Salespeople play three primary roles? What are they?

Question

Description

Review the material in Chapter Thirteen on Professional Selling.

Salespeople play three primary roles? What are they?

How does each type of salespeople create value?

Do ethics get in the way of success in sales? Why or why not?

Chapter 13

You’ve created a great product, you’ve priced it right, and you’ve set a wonderful marketing communication

strategy in motion. Now you can just sit back and watch the sales roll in, right? Probably not. Unless your

company is able to sell the product entirely over the Internet, you probably have a lot more work to do. For

example, if you want consumers to be able to buy the product in a retail store, someone will first have to convince

the retailer to carry the product.

“Nothing happens until someone sells something,” is an old saying in business. But in reality, a lot must happen

before a sale can be made. Companies count on their sales and marketing teams not only to sell products but to the

lay the groundwork to make it happen. However, salespeople are expensive. Often they are the most expensive

element in a company’s marketing strategy. As a result, they have to generate business in order to justify a firm’s

investment in them.

What Salespeople Do

Salespeople act on behalf of their companies by doing the following:

• Creating value for their firms’ customers

• Managing relationships

• Relaying customer and market information back to their organizations

In addition to acting on behalf of their firms, sales representatives also act on behalf of their customers. Whenever

a salesperson goes back to her company with a customer’s request, be it for quicker delivery, a change in a

product feature, or a negotiated price, she is voicing the customer’s needs. Her goal is to help the buyer purchase

what serves his or her needs the best. Like Ted Schulte, the salesperson is the expert but, in this case, an expert

representing the customer’s needs back to the company.

From society’s perspective, selling is wonderful when professional salespeople act on behalf of both buyers and

sellers. The salesperson has a fiduciary responsibility (in this case meaning something needs to be sold) to the

company and an ethical responsibility to the buyer. At times, however, the two responsibilities conflict with one

another. For example, what should a salesperson do if the product meets only most of a buyer’s needs, while a

competitor’s product is a perfect fit?

Salespeople also face conflicts within their companies. When a salesperson tells a customer a product will be delivered in three days, she has made a promise that will either be kept or broken by her company’s shipping

department. When the salesperson accepts a contract with certain terms, she has made a promise to the customer

that will either be kept or broken by her company’s credit department. What if the credit department and shipping

department can’t agree on the shipping terms the customer should receive? Which group should the salesperson

side with? What if managers want the salesperson to sell a product that’s unreliable and will swamp the company’s

customer service representatives with buyers’ complaints? Should she nonetheless work hard to sell the offering?

Situations such as these create role conflict. Role conflict occurs when the expectations people set for you differ

from one another. Now couple the situation we just mentioned with the fact that the salesperson has a personal

interest in whether the sale is made or not. Perhaps her income or job depends on it. Can you understand how role

conflict might result in a person using questionable tactics to sell a product?

So are salespeople dishonest? Many people think so in part because certain types of salespeople have earned poor

reputations that have tarnished the entire profession. As a result, some business students avoid sales despite the

very high earnings potential and personal growth opportunities. You might be surprised to learn, however, that

one study found that salespeople are less likely to exaggerate in order to get what they want than politicians,

preachers, and professors. Another study looked at how business students responded to ethical dilemmas versus

how professional salespeople responded. What did the study find? That salespeople were more likely to respond

ethically than students were.

In general, salespeople handle these conflicting expectations well. Society benefits because salespeople help

buyers make more informed decisions and help their companies succeed, which, in turn, creates jobs for people

and products they can use. Most salespeople also truly believe in the effectiveness of their company’s offerings.

Schulte, for example, is convinced that the pacemakers he sells are the best there are. When this belief is coupled

with a genuine concern for the welfare of the customer—a concern that most salespeople share—society can’t

lose.

Most marketing majors begin their career in sales. While a growing number of universities are offering a major in

sales, the demand for professional salespeople often outstrips supply, creating opportunities for marketing majors.

Sales is a great place to start a career not only because the earnings are at the top of any business major but because

sales is the only place to really learn what is happening in the market.

Creating Value

Consider the following situations:

• At the beginning of the chapter, we described a real-life situation—a cardiac surgeon with a high-risk

patient is wondering what to do. The physician calls Ted Schulte at Guidant to get his input on how to

handle the situation. Schulte recommends the appropriate pacemaker and offers to drive one hundred

miles early in the morning in order to be able to answer any questions that might arise during the

surgery.

• A food wholesaler is working overtime to prepare invoices. Unfortunately, one out of five has a

mistake. The result is that customers don’t get their invoices in a timely fashion, so they don’t pay

quickly and don’t pay the correct amounts. Consequently, the company has to borrow money fulfill its

payroll obligations. Jay King, a salesperson from DG Vault, recommends the wholesaler purchase an electronic invoicing system. The wholesaler does. Subsequently, it takes the wholesaler just days to get

invoices ready, instead of weeks. And instead of the invoices being only 80 percent accurate, they are

close to being 100 percent accurate. The wholesaler no longer has trouble meeting its payroll because

customers are paying more quickly.

• Sanderson Farms, a chicken processor, wants to build a new plant near Waco, Texas. The chambers of

commerce for several towns in the area vie for the project. The chamber representative from Waco,

though, locates an enterprise zone that reduces the company’s taxes for a period of time, and then

works with a local banker to get the company better financing. In addition, the rep gets a local

technical college involved so Sanderson will have enough trained employees. These factors create a

unique package that sells the company on setting up shop in Waco.

All these are true stories of how salespeople create value by understanding the needs of their customers and then

create solutions to meet those needs. Salespeople can adapt the offering, such as in the Sanderson Farms example,

or they can adapt how they present the offering so that it is easier for the client to understand and make the right

decision.

Adapting a message or product on the fly isn’t something that can be easily accomplished with other types of

marketing communication. Granted, some Web sites are designed to adapt the information and products they

display based on what a customer appears to be interested in while he or she is looking at the sites. But unless

the site has a “chat with a representative” feature, there is no real dialogue occurring. The ability to engage in

dialogue helps salespeople better understand their customers and their needs and then create valuable solutions

for them.

Note also that creating value means making sales. Salespeople sell—that’s the bulk of the value they deliver to

their employers. There are other ways in which they deliver value, but it is how much they sell that determines

most of the value they deliver to their companies.

Salespeople aren’t appropriate channels for companies in all situations, however. Some purchases don’t require

the salesperson’s expertise. Or the need to sell at a very low cost may make retail stores or online selling

more attractive. But in situations requiring adaptation, customer education, and other value-adding activities,

salespeople can be the best channel to reach customers.

Managing Relationships

Because their time is limited, sales representatives have to decide which accounts they have the best shot at

winning and which are the most lucrative. Once a salesperson has decided to pursue an account, a strategy is

devised and implemented, and if a sale happens, the salesperson is also responsible for ensuring that the offering

is implemented properly and to the customer’s satisfaction.

We’ve already emphasized the notion of “customers for life” in this book. Salespeople recognize that business is

not about making friends, but about making and retaining customers. Although buyers tend to purchase products

from salespeople they like, being liked is not enough. Salespeople have to ensure that they close the deal with the

customer. They also have to recognize that the goal is not to just close one deal, but as many deals as possible in the future. Gathering Information

Salespeople are boundary spanners, in that they operate outside the boundaries of the firm and in the field. As

such, they are the first to learn about what competitors are doing. An important function for them, then, is to report

back to headquarters about their competitors’ new offerings and strategies.

Similarly, salespeople interact directly with customers and, in so doing, gather a great deal of useful information

about their needs. The salespeople then pass the information along to their firms, which use it to create new

offerings, adjust their current offerings, and reformulate their marketing tactics. The trick is getting the

information to the right decision makers in firms. Many companies use customer relationship management (CRM)

software like Netsuite or Salesforce.com to provide a mechanism for salespeople to enter customer data and

others to retrieve it. A company’s marketing department, for example, can then use that data to pinpoint segments

of customers with which to communicate directly. In addition to using the data to improve and create and

marketing strategies, the information can also help marketing decision makers understand who makes buying

decisions, resulting in such decisions as targeting trade shows where potential buyers are likely to be. In other

words, marketing managers don’t have to ask salespeople directly what customers want; they can pull that

information from a customer database. (For an online demonstration of Aplicor, visit http://www.aplicor.com/

product_tour.php.) Types of Sales Positions

There are different ways to categorize salespeople. They can be categorized by the customers they work with,

such as whether they are consumers, other businesses, or government institutions. Another way to categorize

salespeople is by the size of their customers. Most professional sales positions involve selling to other businesses,

but many also sell to consumers like you. For the purposes of this book, we will categorize salespeople by their

activities. Using activities as a basis, there are four basic types of salespeople: missionary salespeople, trade

salespeople, prospectors, and account managers. In some discussions, you’ll hear that there are three types: order

getters, order takers, and sales support. The four we describe in the following are all types of order getters; that is,

they actively seek to make sales by calling on customers. We’ll also discuss order takers and sales support after

we discuss the four types of order getters.

Missionary Salespeople

A missionary salesperson calls on people who make decisions about products but don’t actually buy them,

and while they call on individuals, the relationship is business-to-business. For example, a pharmaceutical

representative might call on a physician to provide the doctor with clinical information about a medication’s

effectiveness. The salesperson hopes the doctor will prescribe the drug. Patients, not doctors, actually purchase

the medication. Similarly, salespeople call on your professors urging them to use certain textbooks. But you, the

student, choose whether or not to actually buy the books.

There are salespeople who also work with “market influencers.” Mary Gros works at Teradata, a company that

develops data warehousing solutions. Gros calls on college faculty who have the power to influence decision

makers when it comes to the data warehouses they use, either by consulting for them, writing research papers

about data warehousing products, or offering opinions to students on the software. In an effort to influence what

they write about Teradata’s offerings, Gros also visits with analysts who write reviews of products.

Trade Salespeople

A trade salesperson is someone who calls on retailers and helps them display, advertise, and sell products

to consumers. Eddy Patterson is a trade salesperson. Patterson calls on major supermarket chains like HEB

for Stubb’s Bar-B-Q, a company that makes barbecue sauces, rubs, marinades, and other barbecuing products.

Patterson makes suggestions about how Stubb’s products should be priced and where they should be placed in

store so they will sell faster. Patterson also works with his clients’ advertising departments in order to create

effective ads and fliers featuring Stubb’s products.

Prospectors

A prospector is a salesperson whose primary function is to find prospects, or potential customers. The potential

customers have a need, but for any number of reasons, they are not actively looking for products to meet those

needs—perhaps because they lack information about where to look for them or simply haven’t had the time to do

so. Prospectors often knock on a lot of doors and make a lot of phone calls, which is called cold calling because

they do not know the potential accounts and are therefore talking to them “cold.” Their primary job is to sell, but

the activity that drives their success is prospecting. Many salespeople who sell to consumers would be considered prospectors, including salespeople such as insurance or financial services salespeople, or cosmetic salespeople

such as those working for Avon or Mary Kay.

In some B2B situations, the prospector finds a prospect and then turns it over to another salesperson to close the

deal. Or the prospector may take the prospect all the way through the sales process and close the sale. The primary

responsibility is to make sales, but the activity that drives the salesperson’s success is prospecting.

Account Managers

Account managers are responsible for ongoing business with a customer who uses a product. A new customer

may be found by a prospector and then turned over to an account manager, or new accounts may be so rare

that the account manager is directly responsible for identifying and closing them. For example, if you sold beds

to hospitals, new hospital organizations are rare. A new hospital may be built, but chances are good that it is

replacing an existing hospital or is part of an existing hospital chain, so the account would already have coverage.

Taylor Bergstrom, a Baylor University graduate, began his career as a sales representative prospecting for the

Texas Rangers baseball team. Bergstrom spent a lot of time calling people who had purchased single game tickets

in an effort to sell them fifteen-game packages or other special-ticket packages. Today, Bergstrom is an account

manager for the club. He works with season ticket holders to ensure that they have a great experience over the

course of a season, regardless of whether the Rangers win or lose. His sales goals include upgrading season ticket

holders to more expensive seats, identifying referral opportunities for new season-ticket sales, and selling specialevent packages, such as party packages to box-seat holders. While most account managers sell to businesses,

some, like Bergstrom, sell to individual consumers.

Account managers also have to identify lead users (people or organizations likely to use new, cutting-edge

products) and build relationships with them. (Recall that we discussed lead users in Chapter 6 “Creating

Offerings”.) Lead users are in a good position to help improve a company’s offerings or develop new ones.

Account managers work closely with these lead users and build relationships across both their companies so that

the two organizations can innovate together.

Other Types of Sales Positions

Earlier, we stated that there are also order takers and sales support. These other types of salespeople do not

actively solicit business. Order takers, though, do close sales while sales support do not. Order takers include retail

sales clerks and salespeople for distributors of products, like plumbing supplies or electrical products, who sell to

plumbers and electricians. Other order takers may work in a call center, taking customer sales calls over the phone

or Internet when customers initiate contact. Such salespeople carry sales quotas and are expected to hit those sales

numbers.

Sales support work with salespeople to help make a sale and to take care of the customer after the sale. At

ResearchNow, a marketing research company headquartered in Dallas, sales support help salespeople price

projects and prepare bids. At Oracle, an information systems provider, sales support assist by engineering

solutions and, like at ResearchNow, pricing offerings and preparing proposals. At ResearchNow, the sales support

staff also helps deliver the project, whereas at Oracle, another team takes over when the sale is made. Customer Relationships

Some buyers and sellers are more interested than others in building strong relationships with each other. Generally

speaking, however, all marketers are interested in developing stronger relationships with large customers. Why?

Because serving one large customer can often be more profitable than serving several smaller customers, even

when the large customer receives quantity discounts. Serving many small customers—calling on them, processing

all their orders, and dealing with any complaints—is time consuming and costs money. To illustrate, consider

the delivery process. Delivering a large load to one customer can be accomplished in just one trip. By contrast,

delivering smaller loads to numerous customers will require many more trips. Marketers, therefore, want bigger,

more profitable customers. Big box retailers such as Home Depot and Best Buy are examples of large customers

that companies want to sell to because they expect to make more profit from the bigger sales they can make. Marketers also want stronger relationships with customers who are innovative, such as lead users. Similarly,

marketers seek out customers with status or who are recognized by others for having expertise. For example, Holt

Caterpillar is a Caterpillar construction equipment dealer in Texas and is recognized among Caterpillar dealers

for its innovativeness. Customers such as Holt influence others (recall that we discussed these opinion leaders in

Chapter 3 “Consumer Behavior: How People Make Buying Decisions”). When Holt buys or tries something new

and it works, other Cat dealers are quick to follow. Some companies are reaching out to opinion leaders in an

attempt to create stronger relationships. For example, JCPenney uses e-mail and Web sites to form relationships

with opinion leaders who will promote its products. We’ll discuss how the company does so in the next chapter.

Salespeople are also tasked with maintaining relationships with market influencers who are not their customers.

As mentioned earlier, Mary Gros at Teradata works with professors and with consultants so that they know all

about Teradata’s data warehousing solutions. Professors who teach data warehousing influence future decision

makers, whereas consultants and market analysts influence today’s decision makers. Thus, Gros needs to maintain

relationships with both groups.

Types of Sales Relationships

Think about the relationships you have with your friends and family. Most relationships operate along a

continuum of intimacy or trust. The more you trust a certain friend or family member, the more you share intimate

information with the person, and the stronger your relationship is. The relationships between salespeople and

customers are similar to those you have, which range from acquaintance to best friend (see Figure 13.5 “The

Relationship Continuum”). At one end of the spectrum are transactional relationships; each sale is a separate exchange, and the two parties

to it have little or no interest in maintaining an ongoing relationship. For example, when you fill up your car with

gas, you might not care if it’s gas from Exxon, Shell, or another company. You just want the best price. If one of

these companies went out of business, you would simply do business with another.

Functional relationships are limited, ongoing relationships that develop when a buyer continues to purchase a product from a seller out of habit, as long as her needs are met. If there’s a gas station near your house that has

good prices, you might frequently fill up there, so you don’t have to shop around. If this gas station goes out

of business, you will be more likely to feel inconvenienced. MRO (maintenance, repair, and operations) items,

such as such as nuts and bolts used to repair manufacturing equipment are often sold on the basis of functional

relationships. There are small price, quality, and services differences associated with the products. By sticking

with the product that works, the buyer reduces his costs.

Affiliative selling relationships are more likely to occur when the buyer needs a significant amount of expertise

needed from the seller and trust is an issue. Ted Schulte describes one segment of his market as affiliative; the

people in this segment trust Schulte’s judgment because they rely on him to help them make good decisions on

behalf of patients. They know that Schulte wouldn’t do anything to jeopardize that relationship.

A strategic partnership is one in which both the buyer and seller to commit time and money to expand “the pie”

for both parties. This level of commitment is often likened to a marriage. For example, GE manufactures the

engines that Boeing uses in the commercial planes it makes. Both companies work together to advance the state

of engine technology because it gives them both an edge. Every time Boeing sells an airplane, GE sells one or

more engines. A more fuel-efficient or faster engine can mean more sales for Boeing as well as GE. As a result,

the engineers and other personnel from both companies work very closely in an ongoing relationship. Going back to the value equation, in a transactional relationship, the buyer calculates the value gained after every

transaction. As the relationship strengthens, value calculations become less transaction oriented and are made less

frequently. There will be times when either the buyer or the seller engages in actions that are not related directly

to the sale but that make the relationship stronger. For example, a GE engineer may spend time with Boeing

engineers simply educating them on a new technology. No specific sale may be influenced, but the relationship is

made stronger by delivering more value.

Note that these types of relationships are not a process—not every relationship starts at the transactional level

and moves through functional and affiliative to strategic. Nor is it the goal to make every relationship a strategic

partnership. From the seller’s perspective, the motivation to relate is a function of an account’s size, innovation,

status, and total lifetime value.

Selling Strategies

A salesperson’s selling strategies will differ, depending on the type of relationship the buyer and seller either

have or want to move toward. There are essentially four selling strategies: script-based selling, needs-satisfaction

selling, consultative selling, and strategic partnering.

Script-Based Selling

Salespeople memorize and deliver sales pitches verbatim when they utilize a script-based selling strategy. Scriptbased selling is also called canned selling. The term “canned” comes from the fact that the sales pitch is

standardized, or “straight out of a can.” Back in the late 1880s, companies began to use professional salespeople

to distribute their products. Companies like National Cash Register (NCR) realized that some salespeople were

far more effective than others, so they brought those salespeople into the head office and had them give their sales

pitches. A stenographer wrote each pitch down, and then NCR’s sales executives combined the pitches into one

effective script. In 1894, the company started one of the world’s first sales schools, which taught people to sell

using the types of scripts developed by NCR. Script-based selling works well when the needs of customers don’t vary much. Even if they do, a script can

provide a salesperson with a polished and professional description of how an offering meets each of their needs.

The salesperson will ask the customer a few questions to uncover his or her need, and then provides the details

that meet it as spelled out in the script. Scripts also ensure that the salesperson includes all the important details

about a product.

Needs-Satisfaction Selling

The process of asking questions to identify a buyer’s problems and needs and then tailoring a sales pitch to satisfy

those needs is called needs-satisfaction selling. This form of selling works best if the needs of customers vary,

but the products being offered are fairly standard. The salesperson asks questions to understand the needs then

presents a solution. The method was popularized by Neil Rackham, who developed the SPIN selling approach.

SPIN stands for situation questions, problem questions, implications, and needs-payoff, four types of questions

that are designed to fully understand how a problem is creating a need. For example, you might wander onto a

car lot with a set of needs for a new vehicle. Someone else might purchase the same vehicle but for an entirely

different set of reasons. Perhaps this person is more interested in the miles per gallon, or how big a trailer the

vehicle can tow, whereas you are more interested in the vehicle’s style and the amount of legroom and headroom it has. The effective salesperson would ask you a few questions, determine what your needs are, and then offer you

the right vehicle, emphasizing those points that meet your needs best. The vehicle’s miles per gallon and towing

capacity wouldn’t be mentioned in a conversation with you because your needs are about style and room.

Consultative Selling

To many students, needs-satisfaction selling and consultative selling seem the same. The key difference between

the two is the degree to which a customized solution can be created. With consultative selling, the seller uses

special expertise to solve a complex problem in order to create a somewhat customized solution. For example,

Schneider-TAC is a company that creates customized solutions to make office and industrial buildings more

energy efficient. Schneider-TAC salespeople work with their customers over the course of a year or longer, as well

as with engineers and other technical experts, to produce a solution.

Strategic-Partner Selling

When the quality of the relationship between the buyer and seller moves toward a strategic partnership, the

selling strategy gets more involved than even consultative selling. In strategic-partner selling, both parties invest

resources and share their expertise with each other to create solutions that jointly grow one another’s businesses.

Schulte, for example, positions himself as a strategic partner to the cardiologists he works with. He tries to become

a trusted partner in the patient care process.

Choosing the Right Sales Strategy for the Relationship Type and Selling Stage

The sales-strategy types and relationship types we discussed don’t always perfectly match up as we have described

them. Different strategies might be more appropriate at different times. For example, although script-based selling

is generally used in transactional sales relationships, it can be used in other types of sales relationships as well,

such as affiliative-selling relationships. An affiliative-sales position may still, for example, need to demonstrate

new products, a task for which a script is useful. Likewise, the same questioning techniques used in needssatisfaction selling might be used in relationships characterized by consultative selling and strategic-partner

selling.

So when is each method more appropriate? Again, it depends on how the buyer wants to buy and what information

the buyer needs to make a good decision.

The typical sales process involves several stages, beginning with the preapproach and ending with customer

service. In between are other stages, such as the needs-identification stage (where you would ask SPIN questions),

presentation stage, and closing stage (see Figure 13.8 “The Typical Sales Process”).

The preapproach is the planning stage. During this stage, a salesperson may use LinkedIn to find the right person

to call and to learn about that person. In addition, a Google search may be performed to find the latest news

on the company, while a search of financial databases, such as Standard & Poor’s, can provide additional news

and information. A salesperson may also search internal data in order to determine if the potential buyer has

any history with the company. Note that such extensive precall planning doesn’t always happen; sometimes a

salesperson is literally just driving by, sees a potential customer, and decides to stop in, but in today’s information

age, a lot of precall planning can be accomplished through judicious use of Web-based resources. In the approach, the salesperson attempts to capture enough of the prospective customer’s attention and interest in

order to continue the sales call. If it is a first-time call, introductions are needed. A benefit that could apply to just

about any customer may also be offered to show that the time will be worthwhile. In this stage, the salesperson is

attempting to convince the buyer to spend time exploring the possibility of a purchase. With the buyer’s permission, the salesperson then moves into a needs identification section. In complex situations,

many questions are asked, perhaps over several sales calls. These questions will follow the SPIN outline or

something similar. Highly complex situations may require that questions be asked of many people in the buying

organization. In simpler situations, needs may not vary across customers so a canned presentation is more likely.

Then, instead of identifying needs, needs are simply listed as solutions are described.

A presentation is then made that shows how the offering satisfies the needs identified earlier. One approach to

presenting solutions uses statements called FEBAs. FEBA stands for feature, evidence, benefit, and agreement.

The salesperson says something like, “This camera has an automatic zoom [Feature]. If you look at the viewfinder

as I move the camera, you can see how the camera zooms in and out on the objects it sees [Evidence]. This zoom

will help you capture those key moments in Junior’s basketball games that you were telling me you wanted to

photograph [Benefit]. Won’t that add a lot to your scrapbooks [Agreement]?”

Note that the benefit was tied to something the customer said was important. A benefit only exists when something

is satisfying a need. The automatic zoom would provide no benefit if the customer didn’t want to take pictures of

objects both near and far.

Objections are concerns or reasons not to continue that are raised by the buyer, and can occur at any time. A

prospect may object in the approach, saying there isn’t enough time available for a sales call or nothing is needed

right now. Or, during the presentation, a buyer may not like a particular feature. For example, the buyer might find

that the automatic zoom leads the camera to focus on the wrong object. Salespeople should probe to find out if the

objection represents a misunderstanding or a hidden need. Further explanation may resolve the buyer’s concern

or there may need to be a trade-off; yes, a better zoom is available but it may be out of the buyer’s price range, for

example.

When all the objections are resolved to the buyer’s satisfaction, the salesperson should ask for the sale. Asking for the sale is called the close, or a request for a decision or commitment from the buyer. In complex selling situations

that require many sales calls, the close may be a request for the next meeting or some other action. When the close

involves an actual sale, the next step is to deliver the goods and make sure the customer is happy.

There are different types of closes. Some of these include:

• Direct request: “Would you like to order now?”

• Minor point: “Would you prefer red or blue?” or “Would you like to view a demonstration on Monday

or Tuesday?”

• Summary: “You said you liked the color and the style. Is there anything else you’d like to consider

before we complete the paperwork?”

When done properly, closing is a natural part of the process and a natural part of the conversation. But if pushed

inappropriately, buyers can feel manipulated or trapped and may not buy even if the decision would be a good

one.

The sales process used to sell products is generally the same regardless of the selling strategy used. However,

the stage being emphasized will affect the strategy selected in the first place. For example, if the problem is

a new one that requires a customized solution, the salesperson and buyer are likely to spend more time in the

needs identification stage. Consequently, a needs-satisfaction strategy or consultation strategy is likely to be used.

Conversely, if it’s already clear what the client’s needs are, the presentation stage is likely to be more important.

In this case, the salesperson might use a script-based selling strategy, which focuses on presenting a product’s

benefits rather than questioning the customer. The Sales Cycle

A key component in the effectiveness of salespeople is the sales cycle. The sales cycle—how long it takes to close

a sale—can be measured in steps, in days, or in months. As Figure 13.9 “The Sales Cycle” shows, the sales cycle

is depicted as a funnel because not all the people and firms a salesperson talks to will become buyers. In fact, most

of them won’t. he cycle starts with a lead, which is often nothing more than contact information of someone who might be

interested in the salesperson’s product. To follow up on the lead, the salesperson might phone or drop by to

see the person identified in the lead. This stage of the sales process is called the approach. (Recall that prior

to the approach the salesperson may engage in preapproach planning and research.) During the approach, the

salesperson introduces himself or herself and his or her company to the buyer. If the buyer shows interest, the

salesperson then moves to the next step in the sales process.

A suspect is a person or organization that has an interest in an offering, but it is too early to tell what or if they are

going to buy. They’ve agreed to meet with the salesperson and will possibly listen to the sales script or participate

in a needs-identification process. During the needs-identification stage, the salesperson is trying to qualify the

account as a prospect. Qualifying a prospect is a process of asking questions to determine whether the buyer is

likely to become a customer. A prospect is someone with the budget, authority, need, and time (BANT) to make

a purchase. In other words, the person has the money to make the purchase and the authority to do so; the person

also needs the type of product the salesperson is selling and is going to buy such a product soon. Once the purchase has been made, the sales cycle is complete. If the relationship between the company and the

buyer is one that will be ongoing, the buyer is considered one of the salesperson’s “accounts.” Note that the

buyer made a decision each step of the way in the cycle, thereby moving further down the funnel. She decided to

consider what the salesperson was selling and became a suspect. She then decided to buy something and became

a prospect. Lastly, she decided to buy the salesperson’s product and became a customer.

Metrics Used by Salespeople

As you know, the key metric, or measure, salespeople are evaluated on are the revenues they generate. Sometimes

the average revenue generated per customer and the average revenue generated per sales call are measured to

determine if a salesperson is pursuing customers that are the most lucrative. How many prospects and suspects

a salesperson has in the pipeline are two other measures. The more potential buyers there are in the pipeline, the

more revenue a salesperson is likely to generate.

Conversion ratios are an extremely important metric. Conversion ratios measure how good a salesperson is

at moving customers from one stage in the selling cycle to the next. For example, how many leads did the

salesperson convert to suspects? A 10:1 ratio means it took ten leads for the salesperson to get one suspect who

agreed to move to the next step. A salesperson with a 5:1 ratio only needs to pursue five leads to get a suspect.

So, if the representative can make only ten sales calls in a day, then the salesperson with the 5:1 ratio will have

produced two suspects versus just one suspect for the other salesperson. As a result, the second rep will have

more suspects in the pipeline at the end of the day. Similarly, how many suspects did the salesperson convert to

prospects and finally to customers? If all the other conversion ratios (suspect-to-prospect ratio and prospect-tocustomer ratio) are the same for the two salespeople, then the rep with the 5:1 ratio will close twice as many sales

as the one with a 10:1 ratio.

Salespeople can track their conversion ratios to identify which stages of the sales cycle they need to work on. For

example, the sales representative with 10:1 ratio can study what the rep with the 5:1 ratio is doing in order to try

to improve his efficiency and sales levels. His conversion ratios also tell him how many sales calls he has to make

each day or week to generate a sale and how many calls must be made on leads, suspects, and prospects to convert

them.

How many sales calls of each type a representative has to make in a certain period of time are activity goals.

As Figure 13.10 “How Activities and Conversions Drive Sales” illustrates, activities and conversions drive sales.

More calls translate into more conversions, and more conversions translate into more sales. You can think of it as

sort of a domino effect.

A win-loss analysis is an “after the battle” review of how well a salesperson performed given the opportunities she

faced. Each sales opportunity after the customer has bought something (or decided to buy nothing) is examined

to determine what went wrong and what went right. (Keep in mind that to some extent, all salespeople think back

through their sales call to determine what they could have said or done differently and what they should say or

do again in the future.) When several professionals are involved in the selling process, a win-loss analysis can

be particularly effective because it helps the sales team work together more effectively in the future. Like a team

watching a film after a football game, each member of the sales team can review the process for the purpose of

improvement. When the results are fed to managers, the analysis can help a company develop better products. A

marketing manager who listens carefully to what salespeople say during a win-loss analysis can develop better advertising and marketing campaigns. Communicating the same message to the entire market can help shorten the

sales cycle for all a company’s sales representatives. Another important metric used by many salespeople is how much money they will make. Most salespeople are

paid some form of incentive pay, such as a bonus or commission, which is determined by how much they sell. A

bonus is paid at the end of a period of time based on the total amount sold, while a commission is typically thought

of as a payment for each sale. A bonus plan can be based on how well the company, the individual salesperson,

or the salesperson’s team does. Some salespeople are paid only on the basis of commission, but most are paid a

salary plus a commission or a bonus.

Commissions are more common when sales cycles are short and selling strategies tend to be more transactional

than relationship oriented. Perhaps one exception is financial services. Many financial services salespeople are

paid a commission but expected to also build a long-lasting relationship with clients. Some salespeople are paid

only salary. As might be expected, these salespeople sell very expensive products that have a very long sales cycle. If they were only paid on commission, they would starve before the sale was made. They may get a bonus

to provide some incentive, or if they receive a commission, it may be a small part of their overall compensation.

Metrics Used by Sales Managers

The sales manager is interested in all the same metrics as the salesperson, plus others. The metrics we discussed

earlier can be used by the sales manager to evaluate salespeople, promote them, or pinpoint areas in which they

need more training. Sales managers also use sales cycle metrics to make broader decisions. Perhaps everyone

needs training in a particular stage of the sales process, or perhaps the leads generated by marketing are not

effective, and new marketing ideas are warranted. Sales cycle metrics at the aggregate level can be very useful for

making effective managerial decisions.

Sales managers also look at other measures such as market share, or how much of the market is buying from the

firm versus its competitors; sales by product or by customer type; and sales per salesperson. Sales by product or

by product line, especially viewed over time, can provide the sales executive with insight into whether a product

should be divested or needs more investment. If the sales for the product line are declining but the product’s

market share is holding firm, then the entire market is shrinking. A shrinking market can mean the firm needs to

look for new markets or develop new offerings.

Time is yet another element that sales managers look at. If the firm’s sales are declining, is the company in a

seasonal slump it will come out of, or does the firm have a serious, ongoing problem? Sales executives are also

constantly concerned about what the firm’s sales are doing relative to what was forecasted for them. Forecasts turn

in to sales quotas, or minimum levels of sales performance for each salesperson. In addition, forecasts turn into

orders for raw materials and component parts, inventory levels, and other expenditures of money. If the forecast

is way off, then money is lost, either because the company ran out of products or because too much was spent to

build up inventories that didn’t sell.

In Figure 13.11 “An Example of the Sales Data Sales Managers Utilize”, you can see a sample of data a sales

manager may review. As you can see, most of the sales teams are performing near quota. But what about the

Midwest? Selling 7 percent more is a good thing, but an astute manager would want to know why sales were short

by over $200,000. Inventory can be balanced against the Southeast’s shortfall, but that adds cost to ship from

the plant to Atlanta, then to Chicago. Accurate forecasts would have put that product in the Midwest’s Chicago

warehouse to start with. Similarly, a manager would be concerned about Jerry’s lack of sales. That one salesperson accounts for the entire

region’s shortfall against quota. Was the shortfall due to Jerry’s inability to sell, or did something happen in the

territory? For example, if a hurricane came ashore in the Carolinas or if Jerry had a health problem arise, the

manager’s concern would be different than if Jerry lost a major account or had a history of failing to reach quota. Sales executives don’t just focus on sales, though. They also focus on costs. Why? Because many sales executives

are held accountable not only for their firms’ sales levels but also for profit

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