This chapter is the third of four chapters covering the final marketing mix element—promotion. The previous two chapters dealt with overall integrated marketing communications and with advertising and public relations. This chapterinvestigated personal selling and sales promotion. Personal selling is the interpersonal arm of the communications mix. Sales promotion consists of short-term incentives to encourage the purchase or sale of a product or service.
Most companies use salespeople, and many companies assign them an important role in the marketing mix. For companies selling business products, the firm’s sales force works directly with customers. Often, the sales force is the customer’s only direct contact with the company and therefore may be viewed by customers as representing the company itself. In contrast, for consumer product companies that sell through intermediaries, consumers usually do not meet salespeople or even know about them. The sales force works behind the scenes, dealing with wholesalers and retailers to obtain their support and helping them become more effective in selling the firm’s products.
As an element of the promotion mix, the sales force is very effective in achieving certain marketing objectives and carrying out such activities as prospecting, communicating, selling and servicing, and information gathering. But with companies becoming more market oriented, a customer-focused sales force also works to produce both customer satisfaction and company profit. The sales force plays a key role in engaging customers and developing and managing profitable customer relationships.
High sales force costs necessitate an effective sales management process consisting of six steps: designing sales force strategy and structure, recruiting and selecting, training, compensating, supervising, and evaluating salespeople and sales force performance.
In designing a sales force, sales management must address various issues, including what type of sales force structure will work best (territorial, product, customer, or complex structure), sales force size, who will be involved in selling, and how various salespeople and sales-support people will work together (inside or outside sales forces and team selling).
Salespeople must be recruited and selected carefully. In recruiting salespeople, a company may look to the job duties and the characteristics of its most successful salespeople to suggest the traits it wants in new salespeople. It must then look for applicants through recommendations of current salespeople, ads, and the internet and social media as well as college recruitment/placement centers. After the selection process is complete, training programs familiarize new salespeople not only with the art of selling but also with the company’s history, its products and policies, and the characteristics of its customers and competitors.
The sales force compensation system helps to reward, motivate, and direct salespeople. In addition to compensation, all salespeople need supervision, and many need continuous encouragement because they must make many decisions and face many frustrations. Periodically, the company must evaluate their performance to help them do a better job. In evaluating salespeople, the company relies on information gathered from sales reports, personal observations, customer surveys, and conversations with other salespeople.
The fastest-growing sales trend is the explosion in social selling—using online, mobile, and social media in selling. The new digital technologies are providing salespeople with powerful tools for identifying and learning about prospects, engaging customers, creating customer value, closing sales, and nurturing customer relationships. Many of today’s customers no longer rely as much on assistance provided by salespeople. Instead, increasingly, they use online and social media resources to analyze their own problems, research solutions, get advice from colleagues, and rank buying options before ever speaking to a salesperson. In response, sellers are reorienting their selling processes around the new customer buying process. They are using social media, mobile devices, web forums, online communities, blogs, and other digital tools to engage customers earlier and more fully. Ultimately, online, mobile, and social media technologies are helping to make sales forces more efficient, cost-effective, and productive.
Selling involves a seven-step process: prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing, and follow-up. These steps help marketers close a specific sale and, as such, are transaction oriented. However, a seller’s dealings with customers should be guided by the larger concept of relationship marketing. The company’s sales force should help to orchestrate a whole-company effort to develop profitable long-term relationships with key customers based on superior customer value and satisfaction.
Sales promotion campaigns call for setting sales promotion objectives (in general, sales promotions should be consumer relationship building); selecting tools; and developing and implementing the sales promotion program by using consumer promotion tools (from coupons, refunds, premiums, and point-of-purchase promotions to contests, sweepstakes, and events), trade promotion tools (from discounts and allowances to free goods and push money), and business promotion tools (conventions, trade shows, and sales contests) as well as determining such things as the size of the incentive, the conditions for participation, how to promote and distribute the promotion package, and the length of the promotion. After this process is completed, the company must evaluate its sales promotion results.
Personal selling (p 456)
Salesperson (p 457)
Team selling (p 461)
Sales quota (p 465)
Social selling (p 466)
Selling process (p 469)
Prospecting (p 469)
Preapproach (p 470)
Presentation (p 470)
Go to mymktlab.com to complete the problems marked with this icon .
16-1 Define personal selling and discuss its role in a company’s promotion mix. (AASCB: Communication; Reflective Thinking)
16-2 Name and describe the four sales compensation elements. What are the various compensation combinations, and how can they be used to achieve the company’s marketing objectives? (AACSB: Communication; Reflective Thinking)
16-3 What is social selling, and how is it affecting the sales function in organizations? (AACSB: Communication; Reflective Thinking)
16-4 Name and explain the steps in the selling process. (AACSB: Communication)
16-5 What is sales promotion? Discuss its growth as a short-term consumer promotion tool. (AACSB: Communication)
16-6 There are considerable free sales training resources available on the internet. Search “free sales training” to find some of these resources and access one of them. Create a presentation highlighting what you learned. (AACSB: Communication; Use of IT; Reflective Thinking)
16-7 You are the district manager for Pureation Beverage Group, a beer and wine distributor. The company has experienced rapid growth and needs to add additional salespeople to its team. Using the sales force management steps in Figure 16.1, discuss what needs to be done to effectively manage your sales force. Support your position. (AACSB: Communication; Reflective Thinking)
16-8 In a small group, design a sales promotion campaign using online, social media, and mobile marketing for a small business or organization in your community. Develop a presentation to pitch your campaign to the business or organization and incorporate what you’ve learned about the selling process. (AACSB: Communication; Reflective Thinking)
More than 320 billion coupons are distributed each year, with more than 90 percent of them printed on paper. Consumers redeem only about 1 percent of coupons distributed, often because they clip them but forget to use them in the store. SnipSnap has a solution for consumers. Hailed as the Best Shopping App by About.com and winning Media Post’s Apply Awards for Best Finance App, this app has mobilized those paper coupons for consumers. SnipSnap now boasts 4 million users and more than 50 national retail partners. The app allows consumers to snap a photo of retailers’ paper coupons and redeem them at the store. Users can share with friends on Facebook and Twitter and follow others’ couponing. SnipSnap is the first mobile app that scans the text, images, logos, and barcodes in printed coupons and creates a mobile coupon. It also sends expiration date reminders and location-based notifications. Retailer Lord & Taylor installed iBeacon technology and partnered with SnipSnap to send shoppers targeted coupons based on where they are in the store. So if you want a good deal on a Michael Kors purse, it knows you are looking at the item and might send you a coupon through the app. SnipSnap employees noticed consumers were snapping pictures of “coupons” they created to send to friends and family that were good for some special treatment, so the company created a spinoff app called GoodFor. Now, if you want to send a special someone a coupon good for a 30-minute massage or your kid a “get out of chores free” coupon, GoodFor allows you to do it!
16-9 Research other types of apps that rely on smartphone cameras to redeem a sales promotion offer. Explain how they work and how they are similar to and different from SnipSnap. (AACSB: Communication; Use of IT; Reflective Thinking)
16-10 The profitable growth potential for SnipSnap is in the enterprise market where it provides mobile promotion services to retailers. SnipSnap is working with retailers to create and manage geo-conquesting campaigns. Research what this is and create a presentation explaining how it works. (AACSB: Communication; Use of IT; Reflective Thinking)
Employees at Staples face a challenging work environment. According to The New York Times, Staples maintains an internal reporting system nicknamed “Market Basket” that carefully tracks all equipment and protection plan add-ons that each sales staff member sells. Staples expects that each salesperson will upsell each transaction by $200 with additional merchandise and warranty contracts. Staples salespeople have been trained to push until they get at least three objections. This is a classic hard-sell technique. Sales staff who do not meet their goals are coached. If that doesn’t work, the underperforming employees face disciplinary action that can lead to more night and weekend shifts, reduced work hours, or even termination.
Store managers also face intense scrutiny. They have received a clear message that to avoid bringing down a store’s Market Basket averages, salespeople should “walk the customer” if they cannot be successfully upsold. The customer is informed that the merchandise is not in stock and then leave the store empty-handed. Salespeople have another option: They can escort customers to an in-store kiosk to place an online order. Online orders are not subject to Staples’s key performance indicators (KPI) and are not reported to a store’s Market Basket. (For more reading, see David Haggler, “Selling It with Extras, or Not at All,” www.nytimes.com/2012/09/09/your-money/sales-incentives-at-staples-draw-complaints-the-haggler.html?smid=pl-share.)
16-11 A company’s sales force creates and communicates customer value by personally engaging customers and building customer relationships. With its Market Basket approach, was Staples focusing on building customer value and relationships? Explain.
16-12 Read Staples’s code of ethics at www.staples.com/sbd/cre/marketing/staples_soul/documents/staples-code-of-ethics_english.pdf. Is the situation outlined above consistent with Staples’s ethics policies? Is “walking the customer” a violation of the ethics code? Provide specific examples.
Wheels, Inc. is a manufacturer of bicycles sold through retail bicycle shops in the southeastern United States. The company has two salespeople that do more than just sell the products—they manage relationships with the bicycle shops to enable them to better meet consumers’ needs. The company’s sales reps visit the shops several times per year, often for hours at a time. The owner of Wheels is considering expanding to the rest of the country and would like to have distribution through 1,000 bicycle shops. To do so, however, the company would have to hire more salespeople. Each salesperson earns $40,000 plus 2 percent commission on all sales. Another alternative is to use the services of sales agents instead of its own sales force. Sales agents would be paid 5 percent of sales.
16-13 Refer to Appendix 2 to answer this question. Determine the number of salespeople Wheels needs if it has 1,000 bicycle shop accounts that need to be called on four times per year. Each sales call lasts approximately 2.5 hours, and each sales rep has approximately 1,250 hours per year to devote to customers. (AACSB: Communication; Analytical Reasoning)
16-14 At what level of sales would it be more cost efficient for Wheels to use to sales agents compared with its own sales force? To determine this, consider the fixed and variable costs for each alternative. What are the pros and cons of using a company’s own sales force over independent sales agents? (AACSB: Communication; Analytical Reasoning; Reflective Thinking)
First Flavor is a start-up company with a unique product. It manufactures great-tasting edible film that can replicate the flavor of just about anything, from an eight-topping pizza to an alcoholic beverage. If you’re wondering why a company would make such a product, think of the endless possibilities it allows for consumers to sample the taste of a food or beverage before purchasing it.
Although First Flavor first replicated flavors on thin film in order to market the product as a new method for product sampling, the company is now evaluating many other applications of the technology. This video demonstrates how one product can be marketed in multiple ways.
After viewing the video featuring First Flavor, answer the following questions:
16-15 Classify First Flavor’s core business as a sales promotion element.
16-16 Brainstorm a list of the ways that First Flavor’s edible film might be used to sample products.
16-17 Can First Flavor successfully in pursue consumer product opportunities in addition to its promotional services? Explain.
If asked what company topped the most recent Selling Power magazine list of 50 Best Companies to Sell For, you’d probably guess IBM, P&G, or maybe Xerox, companies long known for their outstanding sales forces. But number one on this year’s list is a company you probably know less about—software and technology services company SunGard.
What makes SunGard such a good place to work as a salesperson? For starters, SunGard has strong name recognition and a solid reputation in its industry. SunGard has long provided excellent compensation and training to its salespeople. And the company has consistently delivered strong customer growth and retention. However, although SunGard has long been good in these areas, what has made it outstanding and put it at the top of Selling Power’s list is a recent complete transformation of SunGard’s sales force model.
In the late 1970s, the computer services division of the Sun Oil Company (today Sunoco) pioneered a service now considered indispensable by virtually every company in the world. Sun and 20 other Philadelphia-area companies entered an agreement to act as backups for each other’s data systems. To create the needed capacity, the group developed a designated disaster recovery backup center. But when member companies were slow to pay their shares of the expenses, Sun Oil took over the backup operation and began selling computer services. In 1983, Sun Oil spun off the computer division and SunGard was born.
Since then, with the help of a few acquisitions, SunGard has grown steadily. It’s now one of the world’s leading software and technology services companies, with nearly $3 billion in annual revenues. SunGard now provides processing solutions for the financial services industry, K–12 education, and public sector organizations. It serves 16,000 customers in more than 70 countries. As a business-to-business service provider, that requires a substantial sales force.
When Russell Fradin took over as the CEO of SunGard, business was good. But the company faced some issues of concern. For starters, the internet increasingly provided SunGard clients and potential clients with the information they needed to solve their own problems. For both its private and public sector businesses, compliance with government regulations was also increasing. And increasing globalization made it more and more challenging for SunGard’s sales reps to meet client needs. SunGard was not alone in facing these issues. But that just added to the pressure—any company finding effective ways to meet these challenges would gain considerable strategic advantage.
SunGard also faced plenty of internal issues. The company sold multiple product lines, and Fradin felt that the SunGard sales force wasn’t achieving its potential in terms of selling the optimal mix of products. The company’s thousands of sales reps spent most of their time and effort selling licensed software rather than developing broader solutions to customer problems. Moreover, with multiple divisions and product lines and a fragmented go-to-market approach, SunGard often had multiple sales reps pursuing the same clients, sapping productivity and even driving some customers away.
Based on these assessments, Fradin asked himself, “How can SunGard make its sales force—one of the company’s biggest and most important investments—perform more effectively?” SunGard had decent systems in place for recruiting, hiring, and training its salespeople. And SunGard’s sales executives did a reasonable job of making incremental changes. But Fradin felt that the company needed to do more in order to improve its growth and performance. If more drastic changes weren’t made, the mounting challenges would likely limit future sales and profits. To Fradin’s thinking, SunGard needed a complete sales force transformation.
According to a report by global sales consulting firm ZA Associates, companies that move sales force effectiveness from good to excellent by virtue of a sales force transformation can increase profitable growth by as much as 20 percent. But that kind of transformation would require a major effort, many months to plan and execute, and even longer to take hold. It would demand nothing less than a total commitment from everyone in the organization—those at the lowest rung on the corporate ladder up to senior management and executives. It would also require that everyone have a clear vision of the benefits, both for themselves and for the organization as a whole. Disruptions from implementing such a sweeping change would likely mean losing good people and clients. It might also result in a short-term dip in performance before the benefits began to kick in.
All challenges considered, Fradin hired Jim Neve and Ken Powell to head up SunGard’s global sales efforts. The two-person team had worked on other successful large-scale sales force transformations and planned to carry out the same process at SunGard. “We needed to maximize our channels, sell the broadest set of solutions possible, and go to market in a coordinated manner,” said Powell. “We needed to build a sustainable growth engine.”
Neve and Powell branded the sales force transformation initiative as “Selling the SunGard Way.” More than just a fancy title, “Selling the SunGard Way” was a philosophy defined by specific goals and characteristics. First and foremost, the transformation would shift the basic sales approach from selling based on meeting customer needs to selling based on insights. SunGard reps needed to thoroughly understand the client buying decision process, anticipate needs before even customers themselves were aware of them, and tailor the client relationship to meet shifting concerns. Focusing on product functionality and price just wouldn’t cut it anymore. And sales interactions would need to draw from technology and services across all SunGard business units, not just within specific divisions or product lines. In order to achieve these skills, SunGard’s sales personnel would need greater knowledge and expertise of the full line of company products as well as the nature of each client’s business.
After thoroughly surveying the needs of SunGard sales associates, Neve and Powell drafted a detailed transformation plan. Sales reps needed better training, detailed competitive analyses, and more effective sales campaigns. They needed better data, fewer administrative tasks, and a simplified interface for the company’s Salesforce CRM sales management tool. To achieve such goals, Neve and Powell set out to overhaul SunGard’s core sales functions, including recruiting, training, managing, and compensating sales force personnel.
This transformation would take time and effort, and it would cost millions. But by the time the plan was revealed, there was support throughout the company. “The whole organization gravitated toward change,” said Powell. “[Everyone] knew it had to happen.” To help cover costs, the company shifted budgets, reallocating funds from ineffective programs to the transformation project.
On the recruiting front, SunGard adopted a new talent-assessment tool that defined ideal job profiles and evaluated skills and performance patterns of potential hires. The company also hired a team of sales development managers, charged with increasing the productivity of first-year sales reps. It was their job to make sure that new sales reps received all the training and exposure necessary to understand the company’s structure, strategic plans, products, and sales tools. That relieved front-line sales managers of these tasks, letting them focus more on selling. Sales development manager compensation hinged on the performance of first-year sales reps.
For existing sales personnel, SunGard revised procedures, metrics, training, and tools to make them consistent across the organization. It also made major revisions to its Salesforce CRM and sales management tool with an eye toward providing salespeople with all the information they needed for every aspect of the sales process. The important tool now provided easy and immediate access to content such as case studies, customer information, and market data. Additional tools were made available to guide people through the necessary steps of effectively closing a sale.
But to improve effectiveness for both new and existing sales personnel, SunGard needed to make even more changes in how it measured and tracked performance. For example, prior to the transformation, the company tracked incentives and commissions manually, and they were not readily accessible by relevant stakeholders. Under the new scheme, metrics such as individual goals and forecasts, as well as how often sales were made or lost, became part of an automated system, accessible by sales reps and managers via mobile interface at any time. They could even run “what-if” scenarios to determine potential earnings of different situations. This capability motivated sales reps by increasing accountability and promoting a competitive spirit.
As the new sales structure and tools took root, it wasn’t long before they began to bear fruit. “There was a tremendous product suite that had yet to capture its full market share,” says Todd Albright, who joined SunGard as senior vice president of sales for the Americas after the transformation was under way. That market share will soon be achieved. “There were tremendous assets locked up at SunGard,” Neve summarizes. “We put a road map in place to unlock those assets, translating them into new sales and revenue growth.”
With its billion-dollar sales plan now in place, SunGard is on target. As one example, consider the productivity improvements for first-year reps. Prior to the transformation, about 75 percent of new reps booked their first sale before the end of their first year at an average of about $400,000. Through the new policies, that sales productivity has doubled, adding an incremental $30 to $40 million to annual sales.
If boosting sales force effectiveness was easy, every company would achieve optimal sales force productivity. SunGard was willing to pay the price. In the first year following the implementation of the transformation, as expected, SunGard revenues decreased over the previous year—down by about 16 percent. However, profits rose by nearly 35 percent, thanks in part to reduced costs from more efficient operations. By the end of the second year, revenues were back on the rise. Fradin was notably pleased. “Clients are responding positively to these initiatives, knowing that our offerings help their businesses be more competitive. We [are] particularly pleased with our sales momentum and our organic revenue growth.”
Importantly, SunGard’s sales force is now much more coordinated and collaborative. It’s better trained and equipped to sell based on insights. Its products and services are bundled across product lines rather than within lines. And reps are developing partnerships with customers, assisting them in streamlining operations, accelerating growth, and complying with regulations. By transforming its sales force to “Selling the SunGard Way,” SunGard is on a path to sustainable, organic growth for years to come.
16-18 Compare SunGard’s sales force structure before and after the transformation.
16-19 What are the positive and negative aspects of SunGard’s new sales force structure?
16-20 How would the challenges faced by SunGard have affected sales productivity had the company not initiated its transformational plan?
16-21 Identify specific ways SunGard’s transformational plan addresses the different steps of managing the sales force.
16-22 Will “Selling the SunGard Way” really work? Why or why not?
Sources: Henry Canaday, “Selling the New SunGard Way,” Selling Power, www.sellingpower.com/content/article/?a=10217/selling-the-new-sungard-way&page=1, accessed June 2016; “50 Best Companies to Sell for in 2015,” Selling Power, www.sellingpower.com/2015/50-best-companies-to-sell-for/, accessed June 2016; Andris Zoltners, P. K. Sinha, and Sally Lorimer, “Improving Your Sales Force: Fine-tune or Transform?” Harvard Business Review, November 13, 2012, http://blogs.hbr.org/2012/11/improving-your-sales-force-fin/; and information from www.sungard.com/about-us and www.sungard.com/financials, accessed June 2016.
Go to mymktlab.com for Auto-graded writing questions as well as the following Assisted-graded writing questions:
16-23 Describe the roles a salesperson and the sales force perform in marketing.
16-24 What is team selling, and why has it become more important? Are there any pitfalls to this approach?
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