Selling Strategy There was a time when the problems of selling were simpler than they are today. Recent years have produced a variety of changes in the selling strategies of businesses. The complexities involved in selling as we approach the next century are different from those in the past. As an example, today a high-principled style of selling that favors a close, trusting, long-term relationship over a quick sell is recommended. The philosophy is to serve the customer as a consultant, not as a peddler. Discussed below are objectives and strategic matters pertaining to selling strategies. Objectives. Selling objectives should be derived from overall marketing objectives and should be properly linked with promotional objectives. For example, if the marketing goal is to raise the current 35 percent market share in a product line to 40 percent, the sales manager may stipulate the objective to increase sales of specific products by different percentage points in various sales regions under his or her control. Selling objectives are usually defined in terms of sales volume. Objectives, however, may also be defined for (a) gross margin targets, (b) maximum expenditure levels, and (c) fulfillment of specific activities, such as converting a stated number of competitors’ customers into company customers. The sales strategist should also specify the role of selling in terms of personal selling push (vis-à-vis advertising pull). Selling strategies depend on the consumer decision process, the influence of different communication alternatives and the cost of these alternatives. The flexibility associated with personal selling allows sales presentations to be tailored to individual customers. Further, personal selling offers an opportunity to develop a tangible personal rapport with customers that can go far toward building long-term relationships. Finally, personal selling is the only method that secures immediate feedback. Feedback helps in taking timely corrective action and in avoiding mistakes. The benefits of personal selling, however, must be considered in relation to its costs. For example, according to the research department of the McGraw-Hill Publications Company, per call personal selling expenditures for all types of personal selling in 1994 came to $205.40, up 15.4 percent from 1991.

Thus, the high impact of personal selling should be considered in light of its high cost.

Strategic Matters. As a part of selling strategy, several strategic matters should be resolved. A decision must be made on whether greater emphasis should be put on maintaining existing accounts or on converting customers. Retention and conversion of customers are related to the time salespeople spend with them. Thus, before salespeople can make the best use of their efforts, they must know how much importance is to be attached to each of these two functions. The decision is influenced by such factors as the growth status of the industry, the company’s strengths and weaknesses, competitors’ strengths, and marketing goals. For example, a manufacturer of laundry detergent will think twice before attempting to convert customers from Tide (Procter & Gamble’s brand) to its own brand. On the other hand, some factors may make a company challenge the leader. For example, Bic Pen Corporation aggressively promotes its disposable razor to Gillette customers. The decision to maintain or convert customers cannot be made in isolation and must be considered in the context of total marketing strategy. An important strategic concern is how to make productive use of the sales force. In recent years, high expenses (i.e., cost of keeping a salesperson on the road), affordable technological advances (e.g., prices of technology used in telemarketing, teleconferencing, and computerized sales have gone down substantially), and innovative sales techniques (e.g., video presentations) have made it feasible for marketers to turn to electronic marketing to make the most productive use of sales force resources. For example, Gould’s medical products division in Oxnard, California, uses video to support sales efforts for one of its new products, a disposable transducer that translates blood pressure into readable electronic impulses. Gould produced two videotapes a six-minute sales presentation and a nine-minute training film costing $200,000.

Salespeople were equipped with videorecorders an additional $75,000 investment to take on calls. According to Gould executives, video gives a concise, clear version of the intended communication and adds professionalism to their sales effort. Gould targeted its competitors’ customers and maintains that it captured 45 percent of the $75 million transducer market in less than a year. At the end of nine months, the company had achieved sales of more than 25,000 units per month, achieving significant penetration in markets that it had not been able to get into before. Another aspect of selling strategy deals with the question of who should be contacted in the customer organization. The buying process may be divided into four phases: consideration, acceptance, selection, and evaluation. Different executives in the customer organization may exert influence on any of the four phases. The sales strategist may work out a plan specifying which salesperson should call upon various individuals in the customer organization and when. On occasion, a person other than the salesperson may be asked to call on a customer. Sometimes, as a matter of selling strategy, a team of people may visit the customer. For example, Northrop Corporation, an aerospace contractor, assigns aircraft designers and technicians not salespeople to call on potential customers. When Singapore indicated interest in Northrop’s F-5 fighter, Northrop dispatched a team to Singapore that included an engineer, a lawyer, a pricing expert, a test pilot, and a maintenance specialist. A manufacturer of vinyl acetate latex (used as a base for latex paint) built its sales volume by having its people call on the “right people” in the customer organization.

The manufacturer recognized that its product was used by the customer to produce paint sold through its marketing department, not the purchasing agent or the manager of research. So the manufacturer planned for its people to meet with the customer’s sales and marketing personnel to find out what their problems were, what kept them from selling more latex paint, and what role the manufacturer could play in helping the customer. It was only after the marketing personnel had been sold on the product that the purchasing department was contacted. Thus, a good selling strategy requires a careful analysis of the situation to determine the key people to contact in the customer organization. A routine call on a purchasing agent may not suffice. The selling strategy should also determine the size of the sales force needed to perform an effective job. This decision is usually made intuitively. A company starts with a few salespeople, adding more as it gains experience. Some companies may go a step beyond the intuitive approach to determine how many salespeople should be recruited. For instance, consideration may be given to factors such as the number of customers who must be visited, the amount of market potential in a territory, and so on. But all these factors are weighed subjectively. This work load approach requires the following steps:

1. Customers are grouped into size classes according to their annual sales volume.

2. Desirable call frequencies (number of sales calls on an account per year) are established for each class.

3. The number of accounts in each size class is multiplied by the corresponding call frequency to arrive at the total work load for the country in sales calls per year.

4. The average number of calls a sales representative can make per year is determined.

5. The number of sales representatives needed is determined by dividing the total annual calls required by the average annual calls made by a sales representative.

Sales Motivation and Supervision Strategy To ensure that salespersons perform to their utmost capacity, they must be motivated adequately and properly supervised. It has often been found that salespeople fail to do well because management fails to carry out its part of the job, especially in the areas of motivation and supervision. Although motivation and supervision may appear to be mundane day-to-day matters, they have far-reaching implications for marketing strategy. The purpose of this section is to provide insights into the strategic aspects of motivation and supervision.

Motivation. Salespeople may be motivated through financial and nonfinancial means. Financial motivation is provided by monetary compensation. Nonfinancial motivation is usually tied in with evaluation programs. Compensation. Most people work to earn a living; their motivation to work is deeply affected by the remuneration they receive. A well-designed compensation plan keeps turnover low and helps to increase an employee’s productivity. Acompensation plan should be simple, understandable, flexible (cognizant of the differences between individuals), and economically equitable. It should also provide incentive and build morale. It should not penalize salespeople for conditions beyond their control, and it should help develop new business, provide stable income, and meet the objectives of the corporation. Above all, compensation should be in line with the market price for salespeople. Because some of these requisites may conflict with each other, there can be no one perfect plan. All that can be done is to try to balance each variable properly and design a custom-made plan for each sales force. Different methods of compensating salespeople are the salary plan, the commission plan, and the combination plan.

The greatest virtue of the straight-salary method is the guaranteed income and security that it provides. However, it fails to provide any incentive for the ambitious salesperson and therefore may adversely affect productivity. Most companies work on a combination plan, which means that salespeople receive a percentage of sales as a commission for exceeding periodic quotas. Conceptually, the first step in designing a compensation plan is to define the objective. Objectives may focus on rewarding extraordinary performance, providing security, and so on. Every company probably prefers to grant some security to its people and, at the same time, distinguish top employees through incentive schemes. In designing such a plan, the company may first determine the going salary rate for the type of sales staff it is interested in hiring. The company should match the market rate to retain people of caliber. The total wage should be fixed somewhere near the market rate after making adjustments for the company’s overall wage policy, environment, and fringe benefits.

A study of the spending habits of those in the salary range of salespeople should be made. Based on this study, the percentage of nondiscretionary spending may be linked to an incentive income scheme whereby extra income could be paid as a commission on sales, as a bonus, or both. Care must be taken in constructing a compensation plan. In addition to being equitable, the plan should be simple enough to be comprehensible to the salespeople. Once compensation has been established for an individual, it is difficult to reduce it. It is desirable, therefore, for management to consider all the pros and cons of fixed compensation for a salesperson before finalizing a salary agreement. Evaluation. Evaluation is the measurement of a salesperson’s contribution to corporate goals. For any evaluation, one needs standards. Establishment of standards, however, is a difficult task, particularly when salespeople are asked to perform different types of jobs. In pure selling jobs, quotas can be set for minimal performance, and salespeople achieving these quotas can be considered as doing satisfactory work. Achievement of quotas can be classified as follows: salespeople exceeding quotas between 1 to 15 percent may be designated as average; those between 16 and 30 percent as well-performing; finally, those over 30 percent can be considered extraordinary salespeople. Sales contests and awards, both financial and nonfinancial, may be instituted to give recognition to salespeople in various categories. Supervision. Despite the best efforts in selecting, training, and compensating salespeople, they may not perform as expected. Supervision is important to ensure that salespeople provide the services expected of them. Supervision of salespeople is defined in a broader sense to include the assignment of a territory to a salesperson, control over his or her activities, and communication with the salesperson in the field. Salespeople are assigned to different geographic territories. An assignment requires solving two problems: (a) forming territories so that they are as much by analyzing customers’ locations and the potential business they represent. Customers can be categorized as having high, average, or low potential.

Further, probabilities in terms of sales can be assigned to indicate how much potential is realizable. Thus, a territory with a large number of high-potential customers with a high probability of buying may be smaller in size (geographically) than a territory with a large number of low-potential customers with a low probability of buying. Matching salespeople to territories should not be difficult once the territories have been laid out. Regional preferences and the individual affiliations of salespeople require that employees be placed where they will be happiest. It may be difficult to attract salespeople to some territories, whereas other places may be in great demand. Living in big metropolitan areas is expensive and not always comfortable. Similarly, people may avoid places with poor weather. It may become necessary to provide extra compensation to salespeople assigned to unpopular places. Although salespeople are their own bosses in the field, the manager must keep informed of their activities. To achieve an adequate level of control, a system must be created for maintaining communication with employees in the field, for guiding their work, and for employing remedial methods if performance slackens. Firms use different types of control devices. Some companies require salespeople to fill in a call form that gives all particulars about each visit to each customer. Some require salespeople to submit weekly reports on work performed during the previous week. Salespeople may be asked to complete several forms about sales generated, special problems they face, market information collected, and so on.

Using a good reporting system to control the sales force should have a positive influence on performance. In recent years, more and more companies have begun to use computer-assisted techniques to maintain control of the activities of their sales forces. Management communicates with salespeople through periodic mailings, regional and national conferences, and telephone calls. Two areas of communication in which management needs to be extra careful to maintain the morale of good salespeople are (a) in representing the problems of the field force to people at headquarters and (b) in giving patient consideration to the salesperson’s complaints. Asales manager serves as the link between the people in the field and the company and must try to bring their problems and difficulties to the attention of top management. Top management, not being fully aware of operations in the field, may fail to appreciate problems. It is, therefore, the duty of the sales manager to keep top management fully posted about field activities and to secure for salespeople its favor. For example, a salesperson in a mountainous area may not be able to maintain his or her work tempo during the winter because of weather conditions. Management must consider this factor in reviewing the salesperson’s work. It is the manager’s duty to stand by and help with occupational or personal problems bothering salespeople. Close rapport with salespeople and patient listening can be very helpful in recognizing and solving sales force problems. More often than not, a salesperson’s problem is something that the company can take care of with a little effort and expenditure if it is only willing to accept such responsibility. The primary thing, however, is to know the salesperson’s mind. This is where the role of the supervisor comes in. It is said that the sales manager should be as much a therapist in solving the problems of his or her salespeople as the latter should be in handling customers’ problems.

Promotion strategies are directed toward establishing communication with customers. Three types of promotion strategies may be distinguished. Advertising strategies are concerned with communication transmitted through the mass media. Personal selling strategies refer to face-to-face interactions with the customer. All other forms of communication, such as sampling, demonstration, cents off, contests, etc., are known as sales promotion strategies. Two main promotion strategies were examined in this article: promotion-expenditure strategy, which deals with the question of how much may be spent on overall promotion, and promotion mix strategy, which specifies the roles that the three ingredients of promotion (i.e., advertising, personal selling, and sales promotion) play in promoting a product. Discussed also were two advertising strategies. The first, media-selection strategy, focuses on the choice of different media to launch an ad campaign. The second, advertising-copy strategy, deals with the development of appropriate ad copy to convey intended messages. Two personal selling strategies were examined: selling strategy and sales motivation and supervision strategy. Selling strategy emphasizes the approach that is adopted to interact with the customer (i.e., who may call on the customer, whom to call on in the customer organization, when, and how frequently). Sales motivation and supervision strategy is concerned with the management of the sales force and refers to such issues as sales compensation, nonfinancial incentives, territory formation, territory assignments, control, and communication.