Marketing exam 4 chapter 18

Recruiting

developing a list of qualified applicants for sales positions

Sales force compensation

When we look at compensation plans, we can usually categorize them into three groups. One compensation plan is referred to as straight salary. Straight salary means that a salesperson is paid a set amount, independent of how much they actually sell. And, I mean, obviously long term, they're going to have to sell something. But their compensation is not directly tied to sales. But with a straight salary, it means that sales management has the most amount of control over salespeople. Sales management may need salespeople that engage in activities that are not directly focused on selling something right now. For example, a salesperson may be needed to go to a customer who's having some kind of a problem with the product, and that salesperson needs to be a troubleshooter. Or the sales person may be asked by sales management to do an analysis to find out a particular customer's product needs. What types, what kind of problems that they're having. Not with a specific product but with With some kind of process for which they might have some solutions. A sales person might be asked to follow up on a customer to find out how they're doing and maybe they need some accessory kinds of products. With a straight salary, a salesperson typically is willing to go out and do these kinds of things. And these are activities that don't yield direct sales at the time. Now another approach, is referred to as straight commission. With straight commission a sales person is paid a certain percentage of the sale as compensation. It might be 6% of the total price. It might be 12% of the total price. It's a certain the commission is a percentage of the sales revenue. And the sales person gets compensated only in this way if it's straight commission. This is a type of compensation method where sales management has the least amount of control over sales people. When a sales person is getting paid on straight commission, they're interested in engaging in activities that are directly focused on yielding a sale. They are driven to make a sale as soon as they can. They're not as interested in being a consultant. They're not as interested in being a troubleshooter. They're not as interested in following up, because those activities don't lead to a sale today, which gives some kinda compensation to a person that's on a straight commission basis. However, generally speaking, some of the best sales people are most motivated by a straight commission. They may be a little harder to control, little harder to manage, but if they like that approach they often are driven by it. When a person is being paid on a straight commission basis, they can still get what's known as a draw from the company. A draw is a certain amount of money. It might be they take a draw of maybe $4,000 a month. And at the end of that month, or at the end of the quarter, they have to look at what's been drawn, and compare that to their commissions. And then they're paid if they're owed money, they're paid the extra money. A third approach is a combination approach, and this is the most common approach, where you kinda combine straight salary and straight commission. The compensation plan has kinda two components to it. One component of a combination approach is that you're paid a base salary on a monthly basis. And then you're paid some type of commission based upon your sales. Sometimes that commission starts at the first dollar of sales Sometimes you're paid a commission on sales in excess of a certain amount for that month. And so it's a combination of where you have straight salary as well as some commission built on top of it. The people that sell textbooks for Cengage Publishing, the publisher of your marketing book, they have a combination salary plan. They're paid a straight salary for part of their plan, but they also have an annual sales goal. If they make their sales goal, they get paid a substantial annual bonus on the sales. And the greater percentage that they go over their goal, that bonus goes up. However, if they come in close to meeting their goal but they don't quite make it, let's say they come in at 98% of the goal, too bad. No bonus. Yeah, no bonus if they're at 98%. Their other compensation is based upon their salary. But there's no bonus for that year. The bonuses in that type of industry are substantial. The bonus might be 50% of their annual amount of compensation that they're getting through straight salary. Yeah, it could be quite significant. So if you missed your goal, and some do certainly, then there is no bonus for that year. If you're on straight commission, you gotta realize that if you take a draw, you gotta be a little careful with that, in case you don't make it for that month or that quarter. You gotta pay the money back. Yeah, or it goes against the draw for the next time period. That can happen too. So you do have to gave it back, there has to be. If it's on a draw basis and a straight commission, you have to give it back or settle up, so-to-speak. There's an interesting relationship between recruiting, training, and compensation. They are intertwined. In a number of industries, you'll find that there'll be a particular company that's pretty good at recruiting. And they recruit quite a few new people that you might call rookies, and they provide them with great training. And then they do continuous training. And they're very good at training. Their compensation plan is average because they're putting a lot of money into training. In the same industry, you'll find other firms that don't spend very much money recruiting a lot of people like rookies, and they don't put much money into training. Instead, they will keep an eye on who the best new salespeople are that the other company has trained. And they'll kind of watch them over maybe a period of a year or two years or three years. They kind of monitor them. It's a pretty small community, so-to-speak. And these companies that don't spend much on training or that type of thing, they will go out and cherry pick the best performers from the company that's done a lot of training. Remember their compensation plan's only average. They will spend the money on higher compensation for the best people in the industry. Yeah, so they're kinda deciding, where do we put our money? Do we put it on training and we train a lot of people and we only have average compensation? Or do we, instead, not spend much money on recruiting or training? And instead, we just spend a lot of money on the best salespeople in our industry and we just hire them away from our competitors? So those three areas are very tied together. It's not unusual to see those relationships occurring in multiple industries.

Money refunds

sales promotion techniques that offer consumers a specified amount of money when they mail in a proof of purchase, usually for multiple product purchases

Team selling

the use of a team of experts from all functional areas of a firm, led by a salesperson, to conduct the personal selling process

Coupons

written price reductions used to encourage consumers to buy a specific product

How can sales promotion be used?

•Introduce a new product • Increase total users of established brand • Encourage greater usage by current users • Educate customers about product improvements • Bring more customers to retail stores

How can sales promotion be used? 2

•Stabilize fluctuations in sales •Increase reseller inventories •Combat competitors' marketing efforts •Obtain more and better shelf space and displays

Primary sales management decision areas

-Sales force objectives -Sales force size -Sales force organization -Territory design -Recruitment and selection -Training -Sales force compensation

Trade type sales promotion methods

are aimed at generally at retailers. And they are methods that are sponsored by the producer. And they attempt to encourage a retailer to take on a particular product and start selling it or to market that product more aggressively.

Premium money (push money)

extra compensation to salespeople for pushing a line of goods

Preapproach

involves identifying key decision makers, reviewing account histories and problems, contacting other clients for information, assessing credit histories and problems, preparing sales presentations, identifying product needs, and obtaining relevant literature

trade sales promotion methods

methods intended to persuade wholesalers and retailers to carry a producer's products and market them aggressively

Rebates

sales promotion techniques in which a consumer receives a specified amount of money for making a single product purchase

Combination compensation plan

paying salespeople a fixed salary plus a commission based on sales volume Advantages: provides certain level of financial security; provides some incentive; can move sales force efforts in profitable direction Disadvantages: selling expenses less predictable; may be difficult to administer

Straight salary compensation plan

paying salespeople a specific amount per time period, regardless of selling effort Advantages: gives salespeople security; gives sales managers control over salespeople; easy to administer; yields more predictable selling expenses Disadvantages: provides no incentive; necessitates closer supervision of salespeople; during sales declines; selling expenses remain constant

Cents-off offers

promotions that allow buyers to pay less than the regular price to encourage purchase -Hello Fresh - price reduction on a subscriber's first box

Demonstrations

sales promotion methods a manufacturer uses temporarily to encourage trial use and purchase of a product or to show how a product works

Technical salespeople

support salespeople who give technical assistance to a firm's current customers

What are the major categories of sales promotion methods?

-consumer sales promotion methods -trade sales promotion methods

Merchandise allowance

A manufacturer's agreement to pay resellers certain amounts of money for providing special promotional efforts, such as setting up and maintaining a display

Prospecting

Developing a database of potential customers

Free merchandise

Free merchandise is where you buy a certain quantity, and because you're buying a large quantity, you receive some free merchandise usually it's of the same type. Let's say we're talking about cases of detergent. And maybe there's a deal where if you buy four cases of detergent, they'll give you a fifth case for free. Or maybe the agreement is for an appliance store if you buy six washing machines will send you seven. So in other words, it's usually based upon a quantity purchase and you're provided with extra product, and that's why it's called free merchandise.

Premiums

Items offered free or at a minimal cost as a bonus for purchasing a product

Sales force organization

How do we organize a sales force? There's different approaches. One approach to organizing a sales force is to base it upon geographic area. This means that we look at our, a map of the whole area that we want to cover, maybe it's state-wide, maybe it's national, and then we decide that we will divide it up into geographic units based upon some characteristics, and we will assign a salesperson to a specific geographic unit. The geographic area approach works well from the standpoint that it is finite, it's definite. We can tell a salesperson, your sales territory, or your area to cover, has these boundaries on it, and you are responsible for what happens inside of that area. You're responsible for sales, you'll get credit for all of the sales that occur within that geographic unit, and if good things happen in that geographic area, like the sales go up by 10% a year or something, you're going to get rewarded. And if bad things happen there, like the sales decline, you're probably going to be punished in some way. You're not going to do well, you might lose your job. It's a definite assignment of responsibility. Because we're looking at physical boundaries, aren't we? So it's a very finite approach or a very definite approach. It's appealing on that basis. And you can make a definite assignment of responsibility. Now another possibility for organizing the sales force would be to organize it on the basis of product groups. When an organization has a wide product mix, there's a good chance that a particular sales person a specific sales person can't be knowledgeable about all those different product areas. You recall we talked about general electric having a wide product mix. They sell jet aircraft engines, they sell large electrical generating equipment to utility companies, they sell all kinds of light bulbs, they sell major home appliances, and they sell financial services to businesses. We can't expect a particular salesperson to be an expert on all those different product areas. So instead, we organize the sales force into product groups and we'll have a one sales force group that's aimed at selling jet aircraft engines. Another that is aimed at, you know there job is to sell large electrical generating equipment. Our third group is the light bulb group. Fourth group is the home appliance group. Fifth group is the financial services to businesses. This approach works well in situations where the organizations product mix is really quite wide. You might find this used in a pharmaceutical company. They might divide their products into groups such as blood pressure medications. That might be one group. Another is a diabetes products group. Third might be cancer, oncology type products and so forth. Although when you think about pharmaceuticals being a more narrow product mix, it's highly technical. And so you can't expect a particular sales person to know everything there is to know about, you know, blood pressure medicine and then over here to the diabetes medications and so forth, because it's fairly technical. So, in that case, you're probably going to use product groups. A third possibility is to use some customer characteristic for dividing your sales force. It's not unusual for a sales force to be categorized based upon customer size. For example, you'll find in some organizations that there is a sales group and they sell just to national accounts. They're in that sales team or group that sells only to national accounts. And then they divide up the others into different customer groups. It could be that is based upon industry. For example, a software company might have a software that can be applied to the banking industry or it could be applied, the same software with some adjustments, can be applied to the hospital industry. Those are very different industries. And you all, you know, likely you would have one sales force that focuses just on banking. The other part of the sales force focuses just on hospitals. So that would be a customer characteristic of industry category. It's not unusual for maybe two out of the three of these to be used. You might find that a sales force is organized on the basis of geographic area and also on the basis of product group. So you could use multiple forms of organization.

Trade salespeople

Salespeople involved mainly in helping a producer's customers promote a product- they are likely to restock shelves, obtain more shelf space, set up displays, provide in-store demonstrations, and distribute samples to store consumers

Rebates

Something that is related is called a rebate offer and with a rebate offer this is usually done for shopping products, shopping goods. They're more expensive, and it's for a one-time purchase. We see this a lot with consumer electronics. You go into consumer electronics store and you'll see a sales sign with the special price on let's say a digital camera. And it'll say something like $99 worth rebate. So if you buy that because of the rebate, you're going to pay maybe $139, but that rebate is worth $40. It's on a one time purchase. We see it not just on consumer electronics, it's also on cars. And it's on other kinds of products too sometimes. People sometimes are encouraged to buy the product because of the rebate offer. And yet they never get the rebate, because they don't send it in. Usually there's a deadline on it and you have to jump through several hoops, meaning send in several different things in order to get that money back. So it's not unusual for someone to buy it because of the rebate, but they never really apply to get the rebate money back. And it may be fairly substantial like 30 or $40. One problem I see with rebates is it takes the company too long to send you the money. It takes a long time, and I think one reason for that is that these programs are run by third party operators that is buy other companies, that specialize in sales promotion methods and they wait awhile to send the money. And to me it's a lost opportunity, it's a lost marketing opportunity on the part of the marketer or the sponsoring organization. Because just think about the opportunity there if they were to send you the money quickly. Let's say within a week you got it. And with that, they sent you some additional offers. Maybe you need some accessories for that phone you purchased or for that digital camera that you bought. They could establish a much closer relationship directly with you and perhaps sell you additional things that go with that product. And also make you happier that you got the rebate within a week, it doesn't have to take eight weeks. One time I remember buying something through AT&T and there was a rebate I believe on the phones we were getting. And it took about six weeks for me to have any contact after I set it in. I got a letter back saying that I didn't qualify cuz it said something to the effect that you didn't have the phone service at the time, you got the phones, something like that. Well I was really irritated by that, that in a way turns me into kind of a mad dog when a big company tries to tell you, you didn't qualify. And you conform to and you did everything that the offer said and then they're gonna say that you didn't qualify. For me, it becomes a sport in getting the money. I will ride these companies down to the ground and get the 30 or 40 bucks. I might spend a couple $100 doing it, but it's the principle of it. If they say they're gonna do something I expect them to do it. And they do end up doing it sometimes unwillingly, but they end up, I eventually get the money. That's just it's almost an illness for me it's a sickness but I will pursue it with great fervor when that happens. So I did, I contacted them. I pointed out to them that I got the service on the same day that I got the phones and that I deserve the money and I expect them to send it, and they said they'd send it. And they did, they later sent it. It came in the form of Visa card, they like a gift card, and that's okay. I can deal with that, I use that kind of thing. So one time a little bit later my wife and I were out for dinner somewhere. I thought this is a good time to use that little Visa gift card, I got it out, gave it to the wait person. They went, processed it, came back, but there was a problem. The card didn't work, so I don't know the reason for that some kind of technicality maybe. But my wife has a business, a store, so after dinner we just went to the store and we put it right through her machine and we got it to work got the 40 bucks. I felt good but it was a hassle. I had a thought a lot better about AT&T if they had sent the money quickly. So I think it's a lost opportunity for these companies to do, to use the rebates the way that they do.

Creative selling

Using both inside and outside salespeople to manage an account -requires that salespeople recognize potential buyers' needs and give them necessary information

Free samples

When we look at free samples, this is the most expensive form of sales promotion. Think about the money that has to be spent. You have to sometimes build a separate small product as the sample. It's not a sellable size but you're not going to give away regular size, so you might have to create that small size. Then you're going to give it away for free. And you have to distribute it. You have to send it out to someone's home or residence, or you have to sample it in a store. So you have to pay someone to sample it in store. Generally, items that are sampled in store, if it's a food item for sure it's gonna be sample in the store. You want to maintain control over something that someone is going to ingest, and you're likely not gonna send that through the mail or by some other kind of distributor. And often times that product that you distribute that food line, that you distribute at the store. It needs special attention like eating, cooling, and you need someone that's careful in handing it out and sampling it to people and so forth. It's expensive, think about a sending it to someone's home, a non-food product. You're gonna send out a free bar of soap. That's expensive, isn't it? It costs money. Sampling is used to stimulate a product trial. You're trying to get people to try something and you're trying to make it easy on them to do it. So let's say you get home tonight, and in the mail today you get a free bar of soap. It's a sample. What do you gonna do with it? You probably not gonna throw it away. Are you going to take it and run and jump in the shower immediately? Probably not. The people that sent it to you, they would love you for that. That's what they want. They want you to try it immediately, and they would really like that. But you know what? It's likely you've already got a bar working so to speak, right? You don't start out with a new bar for every shower. So it's likely you have a bar already partially used, and it just takes a while to use that up. So you might take that one you got today and put it in a drawer or something, put it away. You might not think about it for a while. But after a few weeks, a month, six weeks you run out of your regular soap, and you think, yeah, I'll try that out. The people that sent it to you will not like you for that. They want you to try it very soon. And so, to encourage you to try it soon, sometimes they send you a coupon that has a short fuse on it, meaning a short deadline, where you can get the next bar for free or for half price, right. Realize that this is very expensive and it has some hazards associated with it. I want to tell you about a student that told me that he actually used free samples or sampling as a part of his dating that he did. He said that what he did when he was in college, he was a college student. So he said what he would do is he would find out the days of the week that the free samples were given away at grocery stores in his community. He would play them for dates during those days. And he said, sometimes the date would involve going out for dinner, or something. So he said, when he picked his date up, they'd be chatting in the car, and he'd say, I need to make a stop at Albertson's or HUB for a few minutes. Let's just go in, I gotta pick something up. He would know that they were having samples that day of food. So he and his date would go in. They would sample these things and maybe sample these things a few times. He said it really reduced the cost of meals for dating. Because she wasn't very hungry after that he said it worked well. Now I know that everyone in the class is taking notes on this, the guys and the women in class. The women are writing it down as something to be careful about and caution. The guys are thinking, what a great idea,

Dealer loader

a gift, often part of a display, given to a retailer that purchases a specified quantity of merchandise

Sales Contest

a sales promotion method used to motivate distributors, retailers, and sales personnel through recognition of outstanding achievements

Buy-back allowance

a sum of money given to a reseller for each unit bought after an initial promotion deal is over

Consumer sales promotion methods

sales promotion techniques that encourage consumers to patronize specific stores or try particular products

Support personnel

sales staff members who facilitate selling but usually are not involved solely with making sales

Free samples

samples of a product given out to encourage trial and purchase

Closing

the stage in the personal selling process when the salesperson asks the prospect to buy the product

General steps in the personal selling process

1. Prospecting 2. Preapproach 3. Approach 4. Making the presentation 5. Overcoming objections 6. Closing the sale 7. Following up

Buy allowance

A buying allowance is where the producer puts the product on sale for a given time period, usually a fairly short time period. This sale has greater savings in it, than just the typical discount. I mean, it goes beyond the regular trade discount that a retailer would receive from a manufacturer. So it's something that is greater than that and it's temporary. The easiest way to think about it is that the producer is putting the product on sale. And making it available at a sale price to the retailer.

Free merchandise

A manufacturer's reward given to resellers that purchase a stated quantity of products

Scan-back allowance

A manufacturer's reward to retailers based on the number of pieces scanned

Consumer sweepstakes

A sales promotion in which entrants submit their names for inclusion in a drawing for prizes

Scan-back allowances

A scan-back allowance is a type of an arrangement where the goal is to rebuild the inventory of the retailer. It encourages the retailer to rebuild his inventory. And it's usually done after some type of consumer sales promotion method that may have reduced inventories at the retail level. The idea is to rebuild those immatories of the retailer. So the way that my work is that, and reason the word scan is in there is that is based upon scanner data. So a choosy done at a sales server's environment, her scanners are used for checking people out. And that's the reason that the word scan is there. And so an example of this would be that a producer tells retailers, for the time period, let's say July the 2nd to July the 8th. We're going to allow you to buy back all the products that you sold of a certain type during the time frame of July 2nd to July 8th. And we will look at your scanner and then you'll be allowed to buy that much other product back at a reduced price. So let's say between July the 2nd and July the 8th that a store sells 416 units of a particular product. Then after that point, the store can buy back at a reduce price 416 units of that product. And then award at its price, it's a reduced price and that count is done by the scanner during that time period. So that's why it's referred to as a scan-back allowance.

Consumer sweepstakes

A sweepstakes is where you simply have to enter. You just provide your contact information in order to participate. You're not really competing by having to create or develop any type of material with this sweepstakes. Because sweepstakes are easier to participate in, they often attract more participants than a contest does.

Sales promotion

An activity and/or material intended to induce resellers or salespeople to sell a product or consumers to buy it

Cooperative advertising

An arrangement in which a manufacturer agrees to pay a certain amount of a retailer's media costs for advertising the manufacturer's products

The other approach is known as a workload approach, sales force workload approach.

And on the screen, there's a formula for calculating the number of sales people. So the N is the number of sales people. That's what we're trying to consider as we're looking at the idea sales force size. As you can see in the numerator, we try to estimate the number of total sales calls we're going to need for the whole year on the part of the organization. That is to accommodate all the customers that we have, and those we might be able to get as new customers and so forth. We calculate that numerator for the whole sales force, for a whole organization, for a whole year. The denominator is basically a statement that says, on average, a salesperson for our organization can make x number of sales calls per year. That is one person can make x number of sales calls per year. So how might we determine that numerator? How many calls does the whole organization need? One way to do it is to divide our existing customer base into perhaps three size categories. And when I'm talking about the size of the customer, I'm talking about how much product do they purchase from us. So if we're talking about large customers, we're talking about those that buy the most. Their purchases are large. So we might call those A customers. The B customers would be those that purchase a moderate amount of product from us. And the C customers are those that purchase a small amount from us. So we're dividing our customer base into three categories. Large customers, medium-sized customers, and small customers for the third. So the A accounts are the biggest. And so we would estimate how many times a year do we have to call on our A customers to serve them well? So let's just say that we decide that we have to call on those people once a week. So that tells us that the A customers are gonna have to be called on 52 times a year. They're big customers and they require a lot of attention. And we'll have to call of them, probably, once a week. So we would put A customers, multiply 52 times the number of A customers. For the B customers, those are the medium sized customers, let's say we determined that we can call on those people once every other week, every two weeks. So that means that we're gonna have to call on those people 26 times a year, aren't we? So we would multiply the number of B customers times 26, and get the number of calls for that group. Then we would look at our small accounts and say, okay, for these smaller customers, how many times do we have to call on them? Let's say once every four weeks. So, we're going to call on those people 13 times a year. So, they multiply the C size customers, that number of customers, by 13. We would then add those three subtotals together and that would tell us how many sales calls that we have to make a year. Now, that numerator, we might have to make some alterations in it for certain kind of conditions. For example, it's likely that we're going to want to start serving some new customers. And, large or small, those new customers, they take a little more nurturing, a little bit more time. So we're gonna have to add in some extra sales calls to take care of those new sales customers. I mean, those new customers independent of whether sales are large or small. And then there could be some other situations like, perhaps the customers that are B sized customers, maybe we'd like nudge their sales up. We want to encourage them to buy more. We wanna turn some of those B customers into the A size. And we wanna turn some of those C level customers, get them to buy more, make them B size customers. So that may take some extra effort to do that. We're going to have to work in a few calls for them as well. So, likely we're going to have to add a few more sales calls in to that numerator. We're gonna come up with some big number on that numerator. And who knows maybe it's 3600 customers calls a year. Just as an example. So then let's talk about that numerator, how do we, I mean that denominator how do we determine what the average sales person can do in a year? We'd look back at our sales records. We'd look back at our sales history. And likely, we can determine that the average number of calls that a salesperson can make. So we're going to determine that maybe they can make four sales calls a day and we're gonna work 250 days. We can't get those sales people to work on the weekends probably, Saturday and Sunday. So there's about 250 other sales days that are out there. So, they're going to work, they're going to build on average, the person on average can do four calls a day so that means the average person can do about a thousand. So lets just say we ended up with a thousand. Well we divide the thousand into the thirty-six hundred, and we get three point six sales people, right? So likely that would tell us we need about four people, unless we are going to hire someone part time, and that's, we're probably aren't going to do that. So we probably round off to maybe four so the in that case would four sales people that we would need. So, that's what, that's what these Workload Approach means.

Sales promotion efforts are used for a lot of different purposes or for a lot of different reasons.

And you might use sales promotion efforts to introduce a new product. You might use sales promotion efforts to generate a bigger customer base for an established brand. You might use sales promotion efforts to try to increase the usage level among current customers. An example of that might be to encourage customers when they buy your product, to buy a greater quantity because they will take it home and if it's available at the point of consumption, they'll consume more. Think about something like a snack food, if you can encourage your customers to buy a bigger package or multiple packages of a snack food when you're making a purchase and they take it home to the point of where the consumption occurs. Then it's likely, if it's available, that more of it's gonna be consumed. We might see that with a snack food or something like soft drinks. It doesn't work with all products, though. Some products that doesn't necessarily happen if you think about something like bars of soap, encouraging people to take home a greater number of bars of soap. So they are available at point of consumption is not going to increase consumption, just because you have six bars of soap in your cabinet. Doesn't mean that you're gonna take a couple of extra showers a day or something. Doesn't mean it's just not gonna happen. Your usage rate is gonna stay about the same on something like bars of soap. Certainly you might use sales promotion to generate greater amount of traffic at a particular retail location, maybe at a particular store or at a shopping center. We also know that we use sales promotions to help stabilize sales fluctuations by offering perhaps pre-season types of offers, or post-season types of offers for seasonal items. Sometimes we try to increase reseller inventories using sales promotions by making offers to retailers. It wouldn't be unusual to use it for trying to obtain more shelf space, more desirable shelf space in grocery stores.

Trade sales promotion

Buying Allowances Scan-back allowances Free merchandise Merchandise allowances Cooperative advertising Premium, or push money Sales contests

Consumer games- video

Consumer games are often used at buy retailers and they're used to encourage multiple visits. With a consumer game, you're given, when you make a purchase let's say at a fast food place, you're given a game piece. And when you return, And that game piece can be used in two ways. It can be used for an immediate win on something like maybe some fries or that kind of thing. But, in addition to that, the game is to collect these game pieces over time, and to be able to spell some time of a word with the game piece letters, let's say. And, I mean they operate in different ways, but the idea is that, that the customer plays the game by collecting the game pieces and the game pieces are put together in a certain way. And of course then, and it usually runs for multiple weeks, maybe four to six weeks. And so the idea is to encourage consumers or customers to visit more frequently, at least during that time period. And so, the game is aimed at stimulating revisits or additional visits.

Cooperative advertising

Cooperative advertising is usually called coop advertising. And the way it works is that the manufacturer makes an offer to a retailer that sells that manufacturers products. And says, we will pay you a certain percent of your advertising bill to advertise our product at the local level. So let's say the maker of Levis tells a local store, if you'll advertise our product, we'll pay 60% of your advertising cost, if you just advertise in local media. Often times it's the local newspaper. The manufacturer will do this for two reasons. One, it's a way to support your local retailers and local retailers like that kind of support. And the second reason that manufacturers do it, is that the local retailer can buy advertising space in the local paper at a lower rate. Then if the national company where to go directly to the newspaper and try to buy the space. They're gonna be charged, the manufacture is gonna pay the national rate or whole sum as a general advertising rate with no discount. Local firms can buy space in the local newspaper at a cheaper rate and get discounts for volume. So it's a way that the manufacturer can buy advertising locally at a better rate. They reimburse the retailer is the way it works and the retailer has to show proof that the ads have actually run. Sometimes the manufacturer will also send advertising materials like ads that are already made up. They usually don't require the use of those ads at the local level. But oftentimes, they're used because they're professionally developed, professionally made. And why would the retailer want to change it or make up their own ad? It's easier just to have to hand this ad to the newspaper, and that rep could be on their way. It's easier for the retailer. So that's how coop advertising works.

Demonstrations

Demonstrations are used to draw people to particular locations, aren't they? They're aimed at showing how products are applied. How you use something and use it in an efficient ways. Sometimes we're done by a store employee. Other times we're done maybe by an invited guest maybe like a guest make up artist. Or maybe a local celebrity demonstrating some kind of new cookware. So demonstrations are used to bring people to particular locations, oftentimes showing exactly how something can be used. Maybe it's a piece of equipment or some sort of ingredient.

Manufacturer coupons

In terms of appearance, they look a little bit like the retailer coupons, bar codes, and how much you can save and so forth. But these are not issued by retailers. These are issued by the manufacturer. They might come in the mail. You can get them online. They're sometimes put into ads. And this is a way that a manufacturer can offer savings directly to the consumer. They're usually redeemed at retail stores. And it's not unusual for retailers to use them for their own promotional programs. It's not unusual,, for example, to see retail grocery operators, your Kroger's and Randall's and Albertson's and so forth,to use them to attract people to their stores. And they will do this by offering double value, like double coupon day. I've even seen triple coupon day. And usually there are some restrictions on the redemption of these. If you see it in a newspaper ad, or some kind of ad, it will list what the restrictions are. But they will actually be used by retailers even though they're issued by the manufacturer. One time my older son worked for Randall's when he was in high school. There used to be a Randall's store here in College Station. It was a store located right across from the Hilton, on University. You can still see the grocery store there. Eventually, it became an Albertsons but it was originally Randalls. They built it. He worked there when he was in high school as a cashier. He was there on a weekend day, when they were running either double or triple coupon, and they had done a lot of advertising in the local Eagle newspaper. The restrictions did not appear in the ad So, Randall's had to make a quick decision on what to do, they had two choices, turn people away or honor it with no restrictions. It was an easy choice, they're not gonna send people away, they're not gonna do that, they're going to honor it. So they honored it. My son said that there were people with double buggies and they were full of stuff. He said he could look back to the back of the store from being up near the front where his checkout area was, be a line all the way back to the back. All the registers were running, he said there were empty shelves. He said, you know, the shelves were wiped out. And he said that someone would come through with two buggies, two baskets of food. They might be paying $18. It was amazing. He said that Randall's, of course, blamed the newspaper. They made the newspaper, the local Eagle, the Eagle had to eat it, meaning it was the newspaper's fault for not putting in the rules. They were not going to turn their customers away. They were not going to say, we forgot to put the rules in, no way. They were gonna honor it and they did, and the Eagle had to pay. Remember local newspapers are highly dependent on all the advertising that local supermarkets do. .They do a lot of advertising on a weekly basis, and they're not going to make Randall's mad. So the Eagle had to eat it, and they did.

Training

Making selection decisions is really important because mistakes are very expensive. When you are selecting people, if you make a mistake, it can be expensive because you may have to spend quite a bit of money in training. For some industries, you may find that during the first year there's a lot training that goes on. And you're investing a lot of money in these new recruits. And they're not producing much because you're investing in these people as an organization. And you might spend $150,000 training someone, takes a year or so, and they're not generating very many sales then. And if you make a mistake. You've wasted quite a bit of money. Plus, you've wasted that person's efforts too. So selection is really crucial, and it has to be very careful to avoid mistakes that could be quite significant. Lets talk a little bit about training. When we think about training, sometimes you think initially, well we certainly have to train new people and that's true. But we also have to train established or sales people that have been with us for some time as well. Training is not just for new people. Realize that training is for all people in the sales force. The training can be different for people that are new compared to people that are not new, that are established and been with you for some time. The topics could vary a lot. It could be about products, the information that's needed, the training that's needed, might be about products. It might be about company procedures. It might be direct sales training, that is training to make you a better salesperson. Sales techniques are precious to selling and so forth. It might be about software. I mean companies change sales related software fairly often. It might be about hardware for that matter. The sales training can occur online. It can occur in face to face sessions, where you have people come to a particular sales training conference. The sales training can occur on the job. Sales training is fairly expensive and it's time consuming and it's very necessary.

Sales Force workload approach

N= Total sales calls in firm's workload over Average annual calls per salesperson

Sometimes you use sales promotion for trying to offset the actions of competitors. So let's talk about sales promotion methods. There are two general categories.

One of these would be consumer type sales promotion methods. And the other is what we call trade type sales promotion efforts. Consumer-type sales promotion methods, obviously, are aimed at consumers, people like you and me, as individual consumers. And that's what I mean by consumer sales promotion methods. They may be sponsored by retailers, or they may be sponsored by the manufacturer but they're aimed at regular consumers. The other category is referred to as trade sales promotion methods. With trade sales promotion methods you essentially are aiming a sales promotion method at either wholesalers or retailers. And usually, it's at retailers. And you're trying to use these methods, either to encourage a retailer to take on the product. And to handle the product, or if they already carry the product, perhaps you're trying to encourage them to market the product more aggressively through sales promotion methods.

Personal selling

Paid personal communication that attempts to inform customers and persuade them to buy products in an exchange situation

Straight commission compensation plan

Paying salespeople according to the amount of their sales in a given time period Advantages: provides maximum amount of incentive; by increasing commission rate, sales managers can encourage salespeople to sell certain items; selling expenses relate directly to sales resources Disadvantages: salespeople have little financial security; sales managers have minimum control over sales force; may cause sales people to give inadequate service to smaller accounts; selling expenses less predictable

Point of purchase displays

Point-of-purchase is also known as point-of-sale. These are displays that are often used in self-service retail environments. You particularly see these at the end of isles. And they're usually large displays sometimes with lights and motion, and quite a bit of inventory. And the retailers ask to set these up and to leave them there for X number of days. And these are sizable displays to attract attention. There may be some special prices offered. And they're pretty common in self service environments such as at super stores and supermarkets

Premium, or push money

Premium or push money, this is also called a pm, short for push money or premium money. It's also called a spiff. I don't know why about the spiff, but it's called a spiff also. The way this works is that a manufacturer makes an arrangement with a retail store management. And the arrangement is that sales people will receive a certain amount of money on each unit of the product sold at that retail store. The money goes to the salesperson directly. Obviously the store management knows about it and cooperates. It's built on top of the regular compensation of the retail sales person. So it's called a PM or a spiff or push money. The word push money sounds like it's kind of unethical or illegal, it's not. It's ethical and it's legal. And it's done, it's a practice that may be common for certain product categories. It's been done quite a bit in the area of cosmetics. If you go to a department store and a person is working at a cosmetic counter, where multiple brands are sold. And it wouldn't be unusual for in that situation, for the sales person to get paid a PM or spiff to sell a particular brand of cosmetic when there's multiple brands at that counter. It's done sometimes for shoes, at shoes stores. The manufacturer of the shoe will say we'll pay you $3 or $4 for a pair of shoes if you sell a pair of shoes of a particular brand or type. And these arrangements usually go on for awhile. It's not necessarily just a week or two weeks, but it goes on for awhile.

Premiums -video

Premiums are free gifts, it's free with the product, it's either in the package or it's on the package. You know that little toy that comes in Cracker Jacks? That's a premium, it's something kinda extra. When you buy toothpaste and they give you a free toothbrush with it, it's something extra. You can see it right on the package and the idea of using a premium often is that they will put the premium on the product and they'll leave it on there for a few months. They're trying to attract people that are not particularly brand loyal and so if you're a consumer and you're not particularly brand loyal to a brand in that product category. If you see something extra that comes with it for the same price, you say, that looks like a good deal and so you just buy it on the basis of the premium. Then later, they will take the premium off and their hope is that you'll continue to buy that brand. Research has shown that when this happens oftentimes, it ends up that people are don't become brand loyal, they're premium loyal and they'll switch to a different brand that's got another premium on it. But in some cases, maybe they generate business, at least in the short term by doing that. Premiums are free, and they're in the package or they're on the package. There is a type of premium called a self liquidating premium. This is an offer by the manufacturer that they can make you a special deal on something, that might be related to the product that you're buying. For example, if it's a cereal company, they might have an offer on the back of the box for some cereal bowls. Maybe you can get four glass cereal bowls for perhaps $2 and you just send in your information and your 2 bucks. And it's called a self liquidating premium because the company is not making any money on those bowls but their just covering their cost and so that's why they call it self liquidating. Is that the costs are being covered, but they're not making a profit on all those bowls. When the word premium is used, it means it's free. If it's the other kind of premium, they'll have the phrase, self-liquidating on it

Consumer sales promotion

Retailer coupons Demonstrations Frequent-user incentives Point-of-purchase displays Manufacturer coupons Free samples Money refunds Rebates Premiums Cents-off offers Consumer games Consumer contests Consumer sweepstakes

Retainer coupons

Retailer coupons are coupons issued by the retail business. They are issued by the retail organization. We see this done by grocery stores, by discount stores, it's pretty common. Some department stores like Kohl's might do this. Bed Bath & Beyond might do it. They issue actual coupons good for specific savings on specific products. Retailer coupons sometimes are used as a competitive strategy to build a customer base. Let's say that a supermarket opens a new store and a neighborhood. It's an established neighborhood. Where are they going to get their customer? Where is the customer base going to come from? It's likely, it is going to come From people that live within a one or two mile area. Are these customers not currently buying groceries? No, they're buying them. They're buying them from another store, aren't they? So to build a customer base, you're gonna have to take customers away from the competitors. How do you do this? You probably have to offer them some special deals. One way to do that is to use retailer coupons. Retailer coupons usually offer great savings on common items like milk and bread and eggs. And other types of broadly demanded items. We as consumers like to get used to buying groceries at the same place, don't we? Because it's faster, it's easier for us. We already know where the catch up is, don't we, if it's an established store and we've gone there. We don't have to do a lot of searching. Let's face it. Grocery shopping is not a growth experience for any of us. It's kind of a drag. We wanna get in, get our stuff and get out and we want to do it efficiently. The way we can be efficient is to keep going to the same place. But that new store they want us to come there, don't they. So they're going to have to encourage us to go there by using something like retailer coupons giving us a good deal. So these retailer coupons are made available to us maybe on certain dates. On a certain day, you can get bread at a great deal. On another day, you can get eggs at a great deal. And I hope not just come in for the eggs or the bread. They hope when you go in, you'll spend $50 or $60 on groceries. So we see sometimes that a new store will try to build its customer base by drawing customers away from the existing stores. And one way to do it is through retailer coupons. Now, will the existing stores, the ones that are all ready there just sit idly by and let their customer base be eroded? Probably not. They're probably going to run ads that will say. Something like, bring us anyone's coupons and we'll redeem them any day of the week. They wanna blunt that type of aggressive, competitive behavior, don't they? They wanna hang on to their customer base. So how do people get retailer coupons? They can come through the mail. You might get them at the store itself. If you're a CVS customer you can put your CVS card into a machine. It'll issue you coupons right there. It's based upon previous purchases, isn't it? You can get them right at the store. You might wanna get them online. There are several locations you can do that. They might be issued in other ways at the store, like a shelf dispenser. That's a possibility.

Sales force objectives

Sales management gets involved in sales force objectives because they're responsible for eventually taking the overall sales goal for the organization, let's say for a year, and breaking it down into different groups of salespeople, and then eventually to individual salespeople. The people at the top will come out with a statement about what they think the sales should be for next year for a brand or for a company. This is based upon perhaps a significant amount of sales forecasting. This big number then is given to the top level sales management. That top level sales management takes this figure, this sales goal, and they break it down by regions of the country, by geographic regions, by sales divisions, and eventually they associate a certain amount of sales coming from each sales territory. So that means that an individual salesperson is assigned an annual sales objective that in turn may be broken down into some quarterly sales objectives for a salesperson, it might be broken down into monthly sales objectives for a salesperson. And just to give you an example, the company that publishes your books, Cengage Publishing, they have a sales force that calls on professors in colleges and universities. And this sales force, obviously, has a large sales goal for the year that's broken down into regions, and then eventually into sales territory, so that each salesperson ends up with a particular sales goal for the year. These people call on colleges and universities and talk to professors about their particular set of publications. An example of an individual sales objective for a salesperson on an annual basis might be $2.8 million of sales. That is the revenue that they would receive from all the colleges and universities in their sales territory. That's what the book stores would be paying, not what students would be paying. In addition to a salesperson getting a particular sales objective, it's likely that they're going to get or receive a certain sales budget. They'll have certain travel expenses. They'll have certain expenses related to maybe some events that they help to sponsor at a university that deals. The event might be aimed at professors, might be some kind of book fair or that type of thing.

Sales promotion

Sales promotion can be described as any activity and/or material that acts as a direct inducement, offering added value or incentive for the product to resellers, sales persons, and consumers. Again, sales promotion can be described as any activity and/or material that acts as a direct inducement offering added value or incentive for the product to resellers, sales persons, or consumers. Looking at the characteristics of sales promotion, you might remember that I'd said that the area of sales promotion is sort of a catch all our miscellaneous category, a marking communication or promotional efforts. If you can call something advertising, and you say, well, no, it's not really personal selling, it's not public relations, then we say, okay, that's sales promotion. This means that the category is quite diverse in the types of methods that are used. Generally, sales promotion efforts are combined with other forms of marketing communication, that is they're combined with advertising, or they're combined with personal selling, or they're combined with PR. They generally are not stand alone, you hardly ever see a promotion mix made up only of sales promotion efforts. It can happen, but it's not normal. Usually sales promotion efforts have short term objectives. You don't see sales promotion methods that are going to extend into five or ten year kinds of efforts. There are a few exceptions, though, and I'll talk about that later. But generally speaking we think of sales promotion as being something that's short term. Usually sales promotion efforts are not very predictable. They're not very cyclical, which means that it's hard to know when your competitor is or is not going to use sales promotion. In a given industry, firms develop a pattern over time, regarding their advertising, regarding their personal selling. And it becomes rather predictable, from one firm to another. But that's not the case for sales promotion. It's not that predictable from a competitive standpoint.

Point- of-purchase (POP) materials

Signs, window displays, display racks, and similar devices used to attract customers

Missionary salespeople

Support salespeople, usually employed by a manufacturer, who assist the producer's customers in selling to their own customers

Relationship selling

The building of mutually beneficial long-term associations with a customer through regular communications over prolonged periods of time- involves finding solutions to customer's needs by listening to them, gaining a detailed understanding of their organizations, understanding and caring about their needs and challenges and providing support after the sale

Sales force size

There are a number of methods that could be used that relate to determining the size of the sales force. We're going to look at two methods for determining the size of the sales force. One of these is referred as a productivity approach to determine the size of the sales force. The productivity approach is also known as an incremental approach to determine the size of the sales force. The incremental approach or this productivity approach is based upon the idea that you have a certain geographic region, how many salespeople do we need to cover that certain geographic region? And the incremental approach means that you look at the impact of adding one additional salesperson to the impact on the firm's costs and the firm's sales revenue. So if you look at this chart on the screen, in the left hand column, it just identifies how many salespeople are involved at each of these levels, and then, you're looking at what the cost per salesperson is, and what is produced by one or two or three or four salespeople, in terms of sales revenue. What you're interested in, primarily, is the operating margin that's shown in the far right hand column. Because the idea of this approach, this productivity approach, is to look at the size of the sales force that will give you the greatest amount of operating margin. The operating margin is the difference between the total cost of selling products and the sales revenue that you get from these sales. So you wanna maximize the difference between what your costs are and what your revenue is. And so, you add salespeople to this geographic area until you maximize, you reach a maximum point, in terms of your operating margin. As you can see, as you add the second salesperson, operating margin goes up. And when you add the third salesperson, the operating margin goes up. And when you add the fourth salesperson, the operating margin in the right hand column over there, it goes up again. But look at what happens when you add the fifth sales person. Operating margin begins to decline. Because as you add that fifth sales person, you've increased your cost relative to the sales generated. And so you've actually taken down the amount of your operating margin as you add that fifth person. So in this particular example it says, with these numbers, the best sized sales force is four. Because at four salespeople, you have maximized your operating margin. Again, the operating margin is the difference between what your selling costs are, and the amount of revenue that you are generating from these sales people. So again the idea is to maximize your operating margin. You want to figure out the number of sales people that gives you the maximum amount of operating margin,

Cents-off offers

These offers are also referred to as money-off offers. Essentially the manufacturer puts the product on sale to the ultimate consumer by putting a message right into the label, built into the label, that it's so much off when you buy that product. It might say, $1.27 off, or save $1.27. That means it comes right off of the purchase price. And it's a way that the manufacturer can communicate directly with the consumer. It's usually on grocery items. In a self-service environment and it's placed on there by the manufacturer. And at times, retailers, and particularly store managers, find this to be a little bit of a hassle because it can create some confusion at the point of checkout. When people are going through the checkout and they're looking at the people, the cashier, scanning. And the person's looking at this meter, when a product goes through that's supposed to have a $1.27 savings on it, the customer may say to the cashier, did I get credit on that $27 saving? So the cashier has to stop and check it to make sure that it occur. You see, it's put into the computer and that's how the credit's given. But occasionally, there's a mistake made and it's not. But because of that, it can lead to a little bit of disruption at the point of check out

Recruitment and selection

This is certainly a challenging area. It would be nice if I could tell you that in order to hire the best salespeople, you need to hire people that have these six key characteristics, whatever they might be, or these eight characteristics. I'd like to be able to kinda give you this silver bullet of a list. And although you might think that, due to stereotyping, that we could do this with naming the six or eight key characteristics of the best sales people, that's not the case. All kinds of people can be good at selling. Depends on the nature of the customer, the type of product, and so forth. And so I can't give you the six key characteristics of the best sales people as just a generalized list because it doesn't exist. Within a company, based upon historical information, you might be able to isolate for that company, for that set of products, for that industry that you need people that have these four or five characteristics. That's only specific to that company, and that set of products, and those customers. You might be able to do that. And if you came up with this list for your company, and your products, etc., You wanna view these as guidelines and not as laws. You wanna view them as guidelines because, invariably, you'll find people that don't meet those characteristics, but are great at selling your particular products. Recruiting happens in a lot of different ways. Obviously, at the college level, you might be able to go to a career fair and find just the right people. Certainly, you can try to go online and look for, do some recruiting online. You might look at your competitors and try to find out based upon your observations, try to find people interested in changing to your company. I mean, there's a lot different ways to do recruiting.

Money refunds

When we talk about money refunds, we're talking about an offer that's made by a, Manufacturer, and the offer says, if you will send us multiple proof of purchase. Maybe two proof of purchase, three proofs of purchase, four proofs of purchase, we will send you $8, $6 and so forth. So all the money refund offer and it's designed to get you to purchase the same product several times. It's used primarily for convenience goods and you will receive a certain amount of money when you send in multiple proofs of purchase. We see this sometimes with a new cereal brand and if you have tried three boxes of this cereal. And you decide to go ahead and get your 6 bucks, or whatever. The fact that you have bought and consumed a third box, it probably means that you've given it a good trial and that you like it. I don't think you're trying to do this just to get the 6 bucks. But a money refund offer is done usually on convenience items.

Territory design

When you're designing territories, generally, you want to design territories in a way that you can minimize non-selling time, and you can minimize selling costs. Ideally, you would like to be able to design your territories in a way where they are equal in terms of sales potential. And they're equal in terms of workload, that would be the ideal situation. But in order to make that happen, it's likely you would have to get your customers to equally space themselves, right? And we know that customers don't do that. Customers clump up, don't they? They just don't equally space themselves because populations clump up, don't they? If we were thinking about how sales potential could vary and how workload might vary. If we're looking at the sales potential for, let's say, something like dry cleaning equipment. This would be dry cleaning equipment used in retail dry cleaning establishments. The demand in a sales potential for dry cleaning equipment in Chicago is probably equal to the demand for dry cleaning equipment in the six least-populated Western states. Yeah, probably, that's how you would get equal sales potential. Would that give you equal workload? Not at all, the workload's way different, isn't it? So, It's a real balancing act and the reality is that you're probably not going to get these equalities in sales territories that you'd like to have. So instead, you have to think of how to overcome these inequalities, what you have to do. So for example, if you have a sales person in a sales territory that covers Chicago, could you think about what kinds of transportation needs they have? They don't need much of a car. They can probably get by with an inexpensive car. Some days, they might not wanna even use a car cuz they wanna use public transportation in a real dense area where the population density's really high. In Chicago, a car might be in the way. So you might be able to get them a used Yugo, okay? Not much of a car. But how about that person, that man or woman out there that has a territory of six Western states that are kinda sparsely populated? That person's gonna need a great car, aren't they? They're gonna use it every day, they're gonna be in it a lot. You need to give them just a great Land Cruiser, comfortable kind of a car. Cuz they're gonna be spending time in it. Plus the person in the six least-populated Western states, you probably need to give them one of those air travel cards or credit cards where they can fly about anywhere they want to any time within their territory. Because you need to cut their travel time so they'll have more selling time. So territory design is pretty darn challenging.

Consumer contests

With a consumer contest, customers are actually, or those that enter, are actually competing. They're doing something to compete. They are contestants. It might be naming a mascot or it might involve submitting a recipe. It might involve writing a jingle. You know there can be different, sort of different types of competitions. But these type, this particular type of method, it doesn't attract as many contestants, or as many customers to it, because, in order to enter, you actually have to do something. But still, it could be an effective form of sales promotion

Sales contests

With a sales contest, the producer or manufacturer sponsors a sales contest among retail sales people. And it might be that the retail sales people at one store compete against aales forces of other stores. They're structured in different ways. Sometimes people within, it's an individual basis, and people within a store compete with each other. In some cases, if the salesperson's in this industry have some longevity at these stores and have been there for awhile. It could be that even a sales person competes against himself or herself for a previous time period in terms of their sales. These can be structured in different ways, but they're set up and sponsored by our producers or manufacturers.

Buying allowance

a temporary price reduction to resellers for purchasing specified quantities of a product

Dealer listing

advertisements that promote a product and identify the names of participating retailers that sell the product

Merchandise allowances

merchandise allowance is actually money, it's a money payment. And the way it works is that the manufacturer will tell the management of a retail store. If you'll do certain things in your store related to our product, we'll pay the store $200. For example, let's say that, that store receives a packet that relates to end of aisle display. And so it's got banners and maybe balloons and some signage. And so the manufacturer says, if you'll set up this display and leave it up at the end of the aisle for one week, we'll pay your store $200. Retail stores, particularly supermarkets and mass merchandisers. They receive a lot of promotional material more than they can ever use or set up and some of it is actually just discarded. Because there simply isn't time or space for it, so in order to make sure that that material is used. The manufacturer might use a merchandise allowance until the management repay the store $200, if you'll just set up the display and keep it up for one week. And put up the banners and put up those balloons that we are sending you and so forth. That's the nature of a merchandise allowance.

Consumer contests

sales promotion methods in which individuals compete for prizes based on their analytical or creative skills

Consumer games

sales promotion methods in which individuals compete for prizes based primarily on chance

Frequent-user incentives

sometimes called frequency programs, sometimes called customer loyalty programs. These programs are aimed at rewarding customer loyalty. They're aimed at maintaining a loyal customer base. Certainly we see this used sometimes by restaurants, at a sandwich place where they have a card that you can get punched. If you buy a certain number, over a period of time you buy a certain number of meals, you can get a free meal, so we see some fast food places use it or restaurants use it sometimes. Probably in terms of, if I were to play to a single example of a great customer royalty program, I'd have to look at the use of airline miles programs. Most airlines have their own miles programs. And they try to keep their customers loyal by giving customers miles that can be redeemed for free or low priced travel. We know that there are air travelers that will go out of their way and fly on the same airline go to, and it might take extra time in order to get their air miles on the same airline. There are people that will take a flight that stops three times in order to stay on their airline when they could have flown on a competitive airline nonstop for maybe the same or less money. People become very loyal and they wanna hang onto those miles, don't they? The best evidence that these programs are effective is the fact that today, more airlines are being used for rewards for not flying than for flying. Now more airline miles are given away by non-airline companies. They're given away by banks. They're given away by car rental companies. They're given away by hotels. In other words, other types of businesses that are not in the airline business, they buy miles and make them a part of their own loyalty programs. Because these airline miles programs are so successful in generating loyalty. We know that there are some problems ahead with airline miles programs. The number of miles keep getting higher and higher, don't they? People have a greater, larger amount of miles that they're holding. And we see airlines doing certain things to restrict travel using airline miles or they're raising the price of these, you know, what it takes, the number of miles it takes to get a certain flight. They have a greater number of blackout days. Greater number of times where you have to use a larger number of miles in order to benefit from them. In other words, the people that are very loyal are the ones that are taking greater amounts of restrictions on the use of the miles. These are the people that you wanna take care of. You know, they are your loyal customers. But there is greater abuse being put onto these customers. And I suspect down the road we will see these programs eventually be phased out. The airlines will probably learn that as they put more restrictions on people for using it, it's less of an incentive to be loyal. And so right now they're pretty popular and they've been pretty popular a long time, but at some point they probably will lose their effectiveness. And probably when we see one or two major airlines start phasing them out, we'll see many airlines jump on the bandwagon, and phase them out, also.

Approach

the manner in which a salesperson contacts a potential customer