What is Sales Management Importance, Process, Trends

Importance Of Sales Management

Table of Contents:-

  • What is Sales Management?
  • Importance Of Sales Management
  • Scope of Sales Management
  • Sales Management Process
  • Administration of Strategic Sales Management Programme
  • Assessment and Control of Strategic Sales Management Programme
  • Trends in Sales Management
  • Types of SalesPersons

What is Sales Management?

Sales Management was originally said to be the function of directing the efforts of the business’s salesforce. However, in modern times, the broader view of sales function is found to be more popular with businesses. Accordingly, Sales Management is concerned with the development of the sales staff, managing sales-related operations, and implementation of sales techniques such that sales targets of the business are accomplished effectively.

American Marketing Association defines sales management as follows: “Sales Management is the planning, direction, and control of selling of business unit including recruiting, selecting, training, equipping, assigning, routing, supervising, paying and motivating as these tasks apply to the personnel of the sales force.”

The definition of AMA focuses on two major aspects of sales management. First, you have to plan, direct, and control selling activities. Second, you have to recruit, select, train, equip, assign, route, supervise, pay, and motivate the sales force. The definition equates sales management to the  Management of sales staff. However, contemporary sales managers have a broad spectrum of responsibilities to perform. In addition to managing the sales staff, they are also responsible for developing the company’s long-term sales plan, chalking out sales strategies to be implemented in target markets, and implementing sales budget. They are responsible for managing the company’s omnichannel. They scan the marketing environment continuously to frame responsive sales strategies.

The sales management function primarily seeks to accomplish three basic functions, namely sales volume, profit maximization, and growth. The top-level management delegates the authority to achieve these three goals to the sales management through marketing management.

Importance Of Sales Management

The significance of sales management as a function is evident from the substantial budgets allocated for it across companies. This is because it helps the firm navigate competition and is thus considered an essential part of the business organization.

Importance Of Sales Management

The importance of sales management as a function can be summarized in the following points:

1. Attains organizational goals: Sales management aids in achieving predetermined organizational goals by translating marketing plans into actions to generate profits, meet customer demands effectively, and capture market share.

2. Aids in better planning: One of the fundamental tasks of sales management is to formulate sales plans and budgets, and develop sales strategies so that the efforts of the salesforce can be well directed toward achieving common organizational goals.

3. Maximizes sales: By supporting the establishment of SMART sales plans, sales management helps maximize sales and, consequently, revenue for organizations.

4. Fosters strong customer relationships: Sales management encourages the salesforce to prioritize building strong customer ties. Strong ties with customers facilitate the development of a loyal customer base and increase profitability for the brand.

5. Optimum utilization of distribution channels: Organizations can more optimally utilize channel of distribution when sales management identifies appropriate distribution channels. They must take adequate steps to resolve distribution issues and enhance the smooth operations of the distribution channel.

6. Develops result-driven salesforce: Sales management is concerned not only with recruiting but also with training, motivating, and compensating the sales staff. Continuous training, development, and motivation drive them to contribute effectively to the profits of the firm.

Evolution of Sales Management

Pre-Industrial Revolution era

Before the Industrial Revolution, the economic landscape was predominantly shaped by small-scale industries, whose primary focus was catering to the needs of local customers. In such a setup, manufacturing and selling functions were handled by a single person. The main challenge faced by small-scale businesses was to produce enough to meet customer demands. Thus, the emphasis was more on manufacturing issues, and selling was fine as all orders were received well before production.

Post industrial Revolution

The Industrial Revolution that took place in England in the year 1760 brought about significant changes in the marketing landscape for businesses. Mass production of goods in factories with the help of modern machines began, leading businesses to seek newer markets to sell their produce. The demand in local markets needed to be more significant to absorb the enormous quantities produced by the factories, necessitating the need for sales to ensure the surplus produce was absorbed.

Other operational issues that dominated the business scene included the recruitment of workers in large numbers and the acquisition of fixed assets, such as buildings and machinery, for which significant funds needed to be raised. This situation forced many firms to adopt the corporate form of organization. With the magnitude of operations increasing multifold, separate functional departments emerged, such as the financial, manufacturing, personnel, and sales departments.

The establishment of the sales department helped firms address problems related to expanding their markets. Goods were sold to small retailers, who sold them in small quantities to end-users. Subsequently, wholesalers emerged, purchasing large quantities to sell smaller quantities to retailers, who finally sold to end-users. The emergence of many intermediaries created challenges in communicating with end customers for businesses.

On the other hand, the marketing function became more critical in firms, with advertising and sales promotion becoming more complex. The need to separate marketing from the sales function was increasingly felt. Thus, new departments like Marketing Research, Advertising, Merchandising, etc., existed. Despite the emergence of separate marketing functions, the sales department continued to hold an essential position for businesses as it is the only function that brings in revenue. It is aptly termed as the “Income Centre” of the business organization.

Scope of Sales Management

Sales is the management function responsible for ensuring that an organization has sustainable cash flow. For this, the sales department undertakes a variety of functions.

Scope of Sales Management

The scope of sales management is discussed below:

Sales Forecasting and Budgeting: Sales managers are expected to formulate well-structured sales plans in advance. They should estimate the expenses that will be incurred as a result of various sales activities.

Sales Team Structure: The sales team is expected to perform a variety of sales-related activities. The sales manager is responsible for determining and organizing the functions to be performed by their sales team.

Sales Training: To drive effective performance from the salespeople, it is important to impart them with the right skill sets. Sales managers are responsible for providing training and orientation to newly hired sales candidates to establish a suitable match between the know-how and the job position.

Manpower Planning and Hiring: The sales manager is required to estimate the requirements of sales personnel in the organization. Based on the organization’s needs, they should plan recruitment and selection activities.

Sales Areas: The sales manager is responsible for establishing sales goals for the team. For this purpose, they determine the sales quotas and identify the sales territories. Additionally, they determine the region where the company wants to sell its products based on the profitability of the organization.

Salesforce Management: The sales manager is entrusted with the responsibility of motivating the sales personnel, appraising their performance, ascertaining their remuneration, and rewarding them for the targets achieved. Therefore, they should manage the sales force in such a way that they are driven toward the achievement of the goal.

Sales Management Process

The sales management process is concerned with accomplishing salesforce objectives and targets effectively and efficiently by implementing the management processes of planning, organising, staffing, training, leading, and controlling. The sales management process is a three-step process.

A well-planned sales management program begins with an extensive environment scanning by the sales planner. The trends prevailing in the contemporary political environment, economic, social, technological, ecological, and legal environment must be thoroughly examined to identify the upcoming opportunities and threats for the business. The competitors’ moves and the demands of the potential customers must also be ascertained. An appraisal of the firm’s internal environmental factors, i.e., the organization’s strategic intent (Vision, mission, objectives), human capital, financial resources, firm’s current level of capacity utilization, manufacturing processes, research and development activities must also be undertaken by the sales planners to determine firm’s ability to carry out certain strategies.

The sales manager is expected to make the following five important decisions at this stage:

1. Determining the firm’s personal selling strategy.

2. Determining the firm’s account management policies.

3. Organization of the firm’s salesforce.

4. Decisions regarding establishing sales quotas, sales forecasts, and sales budgets.

5. Designing the sales territories and allocating them to the salespersons.

Administration of Strategic Sales Management Programme

Administering the sales management program involves channeling the salespeople’s efforts toward the attainment of organizational goals. Various factors play an important role in determining the job behavior of the salespeople. A sales manager must know these factors, which are stated below:

Environment

The macro-environmental variables that affect the ability of the salespeople to achieve their sales goals are economic, political, social, technological, ecological, and legal conditions prevailing in the market. The microenvironmental variables include demand-supply-related market conditions, competitors’ strategies, etc. Various components of the marketing mix, like brand image, product quality, pricing policies, channel design, and promotional efforts of the firm, also have a significant bearing on the performance of the salespeople towards the attainment of the sales targets. Therefore, they should analyze the whole range of marketing mix carefully. 

The clarity of job description

The roles and responsibilities of the salespeople should be clearly laid down in the job description so as to clarify the role expectations and to avoid any confusion. They must be equipped with the know-how to handle various sales situations that they would face on a day-to-day basis. The proper analysis of the job and the roles of salespersons may facilitate them in performing sales activities effectively.

Personal factors

Various personal traits possessed by the salesperson, like personality, analytical and critical thinking abilities, education level, sales aptitude, selling skills, motivation, commitment level, etc, determine the performance levels of the salesperson. These traits are very helpful in performing the sales job. 

HR Policies

The HR processes of recruitment and selection criteria for the salesman must be carefully designed. An ongoing training program is a must to upgrade the salesforce’s know-how regarding various aspects of the market and the product. To keep the salespeople going, the sales manager needs to suitably reward the superior performances. Both financial and non-financial rewards go a long way in motivating the salesforce towards a consistently superior performance. 

Assessment and Control of Strategic Sales Management Programme

To ensure that the sales management program generates the desired outcome, the sales manager needs to monitor its implementation as stated in the strategic plan. The sales manager should keep a close watch on environmental changes, as sales plans may need adjustments from time to time in light of these changes.

Various performance parameters need to be measured to make accurate decisions. Three basic analyses conducted by the firms in this regard are as follows:

Sales Analysis: It is a practice to break down the total sales territory-wise, product-wise, and customer-wise, comparing quotas and forecasted sales in those areas. If there is any discrepancy, proactive steps should be taken to bridge the gap. Breaking up these activities provides a good opportunity for improvement.

Cost Analysis: Sales managers calculate various costs related to each salesperson, product line, sales territory, and customer type. This data is then combined with the sales analysis data to determine customer profitability and the profitability of each segment. If the cost of a particular unit is excessive or insufficient, necessary corrective measures should be taken.

Behavioral Analysis: In this phase, the salesperson’s job-related behaviour is assessed using various techniques such as self-appraisal, field observations, customer feedback forms, and supervisor ratings, along with their sales volume, to evaluate overall performance. High-performing individuals should be encouraged and incentivized.

Trends in Sales Management

Contemporary businesses operate in the VUCA world, characterized by high levels of Volatility, Uncertainty, Complexity, and Ambiguity. To survive in this highly disruptive business environment, the sales manager must continuously scan emerging trends.

Global Markets

With the rise of globally connected economies, companies have also begun expanding their operations across national frontiers. When selling products abroad, sales managers may face many challenges related to differences in culture, laws, customer preferences, negotiation style, etc. Sales managers must take into account global competitors when devising their sales strategies to tap into the business opportunities arising in global markets.

Technological Advancements

Emerging digital technologies have made modern-day customers more aware than ever before about new product launches, the prices of various products, and the strengths and weaknesses of different products. Customers can access almost every piece of information about brands online, and internet-based content consumption has significantly increased among consumers. Marketers are also leveraging technology to collect information about their customers, competitors, and market trends and to develop customized products that offer superior value to their customers. Sales managers are also utilizing technology extensively, including the latest sales and CRM software, videoconferencing apps, etc., to deal with competition effectively and cost-effectively.

Diverse Salesforce

The modern-day salesforce consists of individuals with diverse backgrounds, genders, ages, cultures, educations, etc. This diversity brings differences in the needs and expectations of the salesforce. A sales manager needs to understand these differences to manage them effectively.

Omni-Channel Management

Contemporary businesses are increasingly adopting a multichannel route to provide a superior customer experience, whether customers shop online or offline. The use of omni-channels offers many benefits, such as a reduction in channel cost, better market coverage, and customized selling. However, one flip side of using omni-channels is that it can lead to the emergence of channel conflicts when two or more channels start competing against each other. Sales managers must utilize various conflict resolution techniques to handle such disputes.

E-Selling

With increased internet penetration, more and more customers expect companies to sell their products online. Increased online buying requires brands to focus their efforts on selling to convert a passive audience into active customers. Sales managers must carefully select shopping cart software and services.

Types of SalesPersons

The existence of varied buying situations has led to the emergence of various selling functions. Selling tasks determine the nature of the sales process for any situation.

Order takers

Order takers are not expected to steer clients to buy the organization’s merchandise or increase their quantity of purchases. They are required to take orders from customers and share the information with the relevant people within the business enterprise. Order takers are also expected to have up-to-date information on the date and time of delivery of orders that they have booked for the customers. They need to respond to queries from customers regarding the delivery date.

Inside Order Takers

Retail sales assistants may guide customers inside the retail store. Customers freely select products from the retail outlet without the presence or impact of a salesman. They are responsible for taking payments and delivering the goods.

Delivery Salespeople

Timely delivery of the product is the primary responsibility of delivery salespeople. They do not try to persuade customers to increase the order size. The reliability of product delivery determines the probability of getting or losing the order from the customers. Therefore, the delivery must be made on time.

Outside Order Takers

They are primarily concerned with responding to customer calls. They secure orders from customers on the basis of sales calls.

Order Creators

In certain industries, the job of a salesperson is not to close the sale but to convince the customer to promote the seller’s brand. Such salespersons are termed Missionary Salespeople. For example, medical representatives contact doctors not for direct sales but to convince them to prescribe their brand’s medicines.

Order Getters

The main aim of order getters is to convince customers to purchase the company’s merchandise. The salesman must be able to comprehend client needs and persuade them that his company’s products best serve their needs. The order getters must have complete knowledge of the products so that they may convince people by highlighting the functions and features of the product.

Conclusion

Sales Management was originally seen as the function of directing the efforts of the business’s salesforce. However, in modern times, the broader view of the sales function is more popular with businesses. Accordingly, sales management is concerned with developing the sales staff, managing sales-related operations, and implementing sales techniques to accomplish the business’ sales targets effectively. The scope of sales activities revolves around sales forecasting and budgeting, sales team structure, workforce planning and hiring, sales training, sales areas, and salesforce management.

The sales management process is concerned with accomplishing salesforce objectives and targets effectively and efficiently by implementing the management processes of planning, organising, staffing, training, leading, and controlling

To survive in this dynamic business environment, the sales manager must continuously scan emerging trends like global market conditions, diverse workforce, technological advancements, omnichannel management, and e-selling, etc.

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