1.1 What is Sales Management

What Salespeople Do

Salespeople act on behalf of their companies by doing the following:

• Creating value for their firms’ customers
• Managing relationships
• Relaying customer and market information back to their organizations

In addition to acting on behalf of their firms, sales representatives also act on behalf of their customers. Whenever a salesperson goes back to her company with a customer’s request, be it for quicker delivery, a change in a product feature, or a negotiated price, she is voicing the customer’s needs. Her goal is to help the buyer purchase what serves his or her needs the best. Like Ted Schulte, the salesperson is the expert but, in this case, an expert representing the customer’s needs back to the company.

From society’s perspective, selling is wonderful when professional salespeople act on behalf of both buyers and sellers. The salesperson has a fiduciary responsibility (in this case meaning something needs to be sold) to the company and an ethical responsibility to the buyer. At times, however, the two responsibilities conflict with one another. For example, what should a salesperson do if the product meets only most of a buyer’s needs, while a competitor’s product is a perfect fit?

Salespeople also face conflicts within their companies. When a salesperson tells a customer a product will be delivered in three days, she has made a promise that will either be kept or broken by her company’s shipping department. When the salesperson accepts a contract with certain terms, she has made a promise to the customer that will either be kept or broken by her company’s credit department. What if the credit department and shipping department can’t agree on the shipping terms the customer should receive? Which group should the salesperson side with? What if managers want the salesperson to sell a product that’s unreliable and will swamp the company’s customer service representatives with buyers’ complaints? Should she nonetheless work hard to sell the offering?

Situations such as these create role conflict. Role conflict occurs when the expectations people set for you differ from one another. Now couple the situation we just mentioned with the fact that the salesperson has a personal interest in whether the sale is made or not. Perhaps her income or job depends on it. Can you understand how role conflict might result in a person using questionable tactics to sell a product?

So are salespeople dishonest? Many people think so in part because certain types of salespeople have earned poor reputations that have tarnished the entire profession. As a result, some business students avoid sales despite the very high earnings potential and personal growth opportunities. You might be surprised to learn, however, that one study found that salespeople are less likely to exaggerate in order to get what they want than politicians, preachers, and professors. Another study looked at how business students responded to ethical dilemmas versus how professional salespeople responded. What did the study find? That salespeople were more likely to respond ethically than students were.

In general, salespeople handle these conflicting expectations well. Society benefits because salespeople help buyers make more informed decisions and help their companies succeed, which, in turn, creates jobs for people and products they can use. Most salespeople also truly believe in the effectiveness of their company’s offerings. Schulte, for example, is convinced that the pacemakers he sells are the best there are. When this belief is coupled with a genuine concern for the welfare of the customer—a concern that most salespeople share—society can’t lose.

Most marketing majors begin their career in sales. While a growing number of universities are offering a major in sales, the demand for professional salespeople often outstrips supply, creating opportunities for marketing majors. Sales is a great place to start a career not only because the earnings are at the top of any business major but because sales is the only place to really learn what is happening in the market.

Creating Value

Consider the following situations:

• A cardiac surgeon with a high-risk patient is wondering what to do. The physician calls Ted Schulte at Guidant to get his input on how to handle the situation. Schulte recommends the appropriate pacemaker and offers to drive one hundred miles early in the morning in order to be able to answer any questions that might arise during the surgery.
• A food wholesaler is working overtime to prepare invoices. Unfortunately, one out of five has a mistake. The result is that customers don’t get their invoices in a timely fashion, so they don’t pay quickly and don’t pay the correct amounts. Consequently, the company has to borrow money fulfill its payroll obligations. Jay King, a salesperson from DG Vault, recommends the wholesaler purchase an electronic invoicing system. The wholesaler does. Subsequently, it takes the wholesaler just days to get invoices ready, instead of weeks. And instead of the invoices being only 80 percent accurate, they are close to being 100 percent accurate. The wholesaler no longer has trouble meeting its payroll because customers are paying more quickly.
• Sanderson Farms, a chicken processor, wants to build a new plant near Waco, Texas. The chambers of commerce for several towns in the area vie for the project. The chamber representative from Waco, though, locates an enterprise zone that reduces the company’s taxes for a period of time, and then works with a local banker to get the company better financing. In addition, the rep gets a local technical college involved so Sanderson will have enough trained employees. These factors create a unique package that sells the company on setting up shop in Waco.

All these are true stories of how salespeople create value by understanding the needs of their customers and then create solutions to meet those needs. Salespeople can adapt the offering, such as in the Sanderson Farms example, or they can adapt how they present the offering so that it is easier for the client to understand and make the right decision.

Adapting a message or product on the fly isn’t something that can be easily accomplished with other types of marketing communication. Granted, some web sites are designed to adapt the information and products they display based on what a customer appears to be interested in while he or she is looking at the sites. But unless the site has a “chat with a representative” feature, there is no real dialogue occurring. The ability to engage in dialogue helps salespeople better understand their customers and their needs and then create valuable solutions for them.

Note also that creating value means making sales. Salespeople sell—that’s the bulk of the value they deliver to their employers. There are other ways in which they deliver value, but it is how much they sell that determines most of the value they deliver to their companies. Salespeople aren’t appropriate channels for companies in all situations, however. Some purchases don’t require the salesperson’s expertise. Or the need to sell at a very low cost may make retail stores or online selling more attractive. But in situations requiring adaptation, customer education, and other value-adding activities, salespeople can be the best channel to reach customers.

Managing Relationships

Because their time is limited, sales representatives have to decide which accounts they have the best shot at winning and which are the most lucrative. Once a salesperson has decided to pursue an account, a strategy is devised and implemented, and if a sale happens, the salesperson is also responsible for ensuring that the offering is implemented properly and to the customer’s satisfaction.

We’ve already emphasized the notion of “customers for life” in this book. Salespeople recognize that business is not about making friends, but about making and retaining customers. Although buyers tend to purchase products from salespeople they like, being liked is not enough. Salespeople have to ensure that they close the deal with the customer. They also have to recognize that the goal is not to just close one deal, but as many deals as possible in the future.

Gathering Information

Salespeople are boundary spanners, in that they operate outside the boundaries of the firm and in the field. As such, they are the first to learn about what competitors are doing. An important function for them, then, is to report back to headquarters about their competitors’ new offerings and strategies.

Similarly, salespeople interact directly with customers and, in so doing, gather a great deal of useful information about their needs. The salespeople then pass the information along to their firms, which use it to create new offerings, adjust their current offerings, and reformulate their marketing tactics. The trick is getting the information to the right decision makers in firms. Many companies use customer relationship management (CRM) software like Netsuite or Salesforce.com to provide a mechanism for salespeople to enter customer data and others to retrieve it. A company’s marketing department, for example, can then use that data to pinpoint segments of customers with which to communicate directly. In addition to using the data to improve and create and marketing strategies, the information can also help marketing decision makers understand who makes buying decisions, resulting in such decisions as targeting trade shows where potential buyers are likely to be. In other words, marketing managers don’t have to ask salespeople directly what customers want; they can pull that information from a customer database.