What is Sales Management:
An introduction to sales management.
The different topics that will be covering in this article are in the following manner:
- What is sales management?
- How did sales management evolve as a function?
- What is the nature and role of sales management?
- What is the importance of sales management for the marketing function and for the organization as a whole?
- What are the different trends are emerging trends in sales management?
Now, let us start with what is sales management?
Originally the sales function or the sales management was very narrowly defined as the direction of the personal sales force.
It was basically just that the manager of an organization could delegate the task of selling to his people.
And the sales team and or the team of people who were instructed with this job we’re supposed to just go
And sell what the organization produced or manufactured.
It was very narrowly defined and merely a direction giving to the sales force personnel to sell what the organization makes.
However gradually it was realized that it is not important to sell what you make but at all, it is important to make what the customer wants.
That is where the customer as an entity began to gain importance.
At this particular time sales management began to relate to other functions of management both strategic and tactical including STP i.e:
STP product merchandising and assortment pricing physical distribution and marketing communication including advertising and sales promotion.
Subsequently, it was realized that sales management as a function was getting broader and broader.
And the academia, as well as the businesses, started using the word marketing management rather than sales management.
So sales management then which was initially the term got replaced by a broader term which was marketing management.
Where the importance lay or the difference lay in terms of identifying the needs and wants of the customer.
And delivering desire satisfaction in a more effective manner in a more efficient manner than what the competitors were doing
If we try to define sales management according to the market American Marketing Association:
“Sales management is defined as the planning direction and control of personal selling including, recruitment selecting equipment designing routing supervising paying and motivating as these tasks apply to the personal sales force.”
So in a way that it is the HR function as applied to the marketing sales team and the sales force.
That it came to be defined in that particular manner.
It was basically,
Planning the sales function,
Directing the salespeople,
Controlling the salespeople.
This involved all the HR functions including recruitment.
Recruiting them selecting them training them praising them looking for career advancement for them.
To do all that and of course to appraise their performance.
To do all that it was very important to set for the goals or targets.
It was important for them to for the managers to define a path or a territory within which these people must function.
It was important that they were given proper incentives to keep them motivated at work.
It was also important that they were compensated as well as per industry standards.
So that the people would work for the benefit of the organization.
Here again, if we define we would say it is the planning direction and control of the personal selling including:
- Paying and
- Motivating as these tasks apply to the personal sales force.
- Evolution of Sales Management:
The importance gradually from the pre-1950s to the post The 1950s if we think about the era.
The importance gradually began being given to the customer.
It was very very important that the needs and wants of the customers are identified.
And proper a good or service offering is provided which would help meet the needs and wants of the customer.
Product was not of just a product or a service
But it was something which would help meet the need and want because of the benefit that is provided.
It is important to understand that customers do not buy products or services.
They buy actually the benefit which they derive out of it.
It was important that marketers may focus on the customer.
The customer becomes the core of his needs and is identified.
He has provided a product or service offering which would help him need to meet the need and wants of the customer.
So that the customer would be happy and the company would be able to gain the satisfaction of the customer.
The company would be able to the commitment of the customer.
7P’s or marketing makes for the marketing program needed to be designed.
The 7P’S or the marketing mix needed to be designed in a manner keeping in mind the customer segment.
Which the marketer was going to deal with.
But all this was also had to be done within the socio-cultural, legal, ethical, and environmental framework.
What was important for marketers was to understand why people buy?
What was important was to make them understand or to inform them about their product and service offerings.
Marketers communicated with the customer.
The sales staff had the knowledge, the expertise, the skill to be able to not only educate the customer but also be able to persuade him to influence him.
Both through his communication skills and through his persuasion skills.
And this involved the entire sales function starting from:
Pre-approaching the client,
Approaching the client,
Giving a presentation,
Try closing the deal and
Follow up with his services.
So to convey be able to be there and present for the customer as in when the customer needs the marketer.
Now it needs the salesperson and the marketer.
When we do that the sales function involves a lot of things;
Just a sales dialogue,
A sales meeting,
A sales presentation is one.
The other important part is which is more strategic for the sales function lies in terms of being in the following manner:
In also deciding on territories and territory management
that what goals to be attained in what time.
For this, it is important that the salesforce management function is performed very carefully.
Whether it is with terms of recruiting selecting the right person for the sales job.
Training them, compensating them, providing not only the basic salary but also giving regular incentives.
To be able to keep them motivated at their workforce at their workplace.
To continually train them whether it is with respect to short or long term training programs keep them.
To abreast of the organizational developments with the new products that have been launched by the organization or by the company.
And also make them aware and informed about decisions taken with respect to a product or product modifications pricing distribution promotion etc.
So this entire gamut actually here is in terms of sales management.
Where sales are one part which is the art of closing a deal.
But beyond that what becomes important is sales force management territory management, budgeting, forecasting, and planning.
And understanding all the time:
- what does the customer need?
- Why does he need it?
- How would he buy it?
- How would he like to transact?
This sales function doesn’t pertain only with respect to the b2b or the or the b2c.
It goes beyond it also how it takes into account, institutional buying, it takes into account government buying.
That there was a very big change that occurred pre and posts the 1950s.
- Now, what was this change of situation before, in fact, the Industrial Revolution in the UK?
There was a dominance of the small scale manufacturers on the economy.
The importance was given to the production function importance was given to the manufacturing function selling was not at all an important function.
Remember that was the era of the product concept and the production concept.
The production concept meant mass, that you have to produce in bulk and sell.
It was even if small manufacturers produced, they produced in bulk.
This more importance was given to production and manufacturing.
- However after the Industrial Revolution in the UK and in the US.
It was a large-scale manufacturer we took over because there was a huge amount of capital intensive.
It means of production, which is placed in the older labor-intensive or small manufacturing practices.
These large-scale manufacturers had dominated the economy now.
Actually gave full-fledged importance to the operations and manufacture.
What was dominant in the product and the production concept?
What was the production concept?
The production concept meant that in order to succeed in sales management.
It is important that businesses must produce mass scale, distribute mass scale they would achieve economies of scale.
They’ll be able to lower down they are per unit cost of production and keeping a margin in hand.
They would still be able to offer their products and services cheaper than the competitor.
They would gain a price advantage they would gain a competitive advantage and be successful in the market.
The product concept talked about focusing on the product per sale.
It was believed that if an organization produced a product or manufactured a product that was good in quality, had innovative chosen was superior.
But people would be buying it and the company or the organization would benefit from it organizations would earn profits.
However, the difference between the pre and the post-industrial era.
A post-industrial revolution in the UK and the USA was
that before the Industrial Revolution.
The organizations, because they were small and led by small manufacturers.
There was no distinct division between the various functional areas.
But once in the industrial revolution happened after that separate functional departments arose in the form of manufacturing finance and sales.
Sales were again sales and not the marketing department or marketing management at that time because the focus again was purely on production.
Then to produce and manufacture and to sell, what that market has made or what the organization made rather than what the customer wanted.
However, as things evolved, there was a pre within the first in the first half of the 20th century.
And again beginning from the 1950s the focus changed.
One thing noteworthy is that in the era of the first half of the 20th century.
The focus shifted from product and production to the selling concept where again the seller remained the king.
The focus was very inside-out to make what he wanted and to sell the same rather than to sell what the customer wanted.
However, the 1950s most colonies in the world started getting, liberated the country started getting independence.
Many countries are given grants by world bodies gradually industrialization began all over the world.
It was realized that the seller could not be the king now.
The sellers were beginning to realize that there was a huge amount of competition that was emerging amongst them.
And if they did not satisfy the customer more effectively and efficiently sooner or later they would be wiped out of business.
The focus here is to get shifted from the seller to the buyer and it was the buyer now who became the king.
Due to the extensive production of goods, due to exports, due to selling, to the neighboring market said it was realized that all this was not sufficient.
The customer is regarded as a core it is important that we marketers with organizations make and produce, what the customer wants.
It was realized that one has to make what the customer wants rather than what the customer wants to make and sell.
It did not sell what you make but it was to sell what the customer needs and wants.
That is where the marketing function assumed importance.
The sales function, which was merely and merely the art of transactions began to lose its importance.
The marketing function was more holistic in nature, and it would involve activities like both strategic and tactical.
It would include concepts of the sale function as well as the support functions like advertising, sales promotion, marketing research, and marketing logistics.
Marketing activities like sales promotion advertising and sales management can begin to gain more importance.
Here was the role of strategic when a requirement for the strategic plan in the form of a value proposition for the segment.
STP, there was also the importance given to tactical plans.
In the form of the main 4P’s of product, price, place, and promotion.
In order to be able to understand the needs and wants of the customer.
In order to be able to deal with them more efficiently and effectively.
It was realized that sales management has to emerge as a different function within the marketing group function.
Sales have to be a different role it was also realized that marketing research is important.
It was realized that communication promotion, sales advertising, sales promotion was important.
And subsequently, all these different functions began to assume importance.
Nature of Sales Management:
What the current scenario looks like, we have ahead marketing.
If we have a department in the marketing department,
The marketing department could gain further be broken into these different wings.
Sales are just one role now because it is it was realized that if we just rely on making and selling we will not be able to prosper.
If what we need to do, we need market research to understand, what needs and wants.
We need different heads to deal with the different P’s.
Whether it is product assortment and product merchandising or pricing.
We need a different team for designing the marketing communication program.
A different team to keep with which keeps tab of the logistics and keep working hand-in-hand with the production in the operations people.
A different head for dealing with after-sales and service.
Of course, a big role to be played by the sales team.
We also need a manager or ahead to be able to deal with the sales force function.
That is how all of these different functions got segregated all under the AGS or all under the umbrella of the marketing function.
So let us now come to discuss the nature of sales management.
When we talk about sales management we will talk about relationship selling here.
Again when the seller was the king he did not require to enter into long term relationships with his buyers.
Because he knew that the seller as a seller he was the king. The buyers are many, the sellers a fee.
The buyer would definitely be coming to the seller time.
Because the seller was more powerful.
As competition emerged as the sellers then realized that there was a huge amount of competition.
That was present or beginning to develop between them.
It was important that they enter into relationships with the customers.
That is how the concept of selling moved from a transactional approach to partnering in a collaborative.
What is transactional selling in the sales management?
What is value-added relationship selling?
What is collaborative or partnership relationship selling?
Transactional selling refers to customers who are sold a particular good and service and they are not contacted again.
This was the in fact right till when the 1950s this was a general trend.
Where the seller actually preferred having a transactional approach.
Because he realized it was no point that goes out of their way and enters into relationships.
He was more powerful and he did not need to do that.
The importance of transactional selling diminished and that of value-added and partnerships began getting importance.
However, there are even now there as in certain cases transactional selling happens.
People go and buy a movie ticket.
And they watch a movie and then they don’t go to the cinema.
The owner of the cinema theatre does not actually have to contact the buyer.
In certain cases where the buyer is entered into a loyalty program.
Or something like that he may be communicated with Edwards or with personal mail or with messages but otherwise, that does not happen.
Relationships selling is a selling style or a situation where the salesperson contacts the customer after the purchase.
As to determine if the customer is satisfied with the product.
If he needs anything else already has any requirements in the future.
Collaborative or partnership:
Collaborative or partnership which is moving much beyond where the seller enters into a long term partnership or a contractual remained with the buyers.
We see, especially in the case of the b2b scenario.
Here he works continuously to improve his customer’s operations and processes.
He comes up with products and services which would benefit the customer.
And help the customer gain, deliver better products and services to gain larger market shares.
Profits and success succeed in the market.
- Nature and Role of Sales Management:
There are certain specific duties of a sales manager.
- To determine the goals and objectives of the sales force.
The goals and objectives here, we refer to in day-to-day language as quotas, as targets but actually, the term is quotas.
- Organizing the sales force in terms of territory management and quota allocation, forecasting, budgeting.
We will be talking about self forecasting and budgeting gradually
Forecasting is the planning function, budgeting it brings in a control element.
We all know that planning and control are the two Siamese twins, they cannot be separated.
The role of the sales manager is also to deal with its force management.
Recruitment selection training,
Motivation performance management,
Praises career development etc
What is the importance of sales management?
The sales department is the only department in an organization which brings in revenue.
Sales department are the only revenue generators.
The financial results of a company actually depend upon the performance of the sales force.
The sales force acts as a link between the customer and the organization.
They are in the interface and the sales executive has a responsibility.
He has a responsibility towards the organization or the object where he works.
He has a responsibility towards the people or the customers.
He has a huge responsibility towards the society to which with where he wrote Is functioning.
What are the top management expectations?
The top management expectations:
- Achieving sales target,
- Profit contributions,
- Maintain continuous business growth.
Sales management here is allocated certain targets or quotas.
Now, on the salesforce also provides feedback to the top management or to the middle management.
This feedback is provided by the salespeople at the territory level or at the lower level.
The feedback provided by them acts as feedback as an input for setting up of objectives which are to be or setting up of targets or quotas.
Targets are set for sales volume, they are set for gross margin for net profit.
Whether these targets with respect to the sales volume the gross margin or the net profits are reached or not.
It depends upon the performance of the sales force.
- Customer expectations:
The expectations which people have from the customers.
Customers also whether it is b2b or b2c, wholesalers, retailers, or industrial users, or where their end customers.
They also expect the salesperson to provide them with the right kind of product at the right price and high-quality support services.
- Society’s expectations:
The society also has huge expectations from the sales force.
Which is in terms of commitment to delivering the right product right quality product at a price which the final buyer will pay.
Products that are ethical, less harmful for the environment, take into account the social and ethical well-being of the community at large.
The importance of sales management:
That sales management contributes directly to the financial results of a company.
The financial results of our company are actually illustrated through two formulae.
1.) Gross margin and
2.) Net profit
- What is the Gross margin?
Gross margin is the sales minus the cost of goods sold or the cost of sales.
Gross Margin: Sale – Cost of good sold
Which will give us the gross margin?
Once we get the gross margin.
- What is Net Profit?
If we actually subtract the expenses what do we mean by expenses, here the selling expenses that we get are net profit.
Net profit: Gross margin – Selling expenses
The salesperson has a very important role to play in bringing in profits or the net profit for the company by doing this.
He either increases the sales or reduces the selling expenses.
By that, he would be contributing to the net profit of the company.
That is why the sales team or the sales force is extremely in front instrumental, in gaining profits for the company and engineering.
And for the organization’s success, the salespeople have a huge role to play.
Sales management influences these figures associated with these formulas either by increasing the sales or by reducing the net profit.
All of this whether you earn your sales, your gross margin, your net profit actually are affected by the performance of the sales personnel.
Emerging trends in sales management:
Companies are multinational because companies are going global.
There are a huge amount of global issues with sales teams or sales management has to take into account.
This is with reference to diversity within the sales force which is another point listed in the following manner:
- Global issues,
- Technological advancement and internet revolution,
- Diversity within salesforce,
- Team selling,
- Multi-channel retailing,
- Ethical, social and environmental issues,
- Customer orientation,
- Relationship selling and partnering,
The diverse sales force but it is always intelligent on the part of corporates or companies to actually have marketing managers.
A marketing manager who may be rotated from one country to another.
But when it comes to the sales force hiring of the sales force and allocating to in two territories.
It is always wiser to have people who are localized.
There has been a huge advancement in technology and with the internet revolution.
That planning the sale targets and having a control mechanism in place, through reports, report generation.
Feedback to the corporate or to the headquarters, reports sending to headquarters situated within and outside the country, all of this has become easy.
With technological advancements sales team in one part of the country or one part of the continent.
It can interact with others across countries, within the country, across the country, across continents.
They are way kept abreast of what is happening all over the world.
They get to know real-time developments product developments or other changes in marketing makes.
A big importance today is being given to team selling, which involves cross-functional roles.
Where a team or sales team specializes in the case of b2b does not comprise only the technical.
But it also involves people from different functional areas both technical and non-technical.
Also retailing today has assumed different forms, you have multi-channel retailing.
Retailing is not what it was just earlier where the sales force made a face to face had a face to face interaction or made a face to face presentation.
There are alternatives available to people where they can search online or offline.
They have different channels which they can a sole resort too.
So they can also directly communicate or interact with the organization and buy or transact.
They are suffering products for which we have indirect channels or the middlemen or the traditional channels.
But today the more modern channels in the form of online in the form of direct marketing direct selling.
In the form of Omni-channel and multi-channel are resuming.
Another important issue is there are ethical social and environmental concerns.
Today marketers, today Salesforce have to connect into account the social issues, the ethical issues, the environmental issues.
And especially environmental issues are some or one thing which is assuming huge
Today customers themselves are becoming very conscious of their environment.
Marketers and sales force have to be well prepared to deal with such issues.
Relationship selling and partnering is the requirement of the day.
As a salesperson one cannot afford a situation, where he just sells and sells the product and forgets the customer.
He has to be continually in touch with the customer continually in touch with him to not only discuss what you know the current requirements are.
But also to understand what future needs could be.
Customer orientation is the key in sales management.
Also as we just said with respect to multi-channel, E-selling is assuming huge importance.
People make presentations to their clients, online and deal with them, transact with them.
Any and every part of the world which means-gives not only huge opportunity to the marketers and sellers.
But it also poses huge challenges.
Because there is always the lack of human interface or the lack of face-to-face interaction is lacking because of which relationship-building can become very difficult.
So it is not only transactions but also it is building relationships which are important in today’s day and age.