Sales Force Management Exam #2

Objective/Task Method of Calculating Sales

Determine the objective and the tasks needed to complete the objective Ex: Objective - Samples to be distributed Task - # of Doctors to be visited Cost of achiving objective: $Samples $ Travel & Time for each sale ====================== Total cost of sampling

Relationship of motivation and leadership

Different people are pursuing the fulfillment of different kinds of needs. The leadership style chosen to motivate each person should be tailored to what is motivating to them.

OSU Studies - four leadership styles

Directive Leadership Persuasive Leadership Delegation Leadership Participative Leadership

When are profit quotas used?

When the firm wants to encourage the sales of items that have higher profit margins. High volume does not mean high profits if the items sold have low profit margins.

What is the point of market tests? What are their limitations?

When you have a new innovative product, or no reliable data marketing tests can collect sales data, and test the marketing plan. Limitations can be if the product requires extensive investment and fixed assets before they are introduced to the market, or if it is a product that takes time to gain acceptance.

Most appropriate leadership style

depends on characteristics, expectations, and conditions of leader

Three elements of leadership

leader, follower, situation

Uses of progressive commission

offers reps a greater incentive in that the more they sell, the more they can make on each sale.

Sales Contests

short term incentive programs that use prizes and awards to motivate sales reps to achieve goals specified by management

Transformational Leadership

-Charismatic leaders -Provides support for their subordinates -Transforms basic values, beliefs, and attitudes of followers such that they are willing to perform above and beyond expectations.

Objectives of a sales training program

-Improved self management -Improved customer relations -Improved communication -Higher morale -Lower Turnover -Increased Sales and Productivity

Teaching Methods

-Lectures -Discussion (cases, round table, panels) -Demonstration - Mentoring - on-the-job - Role Playing - CDs/Podcasts -Web-based training

Trainer Types

-Line Personnel (Senior sales rep, field supervisors,ect.) -Staff Trainers -Outside training specialists

Reactions

-Subjective -indicate if those who participated in the training thought it achieved the stated objectives.

Transactional Leadership

-Task oriented -Clarifies company rules -Activities regarding day-to-day operations -Involves one-way communication -Verbal feedback in form of reward or punishment

Process Models of Motivation

Address more the issues relating to how the process works and sustains itself over time Expectancy Theory/Equity Theory

Mathematical Methods of Forecasting

Apply mathematical and statistical techniques to historical data to forecast sales Moving Avarage Models, Exponential Smoothing Models, Regression Models

Training Evaluation

Assessment of the effectiveness of the training. Serves to determine the value of the training and helps to improve training in the future.

Behavior

Assessment on whether trainees changed in substantial ways. Evaluated by a supervisor's observations

Weighted Moving Avarage

Assigning a heavier weight to current data points since they are more relevant than data points in the distant past

Persuasive Leadership

High task orientation High people orientation

Financial rewards

- Compensation - additional payment used for motivational or rewards - Merchandise - Travel - Experience based

Non-financial rewards

- Job enrichment & support: give reps greater authority, responsibility, control. Increases responsibility and variety - Recognition and honor awards: give public recognition to accomplishments. (most effective: when they include half of the company's salespeople) - Promotions: changing a rep's title - Encouragement and praise: thank-you's, pats on the back, saying job well done - all can go a long way - Customer feedback: powerful motivator because it lets the person see the direct impact of his/her efforts - Corporate culture: providing a healthy work environment (flex time, on-site fitness centers, massage rooms, meditation rooms, etc)

Strengths of sales contests

- all have an equal opportunity to win - equalized through quotas or selling abilities

Limitations of a sales contest

- lead to undesirable selling methods - overstocking, overselling, pressure tactics - can create morale problems - decline in sales occurs after the contest ends

Purposes of rewards

- to motivate salespeople - to create efficiency in their work practices - to generate more sales - to empower salespeople

Uses of straight commission

-if a company is in a weak financial position and therefore selling costs must be related directly to sales. - Salespeople need great incentive to achieve adequate sales - very little missionary work is needed - developing long-term relationships with customers is not required -If a firm uses part-time salespeople or independent contractors such as manufacturers' agents.

Method of compensation

A plan where the reps earn or reach the intended level.

Daniel Pink Part II - Attunement, Buoyancy, and Clarity - What are they? Why are they useful attributes for managers and salespeople?

Attunement - taking on others' perspective Buoyancy - respond to rejection Clarity - asking questions to get precise understanding of problem These qualities are needed to move others and understand selling processes, therefore they are very useful for salespeople.

Simple Moving Avarage

Average price over a specific period of time

Directive Leadership

High task orientation Low people orientation

What is situational Leadership?

Being able to adapt your leadership style (transactional or transformational) to the needs of the current situation and the individual salesperson.

What is better, survey or mathematical methods

Both are good, survey methods rely on the opinions and judgements of experts who will be making the purchase decision. This is mostly used when dealing with a new product where historical data is not available. Mathematical methods apply mathematical and statistical techniques to historical data and forecast sales

Training sites

Centralized and Decentralized

Centralized Training

Centralized training takes place in organized schools or in periodic sales meetings at a central location. Highly skilled personnel perform training and trainees can focus all their attention on training with no distractions. But it is expensive and not many people can miss work for training.

Combination plan

Combines the limited and unlimited plan- may set limits on items such as food and lodging but no ceiling on transportation.

Goals of compensation

Company perspective: (1) motive salespeople (2) correlate performance with rewards (3) control salespeople's activities (4) ensure proper treatment of customers (5) attract and keep competent salespeople (6) be economical yet competitive (7) be flexible yet stable Employee perspective: (1) a secure income and an incentive income (2) simplicity (3) fairness (4) choice

Relationship of motivation to compensation

Compensation can be used to motivate if the compensation comes in the way of bonuses or recognition for a job well done. This is most effective when a person is attempting to fulfill esteem needs (Maslow's Hierarchy)

Content Models of Motivation

Concentrate on the question of 'what' motivates, Mazlow's Hierarchy of Needs/Herzberg's Two Factor Theory

Percentage Sales Method of calculating sales

Cutting a percentage of employees based on sales

Decentralized training

Decentralized is in the field of work, less expensive and provides real work situations. Manager is directly responsible for training or training can conveniently be done online. But managers may not be able to perform the training properly and some needed training equipment might not be available in the field.

Equity theory

Equity theory focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratio of contributions (or costs) and benefits (or rewards) for each person.

When are expense quotas used?

Expense quotas are meant to make salespeople more aware of cost and profits than of pure volume goals. They may have a negative effect if the rep focuses on cutting cost rather than boosting sales.

Extrinsic V. Intrinsic Rewards

Extrinsic - provided by others Intrinsic - come from performing the task itself

Financial versus Non-financial rewards

Financial - basic compensation plan, salary, commission, bonuses, fringe benefits Non-financial - recognition, praise and encouragement, job enrichment, promotion, sales meetings and conventions

Purposes of quotas

Indicate strong/weak spots in selling structure Furnish sales force goals/incentives Control sales force activities Evaluate sales force productivity Improve compensation plan effectiveness Control selling expenses Evaluate sales contest results

What questions should be asked when looking at a mathematical forecasting model?

Is it a new product? Is the historical data bad or non-existent?

Participative Leadership

Low task orientation High people orientation

Delegation Leadership

Low task orientation Low people orientation

Learning

Measures how much information the trainee retained. Can be measured by comparing "before" and "after" tests to see how much improvement there was.

Importantance of motivation

Motivation is needed in order to get people do complete their tasks. Companies have goals and their employees are the ones who get the job done, but only if they are motivated enough to do so.

Herzberg's Two Factor Theory

Motivators (e.g. challenging work, recognition for one's achievement) that give positive satisfaction from the job itself Hygiene factors (e.g. status, job security, salary) that do not give positive satisfaction or lead to higher motivation, though dissatisfaction results from their absence. The term "hygiene" is used in the sense that these are maintenance factors.

Progressive commission rate

Offer reps a great incentive in that the more they sell, the more they make on each sale.

The importance of reinforcement

People will not change their behaviors as a result of training unless there are reinforcements.

Supervisory aids and tools

Personal Contact Sales Reports Telecommunications Printed Aids Meetings Indirect supervisory aids

Outcomes of good leadership:

Well-trained salespeople Trust among salespeople Citizenship behaviors Better performance Sales force morale

The purpose of controlling expenses

When improperly managed they can amount to grand larceny.

Measures of Training

Reactions, Learning, Behavior, and Results

What is the difference between regression and other forecasting methods?

Regressive Method is a simple linear model of forecasting that is used to project sales trends into the future by estimating the relationship among the variables in the chart

Survey Methods of Forecasting

Rely on the opinions and judgements of experts, such as sales reps to derive sales forecasts Executive opinion, Sales Force Composite

What is an equitable expense plan?

Sales reps should be able to maintain approximately the same standard of living on the road as at home. They should not have to sacrifice comfort to stay within expense limits.

Four types of quotas

Sales volume Gross margin or net profit Expenses Activities

Maslow's Hierarchy of Needs

Self-Actulization Needs Esteem Needs Social Needs Saftey Needs Psyhiological Needs

uses of regressive commission

When the company wants to put a cap on sales because of capacity to produce or to cap what the sales person is earning. If sales people are earning more than their managers, it may discourage them from wanting to move up due to fear of pay cut.

Purposes & strengths of the 3 types of compensation

Straight salary: a fixed element related to a unit of time during which the sales person is working. STRENGTH: degree of security, lower turnover rate, customers react more favorably to a salesperson on straight salary Straight commission: a variable element related to the performance of a specific unit of work. STRENGTH: terrace incentive it gives to the sales force, no ceiling on commission earnings, strong motivating factor Combination of the compensation elements: STRENGTH: overcomes the weaknesses of a single method while at the same time keeps their strongest points.

Operational Methods of Forecasting

Take information from the marketing plans, financial requirements, or the company's capacity to derive a sales forecast Test Markets, Capacity-Based Calculations

Target Audience for Training

The average salesperson, the middle 60%

Unlimited payment plan

The most widely used method of expense control where the company reimburses sales representatives for all legitimate business and travel costs they incur while on company business. Reps are required to submit itemized accounts of their expenditures.

What is the purpose of a sales budget?

The purpose of sales budget is to be the basis for all operating activities in the sales department, production department, and finance areas

Relationship between Expectancy Theory and Equity Theory

The three links of Expectancy Theory are; will better performance lead to a reward, will more effort lead to better performance, and are better performances given better rewards. Equity Theory is related to Expectancy Theory because if the link of better performance being given better rewards isn't perceived as present, the sales people will not see the rewards as fair and equal. For example, a salesperson could see a coworker who they do not think performs as well as they do, but that coworker gets a reward that is the same or greater than the reward that they have received, they will not see that is equal or see the link between performance and reward as correlating.

Expectancy Theory

This theory highlights that motivation is partly a decision-making process that evaluates effort for outcomes. 1.) If I put in effort, can I expect to perform at the required task? 2.)Will performing this act or task achieve a desired outcome? 3.)Can I expect the outcome will be available and forthcoming?

Regressive commission rate

This type of commission plan is used if it is hard to get the first order, but reorders come frequently and automatically.

When are activity quotas used?

This type of quota is specifically useful with missionary sales people, whose activities are likely not supervised.

Limited payment plan

Two forms: (1) the plan places a limit on the amount to be reimbursed for each expense item. (2) the plan provides a flat sum for a period of time.

Straight commission rate

Use when a company is in a weak financial position and therefore selling costs must be related directly so sales.

Naive

Using the current sales to forecast the sales for next period, assuming no new trend in sales

Ratio Method

Using the trends from the previous two periods to project sales for the next period , assuming there is a new sales trend

Exponential Smoothing Model

Using this model allows the forecaster to have sales in certain periods of time influence the forecast more than other periods

Contrast the use of Survey and Mathematical Forecasting methods. Which is better?

Usually mathematical forecasting is better, unless it is a new product or the historical data is bad o non-existent.