Sales management - American businessSales management, a critical component in the success of any business, includes recruitment and selection, training, organization, supervision, motivation, compensation, evaluation, and control of salespeople to ensure their effectiveness and to accomplish the firm’s objectives. Recruitment and selection of successful salespeople is the major concern for a sales manager. Generally college students say they do not want to pursue a career in sales, but upon graduation they often find that many of the best opportunities are in that field. Sales careers provide opportunities for success based on one’s own efforts and can offer higher earnings, independence, and job security. As one former student stated, “By going into sales supported by a large, national organization, I got to start my own business without having to invest a lot of CAPITAL.” Students look at sales positions as being riskier than traditional salaried MANAGEMENT positions, but sales is a business skill, and people with demonstrated sales success can transfer that skill to many different opportunities. From a sales manager’s perspective, one question is whether to recruit trained salespeople or people who are new to sales. Many small firms find it less expensive to hire trained salespeople, even though they will demand higher compensation. Small companies often cannot afford to develop and maintain training programs. Hiring trained salespeople reduces the cost of training staff and usually results in faster adaptation of new staff into the organization. Training can take place on the job or through individual instruction, in-house classes, and external seminars. Some companies use videotapes, interactive computer programs, role-playing and shadowing of other salespeople in their training programs. To people considering a career in sales, the time and effort a company is willing to invest in their new salespeople is an important measure of how much a company values its sales team. For example, McDonalds is famous for sending managers to their hamburger university. U.S. Gypsum sends trainees to a two-week program in its Chicago headquarters, while other companies put new sales staff in a back room to watch videos and then shadow (follow) other salespeople for a day or two. Organization of sales personnel presents another difficult sales-management question. Do managers organize geographically, by PRODUCT categories, by type of customers, or by some combination of these three methods? Geographic organization reduces sales representatives’ travel time but forces them to understand all of the company’s products and the needs of different types of customers. Many industrial-products companies have found organization by categories of the company’s products to be more effective than geographic organization. For example, General Electric sells everything from turbines to medicalimaging equipment. It would be nearly impossible to find and train salespeople who could effectively sell GE’s many highly technical products. Recognizing that in many markets a few customers account for a large portion of the company’s sales, many companies divide their sales force geographically but separate out national sales accounts. Supervision is a “touchy” issue in sales management. As stated earlier, one of the motivations for people to choose sales careers is independence. Salespeople often complain that too much of their time to spent complying with requirements imposed by managers. Sales managers must choose how closely to monitor and what support is needed for their staff. Motivation and compensation are related but different sales-management responsibilities. Salespeople are motivated by rewards, but monetary incentives are only part of motivation and compensation. Motivation can include emotional support, information sharing, and financial encouragement. Sales managers often use incentive programs, including prizes, trips and awards, to motivate their staffs. A sales manager once inspired his telephone-sales team by simply saying if they sold so many more thousands of dollars’ worth of product that day, he would cover all the office duties the next day, the Friday before Christmas. It worked! Some managers have adopted the EXPECTANCY THEORY of motivation, whereby salespeople know what is expected in terms of sales and other organizational goals. Sales representatives are assigned to tasks based on their needs and capabilities, making goals achievable, providing immediate feedback, and offering rewards that reinforce the values of each salesperson. SALES FORCE COMPENSATION is based on salary, commission, or a combination of both. Commissions can be “straight commissions,” a percentage of the value of the sale, or be based on a sales quota. Many industrial-sales firms set an annual sales quota, often a percentage above the average sales for the previous two years, and then award a bonus to those who achieve their sales quotas. Some U.S. companies have instituted pay-for-profits compensation plans, recognizing that sales goals and company PROFITs are not the same. 3M Corporation’s sales goals include requirements for sales representatives to increase sales of the company’s new products. Effective sales-quota systems are difficult to develop. They need to be achievable but also substantial enough to keep salespeople motivated throughout the year. If a salesperson achieves their sales quota by September, and next year’s sales objective will be based on their current year’s sales, they actually have an incentive not to increase their sales for the rest of the year. Sales managers must also evaluate their personnel. Sales volume can usually be easily measured, but managers also evaluate new-account development, CUSTOMER RELATIONS / SATISFACTION, and long-term sales efforts. Most sales organizations have well-defined evaluation criteria to guide employee assessment.
See also MOTIVATION THEORY.