Developing Long-term relationships is key, Keiretsu, do business with only those you know and trust. Face-to-face meetings before business to establish trust, the approach stage. Follow up is key to relationship: After sales: call inquiring on cars immediate performance hand written greeting cards written invitations for low cost oil changes Prospecting includes: Driving schools for people to obtain licenses = prospects Also referrals from existing customers is very important Curtesy calls to clients who referred new customers. Timing of presentation: To housewife in the middle of the day Just before 3 year Shaken, following 2 years At first I had no intention of buying a new car, but Mr. Saito is very good at proposing reasons why I should change = $1,600 shaken. Management of Salesforce Sales force is directly responsible for generating sales revenue. Eight general management areas: Establish Salesforce objectives Similar to other promotional objectives Demand oriented or image oriented. Major objective is persuasion, converting consumer interest into sales. Sales objectives; expected to accomplish within a certain period of time. Give direction and purpose and act as a standard for evaluation. Set for total salesforce and each individual salesperson. Can be $s, units sold, market share to achieve, for individual salespersons, also include ave. order size, ave. # of sales/time period, and ratio orders/calls. Organizing the Salesforce In-house vs. independent agents (manufacturers sales agents). Organize by: Geography (simplest, but not suitable if product(s) are complex or customers require specialized knowledge) Customer: Different buyers have different needs Product: Specific knowledge re: products is needed Size. Marginal analysis, or determine how many sales calls/year are needed for an organization to effectively serve its customers and divide this total by the average # of sales calls that a person makes annually. Also use subjective judgement. MBNA estimates how many calls to expect, one year in advance, and then determines the size of the salesforce at any given time. Recruiting and Selecting Salespeople Need to establish a set of required qualifications before beginning to recruit. Prepare a job description that lists specific tasks the salesperson should perform and analyze traits of the successful salespeople within the organization. May use assessment centersintense training environment that places candidates in realistic problem settings in which they give priorities to their activities, make and act on decisions. Recruitment should be a continual activity aimed at reaching the best applicants. Applicants that most match the demographics of the target market. Changing demographics, may be wise to hire hispanic sales people if your territory is in Florida!! Training Sales Personnel Use formal programs, or Informal on-the-job training. Can be complex or simple. Training should focus on: the company products selling techniques. Aimed at new hires and experienced personnel. Can be held in the field, educational institutions or company facilities. Oldsmobile spent $25 million last year to teach its dealers how to better treat its customers. Compensating Sales People To attract, motivate and retain sales people, that facilitate and encourage good treatment of the customers. Need to understand personalities of sales people. Strive for proper balance of freedom, income and incentives. Need to determine the best level of compensation required, and the best method of calculating it. Straight salary straight commission (selling insurance)single percentage of sales or sliding rate Combination plan Motivating Sales People Need a systematic approach, must also satisfy non-financial needs: Job security Working Conditions Opportunities to succeed Sales contests increase sales. Symbolic awardsplaques, rings etc. Can also use negative motivational methods for under performers. Due to burn outeven the best need motivating!! Ongoing process keep reps. hungry Need a motivational program. Spend time with reps, personal attention!! Take interest in them and the sales goals Compensation packet that rewards quality salesmanship and extra effort Recognition of extra effort of sales force Make sure SR feel important Keep SR informed of company activities Make certain reps. believe in the company Goals must be realistic and achievable and changeable Determine what they want and give it to them Controlling and Evaluating Salesforce performance Rely on information from call reports, customer feedback and invoices. Performance is determined by objectives. May compare with predetermined performance standards or with other sales people working under similar conditions. Handout Avon. $4 billion business, relied solely on personal selling until recently, environmental changes have changed this no longer is the wife expected to be at home model is dual income earning parents with children in day care. Need to develop more efficient ways to reach customers. Salespeople earn pure commission, 10% 50% for top sellers (over $32,750) Strategies tried: Avon Select. Direct mail catalog and toll free number, attract those that didnt know an Avon Lady, or didnt want to deal with one. Also used national TV and print campaign in conjunction. Problems = Salesperson creates confidence in the brand, delivering much more than advertising is able to do. When you take away the selling relationship, youre left with a brand thats relatively naked. Key is not to undercut the field salesforce, similar to dual distribution creating channel conflict. Mary Kay Corp has also tried this strategy but differently and more successfully: Catalogs carry different merchandise Forward commission to sales rep. in customers area Never have a grey area regarding competing with sales force. Other demotivational concerns: Restructured commissions Dropped awards, trips and other incentives Leadership Program. A Multi-level marketing (MLM) concept. Rewarded for products sold as well as people you recruit as a sales rep. by getting some of their commission and a portion of the commission of reps. they recruit etc. Created a hard sell environment and was consequently scrapped. To remotiva te: New CEO Reinstate Birthday presents Anniversary plates Annual Pins Phone Blitzs to indicate appreciation Gifts [and recognition] are part of the magic