Selling Exam 1

Levels of listening

1. hearing- tuning in and tuning out, mainly paying attention to yourself, not responding to the speaker, often just pretending to listen. 2. passive listening- not making a great effort to understand what the speaker is trying to convey. not listening to the deeper meaning of what the speaker is saying. more concerned with content of the message than the speakers feelings. speaker may think the listener is really listening. 3. active listening- actively trying to put self in the speakers place. sees things from the speakers point of view, including feelings, reading speakers body language carefully. Avoids all distractions.

Expense accounts

A lack of tight control can tempt salespeople to use their expense accounts to increase their income. to do the job well, salespeople need to incur expenses. However, using their expense accounts to offset what they consider to be inadequate compensation is unethical. A salesperson who cannot live within the company compensation plan and expense policies has two ethical alternatives: 1) persuade the company to change its compensation plan or expense policy or 2) find another job. Sales people are given expense accounts to cover legitimate expenses, such as for travel.

Assertiveness vs. Responsiveness and indicators of each

Assertiveness: Degree to which people have opinions about issues and publicly make their positions clear to others. assertive people express their convictions publicly and attempt to influence others to accept these beliefs. Assertive people speak out, make strong statements, and have a take-charge attitude. When under tension, they tend to confront the situation. unassertive people rarely dominate a social situation, and they often keep their opinions to themselves. • Responsiveness: Based on how emotional people tend to get in social situations. responsive people readily express joy, anger, and sorrow. They appear to be more concerned with others an are informal and casual in social situations. less responsive people devote more effort toward controlling their emotions. described as cautious, intellectual, serious, formal and businesslike.

Selling to amiables

Build personal relationships • Give guarantees about a product's performance • Follow through on commitments • Stress the product's benefits in terms of its effects on the satisfaction of employees

Deception

Deliberately presenting inaccurate information, or lying, to a customer is illegal. Telling half-truths • Withholding important information • Manipulative and unethical Some sales people believe it is the customers responsibility to uncover potential product problems. ex- a salesperson selling life insurance may fail to mention that the policy won't pay off under certain circumstances. Customers also expect sales people to emphasize the positive aspects of their products and spend little time talking about the negative aspects. some salespeople take advantage of the trust customers place in them. salespeople who fail to provide customers with complete information about products lost an opportunity to develop trust.

Uniform Commercial Code

Legal guide to commercial practice in the United States. Agent: Person who acts in place of his or her company, have the authority to legally obligate their firm in a business transaction. Does not have to be in writing. Sale: Transfer of title to goods by seller to buyer for a consideration known as price. Made when the contract is completed and title passes from the seller to the buyer. Contract to sell: When a salesperson makes an offer and receives an unqualified acceptance. Invitation to negotiate: A sales presentation. An offer takes place when the salesperson quotes specific terms. offer states what the seller promises to deliver and what it expects from the buyer. Offer: Takes place when salesperson quotes specific terms. Orders: Written offers from buyers or agents. Sometimes orders contain clauses stating that the firm is not obligated by its salesperson statements. Free on board (FOB) destination: Seller has title until goods are received at destination FOB factory: Any loss or damage incurred during transportation is the responsibility of the seller. Buyer assumes this responsibility for any loss or damage incurred during transportation. Oral agreements are as binding as written agreements. written agreements required for sales over $500. Obligations and performance Warranty: Assurance by the seller that the products will perform as represented. sometimes called a guarantee. Expressed: Oral or written statement by seller Implied: Not actually stated but still an obligation defined by law. ex- products sold using an oral or a written description carry an implied warranty that the products are of average quality. (pg. 21)

Financial measures of value o Simple cost-benefit analysis o ROI o Payback o NPV o Profit margin o Markup o Inventory turns

Simple cost-benefit analysis- Lists the costs to the buyer and the savings the buyer can expect from the investment ROI- • Net profits (or savings) expected from a given investment • Expressed as a percentage of the investment • ROI = Net profits (or savings) /Investments • To ensure accuracy, collect data about costs and savings that the buyer can expect Payback- Length of time it takes for the investment cash outflow to be returned in the form of cash inflows or savings • Calculated by adding up estimated future cash inflows and dividing them into the investment cost • When expressed in years: • Payback period = Investment /Savings (or profits) per year NPV- • Discounting the cash flows - Firms calculate the value of future cash inflows in today's dollars • Net value today of future cash inflows minus the investment • Assesses the validity of an opportunity • Net present value = Future cash inflows discounted into today's dollars - Investment Profit margin- Net profit the reseller makes, expressed as a percentage of sales Markup- ? Inventory turns- Calculated as: • Annual sales/ Average retail price of inventory on hand • Measures how fast a product sells relative to how much inventory has to be carried • How efficiently a reseller manages its inventory

SPIN sequence and types of questions

Situation - data gathering Problem - explores problems, difficulties, dissatisfaction with current situation where salesperson can help Implication - takes identified problem and explores implications Need-Payoff - allows customer the opportunity to tell salesperson the benefits of the proposed solution

Gifts/entertainment

Taking customers to lunch is a commonly accepted business practice. Sales people use the time to take customers to lunch to get to know the buyer better, rather than pitch business. In some instances, some companies take customers to sporting events, to play golf, or even on overnight trips to the company's plant or headquarters. These trips could become quite lavish; the pharmaceutical industry, for example, came under close governmental regulation for questionable practices regarding exotic and expensive trips for doctors who prescribe certain medications. Determining which gifts are acceptable and which ones are not brings up ethical issues. To avoid these issues, many U.S companies have policies that forbid employees to accept gifts or entertainment from suppliers. these firms require all gifts sent to the employees home or office be returned. Many companies have no policy on receiving gifts or entertainment. some industry's use promotional items frequently, but in pharmaceutical sales, gov regulations have increasingly forbidden the use of gifts because no one wants the choice of a prescription to be influenced by a salesperson gift to a doctor.

Non-verbals

Words are responsibly for only 40% of the information people acquire in face to face communication, and about 10% of the message received, and the remaining 50% comes from nonverbal communications. Body angle- back and forth motions indicate a positive outlook, whereas side-to-side movements suggest insecurity and doubt. body movement directed towards a person indicates positive regard; in contrast, leaning back or away suggest boredom, apprehension, or possibly anger. Face- customers indicate interest, expectation, concern, disapproval or approval. Eyes are the most important area of the face. average blink rate for a relaxed person is 10-20 blinks per minute. during a normal conversation, it increases to about 25mph. eye position can indicate a customers thought process Arms- customers will use more arm movement when they are conveying an opinion. Broader and more vigorous movement indicates the customer is more emphatic about the point being communicated verbally. ex- rude to cross arms in Turkey Hands- hand gestures are very expressive. ex- open and relaxed hands are a positive signal, especially with the palms facing up. Self touching gestures typically indicate tension. Involuntary gestures, such as tightening of a fist, are good indicators of true feelings. ex- thumb up gesture is considered offensive in the middle east, rude in Australia, and a sign of OK in France. In Japan the OK sign made by holding the thumb and forefinger in a circle symbolizes money, but in France indicates something worthless. Legs- When a person has uncrossed legs in an open position, they send a message of cooperation, confidence, and friendly interest. Legs crossed away from a salesperson suggest that the sales call is not going well. Crossing your feet and showing the bottoms of your shoes are insulting in Japan.

Resale Price Maintenance

one time it was illegal for companies to establish a minimum price below which their distributors or retailers could not resell their products. legal in some situations Manufacturers do not have to sell their products to any reseller that wants to buy them. sellers can use their judgement to select resellers if they announce their selection criteria in advance. ex- salespeople for a cosmetics company may give a department store's cosmetics salespeople prizes based on sales of the company's product. These special incentives, called spiffs or push money, are legal only if the reseller knows and approves of the incentive and it is offered to all the reseller's salespeople.

Active Listening

salespeople project themselves into the mind of the speaker and attempt to feel the way the speaker feels. think while they listen gestures can motivate a person to continue talking.

Noises

sound unrelated to messages being exchanged by the salesperson and the customer, such as ringing telephones or other conversations near by. to improve communication , the salesperson should attempt to minimize noises in the environment by closing a door to the room or suggesting that the meeting move to a quieter place. salesperson communicates most effectively when they are physically comfortable. if the room is too hot or too cold, the salesperson should suggest changing the temperature or moving to another room.

Organizational buying criteria

• Economic criteria • Life-cycle costing: Method for determining the cost of equipment or supplies over their useful lives • Proves that a product with a higher initial cost will have a lower overall cost • Quality criteria • Firms expect their suppliers to support their efforts to provide quality products • Salespeople need to know what organizational buyers are looking for • Service criteria • Value analysis: Suppliers and customers work together to reduce costs and still provide the required level of performance • Used by salespeople to get customers to consider a new product • Useful for the out-supplier in a straight rebuy situation

Voice characteristics

• Rate of speech - Faster rate for simple messages • Slower rate for more difficult concepts • Loudness: Should be tailored to the communication situation. can be used to emphasize certain parts of the sales presentation, indicating to the customer that these parts are more important. • Inflection: Tone or pitch of speech. At the end of a sentence, the tone should drop, indicating the completing of a thought. when the tone goes up at the end of a sentence, listeners often sense uncertainty in the speaker. use inflection to reduce monotony. • Articulation: Production of recognizable sounds. Best when the speaker opens his or her mouth properly; then the movements of the lips and tongue are unimpeded.

Suggestions for active listening

• Repeating information • To verify information being collected sales people need to be careful when using this technique, however. customers can get irritated with salespeople who echo everything. • Restating or rephrasing information • To verify a customer's intent, to ensure that the salesperson and customer understand each other. • Clarifying information • To verify a customer's meaning. • Summarizing the conversation • To get a quick review. • Tolerating silences • To give customer time to think. bite your tongue technique. • Concentrating on the ideas being communicated • To avoid getting distracted. salespeople should listen to the words from the customers viewpoint instead of reacting from their own view point.

Social Style matrix

• Training program used to help sales people adapt their communication styles • David Merrill and Roger Reid - Patterns of communication behaviors, or social styles • People who recognize and adjust to the behavior patterns have better relationships with other people • Style flexing: Adjusting your behavior to mirror or match your customer's social style.

Selling to analytics

• Use solid, tangible evidence • Use sales presentations that recognize their technical expertise and emphasize long-term benefits

Multi-attribute model

• Used to understand the factors individual members of a buying center consider in: • Evaluating products • Making choices • Used in complex decisions involving several vendors • Based on the idea that people view a product as a collection of characteristics or attributes Performance evaluation of characteristics Importance weights Overall evaluation Value offered Supplier selection (pg. 57)

Customer value proposition

• Way in which a given product will meet the prospect's needs • Identifies how the offerings is different from that of competitors, especially the next-best alternative • Should have following features • One or more key features of the product/service complete with external proof • Benefits, both economical and emotional • Positioning of your company as the prospect's long-term partner • Personal problem solver

How we learn/remember

- We retain 20% of what we hear - We retain 50% of what we see and hear people forget 50% of what they hear; after 48 hrs they have forgotten 75% of the message

Offering proof through verbal and visual tools, including consideration of social styles

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Bribes/Kickbacks

Bribes- Payments made to buyers to influence their purchase decisions Kickbacks- Payments made to buyers based on the amount of orders placed (May be illegal) a purchasing agent personally benefits from bribes and kickbacks, but these payments typically have negative consequences for the purchasing agent's firm because the product's performance is not considered in buying decisions.

Classic vs. SPIN Selling models

Classic Sales Model- Approach- •Pre-call planning •Greeting/introduction •Opening statement Determine Needs- •Asking questions •Probing •Confirm understanding Present Solution- •Present features and benefits •Use trial closes Address Objections- •Probe to understand •Respond •Use trial closes Close- •Ask for the order SPIN Selling Model- Preliminaries- •Pre-call planning •Greeting/intro •Secure permission to proceed Investigating- •Ask questions Situation Problem Implication Need-Payoff •Uncover Implied needs •Convert into Explicit needs Demonstrate Capability- •Present benefits as solution Obtain Commitment- •Secure agreement to move forward (pg. 12)

Stories

Conflicts, trials, and crises • Help listener think through choices and outcomes of those decisions • Word picture: Graphic or vivid story designed to help the buyer easily visualize a point • Analogy: Speaker attempts to draw a parallel between one thing and another ex- to explain how a new machine controller is always monitoring and is ready to respond instantly. • Keep open lines of communication

Confidential information

Disclosing confidential information, gives reputation of being untrustworthy and is unethical. ex- customer asks how well your product is selling, and you reply, "great!" The customer then asks, "Well, how is it doing at HEB?" if the customer is told how many cases are sold at HEB, then HEB's rights to confidentiality was violated. Sometimes salespeople have to sign an nondisclosure agreement (NDA). An NDA is a contract that specifies what information is owned by the customer and how or if that information can be shared with anyone. ex- a customer may be working on a new product, and if competitors found out, they might preempt the new product launch. Long term relationships can develop only when customers trust salespeople to maintain confidentiality.

Physical space

Distance zones The exact sizes of the intimate and personal zones depends on age, gender, culture and race. • Intimate zone: For a person's closest relationships ( 0-2 feet) • Personal zone: For close friends and those who share special interests (2-4 feet) • Social zone: For business transactions and other impersonal relationships (4-12 feet) ex- for Latinos is much closer than that for North Americans. - salespeople should begin customer interactions at the social zone. • Public zone: For speeches, teachers in classrooms, and passersby (beyond 12 feet)

Manipulation

Eliminating or reducing a buyer's choice unfairly unethical

Expressives

Focus on the future • Direct their time and effort toward achieving their vision • Act quickly • Take risks • Base their decisions on their personal opinions and the opinions of others • Impatient and change their minds easily high on assertiveness and high on responsiveness relationships primarily with supporters and followers recruited to assist expressives in achieving their personal goals. people focus on the future, directing their time and effort toward achieving their vision have little concern for practical details in present situations base their decisions on their personal opinions and opinions of others.

Amiables

Give importance to close relationships and cooperation • Make decisions slowly • Build a consensus among people involved in the decision • Avoid risks • Change their opinions reluctantly low on assertiveness and high on responsiveness

Drivers

Have a great desire to get ahead in their companies and careers • Swift and efficient decision makers • Base their decisions on facts • Take risks • Look at several alternatives before making a decision high on assertiveness and low on responsiveness. slogan- "lets get it done now, and get it done my way." work with others only because they must do so to get the job done, not because they enjoy people. Have a great desire to get ahead in their companies and careers. Selling to driver- Direct, businesslike, organized presentation with quick action and follow-up • Emphasize the effects of a purchase decision on profits

Sending verbal messages effectively

Persuading- process by which the salesperson attempts to convince other people to change their attitudes or behaviors regarding an issue while understanding that the other person is free to accept or reject the idea.

Types of B2B customers

Producers buy products and services to manufacture and sell their products and services to customers • Types of buying situation • Products included in manufacturing • Products and services to support the manufacturing operation • Original equipment manufacturer (OEM): Purchase goods to use in making their products • End users: Producers who buy goods and services to support their own production and operations Resellers buy finished products or services with the intention to resell them to businesses and consumers • Profit margin: How much they make on each sale? • Turnover: How quickly a product will sell? • Effort - How much effort it takes to sell the product? • Maximize return on investment (ROI)

Reporting

Sales people on salary are stealing from their employers when they waste time on coffee breaks, long lunches, or unauthorized days off. Even sales people paid by commission cheat their companies by not working full-time. to monitor work activities, many companies ask their sales people to provide daily call reports. A failure to get an appointment with a customer is not a sales call. providing a brief glimpse of a product is not a demonstration.

Backdoor selling

Salespeople ignore the purchasing agent's policy and contact people directly involved in the purchasing decision. can be risky and unethical. if the purchasing agent finds out, the sales person may never be able to get an order. to avoid these problems, the salesperson needs to convince the purchasing agent of the benefits to be gained by direct contact with other people in the customers firm. (Exhibit 2.6 & 2.7)

Persuasion

The decision still remains the buyer's, with attempts made to influence it ethical

Reciprocity

Special relationship in which two companies agree to buy products from each other. ex- a manufacturer of computers agrees to use microprocessors from a component manufacturer if the component manufacturer agrees to buy its computers. such interrelationships can lead to greater trust and cooperation between the firms. Illegal under the sherman antitrust act if one company forces another company to join the agreement only legal when both parties consent to the agreement willingly.

Types of presentations

Standardized Memorized presentation- also called a canned presentation, is a completely memorized sales talk. the sales person presents the same selling points in the same order to all customers. ensures that the salesperson will provide complete and accurate information about the firms products and policies. can bring new sales people up to speed quickly and give them confidence. offers no opportunity for the sales person to tailor the presentation to the needs of the specific customer. Outlined presentation- prearranged presentation that usually includes a standard introduction, standard answers to common objections raised by customers, and a standard method for getting the customer to place an order. very effective because it is well organized. more informal and natural than the standard memorized and provides more opportunity for the customer to participate. Permits flexibility in the approach to present the key points. Customized presentation- written and/or oral presentation based on a detailed analysis of the customers needs.

Types of organizational buying decisions

Step 1- Recognition of a need Step 2- Definition of the product type needed Step 3- Development of detailed specifications Step 4- Search for qualified suppliers Step 5- Acquisition and analysis of proposals Step 6- Evaluation of proposals and selection of a supplier Step 7- Placing and receiving the order Step 8- Evaluation of product performance (pg. 40)

Analyticals

Suspicious of power and personal relationships • Make decisions slowly in a deliberate and disciplined manner • Like facts, principles, and logic • Strongly motivated to make the right decision low on assertiveness, low on responsiveness

Two-way communication model

The sender (Seller) encodes a message --> The receiver (buyer) decodes the message, --> who then becomes... --> The sender (buyer) who encodes a reply message. --> The receiver (Seller) then decodes the buyers message. --> who then become... --> (Go in a circle, above)^ Two-way communication- process begins when the sender, either the salesperson or the customer, wants to communicate some thoughts or ideas. encoding- translation of thoughts into words. decoding- involves interpreting the meaning of the received message. feedback- the customers expression tells the salesperson that the message is not being received. The customer then sends verbal messages to the salesperson in the form of questions concerning the operation and benefits of the product.

Describing value to customers (quality, service, cost savings, etc.)

Value = Benefits Received - Resources Used PRODUCT QUALITY- Performance • Features • Reliability • Conformance • Durability • Serviceability • Aesthetics • Perceived quality DIMENSIONS OF SERVICE QUALITY- Reliability • Responsiveness • Assurance • Tangibles • Empathy

Cues for recognizing social styles

amiable- liberal arts background office has friendly, open atmosphere pictures of family displayed personal momentos on well desk top placed for open contact with people casual or flamboyant

Cues for recognizing social styles

analytical- technical background achievement awards on the wall office is work oriented, showing much activity conservative dress likes solitary activities (reading, individual sports)

Guidelines for gift giving

check your motives for giving the gift. the gift should be given to foster a mutually beneficial, long-term relationship, not to obligate or pay off the customer for placing and order. make sure the customer views the gift as a symbol of your appreciation and respect with no strings attached. never give customers the impression that you are attempting to buy their business with a gift. make sure the gift does not violate the customer's or your firm's policies. the safest gifts are inexpensive business items imprinted with the sales person's company name or logo. customers who can be bribed are more likely to switch their business when presented with better offers.

Cues for recognizing social styles

driver- technical background achievement awards on wall no posters, slogans on office walls. calendar prominently displayed furniture is placed so that contact with people is across desk. conservative dress likes group activities

choice of words

every salesperson should be able to draw on a set of words to best help present the features of a product or service. The words might form a simile. be careful using words that become so common in business conversations as to be almost meaningless.

Cues for recognizing social styles

expressive- liberal arts background motivational slogans on wall office has friendly, open atmosphere cluttered, unorganized desk desk is placed for open contact with people casual or flamboyant dress likes group activities

Trade Secret

information owned by the company by which the company gains a competitive advantage. Protected by law

Defamation

occurs when a salesperson makes unfair or untrue statements to customers about a competitor, its products, or its salespeople. avoid making negative comments about a competitor, its products, or its salespeople unless you have proof to support the statements.

4 parts of a customer value proposition

one or more key features of the products/service complete with external proof the benefits, both economical and emotional positioning your company as the prospects long term partner offering yourself as the personal problem solver

Robinson-Patman act

prohibits unfair business practices that may reduce competition.

Buying center roles

users- Manufacturing personnel for OEM products and capital equipment • Do not make the ultimate purchase decision influencers- Directly or indirectly provide information •Economic influencer: Concerned about the financial aspects of a decision •Technical influencer: Makes sure the technical requirements are met • Coach: Advises and directs a salesperson in a buying process leading to sale Initiators- • Start the buying process • Could be an executive making a decision deciders- Make the final choice • For straight rebuys the purchasing agent usually selects the vendor and places the order gatekeepers- Control the flow of information and limit the alternatives considered • Ensure that purchases are consolidated under one contract • Reduce costs and increase quality (pg. 44)

Switching jobs

when sales people decide to change jobs, they have an ethical responsibility to their employers. some companies require sales people to sign a contract that contains a non compete clause. if you switch jobs in the same industry, you may need to seek legal advice regarding any non compete clauses. Ethical approach when leaving a job: - give ample notice - offer assistance during the transition phase - don't burn the bridges - don't take anything with you that belongs to the company

Active listening actions

• 80-20 listening rule • Listening - 80 percent of the time • Talking - 20 percent or less of the time salesperson can speak at a rate of only 120 to 160 words per minute, but can listen to 800 words per minute. • Speaking-listening differential: Difference between the rate at which people speak and listen. Because of this, people often become lazy listeners. Often remember only 50% of what is said immediately after they hear it.

Selling to expressives

• Demonstrate how a product will help to achieve personal status and recognition • Use product demonstrations and creative graphics • Use testimonials from well-known firms and people • Put them in the role of innovator, the first person to use a new product