MRK2322 [SALES FORCE MANAGEMENT]

MRK2322
Christian Mejlak 36785 G
Brandon Theuma 252885 M
Omar Sant 211180 M
[SALES FORCE MANAGEMENT]

Sales Force Management
Description of Product
Krea is one of the leaders in Malta in the furniture industry. Krea sells various types of furniture such as
kitchens with or without appliances, main bedrooms, spare bedrooms, sofas, TV units, outdoor furniture
and office furniture. At Krea one can also find loose furniture such as shoe cabinets, storage units and
vanity units.
Source of New Business
Krea
31%
Sales 2013
Others
69%
Sales Forecasts
2014
Krea
31%
Others
69%
Market Size 2013 € 11,613,000 Forecasted Market Size 2014 €13,000,000 (+11.9%)
Sales Objectives
Corporate
Objective
• Total of 4,000,000 euro yearly at a gross profit of 40%
Functional
Objective
• Sales per sales rep monthly of 42,000 euro
Unit
Objective
• Average of 330,000 euro monthly
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For the past years Krea sales were always increasing reaching 3,700,000 euro in 2013. Based on the
growth rate of past years and based on incentives which were launched this year (mentioned further
on), we can forecast that for this year the company will be achieving the 4,000,000 euro target. This will
be achieved by working hard on keeping our market share, while a forecast in market growth is evident.
Also it is very important to mention that Krea this year will be launching two new lines of products that
will obviously increase its sales; these are the outdoor furniture and office furniture.
We also did a subjective sales forecast based on feedback gathered from all the sales reps, the
marketing executive, the product executive and the sales manager. We also managed to get feedback
from customers by using a system called the Net Promoting Score (NPS). NPS is actually quite simply, we
call all the clients that receive our products every day and ask for a score from 1 to 10 on different
stages of the service. Krea is planning for a Growth scenario for 2014.
To come up with these objectives, we also had to assess the environment using the common PESTLE
tool which stands for Political, Economical, Social, Technical, Legal and Environmental.
When using Pestle we realized that the Legal environment was going to affect our objectives in a
positive way. The Government introduced and new scheme in the property sector for the first time
buyers stating that anyone who is buying his first property in 2014 was not going to pay any tax on that
particular property. This new law boosted the property sales and as a consequence boosting the sales in
the furniture industry.
We are also forecasting to be affected with the Technical and Social Environment due to the use of
social media marketing which is becoming a fundamental tool in every organization.
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Sales Force Structure
Team Consists of one Sales Manager, one Product Executive, one Marketing Executive, two Team
Leaders who also sell our product and six Sales Reps. Our Sales force structure will be as shown in the
chart below:
Directors
Sales Manager
Marketing
Executive
Product Executive
Bedroom, Office
and Loose furniture
Team Leader
Kitchen, Living
rooms Team Leader
Sales Rep Sales Rep Sales Rep
Sales Rep Sales Rep Sales Rep
We are using a Product Organizational Structure. As shown in the diagram we have team leaders in
charge of two different sections in our retail shop. One of the team leaders is taking care of the
bedroom section, office furniture section, garden furniture section and loose furniture. On the other
hand the second team leader is responsible for the kitchen section and the living and dining section,
with products such as sofas and TV units systems.
Both team leaders will be reporting to the Sales Manager who is in charge of the entire retail outlet.
There are also other two important members in the team, the product executive and the marketing
executive who together with the sales manager will hold meeting to improve marketing campaigns,
product stock levels and new products to introduce in the outlets portfolio. All three will finally report
their decision to the Director.
For our company it is very important that the sales reps are specialized in what they sell. Using a Product
Organizational structure will help us to do so. Every sales person will be a specialist in his or her own
section. This will for surely result in a better service to our customers and as a result a constant increase
in sales.
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Sales Force Size
As mentioned before we will need 6 sales reps and 2 team leaders to reach the goal we are setting for
next year of €4,000,000. We came up with the sales force size using a very simple calculation as shown
below:
Minimum Sales per Sales Rep = €41,000 per Month
Yearly Sales Target = €4,000,000
= 333 333 per month
333 333
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As shown in the diagram we just divided the amount of sales needed per month to reach the target by
the minimum amount of sales needed from each sales rep for him/her to be worth it for the company
ending up with a result of eight in all.
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Sales Force Recruitment
We will be seeking two sales rep to enrich our sales force and to be able to reach our goal. The
candidates we are looking for need to have at least some experience in sales. They don’t need to be
technical since at first they will be selling "off the shelf items" and in time training will be provided.
Confidence is fundamental. We will be looking for someone who is confident talking to clients and
assertive in promoting our products. Another important thing is flexibility in working hours, since the
outlet opens from 09:00 till 19:00 and staff is usually rostered.
Sales Representatives roles and responsibilities
Arrive 15 minutes before shift starts
Sell products in section he is assigned to
Ordering of products from suppliers
Responsible of his/her section, this includes price tags and decoration upkeep
Receiving deposits
After sales and handling customers complains and objections
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We will start our search for the right candidates using the advert shown below:
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The company will start receiving application from candidates. We will then evaluate all application and
start making calls for interviews. First interview will usually be done by the Sales Manager and Human
Resources Executive. After the first interview, the candidate will be short listed ending up with not more
than four. The last four will be called again for a second interview and this time the Director will be
present as well. Finally a candidate will be chosen according the needs of the role and if she or he meets
the interviewers expectations. Following this the company will start training for the chosen candidates.
Sales Force Training
Training is an essential task in the management of the sales force. The salespersons must know what
are the company objectives, the products we offer very well (their benefits), our competition and their
products, selling procedures and techniques, work organization and relationships management. With
the existing team, we already know what are the strengths and weakness of each individual, and
training shall be given accordingly. To the newly recruited personnel and more holistic training must be
given. Training needs may vary from time to time, example, if a new product carries new features,
detailed in house training of the benefits those features bring with them, must be given by the
management.
Sales training is generally given to improve sales performance. There mainly six methods of training
shown below in figure 3. Training must be given to help salespeople “gather information about the
customer through effective listening” (Ramsey and Sohi, 1997), “analyze and understand customer
problems” (Leong et al, 1989), and “tailor their offerings to customer needs” (Saxe and Weitz, 1982).
Lecture
•This method is useful in giving information and providing, a frame of references to aid the learning
process.
Films
•These are a useful supplement to the lecture in giving information and showing how a skill should
be performed.
Role Play
•This learning method moves the trainees into the stage of being consciously able to perform a skill.
It allows the trainees to learn by their own successes and failures in a buyer-seller situation.
Case Studies
•Case studies are particuraly appropriate for developing analytical skills. trainees are asked to
analyse situations, identify problems and opportunities and make recommendations for dealing
with them.
In the field training
•It is essential that initial training given to trainees is reinforced by on-the-job training.
Figure 3 (Jobber and Lancaster, 2012)
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In the field training helps the manager analyze the performance of each salesperson. By doing this he
will be able to identify the strengths and the weakness of each member of his team; teaching and
training the salesperson to overcome his weakness, with the goal of improving sales performance.
Performance must be measured to check if results are improving.
Sales Force Compensation
Our goal is that the company will reach a 4 million annual target. This will require the very utmost from
the sales team involved. In this case there must be a commitment from the employee, however the
company must react with a very attractive salary and an extra package for the targets reached monthly.
What kind of package is ideally to attract our sales team to be motivated for reaching the sales target
set? There are several types of attractive packages that can be negotiated or introduced. You can reach
the compromise for salary plus commission. One can try with salary plus a bonus for the sales
generated throughout the period stipulated. Some salesmen prefer to have an increased sales
commission with an increased sales volume accordingly. Compensation plans may vary between one
individual and the other and might change also by time.
We as a company will opt for a package of salary plus commission basis. All sales reps will receive a fixed
wage according to their scale as shown below. Scale is determined according to experience, product
knowledge and sales.
Sales Rep (Scale 1)
• Euro 13,200 gross yearly
Sales Associate (Scale 2)
• Euro 14,400 gross yearly
Team Leader (Scale 3)
• Euro 16,200 gross yearly
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Commission will be calculated as a percentage on the actual sales made by every individual sales rep.
Different items will have a different percentage according to the difficulty of sale. For example quoting
and ordering a kitchen is much more complicated then a shoe cabinet or a sofa, therefore percentage on
a kitchen would be higher. In the diagram below the products and their percentages for commission are
illustrated.
Product
•Commision
Kitchens 2%
Bedrooms 1.75%
TV units 1.25%
Office Furniture 1.25%
Outdoor Furniture 1.25%
Loose Items (shoe
cabinets, vanity units)
0.75%
Sales Force Evaluation
A company evaluates its team so that it can improve the performance of every individual within the
company. Improving performance of the staff will help them reach their goals and as a result the
company will reach its objectives.
We will evaluate our sales team on:
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Reaching their sales targets
Full time equivalent
Success rate
Grooming
Customer relation
Presentation
Team work
Reaching sales targets (quantitative): Each and every sales rep will have a sales target which is usually
measured yearly but the sales manager has to motivate and micro manage this target with every sales
rep monthly.
Full Time Equivalent (quantitative): Also referred to as FTE, this is the calculation of what a sales rep
must sell compared to the hours worked. This amount can be derived by simply dividing the number of
sales by the number of hours worked by the individual.
Success rate (quantitative): This is a very important KPI. This is the average of quotations that were
actually converted to orders; this quick calculation will be able to determine the success rate of the sales
rep.
Grooming (qualitative): First impression are very important, grooming plays a crucial role in sales. We
judge this on having full uniforms, name tags, hairstyles, and in the case of women makeup.
Customer relations (qualitative): This can be measured true NPS (in this case it can be classified as
quantitative) but we also evaluate this by having the sales manager on the field to assess how the sales
rep are handling customers.
Presentation (qualitative): Here we evaluate the level of presentation skills the individual has when
presenting a project to the customer or a design, especially when we have large contract or Key
Customers.
Team Work (qualitative): Sales rep here is evaluated on the level of team work he expresses during the
working hours. These may also include helping other sales rep finishing a presentation, doing price tags
or checking showroom to be sure that everything is in order.
The sales team will be evaluated by the sales manager. Every associate of the sales team will be having a
quarterly evaluation meeting also referred to performance appraisal.
From these meetings the sales manager will determine if the sales rep needs training, motivation or an
upgrade in his wage or bonus. Here the manager will also discuss way forward with the sales rep, set
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new targets and objectives to be reviewed in the next meeting. The sales rep will be given a table with
all the KPI's with a likert scale as shown in diagram below a week before the meeting.
Sales
Rep
Sales
Manager
1 2 3 4 5 1 2 3 4 5
Sales Target
FTE
SuccessRate
Grooming
Customer
Relation
Presentation
Team Work
The sales representative will rate himself will the sales manager will rate the sales rep. In the meeting
both scores are presented and an agreement is reached on the way forward.
As mentioned earlier in this write up we also use NPS (Net Promoting Score) to get external feedback
from clients, so that we can improve our sales force.
It is very important that when evaluation is done there is positive energy in the team and that
everybody is on the same page, that is, that evaluation is there to help and improve each and everyone
in the team.
Sales Force Motivation
Keeping a motivated sales force is no easy task. Rejections constantly wear down confidence and
motivation of the sales team. “An understanding of motivation lies in the relationship between needs,
drives and goals” (Jobber and Lancaster, 2012). In a work environment the need for money might result
in greater motivation. This said it is not always the case, neither. If a person is making enough money
(what he expected to achieve), money and bonuses won’t drive him anymore. Many psychologists have
researched motivation, and came up with different theories. One of the most popular ones is Maslow’s
hierarchy of needs (diagram shown below). “Maslow argued that needs form a hierarchy in the sense
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that, when no needs are fulfilled, a person concentrates on their physiological needs. When these needs
are fulfilled, safety needs become preponderant and important determinants of behavior. When those
are satisfied, belongingness becomes important – and so on up the hierarchy” (Jobber and Lancaster,
2012). With this knowledge in hand it is very important to train the managers, in recognizing what
motivates each person of the sales force. Only this way, proper motivating rewards can be given. In
instance a person who is making a self satisfying amount of money might be motivated by being praised
for qualities shown, during a sales force meeting.
Self -
actualization
Self esteem
love and belonging
Safety and security
Physociological needs
In relation to Maslow’s hierarchy, with the wages sales people earn, and by working for a long serving
profitable company, we can say that we offer them safety and security. Also we strongly adhere to
working teams. Our teams must be strongly knit, we also encourage get togethers, once a month. This
can give a sense of belonging. We make sure we carry the wins together, not only, we also celebrate
losses, and we make sure we learn from them. Helping our team building the self esteem is crucial.
Through closing sales with great packages the company offers, with the aid of training, we help them
build their self esteem. For those who are highly driven we want them to reach self actualization. We
propose to do this by offering promotions. We are fully aware that an excellent sales persons, does not
necesseraly make an excellent sales manager, but he would make a great senior sales person.
References
Jobber, D. and Lancaster, G., (2012), Selling and Sales Management, Pearson Education Ltd, Essex,
England
Leong, S. Bursch, P.S., and John, R., (1989), “Knowledge bases and salesperson effectiveness, a scripttheoric
analysis”, Journal of Marketing Research, Vol. 26, May, pp. 164-78
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Ramsey, R.P. and Sohi, R.S. (1997), “Listening to your Customers: the impact of perceived salespeople
listening behavior on relationship outcomes”, Journal of the Academy of Marketing Science, Vol. 25, No.
2, pp. 127-37
Saxe, R. and Weitz, B.A., (1982), “The SOCO scale; a measure of customer orientation of salespeople”,
Journal of Marketing Research, Vol. 18, August, pp.343-51
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